1929-03-01

[Stage Direction]
Bill No. 70, respecting Joliette and Northern Railway Company.-Mr. Ferland.


Right Hon. W. L. MACKENZIE KING (Prime Minister) moved:: That the name of Mr. McIntosh be substituted for that of Mr. Bock on the select standing committee on banking and commerce.
That the name of Mr. Bock be substituted for that of Mr. McIntosh on the select standing committee on agriculture and colonization.
That the name of Mr. Howden be struck off the list of members of the select standing committee on miscellaneous private bills.


[Stage Direction]
Motion agreed to.

William Lyon Mackenzie King: Following the practice respecting the debate on the budget, whereby the debate is accorded precedence over other matters once the Minister of Finance has introduced his budget, I beg to move:
That on Monday, the 4th of March instant, and every day thereafter the motion for the Speaker to leave the chair for the house to go into committee on ways and means have precedence over all other business, except the introduction of bills, questions, and notices of motion for the production of papers.


Hon. HUGH GUTHRIE (Acting Leader of the Opposition):: Mr. Speaker, personally I
have no objection to the motion, but I must say that it would suit my convenience very

Precedence of Budget Debate
much if it took effect on Tuesday instead of on Monday, and in conversation with my hon. friend who leads the Progressive party I believe it would suit his convenience also. Monday then would be private members' day, according to the order paper. I do not want to urge my objection too strongly, because it is entirely a personal matter.


Mr. JOHN MILLAR (Qu'Appelle):: I rise to support the view of the acting leader of the opposition.


Some hon. MEMBERS:: Oh, oh.


John Millar: I think on that side of the house they often need support. On looking at the order paper it will be seen that the first resolution refers to the grading of wheat. That matter- itself could very well stand cfVer until after the budget debate with no serious result, but it is intertwined and interlocked with matters of vital importance to western Canada, one of them being the mixing of grain and I know that members on both sides of the house are anxious to have this question proceeded with and sent to committee in order that the other matters which are of pressing importance and which will possibly necessitate legislation during this session may be investigated without loss of time. If the matter stands until after the budget debate is concluded, probably two weeks of valuable time will be lost, and I think it important that this question go to the committee at once. It will not take very long, and if Monday were allowed for private members the matter would go to the committee and they would have something of importance to proceed with.


Mr. ROBERT GARDINER (Acadia):: I
desire to support the views of the hon. gentlemen who have preceded me. There are some very important questions which should go to the agriculture committee, and if the hon. member for Qu'Appelle (Mr. Millar) is given an opportunity to bring up his motion on Monday it will give the agriculture committee an opportunity to look into some questions affecting the grain act which we in western Canada feel should be dealt with this session. Therefore I would suggest to the Prime Minister and his colleagues that Monday remain private members' day and that we proceed with the budget on Tuesday.


William Lyon Mackenzie King: Naturally the desire of the government is to meet the convenience of the house and particularly the wishes of hon. gentlemen leading other parties. May I say that I believe there is a desire on the part of members of the house to conclude the debate which has 'been in progress during 
the last few days on the motion regarding the disposition of natural resources, moved by the hon. member for Winnipeg North Centre (Mr. Woodsworth). I had thought there might be some expression of opinion as to the desirability of concluding that -debate before continuing with the budget debate, and if that request had been made I was prepared to grant it, more particularly since, having regard to the sequence of the order paper, I doubt if it would come up again for some time this session. The motion now appears under public bills and orders and from now on, for the remainder of the session, the notices of motion of private members will be reached before public bills and orders are taken up. I would not say that this motion will not come up again, but there is the probabilty of considerable delay. If hon. members would like to dispose of that motion and also consider the other motion to which reference has been made, I have no objection to amending my resolution in order to permit these two matters to be proceeded with prior to the continuation of the debate on the budget. I think that would suit the convenience of all.


Hugh Guthrie: That would be satisfactory to this side of the house.


Mr. WOODSWORTH:: It would be highly satisfactory if the motion in my name could be proceeded with; I think it would be more satisfactory to all sections of the house if it could be disposed of and not left until after the debate on the budget.


Mr. SPEAKER:: Shall the motion as
amended be agreed to?
Motion as amended agreed to.



RULES OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. JAMES ARTHURS (Parry Sound):: Mr. Speaker, the following motion appears on the order paper under date of February 26:
Resuming the adjourned debate on the motion of Mr. Morin (St. Hyacinthe-Rouville) for the concurrence in the first report of the select standing committee on standing orders.
As this is a very important matter relating to the conduct of the business of this house, and as a number of the members are absent during the early hours of the Monday sessions, I would ask that we be assured that this matter will not be brought up on Monday.


William Lyon Mackenzie King: I am prepared to give that assurance to the hon. member.

The Budget-Mr. Robb



THE BUDGET


Hon. J. A. ROBB (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.


Hewitt Bostock: In accordance with the
rules of the house on Fridays the Speaker leaves the chair without question put, but by unanimous consent this motion may be put.


James Alexander Robb: Mr. Speaker, the general
*optimism prevailing throughout Canada has, during recent months, been so widely reflected and strongly emphasized in provincial legislative assemblies, annual reviews and financial statements that, in presenting this annual budget, little need be said beyond submitting official figures which, when analysed and compared with the records of previous years, will show a steady and1 continuous reduction of both debt and rates of taxation.
The fiscal year ends, as hon. members know, *on the 31st of March, consequently, when on the 16th of February, 1928, the annual budget Statement for 1927-28 was presented, it was necessary to make an estimate of the total revenues and expenditures. The public accounts for that year have since been tabled and give in detail the various revenues and expenditures and show that, after transferring certain old and doubtful assets and soldier settlement loan adjustments from active to non-active assets, the actual net debt reduction for the fiscal year 1927-28 was $50,984,137.17.
Fiscal Year 1928-29	.
Revenues
For the fiscal year 1928-29, which ends on the 31st March, it is estimated that the ordinary revenues will be $450,000,000, which, with special receipts from reparation payments of $3,500,000 and receipts of $1,400,000 from the Imperial government in final adjustment of disputed claims, together with $42,000 miscellaneous receipts, makes total estimated revenues for the year of about $454,942,000. This will be an increase of some $25,000,000 over the revenues for the year 1927-28.
It is estimated that customs revenues will be $185,000,000, an increase of $28,000,000 over the previous year; excise duties $63,400,000, an increase of $6,000,000; income tax $58,500,000, an increase of $1,900,000; interest on investments (including $1,500,000 interest derived from temporary investments of our surplus
cash holdings), $11,600,000, an increase of S660,000; and revenues from other sources
S16,350,000,	an increase of $840,000.
Services which it is estimated will show decreases are: excise taxes, sales, stamps, etc., $81,500,000, a decrease of $8,700,000 from the previous year; delayed business profits tax $450,000, a decrease of $500,000; Post Office $31,000,000, a decrease of $560,000; and miscellaneous services $2,200,000, a decrease of $370,000.
Expenditures
Our ordinary expenditures for the year, Mr. Speaker, are estimated at S355,200,000. This includes payments made under authority of the Maritime Freight Rates Act, 1927, of $2,992,000 to meet the twenty per cent reduction in maritime freight rates, and $4,303,000 to meet deficits on eastern lines. It also includes $1,600,000 by way of special grants to the maritime provinces, $800,000 to be paid to the provinces of British Columbia, Saskatchewan, and Manitoba as the Dominion's share of old age pensions payments, and $2,190,000 to the Federal District Commission under authority of the Federal District Commission Act as amended in 1928.
The capital expenditures are estimated as $24,150,000 and special expenditures at $1,937,000. In addition, loans in cash to the Canadian Government Merchant Marine are estimated at $1,000,000 and to the Quebec Harbour Commission $2,873,000. As these loans are carried as non-active assets the amounts are included as expenditures for the year. The total estimated expenditures will, therefore, be $385,160,000, an increase of $22,332,000 over the expenditures of the previous year.
Surplus $69,782,000
By deducting the estimated total expenditures of $385,160,000 from the estimated total revenues of $454,942,000, it will be observed that the estimated surplus of revenues over all expenditures for the current fiscal year is $69,782,000.
Mr. Speaker, for the convenience of hon. members, may I, with the consent of the house, place on Hansard a comparative summary showing the actual revenues and expenditures by services for 1927-28 and the corresponding estimated revenues and expenditures for the current fiscal year; also a statement of the estimated ordinary revenues and the estimated expenditures, by services, for the present fiscal year, together with their percentages to the total revenues or expenditures as the case may be.
The Budget-Mr. Robb

Revenues
	Actual	Estimated		
Ordinary Revenue	1927-28	1928-29	Increase	DecreaseS	8	8	$Taxation Revenue-	Customs Import Duties	156,985,818	185,000,000	28,014,182	Excise Duties	57,400,897	63,400,000	5,999,103	War Tax Revenues-	90,222,931	81,500,000	8,722,931Income Tax	56,571,047	58,500,000	1,928,953	956,031	450,000	506,0312,569,078	2,200,000	369,078Total Revenue from Taxation	364,705,802	391,050,000	35,942,238	9,598,040Interest on Investments	10,937,822	11,600,000	662,178	31,562,580	31,000,000	562,580Dominion Lands and Parks	3,688,595	4,000,000	311,405	Canada Grain Act	2,677,878	3,000,000	322,122	Miscellaneous Receipts	9,145,306	9,350,000	204,694	Total Ordinary Revenue	422,717,983	450,000,000	37,442,637	10,160,620Special Receipts	German Reparation Payments-	Under Dawes Plan	3,002,048	3,500,000	497,952	3,789,430	3,789,430Refunds of Previous Year's Expenditure on War	204,974	42,000	162,974Received from Imp. Govt, in final settlement of	1,400,000	1,400,000	133,117	133,117
429,847,552	454,942,000	39,340,589	14,246,141
			14,246,141	
Estimated Increase				25,094,448	
Expenditures
Ordinary Expenditure				
128,902,945 39,778,130	125,000.000	3,902,945Pensions	42,000,000	2,221,870	Subsidies to Provinces	12,516,741	12,550,000	33,259	Soldier and General Land Settlement Adminis-	tration	1,334,008	1,400,000	65,992	Soldiers' Civil Re-establishment	6,958,611	7,900,000	941,389	National Revenue	11,801,331	13,300,000	1,498,669	Post Office	31,782,968	33,250,000	1,467,032	National Defence	15,864,188	18,000,000	2,135,812	Agriculture	6,487,766	7,390,000	902,234	Public Works-Chargeable to Income	14,037,366	17,500,000	3,462,634	Ocean and River Service	3,749,105	4,700,000	950,895	Dominion Lands and Parks	4,082,752	5,100,000	1,017,248	Trade and Commerce	
Special Grant to Maritime Provinces	4,015,985 1,600,000	4.600.000 1.600.000	584,015	Maritime Freight Rates Act-	Due to 20% reduction in Freight Rates	1,353,465	2,992,000	1,638,535	Deficit on Eastern Lines (C.N.R.)	2,117,936	4,303,000	2,185,064	Old Age Pensions Act	131,452	800,000 2,190,000	668,548 2,190,000	Civil Government	11,576,140	12,300,000	723,860	Other Expenditures	38,077,072	38,325,000	247,928	Total Ordinary Expenditure	336,167,961	355,200,000	22,934,984	3,902,945Special Expenditure	1,860,985 1,705,311	150,000	1,710,985Miscellaneous Charges to Consolidated Fund	1,787,000	81,689	

The Budget-Mr. Robb
Expenditures-Concluded
	Actual	Estimated		
1927-28	1928-29	Increase	Decrease$	$	$	8Capital Expenditure	1,373,633	1,190,000	183,633Public Works, Marine Department	1,907,464	2,760;000	852,536	Railways	3,591,646	6,960,000	3,368,354	13,762,905	13,240,000	522,905Loans and Advances Non-Active	Canadian Government Merchant Marine	999,837	1,000,000	163	Quebec Harbour Commission	1,458,000	2,873,000	1,415,000	362,827,742	385,160,000	28,652,726	6,320,4686,320,468	22,332,258	Surplus of Revenues over Expenditures..	67,019,810	69,782,000	Estimated Ordinary Revenues for the Fiscal Year 1928-1929 by Services with Percentages to Total Revenues	
Amount
Percentage of total
Revenue

Special War Tax Revenue-
Excise Taxes (Sales, Stamps, etc.)	
Income Tax	
Delayed Business Profits Tax	
Miscellaneous Taxes	
Total Special War Tax Revenue
Customs Import Duties	
Excise Duties	
Total Revenue from Taxation
Interest on Investments	
Post Office Revenue	
Dominion Lands and Parks	
Canada Grain Act	
Miscellaneous Receipts	
81,500,000	18-11
58,500,000	13 00
450,000	0-10
2,200,000	0-49
142,650,000	31-70
185,000,000	41-11
63,400,000	14-09
391,050,000	86-90
11,600,000	2-58
31,000,000	6-89
4,000.00C	0-89
3,000,00c	0-66
9,350,000	2-08
450,000,000	100-00
Estimated Expenditures for the Fiscal Year 1928-1929 by Services with Percentages to Total Expenditures
	Amount	Percentage of total Expenditure
Principal Expenditure attributable to the Great War	$ 112,107,000 40,600,000 7.900.000 1.400.000 574.000 180.000 150,000	29-11 10-54 2-05 0-36 0-15 0-05 0-04
		
		
		
		
		
		
		
	162,911,000	42-30
The Budget-Mr. Robb

Estimated Expenditures for the Fiscal Year 1928-1929 by Services with Percentages to Total Expenditures-
Concluded
Amount
Percentage of total
Expenditure

Other Fixed and Public Debt Charges
Interest on Public Debt (as of 1914)
Other Pensions	
Superannuation	
Subsidies to Provinces	
Expenses of Loan Flotations	
Premium, Discount and Exchange..
12.893.000
1.400.000
1.450.000
12.550.000 10,000 70,000
0-36
3-20
28,373,000
General Expenditure
Charges of Management	
Civil Government	
Administration of Justice	
Legislation	
Penitentiaries	
Agriculture	
Immigration and Colonization	
Health	
National Defence	
Royal Canadian Mounted Police	
Public Works-Chargeable to Income	
Railways and Canals-Chargeable to Income.
Mail Subsidies	
Ocean and River	
Lighthouse and Coast	
Steamboat Inspection	
Fisheries	
Mines and Geological Survey	
Scientific Institutions	
Indians	
Government of the Northwest Territories...
Government of the Yukon Territory	
Miscellaneous	
National Revenue (Outside Service)	
Post Office (Outside Service)	
Public Works-Collection of Revenue	
Railways and Canals-Collection of Revenue..
Dominion Lands and Parks	
Trade and Commerce	
Labour	
Public Printing and Stationery	
Miscellaneous Consolidated Fund Charges...
Capital Expenditure-
Public Works	
Public Works, Marine Department	
Railways	
Canals	
Total Estimated Expenditure on Government Services
975.000
12.300.000
2,200,000
2.400.000
1.800.000
7.390.000
3.000.	000
900.000 18,000,000
2.800.000
17.500.000
1.250.000
1.050.000
4.700.000
2.900.000
140.000
2.000.	000
700.000
1.100.000
4.600.000
460.000
180.000
2.436.000
13.300.000
33.250.000
950.000
2.600.000
5.100.000
4.600.000
1.400.000
200.000
1.787.000
3-	19 0-57 0-62
0-	47
1-	92 0-78 0-23
4-	67 0-73 4-54 0-32 0-27 1 22 0-75
004 0-52 0-18 0-29 119 0-12
005 0-63 3-45 8-63
0-	25 0-68
1-	32 1-19 0-36 O'05 0-46
1.190.000
2.760.000
6.960.000 13,240,000
0-	72
1-	81 3-44
178,118,000
369,402,000
Other Expend itures
Maritime Freight Rates Act-Estimated amount required-
Due to 20% reduction in freight rates	
Deficit on Eastern Lines (C.N.R.)	
Special Grant to Maritime Provinces	
Old Age Pensions Act	
Federal District Commission Act	
Loans to Quebec Harbour Commission	
Loans to Canadian Government Merchant Marine	
Grand Total	
2.992.000
4.303.000
1.600.000 800,000
2.190.000
2.873.000
1,000,000
0-	78
1-	12 0-42 0-21 0-57 0-75 0-26
385,160,000
fMr. Robb.]

The Budget-Mr. Robb
Reduction in Net Debt 1928-29, $69,782,000
Mr. Speaker, having dealt with the revenues and expenditures, the attention of hon. members is now directed to the net debt of Canada which, at the beginning of the present fiscal year, amounted to $2,296,850,232. At the close of the present fiscal year it is estimated it will be $2,227,068,000 or a reduction during the year of $69,782,000. This reduction is arrived at as follows: To the $94,800,000 surplus of ordinary revenues over ordinary expenditures is added special revenues of $4,942,000, being reparation payments and receipts from the Imperial government in final adjustment of disputed claims, thus giving a total of $99,742,000. There are, however, certain other expenditures which must be deducted to arrive at the net decrease in debt. These are: special expenditures on account of adjustment of war claims and miscellaneous charges against consolidated fund $1,937,000; capital expenditures $24,150,000; loans to Canadian Government Merchant Marine, $1,000,000; loans to Quebec Harbour Commission, $2,873,000, making a total of $29,960,000 which deducted from $99,742,000 will result in a reduction in the net debt for the present fiscal year of $69,782,000.
In connection with the debt reduction which the Dominion is again able to accomplish, may attention be directed, Mr. Speaker, to our record in that regard. An examination of the public accounts shows that for a period of fifty-six years, from confederation to March 31, 1923, the net debt was increased year by year with the exception of the fiscal years 1871, 1882, 1900, 1903, 1904, 1907, 1912 and 1913. From the beginning of the fiscal year 1923-24 to the end of the present fiscal year, the net debt has annually decreased, the total reduction in the six-year period amounting to about $226,708,000, or a yearly average reduction of some $37,700,000.
Public interest naturally centres in what has been accomplished in the post-war period; may a survey, therefore, be made commencing with the fiscal1 year 1921-22. The net debt that year was increased by approximately $81,000,000. For the purposes of eventually effecting a balanced budget, provision was made in the budget of 1922 for certain additional taxation. The major increase was made in the sales tax where the rates were increased fifty per cent over the then existing tax. There was also an increase in the stamp tax. These taxes have been steadily decreased year by year until to-day they are considerably less than the rates of 1922.
Certain other taxes, generally classed as manufacturers taxes, were imposed, the articles affected being automobiles, confectionery, cigars, ale and beer and other beverages; these have since been repealed or removed with the exception of the tax on ale and beer, cigars and part of the automobile tax.
The additional revenues thus received, aided by economies in expenditures, in 1922-23 resulted in a lessened increase of net debt by $50,000,000 as compared with the previous year. The following year the era of surpluses and debt reduction commenced, and, as already stated, the net debt for the six-year period has been reduced $226,708,000. In addition, through reductions in the rates of taxation in force in 1922, the sum of $241,000,000 has been remitted to the taxpayers.
Retirement of Maturing Loans
On the loth October, 1928, the five-year five per cent refunding loan of 1923, amounting to $53,000,000 matured. Previous to the date of maturity $20,866,400 of these bonds were purchased in the open market, thus effecting a saving in interest of $482,000. The balance of the bonds, amounting to $32,133,600, was redeemed in cash at maturity. The saving in interest resulting from this redemption will be $2,650,000 annually.
Mr. Speaker, as the interest charges on the national debt are large, it is a source of general gratification that each year witnesses a reduction. Seven years ago, on the 1st April, 1922, the annual interest charge on bonds, debentures and treasury bills outstanding in the hands of the public, amounted to $133,482,113. On the 1st April, 1929, we will have an annual interest liability of $117,142,100, a decrease of $16,340,013. This saving in interest includes the redemption of our bonds held by the Imperial government which by agreement in 1923-24 were cancelled and written off against advances made by the Dominion to the Imperial government.
On the 1st August, 1929, the 5i per cent loan of 1919, amounting to $60,000,000, matures. The government will be in a position to take up this loan out of surplus revenues and thereby effect a further annual interest saving of $3,300,000.
For the information of hon. members, and with their unanimous consent, a statement is now placed on Hansard showing the outstanding funded or dead weight debt in the hands of the public. In doing this it might well be observed that on 31st March, 1914, the dead weight debt in the hands of the public was $303,560,938, while the debt to-day is
The Budget-Mr. Robb

Guaranteed Securities
Certain public services are assisted or allied with our national treasury and a brief survey of our financial commitments in the present fiscal year in connection with the Montreal Harbour Commission and the Canadian National Railway may be made.
Montreal Harbour Commission During the year the government guaranteed securities of the Montreal Harbour Commis-
sioners, as authorized by chapter 58 of the statutes of-1924, to the amount of $9,000,000. The securities were used in the raising of money needed for the completion of the South Shore bridge.
Canadian National Railway Finances
With the exception of the payments made by the government to cover deficits on the eastern lines, no direct financial assistance was extended to the Canadian National Rail-

way Company apart from certain temporary loans, since repaid. The same situation prevailed as in the previous year, the company's financial requirements being raised in its own name, mainly with the guarantee of the Dominion, but, in part, without such guarantee.
This financial position has been reached gradually. In the early years of government ownership, deficits were met, the lines unified and the system rehabilitated largely at the Dominion's expense. Latterly, however, deficits have been converted into a substantial surplus and the management anticipates that further improvements and extensions, involving new capital, will be self-sustaining.
In the calendar years 1920 to 1927, inclusive, leaving aside interest nominally payable on government advances but not actually paid, the net deficits of the Canadian National Railways amounted to $202,900,000. In the corresponding fiscal years, the Dominion paid in cash to the railways, the sum of $367,700,000. In other words, the government paid all losses and, in addition, supplemented the company's capital by $164,800,000. In earlier years, as hon. members know, the companies were operating as separate units and large advances were made by the government for capital purposes, as well as deficits. Mr. Speaker, with the consent of the house, the record for each of the years 1920 to 1927 will be placed on Hansard.
Calendar Year	Net Income Deficit of Canadian National Railways, exclusive of interest due Government	Payments in cash from Dominion Government (By fiscal years)1920	$ 66,131,996 48,899,807 33,047,222 21,539,731 23,589,376 9,994,383 *2,389,009 2,182,378	s 123,590,232 105,623,699 84,932,579 23,710,617 9,934,453 10,000,000 10,000,0001921	1922	1923	1924	1925	1926	1927...	
202,995,884	367,791,580
* Surplus.
Coming now to the railway year recently closed, that is, 1928, the railway officials advise that after paying all charges with the exception of interest due the government, the accounts of the company will show a surplus of about $7,000,000. This sum is, therefore, available to the company for capital purposes.
The Budget-Mr. Robb
The interest due to the government, amounting to over $32,000,000 for the year, is taken into the books of the company as a liability but not paid. As no credit is taken in the books of the government for this unpaid interest, it may be left aside in estimating the outcome of the year's business when considering the government's and the railway's fiscal relationship.
In December last, the government guaranteed an issue of $35,000,000 Canadian National Railway Company 4$ per cent forty-year bonds which were sold by tender. In addition, the company borrowed $40,000,000 by way of temporary loans from Canadian chartered banks. These obligations were issued to finance expenditures on construction and betterments as approved by parliament, and also to refund maturing securities. The following statement indicates the authorities under which these borrowings were made:
Railway Loan Appropriation,
1927-	28	  [DOT][DOT]
Railway Loan Appropriation,
1928-	29	
Branch Lines, special Acts.. Toronto Terminals Railways
Act	
Canadian Northern Income Charge Act, 1928 (refunding)

The net addition in 1928 to the liabilities of the railways, in the form of outstanding long term and short date debt, amounted to $44,800,000. The balance of the borrowings effected during the year was required to provide for the redemption of maturing securities.
Forecast of Revenues and Expenditures
Before leaving the financial accounts, some reference might be made, Mr. Speaker, to the probable revenues and expenditures for the coming fiscal year.
Without being unduly optimistic, the government feels it is warranted in anticipating that, notwithstanding the reductions to be submitted in this budget, the revenues will meet all expenditure obligations and also provide for the redemption of the loan maturing in August next.
The ordinary revenues for the present fiscal year have already been estimated at $450,000,000. It is hoped the ordinary revenues for the coming fiscal year will be at least equal. After making provision for the statutory charges and maturing obligations, the expenditures have been allocated to such votes as will provide for long deferred re-

The Budget-Mr. Robb

pairs and needed improvements to the public properties and services, as are required by a growing and prosperous country.
Mr. Speaker, the monthly publication of trade statistics being available to all, it is unnecessary to place on record any extended statement of the volume of the Dominion's external trade. In the first ten months of the fiscal year the Department of National Revenue reports total exports amounted to $1,187,400,000, which, when the total imports of $1,033,300,000 are subtracted, leaves a favourable trade balance of $154,100,000 for the ten months' period.
The remarkable growth in Canada's external trade may be illustrated by the fact that the favourable balance just quoted is almost equal to the total export trade of this Dominion thirty years ago. It might also be noted that a comparison with the pre-war year of 1913-14 shows the 1927-28 exports of fully manufactured goods exceeded the total exports of raw, semi-manufactured and fully manufactured goods in the year 1914. Canadians may well take pride in the great increase in the per capita producing ability of this Dominion.
Unfortunately, no method has yet been devised whereby the ultimate destination of our exports may be determined. This is particularly true in respect to exports of grains which, on the basis of last year's statistics, represent about one-third of the total exports of the Dominion. Vessels oftentimes obtain clearance for the United Kingdom, but unload in European ports. Thus, while our export records shows a credit to Great Britain, the actual destination is some other country or countries. The trade records of both France and Switzerland illustrate this. The import records of the French government show that in the year ended December 31, 1927, France imported from Canada goods to the value of $28,400,000, but our records for the same period credit an export to France of approximately $11,700,000. The Swiss records credit $17,000,000 as the imports from Canada, while our export records state this Dominion only sold $483,000 of goods to Switzerland.
It is gratifying to note the steady development of inter-empire trade. Canada, the pioneer of the British preference, looks on empire trade as the key-stone of its external trade policy and desires in every way to foster closer trading relations throughout the British commonwealth of nations.
Throughout a period of years parliament has authorized the adoption of various commercial treaties with foreign countries, and it will be recalled that last session agreements with a

number of countries were accepted. These were formally brought into effect during the year. Sufficient time has not yet elapsed to justify a survey of these arrangements, but the trade reports show that in the fiscal year 1927-28 Canada sold 165 million dollars worth of goods to countries with which we have enjoyed most-favoured-nation treatment over a period of years. From the same countries our purchases amounted to 103 million dollars. This record is a substantial improvement over the fiscal year 1921-22 when our exports to the same countries had a value of about 82 millions of dollars and our imports of 57 millions of dollars.
In 1921-22 the concern of all Canadians was that our dollar should be brought back to par, that the nation's purchasing power be substantially increased, that no man willing to work be out of employment, that Canadian goods become firmly established on the international trading markets and that Canadians, wherever they might be, would feel that the problems of each section were the mutual concern of all.
Our dollar is no longer at a depreciated valuation. Canadians to-day are prospering. Em' ployment is at a high level. Our basic and manufacturing industries are producing large quantities of goods for home consumption and also for the vast external trade outlets which have been developed. Many new trade channels within the British commonwealth are being opened and, in addition, the ever-increasing number of countries with which Canada exchanges most-favoured-nation treatment assists Canadian business to establish permanently " made-in-Canada " goods on the markets of the world.
These, we believe, are factors which, coupled with good crops, have materially assisted in the expansion of our basic industries, encouraged the enlargement and extension of industries throughout the Dominion, and provided much new business for Canadian transportation systems. Our railways, relieved in some measure of pressing financial problems through the general increase of business, are now in a position to extend services to parts of the Dominion where additional traffic will add to their earnings.
Enjoying such advantages and blessed with a fertile soil and vast resources, Canada has many opportunities for developing a well-balanced diversity of production within the Dominion as well as securing permanent trade channels with other nations. In so far as we have a fiscal problem, our task would appear to be that of readjusting, as necessity arises, our customs tariff schedules to meet new conditions, of removing inequalities where in-

The Budget-Mr. Robb
quiry proves such to exist, of encouraging greater and more economical production of quality products, of assisting in the utilization of domestic resources and, other things being equal, of favouring those countries which favour our products. In applying these principles, availability of supplies, transportation costs, and the proximity of markets are factors which must be considered if all are to benefit and the Dominion prosper.
The constant expansion within Canada brings new problems. We should recognize that this generation has an obligation to build wisely for the greater to-morrow. The expansion of business within Canada has increased local competition and interlocked the interests of many activities. Add the problems arising out of the varying costs of domestic production, sources of supplies, transportation charges and the location of domestic and external markets. Consider as well the demands for tariff changes of various interests, and it may be of interest to note that there are basic industries applying to the Minister of Finance for increases in customs tariff rates, also manufacturing industries applying for reductions in schedules, and we have an appreciation of some of the domestic problems which must be considered in connection with any tariff revision.
The Advisory Board on Tariff and Taxation has actively investigated numerous requests referred for investigation. Many public hearings have taken place, and the spirit of the applicants before the board, the frankness of the discussions, and the impartiality of the commissioners have created a favourable impression among the Canadian people. It is apparent that it is physically impossible for the advisory board to investigate thoroughly in a few months the scores of applications which have been referred to it and that time must elapse before the government can be placed in possession of the fact-findings, especially in those cases where whole tariff schedules are involved.
This Dominion continues to be one of 'the world leaders in the volume of its external trade; therefore, problems arising in connection with our foreign trade can never be ignored. As the years go by an increasing quantity of our domestic production must necessarily be marketed abroad. It is our desire to trade freely with any and all who are willing to trade with us. What may, or may not, be possible in this particular necessarily depends in some measure on the purchasing power and the fiscal policies of other countries. The policy of this administration is not a high tariff policy; it is a low tariff policy.
7t:.94 381
Its policy is to encourage production at home and the marketing of our excess of production abroad. In applying this policy both domestic and international factors must of necessity be considered.
In accordance with the fiscal policy of the government, the tariff changes to be submitted to-day are designed to reduce taxation and to lessen the costs of production. The changes to be submitted arise out of references which the Advisory Board on Tariff and Taxation has investigated, and are based on its fact-findings. The board is continuing its inquiries, on which substantial progress has already been made, into several larger problems which involve the consideration of whole tariff schedules and the interrelation of many important Canadian industries. While these inquiries are being pursued, opportunity will be afforded for considering the possible effect on trade of changes being proposed in the tariff schedules of other countries, should they be implemented by legislation.
Dealing specifically with the tariff changes proposed in this budget, the resolutions now submitted provide for a revision of certain tariff items of particular interest to the mining industry. In accordance with the traditional policy of assisting the development of our basic industries, the rates of duty on certain machinery and equipment used in the mining industry have been reduced.
There have been various references before the Advisory Board on Tariff and Taxation of interest to those engaged in the fishing industry and it is proposed to assist that industry further by placing certain articles on the free list.
Representatives of the horticultural industry have stated that it would be of assistance if the tariff rates were reduced on certain apparatus for the purposes of bulb sterilization and determining the maturity of fruit. It is proposed to reduce the duty on such apparatus from 20 per cent to 5 per cent under the British preferential tariff, and from 30 per cent to 10 per cent under the general rate.
Resolutions will be submitted for your approval empowering the governor in council, when satisfied that copper bars are being sold in the country of export at a lower price than for export to Canada, to impose, under the general tariff, a duty on copper rods of one-half cent a pound, to equalize such differential as may exist.
Various reductions are submitted affecting items of concern to Canadian industries and are recommended as measures of assistance to producers in order that their cost of production may be reduced.
The Budget-Mr. Robb

3.	Resolved, that any enactment founded on the foregoing resolutions shall be deemed to have come into force on the second day of March, one thousand nine hundred and twenty-nine, and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that date and to have applied to goods previously imported for consumption for which no entry for consumption was made before that day.
Resolved, that it is expedient to amend the Special War Revenue Act, chapter one hundred and seventy-nine of the Revised Statutes of Canada, 1927, as amended by chapter fifty of the Statutes of 1928, and to provide:-
1.	That Part III of the said Act be amended by repealing the following sections and subsections:-
Paragraphs (b) and (c) of subsection one, and subsection two, of section thirteen; section fourteen; section fifteen; section seventeen; section eighteen; and section nineteen, thereby repealing the tax on the net premiums received by every company licensed or registered or otherwise authorized to transact in Canada or any province thereof, the business of insurance.
2. That Part IV of the said Act, which imposes a tax on cable and telegraphic messages, be repealed.
3. That Part V of the said Act, which imposes a tax on railway and other tickets, be repealed.
4.	That Part VII of the said Act be amended by striking out section fifty-eight and substituting therefor the following:-
58. No person shall sell or transfer the stock or shares of any association, company or corporation, or any bond other than a bond of the Dominion of Canada or of any province of Canada by
(a)	agreement for sale;
(b)	entry on the books of the association, company or corporation;
(c)	delivery of share certificates or share *warrants or bond endorsed in blank or payable to bearer; or
(d)	any other method whatsoever;
unless in respect of such sale or transfer there is affixed to or impressed upon the document evidencing the ownership of such stock or shares or bond, or a document showing the transfer or agreement for the transfer thereof, an adhesive stamp or a stamp impressed thereon by means of a die of the value of
(a)	three cents for every one hundred dollars or fraction thereof of the par value of the bond sold or transferred;
(b)	four cents for every share of stock sold or transferred at a price over one hundred dollars per share;
(c)	three cents for every share of stock sold or transferred at a price over twenty dollars per share, but not more than one hundred dollars per share;
(d)	two cents for every share of stock sold or transferred at a price over three dollars per share, but not more than twenty dollars per share;
(e)	one cent for every share of stock sold or transferred at a price of three dollars or less per share.
5.	That section eighty-six of the said Act be amended by providing that the rate of the consumption or sales tax be reduced to two per cent.

6.	That any enactment founded on paragraph one of this resolution shall be deemed to have come into force on the first day of March, 1929v
7.	That any enactment founded on paragraphs twro, three and four of this resolution shall come into force on the first day of May, 1929.
8.	That any enactment founded on paragraph five of this resolution shall be deemed to have come into force on the second day of March, 1929, and to have applied to all goods imported or taken out of warehouse for consumption on and after that day, and to have applied to goods previously imported for which no entry for consumption was made before that date.
On motion of Mr. Guthrie, the debate was adjourned until Tuesday, March 5.
On motion of Mr. Mackenzie King, the house proceeded to the consideration of government orders.



TECHNICAL EDUCATION ACT

[Stage Direction]
The house resumed from February 22 consideration in committee of Bill No. 34, to amend the Technical Education Act.-Mr. Heenan.-Mr. Johnston in the chair.
On section 1-Disposition of unexpended balances.
Mr. STEVENS:: The minister was going to tell us what balances were still unused 'by the various provinces. Will he give that information now?


Mr. HEENAN:: The lapsed and unexpended balances together in the several provinces	are:
Prince Edward Island	
$133,870	01Nova Scotia	
381,840	51New Brunswick	
119,510	07Quebec	
498,193	15Manitoba	
537,402	19Saskatchewan	
705,021	80Alberta	
73,853	03British Columbia	
153,420	78
Ontario has received her full proportion.


Mr. MANION:: How were the original
amounts determined'-by population?


Peter Heenan: By population.


Henry Herbert Stevens: Having had an opportunity to think the matter over, is the minister prepared to make any statement as to the renewal of these grants for a further period of ten years? I should like the minister to be vocal instead of shaking his head, because I want Hansard to get his answer.


Peter Heenan: The principle embodied in this bill represents the thought and policy of the government.


Robert James Manion: Is this one of the "unnecessary extravagances" to which the Minister of Finance referred a few minutes ago?

Technical Education Act


Peter Heenan: You will have to ask the
Minister of Finance.


William Lyon Mackenzie King: It is a luxury, not an extravagance.


Robert James Manion: If the house were permitted to vote on the question, without restriction or discipline of any kind, I think the unanimous opinion would toe that this, instead of being an extravagance, is a necessary expenditure. I think some of the other unnecesary extravagances which according to the minister have been eliminated might well be replaced by a real expenditure on technical education which is so necessary to the advancement of Ontario and the other provinces of this Dominion.


Hugh Guthrie: Will the minister tell us if the three western provinces have made any request that the time for payment of these grants be extended? Are they going into the work of technical education with a view to earning these grants?


Peter Heenan: The only request I have had was from Manitoba, and they asked us to extend the act in its present form.


Hugh Guthrie: What about Alberta and Saskatchewan; has the minister had any request from either of those provinces?


Peter Heenan: No; not that I know of.


Hugh Guthrie: Any discussion or correspondence with them?


Peter Heenan: I do not think so.


Mr. ADSHEAD:: The province of Alberta has about $75,000 coming to it yet. Is that amount for the next five years?


Peter Heenan: The amount is $73,853.


Herbert Bealey Adshead: For the next five years?


Peter Heenan: Yes.


[Stage Direction]
Section agreed to.
Bill reported.
Mr. HEENAN moved the third reading of the bill.
Hewitt Bostock: When shall said bill be read the third time?
Some hon. MEAIBERS: Now.


Some hon. MEMBERS:: Next sitting.


William Lyon Mackenzie King: The bill has not been amended, so there is no reason why it should not be read now.
Motion agreed to and bill read the third time and passed.



MILITIA PENSION ACT AMENDMENT

[Stage Direction]
The house resumed from February 22 consideration in committee of Bill No. 33, to amend the Militia Pension Act-Hon. Mr. Ralston-Mr. Johnston in the chair.
On section 1-Computation of pension on compulsory retirement.
Mr. CLARK:: I understood the minister to say that this period coincided with that in the Civil Service Act, but I think that is an error, because the civil service period is five years.


Mr. RALSTON:: My hon. friend was good enough to point that out to me the other night. It is true that the period does not coincide with the Civil Service Act but the principle is the same; that is, instead of a man being pensioned or superannuated on the basis of his salary at the time of discharge or retirement he is pensioned on an average rate of pay. Under the old retirement act the period was five years and I think under the present act it is ten years. I am glad my hon. friend directed my attention to this point. I understood the period was the same but I have been instructed that what was told me was that the principle was the same.


John Arthur Clark: Why is the three-year period adopted instead of the period contained in the Civil Service Act?


James Layton Ralston: The reason is that this is the period which always has been in the act, as I understand it, for non-commissioned officers and men. The idea is to put officers on the same basis as non-commissioned officers and men with regard to the computation of their pensions.


[Stage Direction]
Section agreed to.
Sections 2 to 5 inclusive agreed to.
Bill reported, read' the third time and passed.


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Railways and Canals) moved that the house go into committee to consider the following proposed resolution:
That it is expedient-
1.	To ratify and confirm the agreement dated the 6th day of February, 1929, between His Majesty the King in the right of the province of Alberta and the Canadian Pacific Railway Company and the Canadian National Railway Company, for the purchase of the undertakings of the Edmonton, Dunvegan and British Columbia Railway Company, the Central Canada Railway Company, the Central Canada
C.N.R.-Alberta Railways
[Stage Direction]
Express Company, the Alberta Great Water-nays Company, and of the province in respect thereof and also in respect of the Pembina Railway Company.	.
2.	To incorporate the Northern Alberta Railways Company, in which are to be vested the said jointly acquired railways.
3.	To authorize the governor in council to guarantee the principal and interest of the securities to be issued by the Canadian National Railway Company, to an amount or amounts fixed from time to time by the governor in council, for the payment of one-half the purchase price and one-half of the obligations assumed under the said agreement.
Mr. E. J. GARLAND (Bow River):: Before the motion is agreed to I would like to ask the minister if he is prepared to make a statement on this resolution now, or if he prefers to wait until we go into committee.


Mr. DUNNING:: I was going to ask the house, for the sake of convenience with respect to questions which will be naturally asked, to permit me to make my statement in committee, when I think I will have all the information required.
Motion agreed to and the house went into committee, Mr. Johnston in the chair.


Charles Avery Dunning: 
Mr. KENNEDY:: That is already built.


Charles Avery Dunning: The company will assume the obligation to pay to the province the cost of the extensions just mentioned, and the portion of the cost incurred by the province up to the date of the delivery of the line. The new company undertakes to construct and put into operation within five years not less than sixty miles of additional branch line.
The properties transferred by the government of Alberta will be subject to $7,400,000 first mortgage 5 per cent debentures on the Alberta Great Waterways Company, due January 1, 1959, the interest and principal of which the province undertakes to assume. An agreement has been entered into between the two railway companies with respect to the incorporation of this new company whereby the Canadian National and the Canadian Pacific each are to be liable for one-half of the purchase price and one-half of the obligations. That is, the Northern Alberta Railways Company, which is to be formed and which will be incorporated under the bill to acquire, maintain and operate these properties, will have its capital equally supplied by the Canadian Pacific and the Canadian National Railways, and each company is to be entitled to appoint one-half of the directors. The agreement, which will be a schedule to the hill ,will also provide the basis upon which the lines to be acquired are to be operated in relation to the systems of each of the joint purchasers.
That is all the information I desire to present at this stage, Mr. Chairman, except to indicate that following the introduction of the

C.N.R.-Alberta Railways
bill and its second reading I intend to ask the house to send this bill to the railway committee in order that the officers of both roads may be there and give any information and any particulars regarding the agreement between them bearing on the acquisition and operation of the properties. As I say, the agreement will be a schedule to the bill itself and will be available for study by the members of the committee and members of the house between the present time and the time when the bill will be considered in the committee.


Hugh Guthrie: To what extent will the Canadian National be obligated, not only with respect to the purchase but with respect to the proposed extensions?


Charles Avery Dunning: I mentioned the figure of $26,000,000.


Hugh Guthrie: It would be 813,000,000 of that?


Charles Avery Dunning: It would be half of that. I used an approximate figure because there will be adjustments between the province and the newly formed company with reference to lines still under construction by the province of Alberta. The Canadian National will also be obligated within five years for one-half of the cost of the sixty miles of branch lines which is provided for in the agreement with the province of Alberta.


Hugh Guthrie: What will that cost be?


Charles Avery Dunning: I will have to figure that out.


Donald MacBeth Kennedy: As I understand this resolution the Northern Alberta Railways Company will be a subsidiary of both the Canadian National and the Canadian Pacific and any new commitments or extensions required in the nature of branch lines, or a Peace River outlet, will require the sanction of the Canadian Pacific, the Canadian National and the Dominion government. This company would be only an agent for all concerned, and any new capital expenditures would require the cooperation of the two railway companies and the Dominion government.


Charles Avery Dunning: It is only natural to assume that this organization in proposing new commitments for itself will decide whether it shall promote them itself. Now, what is itself? Itself is, as the hon. member indicates, a board of directors consisting of one-half Canadian National appointees and one-half Canadian Pacific appointees. This parliament will have to be consulted regarding
commitments which involve the assumption of obligation by the Canadian National Railways' half of that board, as it is consulted and must be consulted in connection with the assumption of new obligations by the Canadian National Railway Company.


Mr. CHAPLIN:: What would happen in the event of a deadlock?


Donald MacBeth Kennedy: You could not do anything.


Charles Avery Dunning: I think the hon. member (Mr. Chaplin) is capable of estimating what would happen in that regard.


James Dew Chaplin: My experience in matters of that kind has been that there is seldom an even board of directors: there is always someone who has the say. I want to know who is going to be the deciding factor in this case.


Charles Avery Dunning: The arrangement proposed and agreed to by the government of Alberta, and I believe by the legislature of Alberta, and the two companies involves an absolutely even obligation, an even responsibility and an even control.


Mr. IRVINE:: Can the minister give some good reason why the Canadian National did not undertake the purchase of these lines itself?


Charles Avery Dunning: Many unfair statements have been made in that connection to the detriment of the Canadian National management and I would very much prefer it if my hon. friend who, I know, wants to be fair in the matter, would wait until Sir Henry Thornton and the railway management are before the railway committee in connection with the matter, and let them answer for themselves. I can assure my hon. friends opposite that the record of the Canadian National in connection with the whole matter of this negotiation is one of which they have no reason to be ashamed. I can only give this assurance at this time; I would much prefer that the management answer for themselves in connection with the matter.


Mr. SPENCER:: In regard to the joint
board of directors that will be appointed from the Canadian National Railways and the Canadian Pacific Railways, is there any arrangement as to which company will have the chairmanship of the board?


Charles Avery Dunning: 
John Arthur Clark: As the matter now stands,
can either one of these railway companies hold up development which the other railway may desire, which the province of Alberta may desire and which even the public generally may desire?


Charles Avery Dunning: A hypothetical1 question
like that is difficult to answer from the terms of a legal agreement. The reason why I was delaying for a moment was because I was looking over the agreement in order to find something which might touch directly my hon. friend's question. Quite frankly, I cannot conceive of a situation in Which one of the parties to the agreement, backed by public opinion, desires to have certain development of the jointly owned property, to which development the other party can or would impose insuperable objections. Both of these great public service corporations are and must be amenable to public opinion, particularly as one of them is in cooperation with public opinion, as was indicated by the hon. member for Vancouver-Burrard. I do not think we can imagine a situation arising in which the other would conduct a hold-up.


John Arthur Clark: It is obvious that if there is an equal division of directors on the board, one or the other may legally hold the matter up. We know as a matter of fact that over a long period of years the management of one or possibly both of these organizations was distinctly opposed to railway development in the Peace River district. True, they both appear to have altered their attitude at the moment. One has entered into an agreement and the other is now joining with it. But it seems to me a most unsatisfactory arrangement if the Pacific coast and the Peace River district generally must depend upon an equally divided board of directors for an outlet which we at least in the western country consider an essential to the development of that portion of Canada. That particular area presents an opportunity for colonization which is not presented in any other part of the country, and yet either the Canadian Pacific Railway or the Canadian National organization individually can hold up that development.


Charles Avery Dunning: No.


John Arthur Clark: It certainly can if the management of this is to be left to an equally divided board.


Charles Avery Dunning: Will my hon. friend permit me? He is under a misapprehension.


John Arthur Clark: I hope I am.


Charles Avery Dunning: With respect to extensions to the Pacific coast I am aware of nothing which would prevent either the Canadian National or the Canadian Pacific, whichever one of them desires to do so, from building a line which would be owned by itself from a point on this line to any other point on the west coast.


John Arthur Clark: They would have to come
before parliament for their charter just as both companies are before parliament this year.


Charles Avery Dunning: What bearing has that
on the point?


John Arthur Clark: Just this, that it makes it very much more difficult, when these two bodies come before a parliamentary committee and represent that they have assumed a big financial obligation in taking over the Edmonton and Dunvegan, for parliament to come to a decision. Parliament will naturally hesitate to issue a charter to one or the other when the two have joined together in connection with the Edmonton and Dunvegan. We will all naturally be inclined to give that organization an opportunity of extending to the coast north, west or in any other direction that may be advisable, and delay will result unless an independent director is put on the board so as to enable it to make a decision which will be binding on both railways. It will be unsatisfactory if the matter is left to an equal number from each of the organizations.


Charles Avery Dunning: What does my hon.
friend suggest?


John Arthur Clark: At the moment I must
confess I have not had an opportunity of considering the matter as the minister has, but if I had had an opportunity of considering it, I would certainly undertake to make a suggestion. I do not propose to make one offhand.


Charles Avery Dunning: I asked the question not with the idea of embarrassing my friend, but because I have been compelled to give consideration to the matter, and because, quite frankly, I cannot see a way out of that particular difficulty save that of the circumstances of the case itself. My hon. friend means that if one of the railways owning the Northern Alberta railway desires to build a line and

C.N.R.-Alberta Railways
the other one does not, that prevents the joint undertaking from constructing it. But it does not prevent the one which desires the construction from proceeding on its own account. That is the position.


Mr. LADNER:: Supposing one of these lines entered into an arrangement in regard to the *construction of a line south from the Peace river to connect, let us say, with the Pacific Great Eastern on its way south to Vancouver. Under the arrangements as now existing between these two great companies with respect to the Edmonton and Dunvegan, has the company which would undertake such a southern projection of its line the right of operating its *cars over the Edmonton and Dunvegan and carrying on its business excepting with the consent of the joint board, or does the agreement give them power to have the right of way, or is there some way in which they could be protected apart from the Board of Railway Commissioners?


Charles Avery Dunning: My hon. friend, of
course can understand the difficulty I am under in answering these questions by means of chasing through an agreement which is not yet in his hands, but which will be in his hands the moment the financial resolution passes and the bill is introduced. I suggest to my hon. friends, particularly those who are lawyers, the desirability of studying the agreement which is part of the bill itself, in order, let me say quite frankly, to help me in dealing with the matter instead of, in anticipation of the bill being in the hands of members of the commttee, asking me questions relating to an agreement, which questions it is very difficult under the circumstances for me to reply to intelligently.


Mr. LUCHKOVICH:: Just a few moments ago I heard the Minister of Railways make some remarks which conveyed to me the idea that public opinion was the factor in railway matters. From my experience in railway matters I have come to the conclusion that the public are ignored.


Charles Avery Dunning: The hon. member has not had much experience before the parliamentary railway committee. The railway committee of this parliament, no matter which government is in office, does give painstaking attention to the public interest, and the arguments made by members of that committee, no matter on which side of the house they sit, do, I believe, reflect the opinion of the members of this house in the public interest so far as railway extensions are concerned.


John Arthur Clark: But the minister overlooks that these bills that go before the railway committee are initiated by the railway companies, and not by the public. Public opinion has nothing to do with the initiation of these bills.


Charles Avery Dunning: My hon. friend asked me a question relating to the attitude of this parliament towards the public interest in connection with railway construction.


Edward Joseph Garland: No. _ The point raised by my hon. friend from Vegre-ville was that in his experience he had not found that the railways paid any particular attention to the public interest. My own experience has been precisely that, especially in connection with the Canadian Pacific. I am glad to say that we are getting a lot of the difficulties ironed out now, and they are going ahead with construction work that we have been waiting for, in one case, for fifteen years, during which time a perpetual agitation for construction has been sustained. Fortunately we are now getting the needed construction, but it took fifteen years to do it.
There is just one other point. The Minister of Railways a few moments ago said that he could not contemplate a situation where a board of directors of this character, dual in make-up, would, having in their minds the public need, divide equally on a question of important public interest. Was not that what the minister intimated?


Charles Avery Dunning: No. I know my hon. friend's misunderstanding is unintentional, and I am not complaining of it-


Edward Joseph Garland: Perhaps the minister would repeat what he said, so that I can get quite clearly what he had in mind.


Charles Avery Dunning: What I mean is this: I cannot conceive of a situation where one of the owners, the Canadian Pacific or the Canadian National, desiring a jointly owned property to follow a certain course of development, and backed by public opinion, would be successfully held up by the other party.


Edward Joseph Garland: The minister will not be at all surprised, I think, as a result even of his own experience, to know that in connection with the joint ownership of a proposed branch line, just that very thing occurred. For years the joint section of the Rosedale southeasterly branch was held up by one or the other party, and in every case each accused the other of holding it up. I took the matter up with the Hon
C.N.R.-Alberta Railways

George P. Graham when he was Minister of Railways, and we had some pretty heated discussions of the matter in tihis house. There was a specific instance in which one or other of the parties-I am not levelling any charge against either-deliberately prevented the construction of that line, or possibly both were not anxious for its construction. At any rate, somebody held it up, contrary to the public interest and public demand.


Charles Avery Dunning: My hon. friend will
permit me to say that my remarks were based upon this particular set of circumstances. The area to be dealt with is large and important. It is not similar at all to a small joint operation covering only a comparatively few miles, but has to do with the operation of a very considerable mileage of railway, serving a very large portion of northern Alberta; in fact, serving practically all of Alberta north of the city of Edmonton, with the exception of some lines that run through the southern part of that area, and I cannot conceive that in such a case the danger which is pointed out is likely to be acute. But I can say this: I am prepared to put before the two railway companies any suggestion which may come from members of this committee or of this house, after consideration, designed to overcome the possibility which apparently my hon. friends fear. I would suggest again that it is possible to discuss this matter with the officers of both companies concerned in the railway committee, where the matter could1 be threshed out thoroughly, and any remedy that was thought necessary perhaps be devised. I gather that there is no serious opposition in this committee to the joint acquisition proposal, but there is this criticism, properly and fairly made, that joint and equal ownership has in it obviously the theoretical possibility, at all events, of a deadlock.


Leon Johnson Ladner: The practical possibility.


Charles Avery Dunning: My hon. friend thinks
it is a practical possibility. There I rather part company with him, because of the largeness of the issues which would be involved. We say sometimes that the British constitution is -a most impractical thing, that theoretically it is unsound, but, nevertheless, it works partly beause of the largeness of the issues involved, and mainly because of the common sense of the people who are applying it. Now one of the parties to this undertaking will be our nationally-owned railway system, and the other will be the Canadian Pacific Railway, both of them prominent in the public eye, and constantly coming before this parliament in connection with various features of their own undertak-
ings, and under those circumstances I cannot conceive of any large major difficulty arising in which one of the parties, backed by public opinion, and taking one view, would be blocked by the other party. The issues are too large and too important for that danger to be as real as my hon. friends think. That is just my opinion. But in spite of that opinion, if hon. members, after a study of the agreement which they will be able to make when they get the bill in their hands, have any practical suggestions to offer whereby that difficulty could be overcome, I shall be very glad to give consideration to them.


Edward Joseph Garland: Does the
dual ownership of the lines, and what is contingent upon that ownership, extend into the field of future development also; in other words, will this board of directors really have anything to do with extensions? Is that provided for?


Charles Avery Dunning: Again I have to chase
through page after page of the bill, which my hon. friend will have in his own hands at a later stage, and I -wonder if he would not mind dealing with that question when he has a copy of the bill in his hands.


Leon Johnson Ladner: Referring to the point
raised by the minister a moment ago, that the issues are too large for any conflict to exist, I would ask him to consider this feature: Supposing in this joint arrangement, you had a board equally divided. For the sake of argument let us assume that the Canadian Pacific decided to build a short cut from the Peace River district to the coast, to Stewart, Prince Rupert, or Vancouver-


Charles Avery Dunning: Do not forget Prince
Rupert. If you are going to ask hypothetical questions, you might as well cover the whole ground.


Leon Johnson Ladner: I have in mind a southern outlet for the Canadian Pacific. The Canadian National have a direct outlet from Edmonton over their regular line to the coast, but the Canadian Pacific, to get out of the Peace River district must go to Edmonton, and then to Calgary and across the Rockies, so from a railroad point of view it is only natural that the Canadian Pacific should be desirous of building from the Peace River district south, rather than the Canadian National. The point is this: Suppose the Canadian Pacific decided to build such a road. It wou'd be necessary to have some working arrangement with the Edmonton and Dunvegan railway, controlled by the joint board of directors, because the trains would have to go eastward as well as westward.

C.N.R.-Alberta Railways
The point would oe reached where that board might very easily arrive at a deadlock with respect to the terms under which the Canadian Pacific Railway would be allowed to operate their connections with the southern road. That is why I contend the arrangement with respect to this particular line is of vital effect to British Columbia to the south, and were the joint board to be equally divided it would not be a good business arrangement. I do not offer this as a final suggestion, but it seems to me, m view of the public interest involved, that the Minister of Railways might have something to say in such a contingency, and in that way protect the interests of the public against the disadvantages that might result from a conflict between the two railway systems through this joint board.


Mr. BRADY:: Mr. Chairman, I wish to ask the hon. minister if the proposed agreement between the two railway companies entered into in connection with the Edmonton, Dun-vegan and British Columbia Railway will interfere with the work already done by way of survey and reconnaissances in seeking an outlet from the Peace River to the Pacific coast. Will that work be continued? The answer is a vital one; for the question of a Peace River outlet has been a live question in the house since 1925.


Charles Avery Dunning: I am of opinion-and of course my hon. friend will understand that it can only be an opinion-that this arrangement will distinctly facilitate rather than hinder that development. While listening to the questions raised by hon. members I have been trying to look through the agreement. As I said before, I did not anticipate having to discuss the agreement at this stage; indeed, it is very doubtful if we are in order in doing so. I would call attention to this last clause in the agreement:
Disputes arising out of this agreement in respect of any matter within the jurisdiction of the Board of Railway Commissioners for Canada shall be referred to the board. Disputes under clauses 4, 5, 6, 7, 8 and 9 of this agreement. not within the board's jurisdiction, shall be submitted to two arbitrators.
The parties agree to co-operate with fairness and candor towards each other and give effect to this agreement in the most liberal and reasonable manner, to the intent that each of them shall receive a fair and equal share of the benefits of the joint undertaking, subject to the provisions of clause 4 hereof.


Henry Elvins Spencer: Will the minister give us clause 4?


Charles Avery Dunning: This is clause 4:
The operations of the new company shall always be conducted with due regard to economy, consistent with good railway practice, and having regard to the future requirements of the property and the necessities of the territory to be served.


Donald MacBeth Kennedy: I do not think we can get very far discussing the agreement piecemeal at this stage. This bill proposes to do something that I understand is a new departure in the Dominion, taking into consideration the problem of the development of the Peace River country. It seems to me a better course to pursue would be to get the bill with the agreement before the committee and then we shall have a chance to discuss every phase of the matter.


Charles Avery Dunning: Absolutely.


Donald MacBeth Kennedy: The outlet and everything else. I think we ought to let this bill go through and get it in such shape that we can obtain full information with the agreement before us.


Charles Avery Dunning: I am sure my hon. friend would be the last to charge me with attempting to stifle full discussion in the committee. I think he will agree that usually I try to afford as full facilities as possible. But as to whether a discussion of this bill can bring about any determination of the outlet question-if my hon. friend desires to have the house on this bill determine the routes and so forth with respect to outlets-then I cannot guarantee it. But I am sure I cannot prevent him from discussing the subject.


Donald MacBeth Kennedy: But as the agreement might bear on the working out of the problem.


Charles Avery Dunning: Quite.


John Arthur Clark: Mr. Chairman, before the
resolution passes I should like to urge the minister to request these railway companies to come before the committee with a concrete suggestion to make it possible to determine finally matters of policy, even though the respective members of the two companies be equally divided, one on one side, one on the other. There must be some way, by agreement or otherwise, of placing on the board a sufficient number of directors to insure a majority on matters of policy. I cannot urge too strongly this fact. Here are practically the two greatest institutions in this country; they are rivals; there are bound to be differences of opinion between them, and the bigger the matter involved probably the more
C.N.R.-Alberta Railways

decided will be the differences of opinion. We have had enough experience to realize that a small difference of opinion between two great institutions such as these may delay a legitimate project for years and years. So far as the pressure of public opinion is concerned, may I point out that the initiation of any project rests with the boards of directors of these two companies. Where do we find the public opinion which will force these organizations to proceed with a new development? Any public opinion in the Peace River district, or in British Columbia for that matter, is negligible. Public opinion in Canada is largely in the central portions and the middle west where the population exists; that is where there is pressure of public opinion. The pressure of such public opinion as exists in the Peace River country would never be heard here, and the people there could send down all the delegations they liked if there was a difference between the two railway companies without producing any effect. I ask the minister to put it clearly before the two railway companies and to ask them to come before the railway committee with some solution of this difficulty, for I see it is a real difficulty. It should be possible to have a board of directors which can decide a matter of policy one way or the other, and not leave it up in the air simply because there is an equal division of opinion between the directors of the two institutions.


Charles Avery Dunning: I shall be glad, Mr. Chairman, to bring this discussion to the attention of the presidents of both railway companies. Of course, we have proceeded somewhat in the dark through not having the terms of the agreement before the members of the committee. I might point out in fairness to my hon. friend from Vancouver-Burrard (Mr. Clark), that in connection with most matters of policy which might be the cause of such a division as he indicates the agreement itself decides. The one matter which of course cannot be decided finally by an agreement relates to extensions-


John Arthur Clark: That is the big thing.


Charles Avery Dunning: Wait a moment. This
is definitely set out in the bill itself. As to certain branch lines and the building within five years of a further sixty miles, those points are covered in the agreement. So far as the operation of the property is concerned, I believe the agreement is devised in such a manner as to overcome any possibility of difficulty through differences of opinion on matters of policy. With respect to exten-

sion, may I point out again that when I spoke of public opinion a little while ago I had in mind public opinion in cooperation with one of the parties to the agreement. I admit freely, in connection with any proposal to extend the Northern Alberta Railway Company's undertaking, that if both the owners do not wish to initiate it, it cannot very well be initiated.


Leon Johnson Ladner: Suppose one of them does.


Charles Avery Dunning: Suppose one of them
does, and assuming it is the major undertaking which my hon. friends all have in their minds -although they have in their minds very different major undertakings and probably would not agree among themselves as to which particular major undertaking would be the best-


Leon Johnson Ladner: Surely they would; you
are wrong there.


Charles Avery Dunning: I am glad to hear it. If there is absolute unanimity-and is my hon. friend stating that there is absolute unanimity as to where a western outlet from the Peace river should go, and1 by what route it should go through-will he say-


Leon Johnson Ladner: Pretty well.


Charles Avery Dunning: Well, he is a courageous man. I am sure the hon. member for Peace River-


Donald MacBeth Kennedy: Which member is it?


Charles Avery Dunning: Exactly; and that is the best answer that can be given. Now the point I was at is this: that with respect to a major undertaking which would relate itself to the lines of this company, if one of the joint owners desires to go ahead with it, and has public opinion with it, I see no reason why it cannot be dealt with as an undertaking of the one desiring it instead of an undertaking of the joint company.


Leon Johnson Ladner: But if the two companies did not cooperate it would not be possible, and how would public opinion be expressed?


Charles Avery Dunning: Again I must say that
lawyers have been looking into these considerations. If my hon. friend will only wait until he gets the agreement before him he will be able to answer that question for himself, and any further doubt he has he can put before the officers of the companies responsible for the drafting of the agreement.
Resolution reported, read the second time and concurred in. Mr. Dunning thereupon

C.N.R.-Quebec, Montreal and Southern moved for leave to introduce Bill No. 71, to incorporate the Northern Alberta Railways Company, and respecting the Canadian National Railway Company and the Canadian Pacific Railway Company.
Motion agreed to and bill read the first time.


Hewitt Bostock: When shall said bill be
read the second time?


Charles Avery Dunning: Now.


Mr. FRASER:: Where are we going to
discuss the general principles of the bill if the second reading takes place now?


Charles Avery Dunning: As regards the general
principle that such a company should be incorporated and owned in the manner set out in the resolution, that principle is being decided now. I am in the judgment of other hon. members, but I think that is the position. So far as discussion is concerned, and the possibility of amendment, I undertake that there shall be the freest opportunity before the railway committee and again when the bill returns here in committee of the whole. I gave that undertaking to my hon. friend from Peace River (Mi-. Kennedy). I move that the bill be read the second time.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the select standing committee on railways, canals and telegraph lines.


[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, that it is expedient to provide that the Canadian National Railway Company may purchase the undertaking and railway of the Quebec, Montreal and Southern Railway Company for $6,000,000; and that the governor in council may guarantee the principal and interest of securities to be issued for this purpose by the Canadian National Railway Company, not exceeding in aggregate face value such amount as the governor in council may consider sufficient to raise the said sum.
Motion agreed to and the house went into committee, Mr. Johnston in the chair.
Charles Avery Dunning: The Quebec, Montreal
and Southern railway extends from a junction, with the Canadian National railways at St. Lambert, opposite the city of Montreal, easterly along the south shore of the St. Lawrence river through the city of Sorel and through Yamaska to Fortierville, a distance of 110 miles, with a branch extending in a southerly direction from Bellevue junction, which is five miles southeast of Sorel, to a connection with the Canadian National Rail-7S594-39
ways at Noyan, a distance of 81 miles, passing through St. Hyacinthe and Iberville.
The railway throughout its entire distance passes through a very good farming country and serves St. Lambert, Longueuil, Boucher-ville, Yarennes, Vercheres, Contrecoeur, Sorel, Nicolet, St. Aime, St. Judes, Pierreville, La Baie, St. Hyacinthe, and Iberville.
The population served exclusively by this railway is 85,000, and the total population of the territory served is 217,000, of which 135,000 is served jointly by the Quebec, Montreal and Southern and other railways.
The tonnage handled by this railway amounts to 650,000 tons annually.
The purchase price of this railway is

The cost of reproduction, less depreciation, of the railway, exclusive of equipment is $4,200,000. The equipment cost of reproduction, less depreciation, is $1,900,000.
Through the purchase of this line the Canadian National Railways will be able to effect economies in the operation of lines on the Levis division to the extent of $150,000 per year, and1 expect to make use of this low gradient line for heavy freight service between Montreal and Quebec. The Levis division is the third heaviest traffic division on the system, and consideration has been given for some time to the possibility of effecting grade revisions, so as to reduce the grades on the present line between Montreal and Quebec, which are 1 per cent and the Quebec, Montreal and Southern Railway from Montreal to Fortierville will make it possible to obtain a four-tenths of one per cent gradient between Montreal and Quebec through the construction of a twenty mile connection with the existing line from Fortierville.
The Canadian National Railways desire to purchase this line for the reasons indicated, and it is believed to be a very important and good piece of business from the point of view of the operation of the Canadian National system.


John Arthur Clark: What have been the net
earnings for a period of five years?


Charles Avery Dunning: I have not that information.


John Arthur Clark: That seems to be the vital thing. Is it worth the money? What will it earn?


Charles Avery Dunning: I am not supplied with
that information, so if necessary I will leave the matter here. I will be quite frank with my hon. friend; I did not expect to get on with these matters this afternoon and I have before me only a broad memorandum instead

610	COMMONS
C.N.R.-Quebec, Montreal and, Southern
of the large file of information which I usually bring before the committee. However, I can assure my bon. friend that every feature in connection with this proposal can be examined before the railway committee, as in the case of the previous resolution, and the officers of the railway can be examined also.


Mr. KAISER:: When shall we be able to
get such information as to how long this railway has been in operation, who are its present owners, and its present earnings and financial position? Is the railway a financial success now?


Charles Avery Dunning: I believe so; I do not
think there is any doubt about that. The present owners are the Delaware and Hudson Railway Company of the United States. This is a United States line in Canada, as I understand it, a subsidiary of the Delaware and Hudson railway.


Thomas Erlin Kaiser: How are we to obtain the
information for which I have asked?


Charles Avery Dunning: I propose to refer the
bill to the standing committee on railways and canals, where all the information requested by my bon. friend, together with everything else, will be made available by the officers of the company who are recommending the purchase.


Thomas Erlin Kaiser: But we are not all members of that committee.


Charles Avery Dunning: I will undertake to see
that these specific questions are answered, and I am sure also that some member of the committee will bear them in mind.


Henry Elvins Spencer: Has this particular line
been on a paying basis up to the present?


Charles Avery Dunning: I cannot give my bon.
friend the exact details, but I think there is no doubt about it; my answer would be yes. There is no doubt as to the opinion of the management of the Canadian National railways that they can make this a very important link in the system, particularly from the viewpoint of a saving in operating expenditure. The very important point is the economy in operation of the Levis division, estimated by the officers of the company at $150,000 a year, which will be made possible by the acquisition of this line. There is the further feature that this line represents practically a water grade along the south shore of the St. Lawrence between Montreal and Quebec. A grade of four-tenths of one per cent is obtainable over the whole distance by only twenty miles of new construction, whereas the existing Canadian National grades are one per cent

on a division which is the third heaviest loaded on the whole system.


Robert Gardiner: What is the mileage
of this road?


Charles Avery Dunning: I gave that a while ago; it is 110 miles with a branch of 81 miles, a total of 191 miles.


Robert Gardiner: What would be the
probable cost of the extra twenty miles necessary to make this effective?


Charles Avery Dunning: I think one could say
roughly that $40,000 a mile would be a fair estimate of the cost. I cannot guarantee that figure, because I do not know the exact nature of the country.


Mr. BOYS:: I believe the minister said a
four-tenths grade could be secured. What is the present grade on that twenty mile portion?


Charles Avery Dunning: The twenty miles of road are not built. The four-tenths grade applies over the 110 miles which would become Canadian National main line, as against a one per cent grade on the existing Canadian National main line.


Thomas Erlin Kaiser: Has the minister any information as to the cost of that 2(Lmile stretch?


Charles Avery Dunning: I believe there is no difficulty at all in that district.


Mr. GEARY:: Does the minister mean to say that the Canadian National railways operate over 100 miles on a steady grade of one per cent, or is that the governing grade?


Charles Avery Dunning: I did not say that. I will read again the exact statement of the company in this regard: "The Levis division is the third heaviest traffic division on the system, and consideration has been given for some time to the possibility of effecting grade revisions so as to reduce the grades on the present line between Montreal and Quebec." It mentions the one per cent grade, but when a railway man uses that term it means that one per cent is the controlling grade on the line, and not necessarily that the whole line is on an up-grade of one per cent.
Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 72, respecting Canadian National Railways and to authorize the acquisition of the Quebec, Montreal and Southern Railway.


[Stage Direction]
Motion agreed to, bill read the first and second times and referred to the select standing committee on railways, canals and telegraph lines.
On motion of Mr. Mackenzie King the house adjourned at 5.15 p.m.

Questions
Monday, March 4, 1929