1925-05-06

PRINTING OF PARLIAMENT

[Stage Direction]
Mr. DECHENE for Hon. Mr. MARCIL (Bonaventure), presented the second report of the Joint Committee on the Printing of Parliament.

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

Mr. JONES:: 1.	Is John R. Fisher, of Truro, Nova Scotia (retired conductor of the Canadian National Railways), now in the service of the railways?
2.	If so, what position does he hold?
3.	What are his duties?
4.	When was he appointed?
5.	What is his salary?
6.	Was the position now held by Mr. Fisher created when he was appointed to it?
7.	If not, how long has the position been in existence, and who was his immediate predecessor in the position?


Hon. Mr. GRAHAM:: 1.	Yes; is in the service, but was not retired.
2.	Inspector of trains and stations-Atlantic region.
3.	To see that passenger cars in service and station buildings are kept in proper condition.
4.	January 18, 1924.
5.	The management does not consider it in the public interest to disclose information of this character.
6.	Yes.
7.	See answer to No. 6.


CIVIL SERVICE RECLASSIFICATION
Mr. CHURCH:: 1.	When will some decision be given by the government or the Civil Service Commission regarding the bonus or reclassification of civil servants?
2.	Will such readjustment be made before next pay day, May 15th?
3.	Has such bonus been cut off from those of the lower grades awaiting the reclassification of salaries?


Right Hon. Mr. MACKENZIE KING:: I
might answer this verbally. The government has approved the joint report of the Civil Service Commission and deputy ministers with respect to the reclassification of civil servants, and I assume that the commission will make public, possibly to-morrow, the terms of the reclassification.


CANADIAN NATIONAL RAILWAYS-PRIVATE CARS
Mr. WILSON:: 1.	How many private cars are in the possession of the Canadian National Railways for the use of officials?
2.	How many of these have been secured in the past two and a half years?
3.	How many were used to carry officers of the compare to Portland on the occasion of the departure of Mr. C. J. Smith for England?
4.	Who were the officers who used these cars for this purpose ?
5.	How many cars were on this same occasion sent around to Halifax, and for what purpose were they so sent?


Hon. Mr. GRAHAM:: The hon. gentleman (Mr. Wilson) is now in his place. I have referred to this question on two or three occasions. I would be glad to give my hon. friend the answer to the first two questions, but I think, on mature consideration, he will see the inadvisability of opening the door to the other two questions. If we do, dear knows to what point they may lead. If these questions are answered, some person may rise and ask who were in somebody's car and how much they ate.


Mr. WILSON:: The reason why I asked
this question and why I think an answer should be given, is because I think it is in the public interest. If there has been an extravagant use of private cars, those who are supporters of public ownership as I have been, have a right to ask these questions.


George Perry Graham: I would not say that my hon. friend is not a supporter of public ownership, but I assure him he is making a mistake if he presses for answers to the last questions. I am ready to give him answers to the first two, and have been since the second or third day after they were asked. These answers are:
1.	64.
2.	During the period mentioned one car has been added and six retired.
I think the hon. member, on reflection, will realize, not that there is any difficulty in answering the last questions, but that if we do, we open the door to a series of question?

Questions
that will become detrimental to the interest of the railway and be of no interest to the public.


Gordon Crooks Wilson: All I can say is that I think it is in the public interest that these questions should be answered.


Mr. SPEAKER:: Stand.


George Perry Graham: No, Mr. Speaker. This question has been asked to stand for a week on account of the absence of my hon. friend. I have answered the first two questions and I am prepared to give my hon. friend, personally, answers to the others. He has been misinformed in every detail as to the answers to the others. I will go that far. I do not think he wants to do anything that would be detrimental to public ownership of railways.


Gordon Crooks Wilson: If the answers are put on Hansard, I can say whether I have been misinformed or not.


CANADIAN NATIONAL EXPRESS COMPANY- TROIS-PISTOLES
Mr. POULIOT:: What was the total yearly amount of business of the Canadian National Express Company branch at Trois Pistoles, county of Temiscouata, Quebec, during the last two years, respectively?


George Perry Graham: Year 1923	 $ 6,315 17
Year 1924	 7,042 52


ONTARIO HYDRO-ELECTRIC POWER COMMISSION POWER EXPORT
Mr. GERVAIS:: 1.	How long has the Hydro-Electric Power Commission of the province of Ontario been exporting electric power to the United States?
2.	What quantity in horse-power or kilowatt hours has been exported within the last five years?
3.	Has the commission obtained since January, 1925, a license or licenses, to export electric power; if so, for what quantity?
4.	From what part of the province of Ontario, or from what power house is said electric power exported?


Hon. Mr. LOW:: 1.	Since August 1, 1917, under the name of the Ontario Power Company of Ontario and also since the 1st November, 1922, under the name of the Toronto Power Company. Since April 1, 1924, under the name of the HydroElectric Power Commission of Ontario.
2.	2,018,874,350 kilowatt hours.
3.	Yes, one license for eighty thousand (80,000) kilowatts and one license for forty-five thousand (45,000) kilowatts of "off-peak or interruptible power."
4.	Niagara Falls, Ontario.
184i


WORKMEN'S COMPENSATION-POSTAL SERVANTS
Mr. IRVINE:: 1.	Does the Act 8-9 George V, chap. 14, chap. 15 as amended, assented to May, 1918, and June, 1919, to provide compensation where employees of His Majesty are killed or injured while performing their duties, apply to postal servants generally?
2.	Who are the administrators of the act?
3.	What are the benefits, if any, to the service by making application to come under the above act?


Hon. Mr. MURPHY:: 1.	No. The scope of the Dominion act is determined by the Workmen's Compensation Act for each province.
2.	The provincial Workmen's Compensation boards, and in provinces having no board, the Deputy Minister of Railways and Canals.
3.	The provision of an established and uniform procedure for dealing with cases coming within the scope of the Compensation Act for the province in which the employee is engaged.


CLARKE STEAMSHIP COMPANY
Mr. BOURASSA:: 1.	Is the government aware that the Clarke Steamship Company, to which it grants a subsidy, so as to help it to give a regular service to the people of the north shore of the St. Lawrence, has rented two American vessels carrying the American flag and equipped by Americans ?
2.	If so, is it the intention of the government to put an end to such a situation so injurious to our Canadian sailors ?


Hon. Mr. LOW:: 1.	No. The two steamers referred to, which have been chartered by the Clarke Steamship Company for the north and south shore services, are of British register and will fly the Canadian flag and carry Canadian crews when employed in the subsidized services referred to.
2.	Answered by No. 1.


SOLDIERS' CIVIL RE-ESTABLISHMENT-PERMANENT EMPLOYEES
Mr. MANION:: 1.	Have any employees of the Department of Soldiers' Civil Re-establishment been given permanent status by the minister without reference to the Civil Service Commission?
2.	If so, what are the names and salaries of such appointees?
3.	Under what authority was such permanent status given ?


Hon. Mr. BELAND:: 1.	No: but certain officers of the department who have been employed for some years in positions of "continuing indeterminate duration" have accordingly been certified by the minister to be "permanent".
Questions

2.	The following officers have been certified to be permanent:
Name	Salary
Arthur, C. G	$4,000
Bell, C. A	4,000
Biggar, Dr. J. L	4,500
Boyd, G. H	5,000
Carmichael, Dr. D. A	4,500
Flexman, E	5,000
George, W. H	4,000
Graham, C. C. P	2,640
Hewitt, Dr. S. R. D	5,000
Hodgins, G. W.	F	4,020Johnson, Dr. G.	R	4,800Meikle, A. U	3,600Morrison, G. F	4,500Macaulay, Dr. M. A	4,800Macfarlane, G.	S	3,240Molvor, Dr. N.	K	4,800Oliver, J. P	4,000Proctor, Dr. A. P	4,800Sloman, H	2,640Thomas, Mrs. A. H	1,680Tucker, C	3,240Wickware, Dr. J. W	4,800Williamson, Dr. H. J	4,500Wright, A. M	4,0003.	A "permanent officer, clerk or employee" is defined by the statutes as "a person who is appointed during pleasure to perform the duties of an office or position of continuing indeterminate duration by act of parliament or by order of the Governor in Council in the competent exercise of subsisting executive powers in that behalf, or under and in pursuance of authority in that behalf conferred upon an officer or agent of the crown by act of parliament or by order of the Governor in Council as aforesaid". The Deputy Minister of Justice has advised that the minister is competent to make such appointments under para, (b) of sub-section 2, of section 5, of the Department of Soldiers'Civil Re-establishment Act as amended by chapter 67, 14-15 George V, and the regulations thereunder, (P.C. 114/1818 of the 17th October 1924).


GENEVA LABOUR CONFERENCE-MR. W. L. BEST
Mr. McISAAC:: 1.	In what capacity did Mr. W. L. Best attend the Labour Conference at Geneva in 1923 or 1924?
2.	What amount was paid him for his services?


Hon. Mr. MURDOCK:: 1. Mr. W. L. Best was accredited as a technical adviser to the delegate representing the workpeople of Canada at the sixth conference of the International Labour Organization held in Geneva, Switzerland, commencing June 16,

1924, on the recommendation of the Trades and Labour Congress of Canada and in accordance with the provisions of article 389 of the treaties of Peace, which sanction the appointment of a workmen's delegate and of advisers to the workmen's delegate "chosen in agreement with the industrial organizations.. .which are most representative.. .of workpeople".
2. Mr. Best received no remuneration for his services.


MR. HENSHAW
Mr. IRVINE:: 1.	Was Mr. Henshaw Acting Immigration Agent at York, England, in 1923 and 1924?
2.	Is he still in the service?
3.	Is he a permanent or temporary employee?
4.	Was he appointed by the Civil Service Commission after examination?
5.	If so, when?
6.	If not, how was he appointed?


Hon. Mr. ROBB:: 1.	Yes.
2.	No.
3.	Answered by No. 2.
4.	No.
5.	Answered by No. 4.
6.	The transfer of Mr. Henshaw from the Soldier Settlement board was arranged with this department but was not finally approved by the Civil Service Commission.
miss McDonald


Mr. IRVINE:: 1.	Is there a Miss McDonald in the employ of the Immigration department, as Canadian agent at Inverness?
2.	Was she chosen by the Civil Service Commission, after examination?
3.	If not, how did she receive her appointment?


Hon. Mr. ROBB:: 1.	Yes.
2.	In view of Miss McDonald's special qualifications, her appointment as agent at Inverness was made by the Civil Service Commission without examination.
3.	Answered by No. 2.


UNOPPOSED MOTIONS FOR PAPERS
Mr. DOUCET:: For a copy of all correspondence, statements of investigation, court proceedings, reports, documents and other papers in the possession of the Department of Customs and Excise and the Department of Justice relating to alleged violation of law in regard to intoxicating liquors in or upon any bonded warehouse at Halifax, Nova Scotia, which the Franco-Canadian Import Company is permitted to establish and conduct, or by any person interested or engaged in the business of said import company.

C.N.R.-Minister's Statement


MATANE WHARF
Mr. HANSON:: For a copy of all correspondence passing to and from the Department of Public Works relating to the wharf at Matane, including copies of contracts, if any, or other documents or agreements relating to 6uch wharf.


CRUDE OIL BOUNTIES
Mr. FANSHER:: For a return showing (a) the total amount paid in bounties to producers of crude oil in Canada for each and every year since the passing of legislation providing bounty on crude oil, and (b) the names of persons and companies who received bounty in each of the years that said bounty was paid, together with the amount each person or company received.


CANADIAN NATIONAL RAILWAYS-VICTORIA BRIDGE, MONTREAL
Hon. Mr. MANION (for Hon. Mr. Stevens):: For a copy of a report made during the year 1924, by Mr. H. McLeod, chief consulting engineer of the Canadian National Railways, regarding the possibility of operating street cars over the Victoria bridge, Montreal.


CECIL R. SMITH
[Stage Direction]
On the Orders of the Day:
Mr. J. S. WOODSWORTH (Centre Winnipeg) :: Since the Supreme court has ruled
in the case of Cecil R. Smith, admitted bootlegger, that an income tax cannot be levied on the gains derived from illicit business or from the commission of crime; and since this judgment thereby definitely classes bootlegging as a crime; what action does the government propose to take to recover the illegal gains and punish the criminal?


William Lyon Mackenzie King: I should be glad if the hon. member would put that question when the Acting Minister of Finance (Mr. Robb) is in his place. He is giving the matter consideration at the present time.


James Shaver Woodsworth: This would seem to me to be a matter for the Minister of Justice (Mr. Lapointe) and not for the Minister of Finance.


Hon. ERNEST LAPOINTE (Minister of Justice):: The matter has not yet been considered; I understand that judgment was delivered yesterday.


CANADIAN NATIONAL RAILWAYS
[Stage Direction]
Hon. GEORGE P. GRAHAM (Minister of Railways and Canals) moved that the House go into committee of Supply.
He said: The discussion of the railway situation is at best dry and somewhat uninteresting, and this year I am inclined to think that it will be even dryer and more uninteresting than ever, for the reason that almost every man who spoke on the budget spoke practically exclusively on the railways for the most part and not on the budget itself. The figures connected with the railways have been discussed on all three, I might say all four, sides of the House and there is comparatively little left for me to say that has not been already said, in some cases perhaps said better than I can say it. However, I shall endeavour to place the situation as fairly as I can before the House.
If I violate the rules of the House in referring to a past debate I hope, Sir, that you will not be too critical of my conduct, because I shall be no greater sinner in doing so than were those who spoke on the budget in infringing on my realm of railways. They really answered my speech before I had a chance to make it, and I am sure that if I deal with some things that have been touched upon in the budget debate concerning the railways hon. gentlemen will forgive me and not call me to order.
One of the difficulties in dealing with the railway situation during a budget debate is quite evident to hon. members in the fact that, unless the very closest scrutiny is made by one competent to make it, the attempt to fit the Canadian National finances into the budget must fail. And it must fail for this reason, that- whereas the railway year ends on December 31, the fiscal or government year ends on March 31, so that it is almost impossible, without the closest scrutiny by one fully conversant with the handling and weighing of figures, to fit the one into the other. A common error occurred in relation to some figures that I brought down myself regarding additions to the railway debt during the calendar year. The information I gave was absolutely accurate so far as the public were concerned-$90,000,000; but when that came to be fitted into the fiscal year and made a part of the budget debate tio show the financial position of Canada, these figures were altogether meaningless, that is, they did not set forth the right Situation. I will give an example. Suppose the Canadian National Railways between January 1 and March 31 borrowed $50,000,000; and suppose that after March 31 they borrowed $50,000,000 more: in the calendar year they would have borrowed $100,000,000 but in the fiscal year only $50,000,000. Consequently when the $100,000,000 is taken in order to size up the situation so far as Canada herself is concerned, the figures are
[Stage Direction]
C.JV.R.-Minister's Statement
$50,000,000 astray, inasmuch as the first $50,000,000 related to the previous fiscal year. Now, I gave the sum of $90,000,000 and that was for the calendar year; but several gentlemen made the mistake of trying to fit it into the fiscal year. When this $90,000,000 was clarified it really was reduced to $64,000,000, and that amount could have been reduced further by taking into account figures which I think might well have been considered. I am not making this argument to show that there were any discrepancies but merely to point out to hon. members that they cannot well, unless they are accountants, or unless they have accountants to advise them, fit in the federal finances with the railway finances. I am going to discuss the situation from the standpoint of railway accounting, which is the standard for all railways on the continent of America authorized by the Interstate Commerce Commission of the United States.
Another hon. gentleman asked me a question that looked very simple: How many men per hundred miles are employed on the Canadian Pacific Railway and the Canadian National Railways respectively for the year? The answer to that question indicated that there were a greater number of men on the Canadian National Railways than on the Canadian Pacific Railway, but the figures were meaningless although strictly accurate. The Canadian National Express is part of the Canadian National Railway system, and in the answer given the employees of the Canadian National Express were included, while in the information regarding the Canadian Pacific Railway the employees of the Dominion Express were not considered. If the figures were taken on the same basis there would be very little difference between the two in the number of employees per hundred miles; indeed, my study of the figures would indicate to me that what difference there was would be in favour of the Canadian National Railways. This goes to show the difficulty of applying figures unless you have the entire explanation before you.
Let me point out another reason why answers of this kind may be absolutely meaningless although accurate. One railway in 1923 may have some extraordinary repairs to make on account of conditions that may not exist on the other railway. For instance, one of the things that occur on the Canadian National railways, although not to so great an extent in the east, is the handling of snow. Last year, if I remember correctly, the Canadian National expenditure for handling snow and kindred work was one million dollars less than the year before. One railway may em-

ploy a thousand men for this purpose, while the other railway, owing to different conditions throughout its territory, may employ only one hundred men. Then, one railway may have its ballasting done by contract, while the other railway, right beside it, may do this work with its own staff. The railway that ballasts its line by contract does not have one single man on its payroll as these men work for the contractor, while the other line doing its own work may have thousands of men on its payroll. So it is impossible to make any comparisons with these figures unless a full explanation is made concerning them.
Now, Sir, I want to deal with the railway situation, not in a pessimistic way at all, because I say at the outset that the showing made by the Canadian National Railways is, under all the circumstances, phenomenal, and I am prepared to sit down and compare the management of the Canadian National system, with all its intricacies, with the management of any other railway in the world. In dealing with the figures I want to have a kindly word for my friend from Vancouver South (Mr. Ladner). He was wrong in his figures; I am not going to argue with him why, but I am going to show that he was wrong. He mentioned the juggling of figures in the fact that a certain amount-I think it was about fourteen million dollars-had been in the Receiver General's hands, and that a goodly portion of it had gone out. He did not think the money had gone astray, but he thought the accounts were juggled. This is the situation. Certain securities were sold, to the extent, if I remember correctly, of twenty-six million dollars. All the money was not needed at the time. It could have been deposited in the bank or placed in the hands of the Receiver General. The latter course was taken and the money was drawn upon as required. This was really a banking transaction as between the Canadian National and the Receiver General, as it would have been had the money been deposited in a bank. Everything is as plain as it can be made. The Canadian National would not hold this fourteen million dollars and be without the interest when the money was not required immediately. As I 6ay, the money has been drawn upon as required, and now as a fact at the end of the fiscal year I think it has all been drawn out but $3,000,000 odd.
Then my friend made another mistake. He gave $913,913,000 as the guaranteed railway debt. This is not so serious, but it is not correct, and I think he would not like it to go unnoticed. Of that amount, only $652,447,283.77, or roughly two-thirds, is guaranteed.

C.N.R.-Minister's statement
Now, in the meeting of interest charges of the Canadian National Railways, due the public, the company makes no distinction; the interest is paid whether guaranteed or not, but, as a matter of accuracy, a third of these securities are not guaranteed by the government at all.
Mr. MEIGHEN:: That was the amount to January 1 last?


George Perry Graham: He was dealing with the annual report.


Arthur Meighen: The 1st of January.


George Perry Graham: My hon. friend from Vancouver South made this mistake, and I am not surprised because it is included in the larger amount; he adds $8,973,000 to the indebtedness of the railway on account of the Central Vermont. But that amount is already included in the balance sheet. It is true-and I want to make it perfectly clear- that this amount, which really means advances to the Central Vermont, is put down as an asset, an amount payable to the Canadian National Railways, but I am free to say that I should not like to pay one hundred cents on the dollar for that asset. Nevertheless, it appears there as an asset, being the amount advanced to the Central Vermont.
But my hon. friend from Vancouver South makes a graver mistake in the mileage and in his accusation of extravagance on capital expenditure. He makes this statement:
So that about five thousand miles of railway have been built or acquired since 1922. Why this further investment was made we do not know. It may be perfectly justifiable. Nevertheless it certainly involves tremendous capital expenditures and obligations on the part of Canada.
The right hon. leader of the opposition (Mr. Meighen) will have to explain to him (Mr. Ladner) why this five thousand miles was added. My hon. friend forgot altogether to take in the Grand Trunk in his comparative figures. He took the Canadian National Railways as represented by the Canadian Northern system, the Canadian government lines, and the Grand Trunk Pacific. But in the interval the Grand Trunk was added. In one of his computations he leaves out the Grand Trunk, and in the other case the Central Vermont. I must say I think there was no excuse for that error. As a matter of fact, between 1921 and December 31, 1924, it will be found that instead of a large addition having been made to the mileage, as the hon. member for Vancouver South says, the Canadian National system as now operated has a net mileage 100 miles less than it had four years ago.
I was going to deal with some of the figures used by the right hon. leader of the opposition, but with his permission-and I think I will get it-I will leave these until we go into committee of supply where we can deal with details, and there will probably be some discussion. This much I want to point out, though, in reference to it. My right hon. friend says they reduced the debt one year by -I forget how much; I did not clearly gather from reading his remarks whether he meant that in adding to the debt they also were replacing another debt, or refunding, and they were thus reducing on one side and adding on the other. But if he meant he was reducing the indebtedness of the Canadian National, I cannot see how he works it out.


Arthur Meighen: I certainly did not
intend that, and I do not think I said so. I know they did not reduce the debt.


George Perry Graham: It looked like that, but I need not argue it further. There is only one way of reducing debt, that is by paying. The money would have to be secured by borrowing either from the government or the public, and in either way it would be a transfer from one to the other and the debt would still remain.
There is one question I should like to mention here, but I will not deal with it at very great length. I refer to the question of whether the guaranteed bonds of the National were charged to the indebtedness of Canada. I do not think there is any doubt that they have never been so charged. I am not arguing whether they ought to be or not, but we on this side of the House, and myself particularly in connection with the management of the National Railways, have been charged with adopting a new plan, that of not adding to the public debt the amount of the guarantees. That never was done. But my right hon. friend will say, and has said, I think, that during his time, in borrowing, the amount of any guaranteed bonds was not added to the public debt because the money was used for refunding.


Arthur Meighen: Not quite. What I said was this: that the total amount guaranteed was equalled and exceeded by the total amount reduced, both by the guarantees and by the cash advances.


George Perry Graham: That is not the way I
understood it; I thought there was a question between us as to the adding to the public debt of the securities guaranteed by the government for the Canadian Northern. I say again it has never been done. If the funds secured by the guaranteeing of Canadian National

C.N.R.-Minister's Statement
bonds were for refunding there is no addition, because the indebtedness would stand as it was. Let me take this just as an example. I am leaving out quite a few figures here but I shall reach my point through the ones I give.
In 1921-22 there were two guarantees of $25,000,000, one on the Grand Trunk account and one on the Canadian Northern account. These were used partly for refunding, but not altogether; and not a dollar of these guaranteed bonds was added to the debt of Canada. The Grand Trunk issue was used for the following purposes:
Operating deficits	$ 1,095,007 50
Interest due public	
4,966,175	40Refunding	
11,967,596	18Betterments	
1,177,245	89Materials and supplies	
1,000,000	00Outstanding liabilities	
2,980,156	18Total	$23,186,181 15
Now, there was an issue of $25,000,000 that year for the Canadian Northern, and it came about in this way: the Canadian Northern, as was usually the case, needed money. The government advanced twenty-six million odd, either through its endorsement at the bank or in some other way.


Mr. BROWN:: For what year is the minister giving the figures now?


George Perry Graham: The year 1921-22. The
government had advanced the Canadian Northern twenty-six million odd. The government, naturally enough, wanted the amount repaid, so the Canadian Northern with the guarantee of the government floated an issue of $25,000,000 in New York for which they received $26,228,163 which they paid the Receiver General. But that did not reduce the debt a cent; it just removed the amount of indebtedness from the Receiver General to the public. That was not refunding; it was merely paying back to the government money the railway had borrowed, but the Canadian Northern bonds were out to that extent. The reason a larger amount than $25,000,000 was secured' through the sale of securities ought to be explained, and it is simple: I take it that it was on account of the rate of exchange at that time. Now, what was this twenty-six million odd used for? The figures are as follows:
Operating deficits	$ 5,000,000 00
Interest due	public	
8,599,507	80Refunding	
4,730,063	03Betterments	
2,725,784	76Materials and	supplies	
5,172,807	44Total	$26,228,163 03
None of these bonds, though guaranteed by the government, were added to the public

debt. I am not arguing whether they should be added or not, but what I want to say, in defence of myself and in defence of the Canadian National Railways, is that no deviation has been made in the matter of adding to the public debt-or, rather, not adding to the public debt-on account of the issue of guaranteed securities of the Canadian National Railways.
I think it is fair to the House to tell them here about the financing of the Canadian National Railways for 1924-25. I do this not because it is connected with the fiscal year; not because I am speaking for the Receiver General, but to point out the conditions that have existed during the past year in regard to the borrowing of the Canadian National system. The Acting Minister of Finance and the president of the Board of Directors of the Canadian National Railways have acted in complete unison in this matter; no borrowings have been made, none have been suggested, without the entire approval being first obtained of the Acting Minister of Finance I am particularly interested because I was really acting for the Finance Minister myself on two occasions and assisted in these borrowings. I want hon. gentlemen to read Hansard of the last two or three days and then make some comparisons, if they wish, in regard to these borrowings. The issues during 1924-25 were as follows:
Canadian National Railway Issues-1924 and 1925 Comparison of cost to Railway, Issue Prices and Market Prices-April 23, 1925 Canadian National Issues:

Three Year 4 per cent-dated July 1, 1924
Cost to syndicate	
4.63	Basis 98.25Sold to pubHic	
4.40	Basis	98.875

Five Year 4i per cent-dated February 15, 1925
Cost to syndicate	
4.70	Basis	99.125Sold to public	
4.52	Basis	99.875


Some hon. MEMBERS:: Hear, hear.


George Perry Graham: I hear some "hear, hears." but I am afraid they will be, "there, theres," before I get through; but I like to hear them anyway.
The United States railways are often compared to ours. I am quite prepared, Mr. Speaker, to accept the challenge on behalf of the Canadian railways, including the two great systems, and compare the service they provide with the service provided by any railway company in the United States. It is true that during the war the railway service in the United States was confused, and the endeavour that was made to amalgamate a lot of lines without any real connecting links under a government head only made confusion worse confounded. During the war the Canadian railways gave a service infinitely superior to the service given by the United States.
I want to interject another remark here concerning the Canadian railways and the American railways. I am not saying that the railways across the line are not well managed, though they are no better managed than ours, but they do get higher freight rates than we do in the Dominion of Canada. And when any person talks of going over to the other side of the line to better his condition or of being attached to that country, if he went there the first crack would be about a 30-per cent addition to his freight rates. So far as transportation is concerned, we in Canada are served too well for our population.
Having said that in defence of the service in Canada-and I think no one will take exception to what I have said concerning the service of our two great railways-I want now to deal in a measure with the finances. Take, first, our gross revenue. The gross revenue of the Canadian National railways did decrease; the gross revenue of all railways decreased, and some railways in the United States have gone into bankruptcy during the past few months although their rates were much higher than ours. This stress has been felt in regard to transportation I think all over the world, and we have no cause to feel pessimistic about our own railway because it suffered the same fate as all railways-. It is no better and no worse, and I emphasize particularly the last sentence, that it is no worse; on the contrary, it has fared incomparably better than the majority of railways on this continent. Now I will give in the words of the two presidents the reasons for our loss in gross revenue. Mark you, I believe that in the Canadian Pacific and in the Canadian National, in Mr. Beatty and Sir Henry Thornton, we have two presidents that will compare with any other presidents of any other lines in the United States or anywhere else in the world. I believe that, and consequently I am quoting verbatim their reasons for the loss in gross revenue. Sir Henry Thornton says:
Decrease in gross earnings, $17,547,305, or 6.93 per cent. This decrease resulted from adverse business conditions which obtained during the greater part of the year throughout Canada and elsewhere. Traffic during the first three months of the year was in excess of that moved in the same period of 1923, but general business suffered a reduction early in April and the depression continued until the end of the year. Due principally to the relatively small graip crop in western Canada th* movement of grain to the lakehead was in much less volume than usual and was considerably below the exceptionally heavy movement which took place in the last three months of 1923, with the result that the impetus to active business which a large grain movement usually engenders was noticeably lacking. The movement was also to some extent affected by the disposition shown to hold grain in the country creating an unusual condition and one which business in general had not anticipated.
2898	. COMMONS
C.N.R.-Minister's Statement
My friends from the west do not need that explaining, but we .in the east perhaps do not understand that so well. In the beginning of the year 1924, on account of the abundant crop the year before, there was a large quantity of grain held for shipment in the spring of the next year, and during the first three months of 1924 the railways had a very large tonnage of grain from the crop of the year before.


Mr. FORKE:: I would like to point out
to the minister that grain is supposed to be hauled at less than cost.


George Perry Graham: I am not supposing; I
am just giving the figures. .


Arthur Meighen: The minister is giving
the gross earnings, anyway.


George Perry Graham: As the right hon. gentleman has said, I am speaking of gross earnings, not about what was left. The grain tonnage in the early part of 1924 was far in excess of the grain tonnage in the early part of 1925, and greater even than the tonnage in the early part of 1923. So, as a matter of fact, the size of the crop does affect the railways. It may not affect the producer to such an extent, for this reason: He may have a smaller crop and a bigger price, and therefore come out at the same point so far as his finances are concerned, but with the railway it is different, for the railways cannot charge according to what the farmer gets; it has to charge according to the tonnage that is produced.
Now let me give Mr. Beatty's figures:
Gross earnings less by $13,334,933. The decrease in freight earnings is largely accounted for by the much smaller movement of grain and flour, particularly the former, owing to the smaller crop in western Canada. There was also a substantial decrease in the movement of manufactured artices due to the depression which existed in Canada during the major portion of the year. In the circumstances, your directors feel that the results of the company's operations must be considered as satisfactory.
I agree with Mr. Beatty that the result of the operations on both these railways must under the circumstances jbe considered as satisfactory. I would like to add a few figures just to show how these two managers trimmed their sails to meet the conditions by reducing the cost of transportation.
The mileage bf the Canadian National railways was 21,872, and of the Canadian Pacific railway, 13,784. Just at that point let me say that I am often asked questions in

this House making comparisons between the figures for the Canadian Pacific railway and the figures for the Canadian National railway, members seemingly altogether forgetting that the Canadian National mileage is fifty per cent greater than that of the Canadian Pacific; so the figures are not comparable to that extent. The figures for the two railways are as follows:	'	*
Canadian	Canadian
National	Pacific
21,872	System mileage	
13,784$235,588,182	Gross earnings	
$182,502,150$ 17,547.305 Decrease in same	
$ 13.334,933$218,343,931	Working expenses	
$145,274,914$ 14,360,907 Decrease in same	
$ 13,083,165$171,045,297 Freight earnings	
$123,505,139$ 14.195,598 Decrease in same	
$ 10,794,41652,498.614	Tons freight carried	
28,776,3804,747,724	Decrease in same	
2,076,608
Earnings per ton mile
c.1.01	1924	c.0.98c.0.99	1923	c.0.93$ 37,233,998	Passenger earnings	
$	33,900,667$ 2,051.319	Decrease	in same	
$	2,415.15022,707,880	Passengers carried	
14,153.500975,901	Decrease in same	
496,927Earnings per passenger per mile c.2.71	1924	c.2.66c.2.71	1923	c.2.63$ 3,595,261	Earnings	from mails	
$	3,537.662$	52.183	Increase	Decrease	$	34,709$ 23,713,624	Miscellaneous earnings	..	..	$	21,558.686$ 1.352,570	Decrease in	same	
$	90,657$ 44.039,965	Maintenance	W &	S	
$	27,277,388$	738,479	Decrease in	same	
$	3,499,035$ 47,972,444	Maintenance	of equipment.. $	32,640,070$ 4,203,875	Decrease in	same	
$	1,684,769$110,085,033	Transportation expenses..	..	$	66,311,741$ 10,217,416	Decrease	in same	
$	6,418,830
Operating ratio
92.68%	1924	79.60%91.92%	1923	80.86%
These figures, Mr. Speaker, may be of importance a little later on. As I pointed out in the beginning of my remarks the figures given for one year cannot be depended upon to provide a yard stick for measuring operation or expenditure, even capital expenditure. Hon. gentlemen will notice how these two railways reduced expenditure, the one in one direction and the other in another direction. Perhaps next year, or the year we are now in, these positions may be exactly reversed, and what one would save on equipment the other might save on maintenance of way and structures, and the position be reversed.
Now we will take the situation for this year. The decrease in expenditure by the Canadian National on ways and structures was $738,479. The decrease -in expenditure on ways and

C.N.R.-Minister's Statement
structures by the Canadian Pacific was $3,499,035. It was stated a year ago, I do not know whether it was in this House, that the Canadian National that year wlas starving its maintenance of way, while as a matter of fact it has been expending an enormous amount on its maintenance of way and must of necessity do so. But it 'will be seen by the figures I have given that notwithstanding that large expenditure on maintenance of way and structures a year ago the Canadian National only reduced this expenditure by $738,479. The Canadian Pacific, acting on just as good a business principle reduced this expenditure by $3,499,035.
Now, in the case of equipment the situation is just reversed. To show that the management of these railways runs along concurrent lines the Canadian National reduced their expenditure for this purpose by $4,203,875, while the Canadian Pacific reduced theirs by $1,684,769, the entire decrease in these two items being $4,942,354 in the case of the Canadian National and $5,184,804 in the case of the Canadian Pacific. As I pointed out a few minutes ago the expenditure for snow shovelling for some years is very large. Last year this decrease in the expenditure on maintenance of way and structures was more than accounted for by the amount saved in snow shovelling, which was something over a million.
Now I want to point out to the House how each dollar is expended on the Canadian National comparing the years 1924 and 1923:
1924	1923
cents cents
Maintenance of way and structures.. ..20	19
Maintenance of equipment	
22	23Traffic	
03	02Transportation (rail)	
50	52Miscellaneous operations	01	01General	
04	03Total	$1 00 $1 00
The above figures will be interesting to hon. gentlemen when they come to compare the otheT figures that they have as to how every dollar, or the proportion of every dollar, was applied.
Now let me take the operating ratio. We have spent a large amount of money, of course, on the Canadian National, and I will deal with that in a few minutes; but the operating ratio on the Canadian National, which is a pretty safe criterion has been constantly decreasing, though this year there is a very smail'l increase owing to the decrease in traffic while the overhead had to be maintained. That is accounted for, to a great extent, by the very large overhead 4 p.m. that cannot be reduced. But, as hon. gentlemen know, the greater the traffic the better the ratio. Let me take a period of three years, beginning in 1920, when these systems were separate entities:
Operating Ratios
	1920	1921	1922
	Per cent	Per cent Per cent	
Grand Trunk	. 96.17	95.53	87.94Canadian Northern	. 124.38	109.37	104.85Canadian Government.. .	. 123.46	113.85	106.10Grand Trunk Pacific.. .	. 170.34	124.21	123.18
I want to take these figures and apply them to the amalgamated line, the Canadian National Railways, and show the House what I have stated, namely, that, with the exception of this year, owing to conditions which I have explained, from 1920, not only the component parts of these lines that were under the control of the government has the operating ratio bettered, but the operating ratio of the Canadian National as a whole has bettered. In 1922, on the combined system the operating ratio was 98.77; in 1923, it was 91.92, and although the railway was suffering under these conditions in 1924, the operating ratio was 92.68. This showing as regards operation by the Canadian National Railways is not discouraging; it is most encouraging to the people of the Dominion of Canada.


Arthur Meighen: Has the minister the corresponding figures for the Canadian Pacific for the past two years?


George Perry Graham: I think they are in the other statement that I have put on Hansard.
As I pointed out some time ago, not a few members have been confused concerning the different figures given as to the mileage of the railways. These different figures are accounted for by the fact that, besides the steam roads, there are electric roads, United States roads, and properties, practically speaking, outside of the system altogether, for instance, the Central Vermont. There are owned and leased mileages. I have had a study made of the mileage giving full explanations, so that hon. gentlemen will have it on record in Hansard and they will know exactly what the mileage of the system is. I had intended to read the condensation of this mileage study and put it on Hansard, but if hon. gentlemen will allow me I will put it all on Hansard and not weary the House by reading this first statement of figures. The condensation is as follows:

C.N.R.-Minister's Statement
Mileage Study	Miles
System steam mileage	 21,872 19
Controlled by constituent companies,
but separately operated:
Central Vermont	 483 47
Thousand Island railway	 6 00
Total steam				22,361 66
Electric			Miles
Canadian National electric	lines:		
Toronto Suburban					
Niagara, St. Catharines	and		
Toronto				
		120 15	
Montreal and Southern	Counties	53 66	
Oshawa Railway Co. ..		9 43	
Total electric				183 24
Total-all lines				22,544 90
1923	1924 Change*
Owned mileage	
20,296	12	20,267	60	Dec.	28.52Leased mileage	
1,448	72	1,503	70	Inc.	54 98Trackage rights	106	05	100	89	Dec.	5 1C
21,850 89 21,872 19
1923	1924 Changes
Atlantic region	
2,760	06	2,803	83	Inc.	43	75Central region	
7,830	91	7,669	24	Dec.	161	67
Grand Trunk Western
lines	
991	69	991	69	Western region	
10,268	21	10,407 43	Inc.	139	22
21,850 89 21,872 19
Net increase in operated mileage	21 30 miles
[Tlhe details of mileage increases and decreases are as follows]	-



[Stage Direction]
Statement showing Mileage Increases and Decreases by Divisions and Regions of Owned Lines, Lines under Lease or Contract, and Linos under Trackage Rights
Territory	Owned Lines	Lines under Lease or Contract	Lines under Trackage Rights	Increase	Decrease	Increase	Decrease	Increase	DecreaseAtlantic Region-	16-79 60-07	
60-53			
	0-66					
		0-08 0-74				
						
	0-24					
Central Region-						
	0-90	17-68	60-53			
						
	0-15					
		0-32 0-23 115-34 131-95				
						
						
						
	0-77					
		25-09				
	6-26					
		0-25				
	609					
		28-6				
						2-53
		0-69				
			0-41			
				2-17		
		2-20				
						
Remarks
H. & S. W. Ry., Granville Centre to Port Wade rendered inactive.
Correction.
Inverness Ry. and Coal Co. taken over April 1st, 1924. Miscellaneous adjustments and corrections.
Miscellaneous corrections.
Miscellaneous corrections.
Miscellaneous corrections.
Total net increase Atlantic Reg'n. 43-75 mi.
Miscellaneous corrections.
Correction in mileage of joint trackage, Cadorna to Palais Station (C.P.R.), Quebec.
Miscellaneous corrections.
Transferred to Hornepayne Division.
Transferred to Port Arthur Division, West Region.
Extension to Pagwa Sub. at Nakina.
Allenby to Donnacona partly dismantled and partly inactive. Donnacona Cut off put into operation.
Miscellaneous corrections, etc.
Transferred from St. Lawrence Division.
Hemmingford to International Bdy, dismantled.
Trackage rights on D. & H. Ry. relinquished.
Transferred to Montreal Terminals Division.
Lines leased from Central Vermont Ry., correction.
Central Counties Ry., correction in mileage of Glen Robertson -Hawkesbury line due to part of line at Hawkesbury now being used as siding.
Belleville North to Belleville Harbour not now operated as main line, included under sidings in 1924 returns.
£
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C.N.R.-Minister's Statement

CANADIAN NATIONAL RAILWAYS-Con.
Statement showing Mileage Increases and Decreases by Divisions and Regions of Owned Lines, Lines under Lease or Contract, and Lines under Trackage Rights-Con.
Territory	Owned Lines	Lines under Lease or Contract	Lines under Trackage Rights	Rernai ksIncrease	Decrease	Increase	Decrease	Increase	Decrease	Central Region-Continued Ottawa Division	0-21	Trackage at Belleville under agreement with C.P.R. not previously reported. Golden Lake Wye-correction. Adjustments. Kowkash Subdivision, etc. transferred from Cochrane Division. Portion at Foleyet transferred from Capreol Division. Adjustments. Trackage rights over Algoma Central Railway at Oba not previously reported. Portion at Foleyet transferred to Hornepayne Division. Addition and corrections-Todmorden to Washago, 0-28 miles, Oriole to Donland, 0-14 miles, Sudbury Junction wye, 0-45 miles, Miscellaneous, 0-18,-Deduction Conn, to T. & N. O. Ry. at North Bay, 0-25 miles. Portion of Donland-Dovercourt Road Line under agreement with C.P.R. but not operated by Can. Nat. Rys.-included in inactive mileage in 1924 returns. Line from Harrisburg to Alford dismantled. New wye at Lynden Junction. International Bridge Co's tracks transferred from trackage rights to owned line.Ottawa Division	0-01	Ottawa Division	0-06	Hornepayne Division (formerly Nipigon Division)	115-34	Hornepayne Division (formerly Nipigon Division)	1-19	Hornepayne Division (formerly Nipigon Division)	0-02	Hornepayne Division (formerly Nipigon Division)	0-01	Capreol Division (formerly Nipis-sing Division)	1-19	Capreol Division (formerly Nipis-sing Division)	1-05	0-25	Capreol Division (formerly Nipis-sing Div.)	0-75	2-84	0-34	1-02	1-02	
126-81	282-97	0-95	2-92	0-01	3-55	Total net decrease Central Region-161-67 miles.
							
Western Division- Lakehead Division			1-63					Midway to Empire Ave. Jet. (Crest Subdivision) reported inactive. Miscellaneous corrections, Trackage rights over C.P.R. Syndicate Avenue to C.P.R. Depot, Fort William not now exercised-Included in inactive mileage. Transferred from Cochrane Div. Central Region. Empire Ave. Jet. to Dog River Jet. (Crest Sub-division) reported as inactive.
	0-12						
						0-53	
	131-95						
Port Arthur Division			27-45					
							
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C.N.R.-Minister's Statement
Port Arthur Division.
Port Arthur Division	
Winnipeg Terminals Division. Winnipeg Terminals Division. Winnipeg Terminals Division.
Portage Division	
Portage Division	
Portage Dibision.,
Portage Division..
Portage Division.. Brandon Division.
Brandon Division	
Brandon Division	
Dauphin Division	
Dauphin Division	
Melville Division	
Melville Division	
Prince Albert Division. Regina Division	
Regina Division.
Regina Division....
Saskatoon Division.
Saskatoon Division.
Saskatoon Division.
Calgary Division____
Edmonton Division.
Ed son Division	
Smithers Division.. Kamloops Division.
Kamloops Division..
Kamloops Division.
Kamloops Division	
Vancouver Island Division.
4-20
0-06
0-43
38-17
0-45
0-98
670-16
2-79 0-06				
	0-02			
				
				
0-04 4-20 271-89 0-90		0-01		
				
				
				0-05
	102-11 0-12			
				
				
158-15 0-03 38-08		102-11 0-21		
				
				
				
				
0-51 0-26				0-01
		0-76		
				
				1-05
0-06				
		2-34		
				
		0-14		
0-28 0-73 0-06 0-03				
				0-04
		0-26		
				
				
18-58				
				
0-01			0-06	
				
				
525-74	102-25	105-83	0-06	1-68
Portion of line at Transcona transferred to Winnipeg Terminals Division.
Miscellaneous corrections.
Transferred from Port Arthur Division.
Transferred from Portage Division.
Miscellaneous corrections.
Transferred to Winnipeg Termnls. Division.
Neepawa, Carberry, Rapid City & Rossbum Sub-divisions transferred to Brandon Division.
Miscellaneous transfer tracks not now included as main line transferred to sidings.
Miami, Carman and Pleasant Point Subdivns. transferred from Brandon Division.
Miscellaneous corrections.
Neepawa Carberry, etc., Subdiv. transferred from Portage Div.
Miami, etc., Subdiv. transferred to Portage Division.
Miscellaneous corrections.
Rhein Sub. inch Wroxton wye transf'd to Melville Divn.
Miscellaneous corrections.
Rhein Sub. incl. Wroxton wye transf'd from Dauphin Divn.
Miscellaneous corrections.
Miscellaneous corrections.
New and existing lines put into operation as main line-Hodge-ville to Neidpath 15-07 mis. Gravelbourg Jet. wye 0-22 mis., Peebles to Handsworth 22-06 mis. wye at Moose Jaw 0-19 mis. So. leg Bdy. wye 0-27 mis. Wye at Talmage 0-36 miles.
Miscl. transfer tracks not now included as main line transferred to sidings.
Miscellaneous corrections.
Miscellaneous transfer tracks not now included as main line- transferred to sidings.
Connections at Nutana 0-46 mis. Conn, at Yorath 0-22 and wye at Tichfield 0-26 miles.
Miscellaneous corrections.
Correction.
Miscellaneous corrections.
Miscellaneous corrections.
Miscellaneous corrections.
Rehabilitation of Grand Trunk Pacific Line Yelsum to Rainbow Conn.
Can. Northern Line Yelsum to inactive, due to rehabilitation Line.
Kamloops to C.P.R. switch 0-76 miles, Kamloops Junction wye 0-22 miles.
Miscellaneous corrections.
Addition to main line mileage of Cowichan Subdivision.
Total net increase Western Region 139-22 miles.
Rainbow Conn, rendered of Grand Trunk Pacific
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[Stage Direction]
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C.N.R.-Minister's Statement

[Stage Direction]
Territory	Owned Lines	Lines under Lease or Contract	Lines under Trackage Rights	Increase	Decrease	Increase	Decrease	Increase	Decrease0-90 126-81 670-16	17-68 282-97 525-74	60-53 0-95 102-25	[DOT]2-92 105-83	001 0-06	3-55 1-68
797-87	826-39	163-73	108-75	0-07	5-23
Increase Decrease Miles Miles
Net Decrease in Owned Lines	 28-52
Net Increase in Leased Lines	 54-98
Net Decrease in Trackage Rights	 5-16
54-98	33-68
Total Net Increase	 21-30
Office of Engineer of Standards, Montreal, Que., April 20th, 1925
Increase Decrease Miles Miles
Net Increase Atlantic region	 43-75
Net Decrease Central Region	 161-67
Net Increase Western Region	 139-22
182-97	161-67
Total Net Increase	 21-30
[Stage Direction]

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C.N.R.-Minister's Statement

C.N.R.-Minister's Statement
An interesting item to which I wish to call the attention of the House is that of insurance. As one can readily understand, the question of insurance in a system the size of the Canadian National Railways is a very important one. Prior to the present management taking hold of the system, there were three methods of insurance. Of course the government railway lines were never insured; the government of Canada always carried that insurance. When I had the honour of being Minister of Railways and Canals before, I instituted what was known as an insurance fund on the Intercolonial railway, with the result that in 1911 there was a tidy balance to the credit of the insurance fund and all the fire losses on the Intercolonial had been taken care of toy that fund. This insurance fund was established out of the receipts of the Intercolonial railway. Some lines under the company system were insured, partly, at least by a fund they had themselves. Others paid out very large sums to companies for insurance. After full consultation, having a competent actuary go into the figures, the management of the railway, in conjunction with the Railway department, came to the conclusion that this system provided enough insurance for a whole company in itself, that is a company of moderate size, and that the company with the government behind it not only could afford to carry its own insurance but could save a great deal of money in doing so. It was not left for the Receiver General to provide the moneys and the Dominion of Canada to carry the insurance through the Receiver General, but each year the amount of the premiums that would go to a company are laid aside in the Canadian National for the purpose of insuring the property. There is still some $2,000,000 or a little over of fire insurance carried with other companies. These policies fall due this year and they will all be brought under the Canadian National insurance fund. The result of this, I think, will be very encouraging.
Mr. MACLEAN (York):: Then the government has a publicly-owned insurance company?


George Perry Graham: The Canadian National
Railway Company is operating it. The annual premiums paid to outside insurance companies in respect to risks placed with these companies amounted to approximately SI ,150,000. This was an annual cash outlay. In addition to this, there was charged to operating expenses and credited to insurance reserves, premiums aggregating $130,000 per annum. An examination of the premiums, as I have 185
pointed out, for a period prior to 1923, shows that there was a great profit in the insurance business as regards these railway properties. So the company, as I have explained, decided to adopt what we call self-insurance. The results of this policy have so far been very satisfactory from the standpoint of the National Railways, as may be judged from the fact that the actual losses in the entire railway system in 1923 and 1924 were only $679,050 and $420,250, respectively, whereas the actual cask paid to private companies for part of the risk carried was approximately $1,050,000. At the present time the cash or securities held in the insurance fund by the Canadian National Railways amounts to $4,074,153. This does not include the merchant marine which also has an insurance fund of its own. This will show to hon. gentlemen, I think, the wisdom of that step, and while we are charging in the expenses the amount of premiums each year, as a matter of fact we have that cash in the treasury, or, if not, we have the amount in bonds. In the Canadian Northern the money for insurance was carried as a book-keeping fund; there was no cash in sight; but the amount in the fund of the Canadian National Railway Insurance De partment is in government bonds or cash.


Mr. MORRISON:: Does the minister refer just to fire insurance?


George Perry Graham: Yes, on the property.


Mr. ARTHURS:: To what fund are the
expenses of this insurance department charged?


George Perry Graham: I think this is charged as part of the operating expenses. The insurance department is a department of the Canadian National. As a matter of fact, the expenses ought to he paid out of the insurance fund, although I am not sure whether they are or not.
Hon. gentlemen have heard a good deal about the difficulties of transportation companies in all countries in meeting competition brought about by automobiles and busses on account of the improvement of roads. This may seem small at first blush, but it is a very important matter and it has to be dealt with. The question will arise: Should' the railway companies of Canada forsake some of their steam lines and operate busses on short hauls, or should they replace their steam roads on little longer hauls with gasoline or electric cars to take the place of the more expensive steam locomotives and regular trains? This is a problem that is being studied by all railways in the country. One can never say that the busses must be banished One cannot say that hon. gentlemen must not ride in their automobiles, but


Mr. CAMPBELL:: How are these figures arrived at?


George Perry Graham: C.N.R.-Minister's Statement
Statement No. 1
CANADIAN NATIONAL RAILWAYS (Including Central Vermont)


INCOME ACCOUNT
[Stage Direction]
Yeaes Ending December 31st, 1924 and 1923 Gross Operating Revenue
1924	1923
Canadian National Railways Lines in Canada	$ 201,224,493 13 $ 214,787,207 46
Canadian National Railways Lines in U.S	
34,303,689 42	38,348,280 15Total Canadian National Railways	
Central Vermont Railway	235,588,182 55 8,380,752 39	253,135,487 61 8,627,980 41Total	243,968,934 94	$ 261,763,468 02	Gross Operating Expenses	Canadian National Railways Lines in Canada	
Canadian National Railways Lines in U.S	189,460,403 90 .. 28,883,52717	$ 202,936,658 84 29,768,179 69	Total Canadian National Railways	
Central Vermont Railway	218,343,931 07 7,298,127 43	232,704,838 53 7,677,080 80Total	..3 225,642,058 50	$ 240,381,919 33	Net Revenue or Deficit from Railway Operations	Canadian National Railways Lines in Canada	
Canadian National Railways Lines in U.S	11,764,089 23 5,480,162 25	$	11,850,548 62 8,580,100 46Total Canadian National Railways	
Central Vermont Railway	17,244,251 48 1,082,624 96	20,430,649 08 950,899 61Total	18,326,876 44	$	21,381,548 69Tax Accruals, Uncollectible Revenues & Miscellaneous Operations	Canadian National Railways Lines in Canada	
Canadian National Railways Lines in U.S	3,471,164 64 1,538,069 82	*	2,895,493 42 1,261,916 85Total Canadian National Railways	
Central Vermont Railway	5,009,234 46 230,656 79	4,157,410 27 243,696 02Total	5,239,891 25	S	4,401,106 29Total Operating Income or Deficit	Canadian National Railways Lines in Canada	
Canadi * National Railways Lines in U.S	8,292,924 59 3,942,092 43	$	8,955,055 20 7,318,183 61Total Canadian National Railways	
Central Vermont Railway	12,235,017 02 851,968 17	16,273,238 81 707,203 59Total 	13,086,985 19	%	
Non-Operating Income or Charges Net				
Canadian National Railways Lines in Canada	
Canadian National Railways Lines in U.S	9,298,130 99 6,769,820,09	$	6,350,039 31 9,121,629 11Total Canadian National Railways	
Central Vermont Railway	2,537,310 90 622,761 69	2,771,689 80 843,976 95Total	1,914,549 31	%	3,616,566 75
[Stage Direction]
C.N.R.-Minister's Statement
Statement No. 1.-Concluded.
Total Income or Deficit Before Fixed Charges
Canadian National Railways Lines in Canada Canadian National Railways Lines in U.S-
1924	1923
$ 17,591,055 58 $ 15,305,094 51 2,818,727 66	1,803, US SO
Total Canadian National Railways, Central Vermont Railway	
14,772,327 92 229,206 58
13,501,649 01 138,773 36
Total
[Stage Direction]
Fixed Charges
Canadian National Railways Lines in Canada:-
Interest due Public	
Interest due Government	 31,271,043 00
Canadian National Railways Lines in U.S.:-Interest due Public	
Central Vermont Ry. due Public	
"	" due Can. Nat. Rys.
Total C.N.R. and C.V. Ry..
Canadian National Railways Lines in U.S.
Total Canadian National Railways.. Central Vermont Railway	
Total Deficit	
Total Deficit
rTE.-in rnese siaiemema me imj uguica ' >* .... ** *. . 

	,
the accounting practices in effect in 1924. The net result, however, is not affected.
.$	37,459,173 25	s	34,125,745 92
	31,271,043 00		30,157,943 67
	68,730,216 25		64,283,689 59
	902,530 89		915,634 36
S	69,632,747 14	$	65,199,323 95
	538,922 04		498,287 61
	587,347 05		446,614 78
	1,126,269 09		944,902 39
.*	70,759,016 23	$	66,144,226 34SI,139,160 67	$	48,978,595 083,721,358 55	2,719,079 8654,860,419 22	51,697,674 94897,062 51	1,081,675 76s	55,757,481 73	$	52,779,350 69to	afford a better	[DOT] comparison with	i is	not affected.	
C.N.R.-Minister's Statement
Statement No. 2

[Stage Direction]
Lines in Canada INCOME ACCOUNT Years Ending December 31st, 1924 and 1923 Gross Operating Revenue
Canadian National Railways (Inc. G.T.R. in Can.)	$ 80,402,154 45
Canadian Northern Railway System	 58,100,383 07
Canadian Government Railways	 43,206,625 72
Grand Trunk Pacific Railway	:	''	19^ 515) 329 89
Canadian National Railways Lines in Canada	$ 201,224,493 13
[Stage Direction]
Gross Operating Expenses
Canadian National Railways (Inc. G.T.R. in Can.)	$ 66.326,773 44 $ 72,075,700 29
Canadian Northern Railway System	
59,012,363	64	62,810,576	31Canadian Government Railways	
41,858,398	43	44,962,554	84Grand Trunk Pacific Railway	
22,262,868	39	23,087,827	40Canadian National Railways Lines in Canada	$ 189,460,403 90 $ 202,936,658 84
Net Revenue or Deficit from Railway Operations
Canadian National Railways (Inc. G.T.R. in Canada)	$ 14,075,381 01 $ 17,673,704 68
Canadian Northern Railway System	
911,980 67	g,593,804 49Canadian Government Railways	
1,348,227 29	162,778 18Grand Trunk Pacific Railway	
2,747,638 60 S 076!678 39Canadian National Railways Lines in Canada	$ 11,764,089 23 $ 11,850,548 62
Tax Accruals, Uncollectible Revenues and Miscellaneous Operations
Canadian National Railways (Inc. G.T.R. in Canada)	$
Canadian Northern Railway System	
Canadian Government Railways	
Grand Trunk Pacific Railway	*
1,686,130 15 $ 1,083,511 57 140,744 59 560,778 33
1,337,608 37 988,414 70 59,186 12 510,284 23
Canadian National Railways Lines in Canada	$ 3,471,164 64	$	2,895,493 42
Total Operating Income or Deficit
Canadian National Railways (Inc. G.T.R. in Canada)	$ 12,389,250 86 $ 16,336 096 31
Canadian Northern Railway System	
1,996,492	14	3,582,219	19Canadian Government Railways	
1,207,482	70	211,959	30Grand Trunk Pacific Railway	
3,308,316	83	3,586,862	62Canadian National Railways Lines in Canada	$	8,292,924 59 $	8,955,055 20
Non-Operating Income or Charges Net
Canadian National Railways (Inc. G.T.R. in Canada)	$	5,310,520 02 $
Canadian Northern Railway System	 1,545,671 30
Canadian Government Railways	 ' 103' 135 54
Grand Trunk Pacific Railway	 2,338) 804 13
Canadian National Railways Lines in Canada	$	9,298,130 99 $
2,857,915 34 1,844,648 29 3,983 96 1,651.459 64
6,350,039 31
Total Income or Deficit before Fixed Charges
Canadian National Railways (Inc. G.T.R. in Canada)	$ 17,699,770 88 $ 19,194,011 65
Canadian Northern Railway System	
449,820 84	1,737.670 90Canadian Government Railways	
1,310,618 24	215,943 26Grand Trunk Pacific Railway	
969,512 70	1 935 402 98Canadian National Railways Lines in Canada	$ 17,591,055 58 $ 15,305,094 51
£Mr. Graham.]

C.NJt.-Minister's Statement
Statement No. 2-Concluded. Fixed Charges
Canadian National Railways (Inc. G.T.R. in Canada):-
Interest due the Public	
Interest due the Government	
Canadian Northern Railway System:-
Interest due the Public	
Interest due the Government	
Grand Trunk Pacific Railway:-
Interest due the Public	
Interest due the Government....
Interest on Receivers' Certificates
Canadian National Railways Lines in Canada
$	17,841,521	04	$	14,179,129	266.673,459	11	5,999,898	75$	24,514,980	15	$	20,179,028	01.$	15.188,695	13	$	15,517,659	5819,528,454	19	18.701,675	52$	34,717,149	32	$	34,219,335	10$	4.428,957	08	%	4,428,957	082,203,724	37	2,823,801	422,865,405	33	2,632,567	98$	9,498.086	78	%	9,885,326	4868,730,216	25	$	64,283,689	59
Total Deficit
Canadian National Railways (Inc. G.T.R. in Canada)
Canadian Northern Railway System	
Canadian Government Railways	
Grand Trunk Pacific Railway	
6,815.*09 27 S 35,166,970 16 1,310,618 24 10,1,67,599 1,8
985,016 36 35,956,906 00 315,943 26 11.820,729 46
Canadian National Railways Lines in Canada

[Stage Direction]
C.N.R.-Minister's Statement
Statement No. 3
CANADIAN NATIONAL RAILWAYS Lines in the United States Income Account
Yeabs Ending December 31st, 1924 and 1923 Gross Operating Revenue
Grand Trunk Lines in New England.
Grand Trunk Western Lines	
Duluth, Winnipeg & Pacific Railway
$	2,595,230 08
29,591,984 53 2,176,474 82
$	3,515,000 00
32,471,522 74 2,361,757 41
Canadian National Railways in U.S,
34,363,689 42 $ 38,348,280 15
Gross Operating Expenses
Grand Trunk Lines in New England	
Grand Trunk Western Lines	
Duluth, Winnipeg & Pacific Railway	
Canadian National Railways in U.S	
3,077,805 13 $ 4,006,702 84 23,881,316 76 23,679,714 70 1,924,405 28 2,081,762 15
28,883,527 17 $ 29,768,179 69
Net Revenue or Deficit from Railway Operations
Grand Trunk Lines in New England.
Grand Trunk Western Lines	
Duluth, Winnipeg & Pacific Railway
483,575 05 $ 5,710,667 77 252,069 53
Canadian National Railways in U.S,
3	5,480,162 25 S
491,703 84 8,791,808 04 279,995 26
8,580,100 46
Tax Accruals, Uncollectible Revenues and Miscellaneous Operations
Grand Trunk Lines in New England.
Grand Rrunk Western Lines	
Duluth, Winnipeg & Pacific Railway
3	215,088 62
1,215,177 96 107,803 24
[Stage Direction]
Canadian National Railways in U.S,
$	1,538,069 82 $
196,809 00 946,068 69 119,039 16
1,261,916 85
Total Operating Income or Deficit
Grand Trunk Lines in New England	 c
Grand Trunk Western Lines	
Duluth, Winnipeg & Pacific Railway	
697,663 67 $ 495,489 81 144,266 29
Canadian National Railways in U.S	 5
688,511 84 7,845,739 35 160,956 10
3,942,09243 $	7,318,18361
Non-Operating Income or Charges Net
Grand Tiunk Lines in New England	
Grand Trunk Western Lines	
Duluth, Winnipeg & Pacific Railway	
Canadian National Railways in U.S.
$	1,344,895	65	$	1,874,456	345,594,937	06	7,174,471	6879,013	62	73,701	14$	6,760,830 09 S 9,131,639 11
Total Income or Deficit before fixed Charges
Grand Trunk Lines in New England	 «
Grand Trunk Western Lines	
Duluth, Winnipeg & Pacific Railway	 " " " "'
Canadian National Railway in U.S	 $
1,943,559 S3 1,099,448 35 223,279 91
8,818,737 66
$	3,563,968 18
671,267 72 88,254 96
$	1,803,445 50
[Stage Direction]
C.N.R.-Minister's Statement
Statement No. 3-Concluded. Fixed Charges
Grand Trunk Lines in New England:-
Interest due the Public	$
Interest due the Government	
Grand Trunk Western Lines:-
Interest due the Public	
Interest due the Government	
Duluth, Winnipeg & Pacific:-
Interest due the Public	
Interest due the Government	
1924	1923
	 $	-
622,330 89	635,114	64280,200 00	280,519	72
Canadian National Railways in U.S,
902,530 89
$	915,634 36
Total Deficit
Grand Trunk Lines in New England	$	1,942,559 S2
Grand Trunk Western Lines	 1,721,779 14
Duluth, Winnipeg & Pacific Railway	 56,920 09
$	2,562,968 18
36,153 08 192,264 76
Canadian National Railways in U.S,
3,721,258 55 $	2,719,079 86
Might I be allowed to point out here, Mr. Speaker, that some confusion has arisen as between the interest on the debt and the accumulation of overhead. Both local papers are very friendly to the Canadian National system, and to government ownership, and they give the management a fair show. But the Citizen in the article I am about to quote makes a mistake concerning the interest due the public. In a recent editorial the Citizen says:
The people of Canada have to contribute $54,860,419 this year to the private holders of railway bonds, in addition to the whole of the profit that the railwaj earned.
The deficit -was $54,860,419, but in that amount was included $31,271,043 owed to the government.
Arthur Meighen: That is the amount owed to the government, but if you add the amount owed to the public you get away over the $54,000,000.


George Perry Graham: I explained that it came
altogether to $69,000,000.


Arthur Meighen: Yes.


George Perry Graham: I am trying to point out the mistake made here. In the Dominion government accounts will be found the entire statement of the amount due both. The situation is this, that instead of $54,000,000 owed to the public in overhead, the amount was $38,361,704. Towards this interest charge the railway provided $12,235,071 from operating revenues. But it supplies more. There is a credit balance of $2,537,310.90 on non-operating account, that is, rentals and various things of
that nature. As a matter of fact, the amount of interest owed to the public being $38,361,704, is reduced by $14,772,327 available from the revenues of the Canadian National itself. The balance, $23,589,377, represents the sum the Canadian National Railway was required to find to complete its interest payments to the public.


Robert James Manion: Would the minister repeat the two figures as to the interest owing by the railway to the government and to the public?


George Perry Graham: The interest owed to the government is $31,271,043, and to the public $38,361,704. Perhaps I am getting on dangerous ground in dealing with this interest, because I am neither an accountant nor a railway man, and I do not pretend to be an expert on figures at all. But, to put it bluntly, one of the difficulties under which we labour is that we are compelled to pay compound interest. I have had several arguments as to the soundness of this, but I will try to explain my position. This one year we have a deficit altogether of interest. We borrow money to pay the principal, including that interest, and we pay interest on the money we borrow. Consequently we are paying interest on the interest of our new borrowings. That is one of the difficulties under which we labour, and I want hon. gentlemen to remember that never was any railway company in the world asked to face such a condition as the Canadian National Railways have been asked to face.


Milton Neil Campbell: Does the minister not think that the partial remedy would be to write down the capitalization?

C.N.R.-Ministers Statement


George Perry Graham: Oh, I am coming to that. Now, it will be clear to every person, I think, that the very large amounts we have expended year by year were necessary in order to bring this property up to a standard where it might be self-supporting, but the time has. arrived when we ought to reduce this capital expenditure as far as possible. It has been reduced year by year. During the four years previous to 1923-24 the average yearly capital expenditure, on investment account, was about $54,000,000. Last year this was reduced to $30,000,000 odd. This year I think I am safe in telling the House that the company is prepared to endeavour to get along with a capital expenditure of $18,900,000. So that we are reducing our capital expenditure to a great extent. It may be asked, why have capital expenditure at all. I reply that so long as you have a railway, you will have capital expenditure. On this system there are millions and millions of dollars worth of trestles that will go to pieces if they are not filled and gradually replaced with permanent structures. All this means capital expenditure, and such expenditure will be required every year, but to reduce it to the minimum ought I think to be the endeavour of the Canadian National Railways and of the Parliament of Canada.


Arthur Meighen: I am not clear on the last figures, the only thing I think I am not clear on. The minister says that last year some $30,000,000 odd was added to capital expenditure. Last year, according to the minister's return and the railway return, about $118,000,000 was added to the National Railways' debt, of which $54,000,000 would be deficit from both sources, which would leave about $64,000,000 in addition. Now, how could there be only $30,000,000 added to the debt when there was that spread of $64,000,000 between the addition to the capital and the deficits?


George Perry Graham: It is a question of bookkeeping. As a matter of fact, these figures are given me to-day as the actual expenditures on capital account last year, not on operation.


Arthur Meighen: What could the balance of $64,000,000 have been?


George Perry Graham: I might explain it this way, the additional capital is not all capital expenditure.


Arthur Meighen: What is it?


George Perry Graham: The deficit is added to the capital.


Arthur Meighen: I know that, but what about the $118,000,000?


George Perry Graham: I do not want to go back to explain that again. Ninety million dollars was part of that $118,000,000.


Arthur Meighen: I know that-but perhaps we had better wait until I speak.


George Perry Graham: That would be better. Now, the capital account of the Canadian National Railways is rather a mixed affair. But, for the last three or four years, perhaps before that, we have been reducing the capital expenditure. I want to make it quite clear to hon. gentlemen that the Canadian National management was not handed a railway system; it was handed a conglomeration of various entities all over the Dominion of Canada, many of them having no connection with any other part of the system. The management was told: You take this mass and whip it into some kind of shape so that the various entities will work together. I do not believe any management in the world could have been found to excel the present one in the attempt to bring some kind of order out of the chaos that existed; in linking up the machinery that was handed to them. Do hon. gentlemen know that in this system there are more than one hundred different companies? Criticism has been made of the accounting department of the Canadian National; of the expense of it, and of the tardiness with which the annual report is brought down. But balance sheets have to be made out for eighty-seven different entities before a general balance sheet can be Struck off for the Canadian National Railways. It is a marvel to me that they are able to get out a balance sheet at all the same year, because no other company with a railway thait is a real railway, the different parts of which are built to work together, has anything of the kind to do. I want to say again that in trying to whip into shape these hundred different companies, keeping separate accounts, as must be done with regard to these entities in the matter of securities-the work done by the Canadian National accounting department is a marvel among railway men in this continent. Let me give you an illustration. Each one of these entities has its own financing. Suppose the Prime Minister represents railway A, and he wants to borrow. Railway B, in the person of the leader of the opposition, endorses the note. He in turn gets the leader of the Progressives to endorse his note. The leader of the Progressives, in turn, gets the whip of the Ginger group to endorse his note. Then, t.o make the circle complete, the whip of the Ginger group gets the Prime Minister to endorse his note. Now, the financing has not got out of the family, but the financial

C.N.R.-Minister's Statement
transactions have been numerous and the amounts involved are considerable. If more money is wanted for one of these entities, the circle is again completed, but beginning, perhaps, with my hon. friend the leader of the opposition. Now, all these entities and the securities issued, the guarantees given, the relation of one security to the other-which is underlying and which is not-have to be taken into account before we really know what is involved in the whole system. The financing of the Canadian National system is the most intricate thing I have ever tried to study. Hon. gentlemen say we ought to reduce the capitalization. This is my view about the capitalization-


James Shaver Woodsworth: May I ask, before the minister leaves that point, whether there is any possibility of effecting a thoroughgoing consolidation so that this thing will not continue indefinitely


George Perry Graham: Now, it is not fair for the hon. gentleman to take my speech away.


William Findlay Maclean: Reorganization of the finances is what is needed.


George Perry Graham: As I pointed out a moment ago, reorganization of the finances of this mass is a great task. But until a thorough investigation is made of every security, of the physical value of each line compared with the securities issued on it; of the practicability of each line as a going concern-until that is done, no question of capitalization can be properly considered, because no man in Canada-and I say it advisedly-now understands this system.


Mr. HOCKEN:: Z. A. Lash is dead.


George Perry Graham: He understood the Canadian Northern, but he did not understand the Grand Trunk. I am not saying a word in criticism of the financing; it had to be done in that way. But at the present moment, with my concurrence, a thorough investigation is being made of the entire system, the securities on each line, the physical value of each line, and the practicability of its being a going concern, now or in the near future.


William Findlay Maclean: When will they
report?


George Perry Graham: When that is done-and
the report, I hope, will be on the table of the House at the next session; it will take months to do it. Then the people of Canada and the Parliament of Canada will know exactly what they have and what it is worth. Until that is done we cannot have any reorganization of capitalization, but the moment it is done, I
believe, some steps ought to be taken by parliament, in conjunction with the Canadian National, looking to the adoption of an altogether new system of financing in connection with the system.
Under present conditions-and I do not want any person to be disturbed about this-with all this mass of intricacies that nobody has been able to unravel, the Canadian National Railways cannot under any management pay carrying charges if we take into account the amounts advanced by the government. The people of Canada could not stand rates which would be sufficiently -high to carry all this under our present arrangement. But there is a note of encouragement: in a portion of these interlocking finances that I have tried to describe by using the leaders in the House as an illustration, there probably is a not inconsiderable amount that can be washed out. If the entities of the Canadian National system owe some of these amounts to each other and not to the public or to the government, intercorporate accounts, if that is the right term, may show that fact; and, as they are all under one system, such obligations could, under proper safeguards, be wiped out; and if any large amounts of that kind be found it will be encouraging to the Canadian National system. Until that is done we will have to go along as we are, but the investigation to which I have referred will enable the people to know what they have and what it is worth. Whether there is amalgamation or co-operation or individual operation this investigation is essential in the first place, so that we can arrive at a definite decision as to what Canadian National ownership means.
It will be seen from the accounts that there is an amount of something over two billion dollars of liabilities of the Canadian National system. But that is hardly a fair statement, though for bookkeeping purposes and in order to show all investments in the National railways in Canada it is essential. From that two billions should at once be taken nearly half a billion that is invested in Canadian government railways, that never paid and never were expected to pay any interest, and which investment is not an indebtedness of the Canadian National Railway system at all. It is true that the Canadian National does not pay interest, but it is nevertheless true that in the statement placed before parliament and the people of Canada, the cost of these government railways is put down as a liability of the Canadian National. To my mind that might well be deducted from the liability of the Canadian National railways.

C.N.R.-Minister's Statement


Arthur Meighen: Is the minister right
in that?


George Perry Graham: You will find it in the
report.


Arthur Meighen: The cost of the Intercolonial and the Transcontinental?


George Perry Graham: You will find $451,000,000.


Arthur Meighen: As a liability of the
Canadian National?


George Perry Graham: It is not an interestbearing liability, you understand; I tried to make that clear, but it is put down as part of the Canadian National in the two billions.


Arthur Meighen: Oh yes, in the two billions.


George Perry Graham: Let me point out further, every improvement that is made on the Hudson Bay railway, every improvement that is made on the Intercolonial, every improvement that is made on the Prince Edward Island railway or on the Transcontinental, is placed in the estimates of the Canadian National railway; and, although these amounts do not go into the interest-bearing assets, year by year they are added to the capitalized indebtedness of the Canadian National railway. These amounts year by year ought, in the minds of the people at least, to be deducted from the amounts expended by the Canadian National railway.
Let me point out another phase of this question. A company owned line, if it is required by the Board of Railway Commissioners to build a viaduct, for example, has the question of the apportionment of the cost decided by the commission. Under an act passed some years ago-I think I was the author of it myself-the government sets aside a certain sum of money each year, under statute, to be applied to the construction of viaducts throughout the Dominion of Canada, and in that act it is provided that the Board of Railway Commissioners shall apportion the cost, a certain amount to the municipality, a certain amount to the railways, and a certain amount out of this government fund. Now the railways that are under private operation, and these include the company railways of the Canadian National as well, get money out of this fund to assist in the construction of viaducts; a certain contribution is made by the municipalities, and the company pays the balance; but the Canadian National, when it makes an improvement of that kind on the government railways, gets no such aid from any person, but has the cost of that entire improvement charged against the capital ac-
count of the Canadian National railway. I say that is another item which we ought to bear in mind when we are discussing the cost of the Canadian National railway.
Now take our United States lines. Hon. gentlemen have spoken in this House-and I am not criticizing them at all-of the expenditure on our United States lines and the service given by them, and some of them have asked that this service be discontinued. Let me point this out to hon. gentlemen: We have several thousand miles of railway in the United States. I pointed out a few moments ago that the duty of service to the community through which a railway runs rests on the railway, because they usually get some compensation for that. A railway company cannot, unless there be good reasons, rob any community of a reasonable service, and when hon. gentlemen opposite tell us that we ought to take up the rails on certain parts of our United States lines, let me point out that these United States lines are under the control oi the Interstate Commerce Commission and of various laws .and statutes of the United States, and this parliament itself would not have the power to interfere with a reasonable service on those lines or to take u,p one foot of rail unless the consent of the Interstate Commerce Commission was given. In Canada our own commission regulates these matters largely, but in the United States the Canadian National lines are subject to the Interstate Commerce Commission, and must be so; it would not be right if it were anything else.


William Findlay Maclean: But you could sell them outright.


George Perry Graham: You could sell the stock in them, of course. Just to show you how delicate some of these things are, recently in a certain legislature in one of the states it was charged against the Canadian National that it was spending all the money in Canada, and not spending in the United States the money to which the United States was entitled on account of the mileage there. Of course, there is not any foundation for that statement, but that question was raised, and I heard that without any criticism that legislature, in both houses, passed an act to take over without the consent of the Canadian National or of the Canadian government a certain mileage of the Canadian National railway, which it is stated that state intends to sell to another company. I do not know whether that is so or not, but I am citing that as a matter of public record just to show the delicate questions that sometimes arise in connection with the operation of the Can-

C.NJi.-Minister's Statement
adian National lines in the United States. I want to add this, that on the whole every state in the Union, and the federal government of the United States as well, has given the Canadian National system fair play, and given it just as good an opportunity as if it was one of their own lines.
Now may I be permitted to refer to the question of taxation? That is a live question in the Dominion of Canada with reference to the railways in the various provinces. The company lines, and these are the lines exclusive of the Canadian government lines, pay their taxes now as they did before. The Canadian government lines proper-these are the Intercolonial, the Prince Edward Island, the Hudson Bay and the Transcontinental-being government owned have not paid any taxes. To my mind, while that is constitutional, because you cannot tax the king or his property, I am rather of the opinion that where a government and the people deliberately go into a commercial enterprise they will eventually have to bear some of the responsibility attaching to that commercial enterprise.


John Morrison: We did not deliberately go into this; we were forced into it.


George Perry Graham: But you are in now.


Arthur Meighen: Is the hon. member for
Weyburn (Mr. Morrison) not wrong? We deliberately went into it so far as the Intercolonial and the Transcontinental are concerned.


Mr. CALDWELL:: Would the minister be
willing to extend that policy to the farms owned under the Soldier Settlement Board?


George Perry Graham: I will consult with my
colleague when he comes in as to that, but I have certainly troubles enough already with the railway. As I was pointing out, Mr. Speaker, when the people of Canada go into a great commercial enterprise, whether they are forced into it or go into it, or however it is, I cannot see how they can well escape a portion of the responsibility at least that pertains to that enterprise. Believing that to be the case, I asked the Canadian National management to appoint a committee to consult with the provinces through which these government railways run. Now, mark you, any taxation that is arrived at to be placed on the Canadian National is voluntary by the Canadian National or by the Canadian government, but notwithstanding that, I think there is a moral claim for some taxation. At the present time, government owned land leased to any individual is taxable to this extent, that the tenant of that property
can be taxed, although, technically speaking, the property itself is not taxed. That was decided, I think, in the case brought by the city of Montreal some three years ago, when the government of which my right hon. friend (Mr. Meighen) was the head referred the matter to the judicial committee of the Privy Council. It was then decided, if I remember correctly, that the property owned by the crown could not be taxed, but that the tenant of the property could be taxed. Consequently the tenants of various properties along the Lachine canal, for instance, leased by the Department of Railways could be taxed by the city of Montreal. That holds good, of course, all over the Dominion. But there is something further than that. The provincial governments tax company lands unless there be some agreement to the contrary. The municipalities in those provinces tax company lands unless there be an agreement to the contrary. Therefore this committee composed of Mr. Ruel, chief counsel, and Major Bell, one of the directors, has been appointed to confer with the Prime Minister of each province and see if some amicable arrangement can be arrived at by which taxation-I think it ought to be small under the circumstances, the principle being acknowledged-might be imposed by each province, or rather by which a certain amount might be paid to each province and to each municipality in that province. That will cost considerable money, but I believe the governments of the. various provinces and the municipalities, under the circumstances will be reasonable, and not expect to receive too large an amount.
Now, Sir, I come to the question of the proposed amalgamation. But before I deal with that question briefly I want to put on record, as I think it is really a splendid showing for the year, these figures-the operating expenses and the operating revenues. During the past year the operating revenues decreased by $17,500,000, and the operating expenses by $14,360,000. The net earnings of the Canadian National, under all the conditions which I have outlined, this year amount to $17,244,251. Now I come to a point where I am not sure that I will agree with anybody. What shall I say about the proposed amalgamation? The hon. member for North Waterloo (Mr. Euler) gave us a most interesting address, as he always does except on the budget.


Some hon. MEMBERS:: Oh, oh.


George Perry Graham: The budget proper, I
mean. He dealt with this question in a very

C.N.R.-Minister's Statement
masterly way, and his conclusion was that we ought to have an amalgamation. He also gave us the figure of $100,000,000 that might be saved by this amalgamation. I think my hon. friend from South York (Mr. Maclean) did not give us any figures, but he told us he was strongly in favour of amalgamation and that he believed it would be the salvation of the situation.


William Findlay Maclean: He gave a very exact programme of action that might be taken in the matter. He showed what could be done in the way of cutting out duplication and other changes and the enormous economies that would be effected.


George Perry Graham: I guess he did.


William Findlay Maclean: Yes.


George Perry Graham: I must approach this
subject in a careful way. To me monopoly is distasteful in any form. I am not sure that amalgamation at the present time is the proper thing. It may be that, in the future, in the maturing of conditions, amalgamation may [DOT] be necessary; but I am free to admit that I would like to try out to
5 p.m. its fullest extent every other method before I submitted to monopoly of any kind in this transportation question. It has been said that the Board of Railway Commissioners could control. True. I believe our Board of Railway Commissioners is an able body of men, and could control, so far as any such body could, the operation and the cost of our transportation companies, or of one company if there were one. But there are so many things that cannot be controlled by a Board of Railway Commissioners or anybody else outside of competition. Without casting any reflection -because that is far from my idea-I will leave it to any man in any part of Canada, or to any hon. member sitting in this House, to answer this question: Is not the Canadian Pacific Company's service to-day immeasurably better than before there were other lines in their territory? Naturally so. I remember visiting a gathering of farmers once in Regina and 'they were pointing out to me-this was some years ago-the improvement in the service since another line came in.


Mr. EULER:: Would that not also constitute a strong argument why there should be no Canadian Pacific monopoly?


George Perry Graham: I will come to that. I
think my hon. friend the member for Vancouver South (Mr. Ladner) wishes to ask a question.


Mr. LADNER:: I should like to ask if
the improvement of the service of the one line has not meant a great amount of increase in capital expenditure in carrying out improvements on the other line, the net result being an increased burden to the people of Canada in railway debt and in taxation?


George Perry Graham: I should not like to admit that. One of the supreme things is service, and we would not have any railways if it were not that we wanted service. Of course if my hon. friend is prepared to take any kind of service he could have a service operated by horses.


Leon Johnson Ladner: Where is the limit?


George Perry Graham: The limit of service is
in the hands of parliament so far as the Canadian National system is concerned. I admit that whether it be the Canadian National or the Canadian Pacific there is no place to get the money to pay expenses except out of the pockets of the people.


William Findlay Maclean: That is the
whole case.


George Perry Graham: But I was discussing the
question of competition and taking this little instance to illustrate my point. I was saying that I was visiting a large gathering of farmers-that was before they were Progressives; they were just farmers in the west then-and the representatives of all the railways were gathered together in caucus with these farmers. The farmers were not hanging on to the railway representatives to find out if they could get cars, but the railway representatives were button-holing the farmers to see what they wanted in the way of cars, on account of competition. * Competition is the only thing that will give a man a car when he wants it. You can have all the railway commissions you like and they cannot control that feature of the service. Competition is the only thing that will give you an improvement in the way of attention on the trains when you are travelling; because if there is no competing system, it is human nature to make as much out of you as possible. I am pointing this out to show that monopolies may become absolutely essential; but at the present time I would rather see our people maintain their courage, maintain their belief in the Canadian National system, and find out if we cannot work out some way by which we can have in Canada not amalgamation at the present time but a co-operation that will give the people the desired service and protect them from monopoly.

C.N.R.-Minister's Statement


William Daum Euler: Is the minister endeavouring to convey the idea that a publicly owned monopoly is on all-fours with a privately owned monopoly as regards service?


George Perry Graham: It is on all-twos; it may not be on fours. A monopoly is a monopoly. I am free to admit that if that is the solution and we cannot get around the problem in any other way, I would prefer a publicly owned monopoly to a privately owned one.


William Daum Euler: That is enough, that will do.


George Perry Graham: For this reason, that a publicly owned monopoly can be controlled annually by this parliament in detail to a large extent and the people's views can be represented, while a privately owned monopoly, no matter how safeguarded, would not be safeguarded with the same close criticism.


William Daum Euler: That was my point.


George Perry Graham: Will hon. gentlemen bear with me for just a few minutes longer? The question of co-operation has been discussed between the heads of the railway companies and myself and other members of the government many times. It is not so easy of accomplishment, as it may appear. Co-operation in the eliminating of certain passenger trains would not be difficult, although the president of the Canadian Pacific put this question to me just few days ago: "You say we are running a lot of trains between here and Montreal. So we are, but I tell you these trains pay. Why should I be asked by you or by the government or by parliament to take off a train that is helping to pay dividends to my shareholders? Is that fair to the shareholders?" That is a matter that has to be considered, because, to my mind, we must not do anything, in either amalgamation or forced co-operation, that is going to frighten capital invested in the Dominion of Canada. At the present time-and I might diverge for a moment-we are being unjustly criticized in England on account of conditions existing respecting the acquisition of the Grand Trunk by the government for the Canadian National system. There are two chief complaints. I say that they are both ill-founded. The first complaint is that the preference and common shareholders of the old Grand Trunk were frozen out in the arbitration or in the settlement with the government of Canada, and that the settlement made gives to other holders of securities, not senior to the holdings they have, remuneration year by year, while under the arbitration they get nothing. Our answer to that was that the Grand Trunk was going into bankruptcy and was practically
bankrupt. The government of the day had either to let the Grand Trunk go into bankruptcy or to make some arrangement for taking it over. If it had been allowed to go into bankruptcy, that would have been better financially, perhaps, for the people of Canada at the present time, but the amount that would have been received by security holders in the Old Land would have been very much curtailed, if not in a large measure wiped out. The complaint is that in the arrangement made with the late president of the Grand Trunk they were deprived of any recompense for their investment, but it went to other gentlemen who held securities. I say that there is no foundation for complaint as to the arrangement made with the government of Canada at that time. Why? The common stockholders of the Grand Trunk never had any equity in the Grand Trunk. That stock is not any good now and never -was any good so far as return is concerned. What were the conditions? I suppose I should not take up time defending my right hon. friend, but I am defending Canada. The government of Canada found the Grand Trunk practically in bankruptcy. They had to decide whether they would let it go into bankruptcy with all that that meant, or try to make some arrangement to rescue it and get it on its feet. I will not argue whether the latter was the right thing to do or not, but that is what was done. The officials of the Grand Trunk agreed to the proposition. Their action was confirmed by the directors of the Grand Trunk and the action of the directors of the Grand Trunk was confirmed by the shareholders of the Grand Trunk who had the" votes. Therefore, it is the shareholders, the directors and the then officials of the Grand Trunk who are to blame if any of the rights of any of the investors were given away to the Dominion of Canada.
Another complaint is made, and I think it is wise to refer to it on account of very misleading despatches that are coming over here from certain sources in the Old Land and on account of the attitude of the press of the Old Land that is either ill-informed or has very ill-digested its information. The other complaint that is made is this. The Grand Trunk Pacific 4 per cent perpetual debenture stock was guaranteed conditionally, by the Grand Trunk. That is not all the investment in the Grand Trunk Pacific, because certain bonds were issued that were guaranteed by the Dominion government, and I want to say now to those critics in the Old Land that those bonds are being taken care

C.NJI.-Minister's Statement
of year by year and that the Dominion of Canada has never declined nor even hesitated to honour any of its liabilities. Interest on bonds, whether guaranteed by the Dominion or the provinces is being paid by the Dominion. This Grand Trunk Pacific 4 per cent perpetual debenture stock was not guaranteed by the government but was conditionally guaranteed by the Grand Trunk Railway Company of Canada, the condition being that the Grand Trunk Railway Company of Canada should have net surplus earnings available for the purpose of the interest. The holders of those 4 per cent debentures are endeavouring to make the people believe that in some way when the Canadian government took over the Grand Trunk, they should have merged into a different position, and that the government of Canada is responsible for this Grand Trunk contingent liability. I say to those security holders, not that you are in the same position that you were in before, but that you are in an infinitely better position than you were in before, because the guarantee of the Grand Trunk will mean something in a few years, whereas under the old condition it would not have meant anything, but the guarantee of the Grand Trunk would have passed out so far as any worth was concerned, if that company had been allowed to go into bankruptcy. In discussions with these gentlemen, they based their contention largely on two things, first a speech made by my right hon. friend.


Arthur Meighen: Will my hon. friend permit me a question first? It is the Grand Trunk's liability to the Grand Trunk Pacific which is contingent on the Grand Trunk earnings?


George Perry Graham: Yes.


Arthur Meighen: Do I understand-I think and I hope I do-that the government acknowledges that, whatever undertaking the Grand Trunk gave itself, that must be lived up to?


George Perry Graham: Surely.


Arthur Meighen: It is because the undertaking of the Grand Trunk does not mature for the reason that there are no earnings, that the government does not acknowledge any liability?


George Perry Graham: That is it. In 1923, the earnings of the Grand Trunk did permit the payment of interest on those securities. The government merely took the place of the Grand Trunk, and it is carrying out the obligations of the Grand Trunk Company and will continue to do so.


Arthur Meighen: This point comes in.
The government acknowledges that whatever liabilities the Grand Trunk is under must be paid. I quite agree that it has paid them, and properly so. The Grand Trunk Pacific is directly liable for the interest but the government does not acknowledge that the liability of the Grand Trunk Pacific must be paid, as it is in liquidation. That is the difference.


George Perry Graham: Yes; Hansard will have
it all clear. But I should like to clarify the matter in a sentence:	The Canadian government, no matter what party was in power, has never repudiated its undertaking and never will. I want to point out further that although the government has merely assumed the liability of the Grand Trunk railway under conditions existing, the holders of the securities are in an infinitely better position than they would have been had the Grand Trunk been allowed to go into liquidation.
Now as to co-operation. As I pointed out a moment ago, co-operation in the removal of a passenger train here and there will not get us very far in the reduction of expenses although it will help to some extent. It is not gentlemen who live in the cities at the end of a run who will suffer. Let us take Montreal, Winnipeg, Vancouver, Ottawa or Toronto: it is easy enough for gentlemen from these places to say that we could eliminate many of the passenger trains, because these gentlemen can always get the service they want. If you cannot get the Canadian National you can get the Canadian Pacific. If you are in Ottawa and you are unable to get the Canadian National on the main line you can get the Canadian Pacific, and if not the Canadian Pacific you can take the tunnel line or, if you like, you can go on the Canadian Pacific by the North Shore line if you want to go to Montreal. I repeat, therefore, it is not the man in the large city who would stand to suffer; he has not a particle of an idea as to what the removal of trains would mean, for it does Hot affect him. You could cut the train service in two between these cities and the people travelling between them would still be able to get their trains. But to people living at Vankleek Hill and Alexandria, and other places between these points, any reduction in the train service would be of considerable significance. Those who live at the extremes would be under no sacrifice if the service were reduced to a considerable extent, but the people in the intermediate sections are affected by any curtailment of train service. Notwithstanding this, however, I think there can be a curtailment of service without injuring anyone.

C.NJt.-Minister's Statement


Mr. HOEY:: That would apply to through trains that do not stop at local points.


George Perry Graham: Speaking of through
trains, hon. gentlemen perhaps forget that in the transcontinental business the Canadian lines are competing not only with each other but with the American lines as well, and it is not so easy a task as it would seem at first sight to take off any trains. I was an agent for an American line many years ago, and it was surprising how many people crossed the river a few miles from here and took the American railway from Ogdensburg to Chicago, if they could get a little better rate, instead of going on the Grand Trunk or on the Canadian Pacific. And this competition is kept up all the time. I think, however, that savings can be effected and I have asked the two presidents on several occasions to discuss the possibility, although I am free to confess at the present moment that wh have not got anywhere so far; we have made no advancement. I am going to request them to come together again to consider the whole question whether it is not possible to come to some arrangement of co-operation that would include not only passenger traffic 'but an exchange of freight on an equality basis that would prevent duplication.


William Findlay Maclean: The minister
might ask them to give their opinion as to what savings could be effected by an extensive system of re-routing.


George Perry Graham: That is included in what I have said. During the war a saving was made as a result of co-operation between the companies, working in harmony with the railway board. But we must remember that during the war the people were willing to make any sacrifice that was necessary; they are not so obedient now. However, I am going to ask the railways to see if they cannot devise some plan by which savings can be effected in this respect, because I frankly confess that at the present time I am not in favour of a monopoly on the part of either private or public ownership. If that cannot be done- and this is not a threat at all-I shall, consider advisedly the question of asking the railway commission or its chairman to sit in on the job to see if some satisfactory arrangement cannot be arrived at. One hon. gentleman said the other day, quite rightly, that in his opinion if the problem is to' be settled it must be by means of a friendly agreement. But if a friendly agreement cannot be reached then I am going to suggest that by some method the Board of Railway Commissioners be allowed to have 186
some say in outlining a plan that would bring about the desired result without injury to either of the railway companies. As I said before, the capital invested in either of the lines must not be impaired in any arrangement that may be made.
Now, I think I have occupied the time of the House at sufficient length, although I should like to speak longer on the question of co-operation. However, let me say a word in regard to immigration-and I am not going to scold] at all, because I believe that everyone has a right to his opinion. This is my opinion, that if the Dominion of Canada, with its far-flung territory, can support only 9,000,000 people then the Creator made a mistake when he made Canada. This great country was not thrown into the universe with the expectation that it should support only 9,000,000, while a country no larger in area maintains 120,000,000. Arguments have been advanced against immigration, but I submit in all modesty that if you sift those arguments they are rather parochial; they are confined to the trouble that may arise for me and my wife or for John and his wife, and they d'o not extend beyond that. If Canada, is to be the country we all want it to be, we must increase the population by bringing in outsiders as well as by following the example of the province of Quebec in home production. We cannot go on with tight or nine million people, scattered over this extensive territory, and expect to be prosperous. We have a transportation system that can support many more people. Had not the war arrived with the calamity that overcame the entire world I am confident that we should have had! many more millions of people in Canada to-day and the present transportation problem would not be a problem at all so far as financing is concerned. This country is capable of maintaining at least 50,000.000 people. If every man did not want to have a couple of hundred acres more of land than he can farm, and if he had neighbours on that land who would farm it more intensively, there being'less land to every man, rt would be better for the Dominion! If we had perhaps just a little less industrialism where there is not a demand for the products of the industry, if we devoted our attention to the development of those things that, go to make wealth, always keeping up our industrial progress with our agricultural progress, because they should go hand in hand, then this country need have no fear of the future. And again I appeal to hon. gentlemen who express themselves opposed to immigration, and I assure them that, though they may not, I believe their children will



C.NJt.-Minister's Statement
live to realize that their policy was really a broad-minded policy that made for the fullest development of the Dominion. We have an immigration department in the Canadian National Railways, the Canadian Pacific Railway also has an immigration department, and the Dominion government, of course, has an Immigration department. I am not going to discuss now how these ought to work together. Some day when I have time I intend to go into the railway immigration departments and see what it all means. But I submit again that the real solution of the problems of the Dominion, industrially, agriculturally, and so far as transportation is concerned, is the bringing to our shores of citizens who will become dwellers in this country to their profit and to the profit of the Dominion. That, I believe, is the foundation on which the solution of these problems rests.


Mr. GOOD:: Mr. Speaker, may I ask the hon. minister what is the use of getting men in here if we cannot keep them?


George Perry Graham: Mr. Speaker, that is just the kind of question to which I was referring. Will my hon. friend allow me to say something to him straight from the shoulder? If my hon. friend would be a leader and not a follower of his people, and if other men like him would be the same, we would not have so much talk about not being able to look after our immigrants. I represent a rural constituency right beside the city of Detroit, and people are going and coming all the time. But I want to say this to my hon. friend and to others that in the development of public opinion a member of parliament has very great responsibilities, and his doctrine becomes the doctrine of 75 per cent of the people. There is no question about that. If men in the House of Commons and in the Senate, if men on the bench and other outstanding leaders, will take it into their heads to say, "We believe in Canada; we are here to stay; the problems of Canada are our problems; the problem.% of the railways of Canada are our problems; we are able to solve them and are going to solve them,"-if we would all do that and go ahead and put our shoulders to the wheel1 only to a. measurable extent that our forefathers did, there would be no question of the solution of our problems, there would be no question about the future of this Dominion.


William Charles Good: Might I put this further question to the minister: Have any members in this quarter of the House deplored immigration, as such? I do not know of any.


George Perry Graham: Oh, yes. I do not want
to go into the question of immigration, but I believe it is a solution for our difficulties. Not a great many, but a few behind my hon. friend and in other parts of the House have said, "What is the use of having immigrants come to Canada? We cannot live ourselves, so what is the use of bringing other people here?" My hon. friend's own question was pretty much along that line. That means there is nothing for immigrants to do in Canada T am prepared to go a long way and say that if the men who come to Canada, or the men who are already in Canada, will show, even to an approximate degree, the stamina of their fathers and grandfathers, there will be more work and more men working.


Mr. McQUARRIE:: May I ask the minister what class or classes of immigrants he would allow to come into Canada that are not allowed entry now? *


George Perry Graham: Mr. Speaker, you know
these gentlemen here are pretty good representatives of the kind of men I would want to come to Canada. They have done well here, I believe better than they would have done anywhere else. There are numbers of men in this group here who will agree with me that their success is a striking example of what young men coming to this country can do if they want to succeed. Now, Sir, I am about through, and I do not think I can enter into-a discussion with my hon. friend from New Westminster (Mr. McQuarrie), but, although I am pretty broad-minded on immigration, I am not strong on oriental immigration-I tell him that; but outside of orientals I would blink a good deal at other qualifications if I knew the men were in good health and willing to go to work.


Mr. JACOBS:: Will the minister tell us
why he lectures the member for Brant (Mr. Good) and not his own government on this question?


George Perry Graham: When my hon. friend becomes a member of the government he will know more about these lectures. He will know that there are internal and external lectures- the internal are not delivered here.
Now, Mr. Speaker, I have dealt with this question pretty exhaustively, and I have tried to make it clear. I want to say again, there is no need for pessimism about the Canadian National Railways; co-ordination or co-operation ought to be tried out before we talk of amalgamation; and above all, we ought to endeavour to solve this problem by filling up our waste spaces, so that we will have the benefit

C.N.R.-Minister's Statement
of competition without any exorbitant freight or passenger charges.
I want to add a few words in reference to the complaints of the holders of Canadian railway securities living in the Old Land. If I have not made anything else clear, I hope I have made it perfectly plain not only to the members of this House but to the country -because the honour of Canada is very dear to our people-and certainly I want to make it clear to the financial papers and the financial men of Great Britain, that Canada always pays her debts, but she will not be stampeded into a position that there would be no justification whatever to force her into.
Now, Mr. Speaker, I have an announcement that I think will help considerably. Hon. gentlemen will have noticed in the Supplementary Estimates of this year an item of $7,500,000. As I have stated before, the railway year ends on December 31. These estimates are made up about that time. I asked the Canadian National Railway board to give me an estimate so I could put it in the sup-plementaries before the end of our fiscal year, March 31, covering everything that might be required for that year. I am prepared to tell the House now that they will not be asked to vote that $7,500,000 because it will be withdrawn; we can get along without it.
I have another announcement to mate which I think will be encouraging. I have conferred with Major Bell and the officials of the Canadian National Railways, and they have been going over very carefully and fine-combing the estimates brought in by the Canadian National Railways, and then fine-combing them again, in an endeavour to see if we could not get along with a less amount of money this year. Now I have the pleasure of being able to tell parliament that when we are in committee of Supply I will ask one of my colleagues to move that the sum of $60,000,000 be reduced by $10,000,000.
I apologize to the House for having taken up so much time-


Some hon. MEMBERS:: Not at all.


George Perry Graham: -but I wanted to make
clear the position of the Canadian National Railways so far as I possibly could. In conclusion, I repeat once more that there is no need for undue pessimism on the railway situation, there is no need for pessimism on account of the situation of the Dominion. We are in as good a position, or better, than most of the other countries of the world, and all we want to make this country prosperous and solve our railway problem is to have 186i
greater courage ourselves. Let us lead the people along the right lines and show them where they ought to go-not tell them where they ought to go, but lead them in the direction in which we think they ought to go; and, in addition to that, let us bring into the Dominion as many people of the proper kind as we can, for to my mind this to a large extent is the solution of all our difficulties.


Arthur Meighen: Mr. Speaker, I am not
going to enter any complaint at all as to the length of the minister's address. It was much more complete than has been customary, and the House is that much better off as a result. The only thing I regret is that the minister chose Wednesday to commence a debate of three hours of which the first speech would occupy two and a half. However, I am sure arrangements can be made to continue for a reasonable time at a later date.


William Lyon Mackenzie King: Would my right hon. friend object if we went into Supply and continued the debate to-morrow?


Arthur Meighen: I am prepared to go on
until six, but I cannot possibly finish by that time; and hon. members to my left and others are entitled to speak as well.
I wish to pay my compliment to the minister not only for the good temper and spirit which he treated the subject-which is always his characteristic-but as well for the marked fairness with which he treated his political opponents, and especially the late administration. In this relation I join with him emphatically in his definition of the conduct of the late government in respect to the Grand Trunk railway and its shareholders, and in his description of the position this country assumes before those shareholders and the investing public generally. I know of nothing ever advanced against a country or a government more utterly unfounded and absurd than the complaints of Grand Trunk shareholders as respects their treatment in the late negotiation and arbitration between them and the government of Canada. I do not think the blame is attribuable wholly to the shareholders themselves-indeed, only in a meagre degree. The fact is that the Grand Trunk Railway directorate, principally by its Grand Trunk Pacific adventure but as well by its inefficient long distance management of the system, had themselves over a series of years wrecked the enterprise; and over those years, while their enterprise was being wrecked by themselves, they did not disclose the full facts to their shareholders, with the result that in the end the shareholders were taken

C.N.R.-Minister's Statement
by surprise and were led by the directorate to believe that the sad fate which had overtaken them was the consequence of harsh treatment by the government of Canada. The minister is entirely right when he says that if we had not opened, at their request, negotiations with the company, the result would have been the bankruptcy of the 'Grand Trunk. Following that bankruptcy there would necessarily have been liquidation and sale. To avoid this consequence, and as well to show that we were prepared to treat shareholders outside of Canada in precisely the same way as we treated shareholders in Canada, we first of all offered a certain definite amount per year, increasing with the years, distributable among the shareholders by the directorate themselves, as a purchase price of the system. No similar offer was made the shareholders of the Canadian Northern. Over this offer they deliberated for almost a year. They vefibally rejected it from the beginning, and finally in definite form rejected it. Had they accepted, it would have meant something to the shareholders who now complain-it would not have meant iniuch, but something. An alternative offer which we made they accepted -an offer of arbitration. And it would be no information to the House to be told that in respect of the phase of the agreement to which the minister has referred-the phase which declared that the moneys we were paying by way of annual outlay to the shareholders should go to the guaranteed stockholders first and that only what should be awarded by the arbitrators should go to the holders of preference or common stock-was naturally dictated by the Grand Trunk directorate itself. It did not matter a whit to us how the money was divided. It did not matter a whit to us whether the guaranteed stockholders were paid in whole or whether a part of the moneys were left over to be paid to the preference stockholders. Naturally the government of Canada was not interested; if the directorate had preferred that only a percentage of the moneys we undertook to pay should go to the guaranteed stockholders, leaving a -balance for the holders of preference and common stock, the government would have immediately concurred. In a word, the disposition of the moneys we are paying to the bondholders of the Grand Trunk Railway is a disposition not only concurred in but stipulated by the Grand Trunk directorate themselves. Consequently, to enter complaint about it because, first of all, negotiations to take the road over on an arbitrated basis were entered into by ourselves as an tMr. Meighen.]
alternative to liquidation, is, to say the least, unfounded; but to complain that the disposition of the moneys that still are being paid is not fair as between themselves is nothing short of absurdity. I think the misconception has largely arisen because of the failure of the shareholders to realize the position their company was in before the negotiations commenced, a position described by their own president as the very end of the resources, the very brink of liquidation itself.
Now, I -believe all concur that the shareholders were treated with absolute fairness. I think also all concur that the people of Canada were treated with absolute fairness in that negotiation. I have never heard anyone complain that there was any unfairness either way 

that is, anyone who understood what was done. The only reason I mention that is this: not in this debate but in previous debates, calumny has been hurled against the late government because in a previous arbitration, or as a result of it, we paid to the shareholders of the Canadian Northern $10,000,000. In the case of the Canadian North-em precisely the same steps were taken as in the. case of the Grand Trunk, and if there was fairness to Canada in the one there was absolute fairness in the other. I know it is true that the member for West York (Sir Henry Drayton), in an investigation conducted by him where the Canadian Northern were not represented', found that in his judgment there was not absolute value in the shares. But he did not -conduct a tria-l; he expressed an opinion, and he recommended besides that though there was not absolute value, in view of the services rendered something should be paid, and paid by annual levy. But because, someone, no matter how high he may be in authority, says that another man's property is worth nothing, that is hardly a justification for the state putting its hand upon it and taking it.. I never knew of any country on earth since civilization was matured being guilty of conduct of that kind. In addition the fact was that these same shareholders were in negotiation for the sale of those exact shares to a rival company-a negotiation which, because we were animated by the principles advocated1 by the minister to-day, we stepped in- and prevented. Under those circumstances it would have been nothing but confiscation, if not larceny, for the government of Canada by main force to seize the shares and tell the shareholders we would value them; that the owners would have nothing to say about it. And the board which valued them was a board of as high standing as any board that ever sat in Canada, judicial or

C.N.R.-Minister's Statement
otherwise, of just as high standing as the board which decided1 the value of the shares of the Grand Trunk. I have never heard yet any method suggested that would be fairer to the shareholders or to Canada than the method adopted.
Before I leave this subject I want to make a reference, just as an expression of appreciation, to the hon. member for George Etienne Cartier (Mr. Jacobs) for the frank and manly way in. which he answered a question anent this same subject put to him by myself. Standing now some years in advance of the events he freely said that under the circumstances that surrounded the late administration, precipitated upon it by years of railway disasters, we had no course save the course we pursued, to amalgamate all these four systems into one and that we had no way of amalgamating them save under government ownership. There was undoubtedly no other course, no other alternative that presented itself that was thinkable to the people of Canada, and the member for George Etienne Cartier is to be commended because he opposed it along with others at the time, but now freely admits that it was a case of Hobson's choice-there was nothing else in the world for us to do.
May I add, and in this I invite criticism if I am wrong, I judge from several addresses made by the minister in this House that that is the opinion of the minister himself. I think I could go further and say there are, not two or three, but many more hon. gentlemen opposite who will at this date conclude that we took the only course that was open to us. However, this question does not arise now. We are now facing the future, not the past.
The minister in the course of his remarks rather intimated at one stage that the present directorate found the system in a state of chaos. As establishing this state of chaos he gave the House, what is true, that it is composed of very many companies, inter-related in various wavs, numbering perhaps nearly one hundred; that separate accounting must take place for each one; that all these are joined one with the other by ownership of stock, by leases by inter-guarantees of obligations; that consequently it is a very complicated system; and that because of those complications the present directorate have been under a handicap and are endeavouring to produce something more simple, something more ordered out of the morass. Now I admit it is complicated, but when I say it is complicated I do not want anyone to think that I admit it is in chaos, or ever was. Complication and chaos are two different things. The complication you cannot avoid.
When the Canadian Northern railway was unified and made a real system in 1914, and when the government of Canada took 40 per cent of its stock, there were in that system I think 39 different companies, and the variety of relationship was vast. Apparently it was very complicated indeed, unnecessarily so; but the fact is it was certainly not unnecessarily complicated, and it was not a truth that the real position of each of those companies and the real relation between them was not fully understood. No investigation was necessary to find out the exact financial standing of any single one of the 39 different companies composing the system, or the relation of any one to any other. The treasurer of the Canadian Northern railway at that time and his staff-I refer to the treasurer in particular because he was a man of eminence in his profession, and indeed marvellously competent-the treasurer could tell you at a few hours' notice the exact position, the assets, the liabilities, the guarantees, the contingencies, and all the rest, of any one of these 39 companies.
Hon. members may wonder why it is that so many of these elements are necessary to make up the composite whole. Well, there are various reasons. In the first place, there are certain of the properties in the United States, in different states of the United States. I refer now to the Canadian Northern; there were only two in the case of that company. There must be separate companies for those properties; the laws demand it. In the next place, not for the sake of complication or difficulty, but for the sake of the very opposite, simplicity of organization, it is found advisable to have a separate express company, a separate baggage company, a separate telegraph company. All these have their stocks pooled and owned by the parent. This is essential; it is the part of wisdom; it is not complication at all. Similarly, there are many properties necessarily held by lease, for 99 years, perhaps 999 years, under separate companies. That proved the easiest way to acquire the property, and it is necessary to keep it a separate company while that exists. It is not a case at all of clumsy or unintelligent management. It is the history of all great corporations, especially railway corporations. The Grand Trunk was in exactly the same position. They had to have several American companies; they had several American properties under lease; they had all the paraphernalia of a railway organization here, and I believe their component elements even outnumbered those of the Canadian Northern.

C.N.R.-Minister's Statement
And the Grand Trunk Pacific, though young in life, had developed quite a system of its own. It owned hotels under one company, one hotel under one company and another hotel under another company, just as the Canadian Government Merchant Marine today, even though it is only some five or six years old, has a company for every boat. This is the act of the government itself; it is the act of every marine corporation.
So I say the fact that there are all these elements, with inter-guarantees, while it makes it complicated, it is true, does not by any means make it impossible of being understood. In fact, it can be quite clearly understood by application, by persistence, and is fully understood by those having the actual supervision of the enterprise itself. There was no chaos to unravel; there was a complication to understand. There was a system just in the sense that the Canadian Pacific railway is a system to-day, and I venture to suggest that if the Canadian Pacific railway is analysed at this hour, it will be found no less complicated in this respect than the Canadian National is now. I venture to suggest that the number of elements which compose it, and the relation of those elements the one to the other is just as extensive as that which pertains to our own road.
The minister, as well, made some reference to complication that arises from the distinction of the government fiscal year from the railway year. There may have been some conflict because of ambiguity there: at the same time, there is no need of it. I do not know where the $90,000,000 came in that the minister referred to. I remember the hon. member for St. Lawrence-St. George (Mr. Marler) complained that the hon. member for West York (Sir Henry Drayton) had had the two confused, but I read the speech of the hon. member for West York, and he did not have them confused at all. The hon. member for West York was referring to the railway year in each case, and plainly said so. In dealing with the railway we just have to remember it is the calendar year always; that is a very simple fact.
It is true that we must maintain separate financing for our railway system and for the government of Canada. This is essential; it is obviously essential. The railway system is a great corporation which we own, the government of Canada is something distinct and wholly apart. That there must be separate financing, separate books, a child would never dispute; but all that has ever been complained of is not the keeping of a certain account, it is the faithful presentation of the joint and

total result at the end so that the people of Canada will know with accuracy whether in the twelve months we have gone forward or back-that is all that ever was demanded or ever could1 be justly demanded.


George Perry Graham: Six o'clock.


Arthur Meighen: I will finish another short subject. It has been said by the minister that the same method has been adopted in the bookkeeping, and he rather complains that in the budget debate we dealt with railway subjects. We cannot help it; the railway question must come into the budget debate-that is to say the financial side of the railway problem. The minister presented it. He is right in presenting it; it must always be done, and the budget debate must cover the financial phases of the railway situation. It covered this year our liabilities in respect of guarantees. Complaint was made that if this government has failed in not adding the railway additions to our railway debt the old government had done the same thing. I sought to show that the old government had not done the same for the reason that wherever we had incurred a debt for the railways we had in one way or the other reduced the railway funded debt by a like amount. Now the Minister of Railways presents figures to show that while we reduced the railway funded debt we did not do so by the amount of our guarantees. He states, and states correctly, that the guarantees were $100,000,000. I gave figures to show, and established right from the reports of the railway companies, that the funded debt was reduced by $112,000,000. But the minister says that of that $112,000,000- and his figures agreed with mine save for this one item-the amount $25,000,000 while a reduction of government debt was not a reduction of funded debt. If he is right that $25,000,000 should not be included. Certainly it was money that came right back to the government, but if it was not a reduction of the company's funded debt then it should not be in any wiay included in the amount by which, I say, the funded debt was reduced. I will look into it. But the minister admits that of that $25,000,000 the sum of $4,730,000 was a reduction of the funded debt. Add that to the figures which I gave and you have $117,000,000. Taking off the $25,000,000 you are only $9,000,000 "shy," and I did not go fully into the funded debt reductions on the Grand Trunk Pacific. But suppose the $5,000,000 was short, and that we had not reduced by $9,000,000 the funded debt, we had not reduced the whole amount that we have guaranteed, the presentation was made by this

Questions
government; it could not have been made by us. If there was a failure to reduce by the amount of our guarantees when the budget was presented in 1923, then the present government should have made clear in the spring of 1922 in the budget presentation that in addition to our ordinary debt, there should be superadded some $9,000,000 addition to the railway debt not represented by refunding.


Hewitt Bostock: Is it the pleasure of the House to adopt the motion?


Arthur Meighen: What motion?


Hewitt Bostock: The motion to go into committee.


Arthur Meighen: We could not adopt that motion at present. I want to speak further on this subject if I may.


William Lyon Mackenzie King: May I suggest to my right hon. friend that if the motion is adopted he can continue his speech tomorrow. If that is not done he cannot continue until next week.


Arthur Meighen: If I can continue tomorrow that is all I could ask.
Motion agreed to and the House went into committee of Supply, Mr. Gordon in the chair.
Railways and Canals-
Salaries	 $208,070
Contingencies	 38,000
Progress reported.
At six o'clock the House adjourned, without question being put, pursuant to rule.
Thursday, May 7, 1925