1927-02-10

NEW MEMBER INTRODUCED

[Stage Direction]
William Duff, Esquire, member for the electoral district of Antigonish-Guysborough, introduced by Right Hon. W. L. Mackenzie King and Hon. J. L. Ralston.


Hon. J. A. ROBB (Minister of Finance):: On February 8 my hon. friend from Vancouver Centre (Mr. Stevens) raised a question with reference to an expenditure of $45,000 under governor general's warrants. There was some controversy between the hon. member and the Prime Minister (Mr. Mackenzie King) as to how this corresponded with a certain speech delivered at Richmond Hill. I promised to lay on the table the papers in relation to this matter, but perhaps the House would like to know that this expenditure was made to comply with the requirements of an order in council passed on December 29, 1921, which, as my hon. friend will recall, was about the day before the government of which he was a supporter resigned. Under the terms of that order in council the Department of Soldiers' Civil Re-establishment was authorized to assume the cost of compensation in respect of pensioners of twenty per cent and upwards who were engaged in industry, the object of such legislation being to make it easier to find employment for disabled ex-members of the forces. That order in council was renewed for one year on September 18, 1924, and accordingly it expired on September 18, 1925. At the time of this authorization an order in council was put through to meet expenditures that had been incurred during the winter of that year, the vote not having been quite sufficient. I will lay all the documents on the table so that my hon. friend can examine them.



IMPERIAL CONFERENCE, 1926 APPENDICES TO SUMMARY PROCEEDINGS TABLED

Right Hon. W. L. MACKENZIE KING (Prime Minister):: The appendices to the
summary of proceedings of the Imperial Conference of 1926, copies of which I am now tabling, are those printed by the British government. I move, seconded by Mr. Lapointe, that 1,000 copies in English and 700 copies in French of the said appendices, laid upon the table of the House this day, be printed forthwith, and that rule 74 be suspended in relation thereto.


[Stage Direction]
Motion agreed to.

Hon. PETER HEENAN (Minister of Labour):: Mr. Speaker, on Tuesday last the
hon. member for Vancouver Centre (Mr. Stevens) requested a statement of expenditures in connection with the fruit and vegetable combine in western Canada. Regarding that request I wish to state that the situation-


Mr. SPEAKER:: The hon. member cannot make that statement just now; he may make it before the orders of the day are called.



LOAN COMPANIES ACT, 1914. AMENDMENT

[Stage Direction]
Hon. J. A. ROBB (Minister of Finance) moved for leave to introduce Bill No. 49, to
amend the Loan Companies Act, 1914.
Mr. GUTHRIE:: Explain.


James Alexander Robb: In the first place this bill adds section 54 to the group of sections which apply to companies incorporated before 1914 requiring loan companies to send copies of their financial statements to shareholders with the notice of annual meeting; (2) permits loan companies to increase by by-law their borrowing powers from four times their capital and reserve to eight times their capital and reserve, due notice being given to shareholders and debenture holders and the by-law being approved by the Treasury board; (3) makes it necesary for loan companies to obtain and have renewed annually licenses from the minister in order that they may be authorized to carry on their business; (4) requires all loan companies to file, on request, with the department, a certified copy of their by-laws; (5) substitutes the word "license" for the word "certificate" and makes it clear that it applies to old as well as new companies.
Motion agreed to and bill read the first time.



INSURANCE ACT. 1917, AMENDMENT

[Stage Direction]
Hon. J. A. ROBB (Minister of Finance) moved for leave to introduce Bill No. 50, to amend the Insurance Act, 1917.
Hugh Guthrie: Explain.


James Alexander Robb: The objects of the bill are as follows:	(1) It gives all Canadian insurance
companies the power to issue sinking fund; (2) increases the deposit to be made by British or foreign companies entering Canada to transact life or fire insurance business [DOT] from $50,000 to $100,000; (3) makes applicable to no par value shares the conditions for eligibility as investments now contained in the Insurance Act regarding common stocks of par value; (4) permits to a limited extent

Trust Companies Act
the investment by Canadian insurance companies in the stock of other Canadian insurance companies, the limit of such investment by any company being fifteen per cent of its own assets; (5) gives to all Canadian fraternal benefit societies the right to issue old age endowments; (6) makes slight change in qualifications of actuaries eligible to make fraternal societies' valuations by adding to list members of the American Institute of Actuaries, and provides that actuaries to be eligible must be members by examination of the various approved institutes; (7) provides that in estimating margin of security provided by Canadian fire and casualty insurance companies any investment in stocks of other companies permitted by the amendment contained in section 4 above shall be disregarded.
Motion agreed to and bill read the first time.



WINDING-UP ACT AMENDMENT

[Stage Direction]
Hon. J. A. ROBB (Minister of Finance) moved for leave to introduce Bill No. 51, to amend the AVinding-Up Act.
Hugh Guthrie: Explain.


James Alexander Robb: Under the bill parts III and IV of the act are merged, the amending clauses removing the suggested discrimination, in liquidation, in favour of Canadian policy holders, as against other policy holders of Canadian companies.
Another object is to make more satisfactory provision for the re-insurance of the policies instead of distributing the assets by way of dividend on the unearned premiums, or net values of the policies. Under the amendment the liquidator will have power to re-insure the business without the consent of the policy holders being first obtained. A new subsection is added to section 162. It is intended to overcome a condition created by a recent judicial decision by which certain rights were given to a class of company in connection with the deposit made with the minister. It is believed that a recognition of this decision would amount to a violation of the trust involved in the making of such deposits, and that this interpretation should be made impossible in future.
Motion agreed to and bill read the first time.



TRUST COMPANIES ACT, 1914, AMENDMENT

[Stage Direction]
Hon. J. A. ROBB (Minister of Finance) moved for leave to introduce Bill No. 52, to amend the Trust Companies Act, 1914.
Hugh Guthrie: Explain.


James Alexander Robb: This bill makes it necessary
(1) for trust companies to obtain and have renewed annually licenses from the minister in order that they may be authorized to carry on their business; (2) for all trust companies to file, on request, a certified copy of their by-laws; and (3) there is a substitution of the word " license " for the word " certificate," making it clear that it applies to old as well as new companies.


Mr. BENNETT:: Before the motion is put may I ask the Minister of Finance if he has considered these bills in the light of the revision of the statutes which is now taking place. It seems to me they should be passed as soon as possible, if they are necessary, and placed in the hands of the commission for the revision of the statutes. Because my hon. friend will remember the old story: You revise the statutes this year and then you have amending statutes the same session, and then the value of the revision in such matters is very limited. I am sure the Superintendent of Insurance will take the matter in hand and see that the revision takes place.


Hon. ERNEST LAPOINTE (Minister of Justice):: May I say to my hon. friend that
the commissioners appointed for the revision of the statutes are going to continue their work until the end of the present session, so that the legislation passed this session will form part of the revised statutes.
Motion agreed to and bill read the first time.



CRIMINAL CODE AMENDMENT

[Stage Direction]
Mr. T. L. CHURCH (Toronto Northwest) moved for leave to introduce Bill No. 53, to amend the Criminal Code (holding public games for charitable objects).
Some hon. MEMBERS:: Explain.


Mr. CHURCH:: The desire for this legislation has come from a large number of municipalities. The privilege is frequently sought to raise funds for relief work by social, church, charitable and patriotic associations, and mayors and wardens have been granting permits to raise funds for these worthy objects. This form of permit was not allowed when the code was drafted thirty years ago, and the object of the amendment is to make this form of permit legal now for the above charitable objects. Many municipalities have petitioned for the change, which is introduced at the request of the municipalities.
Motion agreed to and bill read the first time.
Indian Act



DOMINION FOREST RESERVES AND PARKS ACT AMENDMENT


[Stage Direction]
Hon. CHARLES STEWART (Minister of the Interior) moved for leave to introduce Bill No. 54, to amend the Dominion Forest Reserves and Parks Act.
Hugh Guthrie: Explain.


Mr. STEWART (Edmonton):: The objects of this bill are to change the name of the parks from "Dominion parks" to "Canadian National parks" and to provide statutory authority for the administration of the small areas commonly known as historic sites and monuments that are hereafter being called Canadian historic parks. It is considered that the parks have now become of sufficient national importance that before any change is made, either in the way of an addition or a withdrawal, there should be an open discussion of the matter on the floor of the House, or in other words that no change can be made without a special act of parliament. That is practically all that is provided for in the bill.
Motion agreed to and bill read the first time.



ST. REGIS INDIAN RESERVE CONTROL BY SUPERINTENDENT GENERAL

[Stage Direction]
Hon. CHARLES STEWART (Minister of the Interior) moved for leave to introduce Bill No. 55, to provide for special control by the Superintendent General of Indian Affairs of certain islands in the St. Lawrence river being part of the St. Regis Indian reservation.
Some hon. MEMBERS:: Explain.


Charles A. Stewart: In the Indian act provision is made for doing just what this bill proposes to do, namely to lease lands, but there is not full provision for leasing lands that are already under lease. Inasmuch as these lands have been in some cases for ninety-nine years held under lease with a provision in the lease that there be a continuation of it for a further ninety-nine years-and indeed it is somewhat indefinite- action was taken in the Exchequer court by the Department of Indian Affairs to cancel these leases. It will be understood by the House that there are no Indians residing on these islands but they are very valuable as summer resorts. As regards the islands designated in the bill we have succeeded in cancelling the leases. There are two or three as to which a decision of the court is still

pending. We are asking for power not to sell these islands but to lease them and to get a reasonable revenue out of them for the maintenance of the Indians.
Motion agreed to and bill read the first time.



INDIAN ACT AMENDMENT

[Stage Direction]
Hon. CHARLES STEWART (Minister of the Interior) moved for leave to introduce Bill No. 56. to amend the Indian Act.
Some hon. MEMBERS:: Explain.


Charles A. Stewart: The first
purpose of the proposed amendments to the Indian Act are to give the Superintendent General of Indian Affairs power to deal with small amounts accruing to the bands in the way of band funds where in some cases the bands have become almost extinct, and to allocate these moneys in the interest of the Indians. The second provision is that we shall have more complete control over pool rooms and places of amusement upon the reserve, and the third is as fallows: Under the act as it exists at present all changes in the regulations, and particularly in connection with those dealing with the appointment of Indian chiefs, have to be enacted by order in council. We are asking that this may be accomplished by the Superintendent General without reference to the council. Paragraph 6 is repealed and there is a provision for the repression of intemperance and profligacy. This is to give the council of chiefs themselves more power and to make clearer the meaning of the definition giving them more power to take action.
There is the question of carrying out the temperance laws, which it has become somewhat difficult to enforce, and we are asking wider powers in that connection. In British Columbia we are asking for some control over the sale of totem poles, which are of great historical value and which have been disposed of and sold without let or hindrance, indeed without the Superintendent General or the department being able to exercise any control whatever. These are the main provisions oi the amendment to the act.
Motion agreed to and bill read the first time.



QUESTIONS

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

Mr. BOULANGER:: 1.	Is the government aware that certain insurance companies demand an extra premium on policies issued in favour of Frencli-Canadian women ?

Questions
2.	If so, does the government intend to introduce legislation to stop such unfair discrimination?


James Alexander Robb: The government is aware that higher rates have in some cases in the past been charged Freneh-Canadian women, the extra charge being, it was claimed, justified by the mortality experience of this class of insured risks. It is believed, however, that the practice has been abandoned and that little cause for complaint will be found in the future.


SOUTH INDIAN-CHANGE OF NAME TO LIMOGES
Mr. GARLAND (Carleton):: 1.	Has any change been made by the Post Office department in the name of South Indian post office, in the county of Russell, Ontario?
2.	If so, what is the present official name of this office, and is there any other office of the same name in Canada? If so, where?
3.	Why was a change of name made in respect of this office?
4.	At what date was the change authorized?
5.	Was any petition presented by the local residents in favour of such change of name?
6.	If so, how many petitioners signed such petition?
7.	Was any petition presented against such change of name?
8.	If so, how many petitioners signed such last-named petition?
9.	How and by whom was the new name of this post office selected?


Hon. Mr. VENIOT:: 1.	Yes.
2.	Limoges. No other post office of same name.
3.	Petitioners Stated South Indian has no meaning. There are no Indians in neighbourhood and name provokes ridicule.
4.	Authorized 23rd October, 1926, effective 1st December.
5.	Yes.
6.	59.
7.	Yes.
8.	246.
9.	Recommended by petitioners who stated it was name of former parish priest held in high esteem, whose anceiStors came from Limoges, France.


CHINESE SITUATION
Mr. BLACK (Yukon):: 1.	What has Canada done to protect Canadians in China during the present disturbances in that country?
2.	What protection is now being afforded such Canadians and at whose expense?
3.	If Canada is contributing to the expense of such protection, how and to whom is the contribution made?


William Lyon Mackenzie King: This question relates to the situation in China and I will therefore read to the House the reply which I propose to make to it. The
reply will perhaps serve to answer other questions on the order paper and what it might otherwise be necessary to say in reference to one of the motions of which notice has been given.
The protection of life and property, in any country, whether of nationals or of aliens, is primarily the duty of the government of that country. Of latte, civil war in China, now of several years' duration, has increased the difficulty of ensuring that protection, and the evacuation of certain interior areas by foreign residents has been considered an advisable precaution. At the same time it must be recognized that the loss of life by foreigners in these yearn of disturbance has been extraordinarily small. So far >as is known, only one Canadian has been killed; the existence of a political motive in that case, which occurred in June, 1926, was not fully established, and 'the murderer was shot immediately by Chinese soldiers.
Canada is in full sympathy with the desire, of the Chinese people to secure control of their own destiny, having due regard to the safety of the life and property of foreign residents. While there are extremist elements in the situation, it is clear that as regards the responsible leaders and 'the great majority of the Chinese people, the present nationalist movement is directed, noit against the lives or private rights of foreign residents but against the special! privileges or the measure of control over Chinese affairs exercised by foreign countries as regards extra-territoriality, customs, concessions and other matters. Canada has not in the past had any part in shaping or maintaining the policy of acquiring such rights or privileges in China, and has had no part in the recent hegotiations for their readjustment. The Canadian government is, however, in full sympathy with the British Foreign Secretary's announced policy of "going as far as possible to meet the legitimate aspirations of the Chinese nation," and believes that this course is both just and best adapted to ensure protection of life and of religious and business interests.
Under these circumstances it is not considered that it would serve any useful purpose to propose despatching Canadian forces to China. If the situation should change the government will take the earliest opportunity of consulting with parliament as to the appropriate course to pursue.


SIR AUGUSTUS M. NANTON
Mr. WOODSWORTH:: 1.	What sums of money, if any, were paid during tlie war to Sir Augustus M. Nanton?
2.	For what services?



Montreal Harbour Commission


James Alexander Robb: The late Sir Augustus
M. Nanton was a member of the general executive and the head of the organization for the province of Manitoba in the three victory loan campaigns, 1917, 1918, and 1919. The records of the Department of Finance indicate that he served in these capacities without remuneration.
If my hon. friend desires to inquire from any other department his question will have to stand as an order for a return.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. GARLAND (Bow River):: 1.	In regard to public purchasing and allotment of public contracts under federal government, what is the amount in dollars of purchases and contracts allotted:	(a) total for year
1925-26;	(b) total allotted under open competition; (c) total allotted departmentally; (d) total allotted under authority of the government contracts supervision committee?
2.	In regard to the government contracts
supervision committee, what is the present situation as to:	(a) extent of establishment;
(b)	cost of establishment; (c) nature of duties performed?	[DOT]


FEDERAL GOVERNMENT EMPLOYEES
Mr. GARLAND (Bow River):: 1.	What is the total number of personnel employed by the federal government at the most recent ascertainable date?
2.	How are these employees divided in numbers under the following heads: (a) male; (b) female; (c) permanent; (d) temporary;
(e)	civilian; (f) overseas active service; (g) under the Civil Service Act; (h) exemption from the Civil Service Act?


APPROPRIATIONS, 1925-6
Mr. GARLAND (Bow River):: 1.	What is the total sum of the appropriations for the fiscal year 1925-26, both capital and consolidated accounts?
2.	What is the division of these appropriations under the following headings: (a) appropriations relating to past wars; (b) appropriations relating to future wars; (c) appropriations for civil departments; (d) appropriations for public works; (e) appropriations for science;
(f)	appropriations for social and ethical improvement; (g) appropriations not included in c, d, e, and f?


MAIL COLLECTIONS
Mr. HAY:: 1.	In how many towns in Canada of 3,000 population and under is there a mail collection?
2.	What is the name of each such town, its population, and the number of letter boxes therein?
3.	What is the cost of such collection in each town ?
4.	What is the total cost for the Dominion?



CIVIL SERVICE COMMISSION

Mr. SEGUIN:: What annual amount does the government pay for the functioning of the Civil Service Commission, as to salaries of commissioners and all employees including travelling costs, rentals, and any other expenditure in connection with said commission?



SPECIAL WAR REVENUE ACT, 1915, AMENDMENT

[Stage Direction]
Hon. J. A. ROBB (Minister of Finance) moved that the House go into committee at the next sitting to consider the following proposed resolution:
Resolved, that it is expedient to bring in the measure to amend The Special War Revenue Act, 1915, as passed by both houses of parliament at the last session but not assented to, providing
(a)	for the removal of the one cent additional postage on letters for transmission by post for any distance within Canada; excepting "drop" letters and post cards;
(b)	for the remission of the stamp tax on receipts;
(c)	for a straight tax on playing cards, on every fifty-four cards or fraction thereof in each package-ten cents per pack;
(d)	for a provision to remove doubts as to whether goods are liable to sales tax when sold under process of law, or under a lien, etc.;
(e)	for the exemption of certain specified articles from consumption or sales tax;
(f)	for adding certain specified articles to the list subject to 50 per cent of the sales tax;
(g)	for removing the tax on carbonic acid gas;
(h)	for a refund of tax paid on ships' stores;
(i)	for the removal of excise taxes on automobiles valued at not more than $1,200, when the conditions prescribed in the said legislation are fulfilled as to importation from any British country under the British preferential tariff, or from countries enjoying most favoured nation treatment, or as to automobiles produced or manufactured in Canada, and authorizing a refund of excise tax on such automobiles new, unused and unsold in the possession of the dealer or agent on 8th June, 1926; and
(j)	for the repeal of certain orders in council relating to the operation of these provisions.
He said: Mr. Speaker, this resolution covers legislation arising from the budget of 1926. The measure to be submitted is identically the same as that which passed both houses of parliament, but which failed to receive royal assent. The principal parts of the legislation were made effective by order in council dated July 14, 1926. There is no change whatever in the general principle of the legislation.
Motion agreed to.

[Stage Direction]
Hon. P. J. A. CARDIN (Minister of Marine and Fisheries) moved that the House

Grand Trunk Pacific Ry. Co.
go into committee at the next sitting to consider the following proposed resolution:
Resolved, that it is expedient to bring in the measure to authorize a loan to the harbour commissioners of Montreal in an amount not exceeding $12,000,000, to carry on the construction of terminal facilities, upon approval of the Governor in Council of detailed plans, specifications and estimates for such works and the deposit of debentures of the corporation to cover said loan, which legislation was passed by both houses at the last session, but which failed to receive the royal assent owing to the dissolution of the House.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the House.
This is the same resolution, Mr. Speaker, that preceded the bill of last year for a loan to the harbour of Montreal.
Motion agreed to.


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Railways and Canals) moved that the House go into committee to consider the following proposed resolution:
Resolved. 1. That it is expedient to bring in a measure to confirm the scheme of arrangement, dated 26th August, 1926, with the holders of the four per cent debenture stock of the Grand Trunk Pacific Railway Company issued pursuant to chapter 100 of the statutes of 1906 and chapter 123 of the statutes of 1913, whereby the Canadian National Railway Company may, by by-law approved by the Governor in Council' create and issue new stock in exchange for the certificates registered ;in the name of the holders, for a like amount or the like aggregate amount as the case may require.
2.	That the amount of the new stock shall not exceed in the aggregate £7,176,801 par value, being the par value of the balance of the total issue of £10,176,801 of the Grand Trunk Pacific Railway Company stock now outstanding after deducting from such total issue the certificates representing £3,000,000 of Pacific stock held by His Majesty in the right of the Dominion of Canada as collateral security for advances made by His Majesty to the Grand Trunk Railway Company.
3.	That the new stock shall carry interest as from 1st July, 1926, at the rate of two per cent per annum, payable half-yearly, and a sinking fund is to be set aside each year for redemption of stock equal to two per cent.
4.	That the Governor in Council may authorize the guarantee by His Majesty in the right of the Dominion of Canada of the due and punctual payment of the principal and interest of the new stock, and the provision for and application of the instalments of the sinking fund, and other relative clauses of the scheme of arrangement.
32649-llJ
5.	That upon the said scheme of arrangement being carried out, the Governor in Council may, on such terms and conditions as may be necessary in the public interest, declare that the receivership of the Grand Trunk Pacific Railway is terminated, and upon such termination the said company or any company included in that system, may be amalgamated with the Canadian National Railway System upon the recommendation of the Minister of Railways with the sanction of the Governor in Council.
6.	That the scheme of arrangement having already been assented to in writing by the holders of three-fourths in value of the Pacific stock, shall, according to its terms, become operative on the passing of an act of the parliament of Canada approving the scheme and authorizing the Canadian National Railway Company to create and issue the stock, and authorizing the guarantee above mentioned to be given.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the House.
Some hon. MEMBERS:: Explain.


Mr. DUNNING:: The object of the scheme, which can be much better examined in detail when we reach the committee stage on the resolution, is to clear up a difficulty of very long standing in connection with the four per cent perpetual debenture stock of the Grand Trunk Pacific Railway Company, conditionally guaranteed by the Grand Trunk Railway of Canada. As I think every member of the House is aware, there has been difficulty for a number of years with regard to this matter. I think every member of the House knows that the Grand Trunk Pacific Railway Company is still to-day in receivership very largely, if not altogether, on account of the difficulty created by this particular issue of stock being outstanding. The issue which we seek to deal with is a perpetual issue; that is to say, it never matures. Anything which is done in connection with it, therefore, must be done either by way of purchase in the open market of the whole stock, which might prove to be difficult, if not impossible, or secondly, by way of negotiation.
I do not propose to go into the history of the difficulty at length, except to say this: as a consequence of the difficulty there undoubtedly has existed in England, and in Europe generally, a feeling that Canada was not dealing fairly with these debenture holders. The matter has been discussed in parliament, and I feel sure that every hon. member present who is familiar with the facts believes that Canada has dealt justly with the holders of the Grand Trunk Pacific perpetual debentures in the past. Just as it takes two parties

Grand Trunk Pacific Ry. Co.
to make a quarrel, however, so also it requires agreement between two parties in order to bring that quarrel to an end-at least where perpetual debentures are concerned-and for some time past negotiations have been conducted with committees representing debenture holders in London with a view to amicable settlement and avoiding litigation. I think I am correct in saying that the arrangement proposed in the bill was reached as between the committee of the debenture holders and representatives of the Canadian National Railway during the month of August, and the arrangement here proposed was, I believe, authorized by the government then in office in the Dominion of Canada. The present government has examined it very carefully in detail, and has no hesitation in recommending it to the consideration of the House. Briefly, it provides that such of the present debentures as are in the hands of the public, amounting to something over seven million pounds, shall be taken up by a new issue of Canadian National debentures, the new issue to bear interest at the rate of two per cent per annum. There is a further provision that two per cent shall be placed in a sinking fund, the proceeds of the sinking fund to be used for the gradual retirement of the debentures.
We can go much more readily into the further details in the committee stage, but in the meantime I should like to say that there is no doubt that there is advantage to Canada and advantage to the Canadian National railways from these points of view. First we have the elimination of the accounting necessary to keep the results of the operation of the Grand Trunk Pacific Railway and the Grand Trank Railway of Canada separate, and make it possible to reduce considerably our accounting work and expense. Another important advantage is that it will enable the present receiver of the Grand Trunk Pacific Railway Company to be discharged and permit that company and its lines to be amalgamated with the Canadian National system. I think we may say that another advantage is that this bill, if passed, will eliminate any possibility of a lawsuit which might involve prolonged and expensive litigation, and there is no doubt it will create a better feeling in London and the continent towards Canadian securities and enterprises generally.


Mr. GEARY:: Is this the four per cent
debenture stock which was adjudged in the arbitration to be of no value?


Hugh Guthrie: No, no.


Charles Avery Dunning: No, these are debentures of the Grand Trunk Pacific.


Hugh Guthrie: My hon. friend the Minister of
Railways (Mr. Dunning) asked me if we on this side would assist in expediting the passing of this measure through the House. As it is a proposal which has many apparent advantages, both for this country and for the bondholders who hold those perpetual debentures, we on our part thought that we should do all we could to see that the measure passed through the House with as little delay as possible. I agree with my hon. friend that the passage of this measure will have the effect of setting at rest, upon a satisfactory basis, rather an awkward situation that arose some years ago and has continued to exist down to the present time between the debenture holders in Great Britain or other places and the government of Canada in respect of these debentures. The debentures were originally sold to the public to the extent of about seven million pounds. The government of Canada became the possessor of three million pounds of debentures through a transfer from the old Grand Trunk Pacific at a time when it asked the government of Canada for assistance, and gave three million pounds of those debentures by way of security. The debentures were not only a charge on the Grand Trunk Pacific, but likewise a charge on the old Grand Trunk sj'-stem, but only when the profits on the Grand Trunk system would warrant the payment of the interest on these debentures.


Charles Avery Dunning: After prior charges.


Hugh Guthrie: After interest on prior
securities has been provided for. They were not in one aspect of the case of great value to the Dominion of Canada. However, the real value of these debentures has been a matter of a good deal of difference of opinion. Now the arrangement, as stated by the Minister of Railways, appears to me to be made upon a very satisfactory basis. We are paying two per cent annually to the holders of these debentures. We are taking up the old debentures, issuing new ones on the basis of two per cent per annum, and providing an additional two per cent to pay off the debentures, I suppose in some forty or fifty years, although the term is not stated in the resolution. I therefore think it is our duty in this House to carry through this arrangement. It appears to be fair and reasonable in all its terms and satisfactory to all parties concerned to carry it through as speedily as possible.


Hewitt Bostock: By unanimous consent
this motion is made.
Motion agreed to and the House went into committee on the resolution, Mr. Johnston in the chair.

Grand Trunk Pacific Ry. Co.


Thomas Langton Church: This resolution is one of very great importance, and the minister has not given the House all the information about the particular arrangement made with the shareholders in this connection.
The arrangement is not fair to Ontario. About $122,000,000 credit and $22,000,000 cash were taken out of Ontario by the Grand Trunk and invested in the Grand Trunk Pacific. The Grand Trunk, who were the parent company, brought the government in as a quasi partner and when the Grand Trunk Pacific went to the wall a receiver was appointed. A survey was made by the government and the case heard of the holders of the common four per cent stock of the Grand Trunk Pacific company by a royal commission. The Grand Trunk Railway took all this cash and credit out of the old Grand Trunk Railway in Ontario, when the Liberal government of Sir Wilfrid Laurier sanctioned the construction of the Grand Trunk Pacific through the parent company, the Grand Trunk Railway. On whose credit? Very largely the Grand Trunk Pacific on the credit of the Grand Trunk railway in the old province of Ontario and the federal government. Ontario suffered untold ills as a result of the building of the Grand Trunk Pacific. We have invested over $2,000,000,000 in the publicly owned roads; about half of this is a frozen asset, pays no interest at all and has no sinking fund. If we are going to adopt this principle of allowing the holders of certain stock of a bankrupt road in the hands of a receiver to exchange it for new stock of which the government will guarantee interest, I say it is not in the public interest; it is tantamount to robbing one class of investors in order to pay others-that is, robbing Peter to pay Paul. The construction of the Grand Trunk Pacific impoverished the Grand Trunk Railway to such an extent that for nearly sixteen years Ontario suffered all the inconveniences incident to a very inadequate transportation service by the Grand Trunk system. There was no money for rolling stock or equipment or even for the ordinary betterment of the railway, with the result that the farmers of Ontario suffered very serious inconvenience. I sympathize with the shareholders named in the resolution, but I fail to see why they should be singled out for preferential treatment, especially when the unfortunate depositors in the Home Bank are getting what is little better than pin money. We are being over generous to this particular type of investor.
I am going to vote against this resolution in protest against the scheme of arrangement entered into with the holders of the four per cent debenture stock of the Grand Trunk
Pacific Railway. In my opinion a survey should be made of the whole system. There should be a full investigation of the Grand Trunk Railway and the other railways incorporated in the Canadian National railway system, instead of taking Sir Henry Thornton's word for this or that. It must be remembered that this is not the only company we took over; there are some fifteen or sixteen charters linked up in the one system now known as the Canadian National Railway, all with separate claims and in separate conditions. Consequently if we confirm this arrangement we may have the stockholders of some of the other constituent companies asking for preferential treatment. In my opinion the committee should have more information concerning this particular arrangement, and we should also have a declaration of policy from the Minister of Finance as to how it will affect the deficits of the National Railways and, in turn, the credit of the country. I repeat, Mr. Chairman, I am going to vote against this resolution.


Mr. POWER:: Mr. Chairman, it is not
often that I agree with my hon. friend from Toronto Northwest (Mr. Church) on any subject, but it seems to me that in this case far more information should be given to the House than is at present before us. For instance, I should like the minister to tell us just what legal right the debenture holders have to be paid on this stock; I should like also to know from him just what the arbitration board decided with reference to this matter; and generally speaking, I should like to know why we are disbursing approximately $35,000,000 on stock which apparently is worthless; and, further, I should like to know why we make a reimbursement on this particular debenture stock when there are other stocks and bonds which have been taken over by the Canadian National Railway and on which no dividends are being paid. Apparently there is no chance of ever obtaining reimbursement in those cases. I have in mind bonds subscribed by the city of Quebec and issued by the old Quebec and Lake St. John Railway. If my memory serves me right, the city of Quebec, in order to help the construction of a railway into the northern portion of Quebec, subscribed nearly $1,000,000. In return the city received bonds and also a written agreement whereby it was to be given certain favoured treatment with regard to freight rates. Since this road has been taken over by the Canadian National Railways, the management of the national system has seen fit to repudiate the obligations of the original road, and also apparently to repudiate any



Grand Trunk Pacific Ry. Co.
obligations under the agreement. No interest is being paid, and there appears to be no chance of any reimbursement. Before voting any money as public charity to people who, after all, are not citizens of this country, I would ask the minister to consider very carefully the claims of our own citizens.


Charles Avery Dunning: Perhaps if I had been
a little more familiar with the procedure it would not have been necessary for hon. members to ask me for information, but I was under the impression when I last spoke that all that was required was a general statement sufficient to justify the House going immediately into committee on the resolution. I did not give a complete explanation of such a complicated matter at that stage, believing in my ignorance that these matters would naturally arise on the various sections of the resolution itself in the committee stage, and that on that occasion questioning would be much easier for hon. gentlemen than when the Speaker is in the chair. Perhaps I am wrong in that regard; if I am I apologize.
First, as to the rights of bondholders. The assumption on the part of the hon. member (Mr. Church) and my hon. friend from Quebec South (Mr. Power), that this proposal has some charitable aspects, is I am sure entirely wrong. These people have rights. Let us examine what they are. We want to be just but, of course, we want also to conserve the interests of our own people. My hon. friends will agree with me, I think, in that regard. These people have, not shares, not stock, but bonds of the Grand Trunk Pacific Railway Company, bonds apparently never maturing and bearing a rate of interest of four per cent per annum. These bonds are guaranteed in turn by the old Grand Trunk Railway Company of Canada. The Grand Trunk Pacific Railway Company, the original issuer of the bonds, cannot pay the interest, nor has it done so. The old Grand Trunk Railway Company has paid interest only in those years when it has earned sufficient, over and above prior obligations, to be able to pay. The last occasion on which interest was paid under the terms of the bond was in 1924, by reason of the fact that in 1923 the old Grand Trunk had earned sufficient, over and above prior obligations, to make payments of interest to holders of Grand Trunk Pacific securities.
Now, I put it to the committee merely as a business proposition-not as a charitable proposition at all-that it is desirable in the interests of Canada and of the Canadian National Railways to get these perpetual debentures into a better position, a position which will permit the termination of the receivership
IMr. Power.]
at present existing in connection with the Grand Trunk Pacific, and which will render our liability in relation to them certain rather than uncertain, as it is at present-a position, furthermore, which looks to the termination of what is at present, and will continue to be, a perpetual lien, unless something of this kind is done.


Richard Bedford Bennett: When was interest last
paid?


Charles Avery Dunning: In 1924, as a result of
192.3 business of the Grand Trunk Railway Company.


Charles Gavan Power: Is there any cumulative feature about it?


Charles Avery Dunning: No.


Charles Gavan Power: So that we are not actually under any obligation until the Grand Trunk Pacific has earned enough to pay?


Charles Avery Dunning: Not the Grand Trunk
Pacific but the Grand Trunk Railway Company.


Mr. CLARK:: Has the business of the
Grand Trunk Railway Company justified the payment of interest since 1924?


Charles Avery Dunning: Certain bondholders allege that it has; we say that it has not.


John Arthur Clark: Are the accounts not kept
separately? How did you arrive at the fact in 1924? Is the same system not in vogue to-day?


Charles Avery Dunning: Yes, but there is a dispute, as always is the case in such matters, as to whether the proper system is being followed. Naturally those desiring to collect interest make representations to the effect that if some other system were followed a better result would be shown. In matters of interchange of traffic, and so on, it is difficult to get absolutely accurate figures, but the same principle of accounting has been followed in either case.


John Arthur Clark: Was there any dispute in
1924?


Charles Avery Dunning: No, not with respect to the earnings of the old Grand Trunk Railway as an entity separate from the rest of the Canadian National System.


John Arthur Clark: In that case the earnings of 1924 must have been much better than they have been since.

Grand Trunk Pacific Ry. Co.


Charles Avery Dunning: Yes, on that particular
part of the Canadian National system which must foe considered in determining whether or not the guarantor is in a position to pay interest after taking care of prior obligations.


Mr. CANTLEY:: At what rate of discount were the bonds issued?


Charles Avery Dunning: I have an historical resume which I will try to find for the hon. gentleman.


Charles Gavan Power: Why did not the minister
include these bonds in the bill which he asked the House to sanction last year permitting him to purchase certain bonds which had been guaranteed by the government? Is there any difference between these bonds and those referred to in the bill?


Charles Avery Dunning: Had the legislation which I introduced last year been enacted it would have included provision for just such cases as this, but that legislation was not passed.


Thomas Langton Church: A royal commission investigated this matter and made a report to parliament with reference to the shareholders of the Grand Trunk Pacific Railway. The members of that commission were the hon. member for West York (Sir Henry Drayton), Mr. Acworth, and Mr. Smith, then president of the New York Central Railway. A receivership was established for the Grand Trunk Pacific and an application was submitted to the commission by the four per cent debenture holders of the system, and the commission made a report touching this particular situation. If I remember rightly, they madte no recommendation in favour of these people inasmuch as they had been foreclosed.


Charles Avery Dunning: They never were foreclosed.


Thomas Langton Church: Are you going to give this
particular class of shareholders preferential treatment now?


Charles Gavan Power: Why was this matter not
referred to the Exchequer court? If the debenture holders have a legal claim, they might, by appealing to the Exchequer court, have the whole question discussed and a remedy applied. From what the minister tells us, I think perhaps in equity there may be something to be said for these shareholders, but I see very little to be said in their favour in law. It is unfortunate that these people should lose money, but other people throughout Canada have lost money on other occasions and we have never voted fifty million dollars to pay them.


Charles Avery Dunning: I have not yet made
myself clear. There is no legal question involved. The rights of the bondholders are not in dispute at all; those rights are clear.


Charles Gavan Power: Their rights to dividends
are in dispute.


Charles Avery Dunning: Their rights to dividends are not in dispute, provided the conditions precedent to the payment of dividends are complied with.


Charles Gavan Power: Then it is only a question
of fact: can the Grand Trunk Railway Company pay dividends on their earnings or not? That ought to be established elsewhere than in the House of Commons.


Charles Avery Dunning: In any year in which
the Grand Trunk Railway does earn sufficient to pay interest, in that year interest is paid. And that will be the case in future. If we do not pass this legislation the four per cent payment is due these bondholders in any year in which the old Grand Trunk lines earn that much over and above prior obligations. That will continue to be the position unless some other arrangement is made. We are however adopting the position that we can best solve the matter by agreeing to pay four per cent every year, two per cent of which will go into the sinking fund for the redemption of principal under the conditions which will be outlined in detail in the bill when the scheme of arrangement is before the House. We think it better, from the point of view of Canada, to agree to pay four per cent every year, two per cent of which will go into that sinking fund for the redemption of principal, rather than to place ourselves in the position of having perhaps to pay four per cent, in any year in which the Grand Trunk may earn sufficient to make that possible. It is a purely business negotiation, not a legal matter.


Charles Gavan Power: Is the minister optimist
enough to think they will be able to pay four per cent?


Charles Avery Dunning: My hon. friend forgets
that the Grand Trunk did earn this interest in 1923.


Richard Bedford Bennett: It did last year too.


Mr. WOODSWORTH:: I should like the
minister to state whether, in view of the financial situation of this road at present, it is probable that it will be able to pay in the near future.


Charles Avery Dunning: The old Grand Trunk?


James Shaver Woodsworth: Yes.


Charles Avery Dunning: Yes.

Grand Trunk Pacific Ry. Co.


Thomas Langton Church: I have here the report of the Drayton-Acworth commission and I wish to make a short quotation from it. It deals with the finding of the commission in regard to this particular application. The report says:
Our inquiry has fully satisfied us that the Grand Trunk management was content at the time! with the arrangement made; that it deliberately took its business chances, and pro-ceeded_ with the undertaking. On the evidence there is nothing whatever to justify any charge of lack of fairness or good faith on the part of the government in its dealings with the company. We have no hesitation in saying that, neither legally nor morally, have the promoters or shareholders of the Grand Trunk Pacific Company any bagis for a claim that the country shall make good the Grand Trunk's mistaken investment in the Grand Trunk Pacific. Any aid given to them must be looked upon not as a matter of obligation but as spontaneous bounty.
The question is really so left by the Grand Trunk officials themselves. The record reads (page 176), as follows:
"Sir Henry Drayton: Doesn't it really come down to this, that the statements in your letter mean that in your view, in order to protect the finances of the Grand Trunk, and as a corollary to protect the finances of the country, the government ought to relieve the Grand Trunk in regard to its investment; isn't that the -whole thing?
Mr. Chamberlin: That is the whole thing.
Sir Henry Drayton: There is nothing else to it?
Mr. Chamberlin: Nothing else."
There is the finding of the commission that was appointed to investigate this particular application.


Charles Avery Dunning: My hon. friend is quite
wrong. That is not dealing with the same matter at all but with an entirely different matter.


Thomas Langton Church: It is not a different
matter. It is this particular application, and it is all set out in the proceedings from which I have quoted. The commission were asked for this very relief and they would not give it.


Charles Avery Dunning: Unless the committee is to get a wrong impression may I explain that the quotation which my hon. friend has just read has not the remotest bearing upon the matter which is now before the House. The report of the commission from which my hon. friend has just quoted has to do with the rights of the shareholders of the old Grand Trunk. I am not now proposing, nor do I expect to propose, any measure of relief for the shareholders of the Grand Trunk. The shareholders! This proposal has to do with the people who hold an

absolute security in their hands-bonds, not shares at all. My hon. friend is quoting what relates solely to the shareholders' interests in the old Grand Trunk.


Richard Bedford Bennett: I am quite certain that my hon. friend is under a misapprehension.


Some hon. MEMBERS:: Louder.
Mr. ^ BENNETT: I was saying that my hon. friend was under a misapprehension. The four per cent perpetual debenture stock of the Grand Trunk Pacific was placed on the London market, and the prospectus that was issued referred to the relationship between the company and the government. The stock was bought by investors believing-in many instances they believed, and they say they have established that at least-that it practically carried the guarantee of the government of Canada. Such was not the case. Canada did not guarantee this stock; it was four per cent stock guaranteed by the Grand Trunk Railway Company of Canada.


Charles Avery Dunning: That is right.


Richard Bedford Bennett: That is the thing to remember. The Grand Trunk Pacific could not pay the interest, as it did not earn sufficient. The Grand Trunk Railway Company of Canada was then called upon to pay this interest. They responded that they had not in particular years earned sufficient money to pay the interest upon the prior securities and the interest upon these as well. The result was that there was default in the payment of interest upon this perpetual four per cent debenture stock. There being default in the payment of interest the holders of this stock have always complained that the people of Canada should have paid it,


Charles Avery Dunning: That is right.


Richard Bedford Bennett: Successive governments
of Canada took the position that they were not responsible for payment, and so have declined to pay the interest. But in 1923 the Grand Trunk Railway Company of Canada, after paying the interest upon its securities having priority over these other guaranteed securities, was called upon, out of its earnings, to pay the interest because it had earned it. The difficulty since then has been this: Vast sums of money have been spent on the Grand Trunk railways; very large sums in equipment, in improvement of road beds, and matters of that kind; and the separation of the accounts inter-departmentally, the separation of earnings in the Grand Trunk, the Grand Trunk western, the Canadian Northern and the various branches of the Canadian

Grand Trunk Pacific Ry. Co.
Northern, and the various branches of the Grand Trunk Railway Company of Canada has made it practically almost impossible for the Grand Trunk Railway Company of Canada, now a part of the Canadian National railway system, to say it has not earned the money. Under those circumstances the holders of the debentures constituted a committee of very powerful bankers in England and they were prepared on the advice of counsel to have the accounts of the Grand Trunk Railway Company of Canada examined for the purpose of proving conclusively that the railroad had earned the money. That was their position, and they contend now that the railway company earned money during the years 1924, 1925 and 1926 to enable it to pay these guarantees. Eighty-five per cent or more of these debenture holders, represented in England by eminent bankers, negotiated with the Canadian National railway system and reached a conclusion, a conclusion which is embodied in the resolution now before the House. Under the terms of that resolution the Canadian National Railway System ini this country will pay, not four but two per cent per annum upon this four per cent perputual debenture stock thus saving two per cent. The other two per cent is to be paid into a sinking fund so as to amortize or pay off within a period of fifty years this entire obligation.


Charles Avery Dunning: Thirty years.


Richard Bedford Bennett: It will never take fifty
years of course. The result is that we have removed a sore spot from financial circles in England which is of some importance to this country. But above that we have made it possible to operate the Canadian National system as a whole and are not forced to try to maintain the different accounts that would have to be maintained in order to ascertain just what earnings of the Grand Trunk Railway Company of Canada might be made applicable to this particular guarantee. That position will be cured, that difficulty overcome, and there is the further advantage that this arrangement has been approved by eminent men in the financial world in England who had to do with it as one that was calculated to be first of all in the interest of the railway system, secondly in the interest of the debenture holders, and lastly in the interest of this country, as removing a grievance that the four per cent debenture holders in England have asserted continuously for a period of twelve years in the financial journals of London. That is the position. That is the reason the resolution is in the foTm it is, and certainly I have no difficulty in bringing my mind to the
firm conclusion that it should be supported by the House, as I did several months ago when it met with the approval of the Governor in Council, which had to be given at that time to close it out in order that it might be submitted to parliament by the government of the day, whatever government that might be, and legislation embodying the arrangement enacted by this House.


Mr. DENIS (Joliette):: Is the hon. member in a position to tell the committee the market value of those bonds prior to the 26th August, 1926?


Richard Bedford Bennett: I have not the figures
before me. They are rated on the stock exchange in London. I know however, that a two per cent bond secured with an amortization clause of two per cent does not enhance the value of that security, except that it gives a measure of certainty to it when there was a measure of uncertainty which would have involved the Canadian National system in litigation in respect to keeping accounts and showing in detail what might be available for the purpose of meeting this guarantee.


Charles Avery Dunning: The question raised by
the hon. member is of course a question which must be considered in all these cases whether, as a result of these negotiations, speculative features were introduced which might have resulted in profits to individuals who happened to know of the arrangement earlier than other individuals. In connection with this particular case the nature of the arrangement, if examined by anyone at all independently, will reveal that such a result was not possible, and moreover the market prices of the stock before and after the arrangement became public are a clear indication of what the position is in that regard. If my memory serves me aright, I can assure my hon. friend that the prices at that time ranged between 60 and 70 cents on the dollar. I have not the day-to-day prices before me. A very representative committee of bond holders was negotiating the matter and negotiating it in public. The question was dealt with in every issue of the financial newspapers for the past two or three years.


Richard Bedford Bennett: It was sold down as low
as 47 per cent.


Charles Avery Dunning: I think that was the low point. That was when their hopes wrere the very lowest. The point I was about to make is this: the fact that 85 per cent-and the last cable from London indicates it as more than 90 per cent-of the bondholders, immediately after the terms became public, consented

Grand. Trunk Pacific Ry. Co.
to the arrangement, is evidence that there was no great amount of the stock floating around for speculative purposes, but that they were holding on in the hope of making some reasonable arrangement.


Mr. LAVIGUEUR:: The debate that is
going on just now is very interesting to members from Quebec. The minister states that there is no direct legal obligation to take up this stock. For the past ten years we have been vindicating the right of the city of Quebec. We asked the late government -and we had the approval of our party at that time as we have it to-day-to reimburse the citizens and the city of Quebec for the amount subscribed for the construction of certain parts of the Canadian Northern railway and the Lake St. John railway for which the citizens and the city of Quebec had subscribed more than $650,000, and moreover had for certain considerations handed over very valuable properties to the government. We were always met with refusals, being told that there were no legal obligations to take up the bonds of the city of Quebec, subscribed by the citizens of Quebec. To-day however, although we are told that there is no direct legal agreement, we are asked to vote an amount of $35,000,000 to take up bonds which, as stated by my colleague the hon. member for Quebec South (Mr. Power) a few minutes ago, belong to outsiders, to strangers. The bonds subscribed by the citizens and the city of Quebec are an obligation on this government, and if we take up outside bonds I do not see why at the same time we should not include bonds subscribed by the citizens and the city of Quebec.


Charles Avery Dunning: I understand the situation of the city of Quebec to which my hon. friend and the hon. member for Quebec South referred to be not exactly as he stated. He again falls into the error the hon. member for Toronto Northwest (Mr. Church) fell into in confusing stocks and bonds. In the case of the city of Quebec they own stock in one of the companies now comprised in the Canadian National system, namely, the Quebec and Lake St. John railway. I believe that is the case to which my hon. friend refers.


Charles Gavan Power: Both stock and bonds.


Charles Avery Dunning: Whatever legal rights any citizens of Quebec may have with respect to any bonds which they hold secured upon any part of the Canadian National system, they have just the same right as these other bondholders. But as regards the ownership of

shares they are again precisely in the same position as the junior shareholders of the Grand Trunk; that is to say, they cannot get anything unless the property of which they are shareholders earns something. There is no other way.


Charles Gavan Power: That is to say the bondholders in the old Quebec and Lake St. John railway may at some time obtain the interest on their bonds if that portion of the railway pays.


Charles Avery Dunning: My hon. friend is a
very good lawyer himself and he knows that would depend entirely upon the term of the bond and the term of the mortgage upon which the bond is placed. That is a purely legal question that my hon. friend knows better than I do.


Charles Gavan Power: The minister said that we
were in exactly the same position as the bondholders of the Grand Trunk Pacific railway.


Charles Avery Dunning: In principle.


Charles Gavan Power: I understand we are trying to make a bargain with the bondholders whereby, instead of waiting to find out whether or not the Grand Trunk will ever earn enough to pay the interest on these bonds, we are simply saying that we have hopes in the future of the country; that we think the Grand Trunk will some day make enough money to pay this interest, and we decide we are going to do it ourselves.


Ernest Lapointe: It does.


Charles Gavan Power: If it does, what is the necessity of this legislation? The Minister of Justice does not understand the situation any more than I do.


Ernest Lapointe: His , understanding
seems to be very small.


Charles Gavan Power: I think I will explain to
the minister I know more about it than he does.


Charles Avery Dunning: Perhaps my hon. friend
would let me answer the question.


Charles Gavan Power: I want to answer the Minister of Justice first and then I will answer the Minister of Railways. The minister has just stated the Grand Trunk earns enough to pay the interest on these bonds. If that is so, why come before parliament for legislation authorizing the payment of the interest? If it is not so, then we are anticipating the time when the Grand Trunk will pay the interest and we say, in order to save a little money, two per cent, we have such faith in

Grand Trunk Pacific Ry. Co.
the future of the railroad that we are going to pay the interest in advance. At the present time we are not making money on the road and so we do not have to pay the interest. The bonds remain there. Some day in the future, maybe a hundred years hence, we shall be able to pay the interest. Why not wait those hundred years? Why should we not wait for the bull to come to us before we take him by the horns?


Charles Avery Dunning: Principally because the
bull is here now.


Charles Gavan Power: If he is here, why the legislation? I have not understood yet why we have the legislation if we can do it without it.


Mr. COOTE:: Would the minister be good enough to tell us in how many years the Grand Trunk has failed to pay this interest? I understood him to say that they paid it in 1924. In how many years did they fail to pay it?


Charles Avery Dunning: I think 1924 was the only year since 1915 in which the interest was paid. I will get the exact information for my hon. friend in a few moments, because I want to be sure I am right, and the whole history of this matter is rather complicated. My impression is, however, that 1915 was the last year in which interest was paid up until 1924, and it has not been paid since 1924.


George Gibson Coote: My reason for asking the
question is that it seems to me the information would help us to determine whether this stock is of any value or not. If interest had been paid at four per cent in only one year out of ten, that would seem to be an indication that the agreement to pay two per cent every year is very much in the interests of the bondholders, rather than in the interests of the National Railways and of this country. In addition to that, the minister says that there will be a great saving effected in the matter of bookkeeping. I presume there would be some saving there, and I suppose the minister has some idea of what that saving would amount to. Possibly he would inform the committee on that point. If we had that information it might help us to determine whether or not this agreement would be in the interests of the country.


Charles Avery Dunning: With reference to my hon. friend's first question, I must confess that it embarrasses me, and for this reason: If I advance facts to prove that the old Grand Trunk Railway Company of Canada is likely to earn this four per cent every year in the future, then I am saying to the old country bondholders that this arrangement takes away from
them two per cent per annum to which they are entitled. If on the other hand I do not state that, then my hon. friend and those who sympathize with his view will say that it is not a good deal from the point of view of the Dominion of Canada. Our best judgment has been exercised upon this question; we believe the future will demonstrate that it is a good deal so far as the Dominion is concerned and a fair deal from the point of view of the bondholders. Further than that I do not want to go, and I would ask my hon. friend not to press me for a definite statement as to the basis of calculation with respect to future earnings.


George Gibson Coote: It seems to me the minister is imputing to me an entirely wrong motive. I think anyone would agree that the two questions which I asked were merely for information to enable me as a member of this committee to try and determine whether this agreement was in the interests of Canada or not. If I have got a correct understanding of the last remark the minister made, he simply wants us to believe that in his opinion this is a good agreement, and therefore we should swallow it.


Charles Avery Dunning: That is unfair.


George Gibson Coote: It is unfair if we cannot ask questions without having the minister assume that attitude.


Charles Avery Dunning: I had no intention whatever of assuming any attitude of reflection. I was merely pointing out the embarrassing position in which the minister is placed, in the very nature of things, in negotiations of this kind. I had no intention at all of reflecting on. my hon. friend or on his motives. But it is a simple fact that if I answer my hon. friend by stating that we are reasonably sure the old Grand Trunk will from now on earn the four per cent called for by the existing debentures, then I am serving notice on the bondholders in the old country and elsewhere that the deal which they have agreed to takes away from them two per cent of the interest to which they would have been entitled had they kept their original bonds. I do not propose to make any such statement But I can say, having examined the whole matter very carefully, with more *care than I have given to any other financial transaction, that I am satisfied it is better for the Dominion of Canada to issue these new bonds than it is to retain the old bonds and the obligations under them. I simply ask my hon. friend to accept that assurance; or he can get from me, otherwise than publicly, facts and figures which I feel sure will convince him that I am right in that regard.

Grand Trunk Pacific Ry. Co.


Charles Gavan Power: It Ml boils down to this,
that we have not before us information sufficient for us to give a judgment on this matter, buit we have the word of the Minister of Railways that in his opinion this is a good transaction for the country. I quite understand the nature of his dilemma, and in so far as I am concerned I am prepared to accept his word and will make no further objection. I will go further and say that I am prepared to tell those outside who do not know the minister as well as I do that they should accept his word for it whether they believe it or not.


Mr. GARDINER:: What is the total amount involved in this transaction?


Charles Avery Dunning: 
Mr. CARMICHAEL:: Provided there is a period of great development in Canada and that this railway company should have increased earnings in the future, is there any possibility of the bondholders coming back on the country for increased payments in view of the increased earnings of the road?


Charles Avery Dunning: Ninety per cent of the
bondholders have voted to accept this arrangement, have voted to accept a new bond the terms and conditions of which will be set out just as exactly as were the terms and conditions-of ithe old bonds, and the rights of the bondholders will be restricted absolutely to the terms of the bond itself, just as they are in the case of the bonds we are -now endeavouring to retire. There will be no question of any further claim with respect to these particular bonds.


Mr. SPENCER:: Can the ninety per cent of the bondholders speak for one hundred per cent, or will there still be a liability with respect to the other ten per cent?


Charles Avery Dunning: The legislation which I hope to introduce based on this resolution, and which by the way will explain a great many of the questions that I know are in the minds of many members of the committee, contains a provision whereby the acceptance by seventy-five per cent of the bondholders makes the agreement binding upon the one hundred per cent. That is in conformity with the general practice in the old country in that regard, and is well understood by the people interested. We are fortunate, however, in having ninety per cent in favour of the agreement, which is about the maximum we could

expect, because there is bound to be a percentage of the bondholders who have disappeared in various ways and cannot now be found.


James Shaver Woodsworth: Do I understand
that, according to law, if seventy-five per cent of the bondholders assent to this arrangement it is binding upon the other twenty-five per cent?


Charles Avery Dunning: That will be one of the provisions of the bill when it comes before the House, but for the information of the committee I may say that we already have assent from ninety per cent to -the proposed arrangement.


James Shaver Woodsworth: I do not quite
understand. Is there some manner by which the Other twenty-five per cent can be coerced into accepting a measure of this character?


Charles Avery Dunning: If my hon. friend will
await the terms of the arrangement itself, the details as to how that ^ is to be carried out will make that matter more clear to him than I can do at the moment.


Hugh Guthrie: 
Charles Avery Dunning: 
Mr. KELLNER:: Did the Grand Trunk
arbitration, appointed in 1918, make a return of the value of these securities?


Charles Avery Dunning: No, the matter was not
directly before that tribunal, which was dealing with the value of the Grand Trunk Railway Company of Canada. These bonds represented one of that company's liabilities. The bonds are not an asset of that company but a liability, and I have not any doubt the liability was taken into account by the investigators who were endeavouring to arrive at a proper value for the Grand Trunk property.
Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 57, respecting the Grand Trunk Pacific Railway Company and respecting the Canadian National Railways.

Dissolution of Late Parliament
Motion agreed to and bill read the first time.


Charles Avery Dunning: I understand the bills are not distributed. If I could move along tomorrow with the second reading it would be quite satisfactory.


Hugh Guthrie: It would be satisfactory
so far as we are concerned.



SOLDIER SETTLEMENT ACT, 1919, AMENDMENT

[Stage Direction]
Hon. ROBERT FORKE (Minister of Immigration) moved that the House go into committee at the next sitting to consider a proposed resolution with respect to revaluation of soldier settler lands.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the House.
Motion agreed to.

[Stage Direction]
Hon. PETER HEENAN (Minister of Labour) moved that the House go into committee at the next sitting to consider a proposed resolution with respect to old age pensions.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the House.
Hugh Guthrie: Would the Minister of
Labour inform us whether there is any change in the proposal as set out in the resolution from the bill which was before parliament last year?


Peter Heenan: It is identically the same bill.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Hon. W. R. MOTHERWELL (Minister of Agriculture) moved that the House go into committee at the next sitting to consider the granting of financial assistance to the Royal Agricultural Winter Fair Association of Canada, for the purpose of erecting and equipping a building or buildings in the exhibition park at Toronto, to be used to display for public inspection the live stock, agricultural and dairy products of Canada.
He said: His Excellency the Governor General having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the House.
Motion agreed to.

[Stage Direction]
Hon. J. A. ROBB (Minister of Finance) moved that the House go into committee at the next sitting to consider the appointment of a board to be known as the Canadian Farm Loan Board for the purpose of issuing farm loan bonds to make long term loans to farmers.
He said: His Excellency the Governor General having been made acquainted with the subject matter ol this resolution recommends it to the favourable consideration of the House.
Motion agreed to.


[Stage Direction]
On the Orders of the Day:
William Lyon Mackenzie King: Mr. Speaker, yesterday the hon. leader of the opposition (Mr. Guthrie) requested that-
' as early a date as possible all correspondence which took place between the Right Hon Arthur Meighen and His Excellency the Governor General, then Lord Byng, in June or July last, with reference to the dissolution of the then parliament, and all correspondence which took place between the same persons with reference to the resignation of the Right Hon. Mr. Meighen last autumn; and at the same time and in the same connection all correspondence which took place between the present Prime Minister of Canada and His Excellency the Governor General in the month of June last in regard to the resignation of the then government or in regard to the dissolution of the then parliament-[DOT]
should be laid on the table of the House. I ought to say to my hon. friend that I have no knowledge of any correspondence that has taken place between the former Governor General, Lord Byng, and Mr. Meighen, either in relation to the formation of the government of which Mr. Meighen was the head or with regard to other matters; nor is there, so far as I am aware, any correspondence of the kind on record in the departments of the government. Communications between the Governor General and the Prime Minister, whether verbal or written, are as a rule regarded as confidential, and in that respect they are not
174	COMMONS
Indian Tribes of British Columbia
similar to most communications that pass between heads of departments of state and others.
With respect to the communications between the former Governor General, Lord Byng, and myself with regard to dissolution of parliament last year and as to my resignation at that time, I have personally no desire either to withhold those communications or to lay them on the table of the House; certainly I would not think of publishing them without consulting Lord Byng in the first instance. I shall cable Lord Byng and ascertain whether he is agreeable to having the communications made public; if he is, I am perfectly agreeable. But I would say to my hon. friend that communications of this character, if of any value, generally find their way into volumes of reminiscences and memoirs, and I should think that he and hon. gentlemen opposite would be very glad to have them so appear rather than make their appearance otherwise at too early a date.
I wish to say, however, that if these communications are to be brought down it must be distinctly understood that it is because hon. gentlemen opposite so desire, and not because of any wish on my part to reopen an incident which I am quite content to regard as closed.


Hugh Guthrie: Certainly. ANTI-DUMPING DUTY ON USED PIANOS On the Orders of the Day:


Mr. JOHN MILLAR (Qu'Appelle):: Mr. Speaker, may I ask ithe Minister of Finance the following questions:
1.	Is a duty being levied under the AntiDumping Act on used pianos entering Canada?
2.	Under what section of the act is such duty levied?


Hewitt Bostock: Order. Questions of this nature should be put on the order paper.
CARILLON POWER DEVELOPMENT On the Orders of the Day:


Hugh Guthrie: Mr. Speaker, there is one other
piece of information I asked for yesterday in the absence of my right hon. friend the leader of the government with regard to copies of all orders in council relative to power development on the Ottawa river at Carillon falls. If I could have those laid on the table it would oblige me very much.
Right Hon. W. L. MACKENZIE KING
(Prime Minister): Copies of the orders are being prepared for placing on the table. I hope to have them ready to-morrow.

INDIAN TRIBES OF BRITISH COLUMBIA On the Orders of the Day:


Hon. H. H. STEVENS (Vancouver Centre):: Mr. Speaker, there is a question that I should like to ask the Minister of the Interior (Mr. Stewart), but in his absence perhaps the right hon. Prime Minister will give me his ear for a moment. For many years there has been pending the question of the status of the Indian tribes of British Columbia and their right or title to lands in that province. To my personal knowledge it has been before the public for seventeen years-I was asked to preside at the first meeting when I was acting mayor of Vancouver some seventeen years ago -and it has been pending ever since, without very much warrant in some respects, and at great expense to the Indians. While I have not much sympathy with some of the views entertained by those who are agitating the question, nevertheless I do think it is desirable to satisfy and quiet the Indians in regard to it. I am anxious to co-operate in giving them every opportunity to have the question settled, but I do not think any headway will be made if it is allowed to drift any longer. I do not say this by way of criticism at all, I offer it rather as a suggestion. I would ask the Prime Minister if the government would consider the appointment of a small select committee to hear the representatives of the Indians and give the question study in order to see if we cannot bring it to a conclusion.


William Lyon Mackenzie King: Mr. Speaker, I may inform my hon. friend that I have of late been giving some thought to the question of status in our inter-imperial relations, but the status of the Indian tribes of British Columbia is a subject to which I am afraid I have not given the attention that I should like to have been able to devote to it. In the absence of the Minister of the Interior, who has been considering the matter very carefully, I think I had 'better say to my hon. friend that I will draw his remarks to the attention of the minister and ask the minister to communicate to him the views of the government when he is next in the House.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the Orders of the Day:
Hon. R. J. MANION (Fort William):: Mr. Speaker, I should like to ask the Minister of Railways (Mr. Dunning) a couple of questions based on an announcement which ap-

Fruit and Vegetable Combine
peared in the Wall Street News of the 8th instant, as follows:
The Chicago, Burlington & Quincy has ordered 1,000 freight cars, and the Canadian National Railways has placed a similar order with the Pressed Steel Car Company.
Will the Minister of Railways kindly say if that is true? And if it is true, is he aware that there are a number of big plants devoted to the manufacturing of cars idle in this country, including one in my own city, in the activity of which I am naturally interested?
Hon. CHARLES A. DUNNING (Minister of Railways): It is the policy of the Canadian National to have manufactured in Canada all of the equipment for its Canadian lines that can be manufactured in this country, and of necessity they must have a very large portion, if not all, of the equipment for the American lines manufactured in the United States. I have no doubt that the item to which my hon. friend refers relates to some equipment for American lines. In a few moments I hope we shall be in committee of supply on Canadian National estimates for the current year and I will then give detailed information regarding equipment.


Robert James Manion: Will the minister try to have this information either then or tomorrow?


Charles Avery Dunning: I m'ay have it by me now.



RULES OF THE HOUSE SPECIAL COMMITTEE TO CONSIDER REVISION

[Stage Direction]
On the Orders of the Day:
Hugh Guthrie: There is one more matter to which I desire to call attention: I refer to the revision of the rules of debate in this House. I had an opportunity of a few moments' conversation with my right hon. friend the Prime Minister (Mr. Mackenzie King) in regard to the report made by a committee of the House last year on the question of improving the rules. I want to suggest to my right hon. friend before the session is too far advanced, that another committee be appointed to consider the question with a view to bringing forward some remedy during the present session.


William Lyon Mackenzie King: The government is in entire accord with my hon. friend as to the desirability of having the rules considered at an early date. I am informed by the whip on
this side that the names of members of the committee, so far as we are concerned, are ready, and he is now waiting to get the names of hon. gentlemen opposite.


Hugh Guthrie: On the rules?


William Lyon Mackenzie King: Yes. We hope to have the motion brought in either tomorrow or the day after.


Hewitt Bostock: I may add for the information of the House that the rules were revised by a committee two sessions ago. The report was laid on the table but was not considered last year in view of the length of the session. All that the new committee would have to do would be to reconsider the report, which I am sure would be adopted unanimously. The committee at that time was unanimous, and It should not be difficult to rally its members to the suppprt of the committee of 1927.



FRUIT AND VEGETABLE COMBINE

[Stage Direction]
On the Orders of the Day:
Peter Heenan: The hon. member for Vancouver Centre (Mr. Stevens) the other day requested certain details in connection with expenditures in relation to the fruit and vegetable combine in western Canada and I promised to make a statement on the subject. I now do so.
The situation with respect to the fines imposed in connection with the combine in the distribution of fruit and vegetables in western Canada is as follows. The trial in this case resulted in the conviction of four individuals and four companies. The individuals were sentenced to one day each in jail and to a fine of $25,000 each. The corporations were sentenced to fines of $25,000 each. All of the fines imposed, totalling $200,000, were paid immediately following the trial, and no part of them has since been remitted. The amounts were paid into the British Columbia court and subsequently transferred to the provincial treasury. The federal Department of Justice is negotiating with the provincial attorney general with a view to the transfer of these funds to the Receiver General of the Dominion. The cost of the investigation and the prosecution amounted to $116,724.53, the fines therefore exceeding the cost by $83,275.47. With respect to the expenditure I am laying on the table of the House a detailed statement as promised.
Supply-C.N.R.



DEPARTMENT OP RAILWAYS AND CANALS

[Stage Direction]
The House in committee of supply, Mr. Johnston in the chair.
Railways and Canals-Loans to Canadian National Railway Company
Amount not exceeding $31,000,000 to meet expenditures made or indebtedness incurred (where amounts available from net operating income or investments may be insufficient) by or on behalf of the Canadian National Railway Company, herein called "The Company," or any company specified or referred to in chapter 13 of the Statutes of Canada, 1919, and chapter 13 of 1920 or now or hereafter comprised in the Canadian National Railways or by the company in respect of any railways, properties and works entrusted to it from time to time under the provisions of section 11 of chapter 13 of the statutes of Canada, 1919, or any one or more of such companies, on any or all of the following accounts, such expenditures or indebtedness being herein called authorized expenditures: -
(a)	Interest on securities, notes and other obligations; rentals for lease of lines;
(b)	Equipment principal payments; sinking funds; miscellaneous maturing or matured notes and other obligations secured or unsecured;
(c)	Operating income deficit, whenever incurred or ascertained;
(d)	Construction and betterments, including
co-ordinations; acquisition of real or personal property.	_
The amount herein authorized may be applied from time to time to meet authorized expenditures, in the discretion of the governor in council:-
(a)	In respect of railways, properties and works entrusted to the company as aforesaid;
(b)	In respect of railways, properties and works not so entrusted by way of loans in cash, or by way of guarantee, or partly one way and partiy the other, subject, however, as follows:-
If by way of loans from His Majesty, the amoqnt or amounts advanced to any one or more of the said companies shall be repayable on demand, with interest payable half-yearly at the rate fixed from time to time by the governor in council, secured if and when directed by the governor in council by mortgage or mortgages upon such properties, in such form and containing such terms and conditions, not inconsistent herewith, as the governor in council may approve.
If by way of loans from persons other than His Majesty (without the guarantee of His Majesty) the amounts, terms and conditions of such loans shall be such as the governor in council may from time to time approve.
If by way of guarantee, any such guarantee may be either a general guarantee covering the total amount of the issue, or by a separate guarantee endorsed on each obligation, and may be of the principal, interest and sinking funds (if any) of the notes, obligations or securities of one or more of the said companies specified by the governor in council, which notes, obligations or securities the companies so specified are hereby authorized to make and issue, and such guarantee may be signed by the minister of finance, or such other person as the governor in council may authorize, on behalf of His Majesty, in such form and on such terms and 
conditions as the governor in council may determine to be appropriate and applicable thereto. Any guarantee so signed shall be conclusive evidence for all purposes that the provisions of this enactment have been complied with.
Should temporary loans be made or negotiated before the lapse of this appropriation either from His Majesty or other persons, guaranteed notes, obligations or securities may subsequently be issued under the provisions of the preceding paragraph of this enactment to renew, refund or adjust such loans, or any part thereof.
Each company herein mentioned or referred to is hereby authorized to aid and assist, in any manner any other or others of the said companies, and, without limiting the generality of the foregoing, may for its own requirements and also for the requirements of any or all of such other companies from time to time:

 _
(a)	Issue notes, obligations or other securities, joint or several, at discretion, for the purpose of any guarantee made or to be made under the provisions of this enactment;
(b)	Apply the proceeds of any such guaranteed issue, or the amount of loans received by virtue of this enactment, in meeting authorized expenditures on its own account or on account of any or all of such other companies;
(c)	Make advances for the purpose of meeting authorized expenditures to any or all of such other companies, upon or without any security, at discretion.
No purchaser of such guaranteed notes, securities or obligations shall be under any obligation to inquire into the application of tbe proceeds of any guaranteed issue	$31,000,000.
Henry Herbert Stevens: In his explanation will
the minister say whether there is any change in this item?
Hon. CHARLES A. DUNNING (Minister of Railways): That is what I propose to do. Perhaps I should make a general statement to the committee regarding the estimate now under consideration. It is for the Canadian National Railway Company and has relation to the detailed estimates which were examined and reported upon favourably last session by the select standing committee which deals with Canadian National Railways and shipping. Only 810,000,000 of the $31,000,000 was however voted last session, and so we are bringing down the whole vote again on this occasion. There are some changes which I should report to the committee, changes which might require a reference again to the special committee; but in view of the fact that these changes are few in number, possibly the House will be able to deal sufficiently with them in committee of the whole instead of sending them back to the select committee.
The first difference I would call to the attention of the committee is in the wording of the resolution itself. One of the difficulties we had experienced in connection with the former wording was this: whenever temporary loans were made it was impossible, under the wording of the resolution as formerly adopted, to fund these temporary borrowings during

Supply-C.N.R.
the year in which the authority was operative. On that account the present resolution is altered in that respect. The change will be found in the second paragraph on page 2:
If by way of loans from persons other than His Majesty (without the guarantee of His Majesty) the amounts, terms, and conditions of such loans shall be such as the governor in council may from time to time approve.
And in the next paragraph but one:
Should temporary loans be made or negotiated before the lapse of this appropriation either from His Majesty or other persons, guaranteed notes, obligations, or securities may subsequently be issued under the provisions of the preceding paragraph of this enactment to renew, refund, or adjust such loans, or any part thereof.
The intention is to enable our long term financing to be done at one time during the year instead of having repeated issues. The object is to enable us to fund temporary loans and thus put all our borrowings for one year together into one considerable transaction, if it proves wise to do so, rather than make a number of small loans. There will be a considerable saving of interest by the adoption of the new wording because it will enable the railway to establish short time banking credits for their requirements, afterwards funding them in accordance with the terms of the resolution by the issue of guaranteed securities.
Now with respect to the estimates themselves, there are one or two changes in detail which I might point out.
Last year, as members of the select committee will remember, provision was made for the purchase of $5,000,000 worth of new equipment for the Canadian National system, $1,000,000 to be secured from the Minister of Finance and $4,000,000 from equipment trust securities under the plan which has now been in operation for some time with respect to financing Canadian National railway equipment. Now that the year is nearly over the management of the system find it necessary to increase their equipment very materially, and I am requested to ask the House to make provision for $20,000,000 worth of new equipment instead of $5,000,000 worth. That $20,000,000 would involve an advance of $5,000,000 from the Minister of Finance instead of $1,000,000 as last year. The balance will be provided by equipment trust obligations in the regular manner.
For the benefit of hon. gentlemen I might give particulars as to the new equipment which should be ordered forthwith for the various parts of the system.


Hugh Guthrie: Is that the new schedule
you have there?


Charles Avery Dunning: Yes, I have the new
schedule here.


Hugh Guthrie: If it is not too long perhaps my hon. friend will read it.


Charles Avery Dunning: I was about to do so.
On the Grand Trunk Western, that is our western lines, the following equipment is needed:
Grand Trunk Western 12 mountain type locomotives at
$75,000	$ 900,000
10 switching locomotives at $40,000.	400,000
6 baggage cars at $20,000	 120,000
2 combination mail and baggage cars
at $24,000	 18,000
1,000	automobile cars at $2,100.. ..	2,100,000
100 ballast cars at $3,000	 300,000
10 air dump cars at $3,000	 30,000
20 cabooses at $3,000	 60,000
Total	$3,958,000
That makes a total of $3,958,000 for equipment for the Grand Trunk Western.


Mr. ROSS (Kingston):: Did the minister
say United States equipment?


Charles Avery Dunning: I did not say United
States equipment. I spoke of the Grand Trunk Western which comprises our United States lines.


Arthur Edward Ross: That is what I
meant.


Charles Avery Dunning: Yes, the United States
lines.	:


Arthur Edward Ross: That means that
the equipment will be bought in the United States.


Charles Avery Dunning: I think all of it. We
must do that under the relations that exist between the two countries regarding tariffs, the regulations of the Interstate Commerce Commission, and all that sort of thing.


Arthur Edward Ross: I do not like to
interrupt the minister but I must point out that the United States company operating railways in Canada do not have any of their equipment made heTe.


Charles Avery Dunning: If my hon. friend can
suggest a means whereby we can get some of the work for our United States lines done in Canada we will be very happy to give consideration to it.


Arthur Edward Ross: I should have
thought that was a matter for the authorities, for the railway management or the government.


Charles Avery Dunning: It must be remembered
also, in fairness to the United States, that we make money operating a railroad there.

Supply-C.N.R.

United States traffic will pay interest on this equipment which we are purchasing for the lines over there. In fairness we should say that.


Richard Bedford Bennett: Are we going to guarantee equipment trust issues?


Charles Avery Dunning: Not at all. Perhaps I
should qualify that by saying that all equipment trust issues are made on the basis that $1,000,000 of cash must be provided for $5,000,000 of equipment. So the proportion of one to five would hold in the case of this $3,958,000.


Richard Bedford Bennett: Twenty per cent must
be put up in cash?


Charles Avery Dunning: Yes, but there is no
government guarantee of the balance.


Thomas Cantley: What is the rate of interest?


Charles Avery Dunning: On the last issue four
and a half per cent.
Now I presume my hon. friends wish the whole list placed on Hansard for the sake of convenience. The Central Vermont railway, which is another United States line controlled and operated by the Canadian National Railways-


Richard Bedford Bennett: And which is losing
money.


Charles Avery Dunning: Which is losing money,
as my hon. friend states.


Richard Bedford Bennett: For which the Canadian people are paying.


Charles Avery Dunning: For which the Canadian people are paying. I will not get into a party controversy with my hon. friend, but certain suggestions are emanating from the Minister of Finance just now as to the responsibility for taking over that railway.


Richard Bedford Bennett: We had the responsibility for the whole railway mess in this country placed this afternoon upon the late Liberal government. The legacy we are taking care of was bequeathed by them and the Minister of Finance knows it.


Charles Avery Dunning: I do hope that we need not, in considering these business matters, get into a political controversy. My hon. friend well knows there is a very effective answer to the remarks he has just made, and I do not doubt that he could come back again. In the meantime, however, the business of the railway would not be under consideration by this committee.


Richard Bedford Bennett: The answer to my statement has not yet been discovered.


Charles Avery Dunning: To resume:
Central Vermont Railway 4 mountain type locomotives at $65,000. $260,000 2 gas electric motor cars and trailers. 115,000 2 gas electric motor cars and trailers. 115,000
15 milk cars at $5,000	 75'000
Total	$565,000
So that for the Central Vermont railway we require $565,000 for railway equipment.


Arthur Edward Ross: That equipment
will be built in the United States.


Charles Avery Dunning: Yes.


Arthur Edward Ross: For which we are paying as in the case of the other line.


Charles Avery Dunning: Perhaps my hon. friend
would wait until the main estimates are down before he comes to the conclusion that Canada is going to pay for all of "this equipment. I gave a very plain statement a year ago as to the position of the Central Vermont in relation to the whole system. It would be unfair to make an extreme statement either way. It is true the railway is losing money, but not to the extent which involves payment by us of the whole of an amount of this character. Now let me take the Canadian lines:
Canadian Lines
20 mountain type locomotives at
85,000	 $ 1,700,000
20	Mikado	type locomotives	at
$75,000	 1,500,000
1 electric locomotive at $70,000..	70,000
25 first-class cars at $34,000..	.	.	850,00012	baggage cars at $25,000	
300,00013	dining cars at $47,500	
617,500
5 compartment-observation ears at
$50,000	 250,000
4 combination baggage and secondclass cars at $33,000	 132,000
30 sleeping cars at $47,083.... 1,412,490
20 sleeping cars at $47,083	 941,660
50	express	refrigerator	cars	at
$10,000	 500,000
60	freight	refrigerator	cars	at
$4,900	 294,000
200	freight	refrigerator	cars	at
$4,900	 980,000
40 tank cars at $3,700	 148,000
800 automobile cars at $2,400..	..	1,920,000
1,000 box cars at $2,700	 2,700,000
50 cabooses at $3,000	 150,000
1 rotary snow plough	 61,500
20 wing snow ploughs at $10,000..	200,000
Total	 $14,727,150
That is $14,727,150 of equipment for Canadian lines, as against $3,958,000 plus $565,000 on American lines. There is sales tax in connection with the Canadian equipment

Supply-C.N .R.
amounting to $736,357 which brings the total cost of the equipment required for Canadian lines to $15,463,507, or a total of $19,986,000, approximately, the amount stated.


Robert James Manion: I should like to ask the
minister a question in regard to the inquiry I made on the orders of the day. There is only one item in the list he has read that covers the item, if it was correct, which I read from the Wall Street News, and that was 1,000 steel cars or box cars. The only item of 1,000 cars mentioned in the list given by the minister just now is 1,000 for Canadian equipment, and this statement which I read says that an order had been given by the Canadian National Railways to a United States company for 1,000 steel cars on the United States side. There was nothing of that sort in the United States equipment the minister mentioned.


Charles Avery Dunning: One thousand automobile cars.


Robert James Manion: It is possible that covers
it. I took it to be box cars.


Charles Avery Dunning: It is, of course, practically a box car.


Robert James Manion: That may be the item.
Would the minister do me the favour of looking into the question and seeing if it is correct? I presume he has not the information with him at the moment but he can give me an explanation later.


Charles Avery Dunning: This is the complete
statement of the proposed equipment orders of the Canadian National Railways, and in itself is a complete check against any newspaper statement. I hope my hon. friend will not ask me to go inquiring if this or that newspaper statement is correct when in tomorrow's Hansard he will have exactly what the Canadian National proposes to do.


Robert James Manion: While that will be in Hansard, there is just this brief sentence in this paper and if the minister could instruct his secretary or whoever he wishes to have this checked up, it would not be very much trouble to him and we would be sure of it. I do not question this item at all but I wish to know the facts in regard to the matter. If it turns out to be as the minister states it is, I have no special criticism of it, but I should like to know that, in view of the fact that a number of immense plants on the Canadian side are idle.


Charles Avery Dunning: WTe will have it checked up, although I thought, as my hon. friend is not quite as busy as I am-though he will be later-he might make a comparison in Hansard himself.
32649-12 J


Robert James Manion: While my hon. friend is
a very busy man, he is a hard worker and I am sure he will do this for me.


Charles Avery Dunning: I will attend to it.


Richard Bedford Bennett: The question of providing money for equipment is one of the most important in connection with the operation of a railway. If this railway is not setting up any reserve, as was the custom with railways in days gone by, the result will be that we are merely confusing the whole situation. I remember at an annual meeting of the Canadian Pacific Railway Company the president of the company told the shareholders that the Canadian Pacific made it a rule out of earnings to provide a new oar for every one that was worn out in service. Whether or not that is being done depends upon the system of accounting that prevails on this road. It is difficult to think that this system, after having spent the enormous millions that we did a few years ago for equipment, should now come back asking for $15,000,000 more if we have been putting aside reserves year after year to take care of the equipment that has become worn out in service. That is the position to which attention should be directed, because after all in the long run the country has to provide the money one way or the other. If there are any deficits, those deficits must be provided by the country. If we are being misled into the belief that we are making money when we are not, that is something that should be attended to without delay. If this equipment is being worn out and no adequate reserves set up to provide for the replacement of a worn out car with a new oDe, the system that prevails is not right. That is all that can be said about it. The matter perhaps can be more fully developed when we have an opportunity of examining the accounting system of the road.
Hon. members in past years complained very bitterly of the expenditures made on the Canadian National to provide equipment. This amounted not to $15,000,000 but to many more millions of dollars. I do not have the exact figures in my mind at the moment. Enormous sums of money were spent on new equipment and if adequate reserves were set up to provide against wear and tear, depreciation of these cars from time to time, there should be a substantial fund to take care of the replacement of worn-out equipment with new. In that way it would not be necessary to commit us to the spending of further sums of money without any relation to reserves as we are being asked to do to-day. The answer my hon. friend makes is that Canada is not guaranteeing these equipment securities;
Supply-C.N.R.

but on the other hand the money has to be found for these equipment securities and the result will be that at the end of the year if the obligation is met, there is that much less money with which to pay the interest upon the fixed charges of the system. That matter should be very carefully inquired into, and I suppose when we have occasion to investigate before a committee of the House the system of accounting that prevails on the road, an opportunity will be given for such an inquiry.


Charles Avery Dunning: I am sure that the system of replacing car for car does prevail, with the exception that if the new equipment is twice as large as the old, one might replace two, and as regards locomotives, the tractive power is of course the basis of comparison, My hon. friend's observations give me the opportunity again to emphasize the value, in connection with an enterprise of such wide ramifications as the Canadian National Railways, of the small committee which it has been the custom of the House in recent years to appoint for the purpose of examining the officers of the system itself regarding all of those matters of finance, accounting, operation and so forth. By means of that special committee inquiry may be made in less formal manner than is possible in the House itself. Very shortly I hope to propose again to the House that a select standing committee be appointed to deal with matters affecting the Canadian National railways and shipping. As was the case last session I intend to propose to that committee, that we again permit any member who so desires to bring any special matter before the committee or, through the committee, before the management or any of the officers of the road. The committee should, and I hope will, extend that privilege to all members.
I have satisfied myself that this equipment is or will all be vitally necessary by the time it can be delivered from the various plants and work shops which will be engaged in the production of it. I would like the committee to understand that this proposal does not involve an increase in the aggregate of the Canadian National vote proposed at the last session; but because of the situation developing more favourably than was then expected we are able to provide for investment in this new equipment without asking the House for any more money than that of which the House voted a third one year ago.


Mr. MATTHEWS:: May I ask what is to be the term of the equipment trust bonds, and whether they will be issued in the usual serial form, maturing year by year? The usual term

I think is ten or fifteen years. These equipment trust bonds have been regarded as a very high grade security, and have always commanded very high prices 'in the market. If these bonds are to be issued in that form, it seems to me that the question raised a moment ago is answered.


Charles Avery Dunning: That is correct. The
usual term of equipment trust securities is fifteen to twenty years. They are always issued in serial form, which means that a proportion of the principal is retired, and must be retired, each year out of earnings.


Thomas Cantley: There are surely no equipment trust bonds for a term as long as twenty years.


Charles Avery Dunning: We are using the fifteen year term.


George Reginald Geary: Did I understand the minister to say that the Canadian National Railways set up a depreciation reserve year by year to cover the cost of property used up in the company's service?


Charles Avery Dunning: Every year a proportion of the loan made for the original purchase of a car is retired out of earnings. That of itself constitutes, of course, a depreciation which is equivalent to the wiping out of the whole cost of the car within fifteen years from the issuance of the obligation.


George Reginald Geary: That is fifteen per cent of
your book cost every year?


Charles Avery Dunning: Is my hon. friend referring to cars not purchased under the equipment trust system?


George Reginald Geary: Yes.


Charles Avery Dunning: In the case of cars not
purchased under the equipment trust system, every one which goes out of service is replaced by its equivalent out of earnings.


George Reginald Geary: There is no depreciation fund set up for that.


Henry Elvins Spencer: The minister in giving us a list of the equipment for the Grand Trunk western lines said that they would need a certain number of the mountain type locomotives, and I believe he gave the price as $75,000 each. Later on he gave us a list of the equipment needed by the Canadian National lines, and as far as I could hear, I gathered that the price for a similar type of locomotive was in that case $85,000.


Charles Avery Dunning: That is correct.

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Henry Elvins Spencer: The first mentioned locomotives were being made in the United States, and the others would be made in Canada. I would like to ask why there is this difference of $10,000 for a similar type of locomotive?


Charles Avery Dunning: The figures in each case are merely estimated, and while the words " mountain type " are used, that should not be taken to signify that the locomotives are identical, for you may have a twenty-five per cent, a fifty per cent, or a sixty-five per cent mountain type locomotive. It is simply a question of type. I am not able to say at the moment whether identically the same locomotive can be purchased cheaper in the United States than in Canada, but I shall be glad to get that information. My deputy informs me that they are cheaper in the United States.


Richard Bedford Bennett: The locomotives are
$10,000 cheaper in the United States.


Charles Avery Dunning: I was just answering the question and pointing out that the use of the words " mountain type " does not necessarily indicate identically the same locomotive.


Mr. HANSON:: I understand that all the
new rolling stock that is being used on the through expresses, such as the Ocean Limited has been purchased with money derived from the sale of equipment trust bonds. Is it the practice of the Canadian National Railways to charge against the government system-I would speak of it as the old Intercolonial-an annual or a per diem rental for the equipment used by that road, and is that a factor in the annual deficit Shown on the Intercolonial? My reason for asking that is this, that the Ocean Limited and other through expresses are equipped with the so-called 6,000 type of engine, and I have been informed that the Canadian National Railway Company charges for the use of those engines a rental said to be as high as $175 a day. If that be the case, I can well understand how they will run up a very large bill against the Intercolonial system every year, and it would never be possible for the earnings to balance the expenditures under that system. If there is nothing in that, I would be glad to have the public know it.


Charles Avery Dunning: I am very glad my hon.
friend has given me an opportunity to explode that particular fallacy. I am glad to be able to prove that at least one imagined injustice does not exist. With regard to charges of the kind mentioned by my hon. friend for the use of locomotives or of cars, in this division or that, there is one great pool, into which is charged all that type of expense, and each division bears its proportion of that expense, having regard to the mileage of the equipment used in that particular division.


Richard Burpee Hanson: There is a rental charge
for the equipment used by the division?


Charles Avery Dunning: Yes, and it is the same all over the system.


Richard Burpee Hanson: If that is the case, it is
satisfactory.


Charles Avery Dunning: It is merely a method of allocating charges properly to the various units of the system, and precisely the same unit basis is used all over the country.


John Millar: I do not expect the minister to be in the inner confidence of the American railways as to the policy they are pursuing in Canada, but could he inform the committee whether the American railways in purchasing equipment for that part of their lines operated in Canada adopt the policy of buying any equipment in Canada?


Charles Avery Dunning: Only to a limited extent. Naturally we have not precise information as to that, but so far as our information goes, the purchases in Canada are not very heavy. I understand that the Customs department is watching very carefully what the American railways are doing with respect to bringing their equipment into Canada for operating purposes, just as the American customs authorities are watching our railways in that regard. In fairness it should be stated that the Canadian National operates in the United States a far greater mileage of railways than is operated in Canada by all the United States railways put together.


Robert Charles Matthews: May I ask the minister as to the average life of the equipment that is used on the railways nowadays? Years ago the equipment bonds were issued for a term of ten years. The minister says that he is issuing these bonds for a term of fifteen years, and that in some cases bonds are issued for a twenty year term. The minister will appreciate the fact that it is very important that the securities issued in respect of equipment should mature well within the life of the equipment. That is the only method by which you can have sound financing.


Charles Avery Dunning: It is the only sound
principle.


Robert Charles Matthews: Quite so. Then I
would ask the minister what is the average life of equipment nowadays; also whether, when
these bonds are to be sold, tenders will be called for?


Charles Avery Dunning: My hon. friend's first
question is a very difficult one to answer because of the transition which is taking place in the type and structure of the equipment used. We might, for instance, be discussing
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all steel equipment, or only part steel, or almost wholly wood equipment. If my hon. friend will bear that point in mind when the special committee is sitting, I am sure the officers of the road who are most intimately concerned with this matter will be able to supply the information he wants. The committee I am sure quite understands that I am not a railroad man. Such knowledge as I have of these matters has been acquired as a result of study in my capacity fas minister, and it would not be difficult for any member to put questions to me which I cannot at the moment answer.
Perhaps the committee would now allow me to explain another variation from the estimate which was presented a year ago.


Robert Charles Matthews: Would the bonds be sold by tender?


Charles Avery Dunning: The sale was subject to the approval of the Minister of Finance, and I fully expect that tenders will be called for, But in the absence of the Minister of Finance I should not like to give a definite answer.
There is one other change, and it is the last change of any considerable importance in the estimate of last year. There are, of course, in the book of particulars placed before the committee last year many changes of a less vital character, but the important change is the request for authority to commence the extension of the Chateau Laurier, and provision is asked of $2,000,000 to enable a start to be made on that work. The management regards the enlargement of the Chateau Laurier as a matter of good business. I have here some facts in that connection which I will put forward for the consideration of the committee. It is proposed to provide not less than two hundred additional rooms and additional accommodation for banquets, balls and other facilities required of first class hotels. The gross revenue for 1926 was $865,408.38, an increase of $135,534.06 over 1925. In straight operation of the service rendered by the Chateau Laurier during the year a net surplus of approximately $180,000 was obtained. We, however, spent some $30,000 of this surplus in renewal of furnishings and equipment, which should have been spread over the operations of the past five years. Thus we show an actual net in operation of $150,746.83. That operating net, it must be borne in mind, does not include interest on the investment in the property.


Richard Burpee Hanson: Depreciation on the structure?


Charles Avery Dunning: Yes. In addition to this, during the first six months of 1926 the Chateau Laurier was filled to capacity 72 nights out of a total of 181; and during this period they were forced to offer some 1,500 guests who had registered at the hotel accommodation in sleeping cars parked at the Union station. Over 1,000 of these guests refused this accommodation and sought rooms elsewhere. There were also hundreds of guests seeking accommodation during this period who did not register when they were informed that the hotel was taxed to capacity.
Another condition existing iat Ottawa, which I am informed by the management, has become most acute, is the fact that the Chateau Laurier banquet and -ball room space is totally inadequate to take care of large functions, and many of a moderate size that are undertaken are very difficult and costly to handle. As an illustration of what we have had to refuse, in the latter part of December, 1925, and 1926, a party -of winter tourists numbering three hundred and fifty, for three or four days, which would have netted the hotel approximately $10,000 to say nothing of additional money brought to the city of Ottawa.
There are other arguments put forward by the management in connection with the proposal, but these are the most vital. The addition of the proposed wings and accommodation asked for, I estimate conservatively, will produce for us an additional revenue of $300,000 per year, with an increased net of approximately $120,000. The management state that they are confident of being able to operate the completed structure with a net surplus sufficient to pay the full interest on the entire investment, from its completion.


Richard Bedford Bennett: After allowing for depreciation, how much will be invested there?


Charles Avery Dunning: I am speaking now without having the actual figures before me. This new addition, together with furnishings and everything, will cost something under $4,000,000. The management has gone into the matter very carefully and very fully, and estimate that they will be able to make an earning on that basis. In the estimates now before the House however we are only asking for $2,000,000 to make a start on the work.


Richard Burpee Hanson: This means an expenditure of $4,000,000.


Thomas Cantley: I should like to congratulate the minister on the statement brought down in regard to equipment. I

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have not a shadow of doubt that the equipment asked for is required; in fact I think some additional equipment is required by way of general service cars, none of which is provided for in the estimates. But when we come to consider the amount of money to be expended in Canada and the amount being expended in the United States, we find the proposal to be to expend for rolling stock in the United States practically one quarter of the entire amount. I submit that amount is out of all proportion to the Canadian National mileage in the two countries. If the minister will review our experience over a period of the last few years I do not think he will find that the United States lines are expending any considerable portion of money for equipment purchased in this country. In the old days the situation was different. At the time the Michigan Central ran a portion of their line through Ontario they had to and did buy their equipment to a large extent, in fact practically all of it, including spare repair parts, in Canada. We have departed from that system and have allowed the Americans to put one over in that regard, to use a common or slang expression. So far as the purchase of equipment by trust equipment certificates is concerned, if payment of these be limited to a period of ten or even fifteen years they will be practically taken care of. The question has arisen as to the life of steel equipment as compared with the former wooden equipment. Our steel equipment is not at present old enough to enable us to determine just what the life of such equipment is as compared with the life of wooden equipment. I am persuaded that the life of steel equipment is two and a half to three times greater than that of the former wooden equipment. If you fix ten years as the average life of wooden oars you can safely estimate the life of steel cars at twenty or twenty-five years. There is another important matter, as to the loss through collision and through the ordinary handling of freight on trains made up of the wooden equipment five and twenty years ago as compared with the present system. That is an item of very considerable importance and value in operating costs.
In that connection there is a matter I desire to bring (to the attention of the minister. On the system we have a very considerable number of Grand Trunk Pacific wooden cars, built fifteen or sixteen years ago. Those cars are a menace to the operation of the railway and should be withdrawn from traffic altogether. I trust he will see to it that no money is spent on repairs to that type of equipment.
Let me call his attention to one other matter. On the service between Sydney and Halifax-


Charles Avery Dunning: Will my hon. friend permit me? Apparently he is about to branch into railway management. I hope he understands that under the law I have absolutely no authority with respect to the question that he is now about to mention or with respect to the preceding question that he brought to my attention.


Thomas Cantley: I think the minister is
anticipating something that I have no intention of saying. I am Comparing the type of equipment on the line between Sydney and Halifax with that used on express trains on other divisions of the Canadian National Railway system. We have to put up with wooden equipment that is not in use on any other section of the government railways.


Charles Avery Dunning: Will my hon. friend
show me wherein this parliament has given either to myself or to the government any authority to decide what type of equipment shall be used on any portion of the Canadian National railway system?


Thomas Cantley: I am not dealing with
any question of authority at all. I am asking the minister to provide steel passenger and sleeping cars for that service similar to those that he provides for the other branches of the road, and I do not want him to try to evade my request by suggesting that I am developing another line of argument; I am not. Within the last two weeks there was a very serious collision on the Canadian National railway in the maritime provinces, and I can assure him that if the equipment in use between Halifax and Sydney had formed part of either of the express trains involved on that occasion somebody would have had to answer for a large loss of life. I travelled from Sydney to New Glasgow a few nights ago in a car in which it was impossible to hear conversation because of the complaining, screeching and squeaking of the decrepit equipment. That particular sleeping car is I think older than the minister and should have been relegated to the scrap heap long ago.


Charles Avery Dunning: Along with the minister.


Thomas Cantley: No; the minister is
physically all right. I thank him for the explanations he has given in regard to many railway matters this afternoon; indeed, I wish
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particularly to compliment him on the very clear exposition which he made an hour or so ago. But I am deadly in earnest in asking him to take into serious consideration the matter of the Sydney-Halifax passenger equipment to which I have just referred.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


Thomas Langton Church: The resolution under consideration involves an expenditure of $31,000,000 and if during the coming twelve months the members of this House find thait agreements have 'been made, title deeds given, and rights of way conferred in regard to which they know nothing then they can only blame themselves, because if any hon. gentleman wants information concerning any of these questions or this system, this is the time now to ask for it.
I am a supporter of public ownership but I believe in the right kind of public ownership. I dlo not want to see public ownership in Canada repudiated because of mistakes made in the administration of our national railway system in regard to either capital or maintenance. The Minister of Railways (Mr. Dunning) has made a statement touching the situation, but it seems to me that the whole of this resolution which we are at the present moment discussing, as well as the following resolution with reference to the merchant marine, is about as illuminating as are some of the talks of Sir Henry Thornton over the radiio; the one contains about as much information as the other.
With all dlue respect to the board of directors, I would point out to the minister that according -to the returns of the Department of Railways the sum of $2,000,000,000 has been expendted on our railways, a considerable proportion of which outlay constitutes nothing but a frozen asset. A very considerable portion of this vast sum dtaes not .pay any interest at all. I quote from page 13 of the report:
Guarantees
The funded debt, unmatured, held by the public amounts to $931,329,302.74, of which roughly two-thirds, or $674,947,283.77, is guaranteed. Of this last-named sum $581,372,903.51 is guaranteed by the Dominion and the balance, $93,574,380.26, by the several provinces, as follows: Ontario, $7,859,997.59; Manitoba. $24,389,892.18; Saskatchewan, $17,904,061.99; Alberta, $18,394,427.37;	British Columbia,

person employed on the works was a Canadian. They had there some of the finest hydraulic engineers in the world, graduates of Toronto university, McGill university, Queen's and other Canadian universities. There is no position in this country that a Canadian cannot occupy, yet when it comes to filling places on the Canadian National system American citizens are favoured and brought over. They are now filling the highest positions on the National system, even the executive offices. Some of the American occupants of these positions call themselves vice presidents, but the fact that they do that does not make them vice presidents in reality; a lot of these high officials do not know any more about railways than I do. There is no use disguising the fact that the Canadian National railway system is a sort of happy hunting ground for Americans. In the House of Commons an hon. member from the maritime provinces asked what was the salary of the Mr. Gaston to whom I referred, and what his duties were. The minister replied that it was not in the public interest that this information should be disclosed. I have referred to the committee on railways and shipping as "a board of strategy" for the National railway system. It was probably appointed to withhold from parliament the information which it would otherwise have got. In spite of the fact that this committee is in existence, we cannot get the information we want. We have an "Alphonse" in Sir Henry Thornton and know his. salary but we are not told who "Gaston" is or his salary.
We are told very little about this protege of Sir Henry Thornton's who was brought to Canada as an authority on railway securities, and on the hypothecation of deeds, and the obligations of guarantees. We are toid that this gentleman is a graduate of Yale university. How can he be familiar with the laws governing real estate in this country, to say nothing about the system of registration and the Torrens land system? A man versed in these matters, and a returned soldier, could easily have been secured from any Canadian law office, but Sir Henry Thornton had to go to New York to get his own man. No sooner was Sir Henry Thornton back from his honeymoon than he appointed his father-in-law as architect to prepare plans for the erection of the Canadian National hotel in Vancouver city. Some fifteen or sixteen gentlemen from the United States have been appointed to fill good positions in connection with the Canadian National railways, but it is impossible to find out what salaries are paid to them or what their duties are. It

seems to be impossible to get a Canadian or a British subject to fill any of these positions.
The Minister of Railways is responsible to the people of this country for what is going on. I do not blame the minister altogether, he has always been willing to give the House any information that he possibly could; but as a Canadian I object to Sir Henry Thomtonism, and many other of his "isms", which he has forced upon this unwilling country.
Over three billions of dollars of Canadian money have been invested on railways in this country with a population of only nine millions. Canada has a huge railway mileage of 40,000 miles of track, equal to what Germany, France and England have with populations of 60, 46 and 47 million people. Think of the over-duplication of railways that has gone on around the city of Toronto and from Toronto on the main line east, three or four different lines.
I was on a train with some Progressive members from the west going to Toronto, and I observed them scrutinizing the railways between Belleville and the queen city. They surely must have been impressed with the railway duplication in evidence between Scarboro junction and Toronto and Belleville and the consequent waste of public money. Compare this with the economy shown in the construction of the hydro electric system. There you have a public ownership system in the ideal administration form. But for Sir Henry Thornton the Toronto and Guelph railway, the Niagara, St. Catharines and Toronto railway, the Toronto and Eastern railway would all have been incorporated in the hydro system without the cost of one dollar to the tax-payers. That shows the kind of public ownership man he is. That is the kind of support he gave to the hydro electric movement in Ontario. Had these three railways been attached to the hydroelectric system, they would have been feeders and brought business to the national railways; they would have given great help to the struggling tax-payers of this country, and would have aided in relieving them of the burden of debt which railway duplication has helped to bring about.
What happened? Under Sir Henry Thornton the radials were killed in Ontario. The province is suffering as others are doing. What is the result to-day? The Ontario government have opened up good roads and the national railways are losing the cream of the business between Toronto and Hamilton; they are losing the business in the Niagara district,

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and they have lost the support of the hydro municipalities' systems as feeders. These interurban hydro radial cars which collect package freight would have acted as feeders for the Canadian National and would have saved Canada from the expense of some of these bankrupt lines in Ontario, some of them not earning enough to pay interest on their indebtedness. I am sorry that happened because, as I said this afternoon, Ontario has suffered more than any other province. The old Grand Trunk, which was a good road, built up that province, 'but it took $150,000,000 in 1905 in cash out of Ontario and left the province to stew in its own juice for a system.
I should like to get some information in regard to these matters. I could get none from the board of strategy of this committee which was appointed, known as the committee on railways and shipping. I think it is the most remarkable committee I ever attended and some of the information I tried to get I was unable to obtain. The administration of Sir Henry Thornton's system is not what it should be, and he is losing business to-day. He seems to take a leaf out of the book of the Canadian Pacific. When I had a cheap fare bill before this parliament three years ago, who appeared before the railway committee to oppose it? The national railways with their directors and a whole carload of lawyers. That particular bill proposed to renew cheap fares as they existed before the war for the farming community for holidays and week ends. It was supported by the municipalities, by different public organizations, by the working classes through their organizations known as the labour councils of this country. The bill proposed to restore to the people single fares on holidays and week ends and special excursions and all that kind of thing. The British railways have again adopted in the ordinary course that principle as a matter of good railway business; the United States railways have done the same; but this national system had to wait for the bill to be prepared and then helped to defeat the bill. When the bill was defeated many sporting organizations throughout the country, instead of travelling on the National railways now use motor busses in order to go to Hamilton, Guelph, Niagara, the Muskoka district and so on, owing to the high railway rates.
Another abuse which I brought up before the committee was the abuse of the pass system. The hon. member for Fort William (Mr. Manion) called this the "deadheads" railway. I call it the "deadheads" railway also here to-night because that is exactly what it is. I travel on the system myself and it is appalling to see the large number of people
who have passes or who travel in private cars. I do not know where they get them, but the receipts have been depleted by the way in which the system has been administered. I was informed by Sir Henry Thornton before the railway commiittee that he had the same pass system as the Canadian Pacific. The trouble with Sir Henry Thornton is that he is always comparing his system with the Canadian Pacific. His system is a bankrupt railway going behind $50,000,000 or $60,000,000 a year in addition to having huge frozen assets. On the other hand the Canadian Pacific is a privately-owned system that cannot operate at cost, that must pay dividends. According to the statement of the year before last, they effected $14,000,000 in economies in operation, and can afford to have a pass system of their own. The railway act covers free transportation. Not so the national railways. I was told by one of the officials of the department that inasmuch as I was one of the few members of parliament who never asked for a trip pass I should have a bust of myself placed in_ the Victoria museum to let future generations see such an exhibit of modesty. The pass system and the private car system of the Canadian National Railways are abused. There is discrimination between different people. Some of one religious denomination can get a private car; others can get none. Some of one religious denomination can get passes, others cannot. There is a wholesale discrimination along that line contrary to the railway act which governs passes. Nobody in this country should have a pass on the national railways except government officials. I endeavoured to secure this information in regard to passes from the railway committee but I was unable to do so. The only time to get this information, as the hon. member for West York (Sir Henry Drayton) said two years ago to the former minister, Mr. Graham, is now.
Another matter about which I was complaining is the way in which the Toronto district is used. With the assistance of some financiers they were to build a sky-scraper at the corner of King and Yonge streets. The existing building was to be torn down and the Canadian National Railways vacated it. They formed a company; they made a proposition, but they did not carry it out. The railway agreed to occupy certain stories and the rent would have paid for the building in a few years. Then it was abandoned after two or three years of negotiations and after the Canadian National Railways had moved to and fro from King and Yonge to Toronto and King and back, and after they spent $100,000 at the comer of King and Yonge on
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repairs, and on repairs at King and Toronto and on the telegraph offices of the Great North Western on Scott street. It was all just a speculation by speculators on the Canadian National Railways credit; they were using the credit of the national railways. The intention was to build a sky-scraper; the Canadian National Railways would be a tenant and out of the rents of which enough money would come to the Canadian National Railways to pay for the sinking fund and interest and wipe out the bonds in thirty-five years, and the speculators would own the property.
It was announced by the minister two years ago that a Pew deal was being made. What happened the other day? After moving back to King and Toronto street for the second time, away from King and Yonge street, after moving the telegraph offices from King and Yonge to Scott and Toronto street, the property at King and Yonge was vacated. Then a company was to be formed for the third time and the building was to be built. Now they announce with a flourish that they are not going to go on with it at all and back go the Canadian National Railways to King and Yonge street again. This was done although there were four or five buildings which had been built by private individuals and in which there was I forget how many feet of space vacant.
That is an example of what happens as a result of passing a blanket item like this of $31,000,000 that will give Sir Henry Thornton power to do everything he wants to do except build a branch line to Timbuctoo. If he had his way he would build lines to the sun, moon and stars and there would be no way of stopping him. He seems to be a law, or a sort of high court of parliament all to himself. Do you think he would obey the orders of the railway commission? No, the railway commission does not apply to this venerable statesman. Does the railway act apply to him? No. How do I know that? I know because when the late Mr. Carvell was considering a railway case in which the city of Toronto was interested, he was not altogether sure Whether, in view of the constitution of this great big legislative system, the railway commission had any jurisdiction over it. I do not believe they have because events during the past two or three years show that they have no jurisdiction over it. When you consider that this is a railway on which the people of this country have spent nearly $2,000,000,000, you would think if it was fit to be called a national railway, it would do something for the people of Canada.
I have already referred to the numerous officials who came over from the United

States and were given soft jobs in this system. Let me refer to the failure of this national system to do anything to build up Canada and to solve our economic needs. The claims of the maritime provinces are at present before parliament in their attempt to get preferential treatment in the Duncan report. I hope that long-suffering part of the country will be given just treatment, and if we have to vote subsidies and subventions for that purpose, let us do it, and the same with the west. Instead of Sir Henry Thornton doing something for the benefit of the west, instead of bringing coal from Alberta and the maritime provinces over the Canadian National system to central Canada, and instead of utilizing the merchant marine for that purpose, what did he do? He sold some of the ships of the merchant marine that were worth $1,500,000 for $50,000. Some of those boats could have been converted into part lake and part ocean boats, like the whaleback boats, and during five or six months of the year could have been engaged in carrying coal from the maritime provinces to central Canada. A large number of extra idle cars at the head of the lakes, for several months empty, could also have been converted for bringing Alberta coal to central Canada. Did Sir Henry Thornton do that? No. He was asked to quote a rate on Alberta coal, and he took so long to do it that the people got tired of waiting for him to do anything to help solve the problem. At last he quoted a rate of $9 during last session. He might just as well have quoted $22. He is content to let Canadians be hewers of wood and drawers of water to the Pennsylvania coal barons. That is what he wants us to be. He did not care about developing this country or solving Canada's economic problems or helping to market the products of the sea, the soil, the forest and the mine. No, he was content to have Canada continue to be the happy hunting ground for the American coal millionaires under his system of administering the Canadian National railways. If Sir Henry Thornton had any conception of his duty as head of that great system he would long ago have soDed the coal problem and adopted a national policy.
The coal situation is in a terrible state. Stanley Baldwin in England has come to the support of the coal mining industry. It is an industry so closely connected with the railways, with steel, agriculture and other basic industries, that Stanley Baldwin during the hard days of the coal strike had to come to the support of the British railways and of

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the ^British coal industry, and by a system of subventions and subsidies help put that industry on its feet. Not so Sir Henry Thornton. He is prepared to have us spend $150,000,000 in the United States for coal, and to let us go on doing so for many a day before he will help to solve the coal problem in this country and come to the help of the people of Alberta and the maritime provinces, who should have been helped long ago to get their coal to central Canada.'
But that is not the only point. A case came before the railway committee not long ago. There are several sub-charters belonging to the Canadian National system- the Vermont system, the Michigan system, and the system running through Maine and I!link>is. In the city of Detroit Sir Henry Thornton gave up a very valtuiable right of way to the people of Miichiigaoi. He gave up an agreement under which he was paying $25,000 taxes to the state of Michigan, and gave up the right of way on Woodward! avenue in the city of Detroit for a backdoor right of way from Detroit out through the State of Michigan, and under this new agreement, instead of paying $25,000 in taxes, the Canadian National railway has to pay $125,000. When I asked for papers concerning this matter, it took me over a year to get them, and when they were finally brought down, they were not the ones I wanted. Millions of dollars of the taxpayers' money of this country is being spent, and when we ask for information, we are told it is nolt in the public interest to give it. I say, Mr. Chairman, that before parliament passes thus large expenditure of $31,000,000 there should be an investigation into the whole administration of the National railways from top to bottom. Before any more large capital expenditures are made, the railway commission should report on this particular matter. In the Drayton-Acworth report, Mr. A. H. Smith, Sir Henry Drayton and the late Mr. Aoworth, the eminent English engineer, after making a survey of the railways in this country, say that the railways had got into a rut of debt because of the haphazard granting of charters and the duplication and waste that went on. So far as the administration of the national railways to-day is concerned, it is a sealed book. You ask for information on the order paper, and you are told that it is not in the public interest to give it. Take the HydroElectric Commission in Ontario. They disclose everything to the legislature in connection with their administration-the salaries of the commissioners and engineers, and all costs and contracts, and all the details of the
plant at Chippawa, which is being built at a cost of $65,000,000.
Sir Henry Thornton seems to take his cue in a great many things from the Canadian Pacific railway. He did so in regard1 to the bill I had. He finds out what the Canadian Paoific railway is going to do, and then he does it. His policy is "me too." He seems to forget that the railways, as I said two years ago, have a commodity to sell-transportation. Instead of being able to sell transportation like any other commodity, in accordance with the law of supply and1 demand1, this particular commodity is hemmed1 iin with all kinds of laws, human and divine, and with all kinds of regulations and legislative restrictions. Secondly, transportation is not a free commodity. There is discrimination in the sale of it, with both sectional and provincial interests being considered. According to speeches that have been delivered, political considerations seem to prevail, instead of economic considerations, in settling the question of rates. Ereight rates from the standpoint of the railways 'and their bondholders should serve four purposes, namely, to provide:
1.	Operating expenses.
2.	Money for sinking fund and fixed charges.
3.	A reasonable dividend on the investment.
4.	If possible, some money for betterments and extensions.
I am very much disappointed! with public ownership, Mr. Chairman, if this is a sample of it that we are having in connection with the administraion of the Canadian National railways. It is not really public ownership at all, as I see it. I believe that this whole resolution should be referred to the railway committee before which the officials of the system could be examined as to securities, notes, equipment, operating income deficit, construction and betterments, and all these other matters as to which it is not fair for us to expect the Minister of Railways to be able to answer. We are being asked to vote $31,000,000 to-night. That is almost as much as it took to run this country when Sir Wilfrid Laurier came into power in 1896. It took $36,000,000 to run the country then, and to-night we are being asked to vote $31,000,000 in this haphazard manner without any report from the railway commission, and without the matter going before the railway committee.
Then as regards the freedom of the press in this country. It was brought out before the committee on railways and shipping that a great many newspapers in this country are
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receiving privileges from the Canadian National railway system. Newspapers to-day are being carried over the system in the mails as third-class matter at a cost of almost SI,500,-000, when the actual cost is over S3,000,000 or S3,500,000. Sir Henry Thornton when he took over the Canadian National railway system went in for advertising very extensively. Hon. members all know that by the literature they receive. Some newspapers were getting paid for advertising from which they received no practical value and there was no passenger or freight business coming to this system as a result of those advertisements. Many of them received passes as well. To do what? Passes no doubt Which would result in praise of the system. Passes to enable many officials coming from the other side to get a good position. Is that the reason? I do not know. I say further that the colonization department of thiis particular system is on a wrong basis. Sir Henry Thornton's whole colonization department of the national railways is on a wrong basis. It is an un-British and un-Canadian policy. It should be coordinated with the immigration policy. Under the present system we are not getting the immigration and I do not expect we will get it. Under this system immigrants are brought to Canada and then they go to the United States. About a hundred thousand people who really belong to this country went to the United States. Why can we not bring these men back and give them a chance to work in Canada? Yet they have an immigration branch and a colonization department, but I do not know whom they are colonizing. We have no way of checking it up. No sooner do the immigrants get here than they go to the States. I might refer to the attempted purchase by Sir Henry Thornton of the Home Bank property in Toronto on King street. The Canadian National Railway money was deposited by the railway in the Home Bank and if it had not been for the question asked in the House we would have lost a million dollars. The money was taken out a week before the bank failed. How did the money get there? The president of the Home Bank happened to be a director of the Canadian National Railways and also [DOT] of the Home Bank and had used his influence with the president and directors of the Canadian National to have the money deposited in that bank. The board of directors of the National Railways look to me more like a Liberal campaign committee. What did they do? Whom did they direct? Sir Henry Thornton seems to have been very successful in directing his votes through parliament in

the dying hours of last session. A special committee was appointed on railways and shipping. To do what? I might call it a whitewashing committee for all the information I could get in regard to it. What is the board of directors for? How do they function? Do they really carry out their duties? I have already explained how one of the directors carried out his duty in the purchase of that building in Toronto. I believe the time is coming when the people of the country are not going to stand for this course of conduct any longer. It is a very important matter to the people of Canada. Instead of Sir Henry Thornton effecting economy, his alleged economy is pure bookkeeping. Why do they not do as the Canadian Pacific did when the earnings of the company went behind $13,000,000 in 1924? They practised economy and effected a saving of $14,000,000 in operation and were thus enabled to pay their dividend.
It was announced in Toronto the other day that Sir Henry Thornton was going to build another hotel in that city. Almost every other day somebody in our city is going to build a hotel. Then Sir Henry contradicted himself and said that no money was going to be furnished by the company. A week ago he comes out with a new statement that he is going to give his goodwill and blessing to a proposition of business men but the Canadian National Railways will put up no money. Will the new hotel be similar to the skyscraper in Toronto at King and Yonge streets? Is the credit of the national railways and the government to be used for building the hotel like the credit was used for the skyscraper? I would like to get this information. The money which will be spent will be frittered away and will help to swell the deficit of $58,000,000. Sir Henry Thornton could find Canadians to fill the chief posts in the railway if he wanted to, and it would be much better for the system. His father-in-law is going to prepare plans to build an hotel in Vancouver for the system; perhaps other relatives will help to build hotels elsewhere.
All over the country a section of the suburban and urban press are talking about the Canadian National Railways. Instead of Christopher Columbus having discovered America, I think, according to some newspapers, it was Sir Henry Thornton who discovered America. Look at the oriental splendour in which he travels over the country and look at the cars in which he travels.

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When the question was asked as to the cost of repairs to Sir Henry Thornton's car it was stated that it was not in the public interest to give the information. And why not? In his tours of America I say that King Solomon in all his glory was not arrayed like Sir Henry Thornton. The Egyptian and oriental splendour that characterizes his travelling through this country with his radio and everything else is something dazzling and is a sight for the farmers and working classes. In a few days he will no doubt announce that some new Alphonse and Gaston from the states are located in a good job on the railway system. Yet they say it is not in the public interest to divulge how these new men obtain thousands of dollars from this Dominion for doing little or nothing.
I believe in real public ownership, but I venture to say that Sir Henry Thornton, from the foregoing, is doing more to-day to kill public ownership than any man I know of. If this matter comes to a vote I intend to oppose this resolution. I believe that this resolution should be referred to either the standing committee on railways or a special committee, or to the railway commission for a report.


Charles Avery Dunning: Some of my hon. friend's remarks are of such a character as to necessitate some brief reference on my part. I do not remember to have ever listened to a more astounding combination of unrelated facts and misinformation than the speech just inflicted upon the committee by my hon. friend. It was a bitter and grossly unfair attack on the Canadian National system. If my hon. friend and those who applauded him so vigorously on the other side of the House-


John Arthur Clark: And your own.


Charles Avery Dunning: Am I to take it that the applause from my friends opposite was merely ironic? If my hon. friend believes even a very few of the statements made by him regarding Sir Henry Thornton in his capacity as president of the Canadian National railway system, it was his duty as a member of this House to conclude his address by a motion that Sir Henry Thornton be at once dismissed from that position.


Richard Burpee Hanson: What good would that do here? It would be out of order.


Charles Avery Dunning: What good would it do here? My hon. friend would not vote for it, would he?


Richard Burpee Hanson: That is quite another
question. I submit that such a motion would be ruled out of order instanter.


Charles Avery Dunning: In this House we are expected to treat serious matters seriously, and when we are dealing with an institution of such great importance to this country as the Canadian National Railway, I think it is at least the duty of every member to assure himself as far as he can of the correctness of every statement he makes. I cannot pretend, sitting here listening, to prepare an answer to misstatements, errors and entirely erroneous statements in such great number as were presented by the hon. member for Toronto Northwest; I can only pick out a few typical instances.
Sir Henry Thornton was blamed for the acquisition of the Toronto Eastern:. The fact is that the Toronto Eastern was acquired by the Conservative government before Sir Henry Thornton ever became president of the Canadian National system. Sir Henry Thornton is blamed as an enemy of public ownership because he opposed the selling of certain Canadian National lines to the HydroElectric Commission of Ontario. He opposed that sale in what he believed to be the interests of the Canadian National system which is owned by the people of Canada. It is difficult for me to see how he can be charged with being untrue to the principles of public ownership simply because he believed it was desirable in the interests of the system that he was running for the government of Canada to refuse an offer for the disposal of certain property belonging to that institution.
My hon. friend repeated over and over again about Sir Henry Thornton's father-inlaw being the architect for the Chateau Laurier extension and, I think he said, for an hotel at Vancouver. I wish to assure my horn friend, and any others who may be interested, that the architect for the extension to the Chateau Laurier, for which partial provision is made in the estimates now under discussion, is Mr. John S. Archibald of Montreal.
With regard to an hotel at Toronto, I want also to assure my friend that the Canadian National Railway is not investing, directly or indirectly, one dollar in the construction of such an hotel, stories to the contrary notwithstanding. As to the twenty-six storey skyscraper that my hon. friend imagined at the corner of King and Yonge, also in the city of Toronto, may I say that the Canadian National Railway ;is not investing, either directly or indirectly, one dollar at the present time or in the immediate future in the erection of such a building.


Mr. McGIBBON:: What about the two
years' rent that they lost?
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Charles Avery Dunning: My hon. friend gives
me an opportunity of going into that; my hon. friend from Pictou (Mr. Cantley) also gave me a lead along that line this afternoon, and perhaps it is just as well that the House should be clear as to what the law is respecting the relationship between the government, represented by the Minister of Railways on the one hand, and the Canadian National management on the other. The law provides that the management of the property shall be committed to a president and a board of directors. They are in absolute charge of all matters of operation and management of the Canadian National Railway property. Under the law enacted by this parliament no power whatsoever is given the minister to interfere in any of those matters. Under the law the minister's power-the government's power-becomes operative only in case proposals are made by the board of directors which would have the effect of increasing the aggregate obligation of the people of this country or of impairing the property in any large way.
What does that mean in practice? It means that with respect to all of the type of matters to which my hon. friend from Pictou referred this afternoon-the class of equipment to be used on any particular branch line, the kind of materials to be bought for this or that purpose, who shall get contracts, and so forth-with respect to those matters the management itself is supreme; which means in railway operation very largely the president of the road. There is no question of that. But when the board of directors or the management propose to expend, let us say, $5,000,000 on a hotel in the city of Vancouver, in the city of Toronto or in the city of Ottawa, or propose to buy $20,000,000 worth of equipment, it is necessary for them to come to the minister. Then if after examination of the proposals he is convinced of their soundness, he must propose to his colleagues in the government an order in council giving the necessary authority for the expenditure and the consequent increase in the capital liability of the people of this country.
I am not arguing that we have yet arrived at a complete adjustment between the necessities of public ownership on the one hand and the necessities of responsible government on the other. I have never argued that we have yet reached the place where we can say that we have successfully adapted our great public ownership experiment to the necessities of responsible government. I do not want to be misunderstood in that regard, I do not want my remarks to be quoted as
[Mr. McGibbon.)
indicating that I am an enemy of public ownership-far from it. Neither am I one of those friends of public ownership who shows his friendship by attacking, in season and out of season, the management of a public ownership undertaking, which management is year by year improving the standing of that undertaking.
With regard to .passes, my hon. friend's remarks were full of insinuation rather than statements of fact. The issuance of passes, as every member of this House knows, is governed by the Railway Act, and I should like any hon. member who has knowledge of a case where the Canadian National Railway issued a pass in contravention of that act to advise me either publicly on the floor of the House or privately, as he may desire. More than that, the Railway Act provides for an audit of all free transportation issued under its provisions. That audit is made under the authority of the Board of Railway Commissioners, and involves sworn, state*-ments and the most careful checks that parliament could devise when, the amended Railway Act was passed in order to prevent abuse of the pass privilege.
So many wild statements were made by my hon. friend that it was impossible for me to follow him sufficiently close to make a note of them all. The few to which I have referred! are samples that will give the House an idea of the effect of my hon. friend's statements generally. What a great opportunity Canada missed when looking for a president of the Canadian National Railway system. If my hon. friend is as qualified a critic of the management as his remarks would indicate, the country surely missed an excellent opportunity. And what an opportunity my hon. friends opposite missed when last year and previously they had the privilege of placing the hon. gentleman, as one of their nominees, on the select committee appointed by this House to investigate the Canadian National railways and shipping. But my hon. friends, in spite of their applause of the hon. member's remarks to-night, saw to it that he was not one of their representatives on that committee.
The hon. member to-night reviewed the proceedings of that committee in a manner which, if it conveyed any reflection at all upon the members of this House, certainly reflected equally upon the members of his own side, because last year, as hon. gentlemen will remember, the committee was composed' of an equal number of Liberals and Conservatives. I attended every one of its sessions. Members opposite and members

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on this side were also in attendance at every session and I think the committee gave careful conscientious attention to the mass of detail which they had to consider in connection with the Canadian National accounts and Canadian National business generally. That is the place where it is possible to make a miu-ch closer examination than can be made before the House as a whole, and I do earnestly urge that statements suich as those made by my hon. friend should not be taken seriously by this House, but that each side should see to it that their best men-good, sound business men who desire to see public ownership a success in Canada-be placed on that select, committee, so that when the officers of the company appear before them it may be apparent to all that a committee of this parliament is doing its best to serve the public interest in connection with the operation of this great system. Very shortly I hope, it will be my privilege to move again the nomination of such a committee, and I trust that my bon. friends opposite wilt give consideration to the nomination, as one of their representatives, of my hon. friend from Toronto-that is, if they really believe that he is an expert in these matters. If his criticism of Sir Henry Thornton and the management is well grounded, the place for him is on that special committee to inquire into these matters.
So far as the Canadian National Railway system is concerned, if four years ago anyone had predicted that the system could be today in the sound financial shape in which we find it he would have been regarded as crazy. Every hon. member knows that. Of course, Sir Henry Thornton makes mistakes; he is human, unquestionably; very human. I do not always agree with him. As minister and president of the system, respectively, we often have very wide differences of opinion on matters which it is Sir Henry's business to place before me at times. Nevertheless I am convinced^ that Sir Henry Thornton is heart and soul behind the system in an endeavour to make 'it a success for the people of Canada. I can say .that, much as I may differ from him in certain particulars.
My hon. friend conveyed the impression that the House was being asked to vote $31,000,000 in a haphazard manner, ignoring altogether the fact that the details of this $31,000,000 were exhaustively gone into by that special committee containing six or seven representatives from the other side of the House with a similar membership from this side. This afternoon I called attention to the only major variations in detail as between
the work of the committee last year and the estimates now under consideration. I shall be glad to answer questions, so far as they may be within my knowledge, but I do not think that the remarks of the horn, gentleman will be taken very seriously by the people of the country.


Richard Bedford Bennett: Nothing could better illustrate the seriousness of our railway problem than the observations of the minister (Mr. Dunning) to-night. The remarks he made with reference to the hon. member for Toronto Northwest (Mr. Church) were wholly out of keeping with the general tenor of his speech. Sarcasm is not an answer, neither is an endeavour to heap ridicule on a member who advances certain opinions any reply to that member's statement. That is clear. But there is this point I should like to impress upon the committee, and I regard it as a matter of great importance. This is an estimate for the fiscal year ending March 31, 1927. It was approved of by the special committee, and to that extent we need not further concern ourselves about it, inasmuch as it was considered in all its bearings. There are in the estimates some items which increase the amount of the country's obligations beyond what was approved of by the committee, as stated this afternoon by the minister himself. But the purpose of my rising now is to point out the very great necessity of seriously considering how the people of Canada, who own the Canadian National railway system, may function as shareholders. That problem has not yet been solved under our democratic system of government. We have no real directorate control of this organization, for the directors are politicians. I ventured on a previous occasion to mention who they were and why they functioned as politicians, what they did in that capacity, and What their efforts were to control votes at election times. The directors of such an enterprise should not be primarily politicians; they should be business men of capacity, able and willing to assist the president of the system in the conduct of its operations. How is that directorate to be chosen and how is it to be elected? If at the annual meeting of the Canadian Pacific Railway Company, or of one of the banks, or of any other corporation, it is found necessary to elect directors, the shareholders have an opportunity to make the election. To-day the shareholders of this system, the people who own it, have no opportunity to place upon the directorate their representatives to control and direct the affairs of the railways. That is the real difficulty of government ownership in this country at the present time. I suggested

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Charles Avery Dunning: Who?


Richard Bedford Bennett: I say boasts made by one of the officials of the road to one of the ministers as to how well he had done his duty. That is what I say exactly, and I say that the time has come when the only way in which the system can be removed from the field of politics is to have a directorate elected by the people. Then we should know where we weTe when we are asked to vote money.


Charles Avery Dunning: In reference to a matter
of that kind, I think my hon. friend should go a little further or else withdraw his statement. I ask What minister he refers to-


Richard Bedford Bennett: I will say-


Charles Avery Dunning: -and what officer.


Richard Bedford Bennett: I am not going to give
the name of the officer. The officer who reads my observations will know exactly whom I mean, and when the time comes he will have an opportunity before the special committee to answer as to the truthfulness and correctness of the statement. Let there be no misunderstanding about that.


Charles Avery Dunning: Will my hon. friend name the minister?


Richard Bedford Bennett: I will name the minister
on that occasion, not now.


Charles Avery Dunning: Not now?


Richard Bedford Bennett: No, I have no intention
of doing it now. I will afford ample opportunity to the man to whom I refer to make his explanation.
An hoh. MEMBER:	You are afraid to
do so.


Richard Bedford Bennett: I beg your pardon.


An hon. MEMBER:: They say you are afraid.


Richard Bedford Bennett: I am not in the least
afraid. Do not for a moment think that.


An hon. MEMBER:: Give us the information then.


Richard Bedford Bennett: I repeat what I said a
moment ago, that one of the responsible officials of this road boasted of the success of his efforts last fall with respect to the vote of the Canadian National railway employees. That is what I say, and I have this much

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further to add:	There are men in this House
who know to whom I refer and the minister to whom the observation was made. What is more he was told that they did not thank him for the observation. I will say that in fairness to the man to whom the observation was made -they did not thank him for that sort of thing. There is only one way in which this system can be lifted out of politics and that is by having a directorate representative of the people of this country who own this road. There is only one way by which we can meet the situation and that is by the method I have indicated, namely, having the largest province and the smallest province each elect one director on a ballot of the members of the legislatures of the provinces and of this House. The difficulties in connection with taking such a ballot are not great. It can easily be done by mail ais is done with respect to the university, as is done in connection with the law society of the province in which I live in western Canada. The election can be carried out in that way, and we will get a class of men who will give disinterested public service, and secure the people of this country against the necessity of saying in parliament What the hon. member (Mr. Church) has been saying to-night.


Charles Avery Dunning: There was no necessity
for saying what he said.


Richard Bedford Bennett: There was with respect
to some of the things he said. With respect to the building on King and Yonge streets there was very great necessity, because I took occasion myself to investigate the facts with respect to that and a suit is now pending which has been brought about by reason of the very circumstances to which the hon. gentleman alluded; and I believe it is the duty of any man who represents a section of the great city of Toronto in this parliament to go into the facts with respect to that property.


Charles Avery Dunning: The facts, yes.


Richard Bedford Bennett: And he has stated the
facts. That property was supposed to be leased for Canadian National purposes and actually a suit is now pending. It will not be discreet to do more than say that litigation is now pending with respect to the matter arising out of the termination of the agreement by which that property was to be used for Canadian National railway purposes. That is the fact. My hon. friend may shake his head but I happened to see the order in council under which the matter was referred to the Exchequer court-


Charles Avery Dunning: Ah, yes, you passed it.
32649-13J


Richard Bedford Bennett: -in order to have the
matter settled. Certainly, that is how I know. The late government passed it because this man preferred a claim for damages by reason of a breach of contract. He alleged that he had suffered loss and damage because the contract which he had entered into had been broken. Surely any hon. gentleman in this House who represents a section of the city of Toronto has a right to direct attention to that fact. Was the Home Bank building bought for this purpose or not?


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: It is alleged that it was
bought for this road. That is the point the hon. gentleman was making, that it is possible on a misrepresentation of the facts by one man to bind this whole Dominion. What about the Scribe hotel? That is another case of the same kind. Was that done openly or not?


An hon. MEMBER:: What about the Vancouver hotel?


Richard Bedford Bennett: The Vancouver hotel
stands in this position-that the president of the road recommended that the site be bought and the hotel constructed, and on the strength of his recommendation the order in council was passed.


Charles Avery Dunning: Without the authority
of parliament.


Richard Bedford Bennett: Certainly.


Charles Avery Dunning: Exactly.


Richard Bedford Bennett: But subject to the approval of parliament.


Charles Avery Dunning: No, no.


Richard Bedford Bennett: I repeat, subject to the
approval of parliament.


Charles Avery Dunning: No, no.


Richard Bedford Bennett: Excuse me, subject to
the approval of parliament. The Postmaster General (Mr. Veniot) has no knowledge of what he is talking about, or the Minister of Railways either if they say it was not subject to the approval of parliament. I can only say to the Minister of Railways that contortions, facial or otherwise, are not answers. The coldblooded truth is that the order in council was passed, but it was subject to the approval of parliament and to the amount being included in the vote that was passed by the special committee and approved by this House.
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Charles Avery Dunning: Does my hon. friend
say-


Richard Bedford Bennett: These are the facts.


Charles Avery Dunning: Does my hon. friend
mean to say that there was any such understanding with the contractor, and that he entered into a contract to build not knowing whether he was to get his money?


Richard Bedford Bennett: No contract was concluded.


Charles Avery Dunning: Ah!


Richard Bedford Bennett: I repeat no contract was
concluded.


Charles Gavan Power: Was the work started?


Richard Bedford Bennett: As to that I cannot say. There was no contract.


Some hon. MEMBERS:: Oh, oh.


Charles Gavan Power: A man who entered into
such arrangements without getting a contract must be crazy.


Richard Bedford Bennett: The hon. member (Mr. Power) asked whether the work was started. My answer was that no contract was signed.


Charles Avery Dunning: Was the property purchased?


Richard Bedford Bennett: I believe it was, and
what is more it was purchased on the strength of a letter which was written by the president of the road asking and directing that it be done in settlement of difficulties between the city of Vancouver and the Canadian Northern, the predecessor of the Canadian National railway system, and the litigation is now pending.


Charles Avery Dunning: But without the authority of parliament.


Richard Bedford Bennett: The authority of parliament was to be given before the matter became final, and they took chances with respect to it. I know that is so. It was to be approved by parliament; there is no doubt about that.


Charles Avery Dunning: Does the order in council say so?


Richard Bedford Bennett: My hon. friend has asked me a question as to which I cannot speak with authority. All I know is this: That the acting minister or Prime Minister wrote a letter and I know that he assured his colleagues and assured this country that it was subject to the approval of parliament. Do not let us have any misunderstanding about the matter. That is the fact with respect to it.


Charles Avery Dunning: We will produce the
facts and the documents too.


Richard Bedford Bennett: The documents will
speak for themselves. Will the hon. gentleman say that the contract was signed?


Charles Avery Dunning: If my hon. friend will
sit down I will tell the House exactly what took plaice.
Mir. BENNETT I asked my hon. friend was it signed.


Charles Avery Dunning: It was signed by the
contractor.


Richard Bedford Bennett: Was it signed by the
railway company? That is the question.


Charles Avery Dunning: Will my hon. friend sit
down and permit me to answer?


Richard Bedford Bennett: I will continue my
observations, and then you can answer my question. I ask this question again.


Some hon. MEMBERS:: Sit down.


Richard Bedford Bennett: I asked my bon., friend
a question and gave him a chance to answer it.


Charles Avery Dunning: He will answer it now.


Richard Bedford Bennett: Well, answer it.


Charles Avery Dunning: I will if my hon. friend will take his seat and let me answer it.


Richard Bedford Bennett: Well, answer it.


Charles Avery Dunning: I am going to answer
it.


Richard Bedford Bennett: You are not going to
make a speech, I hope. When I have finished the minister oan make a speech.


Charles Avery Dunning: My hon. friend will not
prevent me from getting this on Hansard.


Richard Bedford Bennett: Let there be no misunderstanding about the matter. Will the minister say now whether that contract was signed by the 'Canadian National Railways?


Charles Avery Dunning: The horn member will
not let me answer.


Richard Bedford Bennett: Yes or no? Was it signed or not?


Charles Avery Dunning: My turn will come.


Richard Bedford Bennett: It is easy to bluff but
this is not the place for it. Was the contract signed by the railway company?


Charles Avery Dunning: I shall answer when the
hon. member gives me the floor.

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Richard Bedford Bennett: I knew he could not
answer except tto say no. The contract was not signed by the railway company. There was therefore no binding contract between the contractor and the railway company, and there was no order in council.


Charles Avery Dunning: The hon. member says
there was no order in council?


Richard Bedford Bennett: There was an order in
council authorizing it buit it was not completed. I desire 'that there shall be no misunderstanding. The contract with respect to the Vancouver hotel was subject to the approval of parliament and its voting the money with which to discharge the monetary obligation created by contract. This could not be otherwise and the minister has so stated here ito-night. He said that wherever there is a monetary obligation imposed on the ratepayers of Canada, it must have the approval of parliament.


Charles Avery Dunning: No,


Richard Bedford Bennett: That is what the minister saiid a moment ago,


Charles Avery Dunning: What I was discussing
was the relationship between government, minister and railways, and what I said was that expenditures of magnitude could not be incurred without the minister being consulted and recommending to his colleagues in council an order in council authorizing the expenditure. Hansard will bear me out in that.


Richard Bedford Bennett: That is exactly what
was done, but wherever a monetary obligation is imposed upon the country parliament must vote the money.


Charles Avery Dunning: That is right.


Richard Bedford Bennett: This was subject to
parliament voting the money but it had not voted it. The money was to be spent before it was voted.


Charles Avery Dunning: No.


Richard Bedford Bennett: This afternoon the
minister read out a statement showing that oars were on order. Did hon. members hear him? He came to this high court of parliament this afternoon and told us that the orders were already given for cars and asked us to vote the money with which to pay for them. These orders were announced in the press, 'the Wall street Journal and other papers. If the minister will hand me the sheet of paper from which he read this afternoon I will call the bluff at once where it said "on order." Let me 'have the whole statement.


Charles Avery Dunning: That is all the Statement I read, every word.


Richard Bedford Bennett: Let hon, members listen
to this:
Proposed new equipment, 1926-27.
Item 12. Fifteen milk cars on order.
Item 15. One electric locomotive on order.
Item 21. Thirty sleeping cars being built under rental contract.
Item 24. Sixty freight refrigerator ears on order.	,
Item 25. Forty tank cars, on order.
Item 30. One rotary snow plough on order.


Charles Avery Dunning: And the money was voted at the lasr session of this parliament for every one of them.


Richard Bedford Bennett: If that were true it would be an answer.


Charles Avery Dunning: It is true.


Richard Bedford Bennett: But unfortunately it is not true.


Mr. VENIOT:: It is.


Richard Bedford Bennett: The minister was not here.


Peter John Veniot: I know the record.


Richard Bedford Bennett: Judging from the records of the House on that occasion, I think Moses was engaging the attention of the Postmaster General.


Charles Gavan Power: If the hon. member's party had had a. Moses, it might have helped some.


Richard Bedford Bennett: We had a Moses, but the original Moses was not permitted to see the promised land. Joshua saw it, not he. So we had the Moses but it might be my hon. friends had the Joshua for the moment,


Charles Gavan Power: I would imagine the Joshua was on the other side of the House as well.


Richard Bedford Bennett: Parliament did not vote this money.


Charles Avery Dunning: It did.


Richard Bedford Bennett: What happened was that 25 per cent of the estimates were approved. This House passed the balance but they were not passed by parliament. If they were why is the minister asking parliament to vote it to-night?


Charles Avery Dunning: I will deal with that when my hon. friend has finished.


Richard Bedford Bennett: If my hon. friend will make his answer conformable with the facts he will once more agree with me that these various items were on order. Will he say they were not on order without parliament having sanctioned the estimates?
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Charles Avery Dunning: I say that parliament voted the money for them.


Richard Bedford Bennett: What parliament?


Charles Avery Dunning: Last session.


Richard Bedford Bennett: Surely my hon. friend has confused two things. The estimates were not passed.


Charles Avery Dunning: Did my hon. friend not hear me this afternoon even if he were not in his seat? Last session parliament did vote outright $10,000,000 of the amount we are now discussing.


Richard Bedford Bennett: Yes, and the $10,000,000 was lent at once by the Department of Finance to the Canadian National Railways. An amount of $7,500,000 was paid over before parliament was dissolved and the other $2,500,000 afterwards, and none of it has reference to this transaction.


Charles Avery Dunning: How does the hon. gentleman know that some of that money is not available to pay for cars that are ordered?


Richard Bedford Bennett: Because the orders under which it was obtained from the Department of Finance disclosed what it was for and these were not the purposes. These matters stand in exactly the same position as the Vancouver hotel. The money for the Vancouver hotel had to be passed by this parliament and until parliament passed it, there was no money with which to pay any estimates or anything else. What the minister said this evening is true; that is where the functions of parliament come in. Parliament must pass the estimates for expenditures of their money for the Canadian National Railway Company before capital expenditures can be made, and it is for that reason that the authority of .parliament is being sought to-night, just as the minister stated this evening. We agree with that, and until such time as parliament passed that amount the Vancouver hotel project was without money, -absolutely without a dollar-just as in this case, if we do not pass this estimate for equipment, there would be no money to pay for these various items now on order. The two stand in exactly the same position because they are capital expenditures. I would ask the minister, has any money been paid on account of this equipment thus far.


Charles Avery Dunning: Not on account of this particular equipment, no.


Richard Bedford Bennett: It is on order, and the money is not paid.


Charles Avery Dunning: It is not all on order.
fMr. Bennett.]


Richard Bedford Bennett: Part of it is on order, and the money is not paid, and when parliament votes the money, it will be paid?


Charles Avery Dunning: If parliament does not vote this $31,000,000 at all, with the $10,000,000 that has been already voted we can pay for the equipment that is on order.


Richard Bedford Bennett: I can only say that I know of my own knowledge that the $10,000,000 is paid.


Charles Avery Dunning: What for?


Richard Bedford Bennett: To meet arrears of
interest and matters of that kind. Over $10,000.000 was short in interest charges alone. That is the position with respect to that.


Henry Herbert Stevens: 
Charles Avery Dunning: The date is wrong.


Henry Herbert Stevens: Would the minister correct me in that? I am not quite sure as to the date.


Charles Avery Dunning: The arrangement never
was concluded.


Henry Herbert Stevens: Not so far as the minister is concerned.


Charles Avery Dunning: Nor so far as the railway company is concerned.


Henry Herbert Stevens: It was pretty well concluded. It was all concluded to this extent, that the president of the railway gave a letter, and furthermore, authorized the purchase of the property, which property was placed under option by the parties referred to. Let me make this clear:	There was
absolutely no politics in it.


Some hon. MEMBERS:: Oh, no.


Henry Herbert Stevens: Let me just state who
these gentlemen were. First of all there was the mayor of the city, Mr. L. D. Taylor, all his life a Liberal; Mr. McCrossan, all his life a Liberal; the contractor, E. J. Ryan, a Liberal of note. These are the gentlemen who were negotiating this agreement. The mayor asked me to co-operate. The minister knows I co-operated with him and gave every assistance I could to bring about a happy solution of the difficulty between the railway and the city. The whole thing centred around this outstanding agreement. During the hectic days of June, the last month of the session, nothing was done in
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connection with the matter. When the government changed, his worship the mayor wired me-I have not the wire before me- asking me if I was going to take the same stand I had taken in support of Mr. McCros-san and the city council when we were in opposition, and I immediately wired him "Yes." We made no change whatever in the negotiation except one, and by the way I should have made it clear that the one thing remaining to be done was the authority of the government by order in council-


Charles Avery Dunning: Hear, 'hear. And the
authority of parliament, if expenditure was involved.


Henry Herbert Stevens: Yes. My hon. friend from West Calgary (Mr. Bennett) is quite clear on that, but no order in council had been passed.


Charles Avery Dunning: You will be fair enough
to me to say that I consistently refused to ask such authority in connection with that matter.


Henry Herbert Stevens: I could not say as to that. I take my hon. friend's word for it.


Charles Avery Dunning: I told you so.


Henry Herbert Stevens: I do not recall that.


Charles Avery Dunning: My colleagues all know
it.


Henry Herbert Stevens: I am not questioning that at all. The fact remains that at that time it was not authorised by order in council. The matter then came before the new government. The Minister of Railways at thai time, the hon. member for West York (Sir Henry Drayton) I think-


Charles Avery Dunning: Acting minister.


Henry Herbert Stevens: Yes, that is quite true.
My hon. friend is entitled to his little quip,
J he enjoys it. The Minister of Railways it that time contended that instead of approving of a contract such as that which was outlined, namely, the erection of the hotel by a syndicate which would entail a heavy interest cost per annum, it should be provided out of the public funds which were under the control of the railway company, and so the order in council was framed along that line. It was found, and so stated by the railway officials, which the minister can verify, that a saving of fifty to a hundred thousand dollars a jrear would be made in interest alone if the financing were done under the aegis of the railway rather than by a syndicate, and so an order in council was passed, the order in council referred to by the hon. member for West Calgary (Mr. Bennett), approving of the railway's arrangement with the contractor and

with the city of Vancouver; and I want to point out that this hotel contract was a part of the solution of the difficulty with the city of Vancouver and the outstanding dispute. I do not think the minister will contend that the city is not entitled to the carrying out of the agreement for which it turned over the 165 acres of land in the heart of Vancouver, an agreement entered into in good faith by the city and the railway company. I do not think Sir Henry Thornton or the railway directors or management ever had any intention of doing otherwise than carrying out that agreement, with this exception: that in the passage of time it was found that some expenditures were perhaps not wise and not necessary and that a saving could be made, and as I have already stated, the city council of Vancouver approved of the waiving of eight million dollars on the tunnel and also some other matters to bring about a settlement.


Richard Bedford Bennett: And the ships on the
Pacific.


Henry Herbert Stevens: Yes. I do not think the ships on the Pacific were actually named in the resolution which contained these terms, but they were not being pressed. It was a distinct saving to the railway company and to the country.
In so far as the need of the hotel in Vancouver is concerned, there is a situation there which I think parliament ought to take note of. I am no enemy, as the minister is no enemy, of the great Canadian Pacific Railway. In common with many other Canadians, I recognize that it is a wonderful system, well operated and a model of business capacity, but at the same time it does seem to me preposterous that the Canadian National railways, when it comes to that terminal point should turn over all its passenger traffic to the Canadian Pacific railway hotel, which is the one outstanding hotel of Vancouver. The passengers are taken from the Canadian National depot to the Canadian Pacific hotel, and without any question, the business of the management of the Canadian Pacific is, as far as possible, to influence and divert traffic to their own channel. If they did not do that they would not be serving their own interest. The consequence is that the Canadian National directors I think recognize, without any question whatever, that it is highly desirable and necessary that the Canadian National railway should have an hotel at that terminal. As far as I am concerned, I do not care who builds it, or how it is built, as long as we can get an hotel in the city of Vancouver for two purposes; first, to serve the Canadian National railway, and second, to keep faith with

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the city of Vancouver in regard to the agreement of 1913. As far as the minister is concerned I want to say that in any conference or conversation that I have had with him on the subject during the months of, I think, February and March, possibly April and May, he always treated Mr. McCrossan and the representatives of the city and myself with courtesy, fairness and consideration. I have no complaint, and I am not criticizing him in the slightest degree. I wish to point out that an^ action taken so far as the government headed by Mr. Meighen was concerned was taken as, stall I say, continuing the arrangements partially entered into by the national railway; in fact, I think the minister will agree with me in this, that the terms of the settlement, if not, indeed, the actual settlement between the railway and the city, was arrived at long before the change of government. I know that the resolution of the city council of Vancouver approving terms and waiving its rights was passed long before there was any change of government. I think the minister will agree with that. I do not happen to have it before me but I can obtain it, and I know I am right.


Charles Avery Dunning: It was passed before, but not long before.


Henry Herbert Stevens: Not long before. I am
only trying to show that the matter was a question of good faith between the railway and the city. Furthermore, in authorizing the purchase of the land, Sir Henry Thornton acted in perfect good faith and in conformity with the arrangement made with the city and with the syndicate. I urge the minister to lend his co-operation and either to revert to the suggestion of the syndicate, if it is thought better-I see that form is followed in Toronto -and allow the railway to secure accommodation in Vancouver, or to adopt the prinoiple which we adopted, namely, the construction of an hotel financed by the national railway. But in any case let us have the accommodation at the city of Vancouver to serve the national railway as I think it ought to be served. I think that is a fair statement of the case.


Charles Avery Dunning: Mr. Chairman, there are a few paints that very naturally I want to deal with regarding my usually genial friend from West Calgary (Mr. Bennett). First, with regard to politics on the part of the officers or men of the Canadian National Railway. I was struck with surprise to hear such a charge from his side of the House, and there are scores of (bon. gentlemen behind me who must also have been equally surprised, because I know that more than one-half of
the members on this side of the House have reproached me with complaints regarding the Tory activities of the employees of the Canadian National Railway.


Peter McGibbon: It worked the other
way, don't be alarmed.


Charles Avery Dunning: Well, I venture to say
if my hon. friends had been as frank with the people regarding their opinion of the Canadian National management before the election aB they have been to-night we would have had a very much larger representation on this side of the House. They concealed their love for .the president and the management of the Canadian National Railway; they revealed it only after the event.
Now, with regard to the Vancouver hotel situation, let me say to my hon. friend from Vancouver Centre (Mr. Stevens) that I do not propose to discuss any of the obligations which the Canadian Northern Railway may or may not have incurred towards the city of Vancouver, for the reason that I am informed that the city of Vancouver has taken legal action in regard thereto.


Henry Herbert Stevens: I quite agree with my
hon. friend, and I hope he is not suggesting that I was trespassing in discussing a matter that was before the courts. I merely stated the historic fact by way of introduction. *
M.r. DUNNING:	I think my hon. friend
is quite enough of a politician to take care of himself along that line. As the matter is pending before the oourts, I do not propose to say anything touching that phase of it.


Henry Herbert Stevens: Quite so.


Charles Avery Dunning: But I can deal with the proposal to build a hotel in Vancouver without entering into a discussion of any contractual relations which may have reference to it. Last spring when I came down here first as Minister of Railways this was one of the things on my doorstep. Everything was 'arranged. All I had to do was to give approval, as minister, of an arrangement for a syndicate to build a hotel in the city of Vancouver for the Canadian National management. I may as well tell the House on this occasion as well as any other that I have an inherent suspicion of any proposal on the part of a group of philanthropic citizens to erect either hotels or office buildings for the Canadian National Railway Company. I have a very strong leaning towards the Canadian National building its own utilities with money voted by this parliament, rather than under any arrangement whardby third parties, however created, should do the work.


Richard Bedford Bennett: Hear, hear.
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An hon. MEMBER:: You have put your
foot in it.


Charles Avery Dunning: Have I? Perhaps my
hon. friend can point out one single case where, as Minister of Railways, I ever authorized an arrangement of that kind. I will give him an opportunity to do so now.


An hon. MEMBER:: Get up.


An hon. MEMBER:: Come -along!


Charles Avery Dunning: If I have occasion at
any time to change my views in connection with this particular matter I shall expect to come on the floor of the House and give good rdason therefor. As to the Toronto office building, my hon. friend from WeSt Calgary well knows that from the first day I refused to approve of an arrangement whereby a syndicate would buy property from the railway, erect a building for the railway, and then rent it to the railway.


Richard Bedford Bennett: Hear, hear.


Charles Avery Dunning: I disapproved of it, I
refused to endorse it, and I have kept on refusing to this day.


Richard Bedford Bennett: But the arrangement was made before my friend's time.
Mr. DU'NNING:	The arrangement never
was completed.


Richard Bedford Bennett: I know, but they took
possession.


Charles Avery Dunning: The arrangement never
was completed and they never took possession.


Richard Bedford Bennett: Go and look at the
building now.


Charles Avery Dunning: I -believe I am correct in stating that before my time the property was vacated.


Richard Bedford Bennett: The railway moved out.


Charles Avery Dunning: But as a matter of faot the arrangement never was oomjpleted. My predecessor as Minister of Railways, the Right Hon. Mr. Graham, refused to authorize the revival of an arrangement which had lapsed.	.


Richard Bedford Bennett: My hon. friend is right, but the railway vacated the building and there is now a claim pending in .the Exchequer court for a million dollars damages.


Ernest Lapointe: They will not get much out of it.


Richard Bedford Bennett: You and I will not anticipate that.


Charles Avery Dunning: I do not want to branch into a subject which possibly is in litigation, but I certainly think that a government which permitted a claim of that kind against the crown even to go to the Exchequer court is open to very serious criticism indeed.


Richard Bedford Bennett: The poorest subject has a right to go before the court.
Mr. 'CANNON: But this case went by an order of reference.


Charles Avery Dunning: My hon. friend1 The
Solicitor General (Mr. Cannon) is looking after that. I sometimes thank goodness that I am not a lawyer; but a lawyer of the capacity of the Solicitor General is very useful to have around on occasions. Wiith regard to the Vancouver hotel, my hon.- friend from Vancouver Centre knows well that I consistently, and this government in its previous existence consistently, refused to authorize the arrangement whereby a syndicate

no doubt of estimable gentlemen; no douibt they were both Liberals and Tbries- were going to build a hotel for the Canadian National and lease it to the Canadian National. Ostensibly they wiere going to make money out of it. I expect so. When the Canadian National builds a hotel in Vancouver, if it ever does, it will be built straightforwardly with money voted by this parliament for the purpose-at least, so fax as I am concerned and so far as the present government is concerned.


Henry Herbert Stevens: I think the hon. minister will concede that I tried to do him. justice. Will he not now admit that that is precisely a term of the order in council which we passed, that the hotel should be built out of moneys voted by parliament for that purpose?


Charles Avery Dunning: I will oorne to that. I am willing to do my bon. friend from Vancouver Centre this justice, that he was willing to support me in giving Vancouver a hotel any old way at all; and I am willing also to admit that when he had a measure of responsibility as a member of a temporary government, he was very careful not to db it in the precise way in which it had been urged upon me as Minister of Railways of this country.


Henry Herbert Stevens: My hon. friend1 is scarcely fair. I think he wants to be fair. He told me himself that he did not think it was possible to get a vote through parliament for the construction of the hotel when we discussed the building of it in the manner he now mentions.

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Charles Avery Dunning: That is quite right. And I dloubt very much if it would be possible to get a vote through the House for the building of the hotel to-day. But to continue my story. To listen to my hon. friend from Vancouver Centre, one would almost get the idea that this deal whereby a syndicate was to build a hotel in Vancouver for the Canadian National, and renit it to the Canadian National, was all but completed when the stormy times of last June commenced. The actual fact of the matter was that the people concerned were in the position of the importunate widow-they w'ere continually asking and were continually being refused. That is the whole position. There never was on my part or on the part of the government any indication at any time of consent to that proposal. When my hon. friends came into office nothing was dione immediately; but during the election, while the campaign was on, word went out that a $5,000,000 hotel had been authorized to be built at Vancouver by the Canadian National Railways on a cost-plus basis. The former Minister of Finance, the bon. member for West Calgary (Mr. Bennett) would have the House and the aauntry believe that it was -made plain at that time that this hotel was to be built, and the -money spent, only provided parliament voted' the expenditure.


Richard Bedford Bennett: That is the law; that is
the statute law.


Charles Avery Dunning: That is the law, but my hon. friend is the prophet. It will be plain to the House how clever he is in putting forward that explanation-and I always take off my hat to his cleverness in debate-when I tell the House ith-at this proposal, which was to be proceeded with only if parliament approved, first involved the expenditure of about a quarter of a million for land-and they spent it-if parliament approved. But the men who owned the land now have the money and we have the land-"only if parliament approved."


Richard Bedford Bennett: That is absolutely correct.


Charles Avery Dunning: My hon. friend asked
the question, which -he would not allow me to answer, whether the contract was signed by the railway company. Well, because he is so insistent upon an answer I must tell the committee something which I did not deem of great importance but which assumes an importance under the circumstances. After the government of which my hon. friend was a member was sent into opposition by the
people of Canada last September, and just a few days before the new government now in office was sworn in, I received a visit from the Deputy Minister of Railways. I wanted to know what he came to see me for. The Hon. Mr. Black was Minister of Railways and Sir Henry Drayton was acting minister. The deputy minister told me that he came to see me on instructions from Sir Henry Drayiton, to consult me -as -to -the desirability of the railway officials signing the contract for the Vancouver hotel which had been authorized and which had been signed by the contractor and was back for signature by the officials of the railway company. That is how far he went.


Richard Bedford Bennett: He referred it to the new minister.


Charles Avery Dunning: Quite properly; I hope
the committee will not misunderstand. I am not now criticizing the action of the hon. member for West York (Sir Henry Drayton) in instructing the deputy minister to consult me in regard to the matter, although how he knew that I was to be Minister of Railways I do not of course know.


Richard Bedford Bennett: Coming events cast their shadows before.


Ernest Lapointe: It was a strong assumption.


Richard Bedford Bennett: Yes.


Charles Avery Dunning: In any event it was perfectly proper for a member of the defeated government not to sign that contract under the circumstances.


Richard Bedford Bennett: It was the railway company who would sign it in any event.


Charles Avery Dunning: Well, not -to authorize
the railway company to sign it. But I ask the members of the committee whether they are credulous enough to believe that that contract would not have been signed had my hon. friends been returned to power. The assumption is too absurd for words. As a matter of fact, the political campaign of hon. gentlemen opposite, who now represent the city of Vancouver, was based upon the building of' that hotel and the building of it immediately. Are they now, in the language of the hon. member for West Calgary, going to admit frankly that they deceived and deliberately deceived the people of Vancouver in connection with the building of that hotel? Every newspaper and every political speech made by hon. gentlemen opposite who were candidates in Vancouver
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conveyed the impression to the people of that city that the land was bought, that they were going right ahead, that the contract was being let, that the hotel was to be built forthwith in Vancouver. To-night is the first occasion on which I for one have heard the statement that it was quite clear that the hotel was to be gone on with only if parliament approved. I never heard of it before.


Henry Herbert Stevens: Will the minister permit
me-


Charles Avery Dunning: I will permit anything.


Henry Herbert Stevens: One of the bitterest
criticisms of myself was that after coming into office I supported the construction of that hotel in Vancouver. I was criticised and bitterly criticised by my own friends as well as by opponents, but I want to assure the committee that the building of the hotel did not constitute a fraction of the appeal that I made or that any of my colleagues made to the people of Vancouver. Furthermore, this criticism was levelled at me-


Charles Avery Dunning: I protest; I did not inflict this* on my hon. friend.


Henry Herbert Stevens: I know that in his heart my hon. friend does not wish to be unfair. I appreciate his desire to be just. He will therefore allow me to finish my statement. The criticism was also made-and this is where the political side of it comes in-that we were approving of something that was handled entirely by opponents of ours, and I told the mayor of the city that my action would be the same towards the proposition, as the records will show, after the change of office as before.


John Arthur Clark: Mr. Chairman-


Charles Avery Dunning: I had the floor and I permitted my hon. friend (Mir. Stevens) to interrupt, but I must object to further interruptions.


John Arthur Clark: I want to correct my hon.
friend.


Some hon. MEMBERS:: Order.


The CHAIRMAN:: Order.


John Arthur Clark: This is a matter of privilege. The minister made the statement that I personally appealed to the electors of Vancouver on every occasion in the manner he has described. I want to say In answer to that statement that it is absolutely incorrect and without foundation. So far as I at any rate am concerned, not on one platform did I mention the hotel in Vancouver, nor did any

speaker refer to it on any platform on which I stood. To the best of my recollection no mention was ever made of that hotel. I ask the minister, as regards myself at least, to withdraw his statement.


Mr. LADNER:: I rise to the same question of privilege. The minister in his vigorous style sometimes uses extravagant and incorrect language. So far as his words refer to myself, the statement he has made is incorrect, because on no occasion did I ever refer-


Some hon. MEMBERS:: Oh, oh.


Leon Johnson Ladner: I am making this statement as a member and a gentleman and I want to be heard. I say, on no occasion did I ever refer to the Canadian National Railways in connection with this hotel in any of my speeches to the people. The minister should be careful in his statements.


Mr. SPENCE (Maple Creek):: How did
the people of Vancouver find out that they were going to get the hotel?


Leon Johnson Ladner: Through the usual channel, the press.


Charles Avery Dunning: If it will please my hon.
friends opposite, I am quite prepared to believe their statement that they made absolutely no political capital out of the fact that during the election campaign the government of which my hon. friend was a supporter authorized the expenditure of $5,000,000 on a hotel in Vancouver. I am prepared to accept that statement.


John Arthur Clark: Be a man and withdraw the statement. Be a gentleman.


Charles Avery Dunning: Mr. Chairman, I will-


John Arthur Clark: I should like to believe that my hon. friend is a gentleman and that he will withdraw and apologize for his statement.


Charles Avery Dunning: I am quite content to let the facts speak for themselves.


John Arthur Clark: State the facts.


Charles Avery Dunning: I am quite convinced that my hon. friend never mentioned the Vancouver hotel during his election campaign. That is what he says and I accept his word.


John Arthur Clark: I said more than that.


Charles Avery Dunning: More than that?


John Arthur Clark: Yes.


Charles Avery Dunning: Nobody on my hon. friend's behalf mentioned the Vancouver hotel.


John Arthur Clark: There was no such appeal made on my behalf.

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Charles Avery Dunning: I accept that statement- that neither my hon. friend nor anybody on his behalf in his election campaign-


Ernest Lapointe: Nor any newspaper.


Charles Avery Dunning: Nor any newspaper, nor anyone with whom my hon. friend had to do for the purpose of getting elected mentioned the Vancouver hotel.


Some hon. MEMBERS:: Oh, oh.


Charles Avery Dunning: But referring to matters specifically before the House, the hon. member for West Calgary referred to my statement that in regard to every item here mentioned as being "on order" the railway company had sufficient money to pay for that equipment when delivered.


Richard Bedford Bennett: That was not the question at all.


Charles Avery Dunning: My hon. friend read out a few items of the long list I read this afternoon and which had following them the statement "on order". I have totalled up the amount involved and if my figures are correct, and I believe they are, it amounts to $833,000 out of a proposed expenditure of twenty million. I would point out to the House that one-third of the total thirty-one millions which is now before the House was voted at the last session of parliament, that the money was paid out to the Canadian National Railways, and I make the statement that .it was quite proper for the Canadian National Railway Company to pay for that portion of the equipment which is "on order" -that they were quite right in doing so. As to the orders in council to which my hon. friend refers, outlining the purposes for which the advances were made to the Canadian National Railway Company while he was Minister of Finance, I have not received them, but I have sent for them.


Richard Bedford Bennett: They were made before my time.


Charles Avery Dunning: I understand there were orders in council.


Richard Bedford Bennett: That is what I say. There were seven and a half millions obtained before our time.


Charles Avery Dunning: And two and a half millions since.


Richard Bedford Bennett: After you came back.


Charles Avery Dunning: Yes. The point is, in connection with the small proportion of this proposal which is "on order", that there is authority to pay the money required to be paid.


Richard Bedford Bennett: That money has been all spent otherwise.


Charles Avery Dunning: No.


Richard Bedford Bennett: The whole of the ten millions has been spent otherwise. The deputy will tell you that. I know whereof I speak.


Mr. NEILL:: May I say that I live in
British Columbia and have access to the daily papers published in Vancouver. As a loyal British Columbian I feel somewhat inclined to support the attitude of the hon. member for Vancouver Centre (Mr. Stevens) who made a reasonable statement as to the claims of that city. I certainly hope they get the hotel built if they are entitled to it. But when it comes to statements made by his colleagues that they never in any way used this question to promote their political ambitions I must take them with a great deal of gravity. I heard the hon. member for West Calgary (Mr. Bennett) this evening describe what he considered was the nature of that transaction. He called it a contract but he admitted in answer to a question from the Minister of Railways that it was a contract that was not signed by the railway company. That would be somewhat similar to the position of a man who might come to me and say "I have sold you a house". To that I would say, "Oh, have you, I did not know it." "Oh, yes, I have sold you a house because I have got the contract signed." To that I would say, "Have you? I did not sign it," evoking a reply, "No, but I signed it." That is the position the hon. member for West Calgary tells us was the correct one. But that was not the position that was represented to the people of Vancouver. I did not hear those hon. gentlemen say anything about the matter, but in the newspapers friendly to them there was displayed, in such big headlines that there was barely room for anything else on the page, "The contract is signed". There was nothing mentioned to show that it was signed only by the contractor ar.d not by the railway company; that point was not brought out. That modification was not set forth even in the small print that is customary in setting forth the composition of patent medicines. That important detail was omitted entirely. Of oourse I was more particularly interested in the election in Comox-Albemi, but I saw the daily papers of Vancouver and I would say offhand and subject to criticism that as near as I could guess the campaign of their party in that city consisted to .the extent of one-
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third, customs scandal, one-third attacking the old age pension legislation, and one-third enthusing about the building of this big hotel.


Arthur Edward Ross: Did the minister make the statement that the value of these orders amounted to only $800,000?


Charles Avery Dunning: I calculated the amount from the sheet supplied me by the management and which I lent a few moments ago to my hon. friend (Mr. Bennett)-that is I calculated the items stated to be "on order". It is true that within the last few days, knowing the near approach of the session of parliament, orders may have been given with the assurance that parliament was going to deal with the matter, subject to cancellation before any work was done. Even from a technical standpoint I cannot see that the management has not been correct in giving orders subject to the authority of parliiment.


Mr. HEPBURN:: The minister made the statement that it was the intention of the Canadian National Railway management to spend in the United States a portion of the money to be used in purchasing equipment for the American lines forming part of the system. I should like to point out to him the situation in southern Ontario. Despite the tremendous traffic that part of Canada yields American lines, they have in the last few years practically reduced the eonst-uction of car? and the repairs done in their shops in Ontario to a minimum. The result has been that many men have been laid off and the local municipalities have a serious situation to deal with. Is there any way by which this House can compel the American lines operating in that part of Canada to give to Canadian workmen a portion of the work that justly belongs to them? Last year in the estimates there was an appropriation to build new shops for the Canadian National at St. Thomas. I ask the Minister of Railways if it is still the intention of the railway management to go on with these shops, and if not what reason they assign for changing their plans.


Charles Avery Dunning: I found it rather difficult to hear my hon. friend but I gather that his remarks had relation to the desirability of getting as much of this work done in Canada as possible. Am I correct in that?


Mitchell Frederick Hepburn: I should like to point out that in the last few years the American lines have practically discontinued the construction of new cars and are doing no major repairing. They have shops equipped for

that purpose but they a.re not using them; they are not making any major repairs in Canada. I am speaking about the Michigan Central Railway in particular. Are there any customs regulations or anything that would compel them to do a proportionate share of this work in Canada?


Charles Avery Dunning: As I stated this afternoon, the Customs department is watching the situation in that regard; but I would point out to my hon. friend that a great deal of American equipment passes from the United States into Canada and out again just in the same manner as our equipment does, and in such cases the customs regulations of both countries permit the passage through and repairs can be made on either side. I shall be glad to make further inquiries in reference to the point raised by my hon. friend which really has no bearing upon the particular estimates before the committee, although this is a proper time to mention it in any event.


Richard Bedford Bennett: I know the minister
will be very glad to have his attention directed to the fact that the national railway makes contractual commitments before parliament has voted the money, because in the Kingston Standard-Whig of Wednesday I find a despatch from Montreal indicating that the first of a series of orders was received on Saturday by the Canadian Car and Foundry Company, Limited, for $2,000,000 for some of the very equipment that has been mentioned to-day and that orders are now to go to Kingston, to tihe locomotive company for the work that has to be done there. Apparently this is an inspired despatch because it describes where the contracts are to go with regard to the Grand Trunk eastern lines. I merely state that this illustrates the point I was endeavouring to make, namely that the railway company makes contractual commitments before parliament has voted the money, and it is desirable that there should be some uniform system with respect to the matter if it is to be followed along the line suggested by the minister himself. This record indicates clearly what is taking place with respect to the Canadian Car and Foundry Company.


Charles Avery Dunning: My (hon. friend will
surely recognize that that article says merely what the newspaper believes has happened.


Richard Bedford Bennett: It is a despatch from
Montreal.


Charles Avery Dunning: Quite likely, but it is
not a Canadian National official statement.

Rules oj the House


Richard Bedford Bennett: Yes it is. It says that
they have placed orders for new equipment.


Charles Avery Dunning: Who says that?


Richard Bedford Bennett: The newspaper says that the Canadian National has done so.


Charles Avery Dunning: It does not officially
quote the Canadian National.


Richard Bedford Bennett: We will ascertain if the
contracts have not been made.


Charles Avery Dunning: My information regarding that point is simply this:	The railway
company has been pressing very hard to be allowed to get into a position where this equipment will be on order, as much of it will be very badly required before it is delivered and deliveries will stretch over a year or 'more of this particular equipment. Sir Henry Thornton on the last occasion when he discussed the matter with me stated, "I must move forward." I said, "Very well, there is nothing to prevent you from going through all the preliminaries of calling for tenders and getting your prices so that you will be in a position to act with the utmost expedition once we have dealt with the matter in parliament."


Richard Bedford Bennett: Will the minister inquire whether or not on Saturday last a contract was let to the Canadian Car and Foundry Company for $2,000,000 worth of equipment, and let parliament know the result?


Charles Avery Dunning: I will.


Richard Bedford Bennett: If he does I am satisfied he will find that a contract has been let.


Charles Avery Dunning: The deputy minister is
a director of the company and he advises me definitely that such a contract has not been let.


[Stage Direction]
Item agreed to.
Loan to the Canadian Government Merchant Marine Limited, repayable on demand with interest at a rate to be fixed by the Governor in Council, upon such terms and conditions as the Governor in Council may determine, and to be applied in payment of:-
(a)	Deficits in operation of the company and of the vessels under the company's control during the year ending March 31, 1927.
(b)	Capital expenditure in connection with the vessels under the company's control, $600,000.
Hugh Guthrie: Will the minister give a
word of explanation about this appropriation?


Charles Avery Dunning: This appropriation is
identical with the material submitted to the special! committee one year ago. There is no change.


Richard Bedford Bennett: Is it for the year ending March 31, 1927?


Charles Avery Dunning: Yes.


Richard Bedford Bennett: There is nothing for next year?


Charles Avery Dunning: There is nothing in any
of these estimates for next year.


[Stage Direction]
Item agreed to.
Resolutions reported, read the first and second time and concurred in.


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Railways and Canals) moved that the House go into committee of ways and means.
Motion agreed to and the House went into committee, Mr. Johnston in the chair.
Charles Avery Dunning: Resolved that towards making good the supply granted to His Majesty on account of certain expenses of the public service for the fiscal year ending March 31, 1927, the sum of $21,400,000 be granted out of the consolidated revenue fund of Canada.


[Stage Direction]
Motion agreed to.
Resolution, reported and concurred an. Mr. Dunning thereupon moved for leave 'to introduce Bill No. 58, for granting to His Majesty certain sums of money for the public service for the financial year ending March 31, 1927.
Motion agreed to and bill read the first time.
On motion of Mr. Mackenzie King the House adjourned at 10.30 p.m.
Friday, February 11, 1927