1933-03-13

REPARATIONS

Hon. C. H. CAHAN (Secretary of State):: As required by section 5 of chapter 5 of the statutes of 1929,1 present the further report dated November 30, 1932, and the final report dated .March 4, 1933, relating to reparations payments, made by Commissioner Errol M. McDougall, K.C.
In that connection with the consent of the house I should like to make the following motion:
That 500 copies in the English language and 200 copies in the French language of the further report dated November 30, 1932 and the final report dated March 4, 1933 to His Excellency the Governor General, made by Errol M. McDougall, Esquire, a commissioner appointed to investigate and report upon illegal warfare claims and reparations payable in respect thereof laid on the table of the house this day, be printed forthwith, and that standing order 64 in relation thereto be suspended.


[Stage Direction]
Motion agreed to.

Mr. GORDON:: I desire to lay on the table of the house order in council P.C. 439, passed pursuant to the Relief Act of 1932.



IMMIGRATION ACT AMENDMENT

[Stage Direction]
Mr J. S. WOODSWORTH (Winnipeg North Centre) moved for leave to introduce Bill No. 43 to amend the Immigration Act.
Mr. GUTHRIE:: Explain.


Mr. WOODSWORTH:: This is simply to define the term "public charge" so as to exclude from the operation of the act those in receipt of unemployment relief.
Motion agreed to and bill read the first time.

Questions



EXCHEQUER COURT ACT

[Stage Direction]
Hon HUGH GUTHRIE (Minister of Justice) moved for leave to introduce Bill No. 44 to amend the Exchequer Court Act (Exclusive Jurisdiction)
Mr. LAPOINTE:: Explain.


Hugh Guthrie: This bill is intended to confer jurisdiction upon the Exchequer court, as a complementary measure to Bill No. 40 respecting visiting forces of His Majesty from other commonwealths of the British dominions. At the present time there is no court having jurisdiction to deal with such cases, and it is the purpose of this bill to confer that jurisdiction upon the Exchequer court.
Motion agreed to and bill read the first time.



CONTROL OF CURRENCY

[Stage Direction]
On the orders of the day:
Mr IAN1 MACKENZIE (Vancouver Centre) : Mr. Speaker, I should like to ask the Prime Minister if it his intention to speak to this house concerning an article in this morning's press in which the right hon. leader of the government in the Senate is quoted as saying:
But I do feel that we must increase the basis of currency so that an increase in currency itself may take place. We must also devise some means of getting that currency into the hands of those who are capable of effectively controlling it.
Does this expression by the right hon. gentleman who leads the Senate represent the authorized view of the government?
Right Hon. R. B. BENNETT (Prime Minister):: The right hon. leader of the Senate was addressing the Canadian Club at Quebec. He was expressing his personal views. He was not dealing with Canada, but with countries of the world as a whole.



DISARMAMENT CONFERENCE

[Stage Direction]
On the orders of the day:
Ernest Lapointe: I would like to ask again, in view of the fact that the disarmament conference has reached a most critical part of its work, whether Canada is represented there at the present time, and by whom?


Richard Bedford Bennett: In consequence of the gravity of the
situation the government asked the High Commissioner for Canada at London, together with the Under Secretary of State for External Affairs, Doctor Skelton, who has been familiar with the matter from the very
inception to date, to go to Geneva to represent the dominion with the Canadian government's advisory officer. They reached Geneva just prior to the arrival of the Prime Minister of Great Britain and the Secretary of State for Foreign Affairs. They are to-day in Geneva representing Canada in that regard.



PRIVATE BILL


[Stage Direction]
Bill No. 42 respecting the Algoma Central and Hudson Bay Railway Company-Mr. Bradette.

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

Mr. COOTE:: What cause must be shown by any party desiring to export gold in order to secure r licence under the Gold Export Act?
Mr. RHODE'S:	The Gold Export Act is
administered with a view to safeguarding existing monetary gold reserves, and to mobilize current gold production, purchased at the world price, for purposes of the dominion government. Applications for export, not compatible with these objects, are not entertained.


G. N. PELLAND
Mr. CASGRAIN:: 1- Has Mr. G. N. Pelland, chief herdsman at the experimental farm of Sainte-Anne de la Pocatiere, been dismissed?
2.	If so, what were the nature of the complaints lodged against him, and who lodged such complaints?
3.	Have these complaints been investigated?
4.	If not, why?


Mr. WEIR (Melfort):: 1.	Yes.
2.	Mr. J. A. Barrette, M.P., wrote that to his personal knowledge Mr. Pelland was guilty of active political partisanship.
3.	No.
4.	It has never been the custom to hold an investigation when a member of parliament states that to his personal knowledge an employee has been guilty of active political partisanship.


UNEMPLOYMENT RELIEF REIMBURSEMENT
[Stage Direction]
Mr. LaVERGNE:
1.	Have any sums received by the provincial governments from the federal government, and to be applied to the relief and unemployment fund, not been reimbursed?
2.	If so, will the federal government deduct such advances from the subsidy to be paid the provinces?
Questions
Charles Hazlitt Cahan: In duty bound I referred
this question to the department interested, and they say that it is not expressed so as to give an intelligent idea of what is required by the hon. member, and that they cannot answer it in its present form. I suggest that the question be dropped and redrafted and placed on the order paper at a later date.


Mr. SPEAKER:: Dropped.


REPATRIATION OF CANADIANS
Mr. DUGUAY:: Has the Quebec government made representations to the federal government requesting that the dominion grant of $50,000, for the repatriation of Canadians in the United States, be continued?


George Gordon: Yes.


RADIO COMMISSION
Mr. DUFF:: 1.	Is George Brownrigg, Stellarton, Nova Scotia, employed by the radio commission?
2.	If so, what is his salary or rate of pay?
3.	What are his duties?^
4.	Who recommended him for the position?
5.	What qualifications has he for the position?
6.	Is he a great war veteran?
7.	What other employees has the radio commission in Pictou county, Nova Scotia, and what are their rates of pay?


Mr. DURANLEAU:: The following information has been furnished by the Canadian Radio Broadcasting Commission:-
1.	No.
2,	3, 4 and 5. Answered by No. 1.
6.	No information.
7.	The Canadian Radio Broadcasting Commission has no employees in Pictou county, Nova Scotia.
RADIO LICENCES:-SKEENA DISTRICT


Mr. HANSON (Skeena):: 1.	How many radio licences were issued in the Skeena electoral riding, British Columbia, in the years 1931-32?
2.	Who is the radio supervisor for said riding and vdien was he appointed?
3.	What salary or other remuneration did the radio supervisor receive in 1931-32-33?
4.	What is the official duty of the radio supervisor ?


Mr. DURANLEAU:: 1.	Fiscal year 1931-32, 1,059; fiscal year 1932-33, 1,058 (ten months).
2.	A. J. Matheson, Prince Rupert, B.C.; 21st October, 1932.
3.	No salary; commission of ten cents for each licence sold under the house-to-house canvass.
4.	To supervise the house-to-house sale of radio receiving licences in his district.


*BEAUHARNOIS POWER PROJECT
Mr. GARLAND (Bow River):: 1.	Is the government aware of the attempts of Mr. B. Cb Sweezey and his associates acting on behalf of the Beauharnois enterprise, to sell power to United States interests?
2.	Have any representations been made to the government by the Beauharnois interests or by Mr. K. O. Sweezey, for permission to export power to the United States?
3.	If so, what action does the government propose to take?
4.	Does the government propose to have the question of the ownership of the Beauharnois power settled by reference to the privy council?
5.	Is the government aware of an offer for the Beauharnois enterprise made in September, 1931, by the Montreal Light, Heat and Power Company, consolidated ?
6.	If so, will the government table the said offer and any correspondence in connection therewith?


Richard Bedford Bennett: These questions are difficult to answer. As to the first, no formal request has been made to the government with respect to the sale or export of power, but Mr. Sweezey, in the course of conversations, and other people as well, I fancy connected with the enterprise, have made the statement that they thought electrical energy could be sold in the United States. Therefore to answer "yes" or "no" would be difficult.
No formal permission to export power has been given, nor has any request been made formally for permission to export power to the United States. In any event the provisions of provincial statutes preclude the possibility of it being conveyed across highways or public places. Neither this, nor any government as far as I know, is in the habit of stating policy in respect of matters before the conditions necessitating the question of jurisdiction arise.
As to the fourth question, the government does not propose at the present time to submit the question to the privy council.
To the question relating to the Montreal Light, Heat and Power Company, the answer is much more difficult. There were statements made from time to time, but the correspondence that was brought down at the last session clearly indicates the extent to which they assumed any definite form, as to the possibility of the Montreal Light, Heat and Power Company taking over the Beauharnois enterprise in September, 1931. In view of the fact that from time to time all the correspondence of importance has been tabled and that the motion that stands in the hon. gentleman's name asks that the balance of the correspondence be brought down, I do not think I can answer the question except in the manner indicated.

Questions as Orders jor Returns


PATENT RECORD
Mr. MACKENZIE (Vancouver Centre):: What was the total cost of publishing the Patent Record, including printing, cost of cuts, binding, and other details, for the fiscal years ending March 31, 1931, and March 31, 1932?


Charles Hazlitt Cahan: 835,000 for each of the said fiscal years.


OLD AGE PENSIONS ACT-QUEBEC
Mr. LAFLECHE:: Has any correspondence been exchanged between the government of the province of Quebec and the federal government concerning the extension of the provisions of the Old Age Pensions Act to the province of Quebec.


George Gordon: No.


GOLD RESERVES, DOMINION NOTES AND DEBTS
Mr. BRADETTE:: 1.	What are the latest available figures in dollars of the gold reserves held by the Dominion of Canada?
2.	What is the amount of dominion notes issued and in circulation on the basis of the said gold reserves?
3.	What is the total amount of debts contracted by (a) the Dominion of Canada; (b) each province of the confederation; (c) the municipal corporations, or public utilities commissions not included in above; (d) the total amount of debts contracted by private persons on mortgages or otherwise as per nearest available estimates or figures?
4.	What is the amount of gold reserves held by all and every chartered bank or trust company in Canada?
5.	What is the amount of paper money or bank notes issued by each and every chartered bank or trust company which is or are by law authorized to issue and circulate paper money in Canada?
6.	What is the percentage or ratio of paper money issued and circulated or intended for circulation in the Dominion of Canada by those authorized to do so compared with the gold coverage thereof ?


Mr. RHODES:: 1 and 2. As of February 28, 1933, total amount of dominion notes in circulation was $175,701,103.19. These notes were issued under authority of the following statutes:
Chap. 4, 1915	$ 26,000,000 00
Finance Act, chap. 70, R.S.
1927	 41,944,000 00
Dominion Notes Act, chap.
41, RjS. 1927	 107,757,103 19

Total gold held against dominion note issue was $70,348,325.60, including $12,500,000 against the first $50,000,000 of dominion notes issued, $57,757,103.19 representing full coverage against notes issued in excess of $50,000,000 under chap. 41, RjS. 1927, and $91,222.41 representing gold held in excess of statutory requirements. Gold held represents a coverage of 40 per cent against total amount of dominion notes outstanding.
3.	(a) Dominion of Canada funded debt, $2,715,910,607; (fo), (c) and (d) not of Dominion government record.
4.	As of January 31, 1933, by chartered banks, approximately $43,043,000. No information for trust companies.
5.	As of January 31, 1933, bank notes in circulation, $116,868,992.
6.	The ratio of gold holdings to combined dominion and bank note circulation is 39 per cent.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. JEAN:: 1.	How many licences have been granted, in the district of Montreal, in connection with the appointment of custodians and trustees since Act 22-23 George V, Chapter 39, came into effect?
2.	To whom have such licences been granted?
3.	Have any applications for licences made by trustees, in the district of Montreal, been rejected, since said act came into effect?
4.	If so, what are the names of persons whose applications were rejected?


DREDGING IN THE ST. LAWRENCE RIVER
Mr. GARLAND (Bow River):: 1.	What company is doing the dredging work in the St. Lawrence river?
2.	When was the work started?
3.	What is the amount of work done to date?
4.	What is the total cost to date?
5.	Whait was the amount voted last year and how much of this was expended?
6.	How much money has been paid to the company to date?
7.	Was any work done by said company prior to the money required being voted by parliament?
8.	If so, for what amount?
9.	Was the company notified that the estimates' for this work were exhausted?
10.	Was the company authorized to proceed with the work?
11.	If so, by whom?
12.	During the last dredging season, how many government dredges were not in use?
13.	Did the said company sublet their contract?
14.	If so, to whom and where?
15.	Who were the contractors dredging at St. Jean Deschaillons?
16.	What amount of work was done?
17.	What was the total expended in connection therewith?
13. What was the scale of measurement for dredge material?
19.	How was the classification of said material made up?
20.	What was the price per cubic yard in each classification?
Return tabled forthwith.
Motions for Papers



MOTIONS FOR PAPERS


Mr. POULIOT:: For a copy of all correspondence, letters, telegrams, petitions, reports and other documents in the possession of the government, respecting the post office of Pre Ste-Marie, Saskatchewan, since the month of August, 1930.



UNITED STATES CITIZENS EMPLOYED IN CANADA

Mr. BOULANGER:: For a copy of all documents, requests, petitions, correspondence and reports in the possession of the government or of the Department of Immigration, in connection with applications by citizens of the United States for permits to enter Canada for the purpose of employment on Canadian race tracks during the coming racing season.



FEDERAL GUARANTEES TO CORPORATIONS

[Stage Direction]
Mr. VENIOT;
For a return showing what amounts have been guaranteed by the present government of Canada to (a) provinces; (b) railways; (c) harbour boards; (d) banks; (e) wheat pools; (f) Beauharnois Corporation; (g) other semipublic or private corporations up to February 28, 1933.

Mr. GARLAND (Bow River):: For a copy of all correspondence, telegrams, and _ other documents passing between the Dominion government and any persons, companies or corporations, in regard to the Beauharnois enterprise, from August 31, 1930, to date.


Richard Bedford Bennett: A very large number of
papers have been copied and the copies have been laid upon the table of the house. I assume that the hon. member making the motion does not intend that this work should be duplicated, if so it would take a very long time to complete the return.


Edward Joseph Garland: As a matter of fact in the original draft I have the words "balance of." They should be in this.


Pierre Édouard Blondin: Motion amended to include the words "balance of."



SOLDIER SETTLEMENT ACT

[Stage Direction]
Hon. W. A. GORDON (Minister of Labour) moved that the house go into committee tomorrow to consider the following proposed resolution:
That it is expedient to amend the Soldier Settlement Act to provide for the remission of interest in certain cases and the application of payments made to reduction of principal indebtedness; and for additional credit on payment of arrears or instalments; the removal of the lien on the equipment of soldier settlers; and for the application of certain of these
[Mr. E. J. Garlnad.l
provisions to British family settlers by consent of the British government.
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]
The house resumed from Friday, March 10, 'onsideration of the motion of Hon. R. J. Manion for the second reading of Bill No. 37, respecting the Canadian National Railways and to provide for cooperation with the Canadian Pacific railway system, and for other purposes.
Mr. F. G. SANDERSON (South Perth):: Mr. Speaker, in rising to make a few remarks on this question I am fully conscious of the fact, after listening to the very excellent speeches which have been made by hon. members in all corners of the house, that one taking part in the debate at this time cannot very well cover any new ground and must repeat, though perhaps not in the same words, many things , that have been said already. However, I believe this debate to be one of the most important that we have had in this house for some years, because it opens up the whole question of transportation facilities in this country, a question which vitally concerns every taxpayer in Canada. Therefore, with the indulgence of the house, I should like to add a few remarks to what has been said previously.
In passing I should like to commend the Minister of Railways (Mr. Manion), as other members have done, for the tone of his address in introducing the bill now before the house. He placed the debate on a very high plane, if I may say so, and I shall endeavour to follow him in that regard.
I should like to say first, Mr. Speaker, that the history of railroad construction in this young vigorous country in some respects does not make very good reading. Undoubtedly mistakes have been made. There have been not only errors in judgment on the part of some railway promoters; there have been errors in judgment, if you like, by previous governments both Liberal and Conservative. I am not going to dwell upon that aspect of the case because I have not sufficient time at my disposal, but for a moment or two I should like to direct my remarks to the present position of our railway companies. To-day in this country we have two great railway companies. One is privately owned, well managed and well financed; it has served

C.N.R.-C.P.R. Bill-Mr. Sanderson
the people of this country in a very efficient way for a great many years. The other day the Prime Minister stated that the securities of the Canadian Pacific Railway were held not only in Canada but also in the United States, in Great Britain and in almost every country in the world, and those securities always have held a high place in the financial markets of the world. We must admit that when this great railway was being constructed it received very substantial aid from the country, not only by way of money but also by way of large grants of land. I do not take exception to that, because this was a pioneer company which did wonderful work in building this railway line from one end of this country to the other. As a matter of fact I am free to admit-though I hold no brief for the Canadian Pacific Railway-that at present, despite the fact that during the last two or three years its earnings have been depleted because of world economic conditions, it stands to-day as perhaps one of the best managed privately owned railway companies in the world, and it has done a great deal to develop Canada and to advertise this country all over the world.
Side by side with this great privately owned company we have what is known as the people's railway, the Canadian National system. I am not going back to the time when the companies which now make up the Canadian National system were taken over by the government of the day; the other day the Prime Minister went into this question very fully. But I do not want to forget, and I do not believe the people of Canada will forget, that this conglomeration of bankrupt railways, if I may so term them, which were wished on this country and which now comprise the Canadian National system, were taken over by the government at a time when a decision had to be made as to whether the country would clean the slate and take its huge losses in money which had been advanced to these roads, or would take them over and run them as a publicly owned1 and publicly controlled road. I am not going into that phase of the question but, Mr. Speaker, as I believe the Canadian Pacific system is one of the outstanding privately owned railways in the world so I believe that the system owned and controlled by this country stands out as one of the best managed and best organized publicly owned railways in the world, despite the fact that it is going through heavy weather at the present time.
We have, then, Mr. Speaker, these two great competing railway systems, and sometimes I think we do not realize their immensity. In round figures the Canadian Pacific Railway has in Canada some sixteen thousand miles of track,
in addition to which it controls a certain mileage in the United States. The Canadian National system owns about twenty-two thousand miles of track in Canada, in round figures, and also controls some mileage in the United States. These two railway corporations control about 40,000 miles of track and have employed in normal times, the two together, about 190,000 men. In normal times they have paid out in salaries and wages to employees as large a sum as $290,000,000 a year. That will give some idea of the immensity of the business carried on by the two great railway systems of Canada. They have both been successful until the present period of depression struck this country in common with the rest of the world.
I have nothing but praise both for the Canadian Pacific Railway and for the Canadian National, except in one regard. I have always been of the opinion that the management of both railways were very slow in attempting to cope with a new form of competition that has entered the field, competition of enormous magnitude, namely, the commercial motor truck. In my opinion this motor truck competition when it first appeared could have been combated by the railways if they had put their own trucks into operation. Had they done this at the outset of this competition the earnings of both railways would have been augmented by many millions of dollars during the last twelve or fifteen years. Apart from this, however, I think that the management has been excellent in both cases.
I hold no brief for Sir Henry Thornton, and perhaps he made mistakes. But for that matter who has not made mistakes in every business, in every walk of life, during the good times we had in this country for a number of years? I will say this, however, in praise of Sir Henry Thornton. In the number of years during which he was president and general manager of the Canadian National Railways his achievements far outnumbered any mistakes he ever made. There was a time when the earnings of the Canadian National system were piling up, when that system went after business and got it, and when the morale of its thousands of employees was at its highest owing to the example set them by their chief, Sir Henry Thornton. At that time no one in this country would dare to get up and say that Sir Henry Thornton was not making a success of th'e Canadian National Railways; but when conditions began to get bad, when tonnage declined, when business was poor, then the criticism started. The Prime Minister himself gave Sir Henrjr Thornton a good deal

C.N.R.-C.P.R. Sill-Mr. Sanderson
of credit a few years ago. It will be remembered that in 1926 there was a general election in Canada. The present Prime Minister was then Minister of Finance in Mr. Meighen's government-someone says the shadow government. Be that as it may, he was Minister of Finance in that government and during that election campaign to which I have just referred he made several speeches in western Ontario. He went to the city of Stratford in the county of Perth, which is a large divisional point on the Canadian National roads. Many hundreds of railwaymen live there, there are big car shops there, and it is perhaps as important a divisional point as any other in the whole system. The then Minister of Finance in Mr. Meighen's government addressed a meeting in the city of Stratford on the evening of August 14, 1926, for the benefit of the Conservative candidate. He was addressing an audience in which there were hundreds of Canadian National railway employees on whom naturally he wanted to make a good impression, with a view if possible to winning them over for the Conservative candidate. This is what he said then in regard to the Canadian National Railways:
Mr. Bennett denounced in scathing terms the whispering campaign about the Canadian National Railways, saying that Mr. Meighen had always fought for the road, and had no intention of interfering with its management. In that connection he said that he personally had recommended to Mr. King that Sir Henry Thornton be hired to operate the road. This he had done_ as a result of information from Mr. Thomas in England, he said, and indicated that he thought Sir Henry Thornton had been successful and that his work would certainly not be interfered with by Mr. Meighen.


Mr. MANION:: Merely for information, may I ask the hon. member what he is quoting from.


Frederick George Sanderson: I expected that the
Minister of Railways would ask that question and I am happy to be able to inform him. This is an absolutely correct report which appeared in three newspapers at the time. The meeting was held on Saturday, the 14th, and this report appeared in the Toronto Globe on August 16, 1926; in the Stratford Beacon-Herald on August 16, 1926; and-I know that this will please the Minister of Railways and he will take it for granted^ in the London Free Press on August 16, 1926. So that it is official.
I find no fault with the remarks of the then Minister of Finance in Mr. Meighen's government, but I am inclined to think that he has since had a change of heart.


An hon. MEMBER:: He certainly has.


Frederick George Sanderson: An hon. gentleman
says he has, and I accept that. In 1926 the right hon. gentleman who is now Prime Minister apparently not only praised Sir Henry Thornton but wished to get on the band wagon and get all the credit for himself, for he said that he really was the man who had chosen Sir Henry Thornton and had been instrumental in bringing him here. This newspaper report which I have just quoted [DOT]declares that the right hon. gentleman denounced in scathing terms the whispering campaign in regard to the Canadian National Railways. Well, if there was a whispering campaign then in this country there are more than whisperings at the present time. The Prime Minister last Thursday, in the course of his speech in this debate, virtually said that the Canadian National railway system was bankrupt, and instead of joining in a whispering campaign he almost made an
S.O.S. call for the undertaker to bury the whole _ road. I mention this to show the inconsistency between the remarks of the Prime Minister to-day and the statements which he made when he was Minister of Finance in Mr. Meighen's government, when he spoke in the election campaign of 1926.
I will refer now for a moment or two to the royal commission, the so-called Duff commission, who have laboured and brought in this report upon which is founded the bill now under discussion. The commission was composed of seven gentlemen, all very eminent in their own spheres. I have gone through the report of this commission as carefully as possible and the only conclusion I can arrive at is that after holding eighteen meetings, lasting fifty days and travelling over nearly all the main lines of both these railway systems, they have not told us anything about these railroads which we did not already know. They have told us nothing that the Minister of Railways did not know; they have told us nothing that the right hon. the Prime Minister did not know, they have told us nothing that every hon. member of this house and almost every man in the whole dominion did not know. I shall not take up the time of the house in reading the conclusions of the commission because I suppose every hon. member has read them. All through their report these gentlemen seem to be leaning towards the amalgamation of these two roads. They do not say so in so many words but that is the inference I draw from their report. I want to be fair to the members of this royal commission but as a member of this house I think I have the right to criticize their report if I so desire and my criticism is that most of the gentle-

C.N.R.-C.P.R. Bill-Mr. Sanderson
men who composed this commission were in favour of privately owned rather than publicly owned railroads. The report bears out my contention. I repeat, this commission after having gone up and down this country, have not told us anything new. They did make certain recommendations which are embodied in the bill now before us, in the discussion of which I shall take a few minutes.
The -bill is divided into three parts. I am only a layman and could not go into the legal aspects of the bill, but I have endeavoured to study it with an entirely open mind. Part I of the bill deals with the substitution of three trustees or receivers, as the Prime Minister chooses to call them, for the seventeen directors and general manager who have been administering the affairs of this road for some years. These trustees are given absolute powers in the administration of the affairs of the Canadian National system. They are to be given powers which in my judgment should not be given to any three men. They will be a law unto themselves, they will not be responsible to parliament or to the taxpayers of this country who have been paying the deficits of the Cariadian National road. They will be able to do just as they like for a period of seven years. It is true that they can be removed from office by an address to the House of Commons and the Senate but that course would never be taken. They will be vested with authority and responsibilities which should not be vested in any three men no matter how capable they may be, no matter what business sagacity they may possess. It is too much power to be given to any trustees or to any body of men. The Prime Minister said that they would be more receivers than trustees. I was a little puzzled at that definition and I looked up the legal meaning of a receiver. I found that a receiver is a person appointed ordinarily by a court of equitable jurisdiction to receive and hold in trust money or other property pending suit, in the case of a person incompetent to manage his own property or upon the winding up or dissolution of a partnership or corporation. A receiver is an officer of the court and the property held by him is not subject to process other than in the case itself. A receiver often obtains authority to continue to manage the business as a going concern.
These three receivers are to administer the affairs of the Canadian National system for the people of this country for at least the next seven years. As I said before, they are to be vested with authority which should not be vested in any one man or in any three men. They are to be a law unto themselves.
I cannot understand why three receivers- that is what the Prime Minister calls them- should be called in at this stage to administer the affairs of this railway. It is the most peculiar receivership of which I have ever heard.
In addition to providing for the appointment of these three receivers, the bill provides for compulsory cooperation or, as the Prime Minister said the other day, directed cooperation between tbje Canadian -Pacific and the Canadian National roads. What kind of amalgamation is this to be? They will not be joined in wedlock but they will be handcuffed and shackled together. The Canadian National is to be administered by three trustees and by a president who is to be the operating manager. This president is not to be responsible to the Minister of Railways, he is not to be responsible to this parliament, lie is to be responsible only to the three trustees. The purport of this bill is to join these two great railroads together and, as I said, handcuff them and shackle them and keep them in that position for seven years.
A study of the history of the railroads of the United States will show that during the war the government administered the railroads, although at the moment I cannot say whether this was done under trustees, receivers or just what form of control was used. But the result of the control vested in private individuals by the government was that they made bankrupt every railroad which they were permitted to manage. That has been the history of trusteeship or receivership, if you like, in the United States. While I do not want to be pessimistic; while I do not want to make any prophecies as to the future, I am of opinion that if this bill goes into effect, one of three things will happen within the next seven years. One will be that we shall have complete amalgamation of these two railways, either the absorption of the Canadian Pacific by the publicly owned road or the absorption of the publicly owned by the privately owned road, or both roads will be so impaired, so restricted in business that this will constitute one of the biggest calamities Canada has ever experienced.
The very conclusions at which the royal commission- arrived in regard to economy and cutting down of expenses have been put into effect during the last two years. This started before the royal commission began to function and it has been continuing. Some hon. members during the debate have pointed out-I think the Minister of Railways did so-that Mr. Hungerford's report was to the effect that in the administration of the Canadian National in th-e last two years there had been

C.N.R.-C.P.R. Bill-Mr. Sanderson
a saving of $44,000,000 a year due to cutting off trains, perhaps letting out some men and the elimination of duplication. That having already been done, this board proposes to tie these two systems together, the Canadian National under a trusteeship and the Canadian Pacific under its own board of directors. I hold no brief for Mr. Beatty, but I want to read what he said in Winnipeg on February 3. Let me read this paragraph, quoting Mr. Beatty's own words:
I have stated on more than one occasion the objections of the Canadian Pacific to the commission's plan. We are prepared to agree to all proper measures of cooperation, but we cannot consent to our property being administered for us, but at our expense, by others. We cannot agree to turning over to an arbitrary body the conduct of our enterprise and the shaping of our policies, when, in the nature of things, the consequences must be borne by the shareholders. The views of those charged with the responsibility of protecting the enormous investment in the Canadian Pacific would not, in those circumstances, prevail. This is not regulation: it is_ the assumption of complete powers _ of administration without financial responsibility.
That is the opinion of Mr. Beatty, president of the Canadian Pacific Railway, but under this bill he is compelled to tie his system up with the Canadian National. In my humble opinion the cure for the situation in which the two railways find themselves is the one that could be applied to every individual in this country. The reason that these two great systems are in their present condition is that they have not tonnage; they have not business. Give them business and tonnage-and I hope before long we shall have them back- these two railways will again be serving the Canadian people in the efficient manner they did a few years ago. Further, the railways will never be back to normal tonnage until our agricultural industry is back on a footing whereby the product of the farm can be sold at a profit. When that occurs, these railways will not want for tonnage. The bon. member for Muskoka-Ontario (Mr. MoGibbon),-and I welcome him to our side of the house, because I see he is here-said the other day that the Canadian National system was in red ink. There is not an individual or an industry in Canada that is not in red ink. I am of the opinion that the manufacturers of red ink are perhaps the only people who are out of it, because they must be doing a large amount of business. Everyone is in red ink. It is true that the Canadian National, this great system of which we were all so proud a few years ago, is in red ink. But I give it, only as my opinion, that the Canadian people, irrespective of politics in regard to the Canadian National, in the condition in which it is to-day, if you 
like, in red ink and with huge deficits, still consider that it is one of the greatest assets we have and posterity will show that they are right.
In conclusion, I say: Hands off the Canadian National Railways. Let it work out its own destiny, not tied up with the Canadian Pacific Railway, not administered by three trustees whc- are not responsible to anybody, who are not responsible to this parliament and who are a law unto themselves. Let the present manager of the Canadian National and his directors, if you like, who come from all sections of the country and who know the local problems, continue to function. Let them go on carefully as they are doing, keeping down expenses, and when conditions change we shall not hear very much about the woeful position of the Canadian National Railways.


Mr. D. M. KENNEDY (Peace River):: Mr. Speaker, the railway situation in the Dominion of Canada is, I am free to admit, rather serious, but not more serious than that of other industries. We are not discussing this bill and this question to-day solely because of the railway situation. We are studying it largely because of the tremendous worldwide economic depression of which Canada has experienced her full share, due partly to her own policies, partly to policies in other countries and partly to other factors. We have had in the last four years a shrinkage of about 50 per cent in world trade. The British note mailed to Washington last December referred to the depression as one of unparalleled severity. It has been called an economic blizzard and several other names indicating that most people thought it was the worst depression we ever had. The report of the committee on transportation calls attention to this as being one of the contributing factors but the railway problem is not any more serious than the agricultural, the manufacturing or the financial question or that of government, federal, provincial and municipal, with regard to deficits, and unless we can get some other commission or some other means of dealing with the depression as it affects other industries, it is not worth while dealing with this bill or trying to do anything with the railways; we are heading for disaster. Personally, I do not think we are heading towards a disaster although we have already experienced something which might be termed that. I believe that to-day and during the last few years the world has been learning lessons which will be of immense value in the future. When one studies all the troubles confronting the world, considers the position of industry generally,

C.NJR.-C.P.R. Bill-Mr. Kennedy (Peace River)
and the economic life of this and other countries, one feels as though all the waves and billows have gone over it.
Some of the speeches made in the house have indicated that members are under the impression that the trouble is due to extravagance. To some degree I share the views of hon. members who have spoken kindly concerning Sir Henry Thornton, and yet in my judgment in the last eight or nine years some inexcusable things have been done. There was extravagance shown by the railways in the building of hotels, in the development of steamships, and passenger services. But, Mr. Speaker, those were not the factors which made the real railway problem, if we want to discuss it as a problem distinct from all others. The railway problem in Canada was made previous to the war, and any hon. member who has doubts in the matter would do well to read the Drayton-Acworth commission report of 1917. Anyone who considers that report carefully must come to the conclusion that it was what happened previous to 1914, the excess mileage built in those years and the railways planned during that period, which is responsible for the real railway difficulties from which we suffer to-day. Among other things that report states that Canada had room for two transcontinental systems, but not for -three. I believe that is the chief problem. If hon. members would examine the evidence submitted to the commission and study the report prepared by three gentlemen, one from the United States and two from the Department of Finance, they will find that the duplications set out as being unnecessary were duplications of transcontinental mileage mainly, and have nothing to do with branch lines.
There is of course another reason for our great surprise to-day. Is is that no one

* railway executives, bankers, or any other people outside of a few economists-had any idea five years ago what was going to happen. They were caught as much by surprise as were the farmer and his hired man, the bricklayer or the hodcarrier. And if anything has tended to make me lose faith in supermen it is my study of this question. When I was very young I lost faith in Santa Claus. A little later in l-ife I gave up hero-worship. To-day certainly I have lost the last vestige of faith in supermen. They are a relic of barbarism and superstition belonging to the age of tribal medicine men and witch doctors.


Ernest Lapointe: You have lost faith even in prime ministers?


Donald MacBeth Kennedy: It applies to all supermen.


Mr. JACOBS:: Would the hon. member go as far as to say that all the supermen are in the soup?


Donald MacBeth Kennedy: I rise particularly to deal with that section of the report prepared by Mr. Loree respecting tonnage hauled on a certain mileage of railway. In his speech the Prime Minister referred to the fact that the commission had considered what had been done during the last few years in connection with branch lines. His words are:
_ They saw all that was implied and involved in the branch lime programs to which effect had been given -and they learned with dismay of the financial position.
Between the years 1904 and 1917 the railway mileage in Canada was doubled. During those years we completed mileages ranging from 514 miles in one year up to about 5,000 miles in another. During the years following 1923 we built a few hundred miles annually. I challenge anybody to show that the branch lines built since 1923 loaded the Canadian National Railways or the Canadian Pacific Railway with anything which might be described as a real financial problem. The Duff report calls attention to the fact that we have less population per mile of railroad than has any other country in the world. That is only a half truth. Canada stands twenty-third in the list of countries, so far as population is concerned. China is at the top with a population of 444,000,000 and Canada comes in twenty-third along with Ethiopia and the Belgian Congo with 10,000,000. But where is Canada with respect to export trade? In 1929 the United States was at the top, with the United Kingdom running a close second, Germany third, France fourth and Canada fifth. Speaking before the royal commission, Mr. Ilungerford, the acting president of the Canadian National Railways, pointed out that while between the years 1900 and 1929 the railway mileage increased by 135 per cent, the gross earnings of railways in the same period increased 656 per cent and the external trade of the country increased by 645 per cent.
We all know that Canada's railways have been laid out with the idea in mind of a vast export trade. Canada is, and has been for a number of years, leading the world in the export of wheat, and our wheat area is located farther from the sea than the area of any other country exporting wheat to the great markets of the world. It is preposterous to state that because we have less population per mile of railroad than has any other country of the world, we are over-railroaded. That is but a half truth, and before we can thoroughly appraise the whole situation it
2944	COMMONS
CJf.R-C.PJl. Bill-Mr. Kennedy (Peace River)
is necessary that we should understand several other factors regarding the trade of Canada, where it comes from, what it is, and its proportion in relation to the total trade of the world.


Ernest Lapointe: And the area of the territory.


Donald MacBeth Kennedy: Yes. In 1929 while we had only one-twelfth the population of the United States, our trade was one-quarter the volume of the trade of the United States. Section 102 of the report is as follows:
Commissioner Loree, who contributed the studies involved in the preceding tables, has also supplied freight traffic density diagrams showing lines of heavy, medium and light traffic. The first category includes lines carrying annually in excess of 2,750,000 net ton miles per mile of road; the second, the lines carrying less than 2,750,000 and more than 250,000 net ton miles per annum; the third, the lines carrying annually less than 250,000 net ton miles per mile of road annually. In the United States the right to exist, when tested by economic experience, of all railway mileage in the third group is under challenge.
Then he goes on to deal with the percentages.
I wish to mention the right to exist. That statement appears to say that the branch lines built since 1923 were not justified. The Prime Minister in his reference to Mr. Loree said he was not a trunk line man, they tried to get a trunk line man but did not secure one. But Mr. Loree is supposed to be an expert in railways matters. Perhaps it is as well to read the rest of this section.
In Canada 42 per cent of the total mileage carries less than five per cent of the total net ton miles, and falls within the third group. Medium traffic lines, comprising 48 per cent of the total mileage, carry 45 per cent of the total net ton miles, while the heavy traffic is confined to the remaining 10 per cent of the total mileage, which carries 50 per cent of the total net ton miles. The light traffic divisions constitute 42 per cent, or 17,658 of the 42,075 miles of railway in the dominion. Were it possible to abandon this economically unsound mileage, the mileage remaining and now carrying 95 per cent of the net ton miles, would be about 58 per cent of that now in existence.
In other words the right to exist of 17,000 miles of railway in Canada is challenged. If you blotted out this economically unsound mileage the remainder would be about 58 per cent. Now what about that? My point is that Mr. Loree and the commission in accepting that statement and putting it here, utterly failed to grasp the significance of branch lines. That section of the report distinctly leaves that impression. We have on pages 32 to 40 the different zones. First an illustration show-

ing traffic density, and on page 33 the totals. In the Atlantic coast to Levis, zone 1, shown on page 34, we have 2,096 miles of medium traffic and 3,161 miles of light traffic.
On page 35, Quebec to Detroit and Sudbury, zone 2, we have more heavy traffic, the total being 1,501 miles; medium traffic, 5,810 miles and light traffic 3,899 miles.
On page 36, Detroit and Sudbury to Port Arthur, zone 3, we have 2,061 miles of medium and 144 miles of light traffic.
On page 37, Port Arthur to Calgary and Edmonton, zone 4, we have 2,391 miles of heavy traffic, 7,901 miles of medium and 7,203 of light. And on	page	38,	Calgary and
Edmonton to the Pacific coast, zone 5, 139 miles of heavy traffic, 2,518 of medium and 3,251 of light.
Now will anyone	from	the	Pacific	coastnot agree at once that the few miles of heavy traffic close to Vancouver are only heavy because of the branch line traffic back of it? Will not anyone agree that the few hundred miles of heavy traffic around Winnipeg and east to Port Arthur is due to the fanlike extension of railways west towards Calgary and Edmonton and	the Peace	River	country? You could not	have	that	dense	traffic
were it not for that fanlike extension to the west and north. Yet Mr. Loree utterly failed to grasp that. Any board of trustees appointed might accept these figures at their face value and the result would be disastrous to some communities and possibly to the whole of the railways of the Dominion of Canada.
This matter was studied before very thoroughly by the Board of Railway Commissioners for Canada in the western rates case. Here is what they say. You will find a reference to some heavy traffic lines as well as light ones. This is found in the western freight rates case, April 6, 1914:
The existing railway mileage is inadequate for the needs of those engaged in farming (in Saskatchewan and Alberta). In the former province 39 per cent, and in the latter 48 per cent of the total acreage is unprovided with railway facilities within a haul of ten miles. Thus farmers living at greater distances spend more in hauling the grain to the railway than it costs to haul the grain by rail from the railway station to Fort William. The governments of these provinces are therefore justified in assisting railway construction so as to shorten the average haul for the farmers.
In dealing with the principle of pro-rating we find this at page 157 of the western rates case:
A more striking instance of the manner in which the application of the pro-rating principle works out is shown by the Lake Superior division, which is in eastern Canada.

C.N.R.-C.P.R. Bill-Mr. Kennedy (Peace River)
That is one of the heavy and medium traffic lines.
This division, running as it does in great part through a wild and practically unsettled country, accompanied with great operating difficulties, and with, of course, the lowest production of local tonnage per mile of line of any part of the Canadian Pacific railway, nevertheless is shown to make good returns. It has been called by all counsel engaged in this inquiry a bridge over which commerce is compelled to move, the simile of a bridge, of course, being employed by reason of the fact that practically no more local traffic is obtained than would be found in running over a bridge, which, of course is nothing. Yet, as a result of the manner in which the railway's accounts have been divided, and which have been adopted by counsel for the different complainants, the Lake Superior division is shown to be highly productive, the returns for example, of 1911, crediting that division with a net operating revenue of $4,731,287.44. only exceeded by that of Manitoba and Alberta, while Saskatchewan's net operating revenue is shown as $3,745,071.12, a division producing a very large proportion of western traffic. On its face, of course, these figures would show the Lake Superior division to be profitable and one on which a comparatively low local freight rate should be enjoyed, leading, of course, to an absurd conclusion.
Most of the heavy traffic lines set out by Mr. Loree as the ones that have an undoubted right to exist have their heavy traffic because, in addition to the local traffic, they are acting as a bridge for traffic that is gathered from or going out to sparsely settled areas served by the branch lines. If anyone doubts the fact that western prairie lines are profitable, where most of the branch lines have been built since 1923, I refer again to the Drayton-Acworth report, page 36. It is dealing with the Canadian Northern position in 1914. The first two paragraphs relate to the financial position. Then they say:
It will be observed that the first appeal to the government was some months before the war.
The western rates case judgment was given on April 6, 1914, just about the same time. This bears also on that statement so often made about eastern Canada financing railway construction in the west:
No doubt the stringency of the money markets of the world at the time made it more difficult than it otherwise would have been for the company to sell its securities. But that was not all. There was a further cause intrinsic to the company itself. It had gone ahead too fast and had undertaken various extensive schemes, which could not possibly carry themselves from the outset. The Canadian Northern Pacific, the Canadian Northern Ontario, and the Montreal terminal especially implied very serious commitments. And the prairie system, which v-as self-supporting and yielded a profit, was not sufficiently developed to carry this weight.
If we need further supporting testimony we can get it from the speech delivered in New York by Mr. Beatty on February 22, 1925, before the: New York Traffic Club. I am not going to read it all; I should like to refer to only one sentence:
"If," said the speaker, "instead of turning its prairie lines into a portion of a transcontinental system, the owners had been content to make as their termini the mountains on the west, and the great lakes on the east, they would have been the wealthiest men in Canada, and Canada would not to-day be facing the railway burden it is compelled to bear."
I have here a pamphlet on the Canadian Pacific Railway Company, the present situation and future outlook from the viewpoint of the investor, published by Wood, Struthers and Company, dealers in tested securities, of New York, with comments and criticisms by Mr. Edward W. Beiatty, chairman and president. Mr. Beatty's letter is at the end of the pamphlet, so I think this may be taken as authoritative. I quote:
The double tracking of the main line between Winnipeg and Fort William, which is the heaviest traffic division on the Canadian Pacific-
Where there is no local traffic at all.
-over which most of the wheat grown in the prairie provinces must be hauled, has been one of the most outstanding physical contributors to operating efficiency. The operating costs on this division are perhaps the lowest on the entire system.
That bears out the contention expressed by the Board of Railway Commissioners in 1914, showing that branch lines are necessary in order to have heavy traffic lines at all. You might just as well cut off the roots of a tree because they are not as big as the trunk and say, "We do not need them; they are too small and are of no use." I want to state emphatically. Mr. Speaker, and I challenge denial, that the branch lines built through the farming areas of western Canada were justified in practically every particular. Our need is not fewer but more branch lines. I say again that this portion of the report is entirely misleading, and I cannot understand why it should be presented in this light at all. The only favourable thing I can see in this connection is that in spite of the fact that commissioner Loree prepared this study of density of traffic, the commission refused to include branch lines among the list of factors making up the railway problem.
I have here the map included in the report, and I am going to refer to that part of the country with which I am most familiar. This map shows the railways of Canada and indicates those lines whose right to exist is challenged by experience in the United States
2946	COMMONS
C.N.R.-C.P.R. Bill-Mr. Kennedy (Peace River)
If you take the lines running north from Edmonton to serve the Peace River country, those who have been to Peace River know that for the first hundred miles north of Edmonton these lines pass through a well developed farming country. Then, for about 100 miles, there is undeveloped territory with a few sawmills here and there. Then the lines reach the real Peace River farming country, and one of the lines whose right to exist is challenged, according to this map, is the portion which produces all the traffic originating in that farming country, while one of the lines whose right is not challenged is the ICO miles through the territory where there is little local traffic, and where there would be no need of a railway if it were not for the farming district lying beyond.
I listened to the remarks of the Minister of Railways, and I may say that I agreed pretty generally with what he had to say. However, he made one statement to which I should like to refer, because I do not know whether he meant it as it stands in Hansard. He went on to explain it later, but I noticed that one of the newspapers took this portion of his remarks and dealt with it as though it were quite separate. At page 2777 of Hansard for this session the minister said:
T must confess it was my own conviction-[DOT] that grain traffic was the paying traffic of the railways. As a matter of fact, it was not so much the wheat and grain traffic that was the paying traffic for the railways as the fact that the people of the west were selling their products at a reasonable price and had the money with which to purchase goods from some other section of the country, thus providing return traffic; and that total traffic brought about the prosperity of the railways.
Some of us have argued as to the importance to the railways of the wheat traffic, and the traffic in agricultural products generally, but I submit that no one from the west who has had enough knowledge of the subject to express an opinion ever thought that the wheat traffic was sufficiently profitable to carry the railways without other traffic. This, however, does bring out the fact .that the wheat crop is an originator of new wealth and new purchasing power, and unless the farmers can sell their products at a profit in the markets of the world there will be no real solution for the railway problem in this country for some years, at all events. It is remarkable how steady has been the planted wheat acreage of the west in the face of this shrinking price level, and the steadiness and dependability of the railway service throughout these years when the railway companies have been losing money has greatly contributed to the stability of the situation. I do wish that manufactur-[Mr. D. M. Kennedy.}
ing and financial concerns could give the same stability to the development and volume of trade and sales in spite of falling world prices; then we would not have the depression as severe as it is in Canada to-day. But, Mr. Speaker, the farmers have little or no control over the price level of wheat. I think, of course, that a reduction in the wheat acreage, if it could be effected in other countries as well, would help tremendously, and I think we should investigate that possibility. But I notice that the government is not throwing its weight in that direction at the present time. I want to say that the government, through whatever control it has over financial policies, has far more to do with price levels than the farmers have, and to the extent that they acted or did not act they must accept responsibility for the present condition. Any policies that have been adopted that interfere with the purchasing power of the farmers-whether those policies be tariffs or anything else-are contributing to the railway problem of this country. I know, of course, that a great deal of our trouble is world wide; I know the government has done something with regard to prices, but I mention these facts in passing.
I think, Mr. Speaker, that the most important part of this bill is the section having to do with compulsory cooperation. I read the amendment of the right hon. leader of the opposition (Mr. Mackenzie King) and while I agree with some parts of it I cannot quite understand why it was brought forward at the time it was moved. I suppose we will have a chance to deal with these matters later on. When it comes to compulsory cooperation, however, I have been wondering if this principle was called to the attention of the hon member for Toronto Northwest (Mr. MacNieol) and the hon. member for West York (Mr. Lawson). Some years ago when we talked about a conpulsory wheat pool in western Canada we were supposed to be advocating something that was communistic; but here we have compulsory cooperation applied to the railways of Canada, the transportation business of the whole dominion, one of our major enterprises.
I have not much fear of communism or socialism or capitalism. I think the hon. member for Regina (Mr. Turnbull) pointed out that what we had in Canada was a sort of mixture of cooperation and capitalism. I have not much fear of the theories which the ordinary individual has in the back of his head so long as he has common sense enough to know how far they can be applied in connection with the circumstances and affairs with

C.N.R.-C.P.R. Bill-Mr. Harris
which he is called upon to deal. I wish to state therefore that I intend to support this bill in a general way, although I think it is possible that there are in it some things which I should like to see changed and which I will vote to have changed.


Mr. J. H. HARRIS (Toronto-Scarborough):: The manner in which hon. gentlemen have addressed themselves to this question, which is of such importance in this particularly critical time, is a matter of satisfaction not only to the house but to the country at large. The exposition of the railway situation as given by the leader of the government is worthy of the highest commendation, and the way in which the Minister of Railways (Mr. Manion) set forth the facts will equally commend itself to this house when we remember the high plane on which he kept the discussion. Indeed, throughout this debate, so far, all hon. gentlemen who have spoken have endeavoured to keep the discussion on that same high plane. To my mind this emphasizes the seriousness of the problem with which we are confronted.
I feel disposed to support this measure for some half a dozen reasons. First and foremost to my mind is the fact that the putting of this legislation into effect will do more to arrest the possible collapse of our transportation system than any other piece of legislation that has come before the house in the last decade. Who is there in this chamber who will say that our transportation system was not headed for collapse had we continued to follow the policy of merciless competition and expansion which has been in vogue in the last ten years. The system was bound to collapse if we had continued along that line. We have had an example of what was bound to happen in what has happened to the country to the south of us in connection with another great national necessity; I refer to the collapse of the banking system there. The financial affairs of our railways are on a par with the banking system in importance and, I repeat, we were headed for collapse if action had not been taken.
The hon. member for South Perth (Mr. Sanderson) said a few moments ago that nothing was being done, that nothing new has come to light in this particular Duff report. He said that the Duff commission had only brought in evidence and information that we have all known for the last five or ten years. May I remind that hon. gentleman that during the last ten years his friends have been in power. If therefore they knew all these facts throughout that time why did they not initiate some legislation to 53719-187
prevent the collapse that was' inevitable? They had the benefit of the June 1925 report made by that impartial body the Senate. Did they take action on that report? They never did; they allowed the matter to drift. The hon. member also complained about a speech made by the present leader of the government in the city of Stratford, when the right hon. gentleman declared that if given power he would see that no harm would come to the Canadian National Railways. The Minister of Finance of that day knew, as members of the opposition to-day will no doubt recall, that the Senate had brought down a report indicating that something must be done to curb the reckless extravagance that was then taking place, and also emphasizing the importance of taking a grip on the situation and passing legislation of the kind we have before us to-day. The Senate had asked in their first recommendation that cooperation be made possible, and had we been given power at that time, instead of waiting another five years and spending another $500,000,000 of the taxpayer's money, this government would have seen to it that all that extravagance was avoided. I am satisfied that if this government. had been in power a good deal of the money would have been saved and, more than that, there would have been on the statute books of the country legislation similar to this, in accordance with that Senate report of 1925.
This legislation carries out the pledges given to the Canadian people by the party now in power. It is intended to conserve this great railway asset for the Canadian people, and one other bright spot is the assurance that it will prevent the situation from becoming, whenever there is an election in this country, nothing but a political football. It will tend to reconcile the opinions held on the one hand by those who believe in private ownership and on the other the opinions of those who support public ownership, and will avoid any serious divergence in their approach to this problem. It will re-establish confidence in the industries of our country, because from ten to fifty per cent of the cost of operating an industry is made up of transportation expenses and freight costs. Those engaged in industry know now that the government is firmly behind a movement towards retrenchment so far as unnecessary railway expenditures are concerned, and this in due course will reflect itself in freight rates on those commodities with which they carry on their business. Perhaps the most important aspect of all is that the large body of workmen whose vocation is on the railways of this country will now see that the government in power

C.N.R.-C.P.R. Bill-Mr. Harris

is determined that neither the Canadian Pacific nor the Canadian National Railways shall fall into bankruptcy, and that these men's jobs will be assured them for some little time to come.
My hon. friend from Kenora-Rainy River (Mr. Heenan) is concerned in this regard; he says that shops here, there and yon throughout the country will be closed down. He made the suggestion that from eight to ten thousand employees would find themselves out of work. I rather think the hon. gentleman is overdrawing the picture. He has a great love for his fellow men, and being of that Irish makeup you rather expect to find that in him. I often think however when I hear him speak in this house that he allows his love for his fellow men to be very much overshadowed by his devotion to party politics, and when he makes the statement that from eight to ten thousand men will be dismissed I rather think it occurs to him that the political effect will be of some real significance in helping the fortunes of his own party. The hon. gentleman knows, as we all know, that every year sees a turnover of at least five per cent in the personnel of railway companies. He also knows that with a decline in tonnage being hauled on the railways the work is not there, so that they cannot employ as many men as they would like to. The turnover is at least five per cent and, according to Mr. Beatty, it is as high as six per cent; it would be therefore only a matter of four years when twenty per cent of the present employees would be, if things went from bad to worse, out of service in the ordinary course of events. We do not look for that condition, rather we look for an improvement. Far be it from me to say that 20,000 out of the 150,000 are looking for some other vocation in life; the whole system will be demoralized if the 150,000 are not sure of their vocation. I think the men in the employ of these railways are satisfied that this government is going to do something to make the continuance of their jobs actually possible.
I come now to my seventh point. This legislation is the considered opinion of an impartial body which travelled this country from one end to the other in order to make a study of the problem. The hon. member for South Perth (Mr. Sanderson) has made the statement that nothinig new is contained in the report of the Duff commission, but I cannot agree with that statement. There were also the sittings of the Senate committee, another impartial body of men trained in business and from all walks of life, where

this matter was considered in an impartial manner and without political flavour. This bill now before us is the result of information which has been gathered during the past ten years. This information is to be found in the journals of the house, in the proceedings of the shipping committee, in the proceedings of the Senate committee of 1925, in the proceedings of the Duff commission and finally in the proceedings of the Senate committee of this year. All this information has been consolidated into this measure and it should receive the wholehearted support of this chamber.
I should like to make a few observations with regard to the loss of tonnage. Our primary commodities make up a large volume of the tonnage carried by our railways, but it is not always the most profitable tonnage. There is no gainsaying the fact that the low prices now offering for these commodities has retarded their movement. Because of low prices the primary producers find that in many cases it does not pay to send their goods to market. The hon. member for Queens (Mr. Myers) gave an illustration the other evening when he referred to the difficulty in picking up potatoes here and there throughout Prince Edw'ard Island in order to move them to market. He referred to the inflexibility of our railroad classification. In the past our railroads have not adapted themselves to the difficulties faced by a sparsely populated country such as Canada. There is great difficulty in making up carload lots at points of origin, and this offers a big problem to the small shippers who produce only two or three ton lots of goods. The pooling arrangements and the cooperative measures contained within the four corners of this bill will make possible the pooling and loading of carload lots with a resultant benefit to the shipper.
During the past decade the one thought in the minds of the railroad men of America has been to build larger and heavier equipment. As an example, we have our 5700 engines with their 26 wheels. I am not complaining as we will have to do the best we can with them. We have our 100,000 pounds capacity freight cars weighing 40,000 pounds dead weight. I do not consider that such equipment is economical. Apparently the only thought in the minds of our railroad men is the movement of such bulk commodities as wheat, coal, and pulpwood. Did they consider the heavier units necessary to handle this heavy tonnage? I do not think sufficient consideration was given to the cost of the heavier rails, the extra foundation and roadbed and the stronger bridges necessary

C.N.R.-C.P.R. Bill-Mr. Harris
to handle this type of equipment. There was also the necessity of installing heavier cranes, drills and lathes in the shops in order to handle the necessaiy repairs. In the past when thinking of freight we have been too prone to think only of wheat, coal, pulpwood, newsprint and similar heavier commodities; we seem to have lost sight of the fact that the real revenue producer is package freight. We are glad to have the wheat from the west which represents new wealth and all that, but is that the real revenue producer for the railroads? Is it not rather the package freight which is taken back to supply the needs of the primary producers?
I ask the house to bear with me for a moment while I discuss the industrial production in this country and its relation to freight rates. I should like to draw a line of demarcation between the type of industry which is prominently in the minds of certain economists, such as General Motors, the steel works at Sydney and Algoma and the pulp and paper mills, and those other industries which are the real backbone of the industrial life of this country. I refer to the small industries such as the shoe factories in Quebec, the textile mills in the Ottawa valley, the tanneries at Kitchener, Huntsville, Newmarket and Kingston. These are the industries which make up the profitable freight for our railway system. How much consideration has been given to them by the railroads during the past two or three decades? I see my furniture friend is in the house, and I shall include the furniture factories amongst the industries which go to make up the revenues of our railways. How much consideration has -been given to these industries? Very, very little. Apparently all the people can think of is wheat, coal, newsprint and similar commodities; no consideration has been given to the smaller industries in Canada. Many of these industries consume only four or five tons of one particular commodity and the result is that the purchasing agent in need of raw material is forced to take a carload lot of the particular commodity in order to obtain a respectable rate. This is in contrast to the situation which prevails in Europe, to which the hon. member for Kenora (Mr. Heenan) referred the other day. The minimum carload lot in this country is twenty tons, while in Europe the minimum is three or four tons. The purchasing agent finds that twenty tons of a particular commodity will stock his shelves for three or four months and it is necessary to tie up his capital for that length of time in order to obtain the carload rate. A similar condition prevails in 53719-187i
the shipment out of the. finished products of these industries. Shipments are made to sparsely populated districts and a shipment to a particular point may consist of only three or four tons. The industry finds it impossible to make up a carload shipment and in practically every instance the less than carload freight rate is almost double the carload rate plus one cent per hundredweight. This creates a real hardship for these industries. There is contained within the four comers of this bill an opportunity for the railroad companies to pool shipments offered for one particular destination. This will permit a reduction in the cost of operations and in the final analysis will accrue to the benefit of the shippers.
Heavy capital and renewal costs of these giant units of transportation must stop; these units are big enough now. The hon. member for Kenora-Rainy River, who is so solicitous with regard to railway labour, said the other day during the debate, and was rather proud to say it, that within the last ten years these railways had been able to haul per man unit an extra 12,000 tons of freight. Every time you thus increase the efficiency, you cut out the man power necessary to operate the railways. The hon. member talks about efficiency, but if the efficiency rises from, let us say, 60 per cent to 80 per cent in the conduct of our railways and 90 per cent of that efficiency lies in the elimination of man power, where in the final analysis does the benefit accrue to the people of Canada?
We have followed the United States plan; we have Americanized the conduct of our roads and we have even surpassed the United States in that regard to an unnecessary degree. We shall have to put up with this, but the time'has come when we should call a halt to the extravagant expenditures of these big transportation services. We should stay where we are for a while till the population and production of Canada can catch up. In following the United States plan, we have just opened the gate, as it were, to motor truck competition; we have made it possible for motor trucks to fit into the groove where small industry was not getting any real service from the railway companies. It is true that the railway companies are now waking up tc the situation and mending their ways a little, but they are rather late in doing so. The handicap which has been placed on industry through the railway companies not meeting motor truck competition is something which the latter will not get over for some little time. The railway companies have been very arbitrary in setting up their classifications
C.N.R.-C.P.R. Bill-Mr. Harris

and freight rate structures. They seem to have followed the plan: Whatever the traffic will bear, that will be the freight rate. Let us take a case of goods originating in one point and being shipped to another point on another line of railway. If the other end was a competitive point, switching charges were absorbed; but if it was a non-competing point, switching charges were not absorbed. Was the cost in one case greater than in the other? This is a straight example of taking advantage of the local situation. In a like manner take cartage rates, these pin-pricking items of expenditure with which anyone in business finds himself confronted each and every day he is doing business with arbitrary bodies such as at times our railway companies have been and which, I hope, this cooperative measure now before the house will eliminate. One hundred yards from a railway station the cartage is four cents per 100 pounds; half a mile from the same point on the same car, it is still four cents and two miles from the same point it is still four cents. There is no equity, no consideration in that particular regard. At the present time they will quote you a freight and add cartage here and cartage there; in like manner the other Canadian companies will do the same, yet if you have, on a competitive line a siding into your plant, they will absorb the cartage. Is the cost any greater? In the past they have been able to put through these arbitrary rate rulings, and this cooperative measure is long past due in this country to establish and help out industry.
There are in the bill a few features to which I should like to address myself and perhaps only one in regard to which I should like to sound a note of warning. I am a little sceptical about subsection 2 of section 2 where it reads:
Parts II and III of this act shall not apply to any manufacturing, land, mining or ocean marine company, undertaking, property, work or service.
These particular units or assets of our transportation systems have in days gone by in their interlockings undoubtedly had a good deal to do with making our railway systems at some stage or another solvent. The converse of that is true that in days gone by our railway systems from their earnings have, to my mind, done a good deal towards stabilizing the solvency of some of these undertakings which the railway companies in their wisdom have seen fit to assume. During the last few years one might hazard a guess that the Consolidated Mining and Smelting Company has done a good deal to lessen or overcome the difficulties which the Canadian

Pacific might have had in the way of loss of revenue in the operation of their line. During the last decade they have been interlocking and when the railway company was not earning any money, perhaps the mining company or the land company or the mortgage transaction or the irrigation scheme or the immigration and colonization plan was. In other words, when one cow was not milking, the other gave a little milk. Now that these are being separated, my note of warning is to see to it that in days to come traffic borne on our Canadian railways will not be penalized in any degree for the benefit of these interests outside of the jurisdiction of this measure.
But if this one feature is something to which thought should be given in the days to come, there are many features of the bill of which I express hearty approval. We are getting back now to a sound financial statement from our railways. Section 12 of the bill provides that income deficits shall not be funded. Some of the older members will remember about ten years ago the late Right Hon. Mr. Fielding said in the house: "We have a credit balance in the national affairs of this country this year, but when we have to pay the deficits of the Canadian National Railways, it makes a debit balance and adds to the national debt." Mr. Fielding was sound in his bookkeeping system as far as the Canadian National Railways were concerned, and it was a matter of regret to me when I noticed that his followers in office did not continue that sound practice of writing off deficits as they occurred instead of putting them into capital account.
A continuous audit by independent auditors, in accordance with section 13, is something really worth while, but I am glad to see the rider which follows it to the effect that:
Their annual report shall call attention to any matters which in their opinion require consideration or remedial action.
That is very valuable. I would not be surprised if half the people of this dominion are not aware that the Canadian National Railways charge no depreciation whatever for the wear and tear of the equipment that is running on their rails to-day. This has not been done; it is not the bookkeeping practice of the system. I ask any hon. member who has had anything to do with business: Is it not sound business to have depreciation charges provided for each and every year? That practice, however, does not obtain in the bookkeeping of the Canadian National. It is too late to remedy this, yet I point it out as one instance among many others which

C.N.R.-C.P.R. Bill-Mr. Harris
the auditors, if they do their duty according to this measure, must bring to the attention of parliament. The auditors' report attached to the financial statement of the Canadian National Railways has in years gone by been simply that two and two make four and that they have found this to be the case, but as a real audit it has been meaningless and the rider in section 13 will be a good thing for us in that connection.
As provided for in section 14, the annual report comes back to parliament and thus the bogey raised by the leader of the opposition (Mr. Mackenzie King) some days ago is immediately dismissed. Of course we had to put in the provision to the effect that goods should be carried over Canadian railways to the Canadian seaboard rather than to foreign ports. I am quite in accord with that sentiment when it is placed within the four comers of the legislation. It should satisfy the qualms of conscience experienced by the hon member for Queens-Lunenburg (Mr. Ernst) every time he looks at anything concerning railways.
What objection could there be to part III of the bill? It provides for the joint use of terminals, running rights over and joint use of tracks, and the avoidance of duplication in the construction of new lines. Hon. members know what the hon. member for Peace River (Mr. Kennedy) has in mind. We realize that if there were no branch lines there quite probably would be no trunk lines. There have to be branch lines to collect freight. But is there any harm in men who have the interests of the country at heart, the heads of the two railway companies, getting together and deciding on the use of one branch line rather than permitting that line to operate in opposition to another running parallel with it? Sensible men have the interests of Canada at heart, and are willing to cooperate. In his speech made at Winnipeg a few days ago Mr. Beatty indicated that willingness. Why would he not? If he is not willing, if the measure now before us does not go through this House of Commons, and if we continue the policy which has been in vogue during the last ten years, we are headed for a situation the result of which will be one of the greatest financial tragedies Canada has experienced in her economic history.
Then the bill advocates the joint use of facilities. In the city of Toronto we -have an example of what joint use means. The Toronto terminals are being used jointly and to the advantage of the people and the railways. In like manner I can picture possibilities throughout the length and breadth of Canada for the joint use of facilities for the common good.
I now come to part III of the bill, which concerns the pooling of freight and passengei traffic. As I have already spoken concerning this angle of the matter I shall not enlarge upon it at the present time. The hon. members for Kenora-Rainy River (Mr. Heenan) and Winnipeg North Centre (Mr. Woods-worth) seem to be greatly worried about the elimination of services. For their information I direct their attention to subsection 5, section 9 of the bill, which states as follows: Subject to the terms of this act, and until otherwise provided or directed under its authority, every operation and service of .National Railways shall continue and be continued by all persons now concerned therewith as if this act had not been passed.
Surely that is sufficient to satisfy the minds of hon. members opposite. We are not going to dismantle the Canadian National Railways by cutting off services already enjoyed. We are not going to tear up a line here and another there, and leave without railway facilities the population who in good faith have settled in those parts. There is a clause in the bill dealing with that matter, and I am convinced, Mr. Speaker, that the issue has been raised by hon. members merely for the sake of having something to say. _
The principle behind this bill receives my endorsation. The hon. member for Kenora-Rainy River has asked:	Why not send it
to a committee? I suggest that for eight or ten years the matter has been under consideration by the railways and shipping committee. Was it not before a committee of the Senate in 1925, and was it not again only recently before a Senate committee? Have there not been hearings of expert witnesses here and there throughout the length and breadth of 'Canada? Have not the hearings of the eighteen sittings of the Duff commission been put into print, both in the press and in the final report? Is there not in the library of parliament volume after volume of journals of the house containing evidence concerning the railway situation? Is not that enough evidence, or does the hon. member for Kenora-Rainy River want to make a little more political capital by bringing before a committee witnesses from all parts of the country? Does he want to rethresh the old straw that has been threshed many many times? I wonder if it has occurred to him that every day that this House of Commons sits it costs the country $20,000? Will he dispute the fact that if the matter were sent to a committee of the house proceedings would be prolonged by at least another week?
So far as the high plane of debate is concerned, if it goes to a committee I assure the
C.N.R.-C.P.R. Bill-Mr. Hams

hon. member it will be kept on that high plane. But, Mr. Speaker, some regard must be had for our friends of the fourth estate. If this house is deliberating on one problem, and a committee sitting in another place is deliberating on another, and if interests are divided, the public will not have a fair picture of what is taking place in Ottawa. If the fourth estate have nothing to do but to listen to deliberations in this chamber in committee of the whole, where the bill properly belongs, then the public will have a fair conception of what is taking place. The high plane of debate in the house is a matter which will be reported by the press, and it will tend to bring out of the chamber legislation that is really worth while. But after all, the bill would have to come back to this house, and the house would have to take the responsibility. It is quite true that the odd member here and there coming from a railroad centre would be able to hide behind a smoke screen, and say, "Oh, well, a committee of the House of Commons said so and so." But if it is considered by a committee of the whole house that condition will not prevail. I am satisfied that if the bill were referred to a committee there would be at least six or seven days' delay, which, at $20,000 a day, would add another $150,000 to the burden of the taxpayers.
Some hon. members, including the hon. member for Peace River, are worrying about compulsory cooperation. He has stated that we had the shoe on the other foot when we were talking about a compulsory wheat board. I say to him that the problems are entirely different from and foreign to one another. Anyone knows that in one instance we were dealing with 200,000 individual farmers, while in the present instance we are dealing with two corporate entities. Those two corporate entities will see to it that there is cooperation, and in my opinion when this legislation has passed and is functioning very little arbitral power will be exercised by the tribunal. Very few matters will be referred to it for decision. The men who are managing the two great railway systems want to ge,t together and cooperate. They realize where they are heading, and that it is in the interests of Canada and of themselves that they get together and bring our transportation problem out of the maze in which it is at the present time. They are ready and willing to cooperate, and as great Canadians, I am satisfied they will do so for the general welfare of Canada. With such cooperation I can picture a condition under which the present freight rate structure and freight rate classifications will'be made more flexible, thus 
having a tendency to obviate the possibility of cases such as those described by the hon. member for Queens (Mr. Myers) where on account of freight classifications, bricks, mortar, window sash, cement and lumber cannot be loaded into one car. In the final analysis I am satisfied that the freight rate structure, which has remained at such a high level while other commodity prices have come down, will be lowered within a few years so that many primary commodities produced in this country will be able to reach the point of consumption. I have in mmd now the disadvantage of high freight rates so far as their effect on the tonnage of cur railroads is concerned. Not many months ago, I saw an offering of a million pounds of goods to go to Bermondsey, London, England, and when the cost of freight was calculated it was found to be more than the value of the commodity itself. I see that five hundred tons of goods are being burnt annually under the boilers of an industry in Toronto, displacing fuel which in turn would have been freight for the railway company. I see another picture, an industry that I pass each day when I am at home in Toronto, which last year produced two millions pounds of goods that found their market in Boston. Where are those goods going to-day? The low commodity value and the high freight rate to carry them to Boston have placed that thousand tons of goods under the boilers of that industry. With what result? The freight on the goods to Boston is lost, and also the freight on coal to that industry. Boston was supplied with the same commodity by waterborne traffic from South America. During the last twenty years-I can give the facts and figures-5,000 tons per year of nitrogenous products were shipped to Baltimore, that centre of industry which supplies the cotton growers of all the southern states. Now that entire 5,000 tons a year is being burned under the boilers of a 600 horse-power plant. With what result? Five thousand tons of freight haulage is lost to the railway, and the haulage of 1,500 tons of coal is also lost, on account of freight rates. The cooperation which is behind this legislation is going to do much in the years to come to help in an adjustment of that situation.


Samuel William Jacobs: 
Ernest Lapointe: Order!


Samuel William Jacobs: railways are to be amalgamated-or perhaps that is not the word; I will say they are to be "coordinated"; but what is going to happen when the Canadian Pacific Railway is unable to hold up its end? They will have to throw up the sponge, and then what will we do, with one railway already on our hands? We are giving blood transfusions to it now-I do not know the exact term; perhaps the Minister of Railways (Mr. Manion) can tell me. We are using blood transfusions on the Canadian National; we are keeping the system alive in that way. There is transfusion to the Transcontinental, and in a very short time we are going to have the other line in exactly the same condition. Let us say that at that time they are coordinated. What will the government do with the Canadian Pacific Railway? They are entitled to their transfusion also. Why not say at once that this is amalgamation? It cannot be anything else. I am for the principle of the bill because I say it means amalgamation, if not to-day then tomorrow or the day after. It is inevitable; it cannot be otherwise.
Some hon. gentlemen on this side of the house had some doubt as to whether there was not something in the minds of the government in introducing this measure, looking towards amalgamation, and the other day the Prime Minister (Mr. Bennett) assured them that no amalgamation is intended. I believe what he said was said in good faith, but with these facts before the people is there any man who believes that eventually we will not have amalgamation? I am supporting the principle of this bill because I say it is amalgamation and nothing else, and for that reason it is in the interests of the country, of the government and of the stockholders of the Canadian Pacific Railway. I think the bill should go through, perhaps not in its present form but with various amendments which of course can be dealt with when the bill is being considered in committee of the whole.
Speaking the other day the hon. member for North Bruce (Mr. Malcolm) paid a great tribute to the intelligence of the members of this house. He said:
I am thoroughly in accord with the hon.
member for Hants-Kings.
I did not hear the hon. member for Hants-Kings.
I do not think that any man who sat on the Duff commission, regardless of what his ability or previous experience may have been, has any more knowledge or any more conception of the railway situation as it applies in this dominion than have most of the members of this house.
(Mr. Jacobs.]
Later he went on to say:
Not only that, but I consider that hon. members of this house have a better knowledge of the requirements of the Dominion of. Canada and a fuller appreciation of what our railway system means to the national life of this country than any men who could possibly be appointed to any royal commission who have not been engaged in public life for the long periods of time that some members of this house have.
There may be some who have that high degree of intelligence to which my hon. friend referred, but I choose rather to accept the statement made by a former minister of the cfown with regard to the degree of intelligence exhibited by this house in dealing with our railway legislation. He said:
I am sure that all hon. members-and I watched proceedings there over a period of years-will agree with me when I say that, generally speaking, the members of that house, and in some cases ministers of the crown, do not clearly understand what they are doing on these railway matters. I say it advisedly. I have been there; I have gone through the experience. I say that the parliament of Canada has not the opportunity properly to digest, consider and adjudicate upon the budgets that come before it.


An hon. MEMBER:: Who said that?


Samuel William Jacobs: That was said in another place by Senator Calder, and I am prepared to accept every word of it; it is perfectly true. For ten or twelve years we have been voting millions of dollars into this bottomless sink, and where are we to-day? We do not know our business. What do we know about railways? My hon. friend from Toronto-Scarborough (Mr. Harris) knows something about them because he is a business man, but what do I know about railways, or, let us say, what do the medical men in this house know about them, with the exception of my hon. friend the Minister of Railways?


Robert James Manion: The president of the Canadian Pacific Railway is a lawyer, even as my hon. friend.


Samuel William Jacobs: Yes, but he is not a member of the bar. He was a lawyer once, but it is something he has "loved long since but lost a while." I would compare the position in which the railways will be placed when coordination takes place to a companionate marriage. It is not a real marriage; the ceremonies have not been performed. It is not a chance association or an irregular acquaintanceship; it is a companionate marriage.


An hon. MEMBER:: A liaison.


Samuel William Jacobs: I do not know what it is. The only difference between this coordination

C.N.R.-C.P.R. Bill-Mr. Jacobs
and a companionate marriage is that after a companionate marriage you can go back to the old condition if you are not satisfied. If the husband is not suited to the wife or the wife is not suited to the husband they can return to their former status. There is no alimony on either side; they become as they were before.


Ernest Lapointe: As you were.


Samuel William Jacobs: Yes, as you were, as far as that may be possible. What is the objection to an amalgamation or coordination?-and I use that word because some gentlemen here object to the word "amalgamation"; they think it has a sinister meaning. I know my hon. friend from North Waterloo (Mr. Euler) has preached this up and down the country in season and out of season until I believe he has convinced himself that he is correct. I am with him but for different reasons. I support the bill because it means amalgamation, and my hon. friend from North Waterloo and his friends support it because it does not mean amalgamation.


Robert James Manion: To avoid any misunderstanding may I say that I do not agree that it means amalgamation. I say this because I do not want it said that I sat here and agreed with my hon. friend.


Samuel William Jacobs: There are many things on which we do not agree in connection with which it may turn out that the minister is wrong.
There are two particular sections of the bill to which a good deal of attention has been given by the house. One is the famous section 16, which I should like to read, because I think there never before was a section like this inserted in any bill or statute. The section reads:
The National company . . . and the Pacific company . . . are, for the purposes of effecting economies and providing for more remunerative operation, directed to attempt forthwith to agree and continuously to endeavour to agree,-
I wonder how that would be interpreted by a court of justice.
-and they respectively are, for and on behalf as aforesaid, authorized to agree, upon such cooperative measures, plans and arrangements as are fair and reasonable and best adapted . . . to effect such purposes.
For the purposes of effecting economies and so on they are directed to attempt to agree and continuously to agree.


Jean-François Pouliot: That is the position of the ministers with the Prime Minister.


Samuel William Jacobs: That is another story. I should like to have seen the sardonic smile on the face of the Right Hon. Arthur Meighen when he drew up this thing: "To agree and continuously to endeavour to agree." It is a pious exclamation, a most noble sentiment; all it requires is to have a few of the beatitudes attached to it to become a first class sermon in this period of Lent. Of course, I would segregate the beatitude that refers to the meek inheriting the earth-"Blessed are the meek, for they shall inherit the earth." I should like to apply that to my friend the Minister of Railways (Mr. Manion) but I reserve it for the Prime Minister (Mr. Bennett). There are equally good beatitudes which could be found for the Minister of Railways, because he deserves well at our hands. I did not recognize him when he rose to deliver that magnificent speech last Tuesday, which as someone has said changed the whole tone of the debate. We know there are those who can roar like lions, but no lion ever roared as gently as a sucking dove as when the hon. gentleman spoke. I have great admiration and affection for the Minister of Railways. We came into the house together in 1917. We started life having, I think, the same political views, but he wandered away from the path of grace and he is now enjoying the benefits of a change of heart. He was and has been, I think, a minister of every Conservative government- not the Union government-of the time, and vve cannot tell how far he is going to go before he finishes. I only hope he will remain with us for many years, and that he will cultivate that present sweet reasonableness which we welcome in him and which suits him so well.
Now I ask myself why it is that responsibility is shed by the government and placed in the hands of creatures of their own making. After all it ought to be the business of a government to govern; they should have courage. We listen to the Prime Minister when he gets up and there is courage in his remarks, and he is able to carry the entire government with him after they have listened to his blasts. Now, why is it that we have to create a body and put upon them all this responsibility? My theory is that the government do not wish to have any odium attached to themselves; if the thing goes well they will claim that this administration is the father of it; if it does not go well the odium will be borne by the scapegoat. And the scapegoats will be those receiving large salaries for their services, and I do not think they will care very much about the odium
C.N.R.-C.P.R. Bill-Mr. Jacobs

so long as they have done the best they can. But a government must appeal to the people every four or five years, and they have to come, so to speak, with a clean slate and show that they have done nothing during their entire period which indicates that they are after all mere men and not, as my hon. friend from the west said, supermen. There are some people who are supermen until they are discovered.
With this section 16, which I say seems to have been taken holus-bolus from the Sermon on the Mount, mutatis mutandis, we come to the section dealing with the arbitral tribunal- section 19 I think it is. May I tell the house what will happen if the views expressed in section 16 are carried into effect-the section wherein cooperation is suggested. We are told what the Canadian Pacific Railway will have to do: "You agree to cooperate harmoniously, and so on, but if you don't agree this is what will happen to you." Then they proceed to declare what will happen; we have it stated in part III. If they do not cooperate their property will be confiscated. The body set up under this legislation is the court of last resort, for an appeal can be taken to the supreme court only on a question of law. I have not the time to read the section but there it is.
Now, that is not law, nor has it ever been law in any civilized community. It may have been law when Julius Caesar invaded Britain two thousand years ago but it has never been law since that time, and the Canadian Pacific Railway asks that some form of compensation be given in the event of confiscation. But that is turned down and treated as of no consequence at all. We in this house however, who still believe that there is some law and equity and justice in this country, oppose that provision and intend to move amendments which will protect both the Canadian Pacific Railway and the Canadian National Railways in future when they have cooperated and coordinated as they are asked to do.


Ernest Lapointe: And companionated.


Samuel William Jacobs: Yes, and companionated; I thank my hon. friend from Quebec East; he rolls that word under his tongue like a sweet morsel. When I was a boy at school, which is a long time ago, I was compelled to read Caesar's Gallic Commentaries. He said there, if I remember the first lines-Don't ask me to repeat them in Latin-:	All Gaul is divided
into three parts. Well, here we find all gall in part III. To-day in Russia we find the same system as is provided for in part III with respect to the arbitral tribunal. In Russia,

every person, high and low, rich and poor, aristocrat and bolshevist,-they are all forced into apartment houses, tenements and so on; every person is taken care of. The aristocrat who had owned a mansion is obliged to give room in the house to his former butler and his cook and the cook's cousin. He can keep two or three rooms for himself but the others are divided up according to the number of people who are seeking tenancy; and even the piano, which the aristocrat is perhaps permitted to play, must also be given over to the use of other boarders or lodgers from time to time. The aristocrat resents that; he remembers the days when it was not thus. I fancy that- the same feelings must actuate Mr. Beatty and the friends of the Canadian Pacific Railway. They resent people coming into their house and telling them how to run their business. They were a success before the Canadian National Railways was attached to them, and they think they are able to run their own business just as well and perhaps a little better than the others. But they say, "If you are going to do this, then give us something for the use of our property. Compensate us for the confiscation." I am pretty sure that the sense of justice of hon. members in this house will never permit a bill of this kind to go through with such a glaring act of injustice as is contemplated in this part III.
I would welcome and I am sure every person who had at heart the interests of this country would welcome some form of cooperation which will save to this country millions, nay tens of millions of dollars. We have it on the evidence of men who should know that we can save from $60,000,000 to $75,000,000. We will not quarrel over a paltry $5,000,000 or $10,000,000, which is a mere bagatelle in this thing. If we could secure a sort of equilibrium between the moneys which we have to pay out on account of the Canadian National and the moneys we will have to pay out subsequently on account of the Canadian Pacific, if we can make ends meet it would be a magnificent thing. I think this countiy might very well erect a monument in bronze to my hon, friend the Minister of Railways, to the Right Hon. Mr. Meighen and to the other worthy gentlemen should they be able to bring this about. I am sure that in their wildest dreams of imagination they never thought that anything of that kind could be done. The Lord works in a mysterious way his wonders to perform. This may be brought about and some day as I take my walk around parliament hill I may gaze upon the classic features of my friend the Minister of Railways and I will say to myself, "This is the man who did something

C.N.R.-C.P.R. Bill-Mr. Kennedy (Winnipeg)
for his country, and this is the way we recognize it." At one time I did think that this could be done. Now the prophecy is fulfilled: the lion and the lamb shall lie down together and a little child-the Minister of Railways-shall lead them.


Mr. W. W. KENNEDY (Winnipeg South Centre):: Mr. Speaker, the bill now before the house and which has emanated from the Senate is to my mind of first legislative importance in so far as the measures which have and which will come before us are concerned. It is of such importance to the city of Winnipeg, a constituency which it is my privilege to represent, that while I do not intend to speak at any considerable length, I feel my attitude might be misinterpreted in my own constituency if I failed to express my views before the bill goes to the committee of the whole.
Fifty years ago the city of Winnipeg was no more than a hamlet; to-day it is a city of approximately a quarter of a million. Fifty years ago there were no railroads either entering or emanating from that city; to-day a view from the air would show railroads branching out in every direction. There are the two transcontinental systems running east and west and other railroads fanning out north northwest, northeast and south from the city. We have in that city railway yards and shops which will compare favourably as to size, investment and number of employees with any other railway yard on this continent. An important part of our great railway system is the Canadian National Railway, with which this bill is concerned. This railroad is of importance not only from the physical and financial aspect but from the point of view of the number of employees to whom the purpose and effect of this bill are of primary importance.
It is unfair to say, as has been said upon certain occasions, that the government is not concerned primarily in the interests of the employees. I think it is a misstatement of fact to say that the first interest is either that of finance or that of the employees. The financial and physical aspect of the railways and their financial success is so closely correlated with the plight of the employees that it is senseless to endevour to separate them and say that either one or the other is of primary importance. Unless the railway systems of Canada can be made a financial success, there can be no permanent success for the employees. On the other hand, unless the employees are taken care of in a reasonable way you cannot make a success of any railroad, and particularly of any publicly owned system.
What are the objects of this bill? To put it briefly, they are to relieve the plight in which the Canadian National Railway now finds itself. But it goes further than that; it is an attempt to relieve the plight in which all the railways of Canada now find themselves, and particularly the two transcontinental lines, the Canadian National and the Canadian Pacific. It has been suggested, I think by the hon. member for Winnipeg North Centre (Mr. Woodsworth), that it might be feasible and perhaps necessary to consider, the cutting down of the interest rates or even the paring down of the capital debt with respect to the moneys borrowed from the investing public in this and other countries. It seems to me that the road to success in the life either of an individual or of a great industry does not lie over the pathway of broken pledges or repudiated covenants. The government has put the people's money into this undertaking, the government appealed to the investing public in this and other lands to advance their money for the bonds of Canada upon the agreement to repay at certain rates of interest. To my mind it is unsound to argue now that these rates of interest are too high, it is unsound from the point of view of the country s honour and credit to argue that more money was borrowed than should have been borrowed, and on that basis to suggest repudiation. We must face the fact that these moneys, in whatever amounts they stand in the ledger, are moneys advanced by people who had faith in the resources of Canada and in the honour of this country.
To repudiate repayment of either principal or interest would be a dishonourable act so far as Canada is concerned, and I cannot believe it is the serious and considered opinion of the hon. member for Winnipeg North Centre, that if perchance as prime minister leading a party he were face to face with the situation, he would draw a line through Canada's bonds and undertakings and announce to the world that she repudiated her pledges. If this were done, there might be a little immediate financial benefit, but after all the immediate present is only a very short period of time. Stretching ahead of every indivdual and of Canada is the long, long future, and it is better, even if we have to live a little plainer, even if we have as a nation to dig a little more deeply into our pockets, that Canada should honour her bond as given and pay her debts, as I believe she will.
What is the plight of the Canadian National Railways? It can serve no purpose to
2958	COMMONS
C.N.R.-C.P.R. Bill-Mr. Kennedy (Winnipeg)
enter into any detailed discussion. The facts have been placed on Hansard; they have been discussed on every public platform and in every newspaper throughout this country. The railways are facing a financial crisis. A description of the plight of our national railways was given by the first minister (Mr. Bennett) in his speech, concerning which statement there has been considerable comment in the house and also in the press. I refer to the observation made by the Prime Minister on the ninth of this month, when, describing the situation of the Canadian National Railways, he used words to the effect that essentially the people owned not the Canadian National Railways but merely the equity of redemption. The "equity of redemption" is essentially a legal term. To speak legally and in the narrow sense, it is true that the Canadian people do own the equity of redemption in the Canadian National Railways, but the conclusion drawn from that statement to the effect that the equity of redemption amounted to but little is incorrect.
What is the equity of redemption which the people of Canada own in the national railways? Let me explain this as simply and in as few words as possible. If I own a farm, borrow money on it and secure the loan by a mortgage, by the deed I mortgage to the person lending me the money my farm and all my rights and interest therein. If that mortgage be large and I fail to pay the interest thereon, and the interest and taxes accumulate to a degree that the amount of money owing under the mortgage is comparable, let us say, to the actual value of the land, it may be said with truth that I have little interest in that land. I have, it is true, the right to redeem it from the mortgage. That right to redeem is my equity of redemption. If all I own in this world is that farm; if it is mortgaged to the hilt and I do not pay and the mortgagee decides to realize, two courses are open to him. First, if it be the only asset I have; if my covenant be worthless; if to take a judgment against me in case of default would not realize the money, the mortgagee is driven to this position; he forecloses; he takes the farm and through legal means my equity of redemption is extinguished so that he owns the farm. It may be said that my equity of redemption from a practical point of view is worthless; but before he decides to foreclose and take over the farm, if he be a judicious man he will make inquiries to ascertain whether I have other assets available through which 
the amount of that mortgage may be realized. If he finds that I am competent to pay and he can make me pay, he will not foreclose the farm; he will make me pay. If I have the ability to pay and do pay, when I have paid I have my farm clear.
What is the position of Canada in respect to the national railways? The people of Canada, through the government, have mortgaged the national railways to the people who have advanced the moneys. Will those investors in Europe, the United States, Canada, foreclose and operate the road? No. What will they do? They will ask this question: Can Canada pay those mortgage bonds? I do not need to suggest the answer. Canada will pay those mortgage bonds through either the federal government or the provincial governments or both, and those bonds having been paid, the mortgage is paid and the railway belongs clear of encumbrances to the people of Canada. That is what the equity of redemption is worth in the Canadian National Railways, and it is of no small importance.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Donald MacBeth Kennedy: When the
house rose at six o'clock I was referring to the interpretation placed by certain hon. members of the house, as well as by certain sections of the press, upon the expression used by the Prime Minister when he referred to the interests of the Canadian people in the Canadian, National Railways as an equity of redemption. I wish to recapitulate to the extent of stating that, in essence and in fact, the equity of redemption in the Canadian National Railways amounts to the Canadian National railway system free of all bonded debt- and I submit that is a very substantial interest. My reason for so stating is that behind the bonds of the Canadian National Railways in respect to borrowed moneys are the credit and the resources of the Canadian people. The Dominion of Canada cannot and will not default upon her bonded obligations, so far as moneys borrowed in connection with the Canadian National railway system is concerned.
Before leaving that subject I should like to make one further reference to some suggestions which have been made concerning repudiation of the bonded indebtedness of the Canadian National Railways, either as to principal or interest. Speaking on this subject

C.N.R,-C.P.R. Bill-Mr. Kennedy (Winnipeg)
I believe the hon. member for Ivenora-Rainy River (Mr. Heenan) made the suggestion that it might be desirable to cut down the rate of interest on this bonded indebtedness, or even to wipe out all interest commitments-and this, Mr. Speaker, from a member of the house who at one time occupied a position as a minister of the crown, from a man who must have sat in council when many of these obligations were incurred. I submit that such a suggestion cannot come with good grace from the hon. member. Expressions of that sort, contribute nothing to the solution of the present problem. Canada will not repudiate. To the extent that such suggestions receive credence in this or any other country, to that extent instead of assisting to solve the problem they add to the difficulties we are facing by impairing the credit of Canada in the eyes of the world.
I wish now' to refer to another phase of the situation which I shall term the ghost of amalgamation. The possibility of amalgamation of the Canadian National Railways with the Canadian Pacific Railway has been suggested several times during this debate; but it was not first suggested here. I lived in the city of Winnipeg prior to the entry into that city of the Canadian National railway, and I can state that almost since that time there have been suggestions and rumours to the effect that fundamentally the Conservative party is friendly to the Canadian Pacific Railway and antagonistic to the Canadian National. Is that so? I ask for the proof. Has such propaganda been set on foot, and by whom? Not only has it been set on foot, but it has been persistently kept alive for one purpose, and one only, namely for political advantage. It has been the cry of the Liberal party, and has been kept alive by that party, its servants and agents and the press supporting it. That is not a figment of my imagination, but an actual fact. We who have to fight campaigns out in the west know at election times with what persistence the cry prevails, and we know the source from which it comes.


Some hon. MEMBERS:: Oh, oh.


Donald MacBeth Kennedy: Hon. members may laugh, but they know I am stating facts.


Mr. BRADETTE:: It is certainly laughable.


Donald MacBeth Kennedy: Not as
laughable as the attitude of the hon. member. In 1930, when the present Prime Minister opened his campaign in the city of Winnipeg it was felt desirable that the propaganda to which I have referred should be given a definite and explicit denial. As hon. members know, that denial was given. On June 10,
1930, speaking in the city of Winnipeg and dealing with the question of the Canadian National Railways, the Prime Minister said, "No amalgamation." Perhaps it is too much to hope that in times of political warfare a definite statement given by such a public man who carries the respect, at least, of all Canadian citizens, would be a sufficient declaration. It has not been sufficient for those who still see in this ghost of amalgamation an instrument of political advantage.
A certain section of the press of the city of Winnipeg-I refer to it because with it I am more familiar-and of the press of other cities, has taken every opportunity to interpret any criticism of the management or operation of the Canadian National system as an attack upon that railway. But those criticisms have not been confined to the press. Despite the high plane upon which it was suggested this debate should be conducted, and despite the apparent unanimity of opinion that it should be so conducted, the same ghost of amalgamation was made to walk in this chamber. In fact it was taken for quite a ramble by the hon. member for Melville (Mr. Motherwell), and this afternoon, with a great deal of interest but very little conviction, I listened to remarks of a similar nature by the member for South Perth (Mr. Sanderson). I heard him profess this afternoon, as he professes in nearly all his speeches, that he wanted to be fair and that he wanted to approach the subject with an open mind. I have no further comment to make than this, that if perchance an idea free from political bias ever found even temporary lodgment in the brain of the hon. member for South Perth it would find an atmosphere so inhospitable that it would come out like a bat out of hell.
I wish now	to refer to the	amendment introduced by	the right	hon.	leader	of theopposition (Mr. Mackenzie King). That amendment was professedly intended to force a declaration that there is no sinister purpose behind the bill and that there was no intention to amalgamate the two railways. I ask this house: Was	the right	hon.	leader	of theopposition really concerned with that? In half apologetic terms he prefaced his remarks by a statement to the effect that while probably he should accept the declaration of the Minister of	Railways	and	of the	Prime
Minister on the matter, yet to relieve fear and apprehension he had brought forward his amendment. I submit that in that action he was simply bringing up to date the old propaganda and giving new legs to the old ghost that the Conservatives intend to amalgamate
2960	[DOT]	COMMONS
C.N.R.-C.P.R. Bill-Mr. Kennedy (Winnipeg)
the Canadian National and the Canadian Pacific railways. I am here to-night to say, as I stated in Winnipeg at a considerable meeting of those definitely interested as employees of the Canadian National railway immediately before coming east to attend this session, that I had heard the Prime Minister declare in public against amalgamation, I had heard him so declare in private, and in caucus, and as far as I was concerned I was quite prepared to accept that declaration; but if they wanted a statement as to my stand on the matter, I was unalterably opposed to any proposal of amalgamation by this or any other government without a mandate from the people. That is my position.
What have we against this theory of amalgamation? We have the declaration of the Prime Minister in Winnipeg in June, 1930; we have the declaration of the Prime Minister in this house on the ninth of this month; we have the conviction of the rank and file not only of this party but of the party sitting opposite. It is not a question of the Conservative party being against the Canadian National Railways and the Liberal party for it, or vice versa. I submit the rank and file of all parties in this house are opposed to any proposition of amalgamation and would not tolerate it.


Mr. TOTZKE:: Let us make sure of it.


Donald MacBeth Kennedy: The only possible amalgamation that can ever take place would be when the people of Canada themselves decide that it shall be.
I now want to refer for a moment to the compulsory provisions of the bill. Part II of the bill provides for voluntary cooperation, part III provides for what might be termed compulsory cooperation. In criticism of these provisions it has been suggested that the two terms are incompatible, that you must not have the idea of compulsion associated in any way with the idea of cooperation. I do not propose to airgue that at length, but suggest this, that in all matters of cooperation there lies 'behind in some form or other, and intimately correlated, the idea of compulsion. The hon. member for Weybum (Mr. Young) shakes his head. Let me suggest this; in the great cooperative movement for the marketing of wheat in the west, read the contracts and tell me whether the element of compulsion is absent. In the cooperation of citizens to enforce the laws, take for example in the old land the speakers in Hyde park, why do they so seldom transgress the law? Why do they cooperate with the authorities to observe the law? Because they know and realize

that behind that voluntary cooperation there is force to see that the law is carried out. And while for academic purposes the opposition of compulsion to cooperation may be of some interest, it is only as a mental exercise.


Mr. SPEAKMAN:: It is not sound there.
Mr. KENNEDY" (Winnipeg):	Whether it
be sound there or not, to my mind it is purely an academic question and does not go to the root of the matter at all.
Now I come to the last division of the subject, that is this board of three trustees and the arbitral tribunal. It is true, as hon. members have pointed out, that the board of three trustees is vested with wide powers. I concede at once that to vest a board with such wide powers as are entrusted to this board is a matter of concern to the people of Canada and to this house, and to all who are interested in the success of the Canadian National Railways. As to the number, why three? It is open to argument; the number might be one or three or five, or seventeen as at present. But a royal commission spent considerable time investigating the whole subject, and they have recommended as best under the circumstances a board of three members. I do not suggest that because the Duff commission have recommended three, therefore it should be three. I do not suggest that they are in a much better position to decide than are members of this house. But after all, having made a thorough inquiry into the matter, having gathered such evidence as they could, the Duff commission have recommended three. And apparently that number appealed to the Minister of Railways, who was charged with the duty of introducing this bill into the house, and it appealed to the government. I have no quarrel with the number three. Had the government said five that would have been acceptable to me. But this principle I do think is sound, having regard to the purposes for which the board is being set up: that it should not be a large and unwieldy body. Seventeen is certainly too many. I would have no quarrel with five, but that does not mean that one should be opposed to three. The set-up of the board and the reason on which it is founded is financial, an executive setup- not geographic, not class representation. But with this I do agree, the principle of the statement which emanated from some hon. member opposite, that inasmuch as the Canadian National system is a publicly owned system operated for Canada and for Canadians, in the choice of that committee of three it is not a trivial matter but a matter of primary importance that the three who are

C.N.R.-C.P.R. Bill-Mr. Kennedy (Winnipeg)
appointed to that tribunal shall believe in the principle of public ownership. As a private citizen you have a business the management of which you wish to delegate to someone; being interested in the success of that business, are you going to choose as manager or managing board a person or persons who believe in some other system than the one yon believe in?


Ernest Lapointe: Hear, hear.


Donald MacBeth Kennedy: I do not say that they shall be fanatics in the matter of public ownership, but it should be a board not handicapped at the beginning by lack of faith in the principle of public ownership.
As to control by parliament and by the people over this board, it has been urged that parliament is entirely divesting itself of any control. I submit that that is not correct. We have, as has been pointed out, parliamentary control by virtue of the power of parliament to withhold the grant of money. We have also this, and it should not be regarded lightly, that the same power which creates that board under this bill has power to change it.


Ian Alistair Mackenzie: Only with the consent of the Senate.


Donald MacBeth Kennedy: Well, the
two houses of parliament.


Mr. EULER:: May I ask my hon. friend
a question? He has stated that parliament has control over the expenditures of the board. Where does he find that in the bill?


Donald MacBeth Kennedy: They must
submit their disbursements to parliament.


William Daum Euler: Not with regard to the
operation of the railroad-only for deficits and capital expenditure.


Donald MacBeth Kennedy: Well, that
is a very substantial amount.


Some hon. MEMBERS:: Oh, oh.


Donald MacBeth Kennedy: During the
past year it amounted to somewhat around $70,030,000 and from present indications it would appear that it might be as much or more next year, perhaps $80,000,000.


Mr. McPHEE:: What control does that
give us?


Donald MacBeth Kennedy: This control, that they cannot operate very well without money being voted. Let me repeat, Mr. Speaker, that parliament, which creates this board, can also legislate it out of existence. The hon. member for Hants-Kings (Mr. Ilsley) suggested that having appointed them for seven years parliament would not lightly disturb that arrangement. I agree that it should not do so lightly, but it must be remembered that if the board does not function as, in the opinion of parliament, it should function; if it does not work in the interests of the Canadian National Railways and of the Canadian people, I think no such consideration as a previous commitment by statute would or should stand in the way of further parliamentary enactments if such should be necessary.
I should like to conclude by referring to the rights of labour. It has been urged in this house that labour should have a representative on the board of trustees, and I may say frankly that so far as I am concerned I see no very sound argument against that being done. The employees of the railway are tremendously interested in the road and its success. Time will not permit me to enter into any detailed discussion of this question, but I wish to say here and now that I should he very happy indeed to see a representative of labour on that board.
Now Mr. Speaker, what are the chances of success? The success of the Canadian National Railways will depend upon sound management, and in my view the interests of labour will be served best if the railways can be made a financial success, thereby giving the employees both present and future assured employment instead of 'intermittent work. Success must be predicated upon the calibre of the board, upon their ability and their fairness in considering the rights both of labour and of capital. The success of the Canadian National Railways is predicated not only upon the material resources of this country but upon what might be called its spiritual resources as well; that is, the people themselves. We are a nation drawn from many peoples, with all that is best of all those races, and surely we can look with confidence upon that background. The Canadian people have an ancient pedigree which predicates success; in fact they have a veritable genius for success. To the Canadian people drawing upon such resources, success, while it may be delayed, cannot be permanently denied.


Hon. J. C. ELLIOTT (West Middlesex):: Mr. Speaker, I know my hon. friend from Winnipeg South Centre (Mr. Kennedy) will not expect me to follow his remarks at any great length. I should like to say that I think the character of the debate has indicated that the Minister of Railways (Mr. Manion) believed, when he introduced this bill, that it was in the interests of the house and of the
29G2
C.N.R.-C.P.R. Bill-Mr. Elliott

country that this very important matter should be discussed in as non-partisan a manner as possible. I listened with interest to my hon. friend who has just sat down, and I may say to him that with many of his arguments I entirely agree. But, while adopting the very commendable attitude taken by hon. members on both sides of the house, I desire to say that his strongest argument was not his suggestion that the people of this country could feel sure there would be no amalgamation of the two roads because in his keynote speech the Prime Minister (Mr. Bennett) gave the pledge that amalgamation *would not take place. That, I submit, was not the most cogent evidence that it would not happen.
I entirely agree, Mr. Speaker, with my hon. friend's remark that in all probability the interests of the bondholders will be properly looked after. I must say that I do not take much stock in the great solicitude that has been expressed in this house, particularly by the Prime Minister, for these bondholders. What is their position? They hold bonds to the extent of SI,300,000,000, and to some of us that seems a very large amount of money. No doubt it is, but the Prime Minister also stated that the people of Canada have SI.000,000,000 invested in this road, money they have actually paid out, but for which they do not hold bonds. For security the bondholders have not only the assets of the road but also the guarantees and the resources of the people of Canada, and I quite agree with the statement that bondholders could have no better security than the guarantees of the various provinces and of the dominion. So I think we need not lose any sleep over the possibility of the bondholders losing money. But was the argument of the Prime Minister as to the bondholders really being the owners of this road correct? W'as his analogy between these bondholders and the investors in a company whose concern has gone into liquidation a proper one? Ordinarily the company which has gone into liquidation must realize its assets. A number of hon. members were on the committee to which I had the honour to belong a year ago considering amendments to the Bankruptcy Act. The evidence brought out there disclosed the startling fact that in the previous year the claims made against bankrupts in this country amounted to over $58,000,000, while the assets realized amounted to something like $14,000,000, of which amount less than $4,000,000 in actual cash reached the creditors. I think there is not much analogy between the creditors who received $4,000,000 out of $58,000,000 and the bondholders who

will be paid every dollar owed them under those bonds.
Now, Mr. Speaker, I should like to refer for a moment to the statement made by my hon. friend with regard to the circulation of Liberal propaganda. I hope that if such statements have been made they are quite incorrect. But I do not agree with my hon. friend from Cartier (Mr. Jacobs), who spoke this afternoon, with regard to the wisdom of amalgamation. I do not think it is desirable. I must take an opposite attitude from that of my good friend but on exactly the same grounds.
What is the situation that has brought us into the position which the people of Canada find themselves in at the present time? I would mention a fact which I think is well known in this house, and it is this, that railway difficulties in Canada are by no means a new problem. There is not a member in this house who does not know that ever since confederation one of the great problems of the Canadian people has been the railway problem. That has been with us always, and I am glad to observe, listening to remarks made from all corners of the house since this debate began, that the members of this house are about as nearly in accord at the present time as they have ever been in the history of the country. And that should be so, because if there ever was a time when all parties in the house and in the country should endeavour to discuss problems with an eye single to the interests of the people of Canada as a whole this is the time.


Jean-François Pouliot: It is impossible to discuss anything with the Prime Minister.


John Campbell Elliott: Well, he is not here at
the moment-


Jean-François Pouliot: He is never here; he
should be here.


Some hon. MEMBERS:: Order.


John Campbell Elliott: Throughout the time that these problems have presented difficulties to the Canadian people we have always had someone who was honest and sincere in being very pessimistic about the outlook of the Canadian railways; but looking back on what has occurred I think we can all be very thankful that throughout that period there was always someone with vision and faith enough in the future of the country to take an optimistic view. Mistakes have been made, it would be impossible in a matter of this kind that mistakes should not be made; but we must not forget that one of the greatest achievements in the history of the country is the increase which there has been

C.N.R.-C.P.R. Bill-Mr. Elliott
in the trade of Canada during the present century. I should like to give some figures, if the house will bear with me, which I submit are very important if we are to .understand just why the trade of Canada became as great as it was and the prosperity of this country correspondingly great. I would refer to one branch of what I think is the greatest industry in Canada; that is, one department of one branch, the wheat growing industry, in order to show its effect on the railway problem and the effect of the railway problem on wheat-growing in the dominion. Let me put a few figures on Hansard to indicate how the railway development in this country has contributed to that great industry.
In 1901 we exported 9,000,000 bushels of wheat for which we received $6,000,000. Now, if my hon. friends will bear in mind these figures they will appreciate the extent to which wheat growing and agriculture generally have benefited in this country through railway construction. In 1911, we exported 45,000,000 bushels for which we received $45,000,000. In 1921, ten years later, we exported 129,000,000 bushels and received $310,000,000; in 1931 we exported 217,000,000 bushels for which we received 8177,000,000; and in 1929, which was the largest year in our exports, we shipped out 3/0.000.000 bushels, for which we received $428,000,000. I will give one or two more figures before I leave that phase of the subject. In the ten years from 1901 to 1910, we exported an average of $27,000,000 a year; for the next decade $145,000,000 a year; and for the last decade, $297,000,000 a year.
These figures are, I submit, the best evidence that can be given to this house and the country with regard to the effect which railway development in Canada has had upon this branch of the great agricultural industry. In the twenty years, from 1911 to 1930 inclusive, we received for wheat exported from Canada $4,430,000,000. That is for wheat alone; and it has been due very largely to the creation of new wealth in agriculture that Canada has made such tremendous strides in the present century. To-day the best wheat and oats produced in the world are produced four hundred miles north of our southern boundary; they are produced in a region where twenty years ago it was supposed that wheat of any kind would not grow.
Recently wheat has been at its lowest price in several hundred years. The freight on low grades has been in some cases greater than the total amount received by the farmer. Out of what he received he had to pay interest, the cultivation of land, the seed, harvesting, threshing and hauling to the station. A large percentage of that wheat has been produced
in western Canada, and if it had not been for the foresight and vision of the men who through good report and evil report had faith enough in this country to build lines of railway, perhaps beyond the requirements of the country, more than half of that great wheat production would not have taken place. Even in prosperous times wheat cannot be produced far from railways. Various causes, into which I will not enter to-night, have contributed to the low prices for agricultural products. As I say, I do not propose to discuss these at the present time, and I am free to admit that there is a limit to the amount of foodstuffs that can be consumed at any given time. The world to-day seems to have reached that limit. There is no doubt however that the time will come, and we hope quickly, when Canada will again be on the road to prosperity, when the demand for products of the Canadian farm, forest and mine will again be extensive outside of this country. When that time comes our railways will do a business comparable to that which they did in 1928, when my hon. friend the Minister of Justice took such great credit for the part his party had taken in the building up of the great organization known as the Canadian National railway system.
It is bad policy for any concern to determine its future by conditions as they exist either at a time of great depression or at a time of great prosperity. There is no doubt about it, we must economise; that is forced upon us. It is ubter folly to talk of spending money which you have not got and which you cannot get. I think every hon. member is in agreement with that portion of the report of the commission which deals with the necessity at the present time for practising economies. However, I do not think that this is the time for the people of Canada to lose faith in their country and to begin to believe that pants of our great railroads should be scrapped or that other radical changes should take place simply because we are now suffering a depression in common with all the rest of the world
I should like to direct the attention of the house to the fact that the position of the railways of this country is much better than the position of the country as a whole. If the railways are bankrupt then I would not like to say just what is the exaot position of the whole country. I desire to give a few figures to show what the Canadian National and the Canadian Pacific have done in miles of tonnage and number of passengers carried during recent years. In this respect I find that the railways have done much better than most of the branches of the government. For the twelve months ended January 31,



C.N.R.-C.P.R. Bill-Mr. Elliott
1930, our domestic exports were $1,160,000,000, while for the year ending January 31, 1933, they were $487,000,000, just a little over a third of what they were three years previously. Our imports were reduced in about the same proportion. The customs duties for the year ending January 31, 1930, amounted to. $205,000,000, while for last year they amounted to $84,000,000. In 1930 they were about two and one-half times what they were three years later. If we are going to come to the conclusion that the Canadian National Railways are doomed, I think these figures offer the best evidence that many other institutions, including the present government, are also doomed.
I should like to deal for a few minutes with the bill which has been submitted to the house, but first of all I wish to say a word with regard to the commission. I do not think any hon. member of this house can have one word of criticism as to the eminence of the gentlemen who composed this commission. They were very capable men, but I should like to point out, as has been pointed out perhaps better than I can do it by other hon. members who have spoken already, that we have in this house the Prime Minister (Mr. Bennett), the right hon. leader of the opposition (Mr. Mackenzie King), the Minister of Railways (Mr. Manion), and many hon. gentlemen who have sat year in and year out on the railway committee, all of whom are very familiar with railway matters. Perhaps I should refer particularly to my hon. friend and former colleague, the hon. member for North Waterloo (Mr. Euler). It must be known to every hon. member that the members of this railway committee carried out their work most diligently. Perhaps I can say this more freely because I have never been a member of that committee, although I have attended many of its sittings. I believe that these gentlemen who have been watching the railway affairs of this country, either as representatives in this house or as business men in one part of the country or another, are in a much better position to decide what is in the interests of the great masses of the Canadian people-after all that is what we are concerned with at the present time-than any commission coming from other parts of the world and looking into this question for a few months.
In connection with the recommendations of this commission, I should like to refer first of all to the appointment of the trustees, ard I direct the attention of the Minister of Railways to the section dealing with this appointment. Under the provisions of section

4 of the bill the present board of directors is to be replaced by a board of three trustees which shall exercise the direction and control of the national railway and its undertakings. The thing that strikes me as remarkable is that in the appointment of the first three trustees, the Prime Minister, the Minister of Railways and the other members of the government seem to have faith in their ability to select good men. They do not have to ask anyone whom they shall appoint. They have the whole world from which to select anyone they like for the first board of trustees. But then they seem to lose confidence in themselves. While they are perfectly willing to appoint this board without advice from or consultation with anybody, without referring to any panel of nominations, when a vacancy occurs that same governor in council which was able to appoint the first three without any advice is not permitted to fill the vacancy except from a panel named by somebody else. Why is that? Why should they lose their confidence all at once? Has the Prime Minister recently developed an inferiority complex with regard to himself which we have never been able to detect up to the present? Or has he developed an inferiority complex with regard to his Minister of Railways, that makes him feel it is not safe to entrust to the Minister of Railways even with the advice of the rest of the cabinet, the filling of a vacancy? The Minister of Railways cannot fill any vacancy. He has exhausted himself, if I may say so, when he has appointed the first three. He cannot fill the vacancy without going and asking somebody else. I ask: Is that a sensible arrangement to put into any bill? What is the reason?


Mr. BEAUBIEN:: Because he will not be in office when the next one is appointed.


John Campbell Elliott: Of course, life is uncertain, and particularly political life. It seems to me that there must be some explanation which has not been given up to the present time as to why this bill should contain the remarkable provision to which I have referred. I do not intend to go out of my way to say that this is the best government we have ever had or anything like that, because I do not believe it, but I want to say to the Prime Minister, the Minister of Railways and the members of the government that I would much prefer to see the people.of this country who are interested in this railway, and all the people are, in the hands of a board of trustees appointed by a government responsible to the people of Canada than in the hands of a board not responsible to the people of Canada.

C.N.R.-C.P.R. Bill-Mr. Elliott


Robert James Manion: The government makes the appointments. It is only the panel that is submitted to the government on the recommendation of the royal commission.


John Campbell Elliott: I quite understand that; I 9ee that the Minister of Railways understands that also, but what I do not understand and I do not think he understands is how, since he can appoint three in the first place, he is too weak to appoint even another one without consulting someone else.


Robert James Manion: Because the royal commission recommended otherwise.


John Campbell Elliott: That is another reason why we should take the judgment of the elected representatives of the Canadian people in this house and the government responsible to those elected representatives rather than the judgment of a commission which makes such a foolish recommendation as that.
Another matter in this bill to which I should like to refer is the power of the trustees. When I heard of three trustees being appointed by the Minister of Railways I expected that those three trustees who were to replace the whole board of directors of the national railways would be big men; that he would not hamstring or hamper or trammel them in any way, and that they would be men equal in status, redblooded men of the kind I would expect the minister to appoint. But what does he do? He appoints one man with the full status of a man, but the other two- I do not know exactly what you would call them. They seem to be a kind of sterilized trustee.


Robert James Manion: My hon. friend's government, when .they were in power, appointed fifteen of exactly the same kind.


John Campbell Elliott: Is the Minister of Railways really following me? I think not. He is not as bright as he usually is, because he knows, j-ivt as well as he knows he is sitting in that seat, the difference between the powers he has given his chairman and those he has given to the other two men who will sit alongside the chairman. There is no doubt they can put nothing into effect unless the chairman is in favour of it. Will the minister say that the other fifteen of the old board of directors had a similar handicap in regard to their chairman to that under which those two are placed? He knows quite well that is not the case.


Robert James Manion: Does my hon. friend want an answer?


John Campbell Elliott: If the minister wishes to give an answer, I shall be rlad to hear it.
53719-18Si


Robert James Manion: My hon. friend's government appointed fifteen who had not any control whatever. Sir Henry Thornton had the whole control.


John Campbell Elliott: I like to have the minister tell us what is in his mind, because it helps us in a discussion of this kind.


Mr. HANBURY:: Not a bit.


John Campbell Elliott: Oh, yes, it does. When he speaks about Sir Henry Thornton having the whole control, I want to say to my hon. friend that during the time the former government was in power he was one of the most active men in the house in holding up his white hands in holy horror if it were suggested by anybody that anyone was doing anything to control or embarrass Sir Henry Thornton.


Robert James Manion: I should like my hon. friend to give some proof of that.


John Campbell Elliott: It was so evident, no proof was needed. Some things are self-evident and that was always the case. If there is one thing more than another that members on the opposite side give as a sort of justification for this bill, it is the fact that they do not think enough control was kept over Sir Henry Thornton during the time that he was in control of the national railways.


Robert James Manion: Hear, hear.


John Campbell Elliott: I want to say to the
minister and to the house that it will be fortunate for the people of Canada if these railways do as well with this board of one man and two half men. One man has full powers and the two other men have their legs and their hands tied so that they cannot ' exercise the functions of real trustees on that board. Does the minister think he will get from men in that position real service? They can do nothing until they find out that what they propose to do meets with the approval of their chairman. So much for the way in which he has appointed these men and the manner in which he has taken away from them the strength which they ought to have and which they need in a job of this kind. If I may make a suggestion to the minister -and I know he will appreciate any proposal of mine-I would suggest that the three trustees should be full time men. They should' be the very best men that can be got and they should be, like the Canadian people are with those of the other members of the British commonwealth of nations, equal in status, no one inferior to any of the others.
Let me deal next with the powers of these trustees. The crucial times which we are
C.N.R.-C.P.R. Bill-Mr. Elliott

now experiencing,	will, I	hope,	pass	awaybefore long; we trust the change will come sooner than now seems possible, but we should do nothing at this time to hamper and trammel us in again carrying on when times get better.	What	is it	that	thesetrustees may do? Under section 16 they may make leases, arrangements for joint traffic and so forth, and the tribunal that is appointed, and regarding which I want to say a word before I go further, consists of the chairman of the Board of Railway Commissioners and a representative from each of the companies, so that practically we have the chairman of the Board of Railway Commissioners as the functioning power in that tribunal. At the	present	time	that	boardfunctions in regard to nearly all matters delegated to it under the Railway Act. If my memory serves me rightly, you could not, without a hearing before the Board of Railway Commissioners, settle the question of whether you were going to have gates at a particular railway crossing or any other minor question. That board has acquired a certain reputation. Since	the first members	of it
were appointed, we have, I believe, had good men on it. It acquired the confidence of the Canadian people very early in its history. At- the present time, in view of the training many who are sitting on that board have had, it is most unwise, instead of giving to the board the most important duties that can be performed, to set up this tribunal of which the chairman is the chairman of the Board of Railway Commissioners. What happened? Assume a matter comes before the Board of Railway Commissioners and by a majority they decide in a certain way, for instance, against the wishes of the chairman of that board. Then the matter comes before the tribunal. The chairman of the Board of Railway Commissioners is the chairman of the tribunal and he can override the decision to which the whole Board of Railway Commissioners have come previously. In other words you put an appeal from the whole board to the chairman of the board. That is not good business and it does not seem to me as being at all likely to produce good results.
I want to deal just for a moment with something that, I think, is of great importance to the Canadian people. There has been much discussion about the powers of the tribunal. We find in the bill that the power and jurisdiction of the tribunal includes, among other things, disputes as to the joint use of terminals, running rights and joint use of tracks, and the abandonment of lines,
JMr. Elliott.]
services or facilities. Hon. members know that many farms have changed hands since the period of railway construction in Canada. Those who have had to purchase farms have paid higher prices for them because they were close to railway tracks and stations. We will assume, for the sake of argument, that occasionally two parallel lines will decide to run their trains over the same tracks, and to tear up the other line. In such circumstances I say the people who constitute the tribunal to make the decision whether or not that should be done should be the elected representatives in parliament, or the government who would have to report to parliament. They are in a much better position than any tribunal or board of trustees to know the difficulties people would experience by a change in railway accommodation.
There is another matter to which reference was made by the hon. member for North Waterloo (Mr. Euler) and again to-night by the hon. member for Winnipeg South Centre (Mr. Kennedy). If I heard the Prime Minister correctly the other day, and have read correctly the report of his speech as it appears in Hansard, it is his view that parliament has complete control over taxes and expenditures. I submit that the bill before us states otherwise. In section 12 we find the following words:
The annual budget of national railways shall be under the control of the trustees. Amounts required for income deficits, for interest on obligations outstanding in the hands of the public, for capital expenditures and for refunding or retirement of maturing securities shall be submitted by the trustees to the Minister of Finance for the consideration of the governor in council prior to presentation to parliament.
So that so far as expenditures made by the trustees are concerned, apart from those necessitated through income deficits, and the other matters mentioned in the latter part of section 12, the trustees can spend without consulting parliament or directing the governor in council to submit estimates to parliament. In that connection we are getting back to the principle of taking away from parliament the control it should have over moneys expended and, after all, I believe that that is the most objectionable feature of the bill. I object to the principle of appointing a board of trustees for a period of seven years, as is provided in section 7 of the bill. Why should they be appointed for that term? If the people of 'Canada will derive any benefit by the change in management of the Canadian National Railways made recently, would the people not be at a distinct disadvantage. if, during the whole life of this parliament, they werp unable to make any

C.N.R.-CPH. Bill-Mr. Maclnnis
change in the authorities controlling the destiny of the railways?
After all, the government has to take the responsibility; it should have the power and should exercise it in the way it deems best. 1 say the provision for a seven year term is an attempt to create a sort of perpetual succession in trustees by taking the matter out of the hands of the government and placing it in the hands of two trustees, the chairman of the board of railway commissioners and the president of the exchequer court. It is wrong in principle. The fundamental principle of control by the elected representatives of the people over the expenditure of public moneys is one of the most important rights the people of any free country enjoy. This bill strikes at the very roots of that principle. This disregard of the rights of the people constitutes one of the worst features of the bill. I regret exceedingly that hon. members, the Prime Minister and the government did not make it perfectly clear that as far as they were concerned they were willing that any future government when it assumed office should have the right of control over the trustees, or whatever body was in charge of the Canadian National railways. Because, after all, the people who must take the responsibility should not come in with their hands tied.


Mr. ANGUS MacINNIS (Vancouver South):: C.N.R.-C.P.R. Bill-Mr. Madmits
be materially different from those resulting from the cooperation carried out during the past two years.
The government in promoting this bill, the purpose of which is said to be to lighten the load1 on the taxpayers, puts me in mind of the Irishman who had to travel from one village to another on horseback with a sack of potatoes. He was touched with pity for the poor horse and did not like to carry the sack in front of him on the saddle, so in order to lighten the load on the horse he put the sack on his own shoulders. I would like to point out to the government that it does not make any difference whether they have to keep the unemployed in idleness or pay for their keep in the deficits of the Canadian National Railways; they have to look afteT them in any case.
I believe several speakers have pointed out that supposedly the original purpose of railways in this country was to promote the development of the country and increase production. The farmers used to clamour for railways in order that they could get their produce to market. I think they would be just as well off if they did not have the railways now, because their product is not of much value to them when they do get it to market. It would seem, however, from this bill and from speeches made in its support, that the only reason for the existence of railways in the dominion at present is to pay the interest on the capital invested. It is strange, and comforting to me at least, to see how many of our statements are confirmed by statements made by others in the house since the introduction of this bill. The Prime Minister informs us that the people of Canada do not own the Canadian. National Railways, and we were already aware that the people of Canada do not own the Canadian Pacific Railway. As the rest of our natural resources and wealth is held and controlled in the same manner as our railways, it is a logical conclusion, one at which we arrived many years ago, that the people do not own the country, that the country belongs to the bond and debenture and mortgage holders, most of whom I believe do not live in Canada at all. I think it is a most desirable thing to know that, because when the next war comes and from what we can gather there is one in the offing now- and when they ask the people of this country to go to fight for their "king and country," they will have so very few people to conscript or get in touch with that it will materially facilitate recruiting. All they will have to do will be to call upon the bond and debenture and mortgage holders of our railways and
[Mr. Maclnnis.l
other national wealth, and they will have the people who own the country and the only people who should be asked to fight for it.
We have also for years been saying that competition is wasteful. The government, while most vehemently denying our charge, now bring in this bill to make cooperation compulsory. Who will deny that we are making progress?
With regard to the remarks of the hon. member for East Algoma (Mr. Nicholson), who spoke on this bill the other day, I was interested in placing his speech on that occasion alongside of the one he made on the cooperative commonwealth resolution, wherein he berated us for advocating a dictatorship -which of course we did not. If I understand [DOT]him aright, his own objection to the bill is that it does not go far enough in the matter of dictatorship. I do, however, find myself in general agreement with the hon. membeT on some points he made. I find myself in agreement with him in regard to the railway employees. One of the worst features of the bill, as I have pointed out, is that it seems only to have in mind the interest of the bondholders. It is difficult to see how it can be otherwise, as the bill is based on the report of the Duff commission, and the government, with its usual high regard for the interests of labour, saw to it that there was no labour representative on that commission. However, one of the royal commissioners wras taken from the United States, Mr. L. F. Loree, president of the Delaware and Hudson railway. Mr. Loree had a quick and easy way of "putting the boat on an even keel," as he called it. I will quote some evidence taken before the commission. While Mr. S. J. Hungerford was testifying, Mr. Loree asked him:
Who is it that is rocking the boat? Is it labour, or what is it? Take my own company: we will have earned this year above our fixed charges about $100,000; if we had the wage scale of 1913, we could declare a 20 per cent dividend.
It did not matter to Mr. Loree whether the wage scale of 1913 was a just or fair wage scale or not; all that mattered to him was that instead of making 20 per cent they were this year making a profit of only 8100,000.


Wilfred Hanbury: And there was an increase in freight rates during that period.


Angus MacInnis: No doubt. Mr. Loree belongs to that class of people, which I hope is dwindling, who believe the only function of the working class is to produce dividends for shareholders and debenture holders. It never seems to occur to these people that engineers, conductors, trainmen, trackmen and all those

C.N.R ,-C.P.R. Bill-Mr. Maclnnis
others who make a railway possible are just as important to the railway as the president, and that their wages and working conditions should be as little the concern of the public as the salary and working conditions of the president. To quote further:
Mr. Hungerford: Well, the wage scale of the Canadian National, Mr. Loree, is just about the wage scale of all other American railways; they are almost exactly equal.
Commissioner Loree: That balloon has been blown up to such an extent that it is liable to burst at any time.
Mr. Hungerford: Quite so. We have been apparently successful in effecting some reductions anyway.
Commissioner Loree: That is a grain of sand on the beach. If you could go back to the 1913 payroll, you would save about $94,000,000, so you would just about put your boat on an even keel.


Air. HEAPS:: He would not pay wages at all.
Air. AlacINNIS: Unfortunately even railway employees have to eat, and consequently railway owners must pay them wages. Perhaps some day we will evolve a man who will not eat; he will be the ideal employee. Then Commissioner Loree goes on:
There is a great deal of complaint about maldistribution of wealth. I wonder sometimes there is not more complaint about the maldistribution of tenor voices. We have not had any since Caruso stopped singing. When railroading started in England one hundred years ago-
He does not want to go back to 1913; he wants to go back a hundred years.
-a locomotive engineer received $5.25 a week. He had an average daily run of ninety miles between terminals; he worked about twelve hours a day, he took care of his engine, he was a mechanic in the shop when he was not running his engine on the road. The Bank of England discount rate was four per cent.
I believe that in the United States, from which Mr. Loree comes, they had about twelve million unemployed at the time this evidence was given. If they went back to the conditions of a hundred years ago and had railway men working twelve hours a day and caring for their own engines, with the same conditions prevailing in other lines of work, possibly they would have twenty-five million or fifty million unemployed in the United States, and their desire to always have the biggest thing in the world would be well satisfied. Mr. Loree goes on:
To-day our better railroad men get a little over $300 a month; they work eight hours a day. They axe waited on as though they were gentlemen of the court.
I wonder why an engineer should not be waited on as though he were a gentleman of
the court. In my humble opinion he is a little more useful, but of course there may be a difference of view there.
They bring their engine to the cinder pit and the hostler takes it off their hands, puts in sand and water, draws the fire and does all the rest of the work! The locomotive is inspected for them at the roundhouse; they are just riders; they get thirteen times as much wages as the locomotive engineer did a hundred years ago.
That is the type of prehistoric mind we had to import from a foreign country in order to put our railways on a proper basis.
The hon. member for Stanstead (Mr. Hackett) also took a rap at the wages of railway employees when he spoke on March 7. He said that if they were called out for a few hours under certain circumstances it was called a day's work, and that if they went a few miles on certain runs it also counted as a day's work. I understand that the hon. member for Stanstead is a lawyer and, if my information is correct, a corporation lawyer; as a matter of fact I believe he is a railway lawyer. I suppose he belongs to the lawyers' union: I understand they have very definite trades union rules, and I am told they even have a closed shop. I believe one of their rules is that before they take a case or do any work at all they must have a retainer, so I do not see why the hon. gentleman should object to a man doing other work getting paid when that work is done. If I understand railway conditions correctly, and I believe I do, these employees who get paid for working a few hours or for taking a short run must be on duty twenty-four hours a day, for they never know when they are going to be called out. Consequently their time is not their own, and all the time they are at the call of the company though not actually working on the job.
The hon. member for Stanstead stated that we "must scrutinize more closely the conditions of labour as well as the pay of the vast army of railway employees." I would suggest that if such scrutiny is to be made the idea should be to improve rather than lower the standard of living. Perhaps a low standard was necessary at one time, while the necessary capital was being created, but that work is now finished and if we are to make use of that capital the standard of living of the masses of the people not only must not be reduced but must be very materially raised. I have some statistics here with regard to the wages of employees on Canadian railways for 1931. The total number of railway employees then was 154,569, and of these 13,833 received less than S900 per year, or $75 per month. There were 34 who received from

C.N.R.-C.P.R. Bill-Mr. Maclnnis
$900 to $1,000 ; 51,696 who received over $1,000 and less than $1,250, and 44,235 who received over $1,250 and less than $1,500. So it will be seen that the great majority of railway employees received less than $1,500 a year.


Mr. YOUNG:: What was the average wage?


Angus MacInnis: I think the average wage would come to $125 a month. I will give the rating for tihe others. Here are the figures : 6,961 received over $1,500 and under SI,750; 16,294 received over SI,750 and under $2,000; 6,507 received	over	$2,000	and	under	$2,250;4,968 received	over	$2,250	and	under	$2,500;2,821 received	over	$2,500	and	under	$2,750;3,398 received	over	$2,750	and	under	$3,000;
and only 3,591 received over $3,000 a year. This includes officers as well as the others.


Robert James Manion: Where does my hon. friend get such figures? They are all wrong, the last figures.


Angus MacInnis: These figures were worked out from data supplied from the Bureau of Statistics by L. F. Keller, statistician of the Brotherhood of Maintenance of Way Employees, and if they are wrong they can be very easily checked up. Now, while the total payrolls decreased on the Canadian National in 1931 by 7.44 per cent and on the Canadian Pacific during the same year by 9.70, the officers' payroll increased by 6.39 per cent on the Canadian National and 2.58 per cent on the Canadian Pacific. These figures I believe are sufficient to show that if there is extravagance in the management of the railways of this country it is certainly not in the wages paid the employees of the roads.
In my opinion it is absolutely necessary that the working class in this country as well ,as the workers engaged on the railways should have a voice in the direction of the enteiprise, and there is no provision in that regard in this bill. The Minister of Railways (Mir. Manion), in closing his speech on the introduction of this bill last Tuesday, prophesied the return of good times in this dominion, and the ex-Minister of Trade and Commerce (Mr. Malcolm) tells us that this legislation should not be predicated on the assumption that troubled times are going to continue, but should be predicated upon faith in the country. It seems to me that as legislators we should not legislate on either faith or hope; we should not base our enactments on hope of good times returning but on an understanding of the questions that confront us. That understanding is not based on faith or hope, and only on such an understanding can

we be assured that the present conditions or worse will not be with us for some tame to come.
If we 'take into consideration the development that has taken place since the railway era began, we can see very readily how it is that we have come to the present pass. Successful railway operation, it does not matter where you take it, does not date further back than, 1831; so far as the United States is concerned, it dates from 1840 and in Canada from 1851. In 1815 the population of the United States was only a little over eight million people, and our population at that time was between one and two millions. We had no railways at all. In that short period of a little over one hundred years we have seen throughout the world the construction of some 600,000 miles of steam railways. The population of the United States has increased from eight to one hundred and twenty-five millions. We have built in this dominion alone about 42,000 miles of railway and in the United States they have built about 260,000 miles. This railway construction resulted in prosperity so long as building was in progress and capital was being invested. Now, however, that capital investment is complete and there are no more North American continents to be developed, no more Dominions of Canada. There is an industrial equipment on this continent sufficient to meet the needs of the 135,000,000 million people in Canada and the United States, and indeed twice that number at least.
In face of such conditions, on what do we-base our hope for a return of prosperity? Prosperity, as I see it at the moment, will come when we legislate definitely to bring it about; that is to say, when we set about making the fruits of our mechanical equipment and technical understanding of the means of production available to the mass of the people. But there is nothing in this bill that will accomplish that. As a matter of fact, every effort is in the direction of effecting economies: in other words, more and more people will be forced out of employment. The Prime Minister made this statement:
I will admit it is drastic but modern surgery says that if you will cure, the operation must be radical where the evil is deep seated. This is a surgical operation and it must be a radical operation.
I believe that the best medical opinion to-day is coming to realize that these pathological conditions that require operations grow out of habits of life, and if the habits of life are not changed the beneficial effects of an

C.N.R,-C .P.R. Bill-Mr. Ralston
operation ,vill be of very short duration, and then something worse may happen the patient. I will go further than that and say that this is not an impairment of one organ in an otherwise healthy organism; it is in fact disintegration setting in because of senile decay, and there is no operation that will remedy that condition. The only thing that will meet such a condition is a rebirth and there is nothing in this bill that would show that there are any changes at all contemplated except a continuance of the economies of the past.
I am opposed to this bill because it is another palliative that does not palliate. I am opposed to it because it is undemocratic in its operation. As I said in the beginning, in trying to effect a cure for one difficulty or one part, the bill increases and intensifies that difficulty in another.


Hon. J. L. RALSTON (Shelburne-Yar-mouth):: C.N.R.-C.P.R. Bill-Mr. Ralston
time. The assistance was not granted, and it remained for the Conservative government which came into power in 1912 to make a grant of S6.0O0.CD0 towards the extension of the Canadian Northern railway through the Yellowhead pass to Vancouver. It remained also for the Conservative government in 1914 to guarantee S45,000,000 for the express purpose of completing a third transcontinental railway. Yet my right hon. friend wonders how intelligent people could dream of such a thing as a third transcontinental railway. That money was voted by a government which my right hon. friend supported, at a time in the history of the House of Commons with which he is extremely familiar. That was the situation with regard to the three transcontinental railways. Sir Robert Borden moved the introduction of the bill for the purpose of completing the third transcontinental, about which no intelligent man would dream. After referring to the Canadian Northern lines in connection with which it was proposed to vote $45,000,000, he is quoted on page 3660 of Hansard of 1914 as follows:
These lines however, are to-day less profitable than they otherwise would be until the system is extended, on the one hand to the Pacific coast, and on the other hand to Quebec and Montreal, so as to be in touch with the great traffic which has already developed, and which will develop in still greater measure, in the future, upon the Pacific ocean, and to bring the road into touch with the great railway systems of Ontario and Quebec, and particularly the system of government railways, and the Canadian Pacific railway system, so far as it is situated within Quebec and the maritime provinces.
I say to my right hon. friend that evidently there were quite a number of gentlemen besides Sir Wilfrid Laurier, whose friends at least would claim were intelligent, who were strongly in favour of a third transcontinental. Yet my right hon. friend in the midst of what was supposed to be a candid and serious speech went out of his way to refer in a deprecating way to the memory and work of Sir Wilfrid Laurier with regard to this third transcontinental railway.
Now as to the amalgamation of the railways into the Canadian National system. As a deadly parallel I want to put on Hansard just a word or two in connection with what was said by my right hon. friend with regard to the amalgamation of the system of railways now known as the Canadian National railway system. To leave the impression that the Liberal government were wholly responsible for this combination of roads and for the country undertaking public ownership in connection with the different units which make

up the present Canadian National Railways, my right hon. friend is reported on page 2854 of Hansard as follows:
As I have said, Mr. Speaker, I shall not do more than indicate that these bankrupt enterprises were united into one system. When the decision of the privy council was finally given -and at that time the party of my right hon. friend was in power-an order in council was passed that brought all these systems under one control. They are known now as the Canadian National Railways. As I have said, they comprise the old systems, to which I have alluded, together with the new roads built by the people of Canada, the National Transcontinental, the old Intercolonial railway, as well as the Grand Trunk Pacific, the Grand Trunk system, and the Canadian Northern.
My right hon. friend said in effect : We did not do it, it was our friends on the other side who were in power when the decision of the privy council was given,. they were the ones who passed the order in council. There was no attempt made in that speech to take any responsibility or credit for the unification of these roads. Let me now quote from a speech which the right hon. gentleman made in the House of Commons on June 8, 1928. He was referring to the consolidation of the roads and he stated that although the Liberal party had been in power, it was not the Liberal party that had brought it about. These are his words:
The consolidation of these roads took place first under the Union government and later under the Conservative administration. The consolidation could not be carried into _ effect until the judgment of the privy council was delivered, and that judgment was not delivered until after the Conservative administration had been defeated. But the consolidation as such, the framework, the skeleton and the statutes were prepared before the present government took office.
What a difference! None of that was said the other night, because at this time it is not in such good form or fashion to boast of having been such good friends of the Canadian National; at least that is the attitude of our hon. friends opposite. Let me finish the quotation:
We have now spent more than $100,000,000 upon that undertaking.
Note this.
These railroads were not roads that could compete with the Canadian Pacific system, and so we had to spend hundreds of millions of dollars upon the system to make it efficient and effective.
That was said at the same time in 1928.
What is the history of the amalgamation of those two roads? I know there are many complicated facts, but we can summarize them. The Dravton-Acworth report was

C.N.R.-C.P.R. Bill-Mr. Ralston
brought down in 1917 recommending that the government take over the roads, particularly the Canadian Northern. The Canadian Northern got into difficulties. The government purchased the stock and under arbitration paid 810,800,000 for stock that is said not to have been worth a cent. It paid for the stock and it had to assume the bonds as well. What did the government do? Do my hon. friends from the maritimes remember what it did? It established Mr. D. B. Hanna, chairman of the Canadian Northern board, as director of the Canadian Northern Railway, and at the same time it put the Canadian Government Railways under Mr. Hanna as well and moved the headquarters of the Canadian Government Railways with the Canadian Northern Railway to Toronto. That was in 1917. We went along for a while with Mr. Hanna running from Toronto the Canadian Northern and also the Canadian Government Railways. Then the situation arose that the Grand Trunk fell down on their guarantees in connection with the Grand Trunk Pacific. The result was that the Grand Trunk Pacific went into receivership and the Minister of Railways was appointed receiver. In order to give Mr. Hanna a little more to do, the minister made him and his board act for the minister as receiver of the Grand Trunk Pacific. So we had Mr. Hanna and his board operating the Canadian Government Railways consisting of the Intercolonial railway and the National Transcontinental railway, the Canadian Northern and the Grand Trunk Pacific. The Grand Trunk still was left out.
In 1918 and 1919 negotiations went on with the Grand Trunk; there were agreements, arbitrations and lawsuits, but finally in 1920, I think, an arrangement was completed whereby the Grand Trunk stock was acquired by the government and, as everybody knows, that stock was acquired under an arrangement whereby it would be valued at arbitration. The arbitrators finally met and with the late Chief Justice Taft dissenting, found that the stock had no value whatever. The Grand Trunk directors were still allowed to direct. In 1921. I think it was. a Canadian board was appointed by the Grand Trunk and then we had Mr. Hanna running the majority of the roads of which I have spoken and the Canadian Grand Trunk board under Sir Joseph Flavelle running the Grand Trunk Railway. In order that there might be coordination-and this is the first instance we have had of an arbitral tribunal-we find a committee of management appointed of which Mr. Kelley of the Grand Trunk was chairman. That committee operated for a year or more
trying, if possible, to coordinate the operations of those two railways. As a matter of fact the coordination was not particularly successful. It is referred to in one of the minister's reports near the end of his regime and if I have time, I shall put it on record. The Hon. J. D. Reid was, I think, minister at the time and he makes this report:
The system of joint management was stated by the minister to be embarrassing, inconvenient and expensive though justified as a temporary expedient and as providing for the ixjssession which the company (the Grand Trunk) should have during the preparatory period of its case and, at the same time, by means of a committee of management, for such a measure of unification with the government railway system as might be possible.
When the Grand Trunk stock was acquired, and the control by the management committee set up, government ownership of railways was virtually accepted. In fact the Duff report says on page 13 that the government of the Dominion of Canada was projected into the railway business in 1917. It states:
Government ownership of railways on a large scale as a national policy was not contemplated or planned by any government and was not submitted for adoption to the people of Canada. But when in 1917, the government refused to permit the Canadian Pacific Railway Company to negotiate for the majority shares of the Canadian Northern, there was practically no escape from government ownership of all the railways now comprised within the Canadian National Railway system. The consequent completion and operation of the hitherto privately owned and operated lines with the publicly owned railways followed as a matter of course. Thus by a combination of contractual obligations and parliamentary measures, the country was projected into the railway business on a large scale.
I am quoting from the Duff report at page 13. This is what it says in contrast to the offhand and rather casual reference which my hon. friend made the other night inferring that it was the government of my leader that was in power when the railway complication took place. This indicates that the time when the government bit off public ownership was 1917 and that was the legacy handed the Liberal party in 1922. I should mention also that the Canadian National Railways Act had been passed in 1919. Our hon. friends opposite had prepared for this, even though they are not now so keen about admitting the fact. This was intended to take in the Canadian Northern Railway and the Canadian Government Railways, but somehow or another, they had' not quite the courage to proclaim the act and they kept those railways limping along under those two different managements with the management committee over them. Nothing had been done in

C.N.R.-C.P.R. Bill-Mr. Ralston
regard to final and businesslike consolidation when the 1921 elections took place. In October, 1922, the board of the Canadian Northern Railway, including the Canadian Government Railways and the Grand Trunk Pacific, and the Canadian board of the Grand Trunk, both resigned and Sir Henry Thornton and his board were appointed in charge of them all. The Canadian National Railways Act was proclaimed and from that time on the Liberal government was responsible for the administration of the road.
I want to remind the house that what we took over at that time was not a particularly homogeneous system of railroads. Lord Shaughnessy wrote in the Winnipeg Free Press in 1921 with regard to this very matter. I am reading from that paper of December 16, 1931:
Lord Shaughnessy in his letter to the government in 1921 pointed out that in respect to much of the new national' system there was no rolling stock equipment, nor terminal ya,rds, freight facilities, repair shops, nor other requirements commensurate to its needs and that the cost of providing them would be very great. That it would take years of effort, large expenditures of money and the courageous facing of money losses covering many years to establish the Canadian National Railways.
That is the legacy which my hon. friends opposite left in 1921. The minister has often complained, and he complained again to-night, that he had been left an unfair legacy by the late government. I want to point out the distinction between the legacy we got and the one we left. That was the condition of the roads at that time as pointed out by Lord Shaughnessy, and eveiyone will admit that he knew something about railroading. That condition was described by Sir Henry Thornton when he was before the committee on railways and shipping in 1929. I shall not take up time by quoting all he says, but I shall read from pages 138 and 139 of the report of the committee of railways and shipping in 1929. Sir Henry Thornton says:
Now the great problem that confronted us was to arrange to provide such facilities as would permit those discorded parts to operate as one, each part more or less in accord with the other. That involved necessarily very considerable additions to capital, as one can easily see. Take, for instance, this one question of rock ballast and heavier rail on our lines between Montreal and Chicago. We have been pursuing a consistent policy, an increasingly vigorous policy, to as rapidly as possible equip that part of the railway with stone ballast, automatic signals and heavier rail, a large part of which must necessarily go to capital.
Then he spoke concerning wooden trestles which had been renewed. Then:
I do not want this committee to go away with the idea that when the system was handed

over to us we were handed a complete railway. We were handed a very discordant number of parts, a railway which was insufficient in many ways in its railways and traffic. All that involved a good deal of money to put the railway into an efficient position. And the answer as to whether that was wise or not is found in the increasing net earnings, which have increased from $3,000,000 for 1922 to over $58,000,000 last year.
Then Mr. Geary stated:
A good deal of that had been done before you came.
Sir Henry Thornton replied:
The work had commenced, and some of it bad been done; and during the intervening six years we proceeded with it with greater vigour than those who preceded us had been able to pursue it. And then 'again the great advantage was that it was all under one administration, instead of two as it was before.
Then, going down on the page still further, Sir Henry Thornton said:
The railways, as we took them over, were like an orchestra, with each instrument playing its own tune independently of the others; and we are trying to get harmony out of the whole.
Whom do you suppose replied? The Hon. Mr. Stevens replied:
You ought to be complimented upon the way in which you have got harmony out of your organization.
That is the system we got. I should like to place on record what we did with that system, and what Sir Henry Thornton and the railway management did with it between the years 1923 and 1931. I have before me a tabulated statement showing a financial picture of the railways from 1923 to 1931, but I have not time to place that picture on record. At this point I shall attempt to summarize it so that it may be easily understood. In my figures I shall take three periods. First, I have taken the system which made up the Canadian National railways between 1919 and 1921, under the Meighen government, then I have taken the period from 1922 to 1930, during the time the Liberal party was in power and Sir Henry Thornton was president of the railways. Then there is the year 1931. I have endeavoured to get the figures for 1932, but I am informed the report is not yet published. I shall be glad to make a statement concerning that year when the bill is in committee. Let us look at the figures for the periods I have indicated.
For each of the three years from 1919 to 1921 the average annual capital expenditure was $57,000,000; for each of the nine years from 1922 to 1930 it was $45,000,000. Then there was a drop to $34,000,000 in 1931. As everyone knows, the decrease was due to two things: first, to the very extensive lopping off

C.N.R.-C.P.R. Bill-Mr. Ralston
in all capital expenditures in government matters, and second, to the splendid condition into which the road had been put. Let us now turn to the other items which have more to do with operation. The Minister of Railways talked a good deal about the railway going into debt to the tune of a million dollars a week. Let me give him a few figures to show him the legacy we got in 1921. The average yearly amount available for interest payable to the government and to the public was as follows: From the years 1919 to 1921 there was not only not a cent available for interest, but there was an average deficit of S22.000.000 yearly. From 1922 to 1930 the average yearly amount available for interest was $24,000,000, and in 1931, the first full year the present government was in power-and I do not blame them altogether, although they will have to take some responsibility-in 1931, there was again not a cent available for interest; as a matter of fact there was a $5,000,000 deficit.
I now turn to the average annual deficit after paying interest due to the public. This is a matter which has concerned the Minister of Railways very much. He states we ought to pay the interest due to the public. I frankly admit that during the last ten years we have not done that. However let me again compare figures. From the years 1919 to 1921 the average annual deficit after paying the interest due to the public alone was $53,000,000. That is a million dollars a week. In the years from 1922 to 1930 the average annual deficit after paying interest due to the public was not $53,000,000, but $15,000,000 and in two of those years, 1926 and 1928, we actually paid the interest due the public and had surpluses totalling $5,000,000. In the year 1931, the first year of my hon. friend's administration, the deficit, after paying interest to the public, was $60,000,000.
Let us take another item, namely the average annual increase in long term debt, public borrowings, and government advances. From the years 1919 to 1921 there was an average of $111,000,000 each year. From 1922 to 1930, instead of 8111,000,000 the average annual increase on long term debts was $55,000,000, and in three years, in 1922, 1926 and 1928, we reduced the debt due to the public by a total of $34,000,000. The first year hon. members opposite came into power the increase in long term debt, in public borrowings and government advances was $134,000,000.
I do not think the minister should be too greatly appalled by the million dollars each
week. Let me give him a table, with which no doubt he is as familiar as I am, showing the operating results from 1919 forward. These, Mr. Speaker, are the figures after paying interest to the public.


Robert James Manion: Would the hon. member tell what he means by the expression interest to the public? There is interest to the government and interest to the investing public. I should like to have the matter cleared up.


James Layton Ralston: I mean the interest on all obligations, except the interest due to the government. The interest "due to the public" is what is shown in the accounts right straight through. Having said that, let me indicate by the following table what the situation was in each year from 1919 forward after paying the interest to the public:
1919		 $45,000,000*
1920		 66,000,000*
1921		 48,000.000*
1922		 33,000,000*
1923		 21,000,000*
1924		 23,000,000*
1925		 9,000,000*
1926		 2,000,000f
1927		 4,000,000*
1928		 3,000,000f
1929		 12,000.000*
1930		 35,000,000*
1931		 60,000,000*
* Deficit. t Surplus.
And that included eastern lines. These figures indicate that during the thirteen years there was an accumulated deficit of $351,000,000 in connection with these railways which, combined, make up the Canadian National system. Of that $351,000,000, $219,000,000 accumulated during the four years the party opposite were in power. The balance of $132,000,000 was made up during the nine years of the Liberal administration.
No wonder the present Minister of Justice in 1929 was loud in his praises of the railway system. It is impossible to quote too often his remarks, w'hich have already been quoted in this debate. They are as follows:
Now, when this wonderful Canadian National railway system has more than justified itself, now that it is rapidly becoming in the nature of a great national asset, now that we may look forward to a day not perhaps in my life time, but in the life time of some here, when this system will start repaying the government of Canada part at least of the money it owes to the treasury, to the day when it will have a clean sheet as it ultimately will have, in regard to its bonded indebtedness to the public; now that the system is in this, a thoroughly prosperous condition, this government desires to treat it as its own creature. Whereas in 1919 it tried to cast it out as base-born, now it wants to consider it as its legitimate offspring, and to profit by its success.
C.N.R.-C.P.R. Bill-Mr. Ralston

Let me say, in concluding my remarks on this phase of the subject, that the national railway system in this country constitutes a national monument to the ability and statesmanship and determination of a single man, a member of a former Conservative government, and subsequently Prime Minister of that government. It is to his ability and foresight, to his statesmanship and determination, that the people of Canada are indebted for this wonderful system of national railways.


Mr. VENIOT:: The chickens come home to roost.


James Layton Ralston: Yet within two years we have the Prime Minister of Canada comparing this railroad to the Grand Trunk Pacific, and saying we must have a receivership for it! I say that no more unhappy or misleading or harmful expression was ever used than to talk about receivership for the Canadian National. An hon. gentleman in another chamber the other day intimated that while they were the mothers of the road they did not much like the way the foster father had treated it the last six or seven years. Well, after the record I have given I think that this road would be willing to trust itself to the tender mercies of the foster father rather than to the careless and indifferent and inconstant mother who now seems to care so little for her offspring. Receivership, my right hon friend says! He might just as well talk about the government of Canada being in receivership. We have a deficit of $200,000,000 or more; does that mean we are going into receivership? The situation is that we are paying our interest as usual; there is nothing to go into receivership about that I know of. You have a receivership when you do not pay your interest. The people of Canada are paying this interest and propose to pay it. I submit my right hon. friend used an expression extremely harmful to the Dominion of Canada. One would think, Mr. Speaker, that there was $2,300,000,000 of debt that we never had before. But when' we took over these roads there was over $1,700,000,000 due on them. Let me tell you how the $2,300,000,000 is made up. It is not any new figure. The amount due the public is $1,263,000,000, including unguaranteed debt; $618,000,000 dominion government advances, and $405,000,000 for Canadian government railways; $2,286,000,000. Of that $1,700,000,000 was on the time that we took the roads over, and as far as the Canadian National is concerned we have added in capital expenditures just as much and no more in percentage to mileage as the Canadian Pacific has spent during the past ten years. So that comparatively we are in exactly the same position, as far as capital expenditure is

concerned as we were in 1921. And yet a road which was spoken about in such wonderful terms in 1928, which has not done any worse, except that it has not made as much operating revenue, but which at the same time has not increased its capital expenditures any faster than the Canadian Pacific, is now talked about as going into receivership. Yet the people of Canada are in a position, and I hope always will be, to pay the interest.
What is the situation in regard to this road? That brings me to a point that it seems to me is overlooked-it may be regarded as bookkeeping, but I think it is essential if you are going to give the Canadian National system a fair chance. We are talking as if the Canadian National owed us $2,288,000,000. You might just as well say that the Post Office Department owes us $70,000,000 because the post offices and public buildings cost us that much. Do we ever expect to get interest on that? Certainly not. Do you ever expect to get interest on the cost of public works and public utilities all over this country? Certainly not. But because the roads which happen to make up the Canadian National system at some time in their career as private enterprises cost $2,286,000,000, we say this road is going to the demnition bow-wows because it does not pay interest on that amount. It was never bought to pay interest on that amount; the roads were bought as public utilities. The sooner we get these railways recapitalized so that they can be given a fair chance, the better it will be for the finances of the Dominion of Canada and the fairer for the railway itself. My friends have a perfect right to say: You were in power for nine years, why didn't you do it? I say to my hon. friends that it was repeatedly considered, and it was felt that we should have experience for a reasonable time in order to see just what this railway could do. I believe that now is the time this should be done, and particularly do I believe that it should be done when we are proposing to hand over this railway to a set of trustees who are going to run it economically and under a system to make it remunerative. That is the word used in the act. Remunerative on what? Are you going to require the trustees to run it to pay interest on $2,286,000,000? It has never done it yet. It paid interest on a portion for two years. The best estimate I can make, looking at the gross earnings year by year, is that if we get interest on perhaps $700,000,000 or $800,000,000 that would be fail to the railway and to the people of Canada. I submit we might just as well decide now that the people of Canada will cut their loss,

C.N.R.-C.P.R. Bill-Mr. Ralston
it it is a loss, in connection with the Canadian National, and do what almost every other concern is doing, have a reorganization, cut down fixed charges and give this railway a chance to live and pay its way. I have always felt, particularly when we talked about a change in management in the system, that that would be the first thing to be done. I cannot conceive how you are going to put trustees in charge of this road and tell them to run it on the principle laid down in section 16, "remunerative operation," without fixing some decent amount of capital on which the railway is supposed to pay interest. What will they pay interest on? They certainly will not pay interest on the amount due the government. My hon. friend the then Minister of Justice, in 1928, himself called the amount due the government a "bookkeeping entry." The Minister of Railways, speaking here the other day, intimated that no member of the house expected the railway to pay interest on the amount due the government. Well, will they pay interest on the amount due the public? I think not. There was due the public and the government in 1922 something like $1,700,000,000. It cannot carry the interest due to the public, it never has except for those two years when times were particularly good. I do not believe that we should set up the capital oh which the Canadian National should pay interest at any such amount. After all it is a matter of bookkeeping, but it makes all the difference between having us feel that we are losing money, that we have a child in the house which is not paying its way, not earning its keep, and feeling that we have paid for a public utility, the payment being part of the public debt just as the payment for the war or for public works or post offices or any other public facilities. I believe we should get down to that situation, and that is one of the things that should be done not last but first.
Now, Mr. Speaker, after we have done that what is the second step? My friend the Prime Minister mentioned it; he spoke about equilibrium between revenue and expenditure. That is a splendid idea. But you do not get that equilibrium by appointing a receiver, you do it by appointing a manager. That is exactly what we are trying to do here. I think the farther we get away from that figure of a receiver the more self-respecting we shall feel. The spirit of the act is that economies shall be practised and that there shall be remunerative operation. Now it is absolutely a contradiction in terms if you talk about remunerative operation with a capitalization of $2,286,000,000. There are two ways to secure
economies-and I am absolutely in favour of it, let no man in this house mistake that; there is no one who believes more in the necessity of drastic economy than I do, particularly at this time in our history. There are two ways we propose to achieve it, one by forcible cooperation with the competitive railway, and the other that which has been mentioned by the hon. member for West Middlesex (Mr. Elliott) by making the railway independent not only of parliament, but of the public too. With forcible cooperation I have not time to deal except, with my honoured leader, to express my doubts as to the effect of cooperation achieved under the shadow of a stuffed club. Nevertheless I agree that there should be some arbiter, some way should be found; and it may be that this is the way, perhaps some modified form of board; some way should be found whereby needless competition between these railways and duplication of services will be eliminated.
My next point is with regard to the railway being independent of parliament and the government. I know it is no*t intentional, but will the house just recollect that all we are doing here is forming a new board for the Canadian National Railway Company, and that the governor in council still has the right to put a railway company under that national company or take one out from it. So you may have all this machinery, the trustees and all that sort of thing, with not a railway under the act, and that can be done by order in council. I do not think it was intended that it should be left in that way, and I imagine that when the bill is discussed in committee something will be said about it. Another thing should be noted:	It is peculiar that
the first trustees are to be appointed by the governor in council, and that only after that do they become self-perpetuating and are appointed by the president of the exchequer court, the chief commissioner of the board of railway commissioners and the two remaining trustees.
Now with regard to this matter of independent control: Let us remember that at the present time we have these alternatives: We can amalgamate these roads, we can sell the Canadian National, we can lease it or we can run it. By this bill we are deciding that we are going to run it, and why? Not simply because we want to make money out of it; that is perhaps the last thing to consider. We want to save as much money as we can, but we believe it is in the public interest to operate this system, and we believe it is in the interest of the community to run it similarly

C.N.R.-C.P.R. Bill-Mr. Ralston
to the post office or any other government service.	[DOT]
With your permission, Mr. Speaker, I should like to give just one illustration of how I think this act will work out and why I believe there should be a least some protection and some safeguard in the public interest. Take the Halifax and Southwestern railway as an example. This may be parochial; some hon. members may say I am referring to my own province. That is so, and I do so because I am most familiar with that province. Under this act that railway can be abandoned, by agreement between the Canadian National railways and the Canadian Pacific railway; it can be abandoned and the bondholders, who happen to be the people of the province of Nova Scotia, can take it over. It could be abandoned at the behest of a trustee appointed by the governor in council or chosen from such a panel as I have mentioned, which panel is drawn up and the choice made by the president of the exchequer court, the chairman of the Board of Railway Commissioners and the remaining trustees. This trustee is appointed for seven years; he is not removable except by the address of both houses, and his decision may not be reviewed by the governor in -council. I submit, Mr. Speaker, that this is not a fair position in which to place these people of Nova Scotia with regard to that particular road. I am only taking that as an example. I believe every hon. member can imagine some situation in his own constituency which is comparable to the one I have mentioned.


Pierre Édouard Blondin: The hon. member has
spoken for over forty minutes.


Some hon. MEMBERS:: Go on.


Mr. MALCOLM:: Go ahead, with the consent of the house.


James Layton Ralston: I am very much obliged for this courtesy, and I have just one more point to make. I say this illustrates the effect of the act and the irresponsibility of the trustees, if I may put it that way, without offence, who are to be given jurisdiction over our railways. Let me point out one other matter which I hope the minister will consider when the bill is in committee. I think under this act bonds could be issued by the trustees without the approval of the governor in council.


Robert James Manion: Perhaps they could, if they could sell the bonds.


James Layton Ralston: Equipment trust bonds can be issued without any guarantee of any description.


Robert James Manion: Not at the present time.


James Layton Ralston: They have been so issued right along. Perhaps there has been a change since my hon. friend came into office, but I say that under this act bonds apparently can be issued without the approval of the governor in council at all.
I am in accord with those who have spoken with regard to the desirability of a larger number of trustees than is provided for in the bill. I believe the situation with regard to the Intercolonial railway is so vital that we should have some representation from the maritime provinces. I cannot develop this argument to-night except to say that, as everyone knows, the Intercolonial railway was built as a strategic road, two hundred miles longer than was necessary, as a bond of confederation. Further than that, it was bruit as a surface road. We pay more to have our goods hauled because our motive power cannot handle heavy loads because of the grade. An engine that will handle a thousand tons on the prairies will handle only perhaps six hundred tons on that line in the maritime provinces. I think under these circumstances the people of the maritimes are entitled to some consideration. I believe the trustees should have some intimate knowledge of the place and position the Intercolonial railway holds in Canadian confederation.
In closing, Mr. Speaker, let me say that I go as far as any living man in divorcing the management of the railways from party influence, but I believe the provisions of this act go to extremes which are both unnecessary and unsound. I yield to no one in recognizing the necessity for economy, but if we are to retain this railway system the people of Canada who have made the investment should be entitled to something more than the questionable satisfaction of paying interest, at the same time very largely abdicating in perpetuity all practical control of the railway. I still feel that the man who pays the piper should have at least some voice in calling the tune. It has been decided to maintain this railway system as a national undertaking. I believe a vigorous and effective and, if you like, drastic policy of cooperation and retrenchment can be carried out without resorting to hysterical or unsound methods, and wtihout- any such wholesale surrender of governmental authority as is contemplated in this bill.

C.N.R .-C .P.R. BUI-Mr. McKenzie


Mr. ROBERT McKENZIE (Assiniboia):: Mr. Speaker, in spite of all that has been said I feel it my duty to express my views with regard to the bill which is now before the house, because in my opinion this is the most important measure to be considered this session. First we had what is supposed to be a very serious railway problem. The government, realizing the gravity of the situation, appointed a commission, and now we have this bill which is based upon the report of that commission. I will not go into further detail.
My first reason for opposing this bill is that it does not suggest any solution of this great railway problem. More than that, however, I fear that it does mean a consolidation of the two railway systems, probably for all time to come, through the provision concerning the leasing of part of the Canadian National system to the Canadian Pacific Railway. I come from a part of the country which is served almost equally by the two great systems, in the main by branch lines though part of the main line of the Canadian National runs through my district. I hold no brief for either system, but I am concerned over the possibility that through the consolidation of these two systems there may be more men out of work than we have at the present time. I am also fearful that this leasing I have mentioned will result in the branch lines suffering severely through whatever efforts may be made in the name of economy. I am afraid that the Canadian National system may become completely submerged in the privately owned company before many years go by, and to such an extent that it will not be able again to operate as a separate entity. Now, the opinion that the Canadian National railway system may not be able to function as a separate entity is not my opinion alone; we have the opinion of Sir Joseph Flavelle, one of the commissioners. In reply to a question asked by Mr. Beatty he used these words:
We are legislating for the future needs of the country, and the adoption of your suggestion would mean one system of railways in this country for all time to come, unless parliament intervened and said, "It is intolerable; we will break it up." ... I am not altogether sure of the capacity of its executive to interpret, without the whip of competition, what the public have a right to secure in the way of service. . . .
That is the opinion of Sir Joseph Flavelle with respect to this problem, and I say with him that we do indeed need the whip of competition if the people are to get that service they are entitled to. Another thing which the government seems to have lost sight of entirely is the fact that these railways were not built exclusively for the purpose of making money, but as a public utility. Nor did the
railways themselves take that view, that they were operating solely for the purpose of making money for the country.
I will direct attention to the branch line problem, and I will do so as briefly as I can.
I believe that railway development and progress in the direction of branch lines was largely responsibile for the fact that for a number of years our railway operation was so-successful, as pointed out by the previous speaker. From 1923 to 1930 the branch lines .unquestionably played a very important part in providing tonnage for the main lines. On that account it seems reasonable to me to conclude that the development of the country itself has been very materially assisted by the policy of the railways in building branch lines ahead of settlement. Had it not been for this, this country would not have attained the success it did, nor would it have made such strides during the years from 1923 to 1930. This being true, and in view of the fact that the railways themselves did not take the view that they were operating entirely for the purpose of making money, but also had regard for the welfare of the people of Canada in the extension of branch lines, I wonder why it is that the supporters of the government in this house are to-day criticizing our railways to the extent they are. Why is it that the railways are being so severely criticized, notwithstanding that practically every other utility you can mention is in just as bad a position financially as the railways?
Let me refer once more to the evidence taken before the Duff commission. In this connection I will read a few passages from the evidence of Mr. Hungerford, the acting president of the Canadian National Railways, given before the commission. He was pointing out the conditions of these railways when they became a separate entity under the management of Sir Henry Thornton, and he made this statement:
The situation which confronted the new management of the consolidated properties was an extremely difficult one and it had a great multitude of problems to solve. The Grand Trunk Pacific and the Canadian Northern were not entirely completed nor equipped for operation and the earlier constructed lines of the latter company were in a very poor physical condition; while the Grand Trunk and Intercolonial were badly run down as a result of war pressure and financial limitations. All of these groups were very short of rolling stock and what was owned was generally in a poor condition of repair.
On practically all of the lines, the condition with respect to ties, rails, ballast, bridges, buildings, and other features of like character was most unsatisfactory; terminal facilities required enlargement and rearrangement to

tional transcontinental system. Nevertheless the Prime Minister at least pretends that he is in favour of both the trans-Canada highway and the St. Lawrence waterway.
I contend that the legislation now before the house is not necessary in any sense of the word. In the first place it will not solve the problem, and as a matter of fact I have not heard an hon. member opposite, supporting the government, claim that it will do so. I believe the government at this time should let the railways continue unmolested to do as they have been doing in connection with their cooperative measures. Let them cut down their expenditures as they have been doing. In 1932 the revenue of the Canadian National Railways was down $150,000,000 as compared with 1928, and during that period they reduced their expenditures by something like $100,000,000. If the government would change their policy so as to allow goods to move freely in and out of the country, the railways would get business, but under the present system that cannot be expected. If this legislation means the further consolidation of the two railways, as I believe it will, it will at the same time mean throwing more men out of employment and I do not believe any of us at- this time wants to see that happen. Because of the facts I have mentioned I am entirely opposed to this bill and for that reason I shall have to oppose it when it comes to a vote.
On motion of Mr. Veniot the debate was adjourned.
On motion of Mr. Guthrie the house adjourned at 10.55 p.m.
Tuesday, March 14, 1933