1933-03-07

BANKING AND COMMERCE

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Mr. R. C. MATTHEWS (Toronto East Centre) presented the third report of the select standing committee on banking and commerce.
Right Hon. R. B. BENNETT (Prime Minister) moved:: That the name of Mr. Speakman be substituted for that of Mr. Coote on the select standing committee on banking and commerce.


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Motion agreed to.

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On the orders of the day:
Mr. JOHN VALLANCE (South Battle-ford) :: I wish to ask a question of the Minister of Trade and Commerce. Under article 6 of the agreement entered into at the Imperial conference of July last it is provided that Canada shall have the right to free entry of 2,500,000 hundredweight of bacon and ham. I notice a dispatch from London wherein this has been contradicted; it is claimed that a mistake was made by the typist and that there is one "0" too many. They claim that we have the right to only 250,000 hundredweight.


Richard Bedford Bennett: There is nothing in the
report.



TREATY WITH FRANCE

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On the orders of the day:
Mr. S. W. JACOBS (Cartier):: Is it the intention of the government to table the proposed French treaty this session?


Richard Bedford Bennett: The matter is under consideration.



DUTY ON BRITISH IMPORTS

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On the orders of the day:
Hon. E. B. RYCKMAN (Minister of National Revenue):: The hon. member for
North Waterloo (Mr. Euler) yesterday asked me a question, which I said I would answer to-day, in regard to the possibility of reducing the value of the pound sterling for customs purposes from $4.86f to a lower figure. All customs rates for duty were originally fixed upon that value.
I feel that at the present time, in view of the disturbed condition of exchange quotations, it would be unwise for us to consider

any alteration in the present arrangement until it becomes apparent that exchange quotations are more stabilized. Changed circumstances with changed requirements may quickly come.
It might be appropriate at this time, however, without entering into too much detail, to explain to the house the circumstances which prompted the government to establish the present basis.
In September, 1931, the commodity price index wholesale in Great Britain as published in the Bank of England Statistical Summary was 99.2. In that month, as all hon. members are aware, Great Britain suspended payments in gold, and the immediate result was an increase in commodity prices in Great Britain. For October, 1931, the figure was 104.4, and in November, 106.4. Since that time the index figure has moved closer to the 100 mark, and in the month of October, 1932, it stood at 101.1, November 101.1, and in December, the last month for which figures are available, it was 101. Comparing that ' figure, therefore, with the index as in September, 1931, it will be noted that there is actually a slight increase in wholesale prices in Great Britain.
If prompt action had not been taken by our government in September, 1931, to continue to value the pound sterling for customs purposes at |486f, the net result would have beeD that the tariff against Great Britain up to about twenty per cent would have been wiped out, and in some cases indeed the British exporter to Canada would, owing to exchange, be receiving a bonus.
Action could perhaps have been taken by way of special surtax or quota system as has been done by other countries who were faced with unfair competition from countries whose currency had become depreciated, but we adopted the more moderate course of endeavouring to maintain so far as was possible the status quo, with this slight exception that having regard to the fact that there had been an increase in commodity prices in Great Britain variously estimated by experts at the time at anywhere from seven per cent to ten per cent, we decided that although regular duty would be assessed on the basis of $4.86f to the pound sterling, special or exchange dumping duty would only be collected on a basis of $4.40 to the pound sterling, which represents approximately a discount of ten per cent from the par value.
Since that time representations have been made to me both to increase and to lower the

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figure of $4.40, but everything considered I believe it has been fair and reasonable to all interests affected.
As I stated at the outset, I do not believe this would be an opportune time to make any [DOT]change in this arrangement.


Mr. MACKENZIE KING:: While speaking of matters pertaining to the Department of National Revenue, perhaps the minister would explain the rulings given yesterday by his department and the reasons therefor.


Edmond Baird Ryckman: There was only one ruling made by the minister of which the minister had any knowledge. It happens in the ordinary course of business that it is necessary to determine on the spot how an entry should be treated. The result was that our officials were consulted with regard to an entry and, not knowing at what rate the exchange should be computed, they inquired of one of our largest banks as to what they were to do as respects exchange. The answer came that the last rate that was published was $1.18. If they wished to be secured against risk, they would be safe in putting it at $1.25 and making their adjustment afterwards. They adopted the course taken upon the statement of the bank that that was the proper thing to do. Owing to an indisposition I was not in the house yesterday afternoon or evening, but I read the announcements made in the evening papers. I considered the matter, consulted with those who were interested and made up my mind that in view of the- special emergency in the United States and the fact that the par rate is dollar for dollar and no quotations were available, and as some special order had to be given, the fair thing to do would be to set a rate of par for par until we had some different information. With that in view I sought to make it clear that it would be only fair at this time and until the matter was settled, whioh will be no doubt by Friday, that par for par and dollar for dollar should be the prevailing rate.


William Lyon Mackenzie King: Having in mind what the minister has just said, I should like to know if it is customary for an official in his department to give a ruling and make an order without the knowledge of the minister?


Edmond Baird Ryckman: I do not think that is so. I have explained the circumstances in this case and, frankly, I can imagine some measure of excuse for a collector at a port telephoning
to the bank and asking for its best knowledge upon the matter and acting in accordance with what the bank thought he ought to do.
I think we would do likewise.


Mr. CASGRAIN:: No ministerial responsibility.


Mr. IRVINE:: Mr. Speaker, we would like to be informed of the subject matter of the conversation now being carried on.



CANADIAN NATIONAL-CANADIAN PACIFIC RAILWAY BILL

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Hon. R. J. MANION (Minister of Railways and Canals) moved 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.
He said: Mr. Speaker, I do not think it is necessary at this stage of the discussion for me to give any detailed explanation of the bill now before the house. It will be sufficient to say that the bill contains three parts, the first dealing entirely with the Canadian National Railways and the second and third with the two transcontinental railways. The first part deals with the appointment of trustees for the Canadian National Railways, the auditing of its accounts, its annual budget and its annual report to the parliament of Canada; the second part deals with suggested methods of cooperation between the Canadian National Railways and the Canadian Pacific Railway, and the third part provides for the setting up of arbitral tribunals for the settlement of disagreements or disputes arising out of the proposed cooperation.
As the house well knows, this bill is based upon the report of the royal commission on transportation, sometimes called the Duff commission. That commission wTas appointed on November 20, 1931, and made its report on September 13, 1932. The commission was appointed not at the request of this or any other government but really upon the proposal of the heads of the two railways. In the first place, it was proposed by Sir Henry Thornton when he appeared before the select standing committee on railways and shipping, which committee reported to the house on July 16, 1931, in the following words:
Your committee desire to call the attention of the house to the proposal made by Sir Henry Thornton at one of the sessions of the
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committee. He referred to file serious position of the transportation business generally and recommended that a commission be appointed for the purpose of considering the whole question of Canadian transportation. Your committee regard such a recommendation coming from such a source at this time as worthy of the serious consideration of the government.
A moment ago I stated that the appointment of this committee had been proposed by the heads of the two railway companies, and I think the Canadian Pacific Railway can be linked up by a statement made recently by Mr. Beatty before the Canadian Club of Toronto. A pamphlet was circulated, I assume by the Canadian Pacific Railway, entitled, "An Address delivered by E. W. Beatty, Iv.C., LL.D., chairman and president of the Canadian Pacific Railway, before the Canadian Club." This speech was delivered on January 16 last. Mr. Beatty said:
We come now to the events of the last two years. In 1931, during one of the sessions of the special committee of the House of Commons which has annually considered the report and appropriations of the Canadian National Railways, questions were asked which led me to think that the time would be opportune for an inquiry into the whole question of transportation in Canada by an independent tribunal; that much good might result and that at least there would be given much information of value to the public as a whole.
I had for two years prior been very apprehensive as to the railway situation. Our traffic had fallen rapidly, our debts had increased and the deficits of the national lines were great. So I conferred with the former president of the national railways and suggested to him that during the course of his examination by the committee he might advise such an investigation as I had in mind. He readily agreed and made such a recommendation. It was unanimously adopted by the committee and later was unanimously approved by the House of Commons. The government acted upon the recommendation of the house, and the so-called Duff commission was dn due course appointed.
I quote this speech of Mr. Beatty's in order to show that the heads of the two railway companies were unanimous in suggesting the appointment of this commission. It will be remembered that when the select committee on railways and shipping made its report to the house, that report included the clause which I read a moment ago. The report of that committee was unanimously adopted by this house and as far as I know it was supported generally by the press and public of this country. The government felt it to be its duty to look around and endeavour to find a commission which would be above party politics and have such outstanding ability that its report would be accepted with a great deal of confidence by the people of this country.
[Mr. Manion.1
A commission was appointed with the Right Honourable Mr. Justice Duff, an outstanding jurist of Canada, as chairman. There were also upon the commission representatives of Great Britain and the United States, it being felt that such representation should be had upon the commission in view of the fact that the bonds and stocks of the Canadian Pacific Railway were held to a large extent in Great Britain, while the bonds of the Canadian National Railway were held to a large extent in the United States. It was felt to be only fair that these shareholders should be represented upon a commission in whom they would have special confidence. Lord Ashfield, a gentleman who had made a reputation in the United States and later on in Great Britain in transportation matters was appointed. Another appointment made was Mr. Loree, the president of the Delaware and Hudson Railway. While not the president of one of the larger railways in the United States, Mr. Loree was looked upon by most people in that country as one of the outstanding authorities upon railway matters. He has succeeded in carrying his own railway through these very trying times in a splendid condition. The other Canadian representatives besides the Right Honourable Mr. Justice Duff were Sir Joseph Flavelle, who was for some time in the years gone by the chairman of the Grand Trunk Canadian board and who is an outstanding business executive of this country; Beaudry Leman, of Quebec, who had recently been president of the Canadian Bankers' Association and who, in addition, was a well known civil engineer- before he went into banking; Doctor Webster, of Shediac, New Brunswick, a gentleman who had made a reputation in his own profession not only in the United States, but in Scotland as well as throughout the world, and who had that gift few doctors have of being such a good businessman that some years ago he was able to retire from his profession and give, from his native town, Shediac, his services to his country in various lines of endeavour. Finally, there was Professor Murray of Saskatchewan university, who, it was felt, would bring to bear upon the matter the western viewpoint as well as the university-economic viewpoint, if I may so describe it. Therefore I say that we appointed what might well be considered a very distinguished and able commission to deal with this problem, and so far as this bill is concerned, it agrees practically in toto with the report made by that commission. There are some differences in matters of very minor detail, but the principles included in the bill

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are based entirely on the report of the commission.
Speaking of the report generally, I may say that it was a summing up of the whole transportation situation of Canada. It showed the urgent need of economies if the railways of our country were to get back into a prosperous condition. It pointed out the dangers to the people of Canada if steps were not taken to get the railways back into a proper state of economic operation and management. It advocated very emphatically greater cooperation than had existed in past years between the Canadian National and Canadian Pacific railways. Finally, it suggested methods whereby its proposals might be put into effect. I think at this moment it might be well for me to quote the warning-I doubt whether it has been quoted in the house before, but it has been quoted a great deal in the press-given by the commission in regard to the situation of the transportation companies in Canada. They said in paragraph 226 of the report:
We feel compelled, as a matter of public duty, to strike a serious note of warning to the people of Canada. Unless the country is prepared to adopt the plan we have proposed, or some other equally effective measures, to secure the efficient and economical working of both railway systems and thereby not only reduce the burden on the federal treasury but improve the financial position of the privately-owned railway, then the only courses that would be left would be either to effect savings in national expenditure in other directions, or to add still further to the burdens under which the industries of the country are suffering by the imposition of yet further taxation. Failing the adoption of one or other of these courses, and there are obvious limits to their application, the very stability of the nation's finances and the financial credit of the Canadian Pacific Railway will be threatened, with serious consequences to the people of Canada and to those who have invested their savings in that railway.
I may just interject at this moment that some members of the government, notably the Prime Minister (Mr. Bennett) and I as Minister of Railways have at various times in the last couple of years been uttering practically the same warning, and so far as I am concerned I have used on nearly every occasion the same examples or some of them which were used by the transportation commission. I am afraid that the only reward I received, at any rate from one section of the press, was the charge that I was showing enmity to the Canadian National by merely giving the facts. But I submit that no word of mine at any time has been more emphatic in regard to the dangers of the situation than this utterance of the transportation commission. In regard to danger of enmity to the Canadian National may I add this: I believe
there is no Canadian, to whatever part of Canada or to whatever party in politics he belongs, who does not realize that we are all deeply and heavily involved from a financial standpoint in the future of the Canadian National Railways, and who does not feel a very sincere responsibility for it, and a very sincere desire for its return to prosperity. In other words, I think it is the wish of hon. members, in whatever portion of the house they may sit, that the Canadian National may be brought back to an economic situation where it may be able to carry on equally well with the other great transportation company of this dominion.
The remedies proposed by the transportation commission were, in brief, as follows: First, they said that there should be no amalgamation of the two railways. I have read over this bill many times and I submit that in it there is nothing that in any way conflicts with that recommendation. Second, they said that the deficits should be voted. In other words, in the future at any rate, whatever may have been the custom in the past, they suggest that we should not put on the railways mortgages consisting of deficits in regard to the payment of interest charges. Third, they suggest the selection of auditors by parliament from a panel presented to the House of Commons. Fourth, they suggest that instead of the seventeen directors now in control of the Canadian National Railways, there should be a board of three trustees, one of whom would be chairman, giving his full time to the work of attending to the financial end of that railway, and the other two close at hand in order to be able to consult with the chairman at all times. Fifth, they suggest, as I have pointed out before, very much greater cooperation and consultation to bring about that cooperation between the Canadian National and Canadian Pacific railways, and, finally, they provide for the setting up of arbitral tribunals in case there may arise disagreements or disputes in carrying out the proposed cooperations, whether proposed by one railway or by the other.
As one looks around the country, one is struck, and I think all citizens who have thought on the matter at all have been struck by the opportunities of economy from the standpoint of cooperation between the two great railway systems. One has only to walk down Sparks street, two or three blocks from where we are sitting here this afternoon, and past two ticket and telegraph offices on that street within a few doors of each other, occupying very highly priced premises, and within a couple of blocks of the union station, to see a duplication which, to the ordinary
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man at any rate, is certainly unnecessary. This occurs in many of our cities. The same is true at least to a certain extent in regard to duplication of train services throughout the country, although I may say that at times I have come to the conclusion, particularly since the railways have dealt with the matter in some degree, the duplication of trains is somewhat exaggerated. Let me illustrate that by the trains running between Montreal and Ottawa which are often cited by hon. members as being too numerous, and that certainly seem to be so. The other day I looked into the matter and I found that there were three trains in each direction operated by the Canadian National and six trains in each direction operated by the Canadian Pacific. This sounds like a great and unnecessary number of trains to be operating between these two cities. But it must not be forgotten that, for example, in the case of the Canadian National, one of those trains is a transcontinental and is not primarily operated for service between Montreal and Ottawa. Therefore it can be taken from the list. Two of the trains of the Canadian Pacific are likewise transcontinental and accordingly can also be taken from the list. Of the other two Canadian National trains, one is a fast express which connects with the maritime train and with the one to New York. The other is a slow local train calling at the various points between Montreal and Ottawa.
So far as the Canadian Pacific is concerned, their trains are in virtually the same position, with the exception that they have two lines, one the North Shore upon which two locals run in each direction. The others are practically the same, except that they have two transcontinentals which undoubtedly pick up traffic between these two cities, whereas the Canadian National has only one. There is, however, no doubt that throughout Canada between many cities there are opportunities for these two great railway systems to combine their passenger services at least to a certain extent and to effect savings by that kind of cooperation. Not long ago I travelled from Ottawa to my home in Fort William, and between Sudbury and Fort William there was on the train only one passenger besides myself. Hon. members know members of parliament do not pay much for their transportation, so that this service was not very remunerative from the point of view of passenger revenue.
There are other ways in which cooperation can be brought about, by the pooling of different services, by running rights over common trackage, and so forth. But dealing with

the question in a broader way, it is a most serious one impinging as it does on the whole financial structure of this country. At the same time largely because of its immensity, its importance, and its seriousness to this country it should be a non-controversial question so far as this house and even those outside of this house are concerned. I submit that there is no reason for party bias or party controversy in dealing with this question. It is too important and too serious for that type of treatment. In the recent hearings before the Senate committee on railways which considered this bill before it came to this house, the whole question was dealt with on a very high plane indeed. I had the pleasure of reading nearly four hundred pages of the evidence and I can say that the question was dealt with in a non-partisan and an entirely unbiased manner, and if I may respectfully make the suggestion I sincerely' hope that when this bill goes to the committee of the whole or is otherwise disposed of by this house it will be dealt with on exactly the same high plane, because I submit that this is no time for party strife, and I do not believe that the people of this country in these critical times, particularly having in mind the incidents of last week, are looking for party strife on a matter which is so serious to them as is this question.
The bill is a cooperative bill. It has for its purpose the cooperation to a large extent of the two railways. I repeat, there is nothing in it to cause anyone to fear that it may lead to the amalgamation of the two great railway systems of Canada because the whole trend and spirit of the bill, as well as every clause and letter of it, points to cooperation, and cooperation means, and can only mean, the working together of the two parties to an understanding, and in this case the two parties are the Canadian National Railways and the Canadian Pacific Railway. Without doubt this question, in spite of unemployment and the many other problems which Canada and the world at large have to face, is still the greatest problem confronting this dominion, and that is demonstrated by the heavy annual interest charges accruing to the investing public, in the United States to a great extent, on the bonds of the railway, two-thirds of which have been guaranteed by the Dominion of Canada, and for the other third of which this dominion is largely responsible-as the owners of the railway. The interest in 1932 was in round figures $58,000,000. In addition to that, as the house well knows, there is another item of interest which is piling up annually on the books of the company but

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is not shown in the public accounts of the dominion, amounting to §35,000,000 in round figures. That is interest owing to the government by the Canadian National Railways on past loans made by the government to the Canadian National Railways or to its subsidiary companies. None of that has been paid, and quite frankly I believe that no member of this house thinks that any of it ever will be paid.
There are other railways on this continent of course which are having difficulties, and that has often been pointed out. But the difference to us in this house and to the people of Canada is that these other railways, whether in Canada or the United States, are private corporations, and whatever difficulties they may get into, while they may have an indirect effect upon the financial structure and economic position of the country, yet they have not the same direct effect which the difficulties of -the Canadian National Railways have on our whole financial structure. In other words, the Canadian National Railways is directly our problem, and that problem is complicated by the fact that the Canadian National Railways, being a government road, has been for many years borrowing its money upon bonds, while many of the private companies, including the Canadian Pacific, have been raising the hundreds of millions of dollars, which they have put into roadbed and equipment, on stocks of one kind or another. On these stocks, fortunately for the privately owned railways, they may discontinue, and in most cases they have discontinued, the payment of dividends, whereas on the bonds of the Canadian National Railways the payment of interest to the investing public cannot be discontinued without repudiating our debt as a government. The fixed charges of the Canadian Pacific Railway, which as an institution is probably as valuable as the Canadian National Railways at any rate, amounted last year in round figures to $22,000,000, whereas the fixed charges of the Canadian National Railways, because of the reasons which I have just mentioned, amounted to $58,000,000.
In the United States practically all the private railway corporations have about the same proportion of bonds outstanding as against their book values as applies in the case of the Canadian Pacific Railway. The United States railways have a book value of 26 billion dollars, using the word billion in the American sense of one thousand millions. The bonded indebtedness against that 26 billion dollars in the United States is between 1.0 billion and 11 billion dollars, which is about 53719-176
the proportion of bonded indebtedness of the Canadian Pacific Railway as compared with its assets.
The whole situation is complicated, of course, to a still greater extent by the fact that traffic has decreased so very considerably in the last three or four years. In 1928 the gross revenues of the Canadian National Railways amounted to $304,000,000 while in 1932 they amounted to $161,000,000, or not very much more than half the total of the peak year. While at times we do remember that the peak year was a wonderful one from the standpoint of the Canadian National Railways inasmuch as in that year the railway paid the interest on its bonded indebtedness, which was unfortunately $15,000,000 or $16,000,000 less than the fixed charges in 1932, while it did that and had a couple of million dollars to spare, at the same time it had to borrow from the people of Canada, or have its bonds guaranteed by this dominion, to an amount of $26,000,000 in that year. So, even in its peak year, the road was a serious charge upon the people of this country.
I mention that merely to emphasize once again, as was emphasized not once but many times by the royal transportation commission at its hearings from coast to coast in this country, the seriousness of the whole situation, and to indicate why it is necessary for the Canadian National Railways, and the Canadian Pacific Railway indeed, to put into effect very drastic economies of all kinds. When you take into consideration the figures which I have mentioned, the interest owing by the Canadian National Railways, the competition in the last few years of motor vehicles, and finally the injurious effect upon all railways throughout the world of the widespread depression through which we have been passing, you will realize the reasons why the Canadian National Railways and the Canadian Pacific Railway and all other railways on this continent and throughout the world find it necessary to put into effect great economies.
May I at once say this? In 1932 at any rate the Canadian National Railways in that regard did a splendid piece of work, probably unequalled, and I say that deliberately, by any other railway on the continent of North America. Let me give some proof in support of that statement. In 1932-the railway year for the Canadian National Railways is, as hon. gentlemen are aware, the calendar year-the gross revenues of the Canadian National Railways were down by $39,000,000 as compared with 1931. In the ordinary course of railway administration I am informed by the best authorities that when the revenues are down it is generally possible to decrease also
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your expenses by from sixty to seventy per cent of the decrease in revenues, for of course there is the necessity for upkeep, maintenance, overhead and certain other general charges which cannot possibly be decreased as rapidly as the decrease which develops in revenues when conditions have- suddenly gone bad, as they have done throughout the world in the last four years. So taking from sixty to seventy per cent of the decrease in operating revenues of $39,000,000, there should have been a decrease in the operating expenses of the Canadian National Railways last year of between $25,000,000 and $27,000,000. But instead of that there was a decrease in operating expenses last year of $44,000,000, or 112 per cent, instead of the 60 per cent or 70 per cent that should have been expected, and is put into effect on most first class railways throughout the world in times of decreasing revenues. I say that is a remarkable showing oh the part of the Canadian National Railways, and to illustrate what it means I am going to quote statements by S. J. Hungerford himself who from time to time puts out statements for the information of the people of Canada. These statements concern the conditions on the Canadian National railways. On September 24 last, when these economies were being put into effect, Mr. Hungerford put out a statement. The statement was given to Mr. Paul Reading, who in turn quotes it in the Ottawa Citizen of September 4. Mr. Hungerford says:
Railway economy, he pointed out, was a progressive thing. It involved a constant increase in efficiency. Perhaps the best measure of recent improvement was that whereas the net operating revenue of the Canadian National in 1928, its peak year, had been roughly $56,000,0'00, the system as now organized could show a net of over S75.000.000 on the same volume of traffic as it handled in 1928.
In other words Mr. Hungerford pointed out that with the extreme type of economies which the Canadian National management and directorate had put into effect in the last year they could, with the same volume of traffic as 1928, have saved another $10,000,000.
It is sometimes feared that these economies have interfered with the efficiency of the Canadian National railways. In that connection, in the article which I have read, he spoke as follows:
From the standpoint of efficiency the system was in a strong position. "Never in its history" Mr. Hungerford asserted, "has this property been in such good physical condition or so well organized to handle traffic cheaply and efficiently as it is to-day."

Then in a statement which he gave to the press on January 3, 1933, he said the following:
In gauging measures of economy to meet declining revenues, the executives of a railway system must guard against jeopardizing the condition of the property. Facilities and equipment must be maintained on a standard of safety and efficiency. This factor has been carefully considered by the Canadian National Railways management and at the present time the property is in fit and proper condition to handle all traffic offering safely and efficiently.
That, I think, should set at rest any suggestion which occasionally is made to the effect that the efficiency of the railways is being in anyway sacrificed to economies. I may point out another statement Mr. Hungerford made to me personally only a few months ago. A statement had been made in another chamber by a very outstanding gentleman of that chamber that the employees of the Canadian National railways were going around fearfully expecting that when they went out in the morning they might have their positions, but when they came home at night they would not have them. I felt that was not a satisfactory position, and did not promote a satisfactory mental attitude on the part of the employees. With that in mind I talked the matter over with Mr. Hungerford, and he assured me at that time that outside of the necessary decreases due to decreasing business, the necessary contraction, on any large scale, had largely been accomplished.
May I at this point state that I wish to compliment very sincerely indeed not only Mr. Hungerford and the managing officers of the company, but all the men of the rank and file who have kept up their courage and who, through loyalty, have done their work faithfully and well for the Canadian National railways in very difficult times indeed. I wish to compliment them on the splendid esprit de corps they have shown. I do not believe I would be doing justice if at the same time I did not compliment the directors who, in the near future, will probably be replaced by the three trustees mentioned in the bill. The directors were appointed nearly three years ago. I wish to say here and now that the majority of them have done splendid work, have served loyally and well, and have given the very best they had in every possible way to help Mr. Hungerford and the management to bring about the results I have just indicated.
Because I believe the information will be of interest to the house, may I set out a few examples of the types of economies about which I spoke, and which I mentioned were

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specially put into effect by Mr. Hungerford and his managing officers. Not long ago he gave me a statement comparing the savings brought about by these special types of economies, showing the difference between the year 1932 and the year 1930. I did not think to ask him why he took one year instead of another. However he probably took 1932 because it was the last year, and I presume he took 1930 because it was at that time that the particular economies began. As a matter of fact in 1929 the decrease in revenues had not become very heavy, and I have no doubt the railway management of that day were probably hoping in the near future to get business back to normal. There is no doubt many people believed the depression would not last long. At any rate economies were not put into effect to any great extent until 1930.
The savings between 1930 and 1932 brought about by these special types of economies makes very interesting reading. For instance, of positions drawing salaries of $5,000 or over they have abolished fifty-six. Of positions drawing salaries between $3,000 and $5,000 they have abolished forty-seven. In other words among the supervisory officers of one kind and another they have eliminated one hundred and three who were receiving from $3,000, up. They claim that the efficiency of the road will not in any way be endangered by the elimination, and that the present staff could very well look after a very much greater volume of business than the railway is doing at the present time. I have no doubt as to the truth of that assertion. This elimination in salaries over $3,000 brought about a saving, in round figures of a little over $1,000.000,-[DOT] In addition; the reduction of salaries of those receiving salaries over $4,000, made a saving of over $900,000. Travelling expenses and club dues-but largely travelling expenses-were reduced by $850,000. Radio, medical services and advertising were cut by $1,250,000. Those four items alone make a total special saving of something over $4,000,000.
In addition to that however savings were made in passenger services which some years ago were thought to be necessary by all the railways on the continent. There had been growing up on this continent a very elaborate passenger service not only on the Canadian National railways but on all the other railways on the continent. In addition there was a very elaborate branch line service which, because of the popularity of motor cars, had been brought into the position of heavy losers. The lines and services throughout the country were surveyed, and between 1930 and 1932, eight million miles of passenger train services 53719-1765
have been eliminated. It has been estimated that this elimination has brought about a saving of a dollar a mile at least, in fact I have heard it estimated that the saving is as high as $1.50. However taking it at the rate of one dollar per mile the saving amounts to $8,000,000. Many of these savings that I have mentioned are permanent.
It is true that there have been strong protests made to the railway management and to myself personally about taking off services both on the Canadian National and the Canadian Pacific railways. There seems to be a feeling throughout our country, I am sorry to say, that economies in the abstract are all to the good, but should not be applied to our own regions. I believe that is the feeling in the constituencies most hon. members represent. I presume all of us from time to time have received strenuous protests against some economies which were proposed to be put into effect. Apparently people believe we should economize, but should not carry out those economies in their constituencies, but always elsewhere. At the same time it should be pointed out that the people can hardly expect to be given elaborate train services when they are not patronizing these services, but are using automobiles instead of the trains.
There is another matter that I might mention in passing; I referred to radio savings. There is another saving which will be brought into effect in the near future, because it is intended within the next few days that the Canadian National will sell to the Dominion Radio Commission their whole radio plant, at a figure which has been decided upon. This will eliminate another heavy drain upon the Canadian National Railways, and as the staff is being taken over by the radio commission it will not mean any further increase of unemployment.
Mr. VBNIOT:: Would the minister permit a question? He gave the figures of 1932 as to reduction in operating expense of around $44,000,000. What would the reduction in revenue and in operating expense be for 1931?


Mr. MANION:: I looked that up a day
or two ago, and while I cannot give the exact figures, there was no such saving as in 1932. The saving was in the neighbourhood of 50 per cent of the decrease in revenues from the previous year, instead of 112 per cent, as in 1932. Of course it is obvious that by no stretch of the imagination could a saving of 112 per cent of decreased revenues be made for many years. It can only be done at certain times. So that the saving between 1930

C.N.R.-C.P.R. Bill-Mr. Manion
and 1931 was very much less than the saving last year. I stated earlier in my remarks that the usual saving in cases like this was 60 to 70 per cent, so it was in the neighbourhood of the usual figure.


Mr. VENIOT:: Will the minister give the
exact figures in committee?


Robert James Manion: Yes, I shall gladly do that.
There have been other improvements in management in the past year or so in which I think the house will be interested. I give them, I assure the house, in no spirit of criticism of the management or of anyone; I mention them merely because they are questions that have been discussed in the house at various times. For example, there has been a great improvement in regard to switching of estimates. I remember mentioning it here a year or so ago, and my right lion, friend the leader of the opposition supported me in my attitude, that switching of estimates should not be tolerated. Up to a year ago it was possible, for example, for the Canadian National Railways to have estimates passed through this house in their budget for huge amounts to be spent for certain capital expenditures in various parts of the country, and to switch them from that part to some other part and for a totally different purpose. For example, they might, and did on one occasion, if I remember aright, pass estimates for the building of a hotel in one section of the country and switch that money to the building of a branch line in another section. That is a power that no government, whether municipal, provincial or dominion, ever has had since constitutional government came into effect in this country. The railway in that respect had a power that no government had. In fact in 1931 the Canadian National switched amounts to the total of over $8,000,000. They are not permitted to do that any longer.
Another matter in which it was seen there was opportunity for improvement is this: There had grown up up in the Canadian National Railways the practice of permitting one officer, the chief engineer of the railway, to change the specifications or classifications on contract work so that the cost of the contract to the Canadian National might be varied by hundreds of thousands of dollars. Indeed, in one case into which I looked the cost had been increased by something like $600,000. This officer had the power to make changes involving huge sums without consulting even the president or other executive officers or the directors or any other group. I do not suggest for a moment that anything was done of an irregular character in that regard, but

I submit it is a greater power than should be in the hands of any one man of any corporation. I know of no other corporation, railway or otherwise, where one man had any such power. That has now been done away with. Another matter has been cleared up in which the fault I think, was due largely to the habit of architects, for example, of picking out what they think are the best lines of goods or materials and specifying those goods, irrespective of their origin, where the same type and quality of goods were being produced at an equal price in Canada. That habit had grown up in the Canadian National. In an investigation made at my request by the officers themselves, upon which they gave me a statement, it was found that forty per cent of all the specifications going out for materials for the building of hotels, terminals and so on were specifications of American goods. Without in any way thinking of criticizing American producers, I submit, and I know that members of the house will agree, that it is the duty of a Canadian institution supported by the money of the taxpayers to buy Canadian goods as far as possible.
May I, at this point, in regard to these various matters, again compliment the management and the directors who have cooperated so ably with the government in bringing about reform, which I think all hon. members of this house, of whatever party, will agree are advantageous to the Canadian National Railways.
It might be of interest to mention a few figures illustrating the decrease in traffic on all the railways on this half of the continent. Passengers carried in 1923 by the two great railway companies of this country amounted to 38,000,000, whereas in 1932 that number had decreased to less than half, about 18,000,000. Yet, during all that time both railways, and all railways on the continent, were spending huge sums in elaborate passenger services, and elaborate advertising for passenger traffic, which was the non-paying part of the railway business. I noted recently that Mr. Loree made the statement, which was widely quoted in the United States, that he thought too much money had been spent in past years on passenger traffic. That was seen by many men who were not railway men at all in this country in the last few years. During that time, when passenger traffic was decreasing so rapidly, there was a corresponding increase in the number of automobiles operating in Canada. In 1923 there were just over 500,000 automobiles of all kinds in use. and in 1931 just over 1.100.000, more than double the number, while the passengers in trains correspondingly decreased to one half.

C.N.R.-C.P.R. Bill-Mr. Manion
It is well to remember that railways are absolutely necessary in a country such as Canada. With our immense distances, our huge quantities of bulk traffic, this country could hardly live without railways any more than the people of the country could live without air. We must have railways to carry our bulk traffic in such products as wheat, flour, cattle, coal, timber, and pulpwood. I mention those six products because in a recent report asked for by me I found that about two-thirds of the traffic on the Canadian National railways-and I presume it is true of the other railways in Canada-consisted of those six bulk products, products which could not possibly be handled by trucks or motor cars for our distances. So that I say the railways are an absolute necessity in the Dominion of Canada. That does not mean that it is our duty u any way to fetter the automobile progress of our country. We cannot hold back progress any more than we can hold back the tides. At the same time it is clear that the operation of money-making automobiles for private gain on public highways built out of the taxes of the people, a part of which are paid by the railways themselves, should be regulated in such manner as to provide at least fair competition to the railways. It is obvious that if we are to have fair competition for the railways without being unfair to the automobile, we should see that there ;s uniformity of regulation and taxation of road motor vehicles with a view to the equalization of conditions under which road and rail transport is carried on throughout the dominion. The motor cars of the country should pay at least a fair proportion of the upkeep and the interest on investment of the highways, and I feel that this can be brought about without in any way interfering with the progress of the automobile industry. The automobile can be and is now being made more complementary and supplementary to the railways than ever they have been in the past. The railways themselves have been very slow to realize the importance of utilizing automobiles to a greater extent than they have done in the past as feeders to their system. Only recently, it would seem, the railways have taken this into account. They seemed to have rested on their laurels, evidently under the impression that in the long run competition from the automobiles could not possibly handicap them, so that they ignored that competition which in the meantime has been rapidly increasing, with the result that the railways have been losing opportunities for making their business a profitable rather than a losing enterprise.
An arrangement has recently been made between Toronto on the east and Sarnia and Windsor on the west whereby the Canadian Pacific Railway and the Canadian National have undertaken the "pickup" system by means of which, at the Toronto end, hired automobiles -not purchased cars, so that there is no capital expenditure in this regard-are used to deliver goods to the trains, while at the other end automobiles are hired for the purpose of making deliveries to those to whom the goods are destined. It is an attempt, a somewhat belated attempt perhaps, on the part of the two railway companies to compete with the automobile in the carrying of traffic, and at the same time it is a very appropriate period in which to undertake a cooperative experiment, which we all trust will bring satisfactory results to the railway systems of Canada.
In this regard may I add that at the interprovincial conference held recently in this city an afternoon was devoted by the provincial and dominion representatives to a full discussion of the question of automobile competition with the railways, and it was decided on that occasion that my department should prepare a questionnaire to be sent out to the different provinces. When that questionnaire is returned with the appropriate answers from the different provinces it will be the duty of my department to endeavour so to coordinate the answers and afterwards to bring to Ottawa again the officials from the various provinces with the object of instituting more uniform taxation as well as more uniform charges and regulations with respect to motor traffic in competition with the railways. Incidentally, I may observe that within the last couple of weeks I have sent out the questionnaire, and during the discussion of the bill in the house I shall be glad to table it should anyone desire to see the document.
Another figure which is of interest with respect to our railways in Canada is the figure for coal consumption. In 1923 the two railways in Canada used 858,000.000 worth of coal, whereas in 1931 they used exactly one-half of that quantity, $29,000,000. That reduction indicates a greater operating efficiency on the part of the railways, showing that thej can get more out of the coal that they are using; it shows the effects of the depression on business, and it also shows the reason wh>
we are faced with the present difficulty oi having to look -after so many miners at botl ends of the country.
Both the Canadian Pacific and the Canadian National Railways have been making commendable economies. Naturally I am

C.N.R.-C.P.R. Bill-Mr. Manion
more familiar with the economies of the Canadian National Railways than with those practised by the Canadian Pacific, inasmuch as the latter system, as hon. members know, is not under the necessity of reporting either to myself or to this parliament. I do believe however that the two railways have, broadly speaking, reached rock bottom; they have not attained the extreme limit, but they have accomplished nearly the limit, with the exception of certain considerable economies which might still be made as a result of that greater cooperation between the two systems which will be brought about when the present measure becomes law. The foundations have been laid by both railways, and indeed probably by all the railways on this continent, so that they will be in a position when there is a revival of business throughout the continent and the world at large, to come back very rapidly. I believe they will profit by some of the painful experiences they have had to endure during the years of the crisis. I may add, with respect to these rather painful economies that have been made by the Canadian National Railways, that when the three trustees are appointed they should, if they show the proper courage and good judgment, be able to keep that system on the right track, if I may use an appropriate metaphor, so far as efficient and economical management is concerned. It may be added of course that unless there is that business revival which we all look for in the near future there can be no solution of our transportation difficulties throughout this continent. There is however every expectation, particularly after the events of the last week, that we shall in the near future experience that revival in business which we confidently anticipate.
Recently in the United States the bondholders of private railways in that country, who consist very largely of insurance companies, savings banks and trust companies- in other words, the repositories of the savings of the people, holding about seventy per cent of the bonds of the American railways-* got together and appointed a commission on something of the basis of the royal commission which was appointed in this dominion. They appointed the late Mr. Calvin Coolidge as chairman, Mr. Alfred Smith, Mr. Baruch, and two other business men whose names escape me for the moment. These gentlemen reported after a thorough investigation of the situation that, with the economies that have been put into effect on the railways in the American republic, a twenty per cent increase in traffic would serve to bring

their railways back to a good revenue position. I do not believe that twenty per cent of an increase in traffic would restore our railways to a normal condition, but I do think that fifty per cent of an increase would go a long way towards getting them out of the slough of despond into which they have sunk; I think that such an increase would bring them back to something like a hopeful position. Everyone who is reasonable feels that we may well entertain hopes for the future without smashing the whole economic machine which has served us for so many years. When a man has an automobile which has been giving good service for years, he does not, if it goes out of order, take an axe or burglar's tools if he wants to repair it; he gets someone to help him to get it back into running order. Now that should be our attitude towards the economic system under which we live. People generally realize, I believe, that the conditions under which our railways, our agriculture and the whole of our commercial enterprises are operating at the present time are world conditions. That is clearly understood, I think, for people realize that no individual nation or leader alone can restore conditions to normal. In other words, there must be international cooperation on such questions as international indebtedness, world trade barriers and primary commodity prices. These three questions particularly must be studied. If we are to get primary commodity prices back to anything like a reasonable basis, it must be the result of some international conference. The restoration of primary commodity prices to something like a reasonable level, and the stabilizing of those prices at that level, would not only lessen to a large extent the debts of individuals and nations, but would bring back that purchasing power which is necessary not only to provide business for the railways but to further business generally.
I had that well illustrated a few days ago, when I made it my endeavour to find out how shipments of wheat compared in the last year with one of the previous years considered as an outstanding period in the progress of the railways. I found that in the year 1929, 4,600,000 tons of wheat was shipped on the railways, and in 1932, 5,300,000 tons, an increase of 700.000 tons in 1932 as compared with 1929; yet the gross revenues of the Canadian National Railways were down in 1932 as compared with 1929 as by $125,000,000.


Mr. STEWART (Edmonton):: Not on
wheat alone.

C.N.R.-C.P.R. Bill


Robert James Manion: No, on the total revenues.
I mention this to my hon. friend because it has been the conviction of many of us-I must confess it was my own conviction-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.


Mr. MALCOLM:: Could the minister give
us the earnings on the wheat traffic as well as the tonnage carried during the two years he mentioned?


Robert James Manion: I have not that information under my hand but I shall be glad to furnish it during the committee stage of the bill.


James Malcolm: I submit that the earnings would not be larger even though the tonnage was greater if the haul were shorter.


Robert James Manion: There is something in
that because a larger proportion of the wheat has been going via Vancouver which is a shorter haul. However, the 700,000 tons additional in 1932 over 1929 would balance the shorter haul. It is the low purchasing power of the western farmer due to the low prices he is receiving for his grain which causes his inability to purchase the goods of the eastern producer. This in turn prevents the prosperity of the railways as well as of the industrial plants of the country. There is no purchasing power, no effective demand.


An hon. MEMBER:: Hear, hear.


Robert James Manion: I hope that my hon. friend who says " hear, hear," does not imagine that that thought belongs only to our friends over there.


Mr. HEENAN:: Does the minister intend
to move to refer this bill to the railway committee?


Robert James Manion: I am coming to that point.
I submit that the railways as well as the world in general can be more hopeful today than they have been for many days past or even for years, certainly for many months. The time seems opportune for a recovery of world conditions. We are all looking forward to a world economic conference from which, if matters are dealt with in a proper cooperative and international manner, it is hoped world recovery will come. When that recovery does take place, as I sinoerely believe it
will in the near future, then the railways as well as the other industries will come back to prosperity. I submit that the outlook for the railways is far from hopeless, provided always that the trustees to be appointed are careful to carry on the management in an economical manner and provided also that there is at the same time a revival of trade in Canada and throughout the world.
In connection with the question asked by the hon. member for Kenora (Mr. Heenan) as to whether or not it is my intention to submit this bill to the committee on railways, shipping and telegraph lines, I should like to say that it is my intention to suggest submitting it to a committee of the whole house. These matters have been dealt with very fully by the royal commission. This commission travelled from coast to coast and took evidence from all those who desired to submit evidence. They heard provincial authorities, railway officers, railway employees-public bodies and individuals-any who felt that they had some contribution to make to the solution of the question. In addition, the Senate committee heard further witnesses, most of whom had appeared before the royal commission, and it is my opinion that it is not necessary to go to the trouble and expense of hearing these witnesses over again.
In closing may I say that while the principles of this bill are supported in entirety by the government, the government has no strong feeling in regard to matters of detail. We will welcome suggestions from any part of the house with regard to contributions as to details, but at the same time we feel that the royal commission has made a most careful study of the whole question and its submissions should be given fair trial by the people of Canada. After the money and time spent upon this royal commission, if proper heed were not given to its recommendations, the people of Canada might feel that its efforts had been wasted.


Charles A. Stewart: The minister mentioned the decrease in passenger traffic from 1923 to 1932 as being some 18,000.000; has he the corresponding figures for freight tonnage?


Robert James Manion: I have the gross figures
under my hand but I do not wish to give them at this moment. I shall be very glad to give any information asked for when the bill is in committee.
I should like to repeat, and I do it most respectfully, that I believe this whole question is so wrapped up with the future development of this country that it should be dealt with on the high plane of strong

C.N.R.-C.P.R. Bill-Mr. Euler
Canadianism rather than in any sense of partyism. I trust that I have said nothing which might be considered as being unfairly critical of any body or group. In making my remarks I have endeavoured to occupy the same plane which I am suggesting hon. members should occupy in dealing with this bill.


Hon. W. D. EULER (North Waterloo):: Mr. Speaker, it is not my intention to follow the minister in reviewing the financial operations of the Canadian National Railways. He has the advantage of his position in that his department can supply him with figures which are not so readily available to myself. I intend to address myself to the merits of the bill itself. May I say to the minister that as one who sits on this side of the house I can congratulate him upon the moderation of his remarks. Parliament and the country generally may be congratulated upon the optimism with which he views the future. I am afraid, however, that I cannot quite follow him when he states that a more or less mathematical miracle has been performed in the saving of 112 per cent. I used to regard 100 per cent as the limit of what could be done in anything. If the government could make the same saving in its other operations we would soon be out of the difficulties in which we find ourselves.
The minister made reference to the present condition of the Canadian National Railways and he stated that Mr. Hungerford, the present president of the road, declares that the railways are in perfect physical condition. I am glad to hear that, but would like to say, without arousing any recriminations, that admirable condition of the Canadian National Railways was not brought about in one or two years; it is the result of the good work done in years gone by.
It is gratifying that it has been possible in the last year or two to effect the great savings which the minister has mentioned to-day. However, it would not be fair to assume that such savings can be always effected in periods of prosperity. While it is true that great expenditures were made during the prosperous years of 1927 and 1928, I think it must be realized that it is not possible to effect in periods of prosperity the savings which are sometimes enforced upon us during periods such as we now have. Commercial and industrial enterprises have found it necessary to effect economies just as has been done in the case of the national railway. I do not say this by way of criticism but rather that no wrong conclusion may be drawn from the minister's observations.

As has been stated, this bill is the direct outcome of the recommendations contained in the report of the royal commission on railways and transportation, and it might be regarded as being quite in order to discuss at this time some of the features of that report. It is not my intention to do so other than to say that while I disagree emphatically with some of the opinions and inferences that are drawn in the report, I am wholly in accord with the chief purposes that the government desires to attain in the bill now before the house. I do not suppose the government anticipates or expects that this bill will cure all the evils from which the railways are suffering. If the bill carries in its present form, so much after all depends upon the good faith, ability and public spirit, if you like, of the men who will be placed in charge of those railways, that one can only say that the best results can be obtained if those people act efficiently, in a spirit of good faith and with an eye only to the good of the Canadian National Railways.
I support the second reading of the bill chiefly for four reasons. In the first place, the integrity and identity of the Canadian National Railways is preserved. I listened with a good deal of satisfaction to the assurances given by the minister that there was not in the mind of the government-and I may say I do not suspect them-any thought whatsoever that the provisions of this bill might be used for the purpose of amalgamating the Canadian National Railways with the Canadian Pacific Railway. I do say this, however, that while it may be quite true there i3 in the bill nothing which permits amalgamation, that fact might be made just a little more clear by the insertion of a clause making it unmistakable where parliament stands in the matter. I support the bill for the second reason that the establishment of a small body of trustees of three or four, as the case may be, will promote efficiency in the conduct of the Canadian National Railways. There is a third advantageous provision in the bill if it is properly carried out, and if the government would consent perhaps to make some slight changes in the method of appointing the board of trustees, this might minimize to a very great degree the harmful influences that may be exercised in a political way. Fourth, the bill provides a plan whereby it is hoped savings may be effected; that waste that has come because of the severe competition existing between the Canadian Pacific and Canadian National railways may be eliminated. These advantages, in my opinion, are thoroughly worth while.

C.N.R -C.P.R. Bill-Mr. Euler
The railway situation, as has been pointed out by the minister, is assuredly sufficiently serious to be a challenge to the patriotism, if you will, and the sense of public duty and responsibility of every member of this house. The reason for the condition in which the railways find themselves, are fairly obvious to most of us, although there may be some differences of opinion. First, there is the depression which has affected all lines of business and perhaps more particularly the railways. Then there is the contraction of trade, the lack of freight to carry over the railways, the wasteful competition between the two great railway systems and the competition with which the railways have been obliged to deal so far as another method of transportation is concerned, that of the truck and automobile. I would second the wish of the minister when he says that he hopes we may approach this whole question in a spirit free of prejudice, free of partisanship, and with the single purpose of cooperation in the national duty of doing what we can to relieve the country of this burden which has been placed upon us by reason of the depression in the business of the Canadian National Railways and throughout the country generally. The Senate have shown us a very good example; they have discussed and dealt with the question on a patriotic and purely business basis, hoping to do what they can in the interests o>f Canada itself. I might, if I cared, refer to a few exceptions to that, but I shall refrain from doing so.
In addition to the matters mentioned, I would not forget that there are in the bill other provisions which are of some importance, but quite subordinate to the four I have enumerated. The bill provides for a continuous audit, auditors to be appointed by parliament and reports to be made by them direct to parliament. It provides for the separation of the chairmanship of the board from the presidency of the railroad, and I shall have something more to say with regard to that. It provides that all bond issues shall be made by the federal government rather than by the railway itself. It provides further that there shall be no more funding of deficits. These matters are not new and I imagine they are placed in the bill not entirely by reason of the recommendations made by the royal commission, but because our parliamentary committee on national railways and shipping in the past has made these very recommendations coupled with the further one, that we are in favour of a reduction in the number of those who are to form the board of management of the Canadian National Railways.	.
I should like now to discuss the three parts of the bill. The first provides for the substitution of a small board of trustees for the present cumbersome board of management of seventeen, if I may call it such without casting any reflections upon its present members. I believe, as a business principle, a small body of men will do better work than a very large body such as we have. Let me say this further: Perhaps the government will accept a suggestion that I am going to make a little later. I believe by the composition of this board, it might be possible, as I have said before, to exercise political patronage and political influence upon the conduct of the railway. I have never favoured the appointment of the former boards upon the basis of political preference, I am not criticizing any one government more than another. Quite frankly, I believe it has never been in the interests of the Canadian National Railways that in the appointment of that board of sixteen or seventeen directors, any consideration should have been given to the political persuasion or complexion of the members of the board, or to geographical considerations. If there is a small board of trustees of three, although my mind is open as regards increasing that to five, it will be possible to eliminate from the appointments the matter of allotting a member to British Columbia, or the prairie provinces, or Nova Scotia, or any other province. Appointments should be made with certain qualifications in view: first, with reference to the ability of the men who shall be appointed; second, that they shall be men of integrity-and that goes without saying; third, that they shall possess something of the spirit of public service-that is important-and finally-and this is almost of paramount importance; at least it seems of great importance to me- that the men who will be selected as the board of trustees shall be men who believe in the principle of public ownership.
I approve entirely the provision which states that the board shall be responsible to parliament; that may mean responsible to the government, because the government, after all, controls parliament. I believe also it is a good step that the president of the road, who will be the chief operating officer, should be appointed by the board of trustees and responsible to that board alone. Again, although it is perhaps not of great importance, it does not seem appropriate that the chief operating officer of the road should be designated by the name "president." It would be more appropriate and descriptive if you called him the general manager of the road, and the term "president" could be much
27S0
C.N.R.-CI'.R. Bill-Mr. Euler

more fittingly applied to the chairman of the board of trustees. I merely make that suggestion in passing. I believe also that if you have only three trustees, all the trustees should give their whole time to the work, and that not only the chairman but all should be well paid; and if there are only three, or even five, the majority should rule, and the chairman should not have supreme authority.
Just a word with regard to the method of appointment. The1 initial board which will replace the present board is to be appointed by the governor in council, by the government itself. Succeeding vacancies, no matter how caused, by the effluxion of time, by resignation, if you like, by the death of a member of the board, shall be made on an entirely different plan. These succeeding vacancies shall be filled from a panel of eight men, which panel is to be selected by a body consisting of the chairman of the Board of Railway Commissioners, the chief of the Exchequer court and the two remaining trustees. I have no fault to find with that because if it is carried out in good faith it will be possible to give at least the impression which I hope would be based on fact that politics does not enter into the appointment of these men. But I would point out this anomaly. While these succeeding vacancies are to be filled from a panel of eight men selected as I have indicated by this group of four, the government thereby recognizing the principle of nonpartisanship in the composition of that panel and in the appointment of the board of trustees, if that principle is sound in the filling of succeeding vacancies, it ought to be just as sound in the appointment of the original board of trustees. The suggestion I desire to make is this, that this first board of trustees, which appointments the government will make, shall be appointed from a panel of eight selected by the chairman of the Board of Railway Commissioners and the chief of the Exchequer court, and two others as a result of a consultation of the members of this house, all parties included. If the government would do that, I think they would give the impression. and honestly I think, that it is their real desire to remove as far as possible from the administration of the Canadian National Railways political influence and political pull, if I may put it in that way.
We have a precedent for that. When the chief electoral officer of Canada was appointed some years ago, the then Prime Minister consulted with those then leading the opposition and an agreement was reached, and the gentleman who was chosen as a result of that consultation served in a manner that was entirely satisfactory. I just want to impress that once
[Mr. Euler.l
again on the government. If the government sincerely desires, and I do not question their motives for one moment, that the people of Canada shall be impressed with the fact that in the conduct of the Canadian National Railways politics does not enter, and it is a bad thing I will say when politics does enter into business, I think they might very readily accept the suggestion I have made or something similar which would eliminate as far as possible the suggestion of political influence in the appointment of the initial board of trustees.
With regard to part 2 of the bill, I may say that I regarded that as of relatively little importance. It seemed to me that it expresses what is sometimes spoken of as merely the pious wish that the railways should cooperate in the cutting out of useless expenditures, with a solemn injunction to them to do so. But the teeth which are in the bill to implement that pious wish are to be found in part 3.
Before leaving part 2 of the bill I want to make a reference to the matter of amalgamation. The minister assured us during the course of his address that the government had not the slightest desire that anything in this bill should be used for the purpose of merging the Canadian National Railways and the Canadian Pacific Railway, and I accept his word for that. But there was in the original draft of the bill that went to the Senate a clause which has since been elmin-ated, and which reads as follows-it was subsection 2 of section 16:
But nothing herein shall be taken to authorize any amalgamation of any National company with any Pacific company.
I have not followed throughout the proceedings of the Senate committee, but I am curious to know why that clause was cut out.


Robert James Manion: If my hon. friend will permit me to answer now, I did not know that the clause had been cut out until very recently and then I made inquiries from the leader in the Senate and others and found that it was cut out because it was considered as surplus words, that there was nothing in the act leading towards amalgamation or that authorized amalgamation, and that therefore the words were not necessary.


William Daum Euler: I think I heard the Prime Minister say that it was foolish to insert that clause.


Richard Bedford Bennett: Surplus.


William Daum Euler: Perhaps he is quite right. But I would read to him the statement made

C.N.R.-C.P.R. Bill-Mr. Euler
by a rather prominent barrister in the city of Toronto. I shall not read the whole of his statement, but he said in part:
Under the act as it now stands, it is possible to legally disembowel, dismantle and ruin the Canadian National Railways unless a plain, unambiguous clause or section is inserted and made part of the act, preventing and prohibiting any amalgamation, merger or transfer of any of the funds, revenues, business, properties and assets of the Canadian National Railways to or with the Canadian Pacific Railway.
I bring that up merely for the purpose of ensuring that there can be no doubt whatsoever with regard to it. There are some people-I believe there are some on this side of the house as well as throughout the country -who do have the fear that under this bill it may be possible by certain action to effect amalgamation of the Canadian National with the Canadian Pacific, and I would ask the minister, the Prime Minister, and the government whether it would not be worth while, in order to remove the fears of these people, to reinsert this clause that was deleted. If it does not do any good, it can certainly do no harm. I leave that for the consideration of the ministry.
I would certainly say that if ever amalgamation does come, and it may come some day, it should not be possible for this board of trustees. to consummate such an amalgamation. Parliament should deal with the question, and perhaps it might even be advisable to submit it to the people of Canada in a general election.
Lastly I come to part 3 of the bill. Part 3 which deals with what is sometimes called the compulsory cooperation of the two railway systems. It is intended to eliminate wasteful competition and to save money for both railway companies I suppose, but primarily for the Canadian National Railways. I may say in passing, Mr. Speaker, that I think it is the duty of this parliament, when endeavouring to do something for the Canadian National Railways, to do no injustice to the Canadian Pacific Railway.
Ordinarily I do not believe a great deal in compulsion, and when I first read the recommendation of the commission in that respect, and first saw the bill as introduced into the Senate, I had no great confidence that this compulsory cooperation would be very successful or that the clause would be very valuable.
I am not sure that I have changed my mind. Compulsion and cooperation do not go very well together. Cooperation implies voluntary action, not compulsion. But it may be that in the public interest compulsion sometimes becomes necessary. If it does become necessary, and the results one hopes to attain through compulsion can be obtained in no other way and are for the general good of the Canadian people as well as for the good of the Canadian Pacific Railway, then I believe I might strain a point and support even that.
One further word vrth regard to amalgamation: The minister referred to the term to-day, and I have mentioned it myself. It is idle at this time to argue concerning amalgamation. For the time being at least I think it is set aside, and I would not bring it up now were it not for the intensive campaign or propaganda that is being carried on by certain people who advocate the merging of the Canadian National with the Canadian Pacific railways. The president of the Canadian Pacific Railway-and I do not blame him for his activity, because he is acting in the interests of his shareholders-is of the opinion that the only solution to the railway problem of Canada lies in the amalgamation of the two roads and, of course, by preference, amalgamation under private ownership. A-t the risk of being tedious and saying something I have said in the house before, may I repeat that so long as ten years ago I suggested to the then government that it might be advisable to canvass the whole railway situation with a view to possible amalgamation. I believe everybody recognized at that time that there was a great deal of waste and duplication of services, and some of 'the difficulties mentioned by the minister this afternoon.
I made the statement then, and had it on very good authority, that at least $75,000,000 a year could be saved by a merging of the two roads. My suggestion was not acted upon at the time. I made it again last year, and the year before. Now we have Mr. Beatty of the Canadian Pacific Railway making the same claim-although it is contradicted by the president of the Canadian National Railways-to the effect that $75,000,000 a year could be saved by amalgamation. If that had been true, and if action had been taken ten years ago, by this time we would have saved an amount equal to about one-third of the national debt. I agree with Mr. Beatty that we could effect a tremendously greater saving by amalgamation than by any such plan as provided in part III of the bill. I realize it is impossible to do anything in that connection at this time, and I know further, the arguments that are levelled constantly against amalgamation. May I say, lest I embarrass
C.N.R.-CJP.R. Bill-Mr. Euler

hon. members on this side of the house, that on this point I speak for myself and for nobody else, knowing full well thait many hon. members who sit about me disagree with me at times.


Mr. McINTOSH:: That is a wise thing to do.


Mr. HOWARD:: That's playing safe.


William Daum Euler: I speak entirely for myself, and for no one else. I should like to answer the argument which is brought constantly and which, so far as I am concerned, has no force, namely that in all cases monopoly is bad. I say without, fear of successful contradiction that there is a world of difference between privately and publicly owned monopolies. The objectives in the two systems are entirely different. In private monopoly the motive is profit; in a public monopoly the motive is the best of service at cost. In a public monopoly no good can be done by any one trying to take advantage of the public, because the public itself is the owner of the monopoly.
The suggestion of an amalgamation is not particularly new, and at the moment I am not urging it. But even in France, in view of the fact that privately owned roads are losing millions and scores of millions of dollars, we find the Minister of Public Works making a suggestion that the state take over the railways. In Italy the roads are owned by the state. Those roads some years ago were handed over on a leasehold to a private railway concern. The result was that there was constant bickering; the railway company was constantly complaining that it could not get the money necessary to carry out capital expenditures to put the roads in condition. The government and the people complained about the service, and finally the state took the railways back under state control. There is state control in Germany and Australia, and at the present time there is a movement in the United States whereby the multitudinous number of roads in that country are gradually being combined under four great systems. Possible amalgamation may take place later on.
I know that at the moment there is no use arguing in favour of amalgamation, because at this time I do not believe the people of Canada desire it. I do say, however, that if amalgamation does come the people of Canada will not stand for a private monopoly of the -railway business. If we are to have amalgamation it must be publicly owned.
[Mr. Euler.l
There are just two other points I should like to mention in connection with the campaign which has been carried on by the president of the Canadian Pacific Railway. He has stated in his speeches that in the last few years the country has suffered a loss of about $85,000,000 a year on Canadian National Railways account. While in a sense true, that statement is misleading because it includes the $35,000,000 interest on the debt which was created, very largely before the roads were taken over. It includes the advances that were made by the Dominion government to those railways which now comprise the Canadian National railway system, an amount of money which in my opinion should have been written off long ago, an amount which if written off would not save the Canadian people from the payment of interest, but at least would put the principle of public ownership on a basis where it could fairly be compared with a system under private ownership.
When the suggestion is made that the Canadian National Railways should merge with the Canadian Pacific Railway I believe the impression is conveyed, whether intentionally or not, that we would then be rid of the tremendous loss which we suffer in connection with the Canadian National system. When that is suggested I believe the Canadian peo-ple would do well to turn to the words of Mr. Beatty,, as they appear at page 914 of the proceedings of the royal commission. They are as follows:
I also dismiss the possibility of a change involving the transfer of the government lines, subject to their existing obligations, to a private company. No private corporation could assume the enormous obligations which the government railways are under. If it did, the project could never be made to yield a profit and the company would find itself unable to finance the undertaking.
In other words, if we did hand the Canadian National Railways over to the Canadian Pacific Railway we would still have to pay the interest on a large part of our obligations because, as Mr. Beatty said, the Canadian Pacific Railway would not assume them. We would be in the position that the Canadian Pacific Railway would probably have a profitable enterprise and the Canadian people would still be paying the shot by way of interest on liabilities.
To the relief of the house I am about to discontinue my remarks in connection with amalgamation, and shall consider part III of the bill. The purpose of part III, as the minister has said, is a worthy one. It provides for the elimination of wasteful com-

C.NM.-C.P.R. Bill-Mr. Hackett
petition, covering joint use of terminals, running rights, joint use of tracks, new line and duplication of old lines, abandonment of lines, and the pooling of freight and passenger traffic. If one road makes a suggestion that the other road agree to eliminate a service which appears to be extravagant and wasteful, and the other road refuses to accede to the wishes of the first road, there is provision for the appointment of an arbitral tribunal. A tribunal is appointed for each separate dispute. The point I would like to make, in connection with these tribunals, apart from the extreme degree of authority given to the chairman of the tribunal, is that the railways alone can initiate the arbitral tribunal-I think I am correct-that no one else, no matter how far the public interests were prejudiced, can initiate an arbitral tribunal. The chairman always is the chairman of the Board of Railway Commissioners, and there is one representative of the Canadian Pacific Railway, and one of the Canadian National. The chairman is supreme, because decisions cannot be made without his consent. Naturally each representative of the railway would adhere to his own view, the chairman gives the decision, so that in effect the chairman is the one who makes the decision. His decision is final; there is no appeal from it.
My criticisms in connection with the arbitral tribunal plan are these: first too much power in the hands of one man; second-this criticism is made by others and I do not place so much stress upon it, but it is made by the Canadian Pacific Railway-compulsion is unfair to the Canadian Pacific; and third that the public is not protected; and that is the strongest criticism that I have to make. It should be possible for the public to initiate an arbitral tribunal. I make the suggestion for the consideration of the government and the house, that so far as the one man power is concerned, that could be avoided if additional powers, such as are given now to the arbitral tribunal, were vested in the present Board of Railway Commissioners, and that a majority there should decide. With regard to the matter of compulsion I might make this suggestion for what it is worth, that you would get rid of that factor if these disputes were referred to a body similar to that which acts under the Industrial Disputes Act. Their decisions are not compulsory, but usually, if they are fair, and I think ordinarily they are, public opinion would see that they were brought into force.
In conclusion I would say that, after all, the working out of the provisions of this bill will succeed exactly in the degree that it is done in good faith. If a good board is
appointed, a capable board, non-political, a board that is not concerned with anything but the good of the railways, and that believes in the principle of public ownership, I think good may result. If I thought for one moment-I do not-that it is the intention of the government or anyone else that this bill shall lend itself to the amalgamation of the roads without the consent of this house or the people of Canada, I certainly should oppose the second reading of the bill. I prefer to believe that the government, that parliament, that the trustees to be appointed, are sincere in an effort to do what can be done to relieve the people of Canada of the burden now oppressing both railways. I shall therefore vote for the second reading of the bill, reserving always the right to make such suggestions or amendments as may seem desirable when the bill goes into committee of the whole house.
Mr. JOHN T. HACKETT (Stanstead): The discussion on this bill falls within rather narrow limits. The remarks of the hon. gentleman who moved the second reading (Mr. Manion), as well as of the hon. member for North Waterloo (Mr. Euler) who has just spoken, show that the bill will have substantial support from both sides of the house. I do not think any useful purpose can be served by retelling the long story which brought about the investigation and the findings which underlie this bill. My hon. friend from North Waterloo is an ardent and consistent believer in public ownership. He could not therefore refrain from inviting the government to select for trustees under the act adherents of his own economic theory. He is hopeful that men who believe in the principle of public ownership shall be selected for these very important offices. That probably is a natural suggestion from one who entertains his views. But he surely does not expect those who entertain contrary views to be very much moved by the suggestion. He has told us that railroads are publicly owned in other parts of the world; he mentioned Germany, where I think public ownership was adopted for military purposes. He mentioned France, where the roads are with some exceptions publicly owned, to the great dismay of the population and the disarray of their finances. In Australia the railroads are publicly owned. Almost every possible plan of administration has been tried, and the railroads continue to be, as with us, the principal burden and item in public expenditures. My hon. friend from North Waterloo wishes that politics, which he considers a baneful influence in the administration of railways, should be 'banished therefrom.

C.N.R.-C.P.R- Bill-Mr. Hcickett
I think many of us share that wish, but after all when ownership resides in the public I think that the owner, expressing his views through the politician, his mandatory and spokesman, will inevitably and always find a voice. The hon. member for North Waterloo warned the house that he was speaking for himself alone,
I too can say that as far as I am concerned I am not sure that if public ownership is to prevail it will not bring fewer evils in its train, if administered honestly and openly, as the other public undertakings of this country. We have got into serious trouble with our railways largely because, being publicly owned and subject to political influence, we have endeavoured to shield them and ourselves from reality by putting them under what is called independent administration. I do not believe it is possible to have administration which is entirely free from the influence of ownership. So long as we have public ownership of railways, public men are bound to exercise a certain influence over their administration no matter what safeguards surround it. I will ask the house, taking it for granted that a tremendous debt has been placed upon the country as a result of the public ownership and administration of the railways, whether this debt would have been as large, whether our position would have been as perilous if these roads had been administered-with all the ills and evils of partisanship and politics-by a responsible minister of the crown who was subject to the curiosity, to the criticism and control of a vigilant parliamentary opposition. I doubt it very much indeed.
Be that as it may, my task is to discuss very briefly the three or four salient aspects of this legislation. The train of events leading up to the legislation is well known to the house. We have invested in railways $2,600,000,000 and, roughly, half of that amount is owing to the public. The interest on the amount that is owing to the public is about $60,000,000 a year. To find the money necessary to refund and retire maturing obligations; to find the money necessary for capital expenditure, for interest on obligations, and latterly for income deficits, we have borrowed. We have borrowed continuously and consistently until, as I said a moment ago, the amount now owing to the public by the railways is about $1,300,000,000. A very substantial portion of this amount is guaranteed by the government of Canada. About two or three hundred millions are not contractually guaranteed by the government but are effectually guaranteed inasmuch as the debt is^ a lien upon the entirety of the enterprise which is operated as a whole.

The full cost of railway transportation must be paid by the classes served, by the taxpayers of the time, or charged to the future with compound interest. To spread this cost over a long period in the name of constructive benevolence is the course which we have followed until now. We are told that our borrowing power is exhausted; in fact, there is in the bill a provision which .makes it illegal to borrow for the purpose of paying income deficits. The royal commission was appointed to find a solution for this problem. It was appointed to examine the whole transportation problem and if possible to find a way out which would relieve the country and in particular the taxpayer. After considering the problem in all its aspects it brushed aside the possibility of amalgamation either by purchase or by lease. The reason given was that amalgamation was inopportune at the moment. Another reason given was that it would be unwise to formulate in a moment of stress a definite policy which might be unsuited to more normal times. That leads one inevitably to the conclusion that this proposal embodied in the report of the commission and reproduced in the bill is but a temporary expedient and does not contain any final disposition of the railway problem.
The bill aims at bringing some relief to the Canadian taxpayer and it finds that the only way that it can do this is by reducing the cost of operation. It cannot reduce the debt; it cannot increase the earning power; so that the only method left is to reduce the cost of operating of the roads. It proposes to do this in a hitherto untried way. Had amalgamation taken place either under private or public ownership, the owner would then have reduced the railway system to the size, needs and capacity to pay of the Canadian people. This bill, while maintaining the identity of ownership of both the privately and publicly owned roads, attempts to bring about this elimination of unnecessary equipment, mileage and service, by a method which, so far as my investigation has carried me, has never been tried before. The method is euphemistically called cooperation, but it is a type of cooperation which is to be coerced if it is not voluntarily entered into. I cannot see how either party mentioned in the bill can be expected voluntarily to lop off large portions of its system. It is admitted that we have too much mileage; it is admitted that we have too many trains, and it is admitted as a consequence we have too many men in the employ of the railroad companies and that, therefore, it is necessary to reduce the mileage in



C.NM.-C.P.R.

[Stage Direction]
operation and to eliminate the service and equipment which duplicates in any form that given by the other line. The tribunal will have not only the right but the duty of determining where this elimination can most properly take place. Naturally the Canadian National will not be disturbed very much by_ the exercise of these arbitrary powers; it is owned by the people of Canada and indirectly administered by the government of Canada and the creation of a tribunal by parliament will subject the Canadian National to no new control or master. But it is not so with the Canadian Pacific; that road will find itself subjected to the rulings of a tribunal which will have the right to say: this portion of your road you shall no longer use; this station shall be invaded by your erstwhile rivals, or this ticket office shall be closed. In other words, the government will be actually controlling private enterprise and stating how far it may exercise the rights which up until now have been limited only by the statute of its incorporation and by the jurisdiction of the Board of Railway Commissioners. This is a new principle applied to the business life of our country, and whether or not it will be applied tomorrow to the operators of cotton mills, to the growers of wheat or to other branches of our financial, industrial and economic life remains to be seen. It may even contain the germ of the new order toward which all eyes are turned. However, it is an experiment and an experiment which cannot be looked upon with equanimity by both parties affected by the bill. The one will remain under the control of its owners, the other passes under the control of an alien power.
Can this legislation remedy the railway ills of the country? By cooperation, voluntary or coercive, by the elimination of duplication and the loss and waste incident to competition, can we hope that the revenues from the Canadian National Railways will be equal to the carrying charges of the debt which now weighs upon the Canadian National Railways and their owners, the people of Canada? The minister has told us of the great effort which has been made by the officers of the Canadian National to reduce the expenses of that road. I am not in a mood to criticize or to carp, but if the expenses could be reduced by 112 per cent, the road must have been generous if not lavish in its expenditures in better days.
Even though this bill bring all the relief that its most ardent adherents hope for, the railway problem will not be solved. Let no one be lulled into the belief that the passage of this bill will extricate us from the diffi-
Bill-Mr. Hackett
culties incident to the ownership and administration of this vast transportation system. Before we have disposed of the problem not only will highway traffic have to be brought under control, as suggested this afternoon by the minister, but a closer investigation will have to be conducted into the competition offered by our canals. We have spent millions, yes hundreds of millions upon our canal system. We permit foreign boats to leave the port of Vancouver, let us say, go through the Panama canal where they pay tolls, come up the St. Lawrence river and through our canals, which are toll free, and penetrate 2,000 miles inland in competition with our railways. I submit that that is a type of competition rather difficult to justify, especially in these days when the Canadian taxpayer is under such a heavy burden.
There is another aspect of the railway situation which the royal commission seems to have overlooked, that as the relationship between the railroads and the railway employees. I am aware that the railway employees are highly organized, that they are a very valuable element of our population, intelligent, industrious and law abiding; but the fact remains that the scale of wages and the operating rules under which they ply their trade are unusual and exceptional. If members of certain branches of the running trades drive an engine a hundred miles in a couple of hours they have done a day's work. If a crew is called out for a short time, again it is treated as if it had done a full day's work., I am not anxious to take away from the Canadian railway employee anything to which he is fairly entitled, but if this problem is as serious as we are told on all sides and as we have been told by the royal commission itself that it is, it seems to me that we shall have to scrutinize more closely the conditions of labour as well as those of the pay of that vast army of railway employees.
There are aspects of the bill which do not greatly appeal to me. The centralized power in a board of three trustees has elements of strength; it also has elements of peril. In a moment of stress and of emergency it may well be that a small and highly concentrated board of this type can render useful service. But one of the great ills of the years just passed has been the tendency to merge, centralize and concentrate, with the result that the outlying districts have been neglected for the big centres, the cities, rvith the consequence that the strong have become too strong and the weak have become weaker.
[Stage Direction]
C.N.R.-C.P.R. Bill-Mr. Heaps
I fear that in this highly centralized organization there are possibilities of trouble which, in other times at least, should be avoided.
The hon. member for North Waterloo (Mr. Euler) made some reference to the fact that the president was supreme in the arbitral tribunal. I suggest to him that if he reads carefully clause 23 of the bill, he will see that it is only in certain cases that the assent of the presiding officer is necessary and, furthermore, that the criticism which he levelled at the president of the tribunal is not wholly justified, because it is stated in the next section to that to which he referred, that_ a majority of the tribunal shall determine its decisions.
But if there are some features of this bill which are not attractive to me, I feel impelled to support it for several reasons. In the first place, it embodies the result of an investigation by men who were eminently qualified to undertake it. True, it is an experiment; true, it invades or seems to invade private property and makes one wonder whether this is not the introduction of a system of state control which, if carried to extremes, might arouse severe controversy throughout the country. But it is a studied and serious attempt to meet the situation; it is an attempt by a government which is confronted by a multitude of problems, to meet the most serious of our financial difficulties. These are times when I believe a government should be upheld, steadied and supported, almost at any cost. I cannot foretell that the administration of this act will be unfair. Furthermore, this measure is put forward as a temporary means of meeting an emergency, and as such I shall support it, not gleefully, not cheerfully, not even hopefully, but under the dictates of duty, praying that it may do something to arrest the growth of debt resulting from the public ownership of our railways, and something to cure this running sore which has sapped our national life for the last ten years.
Mr. A. A. HEAPS (North Winnipeg):: Mr. Speaker, there are a few observations I desire to make upon the second reading of this bill. I wish, however, to approach the question from a somewhat different angle than that from which it has been approached this afternoon. I have no desire whatever to go into the relative merits of public or private ownership. We find in those countries where the railways are entirely under private ownership they are in exactly the same, if not in a worse position than are our own. I have only to cite the condition of the railways in the United States and Great Britain to show that

my statement in regard to public ownership is correct.
I am in agreement with what the hon. gentleman (Mr. Hackett) who has preceded me has said in regard to the canals of this country. According to a report recently submitted to the house, if we allow a certain amount for interest on capital expenditure on our canal systems, it will be found that the annual interest charges will amount to somewhere in the neighbourhood of $14,000,000, while the return for that expenditure is extremely limited.
The previous speaker has made a sort of veiled attack upon the situation of the men employed on our railways. The condition of most of those employees entitles them to a good deal of our sympathy and consideration. When it is realized that on the railroads of this country including the railway shops only from ten to sixteen days per month is being worked, and that the average wage of all men employed on our railroads from the top right down to the bottom is from 55 to 60 cents per hour, the hon. gentleman who preceded me will get some idea of the conditions at the present time amongst the men employed on the railway systems of this country.
With what the hon. member for North Waterloo (Mr. Euler) said in the house this afternoon I am happy to find myself largely in accord. I wish I could say the same regarding the address of the Minister of Railways (Mr. Manion). I listened very attentively and with appreciation to the very able presentation he made of his case and to his very frank statement. There are just one or two observations I wish to make with reference to some of his statements, and first of all with regard to the character of the men who were appointed to the Duff commission to investigate the railway situation in this country.
The commission was composed of seven gentlemen, no doubt all very estimable in their own way. I find amongst them a lawyer, a doctor, a professor, a bank president, a financier, a gentleman from the United States and a gentleman from Great Britain. The Minister of Railways very frankly stated this afternoon that the appointments from Great Britain and the United States to that commission were made for the purpose of giving protection or representation to the investors in bonds and railway security holders residing in Great Britain and in the United States. Well, Mr. Speaker, if we are going to solve our problems in this country, as naturally I want to see them solved, I believe that we have suffi-

C.N.R.-C.P.R. Bill-Mr. Heaps
cient intelligence within our own dominion to solve our problems without importing people from outside. In that respect I happen to be a very high protectionist; I believe in a Canada first policy.
But we have in this country a very large element which is also deeply interested in the railway problem. I refer to that vast element which is commonly called the labouring element, the men who work on our railways to the number of 175,000, and many others outside the direct employment of the railways, who received absolutely no representation on this commission. I feel that if the investors in the United States and Great Britain were entitled to representation on the commission because of the money interest, the human element, our own Canadian people, were just as much entitled to representation as were investors in railway securities in other parts of the world. While most of the commissioners did not consider the railway problem from what might be termed a party bias, I am satisfied that many of them did have a certain bias in a certain direction when considering this problem, and I believe that their bias was more in favour of the investors, bondholders and stockholders than in favour of the welfare and well-being of the people of this dominion. I remember meeting one of the commissioners for the first time in my life after the report had been made, and discussing It with him. I put this question to him. "You have considered this railway problem and made your recommendations, and no doubt as this process of cooperation goes on between the two railways large numbers of the employees will be eliminated from the [DOT]services. What consideration I asked, did the *commission give to that aspect of the question?" The answer was very simple. He said that they gave no consideration to that aspect *of the question. When I pointed out that these men had given a great deal of service [DOT]and endured sacrifices in helping to build up the railways of this country and asked what he was going to do with regard to the men -who would be so unfortunate as to lose their -positions, the only answer I could get from this gentleman who investigated the problem -was that it was of course a most unfortunate -situation, but nothing could be done.
In the first place, Mr. Speaker, I claim that the present situation in which our railways find themselves is due not directly to the policies of the government, present or past, but rather to the economic conditions prevailing throughout this country, and we are now proposing to pass emergency legislation in order to create a prosperous railway situation in this dominion amidst the present dis-53719-177
tressful economic conditions. , Personally I do not think it is possible even with the economies that may be effected under this bill, to bring about a condition of affairs where the two great railways in Canada will be placed in what might be termed a prosperous condition.
The Minister of Railways claimed that the railway problem was the most important problem that we have to face at this particular time. I do not agree. I think that the greatest problem in this dominion that we have got to face at this time is the unemployment problem that is now before parliament. But assume for the sake of argument that in some way we even partially solved the railway problem; at what expense are we going to solve it? We could partially solve that problem only by adding to the vast numbers of those who are already unemployed in this dominion.


Mr. POULIOT:: Both problems are connected.


Abraham Albert Heaps: I am quite ready to admit
that there is a connection between the two, but if we are going to solve, or partially solve, the railway problem by intensifying the unemployment problem, our national problems would still be in relatively the same position as at present. Until we get down to a more fundamental basis and deal with the whole of our national life and solve our unemployment problem before we attempt to solve the railway problem, I can see no hope of our solving the railway problem. If the government is going to legislate in the interests of the railways to help them solve their problems, I have a right to ask the government that they should help to solve other national problems, and the first problem to which I would direct their attention is the unemployment problem.
Secondly, I would suggest that they do something to solve the farm problem, which is an extremely serious one in this country. I think that point was stressed by the Minister of Railways himself this afternoon when he pointed out that unless we have a prosperous farming community, particularly in the three prairie provinces, there is no hope practically of our national economic life being readjusted.
Furthermore, I think that when discussing these financial questions and other problems that we are asked to consider, our first consideration should not be the dollars and cents; but first consideration ought to be given to the human element which is the very backbone of this dominion. If the basis

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

of cooperation suggested under this legislation is carried out by the railways of Canada, it is bound to mean abandoned rails and bridges, and a certain amount of abandoned equipment, but on all that abandoned equipment we shall have to continue to pay interest charges even though it may never be used again. On the other hand, 1 would point out that it will involve putting out on the streets, and adding to the number of those already unemployed, men who have worked on our railways during the best years of their lives, which they have given to building up the railways of this country. I point that out to show how differently we treat the owners of capital and the human element, our own people here in this dominion.
It was pointed out by the president of the Canadian Pacific Railway that about 83 per cent of the securities of that railway are owned outside of this dominion. I do not know just what the .proportion is in the case of the Canadian National, but if I am asked to choose between the interests of the men employed on the railways and the interests of the foreign bondholders, I am going to choose the interests of the men employed on the railways, and that is the difference between my attitude and that of those who have preceded me in considering the question that is now before the house.


Jean-François Pouliot: This is a sound policy of Canada first.


Abraham Albert Heaps: A few weeks ago the president of the Canadian Pacific Railway, speaking in the city of Winnipeg, made the following reference to those whom he represented. This was his statement, as it appears in a little pamphlet which I presume most hon. members have received and read:
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 these circumstances, prevail. This is not regulation; it is the assumption of complete powers of administration without financial responsibility.
I am attempting to point out that the president of this large railway organization says, in effect, that in reality he is representing the security holders of that corporation. From my place in this house I prefer to represent the Canadian people as a whole who have no doubt a much larger interest in the Dominion of Canada than have any of the bond or policyholders of either of the two great Canadian railways.

In this bill, to a very large extent, we are being asked to cut down on services and personnel for the purpose of protecting the foreign security holders of our railways. That, in reality, is what the measure amounts to. I have no desire in any way to prevent people who have invested in this country from receiving the protection to which no doubt they are entitled'. I believe however that I owe a duty to the people I represent in this house. Therefore unless there is some provision made in the bill which in some way will give protection to the men who may be affected by the proposals contained in the bill, I cannot say that I shall be disposed to support it.
I know there have been many economies effected in the administration of both railways. I realize fully that many of the men employed have been discharged, although some of those employees had been in the service of the railways for terms running up to twenty years. They have received no remuneration or consideration for the services they have rendered either to the railways or to the dominion. In connection with the bill however we find ourselves in a somewhat different position. By the legislation before us we would be putting into effect certain economies which would mean the displacing of large numbers of employees, and depriving them of positions which had previously enabled them to earn their livelihood. If this legislation is going to have the effect I have described, then I believe we ought also to see that they receive exactly the same protection as the bond and security holders. If we dismantle part of our railway system, the people who own the bonds of the dismantled parts will receive their interest charges on the debt guaranteed by the dominion. Why should not a human being be in as happy a position as a man who owns 12,000 worth of bonds. Yet by this legislation we may put thousands of men on the streets, men who have no prospect of being reabsorbed into industry.
I should like to suggest that if as a result of the legislation before us large economies are going to be effected on the railways, I feel a fairly large part of the moneys saved should be placed in a reserve fund. That fund could be augmented by a contribution from the state, and could be utilized to give relief to those men who have been displaced until such time as they can again .be absorbed into industry. If such action were taken, I believe to a very large extent the hardship which would result from the legislation before us would be mitigated. I make that suggestion because with the legislation before us I believe we are in a position different from that in which we were previously. If no such legis-

C.N.R.-C.P.R. Bill-Mr. Hanson (Sunbury)
lation had been, placed before the house by the government I have no doubt that the men affected by changes would be in the same position as men whose services had been dispensed with previously. Those men would be placed in the army of the unemployed. But now that the government is taking a hand in the situation I feel the first thing we ought to do is to make provision for the men who, as a result of the legislation, will no doubt in the very near future find themselves without the means of subsistence.
I feel that perhaps we are emerging into a new period in the history of our economic life. We see evidence of that around us every day. I do not have to point out what is taking place in Canada; we learn of what is taking place across the border line. If we are to solve the problems with which we are confronted, I do not believe we can solve one problem by creating another of greater magnitude. So in connection with the railways, we will not solve the railway problem if in doing so we create another army of unemployed. In the speech he made at Toronto Mr. Beatty pointed out that if all the railways were amalgamated they could get along with about seventy-five per cent of the present personnel. I know there is no talk about amalgamation; it is not proposed in the bill. However, I must say that at times the dividing line between cooperation and amalgamation is so very thin that distinction between the two is almost impossible. Of course, actually in the one instance there are two companies, and in the other only one. However, as far as the men employed are concerned the difference is not very great. It makes no difference whether a man on a railway loses his job through cooperation or amalgamation, he loses it just the same. So, if the prospects are that in the immediate future as a result of cooperation between the two railways 20,000 men will be let out, with no opportunity whatsoever of absorption into the economic life of the country, I think one of the first duties of parliament is to see that we take action which will prevent those people from becoming a burden not only upon themselves but upon the country as a whole.
Therefore in the observations I have made this afternoon, in the interests of our own Canadian people I express the hope that parliament will consider the possibility of additions to our unemployed army because, as I have previously stated, we will not solve our railway problem by simply adding to the great number of unemployed in our dominion.
53719-177J


Mr. R. B. HANSON (York-Sunbury):: Mr. Speaker, I desire to make a few observations at this time, because I consider the measure before us the most important problem with which parliament will have to deal at this session. Because the railway position in Canada has reached sudi stupendous proportions and its effect on the body politic is so great, and because it bears so heavily upon the welfare of our country, I believe all who have studied the problem ought to give the very best consideration to the bill before the house.
In opening may I congratulate the Minister of Railways and Canals (Mr. Manion) on the very reasoned statement he has given to parliament and to the country. While I am no flatterer I think I can honestly say that the hon. gentleman has enhanced his reputation on the floor of this house by the deliverance which he made to-day. With practically all the statements that he has made we find ourselves in agreement. With the remarks of my hon. friend from North Waterloo (Mr. Euler) I find myself also in agreement on nearly every point, the saving exception being his statement, as ' a strong believer in the principle of public ownership, that only believers in that principle should be found on the trustee board. I do not think that it would be the reasoned opinion of this country that only those should be appointed to this proposed board who have demonstrated that they are believers in that principle alone. May I say that many of the best businessmen in this country are not believers in the principle of public ownership, and if the position of the hon. member were maintained in that regard I think he would find .that the limits within which to choose a trustee body would be very narrow indeed.


William Daum Euler: Oh no, no.


Richard Burpee Hanson: Well, I
am only .expressing my own opinion, as I assume he was. While we all know that he has been at all times a very earnest and consistent advocate of the principle of public ownership, yet he will give to those of us who do not agree with that principle the same liberty of private judgment which he claims for himself.
Before I proceed further with the discussion, and lest I forget it, I should like to congratulate the Senate upon having inserted in the bill a provision that is of very great importance to that portion of this dominion from which I come, namely the Atlantic coast; asking parliament once more to embody in the legislation of this country a re-
2790	COMMONS
C .N .R ,-C .P .R. Bill-Mr. Hanson (Sunbury)
quirement for which we from the Atlantic coast ports have been contending for many, many years, namely, that freight originating in Canada for export, when not otherwise stipulated by the shipper, should be routed through Canadian ports. That is a provision which if my memory serves me right is embodied in the National Transcontinental Railway Act, but which has been consistently ignored from that time almost to the present. If the embodiment of this principle will have the effect of satisfying the aspirations of our people in the ports of Saint John and Halifax, it will be an additional reason why I, at all events, will vote for this bill.
There is another thing which the Senate has done for which I commend it. I think, to the utter astonishment of every member of this house and, I believe, of a great many of the people of Canada, there was in the original bill a provision that no member of the House of Commons and no member of the Senate, speaking generally, would be eligible for the position of trustee. As far as I am concerned I never could understand for a moment why the Duff commission put that provision in their report.


William Daum Euler: An insult!


Richard Burpee Hanson: Well, I am not going to use that term, to say it was an insult to members of the House of Commons and the Senate, but I will say that, having been a member of this body for twelve years, and having met many men from different parts of the country, I believe there have been members of the House of Commons and of the Senate, and that there are members of the House of Commons and the Senate, who are quite as capable of performing the duties of trustee of this national railway as any of the business men of this country. When I say that I have not in mind any single individual, I am making the general statement, which I believe is founded on truth, that there are members of this house who are quite as capable of filling these positions as worthily as any citizens of this country.


Samuel William Jacobs: May I suggest to the hon. gentleman that perhaps the reason was that they did not want to lose the benefit of the outstanding abilities of the members of both houses of parliament.


Richard Burpee Hanson: I thank the hon. gentleman for the suggestion. But it is fashionable in Canada to invite outstanding citizens to become candidates for the House of Commons, men are sought for their ability, their standing in the communities in which

they live, and then after they are elected they are sneered at as politicians. I resent that.


Mr. GRAY:: Will the hon. member permit a question? How do you reconcile that with the legislation respecting the tariff board?


Richard Burpee Hanson: I have not in mind at the moment the legislation that the hon. member refers to, and I do not wish to be diverted from the line of thought I am trying to develop. I commend the Senate for what they have done in that regard.
This Duff commission was directly set up by the government of this country as a result of the report of the 1931 select standing committee on railways and shipping. I well recall the day when Sir Henry Thornton made the statement which he did in the spring of 1931 to that committee, of which I was then and had been for some years a member.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



PRIVATE BILL


[Stage Direction]
Bill No. 41, to incorporate the Sarnia-Port Huron Vehicular Tunnel Company-Mr. Gray.

[Stage Direction]
The house resumed consideration of the motion of Mr. 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.
Richard Burpee Hanson: Just before the house rose for the dinner recess I was referring to that section of the original draft of the bill which has been deleted by the Senate, namely, the section containing the prohibition against the appointment of members of parliament, either of this house or of the Senate, as members of the board of trustees. I am glad that the Senate took that course, which has met with such universal approval at the hands of the members of this house.
Just before the dinner recess I was alluding to the birth of the Duff commission. In the session of 1931 Sir Henry Thornton made his recommendation to the special railway committee and brought down the suggestion of *

C.N.R.-C.P.R. Bill-Mr. Hanson (Sunbury)
commission to examine into the railway situation in Canada. I must confess that my first reaction at that time was that it was a vision of despair, on Sir Henry's part, of being able to deal adequately with the situation as it then presented itself; but as it was a constructive suggestion it met with the universal support of the members of the committee, and I believe the unanimous approval of the members of the house when the report was finally presented.
Now what is the underlying principle of the Duff report? The underlying conception of the report is that the utmost economy should be exercised in the management of this railway, and I suggest to you, Mr. Speaker, and to this country, that that is the principle which the special railway committee dilated upon for two sessions and brought to the attention of the house and of the country; and if you will read the report of the special railway committee submitted in 1931 and again in 1932 you will observe that by unanimous consent of the committee and later by unanimous consent of the house that very principle was stressed. Yet, if you examine the Duff report from cover to cover, you will find not the slightest reference to the work of that committee, though I consider that the committee did very valuable work for the people of this country in laying the foundation and the basis of the Duff report. I am not peeved at that but I should like the country to know that as a direct result of the action of the special committee on railways, canals and shipping owned by Canada, and in consequence of the recommendations that were made, the directors of this company, given the proper cue and mandate from the House of Commons, have done valuable work in the direction of this very principle of economy in administration and in particular with respect to the principle of exercising economy in the management itself.
The Minister of Railways this afternoon gave some very interesting figures with regard to the elimination of surplus officers. I say that the mandate for that *work was given by that special committee in 1931 and 1932. As to the personnel of the commission, as has been well pointed out, they were men of very high character. We heard some criticism this afternoon that a particular class in the country had not been represented. I do not think there is any basis for any charge to be laid against the commission in that respect. The members of the commission were selected for their ability and outstanding position in the country, and in my opinion the government was fortunate in getting men of such high character and ability, who were unselfish
enough to devote their valuable time and attention to the consideration of this great problem. I happen to know some of these gentlemen personally. I know the gentleman who was appointed from the eastern provinces and I can assure the house that his greatest ambition in life is to render public service-and he is not looking for any emoluments or rewards or titles. He is a professional man and I believe he brought to bear upon the consideration of the problems that faced the commission ability of the highest character. I had the pleasure of an interview with him in very recent weeks and I am glad to be able to inform the house and the country that, as he tells me, in respect of no single recommendation made by them were the commission influenced, nor was it suggested to them, to make any particular recommendation on behalf of the administration or of any public men in this country. The report is solely the report of the commission, based on their observations and on the evidence adduced before them. We may take it for granted therefore, I think, that the report is representative of the very best judgment of which the men who composed the commission were capable, men who were representative of the best element in the community.
Some criticism has been made with regard to the appointment of a gentleman from Great Britain and another from the United States to serve on the commission. I have not the honour of the acquaintance of either of these gentlemen, but we do know that Lord Ash-field is a man of worldwide reputation in transportation matters, and Mr. Loree was one of the most outstanding railway representatives in the neighbouring republic. I say therefore without fear of successful contradiction that no commission of this kind would have been complete had it not included experts in the transportation business. It has been said that Lord Ashfield was named on the commission because of the large quantity of Canadian Pacific securities held on the other side. That may well be; but I suggest that the underlying reason for his appointment was the fact that he was an expert in transportation, and it is on that basis.and because of that fact that we ought to give the utmost consideration to any recommendations which he had to make at that time, and not because he represents any particular class.
With the exceptions I have noted, the bill as drafted follows very largely the report of the commission. Aside from stressing the principle of economy, I think the most outstanding feature of the report is the recommendation made in explicit terms that there
2792	COMMONS
C.N.R ,-C.P.R. Bill-Mr. Hanson (Sunbury)
shall be no amalgamation of the two great national railways. With that recommendation I am in wholehearted accord. I do not say that amalgamation will never come; if economic conditions continue as they are it is just possible that we may be forced into that position, but I say to the government and to the members of this house that the people of this country are fearful of monopoly of any kind, and particularly of a railway monopoly. It must be remembered that we have only two lines of railways and the people will not accept amalgamation unless such a course is needed to save the credit of the country itself. I congratulate the commission upon this outstanding recommendation in its report and I believe the members of this house will support that recommendation almost one hundred per cent.
I read with a great deal of interest the recent speech made by Mr. Beatty, for whom I have the greatest respect. I do not know him at all intimately, but I have read his utterances from time to time and they have always appealed to me as the utterances of a sound Canadian, one who believes in Canada and above all in the future success and prosperity of his own company. However, I must say that the impression left upon my mind by Mr. Beatty's last address was that it was the utterance of a defeatist. I hope that that is not the case; I hope that Mr. Beatty still has the courage which characterized him as a young man when he took over the position of chairman of the Canadian Pacific Railway.


An hon. MEMBER:: And his predecessors.


Richard Burpee Hanson: Yes, and
his predecessors, who were all great Canadians. I trust he will go on even though he may think that he is being hampered to a degree in the administration and control of his own company. I hope he will go on and make of the Canadian Pacific the great success which its past history warrants. I have always felt in the past that the standing and credit of the Canadian Pacific Railway was the standing and credit of Canada in the eyes of the nations of the world, and I should be sorry to see anything done by this parliament which would impair that standing in any degree. It must be apparent to those who have read the report of the commission, to those who have studied the evidence and to those who have made the observations possible to be made in the years immediately past, that the Canadian Pacific has not been above criticism with respect to the capital expenditures it has made from time to time. I do not intend to particularize or to allocate
[Mr. R. B. Hanson.1
any blame; it may well be that, as has been said, they were forced into this position because of the very keen competition of the Canadian National Railway. I do not see that any useful purpose is to be gained by threshing old straw. We are confronted with a serious situation and we should give to the problems now confronting us our very best thought, irrespective of the past and irrespective of where the blame may lie.
Part I of the bill deals with the setting up of a new system of control. This has been likened to a receivership, but in my humble opinion as a legal man, the analogy is not exact. There can be no such thing as a legal receivership in connection with the Canadian National Railways, having regard to the fact that the country has guaranteed the securities of that company. In my opinion, the new setup means a new system of directorship. In so far as it reduces the number of directors from the large number which now obtains and has obtained ever since the company was formed, I think the new proposal will be an advantage. Heretofore the directors have been appointed upon geographical grounds. We are a country necessarily provincial in character; if anyone does not believe that all he has to do is to look at the map of Canada which shows an area three thousand miles long by three hundred miles wide. The interests of one section of the country cannot coincide with the interests of another. * The history of the past ten years has taught us that we should, as far as possible, avoid sectionalism, but when we come to apply the principle of sectional representation to the administration of a great business such as the Canadian National Railways, I am afraid we will have to admit that while a great deal depends upon the character and calibre of the men appointed as directors, the principle itself is not sound. I find myself in agreement with the hon. member for North Waterloo (Mr. Euler) who on more than one occasion has expressed himself along these lines.
I want it understood that I am expressing my own opinion when I say I doubt very much if a board of three directors will prove to be sufficient, considering the huge problems of finance and of administration which have to be dealt with, not to speak of the problems of operation which will have to be concentrated around the executive officers of the company. Such a board must consider the huge ramifications of the company and its many subsidiaries, and I suggest that a board of five would come nearer to meeting the needs. Again I say I want it understood

C.N.R.-C.P.R. Bill-Mr. Hanson (Sunbury)
that this is my own personal opinion. I do not think these men can be selected because of geographical reasons. For the first year I venture to say that their daily burden will be excessive and that they will have to bring to bear all the ability at their command in order to obtain an' adequate working knowledge of the many problems confronting the company. I venture to say that it will take at least twelve months for this new board to learn the ramifications of the company and its subsidiaries. I know that the present board of directors were in office at least twelve months before they were able to perform any useful functions in connection with the administration of the road. Once they felt their feet under them, once they had obtained an adequate working knowledge of the problems confronting them, in my humble judgment they did excellent work for the people of Canada. Much of the economy to which the Minister of Railways referred this afternoon has been the result of hard, diligent work on the part of the present board.
Another feature of the bill is the provision in part II that the president shall be the supreme authority, or, as some people have termed it, shall be a dictator. To say the least, that is not democracy. Under the provisions of this part the president of the board is to have supreme authority. It may work out all right-much would depend upon the character, calibre, integrity and ability of the chairman. Personally I do not just know where such a superman is going to be found, though it may be possible.


Mr. SANDERSON:: There is only one
superman.


Richard Burpee Hanson: Well, he
is a superman; let the hon. member make no mistake about that. I understand the allusion of the hon. member for South Perth (Mr. Sanderson), and the Canadian people ought to thank God that in these days of stress we have a superman. I venture to suggest that after what happened in the United States last week and what is happening now, the people of that country are thankful that they have a superman. I quite understand the jibe that lies under the remark of the hon. member, and I make this observation in all seriousness and with the best of good faith, that the people of Canada are to be congratulated that there is a superman in this country.


Mr. MACKENZIE (Vancouver):: Ecce homo!
Mr.	HANSON (York-Sunbury):	with
respect to the principle of amalgamation, some reference has been made by the hon. member for North Waterloo to the deletion of a clause or phrase in one of the sections, I think it is section 16, subsection 2, as regards the amalgamation of certain Canadian National railway companies. If I understand the report correctly, it expressly negatived the doctrine of amalgamation; the references in the bill as originally drawn were to the amalgamation of subsidiary service companies of the Canadian National railways, and on the principle of a thing not being negatived in an act of parliament until there is a positive assertion of a right or principle and to clarify the position, that clause was stricken out. If, however, we are wrong in our construction of the statute as drafted, by all means let us put the clause back, because I believe the Canadian people want that in the bill if there is any danger that 'there ever should be amalgamation under this or any other act. While I am speaking of amalgamation, let me say that the party on this side of the Speaker are committed right up to the hilt against a policy of amalgamation and I stand for my party's policy. Unless conditions become so bad that there is no alternative course, I believe we still adhere and should adhere to that principle, for the reasons I have attempted to adduce.
Part II of the bill deals with the principle of cooperation as suggested in the Duff report. Someone has described that as the expression of a pious wish. I think it is something more than that, because we all know that unless there is cooperation between these two railways and a cessation of the expensive competition that has prevailed for a number of years past, the condition cannot continue. Someone has said that you cannot kiss and fight at the same time. That is a true statement of fact, but there must be a cessation of fighting and that is what I think the commission had in mind when they made those recommendations of coordination. There cannot be coordination of these railways without someone being hurt. I certainly do not view with any great complacency the closing down of lines of railway in my community, and I do not suppose any other hon. member views with any degree of complacency that sort of thing in his; but where there are competitive lines, surely something can be done in that regard with respect to trackage and mileage. I do not, however, think that is what the commission had particularly in mind. They had in mind the coordination of the use of terminals. I am thinking of a little town in New Brunswick where three separate railways are functioning; the National system, the Pacific system and a little branch line called the Temiscouata in Edmundston. They maintain three separate stations, three separate
2794	COMMONS
C.N.R ,-C.P.R. Bill-Mr. Hanson (Sunbury)
freight houses, three separate terminals, and there is not a stone's throw between the Pacific railway station and that of the Temiscouata. Yet there is a multiplicity of officials and services there.


Peter John Veniot: And the town is interlaced with level crossings.


Richard Burpee Hanson: Yes,
and the town is interlaced with level crossings so that human life is always in danger at that point. It is the elimination of that sort of thing that the Duff commission had in mind when they made their report.
There is no doubt the bill gives authority to the board, in the case of arbitration, to deal with many different matters. If hon. members will refer to subsection 3 of section 17, they will notice that, without restriction of the terms previously used, a large number of specific matters are set out which may be the subject of arbitration in case of disagreement between the two systems. They are: joint use of terminals; running rights and joint use of tracks; control and prohibition in respect of the construction of new lines; joint use of facilities; abandonment of lines, services or facilities, and the pooling of any part or parts of freight traffic or of passenger traffic. It will, I think, be of the utmost value in solving the financial aspect of the problem if full use is made of the authority given by this bill, and because of that particular object in the bill I intend to vote for its second reading.
One would think-and this brings me to the third part of the bill-that sensible men, without any coercion or compusion, would see the necessity of coordination and cooperation in view of declining revenues and the failure to earn fixed charges. I had hoped and I still believe if the officers of these two railways were left alone, they would work out a very large measure of cooperation, but just because human nature is so frail and some of us are beset with vanity, it may be that they would not do what they ought to do. So the commission decided that there had to be compulsion.


Mr. POWER:: May I ask the hon. member a question just to get his viewpoint? Is be aware of the fact that the bill provides for compulsion only when there is a dispute?


Richard Burpee Hanson: I quite agree.


Charles Gavan Power: In my view, there are not
enough teeth in the bill.


Richard Burpee Hanson: I have
given a good deal of thought to this particular phase of the bill. It has been argued, and

in fact moved in another house, that the application of this principle of compulsion should be suspended in order to give the two groups of officers an opportunity to function along these lines. I am afraid we shall have to adopt the principle of compulsion, because the end in view is so absolutely necessary that there will have to be a board of arbitration in case of dispute to have it settled.


Mr. BEAUBIEN:: Does the hon. member
think you can have cooperation and compulsion at the same time?


Richard Burpee Hanson: I do not
think you can have cooperation and compulsion over the same subject matter, but this is a case where voluntary cooperation fails and there still exists the necessity of doing something.


Charles-Philippe Beaubien: Supposing the voluntary compulsion fails, and then they go before this arbitral board which gives a decision against one of the companies. Will that company ever go before that board again?


Richard Burpee Hanson: I have heard that argument before. If the necessity arises, of course they will go before the board. A man resorts to litigation once and gets licked but that does not cure him or stop him from going to litigation again. If it did. God help the lawyers! I do not agree with the contention of my hon. friend from Provencher (Mr. Beaubien). The worst feature about part III of the bill, or the strongest argument that has been made against it, is that it is an interference with the private rights of property, and unquestionably there is a great deal of force in that contention. But because the Duff commission investigated the matter so thoroughly; because the other house investigated it so thoroughly and heard evidence on that point, and because the arguments adduced in support of the position taken in this bill were so strong, I do not think there is any alternative for us but to adopt it.
To my mind the question resolves itself to this: Is the instrument set up in this bill a proper instrument? I am bound to tell this house that at first I had every sympathy with those who sought to have the Board of Railway Commissioners substituted for the arbitral board here proposed. But with all the information that I have been able to obtain, this is the conclusion I have come to-and may I say that I am speaking for myself alone: With the railway commission as it is at present constituted, and with the tendency to delegate to it from time to time new authority, new powers, and new functions, I am afraid that we are going to build up in this country some-

C.N.R.-C.P.R. Bill-Mr Gray
thing similar to the Interstate Commerce Commission of the United States. Anybody who has studied the history of the Interstate Commerce Commission will have noted that while it started from small beginnings, to-day it is clothed with functions which hamstring the administration of the railways in the United States, and I do not desire, so far as my vote is concerned, to substitute any such body as that for dealing with disputes between the two railway companies such as a.re visualized in this bill. That is my considered judgment on the subject. I would ask hon. members who have other views to study the history of the Interstate Commerce Commission, and if they do, and get a true picture, I think they will come to pretty nearly the same conclusion as that which I have reached-that we do not want to set up in this country a dictatorship covering a multiplicity of subject matters such as is covered by the statutes of the United States relating to the Interstate Commerce Commission.
Finally, will the present bill be a cure-all for the railway ills of this country? I do not think it will. This bill is simply another stage in the railway history of this country. It is like prohibition or government control of the liquor traffic, which is not by any means the final word in liquor legislation. Nor is this the final word in railway legislation in thi3 country. But because we are confronted with a situation, because this house gave authority to the government to delegate to a commission of high standing and high character the investigation of this subject, and because that commission studied the question and the very best brains of the country were brought to bear upon the problem with all the information that was at their command, I believe we ought, and I think the country will expect us, to give effect to the major principles underlying the report of that commission. It is for that reason, Mr. Speaker, that I intend to vbte for the second reading of the bill.


Ross Wilfred Gray: Mr. Speaker, I know that the hon. member for York-Sunbury (Mr. Hanson) will pardon me if I do not follow him in all the remarks he has made this evening, but a little later I shall refer to one or two specific matters which were mentioned by the hon. member.
I should like to join with other members who have taken part in this discussion in congratulating the Minister of Railways (Mr. Manion) on the very interesting and able speech he made to the house this afternoon. I know he will pardon me when I say to him that there were times during his speech when we hardly recognized him, especially
when he referred to t'he effect on the revenues caused by the existing trade barriers which had been erected. I could almost, but not quite visualize the return of the prodigal son.


Robert James Manion: I said world trade barriers.


Ross Wilfred Gray: I feel sure also that the hon.
member for Stanstead (Mr. Hackett) will pardon me when I say I cannot follow him in his suggestion that we should slavishly support the government at all costs, and that therefore we must support this bill. And in certain of the remarks I am about to make I cannot follow my esteemed friend from North Waterloo (Mr. Euler). Be that as it may, I feel it is the duty of everyone who has given some consideration to this bill to speak his mind upon it and to present his views to the house.
The bill, as has been stated, is the outcome of the recommendations of the Duff commission which was appointed by this government. The hon. Minister of Railways, as have other hon. members, referred at some length to that report. I intend to touch upon one feature of it, and to say to the house that I would have had a great deal more confidence in the report of the Duff commission had I not read under section 187 its finding with reference to the effect of waterways upon railway transportation in this country. The commission state as follows:
Water-borne traffic will continue to be a factor of major importance in Canadian transportation both on the inland waterways and coastwise through the Panama canal, but rail traffic has in the main been adjusted to the conditions now existing and it does not seem probable that the developments now under way and in contemplation in connection with the Hudson's Bay route, and the deepening of the St. Lawrence-Great Lakes canals, will seriously prejudice the position of the railways in the future.
I wish entirely to dissociate myself from that view, because I believe that the deepening of the St. Lawrence waterways will seriously affect the railway situation in this country.
With the main features of Bill A now before the house I entirely agree. One cannot but commend the effort to effect economies in evlery way possible at this time. Having said that, it is necessary to examine this 'bill from other points of view in order to see just how these economies are proposed to be made effective.
It has been stated in another place that the first three lines of the bill reading, " An act respecting the Canadian National Railways and to provide for cooperation with the Canadian Pacific railway system, and for other
/796
CAT.R.-C.P.R. Bill-Mr Gray

purposes," constitute the preamble of the bill, and that having adopted the preamble it means that we have stated openly and publicly that we are against amalgamation of the two systems, or to put it another way, against unified management. I submit, Mr. Speaker, and I shall attempt to show to this house, that the separate identity of these two roads is one in name only.
I have said that anyone giving consideration to the railway situation must be impressed with the need for economies. But are these economies to be effected not only at the expense of the roads but with a total disregard of the humane interests in the roads and in the public service of this country? For several months now we have been deluged with propaganda emanating from the Canadian Pacific Railway, from the president of the road down, pressing upon the Canadian people the thought of amalgamation. I say in all sincerity that I believe the Canadian people would have been much better satisfied had the speech which the Minister of Railways made this afternoon, in which he commended the work of that railway system, been made a few months ago. It is unfortunate that the minister reserved this speech until the bill is about to be enacted into law. The statements he made to-day would have had a settling effect upon the minds of the committee and the people of Canada generally, had they been made a few months ago.
The condition in which we find ourselves with respect to railway financing, and transportation finances generally, is not a new one. At the very outset of the regime of my respected leader (Mr. Mackenzie King) when he took office in 1922 following the general election of 1921, he found a somewhat similar situation. In the very first speech from the throne of his term of office, in the session of 1922, we find these words:
The transportation system -weighs heavily upon our national finances.
And it does to-day. Then he went on to say:
But public ownership will be given a fair trial.
Is there anyone here to-night who will deny that public ownership was given a fair trial from 1921 to 1930 during the years of the King administration.


Mr. McGIBBON:: It was not.


Ross Wilfred Gray: Is there anyone who will deny that during that period there was built up in this country a marvellous railway system of which the Canadian people may justly be proud? During that period large capital ex-

penditures were made. The preservation of the identity of the system has been pledged not only by the present Prime Minister (Mr. Bennett) but by the leader of the opposition.


An hon. MEMBER:: Keep politics out of
it.


Ross Wilfred Gray: When I hear hon. members
opposite say we must keep politics out of the discussion, I am reminded that since we last met in this house hon. members opposite have gone up and down this country hurling a tirade of abuse at the administration of the Canadian National Railways. I shall present for their edification, if for that of no one else, some of the statements of hon. members opposite who, under normal conditions, took a saner view of the situation. In that connection I shall refer to a speech made by the present Minister of Justice (Mr. Guthrie) in the budget debate of 1929. At page 743 of Hansard of that year he is reported as follows:
In respect, however, to the national railway we on this side of the house are all optimists. We look upon that railway as practically our own infant and our own creature.
Then at page 745 we find the following:
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 lifetime, but in the lifetime 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.
When the Minister of Justice referred to "this government" he referred to the government of my right hon. leader. The minister continues:
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. Let me say, in concluding my remarks on this phase of the subject, that the national railway system in this country constitutes a lasting monument-
I know hon. gentlemen opposite will applaud this statement.
-a lasting 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.


Ian Alistair Mackenzie: He was
chief pallbearer.

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


Ross Wilfred Gray: The same right hon. gentleman to whom the minister referred, the leader of the government in another place, takes the child now full grown and leads it gently to a courtship with another, while this government looks about it for the dictator who will tie the knot.
As has been said, the bill is divided into three parts. Part 1 deals with the reorganization of the national railways, part II with authorization of and direction for cooperation; and part III provides for the tribunal which is to be set up to compel cooperation. I agree with the hon. member for York-Sum-bury that it is hard 'to reconcile the terms "compulsory" and "cooperation." Much has been said about part III of the bill. In the debate which took place in another place I believe the main opposition was directed against that part. Here again I may differ from some of my colleagues when I venture the opinion that parts I and II, and not part III, constitute the dangerous elements in the bill.
In effect, part I makes five changes. First, there is provision for the reduction in the board of directors from seventeen to three. Here again I shall follow the hon. member for York-Sunbury when I state that in my view the directorate should not consist of three but of five full time men, one of whom should represent labour. The second provision is for a continuous audit by independent auditors; third, that the president of the road shall no longer be chairman of the board of directors; fourth, that the bond issue, which has been mentioned, will now be made direct by parliament instead of by the railways themselves, and guaranteed by parliament. The fifth provision is for the absolute dissociation of the government from any control whatsoever over the road.
As to the general principles in Nos. 1, 2, 3 and 4 I have no complaint. As has been mentioned to-night, all these matters were discussed by the special committee on railways and shipping, and while not all of the conditions 1 have outlined were brought in as recommendations of that committee, some at least were brought in and the others were approved in committee. We did not need an expensive commission to bring in these recommendations; that could have been done simply iby amending the Canadian National Railways Act. I believe the hon. member for York-Sunbury has said that there is no mention whatever of the work of the committee. I find, however, that that is not the case. The criticism is made that the special committee on railways and shipping is not a necessity and should not again be set up.
I shall deal now with the provision that the board of directors be reduced from seventeen to three. I have said that in my view it should be reduced to only five, but I shall be content to discuss the bill as it appears before me. Only the chairman is full time and in him, as has been stated, is vested virtually the power of a dictator. Why do I say that? Because under section 11 (2) of the bill we find that:
The trustees may decide or act at meetings only by unanimous vote or by majority which includes the chairman.
We have heard this afternoon some suggestions as to what a chairman should be. There are those who say: We must trust the chairman; we must feel and know that he will have the interests of the road and of the country at heart; therefore we should not take any other stand with respect to that matter. We are now discussing not a recommendation of the commission, but the adoption of the cold legal phraseology of this bill. It is not what we may think should happen, it is what is permitted under this bill that I propose to discuss. Others will say: But surely the Minister of Railways or his successor will have something to say with respect to the administration? I say not. This is a government road, the people of Canada are the shareholders, and a cabinet has been elected to represent the shareholders. Under the act as far as I can see the Minister of Railways is mentioned only onice. Section 15 states that the annual reports of the trustees and the auditors respectively shall be submitted to parliament through the Minister of Railways. He becomes a mere messenger of the Canadian National board of trustees, to place upon the table of this house the annual report of these trustees and of the auditors for the time being. From the point of view of economy that may be all right; we can close the minister's office to-morrow when this bill is enacted and save the people $15,000 a year. That may be economy, but it is not responsible government. I will refer to that again.
But before leaving this part let me refer to the manner in which the government proposes to fill vacancies created in this office. The first three directors are appointed by order in council. Any vacancies that may occur are to be filled from a panel of eight, and those picking the panel consist of the president of the exchequer court, the chief commissioner of the Board of Railway Commissioners, and the remaining trustee. I hope I may be pardoned when I say that in my opinion this government, having created this board, are
C.N.R.-C.P.R. Bill-Mr Gray

seeking to perpetuate their nominees thereon. Why do I say that? I say it because, as I have shown, two of the trustees appointed for seven years form part of this selecting committee, and the chairman of the Board of Railway Commissioners, an appointee of this government, is one; and I say that this government, knowing that it is going to be in office for only a year, or a short time at best, seeks to perpetuate their appointees upon the people of Canada.
Having set up this machinery, what is proposed by part II of the bill? Let us look at section 16 and see what is possible under it. The hon. member for York-Sunbury and others have said: "No amalgamation." But what I want to point out is that under the powers given to this board, perhaps not amalgamation in the sense of one line being taken over holus-bolus by the other, but under that section piecemeal, this can be accomplished. Section 16 of part II says that the national company-defining it-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, 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 (w-ith due regard to equitable distribution of burden and advantage as between them) to effect such purposes.
That is a general clause. Then subsection 2 says:
Without restricting the generality of the foregoing, any such measures, plans or arrangements may include and be effected by means of-
(a) new companies controlled by stock ownership. . . .
I submit that under that clause if the board of trustees deemed it necessary they could set up a holding company absolutely separate and apart from these two separate identities-


Peter McGibbon: That would be betrayal of trust,


Ross Wilfred Gray: Perhaps so. but I am reading the bill as I see it. Subsection 2 says further:
(b)	leases, entrusting agreements, or licences, or agreements for the pooling and division of earnings arising from the joint operation of any part or parts of freight or passenger traffic. . . .
(e) joint trackage, running rights, joint ownership, or joint operating agreements, depending upon the nature of the property or services included in any cooperative plan.
Let me read (c) putting my own interpretation upon the powers given to this trustee
I Mr. Gray.]
board. Not joint, but "amalgamated" trackage, "amalgamated" running rights, "amalgamated" joint ownership, or "amalgamated" operating agreements-


Robert James Manion: My hon. friend puts in the word "amalgamated." I think he should make it clear that it is not in the act.


Ross Wilfred Gray: I did, I said that is my own interpretation. And then they could at the end of a year bring in an annual report saying that for the purpose of effecting economies we have deemed it advisable to amalgamate this and that.
Then let me point out that under subsection 3-
All or any of such measures, plans and arrangements may. if agreed to by the parties, he made terminable at will, or on or after stated notice, or for a fixed period or periods or any combination thereof. . . .
In other words, if they think it desirable they can do exactly what president Beatty has been urging this country to do, lease to the Canadian Pacific such portions of the road as they deem advisable for a period of ninety-nine years, and the Minister of Railways as I see it cannot do a thing about it. That to my mind is one of the main dangers of this bill.
Let us contrast for a moment the powers given under the Canadian National Railways Act, with respect to the same matters. I will be very brief; I do not even intend to read the section. Under the Canadian National Railways Act of 1927, chapter 172, revised statutes of Canada, 1927, the side note of section 23 is:
Power to abandon line, and dismantle or dispose thereof by consent.
And the section reads:
With the approval of the governor in council, and upon the recommendation of the Board of Railway Commissioners, the company may abandon the operation of any lines or parts of lines.
And section 24:
W7ith the approval of the governor in council, on the recommendation of the Minister of Rail-ways and Canals . . .
Agreements may be entered into. Before I close I intend to submit a point in connection with that.


Peter Heenan: What about section 6?
Mr. GRAY': I admit that abuses have crept in; they are bound to creep in. But it was not with respect to matters over which we are now giving power to this dictator or this board that the abuses crept in. If we as a people are to have government ownership, then let

C.N.R.-C.P.R. Bill-Mr Gray
the government of the day take responsibility. If the time has come that we must have one man operation or a dictator of this road, then I am going to take the responsibility of saying that as far as I personally am concerned, I am ready to take the Minister of Railways right now instead of some outside man whom we do not know. I refuse to take that leap in the dark and to give to someone outside these powers over which we as members of parliament or the Minister of Railways cannot have control.
These trustees, may I say, can be removed not by the governor in council but under section 7 only for cause. Section 7 says:
No trustee shall be removed from office, nor suffer any reduction in salary, during the term for which he is appointed, unless for assigned cause and on address of the Senate and House of Commons of Canada.
How much control has this parliament or the government of the day over this dictator that you are about to appoint?
Before I turn for a moment to part III I wish to discuss briefly one section in particular, and I know that in doing so I shall be treading on the toes of some hon. gentlemen from the maritime provinces. Nevertheless I think it should be pointed out at this time to the government and to the people that in subsection 2 of section 14 of this bill there is-to my mind at any rate-an absolute political sop to the maritimes. I note that the hon. member for York-Sunbury is all for the bill on the ground of economy; he hails it as a great measure because it will effect large economies in the conduct of the railways. But immediately he turns round and commends the government for having in the bill the following provision:
The trustees shall so direct, provide and procure that all freight destined for export by sea which is consigned within Canada for carriage to national railways either at point of origin or between that and the sea shall, unless it has been by its shippers specifically routed otherwise, be exported through Canadian seaports.
That subsection is placed in the section dealing with the annual report to parliament. It has no relation whatsoever to the preceding part of the section but is put in there in the hope that it will not be noticed and will slip through. Let us see what will be the operation of economies in respect of that section. The distance from Montreal to Halifax-I am using this illustration because the freight rate is exactly the same-is eight hundred miles, whereas the distance from Montreal to Portland is two hundred and ninety-six miles, though as I say the freight rate is exactly the same in both cases. But
unless the shipper, who does not care which route is followed inasmuch as the rates are the same, specifically directs to the contrary, we must under this bill, this economy measure, ship the long haul down to Halifax; and I have been informed by the railways that the operating costs are approximately proportionate to the mileage. When therefore hon. gentlemen are protesting against talking politics I think it behooves them to read subsection 2 of section 14 of the bill.
As regards part III, I have simply this to say. I doubt very much that it will ever come into effect, but if it does then I say that it must give the hon. member for Winnipeg North Centre (Mr. Woodsworth) rather a jolt to find that his resolution with respect to the commonwealth federation has now become a government measure in the form of a bill which permits the confiscation of private property. I imagine that this house little thought that such a proposal would be introduced by the Minister of Railways. I have said that it may never operate, but if it does one finds this thought uppermost- we found it before and it is not new-namely, the placing in the hands of one man of -the power of absolute control. Why do I say that? I say that for this reason: Ostensibly there are three, one to be chosen from the Canadian Pacific and another from the Canadian National; but who will give the deciding judgment of the board? Another superman. As someone has said in this house, there is certainly no room for three supermen in this country, and if we are to have an arbitrary board then I submit that we should have a board of railway commissioners, as suggested by my hon. friend from North Waterloo, a board tried in matters pertaining to railways and with precedents to follow; but certainly I am not in favour of placing this matter in the hands of one man.
In conclusion I would ask the house this question: Are the Canadian National Railways protected by this proposed legislation? I think I have shown that while there are advantages they are far outweighed by the disadvantages, especially when we could bring about these advantages that have been mentioned by simply amending the Canadian National Railway Act. In my opinion this bill which is now before us is a far cry from the speech made by the Prime Minister (Mr. Bennett) in Winnipeg in 1930. What did the right hon. gentleman say, speaking in Winnipeg at the time he introduced his campaign?
These were his words:
Here this night, speaking as I am to more than a million of my fellow-countrymen, I say to you that no man in this country rejoices

C.N.R.-C.P.R. Bill-Mr. Bowman
more in the strength and progress of the Canadian National enterprise than I-made possible as it was in the first instance by the genins of our own statesmen and by the passing of legislation by our own party. But, more, more, every effort of mine after July 28 will be for one purpose: That purpose is to preserve not only the identity of the Canadian National Railways as a publicly owned competitor of a private enterprise, but to see that it serves even better and more effectively the Canadian people, who are so proud of it.
And more, I say that if you see any attempt on my part at any time to violate that pledge I give you here and now, then ash for my resignation-insist upon it-for I love my country and wh&t it has done, and one of its greatest achievements has been the development of this great national transportation system of which I believe every Canadian is proud.
Amalgamation? Never. Competition? Ever. That is the policy for which I stand.
Will the government through their minister now undertake that when this bill reaches committee of the whole they will incorporate in it not simply a section such as was read this afternoon with respect to amalgamation, but a real section with teeth in it .making certain that that will not be effective? Will they give an assurance that they will not dissociate themselves absolutely from some form of governmental control under this particular measure? If they will do that and accept some measure of responsibility then I am prepared to support them; if not, then with great reluctance I must vote against the second reading of this bill.


Mr. J. L. BOWMAN (Dauphin):: I am
sure the hon. member for West Lambtom (Mr. Gray) will pardon me if I do not follow him in the address which he has just delivered. Frankly, I prefer to follow the example set by the Minister of Railways (Mr. Manion) and the hon. member for North Waterloo (Mr. Euler) and attempt to discuss the bill before the house in an entirely non-political attitude.
First, may I congratulate the minister on the very able address which he delivered this afternoon, indicating the most careful preparation and consideration to the end that the house might fully view this great problem which faces Canada to-day. May I say to the hon. member who has just taken his seat (Mr. Gray) that while I do not believe that this bill is perfect, I still think that if it receives the approval of the house the excerpts which he read from the speech made by the Prime Minister (Mr. Bennett) in 1930 will be just as true as they were at that time. If I thought for one moment that this bill had for its object the amalgamation, merger or unification of the Canadian National with the Canadian Pacific, I would at once oppose

it. However, I do not think that this is the intention of the bill. One feels almost like apologizing to the house for speaking upon this bill after hearing the very able addresses which have been delivered and which cover the subject so thoroughly; nevertheless there are one or two features to which I would like to direct the attention of hon. members, more particularly with the intention of explaining my viewpoint with respect to part III which deals with compulsory cooperation. Perhaps I shall be pardoned if I refer briefly to the earlier history of the railroads in this country.
The Duff report has covered quite thoroughly the history of the Canadian National and the Canadian Pacific, and hon. members are so familiar with the subject that I hesitate going into details. There seems to be a feeling that the Canadian National Railways is a failure in public ownership. I am no't an apostle of public ownership, but I think hon. members will agree with me when I say that the Canadian National railway system as we have it in Canada cannot be considered as a true test of public ownership.


An hon. MEMBER:: I hope not.


James Langstaff Bowman: 2804	COMMONS
C.NR.-C.P.R. Bill-Mr. Bowman
place a high value upon competitive railway service and would foe reluctant to dispense with such competition. Moreover a monopoly would be placed in the hands of a very few, a tremendous power which might be unwisely exercised. I am convinced that amalgamation would result in an unwieldy system which could not be efficiently managed. Amalgamation must necessarily be permanent in effect. Mr. Beatty, in his presentation to the Duff commission, pointed out that a long lease would be necessary-almost a lease in perpetuity. It is not necessary to point out to the house the trouble there would be in unscrambling the two systems after their being for years under one control. I believe that amalgamation must necessarily be permanent in effect and does not envision a brighter future with more business and a greater population, and consequently better times for our railroads.
For the reasons I have set out I submit that amalgamation or unification of the systems is not only undesirable but impossible. Mr. Beatty objects to the arbitral tribunal because he claims that it overides the contract his company made with the government at the time of its incorporation, and states further that the company were guaranteed certain privileges and rights which were to continue in effect during their term of incorporation. However while Mr. Beatty objects to restraint upon the operations of the Canadian Pacific Railway he is in favour of restraining the operations of the Canadian National Railways. Throughout his speeches he has complained of extravagance on the part of the government railways as being responsible for large expenditures of his own company.
I say that if the Canadian National system is to be under restraint, and the Canadian Pacific is not, there would be a policy of hands off the C.P.R. and hands on the C.N.R. After all. the board which is to be set up is to settle disputes-that is all, and no more. While in the initial stages I perhaps had some doubts as to whether or not I was in favour of compulsory cooperation, the remarks made by Mr. Beatty before the commission finally determined my attitude. When discussing the proposition before the Duff commission that there be unification of the two systems for purposes of administration Mr. Leman made the following statement:
That is where we want enlightenment.
Mr. Beatty replied:
Well, if you can find a way to eliminate the government in the interim we will be taking a long step in the right direction. I am as
(Mr. Bowman.]
convinced as I am sitting here that if three years from now there was .an upturn in business which was, say, substantial, we would meet the same kind of competition and competitive extravagances that we have faced in the last eight years, and while we think we have learned the lesson and won't be extravagant, I do not believe we will realize that hope.
So Mr. Beatty states that if conditions were to improve, at the end of three years there would be just as many extravagances on the part of the publicly owned system as there have been in the past. Consequently he advocates restraint of some kind upon that system. I say if there is to be restraint upon the government railways there should be a like restraint upon the Canadian Pacific Railway and for the reason he sets out, if for nothing else, I should be in favour of the arbitral boards or tribunals which under the provisions of the bill are to be set up.
I feel that section 23, which refers to the powers of tribunals, will have to be amended in certain respects. The effect of that section as at present drafted goes, I believe, much farther than either the Senate or the government intended it should go. Section 23 is as follows:
Where the execution of an order, or the carrying out of a decision of a tribunal, involves the doing of any act which by any statute requires, but for the provisions of this act, the leave, sanction, assent or approval of the board of railway commissioners, or where in the opinion of the presiding officer the public interests involved are of sufficient importance to warrant it, no order made by a tribunal shall be operative without the concurrence of the presiding officer and his formal written assent.
I should like to draw the attention of the house to the fact that the first part of the paragraph provides that the chairman of the tribunal, who is chairman of the Board of Railway Commissioners, shall give his assent in respect of measures which are within the jurisdiction of the Board of Railway Commissioners. With that I agree.


Mr. DEPUTY SPEAKER:: The hon. member has spoken forty minutes.


James Langstaff Bowman: May I finish the sentence? But with respect to the second part ol the paragraph, with regard to all other matters which the chairman believes involve an important public interest, any matter of major importance or one which might be dealt with by five members of the board instead of three, he must in that case, too, give his assent to any order which may be made. In other words his decision has the effect of five, not one. For those reasons I submit paragraph 23 requires amendment, and will doubtless receive the attention of the house when in committee.

C .N .R ,-C.P.R. Bill-Mr. Bmdette


Mr. J. A. BRADETTE (North Timiskam-ing):: Mr. Speaker, rising to speak at this
time may I say that I realize why the hon. member who has preceded me (Mr. Bowman) has so spoken. There are some features of the bill on which I believe the house is absolutely in agreement, one of which is the necessity of cooperation, cooperation that is full and practical. Surely the railroads and the country as a whole must have learned in the school of bitter experience that cooperation is necessary under present conditions. Experience in recent years surely has taught us that lesson for many years to come.
As far as economies are concerned I believe it has been wdlil expressed and emphasized this afternoon and evening that the human factor cannot be forgotten or neglected. Service must also be maintained in some sections of the country. That has always been recognized in the past, and with a new country like Canada even during the present time of stress we must keep up certain capital expenditures and services. And this applies particularly as far as maintenance of service is concerned. As has been so well said by previous speakers, surely the two railways when considering measures of economy cannot any longer place the whole burden upon the working men or the train crews. I share the view expressed a little while ago that of every three dollars the railway companies have saved in recent years two dollars have been saved by curtailing wages and the number of men employed, which is not fair to that class of people. We can go too far in that respect. It is my duty to deal at length with a very important matter, important for my section of the country. The misgiving I feel in that regard is not that I must take the time of the house, but that I may be unable with my limited ability to put as forcibly as I should like the matters relating to our railway systems as they affect our section of the country and the whole of Canada. So I shall concentrate my remarks particularly on that section of the Canadian National railway system which is known as the National Transcontinental.
For the last six years, since I have had the honour of representing the riding of North Timiskaming in this house I have made it my duty to consider this all-important problem and speak of it in this house every year. Outside of our local papers I am sorry to state that so far the result has been disappointing, in that I have never received any support from the press of the large centres of population, never a single line from the daily papers of Toronto or Montreal. The
only support came, I think, from the maritime provinces, the Winnipeg Free Press and some of the western papers. I feel that my arguments are worthy of attention and should receive consideration. Being fully seized of the fairness of my case I am going to avail myself of every opportunity that is afforded me to impress this house and the country with its importance, and I feel confident that I shall receive more support than I have in the past.
I am going to divide my argument into three parts; first, a brief analysis of the Duff report itself, and the personnel of the commission; second the National Transcontinental question; and third, the present proposals. On account of the limited time that a member has at his disposal I am going to deal first with the ail-important question of the National Transcontinental.
When on July 30, 1903, Sir Wilfrid Laurier, launching the project in parliament, introduced the bill for the construction of the National Transcontinental, he used these words:
This new railway will be another link in that chain of union. It will not only open territory hitherto idle and unprofitable; it will not only force Canadian trade into Canadian channels; it will not only promote citizenship between old Canada and new Canada, but it will secure us our commercial independence, and will forever make us free from the bondage of tbe bonding privilege.
These were the statements of a man of vision; indeed they were almost a prophecy. If that great departed statesman could travel in our section of the country to-day he would see that prophecy coming into fulfilment during the present generation. He would see new centres of population, starting from Quebec city to Harvey Junction, and sweeping along the St. Maurice valley, rich in timber and hydro developments, up to the height of land in northern Quebec, which is part of the clay belt abounding in natural resources, and a most promising mining field that will astound the world during the next twenty years; on to northern Ontario with its clay belt and mining and industrial districts where a new town like Kapuskasing has given during normal times in freight and passenger earnings for that section from $150,000 to $300,000 per month. You have in that route the most direct and easiest gradient from the prairies to the St. Lawrence. That section of the line was never intended for local traffic, that was not its purpose. The initial purpose was to give the most direct communication between east and west. When that section was constructed there was practically no population through there, but we have now nearly 200,000 souls. The main reason, in fact the only
2806	COMMONS
C.N.R.-C.P.R. Bill-Mr. Bradette
reason why the connecting link was built out of the public treasury, was to give better communication between east and west. However, Mr. Speaker, it is not my intention to make a speech on that subject; my purpose is to have the house and the country realize that if to-day we have a larger deficit than we should on the Canadian National railway system it is partly due to the fact that the original ideas that prompted the construction of that railway have not been carried out. I would not be working so strenuously or speaking so often on this subject if our wheat and our cattle were moving through Canadian channels. I regret to say that nearly forty per cent of our wheat and heavy freight from the west finds its way out through American ports. I maintain that a large proportion of the national railway deficit would be removed if our freight travelled by its proper routing, the line of least resistance. Again I say I do not pretend to make a speech, but. I desire to place before this parliament and the country a brief showing why the national transcontinental was built and asking why it has not been properly used.
I hold in my hand a circular issued I believe, by the port commissioners of Halifax and Saint John, entitled, Is Canada for the Canadians? I am going to read some parts of it so that the house will be seized of the situation as it actually exists:
A Ruinous Drain
The fundamental trade policy of Canada is the east-and-west policy. This policy was embedded in the conception of confederation, and all through the years it has been recognized as the only true Canadian policy.
Many hundreds of millions of dollars of Canadian public money have been spent to perpetuate this policy and to ensure its success. The greatest single effort for the projection of the east-and-west policy was the construction of the transcontinental railway at an ultimate cost to the Canadian people of $330,000,000.


Armand Renaud La Vergne: Order. The
hon. member must not read articles written by others-


Joseph-Arthur Bradette: I am anxious to follow your ruling, but surely all this afternoon and evening, hon. members who preceded me have been reading articles by Mr. Beatty and others.


Armand Renaud La Vergne: I am responsible only for myself. Hon. members should express their own ideas, not those of people outside. Everyone here can read.


Ian Alistair Mackenzie: Other
statements have been quoted by hon. members, and this article does not reflect on the proceedings of this parliament.
TMr. Bradette.]


Mr. MERCIER (St. Henri):: This is a subject that no one can deal with without reading articles of outstanding writers and views expressed by those who have spoken throughout the country on the question. I submit that we should be allowed to quote such opinions and statements.


Armand Renaud La Vergne: Hon. members are allowed to give quotations as to facts, but the rule is clear that they may not give outside opinions on the policy of the government or the opposition. Hon. members are here to give their own ideas to enlighten the house and the country. Otherwise members might spend their entire time quoting articles from one writer or another.


Paul Mercier: I submit, Mr. Speaker, that the opinion of Mr. Beatty as set out in the article which the hon. member is seeking to quote is absolutely pertinent.


Ian Alistair Mackenzie: May I
quote the rule, Mr. Speaker:
It is not in order to read articles in newspapers, letters or communications emanating from persons outside the house and referring to, or commenting on, or denying anything said by a member or expressing any opinion reflecting on proceedings within the house.
I submit that neither the speech delivered by Mr. Beatty in Toronto nor that which he gave in Winnipeg can be construed as having had any reference to proceedings now before the house, so that those speeches cannot come within the scope of this rule.


Armand Renaud La Vergne: The rule is
clear that hon. members may not quote other people's opinions but must give their own. If they have no personal opinions they need not speak.


Joseph-Arthur Bradette: I am giving my own
opinions, Mr. Speaker, and I do not see why you should apply the rule and make a special ruling applicable to my humble person, notwithstanding that all afternoon those who preceded me were allowed to give quotations.


Armand Renaud La Vergne: The hon. member is not fair to me; I am not giving any special ruling with respect to him.


Joseph-Arthur Bradette: Yes, Mr. Speaker; I submit that the ruling does apply to myself particularly.


Armand Renaud La Vergne: I was not in the chamber this afternoon.


Joseph Philippe Baby Casgrain: There should be uniformity of procedure.


Armand Renaud La Vergne: The hon. member can appeal, but that is my ruling.

CJV.R -C.P.R. Bill-Mr. Bradette


Paul Mercier: Do you not
think, your honour, that the hon. member is within the rule in quoting from a speech of Mr. Beatty's delivered prior to the present proceedings?


Armand Renaud La Vergne: The hon. member may quote facts, but neither Mr. Beatty's nor anyone else's opinion has anything to do with it, and the hon. gentleman has just said that what he is quoting is Mr. Beatty's opinion. Whether it be the opinion of Mr. Beatty or of Sir Plenry Thornton it makes no difference.


Peter Heenan: I am sure, Mr. Speaker,
it is the last thought in anyone's mind to appeal from your ruling, but surely we ought to have some semblance of fair play.


Armand Renaud La Vergne: I do not think the hon. member's implication is fair. I do not think I can be challenged with unfairness in the course of this debate. An hon. member can refer to any opinion expressed outside but he cannot read those opinions in this house when they relate to proceedings now before the house.


Peter Heenan: Will you allow me to
state my point, Mr. Speaker?


Armand Renaud La Vergne: The point of
order has been decided, and unless the hon. member is raising another point of order I rule that he has not the floor. I must ask the hon. member to take his seat.


Mr. GUTHRIE:: May I point out to you,
Mr. Speaker-


Peter Heenan: I have the floor.


Armand Renaud La Vergne: The hon. member for North Timiskaming (Mr. Bradette) has the floor.


Peter Heenan: I have the floor on a
point of order.


Armand Renaud La Vergne: What is the
hon. member's point of order?


Peter Heenan: My point is that when
the minister made his motion this afternoon he quoted from Mr. Hungerford and Mr. Beaty and-


Armand Renaud La Vergne: That is not a point of order.


Peter Heenan: Then, Mr. Speaker, I must appeal from your ruling.


Hugh Guthrie: I do not think this fact
has been brought to your attention, Mr. Speaker. The rule states:
It is not in order to read articles in newspapers, letters or communications emanating from persons outside the house and referring to, or commenting on, or denying anything said by a member or expressing any opinion reflecting on proceedings within the house.
There were no proceedings in the house when Mr. Beatty made the speech in question, nor had the bill been in the house.


Armand Renaud La Vergne: The rule refers to speeches outside commenting on proceedings in the house.


Hugh Guthrie: But the speech in question was delivered long prior to this debate.


Mr. MITCHELL:: May I cite this
precedent, Mr. Speaker. You yourself, speaking the other day as a private member of the house, read a lengthy extract from some journal printed in Paris, and that quotation was in connection with a debate that was in progress at that time.


Armand Renaud La Vergne: The hon. member is entirely wrong. I did not read an article commenting on any debate in the house; I quoted facts concerning the party to which the hon. gentleman belongs.


William Lyon Mackenzie King: I am the last one who would wish to appeal against your ruling, Mr. Speaker, but I entirely agree with the Minister of Justice (Mr. Guthrie) in what he has just said with respect to the rule and as to its bearing on the quotation which it is sought to make at the moment. I wish Your Honour would give further consideration to what has been said on that point; otherwise we shall be constrained to appeal from your ruling.


Armand Renaud La Vergne: If I gave further consideration to the point I should be deciding against the decision of the Speaker the other day and contrary to my own ruling.


Joseph Philippe Baby Casgrain: That was a wrong decision.


Ian Alistair Mackenzie: The ruling the other day was with respect to a quotation which was held to have reference to proceedings then taking place in the house.


Mr. SPEAKMAN:: The suggestion is. Mr. Speaker, that this particular incident does not come within the scope of the ruling given by the Speaker the other day..
2808	COMMONS
C.N.R.-C.P.R. Bill-Mr. Bradette


Paul Mercier: That is the point.


Armand Renaud La Vergne: I cannot hear the hon. member.


Alfred Speakman: I was merely suggesting that permission to the hon. member to give the quotation which he wishes to read would not conflict with the former ruling because it does not come within the scope of the ruling. This particular article does not fall under the ruling. The statements which are being quoted having been made long before this debate, they could not possibly have any reference to the present proceedings.


Armand Renaud La Vergne: I will not stand on pride, and inasmuch as the house is apparently unanimous against my view, I have no objection to the hon. member proceeding.


Joseph-Arthur Bradette: I am glad of Your Honour's ruling, because although I credit most hon. members of the house with a good deal of grey matter, at the same time I think that it is just as well for any member to give adequate preparation and study to any speech he is going to make. I am one of the last men to read speeches in this house; I do no want to read my speeches-


Armand Renaud La Vergne: I did not suggest that the hon. member was reading his speech.


Joseph-Arthur Bradette: In view of Your Honour's ruling, I will proceed with the quotation:
In the calendar year 1931, 62,902.865 bushels of Canadian grain went through United States Atlantic ports, while those same ports were getting only 15,984,659 bushels of United States grain,-and Halifax was getting the "magnificent" total of 162,100 bushels.
In the first seven months of the 1931-1932 crop year, Canadian wheat exports to the United Kingdom were as under:
Via:	Bushels
Canadian	Atlantic ports	
11,028,272Canadian	Pacific ports	
18,418,677United States ports	
37,258,371
Or, of 48,000,000 bushels of Canadian wheat moving eastward for export to the United Kingdom in that period, not less than 37,000,000 bushels went through United States channels!
These are astounding figures, showing in what enormous quantities Canada has permitted the diversion of its own traffic from its own channels.
This ruinous drain upon Canada's economic vitality must cease.
It continues in the same vein until we come to the last paragraph:
The chairman of the Halifax harbour commission has stated his belief that the port of

Halifax has just about reached the limit of its development unless an adequate share of the Canadian grain traffic can be secured, for, manifestly, it is going to he difficult, if not impossible, to develop any turn-around movement of liner tonnage under existing conditions.
In these circumstances, so vital not to this port and province alone, but to the dominion, as a national matter, we respectfully urge an early hearing of the appeal in the transcontinental grain rates ease, and a favourable decision in the interests of our own transportation channels.
The maritime provinces have cooperated with us in this all-important matter.
I am going to give hon. members the situation as it actually exists. When the road was completed in 1916 it was able to quote a rate of six cents per bushel on wheat from Armstrong, a station in the Thunder Bay district just north of lake Nipigon and almost due north of Port William and Port Arthur, down to Quebec city, a distance of 959 miles. But then a mysterious thing happened, the reason for which I have never been able to discover-hardly had the rate been announced than the Conservative government almost quadrupled it. If the railroad was making money with a six cent rate, why was that traffic taken away from us? The increased rate proved to be not only discriminatory but almost prohibitive, because I believe that after 1924 not a single bushel of wheat or a single carload of cattle has been routed from Winnipeg over the National Transcontinental. The expected volume of traffic never developed. There is some local traffic, but, as I said before, this section of the road was never intended for local traffic. When the road was built this section of the country was considered to be a wilderness. I can remember when the government of the province of Quebec granted certain timber, mineral and mining rights to a Belgian company, at that time northern Quebec and northern Ontario were considered as being practically wildernesses. We have developed quite a large population and a considerable local traffic, but the original idea in building the National Transcontinental was to take care of through freight and passenger traffic from ocean to ocean.
In 1921 the Quebec harbour commission made representations to the board of railway commissioners in connection with the 20.7 cents per bushel rate then in force on the Arm-strong-Quebec division. A sitting of the board was held in Quebec city with the late Hon. Frank Carvell presiding. We expected that we would receive fair treatment from the railway commissioners, but here is what hap-

C.N.R.-C.P.R. Bill-Mr. Bradette
pened. An extraordinary argument was used by the chief commissioner that if the rate was reduced, it would mean ruin for other railways. Mr. Carvel! said:
If my conception of the National Transcontinental was right, when it was started and when it was being built, I think freight can be transported over that line at a figure which would mean the absolute ruination of other railways in Canada. If not, we were all wrong and we were not justified in building it.
There was justification in building that section of the road but there is no justification in leaving it idle at the present time. These high rates are hurting the maritimes, northern Quebec and northern Ontario and the whole of Canada. I believe they have an adverse effect upon the western provinces as well. If the western provinces would study this question I believe they would find that the natural routing for their wheat, at least during the winter months, is from Winnipeg to Quebec and down to Halifax and Saint John. At the present time from forty to forty-five per cent of our wheat goes through American seaports. This matter vitally affects the maritime provinces because with the grain being routed as it is at the present time, an unreasonable amount finds an outlet through Buffalo and Montreal to Boston and Portland and other American ports. Were this traffic routed over the transcontinental to Quebec it could be profitably moved after the close of navigation on the St. Lawrence from the ancient capital via the old Intercolonial road to Halifax and Saint John. The present rate on wheat over the 959 miles stretch from Armstrong to Quebec is 20-7 cents per bushel, while the rate from Port Arthur to Edmonton, a distance of 1,305 miles, is only 15-6 cents per bushel. The rate per mile through northern Ontario to Quebec is about double what it is on the prairies. If an eleven cent rate were made effective to Quebec, it would immediately create a maximum rate upon the great lakes. The Canadian Pacific rate from Goderich to Halifax, a distance of 1,305 miles, is 12J cents per bushel, a rate considerably less than that prevailing from prairie points to the head of the lakes. The rate from Fort William to Halifax, a distance of 1,753 miles, is 21-3 cents per bushel while the rate from Armstrong to Quebec, a distance of only 959 miles, is 20-7 cents a bushel. A moment ago I quoted from a circular dealing with this all important question. I was glad to note that at the late imperial conference it was decided that grain being shipped to Great Britain should follow an all Canadian route. I hope that no loopholes will be found in this regulation because this route is the logical
route for grain shipments, especially during the winter months.
Grain is not the only thing which this transcontinental road can deliver most expeditiously. On a trial shipment of 600 steers, the running time of the train between Winnipeg and Quebec was eighteen hours less than it would have been from Winnipeg to Montreal. Two feedings only were sufficient whereas three are normally required. This fact, coupled with the lessened shrinkage in the shipment, represented a saving of not less than $5 per head, or, roughly, S3,000 upon the whole consignment. This experiment was carried on for one winter only and I cannot understand why it was not continued. Is it because we have not sufficient population in these sections to command a certain number of votes? I believe the only way that this situation can be remedied is by bringing forward the facts as forcibly as possible. If it was a parochial or local matter I would not bring it to the attention of the house, but I believe it is more than that. If hon. members from the maritimes, the province of Quebec, the province of Ontario and the three western provinces would study this situation I believe they would find a reduced rate would be beneficial to the country as a whole.
We are in the pioneering sections of Canada and I cannot understand why the older sections of the country do not realize the true position. At times we contend, and perhaps rightly so, that the larger centres of population in Ontario and Quebec are against us. If the traffic which goes from the head of the lakes through American ports was kept in Canada, there would not be so much criticism, but this is not the case, as I have shown, a large percentage of it is entirely lost to Canadian traffic. In 1921 Commissioner Rutherford made a statement in response to a request for lower rates, so when I have another occasion to speak on some of the features of this bill I am going to refer to what a former commissioner had to say as to what happened in our section of the country. This is Commissioner Rutherford's statement:
This is something that has to be general in a very careful way. When we consider the . elevator system at Fort William and Port Arthur, the tremendous machinery created for the movement of that grain crop, to introduce a revolutionary method like the making of a special rate on any one road would mean disturbing the whole movement of grain, such a disturbance as would bring about economic disaster for the time being.
We do not want any special favours or any special rate in our section of the country; we desire only equalization of rates, the same
2810	COMMONS
C.N.R.-C.P.R. Bill-Mr. Bradette
rate as exists in other sections. When we apply to the Board of Railway Commissioners, we do not go there as mendicants; we want to receive the same attention as the rest of Canada is getting, and fair play, that is all. The commission did not make any difficulty about giving its reasons why the rates should be made high: If the road carried grain as cheaply as it could, in view of its superior construction and low grades, other roads, less favourably circumstanced, could not compete, and therefore it must not be allowed to make low rates. This is certainly not a statement from a national point of view, not a statement worthy of a commissioner. Every section of the country should receive the same treatment. I do not like to make this observation, but in our section of the country we feel that because of our small population we are not receiving the treatment to which we are entitled. But without trying to prophesy, I believe, that within the next twenty years instead of 200,000 we shall have a population of at least half a million, and then perhaps we shall be treated more favourably than we are at the present time. I have, however, enough confidence in the fair-mindedness and justice of the present Minister of Railways to believe that, although the particular locality in which he resides may be adversely affected, he will use his influence to see to it that the Canadian National system in our section receives from the railway commission the just treatment it deserves.
A ruling has been made in regard to reading certain extracts. I believe that I shall be in order now in reading a memorial presented by the Cochrane board of trade and, I believe, distributed to all members of parliament ten or twelve months ago. It deals with the matter in a very thorough manner and I am going to read it to the house. It states:
The National Transcontinental railway from Quebec to Winnipeg was conceived and built for the most direct and economical transportation of passengers and freight between eastern and western Canada, and for this purpose it was constructed with a minimum of grades and curves. In the early years of its operation, it was shown that grain could be hauled from western Canada to eastern seaports in greater quantities and at a cheaper rate per train than over any other Canadian railway.
But since this demonstration, it appears that the National Transcontinental railway has been discriminated against by the increase in the freight rate on wheat to help its competitor thereby defeating the very purpose for which it was built and diverting much of our wheat haulage to American territory and to American ships.
fMr. Bradette.]
I believe, in thus mentioning the anomaly, it is stating the case properly.
The possibilities of this railway do not seem to be known and appreciated as they should be by the people of Canada, by the members of parliament or even by the administrative heads of our railway systems.
No doubt this was an allusion to the railway commissioners, because after a great deal of expenditure and much travelling, we could not get a proper judgment from that commission.
Recently the Canadian National trains 1 and 2 between Montreal and Vancouver, which have been running through Cochrane for fifteen years, have been rerouted via Capreol, thereby missing 400 miles of what is perhaps the most prosperous mining, timber, agricultural and tourist district in Canada, namely: between North Bay and Hearst.
Therefore, the Cochrane Board of Trade humbly requests the royal commission and the president of the Canadian National Railways to consider its claims for a restoration of proper passenger and freight service between Winnipeg, Quebec, Halifax, Montreal and Toronto by Cochrane over the National Transcontinental railway of the Canadian National lines for the following amongst other reasons:
(A) Re: Passenger Service
1.	A glance at a map of Canada shows the National Transcontinental line as the most direct link between Quebec and Winnipeg.
2.	This line was constructed with a minimum of grades and curves, permitting fast travel and heavy haulage.
3.	It passes through the prosperous agricultural, mining, timber and tourist districts of Northern Quebec and Northern Ontario.
4.	It is linked at Herve junction with Montreal; at Taschereau with Rouyn and Kirkland Lake; at Cochrane with Montreal, Toronto, Cobalt silver camp, Kirkland Lake and Timmins gold camps, the lower and upper clay belts of Northern Ontario, and the James Bay basin; at Hearst with the Algoma Central railway from Sault Ste. Marie; at Nakina, with Sudbury and Port Arthur districts, at Sioux Lookout with Fort William districts.
5.	The possibilities of increase in population and thus in passenger traffic are greater in the territory traversed by it, than along any other transcontinental line in Ontario and Quebec, owing to the agricultural, mining and timber resources that it taps.
6.	There are greater attractions and interest for cross-country passengers in the territory served by the National Transcontinental railway than along the other railroads.
7.	The mining camps of Tashota. Red Lake, Manitoba and the Peace River were mostly opened up and developed by prospectors and' mining men from the Cobalt, Kirkland Lake and Porcupine camps of Northern Ontario and the National Transcontinental railway is the logical means of communication between them.
S.	The southern part of Northern Ontario, could be served by the Canadian Pacific railway and the northern part can be better served by the National Transcontinental railway.

C.N.R.-C.P.R. BUI-Mr. Bradette
which crosses the only territory in Northern Ontario capable of greater agricultural, mining and industrial development.
9.	Although there is duplication between the Canadian Pacific railway and the Canadian National railway in other parts of Ontario and Quebec, there is no duplication of the Quebec to Winnipeg railway line.
10.	A fast, complete and economical passenger service between Winnipeg and Toronto, Montreal, Quebec and Halifax could be maintained by routing the Toronto-Vancouver trains over the old Grand Trunk railway via North Bay, joining there with the Montreal trains, and proceeding over the Temiskaming and Northern Ontario railway to Cochrane where connections with the Quebec trains can also be made.
11.	Towns were built up along the National Transcontinental railway and industries developed with the expectation of continued main line traffic and at present passenger service is practically cancelled from Hearst westwards to Nakina along this line.
(B) Re: Freight Service
1.	The straight line between Quebec and Winnipeg, with an excellent road-bed and minimum of curves and grades favours rapid and economical haulage of heavy freight trains.
2.	The junctions at Sioux Lookout, Nakina, Hearst, Cochrane, Taschereau, and Herve also support the contention that the National Transcontinental railway should be put to greater use in cross country freight haulage.
3.	During the war, a huge quantity of freight was hauled over this line at a lower tonnage cost thau any other transcontinental railroad.
4.	The winter haulage of grain to Canadian Atlantic seaports can be accomplished more economically over this road.
5.	The rapidity of development of Northern Quebec and of Northern Ontario is an assurance of increasing incoming and outgoing freight.
6.	By using the old Grand Trunk line between Toronto and North Bay, and the Ontario government owned Temiskaming and Northern Ontario railway between North Bay and Cochrane, the National Transcontinental railway can handle the Toronto-Winnipeg freight to greater advantage.
7.	The diversion of Canadian grain to American ships, railroads and elevators with resulting loss of wages to Canadian workmen should be prevented and the National Transcontinental railway restored to its proper object of hauling western grain to Canadian Atlantic seaports and carrying eastern products and imports westwards.
S. Of the three transcontinental lines crossing Ontario; Canadian Pacific, Canadian Northern and National Transcontinental, the last is the more suitable for rapid and economical haulage and crosses the most populated, prosperous and promising agricultural, mining and timber districts, suitable for the establishment of one million more Canadian citizens.
I believe I have built up a case for the National Transcontinental, and it is up to parliament in this new legislation to ensure that our section of the country receives the treatment it deserves. Why should the people
of Canada spend 8170,000,000 for the mere pleasure of building a road, through what was then a wilderness, over which freight could be forbidden to flow? Certainly that was not the intention of those who constructed the transcontinental system.
As I stated at the outset, it was never the intention .to build that section of road purely for local traffic. It is true that up to three or four years ago, only with local traffic, that section of the road was self-supporting, and I believe it is self-supporting at the present time, but it was not intended for local traffic alone. We never, however, received the quota of through traffic we were entitled to get. This applies more particularly to grain and also to cattle. It may surprise hon. members to hear that, although we have the most direct route, for instance from Halifax to Winnipeg and Vancouver, we have never had a single sack of European mail going over our section of the road. It was always moved the other way. It may surprise hon. members also to hear that if I buy a carload of feed or flour to be delivered in the town of Cochrane from Winnipeg, instead of coming in the most direct way from Winnipeg to Cochrane, that carload is billed to Fort William or Port Arthur, from there routed over the Canadian Pacific up to North Bay, and then from North Bay to Cochrane, providing almost double the amount of traffic it should.
I have spoken on this subject on several occasions, Mr. Speaker, and no matter how much the members of this parliament may resent the fact of my speaking about it so often, I intend to bring it up as of-ten as possible until I get the ear of parliament and of the press, and the country realizes the anomaly in the present situation. We maintain that if we had the traffic to which we are entitled the Canadian nation would not lose any traffic, and that is without prejudice to the Canadian Pacific. It would simply be throwing into Canadian channels the traffic that is passing through foreign channels. I believe in the policy of Canada first to the greatest possible extent.


Mr. W. G. ERNST (Queens-Lunenburg):: Mr. Speaker, it is not my intention to detain the house for more than a few minutes to deal with one particular phase of the bill which is before us. But before doing that, I should like to make some brief reference to the remarks made by the hon. member for West Lambton (Mr. Gray).

C.N.R.-C.P.R. Bill-Mr. Ernst
I was grateful to hear what the hon. member for North Timiskaming (Mr. Bradette) had to say about Canadian trade going through Canadian ports, because I gathered that he is entirely in favour of it provided the traffic goes over the National Transcontinental. The hon. member for West Lambton, however, seemed to think that such a slogan and such a policy were inimical to the best interests of this country. I know the hon. member is a lawyer by profession, and I see him now almost within the precincts of the house. I should like to put to him two questions. The first question which I put to him as a lawyer is this:	Has he read his constitutional history and the history of the development of confederation in this country? The second question is: Does he know what constitutes a law, what essential elements are necessary? He seemed to take exception to section 14, subsection 2 of the bill, which provides that the trustees shall route through Canadian ports Canadian shipments unless the shipper otherwise directs. If he has read his constitutional history, he knows that it was part of the 'basis of confederation, part of the pact under which the maritime provinces entered confederation, that the maritime ports were to be the winter ports of the other provinces of Canada. And if he is a lawyer he knows what it means to break a contract, and that was part of the contract. I ask him the further question:	Does he believe in
breaking a contract?


Mr. YOUNG:: Where do you find that in the contract?


William Gordon Ernst: In the discussions preceding confederation, which apparently the hon. gentleman has not read.


Edward James Young: I am talking about the law.


William Gordon Ernst: I am talking of what induced the maritime provinces to enter confederation. The hon. member for Shelburne-Yarmouth (Mr. Ralston) is smiling. I would ask him, does he favour Canadian trade going through Canadian ports?


Mr. RALSTON:: May I ask if it is not
permissible to smile in this house?


William Gordon Ernst: That is not an answer. 1
ask him again, does he favour Canadian trade with Canadian ports?


James Layton Ralston: I certainly do.


William Gordon Ernst: I would ask my hon. friend from Hants-Kings (Mr. Ilsley) if he favours Canadian trade with Canadian ports.


Mr. ILSLEY:: Is this a cross-examination? If so, I may say that I intend to speak in the debate.


William Gordon Ernst: Then I would ask the hon.
member to answer the question. At any rate, the Liberal party as usual is hopelessly divided.


Ian Alistair Mackenzie: We are
not rubber stamps like the Tories.


William Gordon Ernst: I know the hon. member for Vancouver balks. I ask the hon. member for West Lambton further, does he know the essentials of a law?


Edward James Young: Economic law?


William Gordon Ernst: No, the law. Economic laws are inexorable. I am talking about manmade laws. It consists of a declaration and a sanction, the declaration being the words and the sanction the penalty. The only complaint I have against section 14, subsection 2, is that it is a pious declaration that the trade of Canada shall go through Canadian ports, and no penalty is provided in case it does not. What happens if it is not routed through Canadian ports? Is there a penalty? If so, what? What does the act prescribe? My complaint is that the penalty is entirely lacking. It should be made compulsory.
Having said that I want to make one further reference to the speech of the hon. member for West Lambton.


Ian Alistair Mackenzie: It was
a good speech.


William Gordon Ernst: I am sorry to see that my
hon. friend is so vicious a politician. I credited him with something better because the speech of the hon. member for West Lambton wras the first that degraded the tone of this debate. I can liken it to nothing quite so much as the first gas attack, because the Minister of Railways had initiated and others continued the discussion on a very high plane indeed.


Ian Alistair Mackenzie: Is this
the counter attack?


William Gordon Ernst: The Minister of Railways
refrained entirely from any political accusation, and not one member of the house can point to one thing he said that savoured of politics. He appealed to the house to be dispassionate.


Ian Alistair Mackenzie: Follow
your leader.


William Gordon Ernst: My leader has said nothing
on the question that I know of.


Ian Alistair Mackenzie: The
Minister of Railways.

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


William Gordon Ernst: I shall disagree with him
later, but I wish I had always the ability and the courage to follow him on as high a plane as his speech to-day, and I wish this house had.
The hon. member for West Lambton, in tones of great fervour, said that this house endorsed public ownership, and he pleaded eloquently for it, and then in the next breath he complained bitterly because the arbitral tribunal to be appointed under this bill may confiscate what he calls the property of a private corporation. Where does he stand? What does he want? He wants to blow hot and blow cold. He wants to appeal to public ownership sentiment in this country, and to appeal also to the Canadian Pacific Railway workers in his own constituency'-nothing more or less. I do not intend further to deal with the hon. gentleman's speech.
As to the speech of the hon. member for North Timiskaming, I do not think that my hon. friend spoke very much about the bill before the house, but may I say that it is one of the fervent desires of my own province that some day Canada may see fit to use the National Transcontinental for the purposes for which it was intended.
I pass now to the subject which brought me to my feet, and that is part I and part I only, of the bill, which relates entirely to the management of the Canadian National Railways. As you will remember, Mr. Speaker, it was brought out by previous speakers and by the minister when he moved the second reading this afternoon, that part I provides for three trustees to administer the affairs of the Canadian National Railways, a chairman and two others. The chairman under the bill has the power of veto. He can initiate nothing without a majority vote, but he can veto anything.
It was further stated that the three trustees must be so located that they would be available immediately for consultation, the chairman being a full time man and the other two trustees being immediately available whenever required. I think that that must mean, Mr. Speaker, that all three trustees must live in the immediate vicinity of Montreal. The two who are to be part time men must almost be residents of the district in the immediate vicinity of Montreal.


Alfred Speakman: They should all be full time.


William Gordon Ernst: Certainly they should all be full time, and they should not all come from the immediate vicinity of Montreal. I listened to the hon. member for North Waterloo (Mr. Euler) this afternoon when he objected to any trustee being chosen for geographical reasons. With all due deference I am going to advance a contrary argument. I ask the house to remember that in this bill we are dealing with two railway systems but with two systems which are essentially different in structure. One, the Canadian Pacific, was built deliberately and purposely as a system. If mistakes were made they were errors of judgment; but it was built, as one might say, from the inside out. The other, sir, was simply an aggregation of bankrupt railways which were picked up, placed under a common management and an effort made to consolidate them into a system. It was not built scientifically. With all due deference I submit that it cannot ever be managed on a hardheaded business basis, as could the other corporation, without grave danger to the structure of the country. I know that that is an unpopular statement to make, but let me elaborate.
We have within the system a large number of branch lines, part of the old Transcontinental lines, and the old Intercolonial railway. Some of them have never paid and may never pay-although perhaps that is too broad a statement. Let me, however, take the Intercolonial as a starting point. I wish to give one or two illustrations. The Intercolonial-and this time I believe the hon. member for West Lambton will find corroboration for my statement an the British North America Act, section 133-the Intercolonial was, one may say, the quid pro quo for the entrance of the maritime provinces into confederation.


Edward James Young: How many quid pro quos did you get?


William Gordon Ernst: I do not know, but certainly we deserved more than we ever got. The Intercolonial was the quid pro quo, because through it our products were to flow to central Canada, and the products of central Canada were to flow to us, our ports being used for export to the markets of the world. We have surrendered a good deal, so far as the Intercolonial railway is concerned. We surrendered what I believe to be part of our constitutional rights when the Intercolonial became part of the Canadian National railway system. I did not disapprove of the change, but I say that the railway was not built as a commercial enterprise; it was built primarily as a military enterprise, and followed almost the longest possible route in an effort as far as possible to get away from the United States border. I am fearful that if such a railway is placed under the control of a purely business admini-

C.N.R.-C.P.R. Bill-Mr. Ernst
stration, which will not have at heart the history of Canada, damage may be done to the structure of confederation. As a member from the maritime provinces I should like to be sure that those provinces will have representation on the board of trustees in order that the integrity of the old Intercolonial may in some measure be preserved. I do not ask for control-although judging from what we have given to the rest of Canada we might also ask for that-but I do ask that we have some representative whose voice may be heard urging our problems, when they arise, before a decision is given.
I am fearful that on a basis of pure dollars and cents irreparable injury may be done. I ask the hon. member for Vancouver Centre whether he has not the same fears for the Pacific slope, although he has not the bond of the British North America Act to help him out. I am in sympathy with him.
Let me give another illustration. I shall take a branch line such as that running through my constituency. This branch line is supposed to be losing money. Under a board of three trustees from one centre, what will happen? They are charged with making the railway pay, if it is humanly possible, and I have no doubt they will try to do their duty. If they do, what happens? They will look at a report from this branch line and take note that traffic on this particular line is light. They will decide that they can handle the traffic with less trains per week than are now running. Possibly where there are twelve trains per week they would attempt to give the service with six or seven. The interests of the trustees would be purely financial, those of the Canadian National railways and nothing else. They know nothing about the national considerations or the vision which prompted the building of many of these lines. They know that dividends have to be paid in dollars and cents, and for that reason they will say: "We will handle that traffic with so many trains a week."


Edward James Young: Quite right.


William Gordon Ernst: What happens? I will give the hon. member an illustration, because obviously he lives on the main line.


Edward James Young: No, I do not.


William Gordon Ernst: I shall give an illustration.
We will take a fish firm which caters to the fresh fish trade of Canada, and employs between three and four hundred men. In order to continue business that firm must be able to make express shipments instantly. Restrict train service, and that firm might

become bankrupt and the men would have to walk out on the street. Nothing else could happen. What is true of that firm is true of many others. I have no doubt the hon. member for Shelburne-Yarmouth knows of many more firms in his constituency which would be in the some position. If we run the branch lines on a pure dollars and cents basis without taking into consideration the national interest, we will put a good many men on the street who are now earning decent livings.
As I have said, the Canadian National railways were not built as a railway system, but were built by those who had vision and who had faith in the future of the country. Let me give one further illustration in connection with the same branch line. Obviously if those who sit at the head, with the blue pencil, are interested only in the production of dividends, those who manage the affairs on the main line will try to make a good showing, even at the expense of the branch lines. The whole Atlantic region is under one management. What has been happening? Branch lines are saddled with every possible expense which can be piled on to them, so that the burdens of the main lines may be lightened. In December three locomotives were sent from the main lines to this particular branch line. W7hen they got down there they wheezed, whistled and died and had to be sent back to the main line for repairs. Those repairs were charged to the branch line. The main line saved the expense. Its shops were credited with the repairs. If that happens now, what will happen if there is nobody on the board of trustees who has knowledge of local conditions? I put that question to hon. members, and speak feelingly, because after the damage has been done it will be too late.
I now come to the point I have been trying to illustrate, namely that the board of trustees should consist of five members, and I am prepared to support an amendment to that effect. I believe that all five members should be full time members-all of them. I believe the west should have representation, not in order that there might be political or geographical pull, but in order that these peculiar conditions of which I speak might be brought to the notice of the board before it took responsibility for making a decision. I am afraid of the decision that will be made by men sitting in Montreal who perhaps do not know a single thing about the region concerning which they are making the decision.


Jean-François Pouliot: About the branch lines.


William Gordon Ernst: No, more than the branch
lines. I am afraid, Mr. Speaker, that if the

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legislation goes through as the bill now stands many members will come back here at the next session regretting having so voted.
There are other features of the bill of which I do not entirely approve, but which I am prepared to support. I realize the need for every possible economy consistent with the national interest. But my point is that I believe there is an interest greater than the interest of the dollar, and that is the interest of the Canadian people as a whole. I welcome the announcement of the Minister of Railways this afternoon that minor amendments will be considered on their merits, and that the government is willing to accept them if they are in the interests of Canada. I implore the government either to move or to accept an amendment making the board of trustees five and assuring the country that every part will have representation thereon.
I do not speak as a defeatist with relation to the Canadian National. I realize that the problem is acute, but after all it is not much more acute than the problem every one of us has to face to-day. I am confident that we have turned the corner; we are facing prosperity, all we have to do is to go towards it. I speak only as a private member; my opinion may be worth nothing, and I hope it gives offence to none, but I regard the collapse of the financial structure of the great republic to the south of us as the first herald of the dawn. I cannot help but regard it so; for I have always thought, and have stated publicly-not because I have any dislike for the United States; I have two brothers earning their living there-my earnest conviction that the United States has been chiefly responsible for the world collapse. I have always predicted that before we can recover they would have to go through torture and pain. I hope the pain will become no greater, but I am satisfied that from what has happened will result the turn towards a stable international monetary basis, which is the first prerequisite for recovery. When we do that I am satisfied it is going to be on the basis of inflation in the United States; that our dollar, being shackled to the American dollar, will be inflated; that commodity prices will rise, the revenues of the railways will increase, our governmental revenues will go up, our private revenues will go up, and our troubles will be over.
On motion of Mr. Heenan the debate was adjourned.
On motion of Mr. Guthrie the house adjourned at 10.55 p.m.
Wednesday, March 8, 1933