1936-04-27

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

Mr. DESLAURIERS:: 1.	Is it a fact that the Canada Life Assurance Company, investment department, 275 St. James street west, Montreal, has issued a circular stating that by virtue of an agreement with the government this loan company will pay 50 per cent and the government 20 per cent of approved loans in the province of Quebec, that is 70 per cent instead of 80 per cent as the law demands, while in the other provinces of the dominion this company states that an agreement has been made with the government to pay 80 per cent?
2.	If so, can the government state how many of these loans were made in the province of Quebec after an agreement between the government and this loan company?
3.	What are the reasons given for the inequality of treatment between Quebec and the other provinces of the dominion?
4.	What are the other loan companies, if any, who have made similar agreements with the government concerning the province of Quebec?


Mr. DUNNING:: 1.	No information as to the circular referred to. In the case of all lending institutions, the agreements between the dominion government and such institutions provide that the share of the lending institutions may be 50, 55 or 60 per cent of the total actual cost of construction or appraised value of the property, whichever is the lesser, as agreed upon between the lending institution and the borrower in each case. Under the agreements there are mo provisions limiting the operations
of the lending institutions to any one or more provinces or discriminating between various provinces as to amounts loaned or other conditions.
2,	3 and 4. Answered by No. 1.


WHEAT EQUALIZATION CHEQUES
Mr. MAYBANK:: 1. How many grain growers benefited by equalization cheques respecting wheat in (a) Manitoba; (b) Saskatchewan; (c) Alberta?
2. How many grain growers benefited by equalization cheques respecting coarse grains
(a)	Manitoba; (b) Saskatchewan; (c) Alberta?
3.	What is the amount of each of the three largest cheques paid out as equalization money in respect to wheat, and in favour of whom were such cheques made?
4.	What is the amount of each of the three largest cheques paid out as equalization money in respect to coarse grains, and in favour of whom were such cheques made? _
5. In what number of cases did primary producers	assign	such	equalization	paymentsrespecting	wheat	(a)	Manitoba;	(b) Saskatchewan; (c) Alberta?6. In what number of cases did primary producers	assign	such	equalization	paymentsrespecting	coarse	grains (a) Manitoba; (b)
Saskatchewan; (c) Alberta?


Mr. GARDINER:: Mr. Speaker, I would point out in reply to this question that the government will not be in possession of the information referred to. It will be in the hands of the wheat pools, and not even in their hands until later in the year. I would therefore ask that the question be dropped.


Mr. SPEAKER:: Dropped.


CANADIAN NATIONAL RAILWAY SECURITIES
Mr. TUCKER:: 1.	Have the railway obligations or securities against which $16,000,000 of dominion notes were issued pursuant to authority contained in "An act respecting the issue of dominion notes," statutes of Canada, 1915, chapter 4, been paid?
2.	If so, when were they paid?
3.	How much interest, if any, has been paid on said securities to date?
4.	To whom was such interest paid?


Mr. DUNNING:: 1.	No.
2.	Answered by 1.
3.	Interest paid by the Canadian Northern Railway Company and the Grand Trunk Pacific Railway Company on advances secured by the obligations, referred to amounted to $2,327,94523.
4.	Receiver General of Canada.


FARM LOAN BOARD, REGINA
Mr. PERLEY (Qu'Appelle):: 1.	Who was the first appointed to take charge of the farm loan board in Regina, Saskatchewan?
Questions

2.	Was he a returned soldier?
3.	How long did he continue in office?
4.	Were his services satisfactory?
5.	Who is now in charge of said office?
6.	Is he a returned soldier?
7.	Has any change in salary been made?
8.	If so, when was such change in salary made?
9.	By whom was the present officer recommended?


Mr. DUNNING:: 1.	J. F. Anderson, Regina, Saskatchewan.
2.	Yes.
3.	From May 16, 1935 to March 10, 1936.
4.	Not entirely; in reorganizing the work of the board he was retired as in the best interests of the board.
5.	R. S. Rideout, Regina, Saskatchewan.
6.	No.
7.	No.
8.	See answer 7.
9.	Appointment was made in accordance with the provisions of the Canadian Farm Loan Act following his application for the position.


CREW OF STEAMER GRENVILLE
Mr. CHURCH:: 1.	What members of the crew of the steamer Grenville at Prescott, engaged in lighthouse work on the St. Lawrence and lake Ontario, and the great lakes, were dismissed since October 14, 1935?
2.	By whom were they replaced?
3.	What previous experience had the new appointees for this work?
4.	(a) What are the home addresses of the present members of the crew; (b) by whom were they recommended?
5.	What notices, by telegram, letter or otherwise, were given to the members of last year's crew to report for duty?
6.	Were any of said notices cancelled?
7.	Has any member of the crew been dismissed since the opening of the navigation season?


Mr. HOWE:: 1.	First and second engineer.
2.	Chief Engineer H. I. Myers replaced by George Jarrell. Second Engineer W. E. Godkin replaced by George Mortlock.
3.	The new appointees possess the necessary certificates of competency.
4.	(a) Three from Prescott; thirteen from Kingston; one from Spencerville; one from Broekville.
(b)	They were appointed on instructions issued by the department. '
5.	Acting superintendent instructed by letter of the 5th ultimo to recall the first and second engineers, two oilers, three firemen to commence duty on the 10th of March, on the understanding that these appointments were to be of a temporary nature.
6.	Yes.
7.	Yes.
(Mr. E. E. Perley.l


ROYAL CANADIAN MOUNTED POLICE
Mr. PERLEY (QuAppelle):: 1.	Was there a regulation in force on the first day of October, 1935, fixing a retiring age for surgeons in the Royal Canadian Mounted Police?
2.	Has there been any amendment of such regulation? If so, what were the amendments, and when were they enacted?
3.	Who was the Royal Canadian Mounted Police surgeon at Regina on the first day of November, 1935?
4.	Is the position still occupied by the same person?
5.	If a new appointment has been made, what
is:	(a) the name of the appointee; (b) the
date of his appointment; (c) his salary or remuneration; (d) his age?


Mr. CARDIN:: 1.	Yes, for regular uniformed surgeons, but not for "part-time" surgeons.
2.	No.
3.	There was no regular uniformed police surgeon at Regina on the first day of November, 1935, and there has been none since the 28 th February, 1934-the last uniformed surgeon having been retired on the 27th February, 1934. Since that time, "part-time" surgeons only, or acting assistant surgeons, have been appointed, and these have no status for superannuation or retirement, and are appointed on a month to month basis. The "part-time" surgeon, or acting assistant surgeon at Regina, on the lgt May, 1935, was Dr. S. E. Moore, M.B., M.D., F.R.C.S., (C).
4.	Answered in part by No. 3. Dr. Moore is not the "part-time," or acting surgeon, at Regina at present.
5.	The "part-time" surgeon, or acting assistant surgeon, at Regina, at the present date is:
(a)	Dr. W. A. Thomson.
(b)	Date of appointment^-6th April, 1936.
(c)	Salary-$150 per month.
(d)	Age-No information.


AMHERST RURAL ROUTE NO. 4
Mr. BROOKS:: 1.	Were tenders invited during the year 1935 for performing the service on Amherst, Nova Scotia, rural route No. 4; if so, was a contract entered into, and with what person and upon what terms?
2.	What are the names of those who submitted tenders, and the amount of each tender?
3.	If tenders were called and no contract entered into, why was no contract awarded?
4.	When was the last contract terminated, and is the person who had such contract at present conducting the service; if not, why?
5.	Who is at present performing the service and upon what terms?


Mr. ELLIOTT (Middlesex):: 1.	Tenders were invited but contract not yet awarded.

2.	Contract arrangements not having been *completed it is not considered in the public interest to give this information until new contract has been executed.
3.	On account of doubt as to ability of lowest tenderer to give satisfactory service.
4.	December 31, 1935. No. Mr. Ackles, former mail contractor, refused to continue service temporarily for short period beyond that date.
Motions jor Papers
5.	Douglas Baxter, temporary, at the rate of SI 10 per month.


FURNITURE IMPORTATIONS
Mr. EDWARDS:: What was the value of furniture imported into Canada from the United States during each of the months of January, February and March, 1935. and during each of the same months in 1936?


Mr. ILSLEY:: Imports of Furniture from the United States Entered for Consumption in Canada During the Months of January, February and March, 1935 and 1936
Item	Month	1935	1936
Furniture, house, office, cabinet or store			
furniture of wood or other material, n.o.p,,			
in parts or finished	January	.. $18,673	$33,809February	.. 19,990	56,707March	.. 33,982	59,404Furniture, house, office,, cabinet or store., of	metal, in parts or finished	January	.. 10.910	17,142February	.. 12,884	23.270March	.. 17.983	32,329



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. CHURCH:: 1.	What were the yearly expenditures by Canada on the League of Nations from 1920 to 1936, inclusive?
2.	Except by the covenants to the League of Nations, what treaties or undertakings has Canada made to date with foreign powers as a nation which involve supplying armed resistance in certain cases, either separately or as a member of the British empire?
3.	Has the government any information to give the house about any proposals made to reorganize the league with a view of making it a more practical agency for peace and security to meet changed conditions so as to adjust the league to modem 1936 conditions and increase its usefulness by the admission of the United States, Japan, Germany and Russia, as members thereof?
4.	Will any additional papers or other material about the league or the European situation, since the white paper, of February last, be laid on the table of the house?
5.	Is it proposed to send special delegates
with no training as ambassadors for 1936 meetings of the league; if so, and if the delegates have been chosen, who are they, and what reports do these outside representatives make and to whom?	.


PURCHASE OF TURKEYS
Mr. WERMENLINGER:: 1. Since the change of government, did the Department of National Defence or the Department of Labour purchase a number of turkeys during the last Christmas season?
2.	If so, to whom was the contract given?
3.	What was the price?
4.	Were tenders called for?
5.	If so, what were the names of the tenderers?



MOTIONS FOR PAPERS


[Stage Direction]
Mr. MULOCK (for Mr. Maybank:
For a copy of order in council No. 2238.

Mr. BETTS (for Mr. Church):: For a copy of all correspondence, letters, agreements or any other written material between the government of Canada or any officer thereof and the Brotherhood Railway Carmen of America (Canadian division), protesting against the use of sand blasting processes because of the fatal results to operators of these apparatus, during the year 1934 and 1935; to include a copy of any report made by the federal Department of Health regarding this process and as to the great loss of life from a disease known as silicosis, caused by inhaling the dust from the sand blasting operations.



A. GODBOUT

Mr. LAWSON:: For a copy of all letters, correspondence, telegrams and other documents in the possession of the Post Office Department relative to the dismissal of Mr. A. Godbout, former postmaster of La Durantaye, county of Belle-chasse, Quebec.
Motions for Papers



IMMIGRATION

Mr. SYLVESTRE (for Mr. Jean):: For a copy of all orders in council passed since January 1, 1936. authorizing the entry of immigrants to Canada.



PHILIPPE CHALIFOUR

Mr. LENNARD (for Mr. Wermenlinger):: For a copy of all correspondence, telegrams, letters and other documents in the possession of the Department of Marine, with reference to the dismissal of Philippe Chalifour, labourer for the said department at Quebec, dated from October, 1935, to date.



WHEAT CROP EQUALIZATION PAYMENTS ACT

Mr. MUTCH (for Mr. Maybank):: For a return showing:	(1) The name,
address and calling of every person, firm, corporation, etc., other than a primary producer of grain, receiving any payment of money under the provisions of the 1930 Wheat Crop Equalization Payments Act; (2) the amount of wheat for which each of such payments was made; (3) the reason for such payment being made, whether as a result of an assignment by a primary producer or otherwise; (4) the name and address of each primary producer as a result of whose assignment any such moneys as aforesaid were paid.


James Garfield Gardiner: The same thing applies to this motion as was said in connection with the question to which I spoke a few moments ago, and it will apply also to the following motion. It would be impossible for the government to accept these motions in their present form.
Motion dropped.


Leslie Alexander Mutch: For a return showing:	(1) The name,
address and calling of every person, firm, corporation, ^ etc., other than a primary producer of grain, receiving any payment of money under the provisions of the 1930 Wheat Crop Equalization Payments Act; (2) the amount of coarse grains for which each of such payments was made; (3) the reason for such payment being made, whether as a result of an assignment by a primary producer or otherwise; (4) the name and address of each primary producer as a result of whose assignment any such moneys as aforesaid were paid.


James Garfield Gardiner: The same applies here.
Motion dropped.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day.
Right Hon. R. B. BENNETT (Leader of the Opposition):: Is the Prime Minister (Mr. Mackenzie King) in a position to indicate first, what further legislation we may be called upon to consider, and, second, when we may expect the budget?


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I may say I expected my right hon. friend to ask this question, and as I am anxious to give as final a list as possible of the measures to be presented to thv house, I should like to have another day or two before replying to his question. As to the date of the budget, I understand the Minister of Finance (Mr. Dunning) has been endeavouring to arrange matters so as to bring it down at an early date, and perhaps he can state to the house how soon he thinks that will be.
Hon. CHARLES A. DUNNING (Minister of Finance): I think I shall be in a better position to answer that in a day or two. I also have my troubles.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
Hon. G. D. HOWE (Minister of Railways and Canals) moved the second reading of Bill No. 21, to amend the Canadian National-Canadian Pacific Act, 1933.
He said:	Mr. Speaker, in bringing down
this measure I feel I am sponsoring a most important and necessary piece of legislation. It is common knowledge that the three directors to whom the direction of the railways was entrusted as a result of the 1933 act have made no real progress toward the improvement of our railway situation. To date they have failed to achieve any substantial cooperative economies, to secure which was the principal object of their appointment and the outstanding feature of the 1933 legislation. Not only have they failed to secure any substantial results to date, but on their own published statements, the prospect of future results from cooperative measures, plans and arrangements is not bright. Nor have they been able to reduce to any great extent Canadian National operating costs, due to the fact that that avenue had been so thoroughly explored by the previous boards of directors. I shall in a few moments support these statements by citations from the reports of the trustees themselves. That is the external situation.
Internally, as most hon. members are probably aware, there is much unrest among Canadian National employees who everywhere appear to regard the trustee method of direction and control with distrust and suspicion. This is primarily due to the fact that in matters of actual management the chief operating officer with the titular rank of president is subordinated to a trustee

C.N.R.-Board o/ Directors
board of three laymen, inexperienced in railway problems and who know nothing of actual railway practice, and, as a result, have shown a complete lack of understanding of the human element which, under prevailing conditions, enters so largely into successful railway operation. In talking over the situation with the trustees themselves I cannot find that any one of them believes that the present system of management is a good one. As things stand the trustee board is responsible to no one, is apparently without a policy, and. so far as public relations are concerned, is without even a voice. In addition, there is, to put it mildly, serious lack of agreement among the trustees themselves, and the fate of any measure with which they must deal depends upon whether one of the other trustees can be brought to agree with the views of the chairman, who is vested with overriding authority in that a majority vote of the trustees is ineffective unless the chairman be included in that majority.
That the trustee arrangement would not work was clearly recognized by the Liberal opposition when the 1933 bill was under debate in this chamber. At that time the present Prime Minister (Mr. Mackenzie King) took the ground that a ministry could not divest itself of responsibility for the direction and control of the Canadian National Railways, as was contemplated by the act, nor could parliament abrogate its duty. However, the 1933 bill became law and the government of the day set up the trustee form of management and direction largely on the basis of the existence of what was described as a "receivership situation" with respect to the national lines, the object of which was to bring about "an equilibrium between income and expenditure" and restore the railway to a position where it could earn its way.
Two years have passed since the trustees were given complete authority to accomplish this most desirable aim, and I doubt whether anyone in this house will assert that what has been accomplished by the trustee form of direction and control could not have been accomplished equally well if not better by the board of directors who were displaced by the trustees.
In 1933 Canadian National revenues touched an all time low. Such increase in operating surplus as has resulted since 1933 has been due to increase in traffic or to economies introduced by the displaced board of directors rather than to improvements in administrative policy or practice inaugurated by the trustees. As a matter of fact, the former boards of directors had done very good work in the curtailment of expenditures and the
adoption of measures of economy before the board of trustees appeared on the scene. That they had been efficient in that respect is shown by the following extract from the annual report issued by the board of trustees for the year 1934 at the end of their first year in office:
During the year studies have been made in numerous directions in the effort to secure the maximum economy in the operation of all departments. The severe decline in gross revenue had made it imperative that all opportunities for economy be closely examined and re-examined, and the drastic curtailment of all expenditures effected prior to 1934 testifies to the vigorous steps taken. Further economies necessarily became difficult to secure if the efficiency of the service was to be maintained.
As to "cooperative measures, plans and arrangements," the board of trustees require 2,000 words to explain why more had not been accomplished. The Canadian Pacific covered the same ground in 250 words of the directors' report, which concluded as follows:
The total annual joint economy secured by the two companies from the measures put into effect up to the end of 1934 is estimated to be $1,220,510.
That estimate has by the 1935 report of the Canadian Pacific Railway been placed at §1,600,000, one half of which will accrue to each company. That sum includes the economies secured by the former board of directors, as the two railways did not wait for the 1933 bill to become law before taking action in the matter of joint economies. As to this I will quote the following brief extracts from the annual report of the Canadian National Railways for that year, 1933, addressed to the board of trustees by Mr. Hungerford, as acting president, and forwarded by the trustees to the Minister of Railways for presentation to parliament:
In accordance with the expressed desire of parliament, the managements of the Canadian National and Canadian Pacific railways took action in November 1932 toward effecting cooperative economies before the enactment of the Canadian National-Canadian Pacific Act of 1933. Results so far accomplished are evidenced in the partial pooling of passenger train services between Montreal and Toronto and Ottawa and Toronto. Other economies have resulted from arrangements for joint operations, such as switching, car cleaning and freight shed operation at a number of points where duplication existed, as well as the hauling of traffic by one railway for the other. Many similar projects are under study.
In view of the meagre results it is not surprising that the trustees thought it necessary to include in their 1934 report the following explanation as to why greater results had not been secured:	. [DOT]
Joint examination of many projects which superficially appeared capable of yielding CO-
C.N.R.-Board of Directors
[Stage Direction]
operative economies showed that the economies to be derived are not commensurate with the capital expenditures necessary to bring them about, or that under present conditions no economy would result, a condition fundamentally due to the fact that measures already taken individually by each railroad to meet the conditions imposed by the depression had curtailed services to an irreducible minimum.
Since the present -bill was drafted the annual report of Canadian National Railways for the year 1935 has been brought down. This report deals at great length with cooperative measures, plans and arrangements by the Canadian National and Canadian Pacific railways, and once more the trustees are unable to report any substantial progress. They refer to the large amount of "investigational work" by joint committees of the two companies, but "the amount of preliminary detail has proved to be so great that no additional cooperative measures have been made effective." The report states however that the research work "has indicated possibilities of further economies, more particularly in the matter of functionally duplicate line abandonments and joint facility arrangements, and efforts are now being concentrated along these lines." To quote from the 1935 report:
The question of further extending the area of passenger train pooling has been under study during the past year by the joint technical committee and conclusion has been reached that the economy possible of attainment at this time is not sufficient to warrant the expenditure of capital required to make the principal passenger train terminals suitable for joint use and to offset disruption in traffic which would necessarily be involved.
Similarly the trustees report inability, for reasons which they cite, to reduce the number of city ticket offices maintained by the two companies, and then go on to state that the United States legislation of 1933, the general purpose of which was similar to the Canadian act of that year, had failed to produce any definite coordination measures to date:
This further evidences the difficulties inherent in bringing such measures into effect. The British railways met with similar difficulties.
The trustees return to the subject towards the conclusion of their report, when they state:
Some further economy from cooperative measures may be expected but cooperative economy is a most difficult process when maintenance expenditures and train and car mileage have been so drastically reduced. It is becoming increasingly certain that any substantial improvement in net earnings can be secured in no other way than by increased volume of traffic and, in the opinion of the trustees, it is in the public interest that the way out of the present difficulties be found in 
an expansion of earnings rather than by way of a further curtailment of railway expenditures.
Two annual reports from the Canadian National trustees, but one continuous recitation of apologies for lack of success in applying the cooperative provisions of the 1933 act under which they were appointed. The results have been disappointing, and I venture to say they have been disappointing to the hon. gentlemen opposite who were responsible for the appointment of the trustees whose regime was intended to bring about an equilibrium between income and expenditure. The right hon. leader of the opposition himself evidently was not hopeful of the success of trustee direction and control, because toward the end of the late campaign he announced that it was proposed to undertake still another inquiry into transportation in Canada, including railways-the third in comparatively recent years. That proposal could scarcely be regarded as a vote of confidence in the ability of the trustees to do what was expected of them.
I think it can be shown also that the right hon. leader of the opposition himself had some reason to question the degree of authority which the 1933 act placed in the hands of the trustees, and there is evidence also that his Minister of Railways had reason to feel that his position had been rendered very unsatisfactory by the 1933 measure. I am brought to that conclusion by a perusal of statements made by the chairman of the board of trustees before the standing committee of this house which deals with Canadian National accounts and estimates, the recorded proceedings of which show that in the discussion of the recommendations of Touche and Company concerning the capital structure of the railway, no action had been taken by the trustees because of a certain letter received from the then Prime Minister.
Richard Bedford Bennett: That was all put on record later in this house.


Mr. HOWE:: Quite. I do not want to dwell on that.
The Liberal opposition was not alone in expressing doubts as to the success of the 1933 legislation. The railwaymen of Canada, as represented by eighteen railway organizations, and the trades and labour congress, prepared an extensive memorandum of comments and recommendations which were placed before the senate committee which dealt with the 1933 legislation before it was brought into this chamber. These representations were to the effect that a board of trustees consisting of three persons would not be sufficient

CNJt.-Board oj Directors
properly to look after the affairs of so vast a property as the Canadian National system, and they recommended a board of at least five trustees. They were particularly concerned about the problems involving the human element, and considered that at least one member of the new board of trustees, regardless of its size, should be specially qualified to counsel in respect to these problems by reason of his experience and the confidence imposed in him by the railway employees. They pointed out that the policy had been recognized in the appointment of the previous directors by both Liberal and Conservative governments, and to that arrangement was attributed much of the loyalty and enthusiasm as well as the good relations between the management and the men on the Canadian National railways, which had been specially referred to in the Duff report. In the setting up of the board of trustees these views of railway labour were not considered.
Railway labour also objected to the veto power proposed to be vested in the chairman, which, it was felt, would in practice subject him to the temptation of dictatorship. It was regarded as too great a concentration of responsibility and authority in one man.
The difficulties foreseen by these railway representatives have been verified by actual experience. The board of trustees clearly is not representative enough, and the powers granted the chairman have endowed him practically with autocratic authority, the result of which is that, while you have a board of three trustees, it is really a one-man affair. In the circumstances the wonder is that others should be willing to accept appointment to the trustee board with their views and opinions discounted and even nullified in advance.
The reading of the recommendation of the Duff commission, with respect to the board of trustees, admits of no doubt as to the calibre of the men the royal commission had in mind for trusteeship:
All should be persons of proved business skill and capacity;
The chairman in particular should have financial, administrative and executive ability of a high order.
Those were the specifications laid down by the Duff commission. Possibly the recommendation was a counsel of perfection which the then government could not realize. Admittedly it is not easy to enlist the services of executives of that type, and although the 1933 legislation came into force on the first day of July of that year, the appointment of the trustee board was not made until the end of the year, when an order in council was passed appointing Honourable C. P.
Fullerton, K.C., to be chairman, and Frederick K. Morrow, of Toronto, and J. Edouard La-belle, K.C., of Montreal, to be trustees-twyo lawyers, and the third a company director. Both the latter had had a couple of years' experience on the board of directors of Canadian National Railways, but the chairman had had no previous experience in railway management, and while he had no doubt very useful qualifications for the bench or for the board of railway commissioners, his training and experience did not suggest that he possessed the "financial, administrative and executive ability " specified by the royal commission as a prime requisite for chairmanship of the board of trustees. Into the hands of such a board of trustees the act of 1933 delivered the fortunes of the Canadian National Railways- a body of three laymen, only one of whom was permitted an effective voice; not one of the three having any knowledge of actual railway practice, or experience in the handling of the human element, which enters so largely into railway operation.
One of the first acts of this board of trustees was to carry out that provision of the 1933 bill which requires the appointment of a chief operating officer "with titular rank of president," responsible to, and reporting to, the board of trustees and to that board alone, and to pass a by-law setting out his duties. My reading of the legislation, and particularly of the Duff report on which it is based, leads me to believe that the legislation intended that the president should be the operating head of the railway, in fact as well as in name, but this, it seems, was not the view of the trustees. After I assumed office, the chairman himself gave me his interpretation of the legislation, which was that it was intended that the operating head should be president in name only and that his real position was intended to be that of vice-president of the operating department.
The "powers, authorities and duties" of the chief operating officer, with titular rank of president, were defined by by-law of the board of trustees of January 31, 1934, and practical railwaymen will appreciate the fact that in enumerating the duties of the president in the management of the railway's transportation and communication services, the by-law states-"including, for example, the fixing of time schedules and conditions in connection therewith."
Having assigned the fixing of time schedules to the chief operating officer, with the titular rank of president, the by-law further provided that his duties should include:
The engaging and continuing in and discharging from employment, the personnel
C.N.R.-Board of Directors

required for such purposes, or any of them, and the fixing of the terms and conditions of such employment, all salaries to be approved by the chairman of the trustees. This authority, however, is not to cover the appointment of vice-presidents, general managers, secretary, treasurer, European agent, European secretary treasurer, or heads of departments.
Such a state of affairs as reserving to the board of trustees or the chairman of it the authority to reward by way of salary and promotion could have no other effect than to weaken the position of the president as chief operating officer. In general, the man holding the title of president-admittedly one of the ablest railway executives in North America, who, in his forty-five years of service with Canadian railways, has risen from the lowest to the highest rung in the railway ladder- has had his position reduced to that of adviser to the chairman, who has made himself the real operating head of the railway property.
The Duff report, paragraph 209, definitely recommended that "the responsibility for the direction and control of the system should be laid upon the chairman and his associate trustees," but it was also explicitly stated that under the chief operating officer with the titular rank of president "should be placed the entire working of the railway in detail." In conformity with this recommendation, section 10 of the 1933 act provided that the trustees should appoint:
. . . on terms to be fixed by them and with the titular rank of president, a person other than one of themselves to execute and perform, under and in consultation with them, the powers, authorities and duties of chief operating officer of national railways, as such powers, authorities and duties shall be from time to time defined by by-law and resolution of the trustees and committed for execution and performance.
It seems to me that any reasonable man would assume from this that it was the intention that the trustees should confine themselves to matters of policy, particularly in the direction of economies, with respect to which they were specifically enjoined by parts II and III of the Trustee Act, and that the "financial, administrative and executive ability" required of the chairman should be devoted to matters of broad policy. On the other hand it seems obvious that the operation of the railway in all its details was intended to be placed in the hands of an experienced railroad executive.
This intention was obviously not apparent to the chairman of the trustees, who proceeded to divide the offices of the railway into two camps, one responsible to the chairman and the other to the president. In that division of offices the chairman took over for operation by himself the following departments: legal,

finance and accounting, publicity, medical, colonization, land and property, secretary's branch, hotels and1 steamships, and assumed joint direction with the president over the purchasing and stores departments. The fact that the chairman was totally inexperienced in matters affecting any of these departments, except possibly the legal department, did not deter him in the least.
Under the president were placed the departments of traffic, operation and construction economic, personnel, investigation, industrial, express, telegraphs, office services, statistics and pass bureau.
Under this arrangement the chief operating officer of the railway has been deprived of contact with and authority over departments which are an important and essential part of railway operation, such as the law offices and the financial and accounting departments. The fact that he has no control of the publicity department may explain why in recent years Canadian National publicity has failed to place before the people of Canada many of the things that should have been made known with respect to Canadian National Railways.
Having indicated the directions in which the appointment of trustees has failed to realize the expectations associated with the 1933 bill, I will deal briefly with the general provisions of the amendments to the act as contained in the bill now under consideration. I appreciate that consideration of the details of the bill will come in committee of the whole on the bill. However, it is sufficient, perhaps, to say that the present bill does not change the intent and purpose of the 1933 measure other than to the extent necessary to provide for the substitution of a board of seven directors for the present board of three trustees. Some explanation is in order as to why the number is fixed at seven. To limit the directors to three, as in the case of the trustees, would be to invite a repetition of some of the present difficulties, as even were each of the three to be accorded equal voice and vote there would be too great a centralization of authority in the direction of so vast an organization. The Drayton-Acworth recommendation of 1917 was for five trustees, including three railway members, one member to be selected on the ground of business and financial experience, and one as specially possessing the confidence of railway employees.
The Canadian National Railway Act of 1919 provided for a board of not less than five and not more than fifteen directors. That act was amended in 1931 to provide for two additional directors, making seventeen in all. The contact of such a widely scattered directorate, meeting monthly, was found to

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be not sufficiently direct and continuous. To improve matters, an executive committee of six directors within easy reach of Montreal was set up in 1927; increased to seven in 1930, and to eight in 1931, when a finance committee of three directors (members of the executive committee) was also established. I mention these matters to show that the former directorate was found in practice to be unwieldy and cumbersome, and that an effort had been made to improve matters by centralizing the executive direction and control in the hands of a committee approximating in numbers those provided for by the present bill. The number is small enough to permit selection of men of proven worth and outstanding ability, and large enough to bring a variety of experience to bear upon important railway problems.
The present bill provides that the governor in council shall appoint the directors and also appoint one of their number to be chairman. A majority of the directors will govern, instead of the present trustee provision that the vote of the chairman is required before a decision can pass. This government will make a strong effort to secure men of "proven business skill and capacity," and it is intended to return to the practice, departed from in the case of the trustees, of placing on the board an outstanding representative of organized labour. It is the intention of the government to appoint as chairman a trained and experienced railway man, one not only thoroughly conversant with the Canadian National railway system and its problems but one who understands the human element, which enters so largely into successful railway operation.
It is not the intention to reappoint the deputy minister of railways to the board of directors. If it were considered desirable to do so, the present deputy minister of railways has very excellent qualifications for the post, by training and experience not only with the Canadian National, but with other railways, and as a professor of transportation at McGill for some years. The decision of the government, therefore, involves no reflection upon the present deputy minister of railways, but merely indicates that the government intends to appoint a board of directors and then permit it to function without necessity to have regard to the presence at the directors' table of one who may be assumed to represent the view of the government upon such matters as may be under discussion, as to which the government is properly concerned with policy only. The government intends to see to it that the 12739-140
directors are in a position to discuss freely and among themselves any and all matters coming before them.
The government believe, however, that it is very necessary for the Minister of Railways to work in harmony and in close contact with the chairman of the board of directors because of the problems that constantly arise as affecting government and railway policy, which matters cannot be dealt with adequately by the directors unless they know authoritatively the policy and intention of the government with respect to the matter at issue. The government will not again be satisfied to be wise after the event. If it is obliged to carry responsibility for the national railways, as it must, it is necessary that it should be in close touch with railway policy and have a voice in the shaping of that policy, as it is the government which must find the money for railway purposes. Whatever contact with the board may be necessary to keep the government in touch with railway policy and the railway property will, therefore, be as between the chairman of the board of directors and the Minister of Railways direct.
The government have given careful thought to the question of tenure of the board of directors. As to that there are a number of considerations involved. For the board of trustees the Duff commission recommended a tenure of seven years, with provision for a measure of continuity by staggering the terms of the initial appointees. The 1933 act restricted the tenure to five years, and for purposes of continuity the chairman was appointed for five, Mr. Morrow for four, and Mr. Labelle for three years. It is the intention of the present bill to establish a tenure of three years, and three of the original directors will be appointed for that term, two for two years, and two for one year terms; subsequent appointments of all to be for three year periods. In this way provision is made for necessary continuity by annual rotation of a portion of the board, which is the practice followed by many large corporations, notably the Canadian Pacific Railway. All appointments to the board will of course be by the governor in council, but it is hoped that reasonable permanency will be assured by the modified tenure proposed, and by the process of rotation, but most of all through the outstanding merit of the appointments to be made.
As to executive direction, I may say quite frankly that the government can see a certain merit in having the office of chairman held by one man and the office of president held by another, provided the president is made



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the real operating head of the railway, and provided the president and chairman can work in complete harmony, with the president attending to all matters of operation and the chairman confining himself to matters of policy and public relations. Therefore provision is being made in this legislation for combining the offices of chairman and president, and for the separating of the two offices as the directors may decide and as personnel available for these two important offices will permit. It is felt that best results can be obtained if the chairman himself could be allowed to train and develop the man who will occupy the office of president, and it is therefore intended that the two offices shall be combined until such time as it is reasonably certain that they can be divided without endangering the operating efficiency of the railway.
I am aware that the Duff commission did not recommend the appointment of a present officer of the Canadian National Railways to the post of chairman, or as trustee; also that the commission recommended that any senator, member of parliament or former office holder be disqualified for appointment as trustee. Appointment of senators or members would scarcely be urged, but in other respects it seems to me that the action of the royal commission was contrary to well established precedent and the rules of common sense. Most of the successful industries in Canada or elsewhere are headed by a chief executive who grew up with the business. It sometimes happens that a business does not produce an executive who is competent to direct its policies, and that an outsider has to be brought in, but almost invariably this outsider is one trained in the same line of business. Fortunately Canadian National Railways have a man who is not only outstanding as a railway executive but has the respect of the Canadian people and of railway labour, and the confidence of this government. The 1933 legislation eliminated that part of the Duff report which specifically debarred holders or former holders of public office; the present bill removes the disability which would operate against employees of Canadian National Railways in the selection of chief executive.
The present bill provides for the approval of the governor in council, when by law approval of the shareholders of a company is required, instead of dispensing with any such approval by either the governor in council or shareholders, as was done in the 1933 bill. This is but right and proper, as the government are the elected representatives of the owners of the national railways, and there can be no question as to the mandate.

The act of 1933 was in four parts. Part I dealt with the trustees, and hon. gentlemen will note that the amendments contained in the proposed bill have to do almost entirely with this part of the 1933 measure, and are intended to effect a substitution of a board of seven directors for the board of three trustees.
Part II of the 1933 act enjoins upon -the two railways the duty of attempting "forthwith to agree and continuously to endeavour to agree" upon "cooperative measures, plans and arrangements." I have already dealt at length with the failure of the trustees, on their own admission, to achieve any great-result under this section. They are not very hopeful of further economies, but tell us that the field of cooperative effort is still being explored, and if there still remain possibilities of worth while savings through cooperative efforts it is the desire of the government that they be secured. Before passing judgment on the practicability of Part II, it would, I think, be well to have the situation reviewed by the board of directors which will succeed the trustees. The substitution of the word "directors" for the word "trustees" is therefore the only change made in Part II of the 1933 act.
Part III of the act provides for compulsory arbitration by the chief commissioner of the board of railway commissioners. While Part III has never been invoked, and it is rather unlikely that it will be, we are leaving that in the aot.
Part IV of the 1933 act definitely provides against amalgamation of the two railways, or unified management and control, and that feature is also being reenacted without change.
I have dealt somewhat fully with the difference betwreen the board of directors as now proposed and the board of trustees. In case it may be suggested that the present bill returns the Canadian National Railways to the same form of direction that obtained under the late Sir Henry Thornton, I would point out that the situation is materially different. Sir Henry Thornton as managing head had a direct contract with the government, the last one covering a five year period. He therefore spoke with the voice of the government. The Department of Railways maintained a connection with the Thornton board in the person of the deputy minister, and was thus in a position to influence the board and the managing head-who was also chairman and president, by election-whether on matters of high government policy, or on matters of operation, with which the government properly was not concerned.

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The present bill is intended to afford a much greater measure of autonomy to the chairman and board of directors. There will be no one at the directors' table other than the seven directors themselves. Such contact between the government and the board as may be necessary in the public interest will be provided by conference between the chairman and the Minister of Railways as and when questions arise where the intentions of the railway should be made known to the government and the views of the government should be declared to the directors. There will be no question about that contact or the medium of it. It is in effect the essence of the present legislation, for reasons already adduced, which it is not necessary to repeat.
The new board will differ from previous boards also in other important respects. The contact of the former boards of directors was casual rather than continuous, and it is proposed that the coming board shall take a much more active and effective part in the administration of the affairs of the railway.
Benefiting from past experience, the government will avoid the mistake of appointing too elaborate a board, with its invitation to political and public pressure, which the Duff commission reprehended. It will in the first instance appoint the chairman and president in one person. As and when a president, other than one of the directors, is chosen chief executive officer, he will be appointed by the board, subject to the approval of the governor in council. The directors and salaried officers will be each paid but a single remuneration, no matter how many subsidiary boards of the Canadian National system they may find themselves on. The present bill is thus not intended to reestablish the old order.
May I add that in my opinion the provisions of this proposed bill are of great importance. There can be no doubt that this government has a mandate to do its utmost to improve the operating position of Canadian National Railways so that there may be an end to the deficits that are so harmful to the credit of Canada. In this it must have the assistance and cooperation of an executive possessed of all the ability and experience that can be brought to bear upon the problem. Unfortunately the trustees have not been able to bring to bear either the ability or the experience contemplated by the Duff commission. No doubt they have done their best, but that best falls far short of the Duff commission concept of the administrative requirements of the national lines, and in the making of the appointments the late government either lost sight of the commission's
recommendations or were unable to secure men of the calibre the Duff commission had in mind when it advised that all three trustees should be persons of proved business skill and capacity, and that the chairman in particular should have financial, administrative and executive ability of a high order. The chairmanship was the key post, and failure at that point has been fatal to the success of the trustee plan as a whole. That failure has been aggravated by the inability of the chairman properly to interpret his own duties and responsibilities in the light of either the 193f act or the Duff report. The act called for the appointment of a chief operating officer other than one of the trustees, but in practice we find the chairman of the board of trustees usurping powers appertaining to the chief operating officer, in whose hands the Duff report recommended should be placed the entire working of the railway. There has thus been a progressive departure all down the line from the high ideals of direction and management contemplated by the Duff commission, and it has been amply demonstrated that the board of trustees, regardless of intentions, is incapable of meeting the situation, and that their lack of knowledge of railway administration acts as a wet blanket and dampens the ardour and enthusiasm of a railway staff which in former days distinguished itself, and which, properly led, will be able to go on to still greater achievements. To be effective, reorganization of the railway management must start from the top, but without the legislation now proposed this government will be helpless to effect the reforms so obviously needed I have attempted to deal with the situatior fairly and to present this measure in such a manner as to command consideration on its merits, divorced from any considerations of party advantage. Such criticism as I have directed to the working out of the 1933 measure has, I hope, been reasonably void of offence to hon. gentlemen who, three years ago, attempted in good faith to give effect to the recommendations of the royal commission. That those plans and arrangements have failed to effect the purpose intended is not a matter of gratification on the part of anybody. As already expressed, it is my personal belief, after close study and investigation, that the trustee plan is unworkable, and that it has shown itself to be so. I believe that the proposals contained in the present bill, in which, as it should be, account is taken of past mistakes, we have a much better plan, one much more in keeping with the principles of responsible government, and for which, in conclusion, I would request the careful consideration of hon. members on both sides of the house, having

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regard to the fact that the railway problem is not a party question, nor ought it to be, but a matter of business of vital concern to every Canadian citizen.


Richard Bedford Bennett: Mr. Speaker, the temptation to follow the political address of the hon. gentleman who has just taken his seat (Mr. Howe) is very great. The first few minutes of his speech was of such an acrimonious and political character that I find it difficult to recall myself to the duty which I owe to myself and the country, which far transcends in importance the answering of the speech to which we have just listened. To indict a man upon his removal from office in his absence and without opportunity to be heard, has not been the usual practice in parliament. The statute that placed the chairman in office provides for his removal. It provides that he can be removed only by joint address of both houses of parliament, which, of course, involves an opportunity for him to give his defence against any charges which might be preferred against him.
The minister has seen fit this afternoon to make a series of charges against the chairman, some of which, if warranted by facts, would entirely support a charge being laid against the chairman under the provisions of the section providing for his removal. There is, however, a committee appointed by this house which will have to consider the Canadian National Railway accounts for the past year, and I suggest to the minister that if he expects to get far with this bill the first thing he must do is to call that committee together at the earliest possible moment to afford the chairman an opportunity of presenting his defence in respect of the charges that have been made against him.
So far as the other phase of this matter is concerned, ample reasons were given why, if I were so minded, I should bring to the attention of this house and the country conditions that I think would place the responsibility for the operating situation and the financial position to which the hon. gentleman referred, upon those who were responsible for the creation of the systems of railways in addition to the Canadian Pacific Railway which have brought ruin to this country at the moment. But I content myself with the realization that at the moment I have a responsibility far greater than that. I shall endeavour to discuss this matter as best I can without suggesting responsibility on the part of those now in office or dealing at all with the question of responsibility. I shall endeavour to discuss this terrible situation so far as the railways are concerned as a con-

dition and not a theory, a condition that must be grappled with and must be met if the solvency of this country is to be maintained.
During the five long and weary years of world depression, when the trade of the world had fallen to only thirty per cent of what it was before the depression began-not simply a thirty per cent diminution in trade but a drop in world trade to only thirty per cent of what it was before the depression, and at the darkest moment the figure was 33i per cent-the one great problem that the government of this country had to consider, in addition to the general financial situation and the internal situation of its people, had to do with railway conditions.
I am going to do what is perhaps an unusual thing. In view of the correspondence and the articles that are appearing in the newspapers it is quite clear to me that the people have not had an opportunity to read the report of the so-called Duff commission or to appreciate the facts to which it directs attention. I shall therefore place upon Hansard extracts from that report in order that those who now read at least short resumes of what takes place in parliament will have a clear appreciation and understanding of the facts as found by that commission. But before doing so, instead of reviewing the circumstances that brought about the three transcontinental railway systems, now merged into two, I point out that a commission was appointed, the Dray-ton-Acworth commission, to consider the railway situation and to make a report to the minister. But in 1931 it became apparent that the railway situation was one of extreme gravity. It became more apparent, shall I say, than ever before because of the reports made by the then, chairman, Sir Henry Thornton, to which I shall direct attention presently, as his remarks were recorded and made part of the report, and because of the observations made by the president of the Canadian Pacific Railway Company. Both were of the opinion that the government should set up a commission to investigate and study the situation. The reasons they gave were not identical, but they at least reached the same conclusion, namely, that a commission should be appointed to investigate the whole situation for the purpose of seeing what might be done, but not for the purpose of bringing about an equilibrium between income and expenditure within a few months; because no one in those days, any more than does the government of to-day, contemplated the possibility of bringing about that desired end. The very fact that the government the other day desired

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to make provision for deficits on the Canadian National Railways for the year 1936 indicates that in accordance with the opinion of those responsible for administration the Minister of Finance anticipates there will be a deficit in the Canadian National railway undertaking during the current year. No one in 1931 had any opinion other than that. I concluded, after discusisng the matter with my colleagues at some length on many occasions that it would be desirable to appoint a commission.
The personnel of the commission gave us much difficulty. It is not an easy thing to secure a commission of men who have a clear insight into and understanding of the problems to be dealt with by any commission studying the transportation problem in Canada. We realized that practically the whole of the Canadian Pacific four per cent perpetual debenture stock, and its preference stock, as well as a large share of its common stock, was held in Great Britain. We realized that a very large volume of the securities issued by the Canadian National system when it consisted of the Canadian Northern and the Grand Trunk were held in Great Britain and that there should be on that commission some person whose domicile or home was in Great Britain and who had a clear and, shall I say, comprehensive understanding of the problems connected with transportation and with finance as related to transportation. We were fortunate in securing the services of Lord Ash-field, who was born in the United States and trained in transportation at Detroit, Michigan, and elsewhere in the United States. Finally he had been entrusted with the enormous responsibility of consolidating the transportation services of the city of London and district, comprising the underground, the above ground and the on-the-ground lines, the street railway, the tube, and the bus. About that time he was concluding his efforts, as was indicated by a measure passed by the parliament of the united kingdom a short time afterwards. He decided to come, not because he desired to come but because he believed it was a public duty, having regard to the conditions that existed in this country and which were apparently fairly well known to everybody.
The chairmanship of the commission was very important, and we were fortunate in securing the services of the Chief Justice of Canada. The chief justice has been on the bench for many years, and so far as I know he has no political views, although at one time he was actively associated with the fortunes of the Liberal party in British Columbia. He has held high judicial office
in that province and has made for himself an outstanding name among the great jurists of the world, of which I believe every Canadian is truly proud. Because of the lifelong experience he has had in sifting facts and applying legal principles, he has attained for himself a position equal to but not excelled by the great jurists of the British empire. I have heard this statement made by two gentlemen who were lord chancellors and by others who occupied positions of great responsibility as jurists in the United Kingdom. He undertook the chairmanship of this commission, thereby ensuring, I think, such complete impartiality of inquiry as can come only from one who understands the relationship of testimony and evidence and who is able to sift it and consider it in relation to the facts with which he has to deal.
It was important also that there should be upon the commission a representative of business in the large sense to which the minister has referred. We secured for that purpose the services of Sir Joseph Flavelle and Mr. Beaudry Leman, the latter general manager of the Banque Canadienne Nationale. In their realms of business activities both these gentlemen are held in the highest regard and esteem. Mr. Leman, who had the advantage of training as an engineer, brought to bear upon the problems presented to him the mind and skill not only of a trained engineer but of one who had had much experience in business and was able to appreciate the relation of the solution of the problem to the whole financial structure. Sir Joseph Flavelle has many enemies and many friends, but whatever may be the views of those who oppose or support him, I have never yet met a person who was not prepared to admit the power of his intellect and the strength of his mental equipment in dealing with problems and matters of business. He had had some experience, for he had been chairman of the Grand Trunk Canadian board.
It was felt that we should have a railway man not a Canadian and it was a difficult problem to secure the services of a railway man on the American continent. It is well known that an effort was made to secure the services of the presidents of two of the largest transcontinental systems. They were not available, and we were recommended to apply to the president of the Delaware and Hudson railway. This is not a large railway system, but it is one which has been successful during these dark days. Mr. Loree had made for himself amongst the captains of industry in the neighbouring republic and the great railway executives of the transcontinental systems a reputation that warranted our relying
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upon him in dealing with problems of this kind. He was good enough to undertake that responsibility.
We felt that it was desirable to have on the commission someone from the maritime provinces who was not actively engaged in political warfare but who knew something of the history and development- of the mari-times and their relation to the general picture so far as railways were concerned. We asked Doctor Webster to accept, and he expressed a willingness to do so. In his youth he was a distinguished student, a graduate of one of the smaller universities in the maritimes. In his work in the medical department of the great university of Edinburgh he attained a position of prominence which enabled him a little later to become one of the foremost in his 'branch of medical science in the city of Chicago. When fortune had smiled upon him and he had reached the age at which it is said a great physician intimated a man should retire, instead of retiring to easier circumstances, as some men might do, he came back to his native province where he has rendered distinguished service to his country through his public activities and public service.
Doctor Murray has been the president of Saskatchewan university since its inception and has a knowledge of Canada not excelled by anyone. He was a Gilchrist scholar and a professor of repute. To these gentlemen we entrusted the inquiry as outlined by order in council dated November 20, 1931. May I for a moment direct attention to what they did? I am going to read extensively from their report-although such a practice is sometimes burdensome-in an effort to bring it to the attention of the Canadian people. They reported:
In the course of our investigations we have held eighteen sittings, occupying fifty days altogether, and have travelled over most of the main line mileage of the two chief railway systems. Throughout our journeys we were accompanied by the responsible officials of both railways, thus enjoying the advantage of almost constant discussion with them of matters relating to the inquiry, and of transportation problems more particularly affecting the territories traversed. Our itinerary included the principal centres of the various provinces, with the exception of Prince Edward Island, the only province of Canada in which railway competition may be said to be non-existant. In the ease of Prince Edward Island the provincial government kindly indicated their willingness to transmit in writing any representations on the general question of transportation they might desire to make. With this exception we have had the benefit of direct conference with the government of each province, which has included, in most instances, a full statement by the provincial prime minister of any considerations of a special or local character affecting the subject 
of our inquiry. The expositions we have received in this way of provincial policy regarding highway construction and motor traffic have been comprehensive and valuable.
At all of the provincial capitals visited, and also at Vancouver, Calgary, Montreal and Saint John, we have conducted, in addition, public hearings, duly advertised, at which representations from public bodies, labour and transport organizations and private individuals were invited and received. A list of witnesses appearing, and of persons or organizations who have filed submissions, is included as an appendix to our report.
I shall content myself with laying this foundation, before I proceed to make reference to the findings of the commission, by saying to this house that I believe no commission more competent has ever been appointed in this country to make such an investigation. I do not believe the language of that statement is extravagant, nor is the fact important that they were appointed by the previous government. That statement is based upon the personnel of the commission, upon their industry and their desire in and concern for all that affected the welfare of this country as related to the problem of transportation.
I know that when the report was published there was a great deal of misapprehension on the part of many people, because I think I should say frankly to this house that an effort has been made to have it appear that from the day the late government took office until the last day it held office it was opposed to the Canadian National Railways. But those who will take the trouble to read the reports on the subject and the statutes of this country will realize that the Canadian National Railways came into being by virtue of the efforts made by the Union government under Sir Robert Borden, through the bill then submitted; and under and by virtue of the powers conferred by that bill upon the governor in council the final proclamation was made that merged into one system the Canadian Northern, in its various ramifications and interests, the Grand Trank Pacific, the National Transcontinental and other lines. That proclamation was made by virtue of a statute which was piloted through the house of that day largely by Mr. Meighen. When it is said that this party or the late government was opposed to the Canadian National Railways I should like the country to understand that during a long period of five years, over sixty months of untiring effort to maintain its integrity, to provide money to pay its deficits and to enable it to function, during those long years the constant endeavour of the then government was, not to destroy but to maintain the system, not to lessen but to

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improve its efficiency. But unfortunately- and I say unfortunately with very great deliberation-there was a school of thought in this country that believed that when you have to deal with a problem that vitally affects the very life of the country, if you can play politics with it, so much the better. In the west the Free Press constantly made the people believe that the approach of the government was an approach to destroy and not to support the system. The opposition of that day, now the government of the day, constantly tried to make it appear that the then government was endeavouring to destroy the road. Well, I can only say that, earnest and anxious as I am that the road should succeed to-day, under the control and direction if you will, as the minister says, of his government, even greater was the desire in those days that it should succeed. Why? Because unless it can succeed this country cannot maintain its solvency as a nation. Every thoughtful man in Canada knows that that is so, and this commission that dealt with it and found the facts upon which it predicated its recommendations realized as business men, as railway men, as security holders, as men interested in the maintenance of the credit of the country and of the railways, that unless some action were taken danger of a most grievous kind confronted us and might indeed lead to disaster. That is the reason I desire, with great effort, to refrain from making a political address this afternoon and to place on Hansard extracts from the report of that commission, in order that those who take the trouble to read what the minister has said or what is said by others in this house may realize that in the minds of the members of this commission the situation was dangerous, if not fraught with immediately possible disaster, and that action of the most drastic sort should be taken if we were to preserve the railway system as such and the credit and integrity of the country.
There was one thing the minister did not do this afternoon, and I shall anticipate it before I deal with the matter as it is referred to in this report. He did not deal with the fact that the difficulties to which reference had been made could be solved by taking up the rails and abandoning thousands of miles of railway. That is where politics comes in. Leaving out, if you will responsibility for the construction of the rails, there was the recommendation of the removal of rails and the abandonment of lines; and every time there was the slightest suggestion that anything of the kind was contemplated my friends opposite cried to high heaven that the people must be protected and that these
lines must not be abandoned. That is but natural. The minister has not nor have I the power to lift the discussion entirely out of politics; it has been too closely connected with politics for twenty-five years. What was onoe the proud boast .of a party has now become a dragging legacy that threatens the very life of the country; and when suggestions are made that there should be an abandonment of mileage, the party in opposition during the last five years expressed of course, upon the hustings and elsewhere, strong views on the problem; and I suppose that if the government of to-day undertakes to abandon lines it is expected that the opposition shall oppose that view.
Is it any wonder that we have a railway problem of this magnitude or that it will increase and finally end in disaster if we approach it as the minister did this afternoon in the early part of his address? I am going to refer to some of these paragraphs, because after perusing them the other day I realized that the people of this country had not any clear appreciation of the problem. If the hon. gentleman opposite speaks a little louder I shall be able to hear him; if he desires audibly to interrupt he might speak more moderately. I desire to point out that the early part of the report is but a resume of the history of transportation in Canada in the early days. It requires nothing to be said except to indicate the vast sums expended on canals. I quote from paragraph 9:
9.	The promise of railway construction formed an integral part not only of the confederation of 1867, but also of the terms upon which Prince Edward Island and British Columbia later entered the dominion. The obligation to the maritime provinces was discharged by building entirely at public cost, the Intercolonial Railway from Halifax, N.S. to the St. Lawrence at Riviere du Loup, by the construction of the Prince Edward Island Railway, and the provision of a train ferry between that island and the mainland.
10.	The agreement to connect British Columbia with eastern Canada by a railway from the Pacific ocean was fulfilled by the building of the Canadian Pacific Railway. Failing to interest private capital in this project the government undertook the work as a public enterprise. Later a syndicate, which afterwards developed into the Canadian Pacific Railway Company, entered into an arrangement with the government to construct this transcontinental line in ten years, from 1880 to 1890. The agreement provided that the country subsidize the company by a gift of twenty-five million dollars, twenty-five millions acres of land, and of the railway lines already constructed with public moneys at a cost exceeding thirty-seven million dollars.
11.	The company carried through its undertaking in five years in place of ten, during which time the government paid the Canadian
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Pacific $10,189,521 for 6,793,000 acres of land relinquished by the company, and guaranteed securities of the company to an amount of $15,000,000 to assist its finances over a diflicult period. The company paid the guaranteed bonds upon maturity, and the country was relieved from the responsibility of the guarantee.
12.	Eighteen years after the completion of the Canadian Pacific, parliament (in 1903) authorized the building of the National Transcontinental Railway from Winnipeg, Manitoba, to Moncton, New Brunswick, as a part of the Grand Trunk Pacific project. In 1911, the construction of the Hudson Bay Railway was undertaken, also as a government enterprise.
The three railways, the Intercolonial (including the Prince Edward Island line), the National Transcontinental, and the Hudson Bay. embodying 4,650 miles, constructed exclusively, with public moneys, have been operated by or on behalf of the government of Canada. While prior to 1917 the Intercolonial in certain years paid operating expenses, the three railways have earned nothing by way of interest upon the total investment, which, together with certain deficits on operation, now total $512,000,000.
Then comes the beginning of western railway construction.
Some years after completion of the Canadian Pacific Railway, construction was commenced as a private enterprise, upon a line of railway running from Winnipeg in a northwesterly direction, with Edmonton as its objective, and easterly to Port Arthur, Ontario. This line came to be known as the Canadian Northern Railway. It secured substantial cash subsidies, guarantees and land grants from the dominion parliament, provincial legislatures and from municipalities. By 1901, the line had been completed easterly to Port Arthur; and by 1905, westerly to Edmonton, Alberta.
This was the first of the lines extended ultimately to the coast. Parliament did not authorize the extension of the Canadian Northern to Vancouver; that was done through legislation enacted by the province of British Columbia. But parliament did subsidize the construction of the Canadian Northern railway to the summit of Alberta, where it connected with the Canadian Northern in British Columbia.
Proceeding with paragraph 14:
In 1903, the Grand Trunk Railway, which had been operating for over fifty years in Ontario and Quebec, and owned direct lines from Ontario through the states of Michigan and Illinois to Chicago, determined to extend its lines to the Pacific coast of Canada. They made application to the federal government for a charter to construct the Grand Trunk Pacific from Winnipeg to the Pacific coast, and to make connection from eastern Canada to Winnipeg through the United States by way of the company's Chicago lines, and by securing running rights over United States railways to the border of Manitoba.
The application was refused, but an alternative arrangement -was proposed by the govern-

ment which contemplated the construction of the Grand Trunk Pacific from Winnipeg to the Pacific coast, with an eastern connection to be provided through a publicly-owned (National Transcontinental) line from Winnipeg to Moncton, N.B., via the city of Quebec.
If, in 1903, the Grand Trunk Railway Company in the east, and the Canadian Northern Railway Company in the west, had been told they must come together and constitute a Becond transcontinental line, the country would not have been called upon to face the present gravely alarming situation, while a powerful corporation, with a serviceable railway from ocean to ocean, owned and operated by private capital, would, with the Canadian Pacific and Intercolonial, have given the needed transportation facilities for the present and reasonable future requirements of Canada.
The ultimate decision of parliament led to two transcontinental railways being constructed in addition to the already established Canadian Pacific Railway.
That is the record of the commission. We must take it as we find it: it cannot possibly, I think, be controverted. Then we had, of course, these lines uncompleted when the war began in 1914. You will recall the efforts made to rehabilitate them by loans and by guarantees, and possibly to save them from receivership. In my place in the house I supported a receivership and opposed the government of the day. I believed that the proper course to pursue was to place those lines in the hands of a receiver. The leaders of the government I supported at that time thought otherwise, but that did not deter me from placing on record my views of the situation, and I voted on that matter against the government.
Having taken the action that was taken to preserve those companies and save them from receivership, the next step was to appoint a commission to make an investigation as to what should be done with the properties. Without going into it at length, it is sufficient to say that in the end all those properties were merged into what is known as the Canadian National system: the Canadian Northern Railway, with all its subsidiary companies and branch lines and affiliates; the Grand Trunk, with its properties in the United States; the Grand Trunk Western, with the Central Vermont, the line running to Portland, the new National Transcontinental from Winnipeg to Moncton, the Grand Trunk Pacific, the Grand Trunk Pacific branch lines, the branch lines in Alberta and in Saskatchewan-'both of which provinces, together with Manitoba, have made commitments by way of guarantee or otherwise which, of course, it is impossible for them to pay, and at the present time such guarantees are paid out of the federal treasury. That was the position with respect to them when the order in council was passed

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under the authority of the legislation passed by the government of that day. We thus have a single system of railways that did not come into being as a system, but came into being because of economic and financial conditions that necessitated, in the opinion of the government of the day, their being united as one system. That of course makes it impossible to compare this system with the Canadian Pacific. The Canadian Pacific developed as a considered whole. The Canadian Pacific was developed as a railway; its branch line system was considered as such with relation to the whole. It deliberated over every action that it took and every extension that it made was in the light of its general plan. But that is not so in the system with which we are now dealing. The system which came into being under this order in council was a combination of many systems, many companies and several roads, in two countries at least, some und r provincial and some under federal control, and not devised or developed as a unified system, but developed along three lines and ultimately merged into one. That is the reason it has been so difficult to deal with, and that is the reason why, notwithstanding the speech made by the minister at Toronto' and at Three Rivers, I think that before he achieves the end he has in mind, unless he is prepared to adopt some of the drastic provisions of this report, he will indeed be as old as Methuselah.
I wish to deal here with one observation made by the minister. He referred to the fact that the chairman, in his evidence last year before the standing committee, alluded to a letter which he had received from me, and that was given as some reason why steps had not been taken to deal with the capital structure of the national railways. I trust that the hon. gentleman, before making that statement, took the trouble to look at the record, because the other day he himself referred to the fact that the whole case of the Canadian National Railways was sub judice because of a case now before the privy council. Therefore he must have known when he dragged that into the debate that it was being done for no useful purpose but rather to indicate that there had been an interference with the authority of the members of the commission by the government of the day. Such of course is not the case. The truth is this, that Mr. Lovibond, one of the shareholders of the Grand Trunk Railway, owning a small number of shares of each type, has taken steps in the courts to have it declared that the legislation that resulted in the removal of the names of the Grand Trunk shareholders from their registers in Dashwood House and the substitution of the name of the Minister of Finance as the holder of the shares was beyond the competence of this parliament to enact. That matter was argued a few weeks ago before the privy council, and the argument took many days.
I understand that Mr. Lovibond has now said that he is prepared to accept damages rather than a return of the status quo, and that the whole question may involve the launching of a new action, or whatever it may be; but the final determination of the question as to whether or not we are validly in possession of the property has not yet been made by the courts. I did say then, and I said to the chairman, as I say to every member of this house, that I did not believe that any government with a sense of responsibility would permit any changes to be made in the capital structure of a railway when it was not yet determined whether they legally owned it or not. That was the reason steps were not taken to deal with the capital structure of the Canadian National Railways. It is sufficient now merely to refer to that, because I proceed to direct attention to what the findings of this commission were. At paragraph 28 you have a summary:
Government ownership of railways on a large scale as a national policy was not contemplated or planned by any government and was not submitted for adoption to the people of Canada. But when in 1917, the government refused to permit the Canadian Pacific Railway Company to negotiate for the majority shares of the Canadian Northern, there was practically no escape from government ownership of all the railways now comprised within the Canadian National Railway system. The consequent completion and operation of the hitherto privately owned and operated lines with the publicly owned railways followed as a matter of course. Thus by a combination of contractual obligations and parliamentary measures, the country was projected into the railway business on a large scale.
That, in a single paragraph, summarizes the situation. The Canadian people were not called upon to make, by plebiscite or otherwise, a declaration as to their views with respect to this matter; the administration and ownership of these properties by government came about in the manner indicated by the report.
I think I can shortly summarize the findings of the commission with regard to the period from 1923 to 1931 by stating that after the arbitration had been completed as to the value of a certain class of Grand Trunk shares, resulting in the arbitrators declaring, with a dissenting judgment, that they had no value, the case subsequently was appealed to the privy council which sustained the opinion of the majority. While awaiting that final
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determination the properties at times were administered jointly, when it became apparent that they were no longer able to provide for their necessities by their own resources. Perhaps in order that those who read may have this shortly before them, I should refer to two of the paragraphs:
Following upon the consolidation of many lines into the Canadian National system, in 1923, the railway has been energetically administered, and has deservedly won approval by its success in welding together the various forces of the separate companies in the consolidated system.
Running through its administrative practices, however, has been the red thread of extravagance. The disciplinary check upon undue expenditure, inherent in private corporations because of their limited financial resources, has not been in evidence. Requisitions of the management have been endorsed by governments, and successive parliaments have voted money freely, if not lavishly.
Within the railway organization there has been freedom in expenditure and encouragement in plans for expansion and extension of services which were inconsistent with prudent administrative practice. The administration failed to realize that this country, with the greatest railway mileage in the world in relation to population, could not afford further capital and maintenance expenditures for unwarranted branch lines, for de luxe services, for unrequired hotels, for the building of ships in competitive service to be shortly abandoned; and, generally, for costly adventures in competitive railways out of proportion to the needs of the country.
There is a statement that has aroused the animosity of some of those who supported the present government when it was in opposition. But, sir, if any man in this chamber will be fair and merely take the figures as to expenditures, as they were produced and shown, he cannot but agree that this is a correct and sound conclusion on the part of these commissioners. In private conversation I have heard no one dispute that, but naturally in this house one hears entirely different views. Then section 35 of the report expresses a thought that I believe must be in the minds of many:
There has been in the country a general sense of expectancy that the publicly owned enterprise should give all and sundry the railway service desired, and there is no evidence that the' representatives of the people in parliament exercised any appreciable restraint upon railway estimates placed before them.
Well, Mr. Speaker, how could you expect it? After all, members of parliament are human; they are thinking of their constituencies and of their party fortunes, and their desire to project a branch line here and a branch line there, to extend further this line or that line, and this attitude reflects the inevitable disaster that overtakes parliamentary effort to deal with a property owned by 
the people themselves. This is beginning again now, as I am going to point out presently. The minister, who has not been here during all these years, understands it only from having read it. Alas, many of us know it from another angle altogether; we have seen it. When I say that a few months ago money was standing in a bank representing the sale of guaranteed securities to construct a line from Calgary to Edmonton, part of the grade of which had been constructed, the minister will understand just what I mean. That line probably never will be built; I do not think it will, but there you have an illustration of what is meant by this report, in dealing with this problem. How are we to get out of it? How are we to get beyond it? How is this country to save itself if we continue to play politics with the Canadian National railway system? I ask you that, Mr. Speaker, and presently I am going to point out what has happened since October 23, to show that we are just going back to the thin red thread of extravagance and worse, to complete subjugation of this great property to political considerations and control.
This is not a matter of party. I wish I could speak as with the tongues of angels and convince my fellow members here that we are trustees of a situation so grave, so difficult and so far-reaching, the consequences of which must be carried by those yet unborn. I wish I could convince hon. members that we must approach this problem not from the angle indicated by the minister in the first part of his speech but from an angle that far transcends any mere miserable party consideration, in the earnest hope and desire of lifting it out of the morass in which it now finds itself by reason, as I shall say, of a lack of support being given the earnest effort that was made to lift the matter out of politics. That is the real reason.
I do not propose to-day to deal with the financial side of the question; I am not going to further harrass an already harrassed people by pointing out to them how great are their responsibilities financially and how large is the measure of their obligation. That can be done by others in this chamber; I merely wish to point out that they are so vast that the mere contemplation of them is calculated to fill any reasonable man with at least alarm, shall I say.
The reason I took some little time to refer to the personnel of the commission was because in his speech the minister said that anyone who would make one of the recommendations made by the commission was lacking in common sense. I cannot think he meant it in that way, but that was what

he said. I am prepared to compare the minister and his common sense with that of the commission, and I think the Canadian people would be prepared to do so also. Why he should indulge in such an extravagant statement I do not know, but he thought it necessary to do so for some purpose, and I desire to make my observation in that regard quickly as I proceed because, as I say, I am not going to deal with the enormous financial obligations involved, except in the broadest and most general way. But if hon. gentlemen will take the trouble to ascertain just how much per minute it has cost this country since we became the owner of these railways, and what has been the inevitable result, they will then have a clearer appreciation and understanding of the problem. I do not say so much per day, so much per month or so much per year, but just so much per minute, so much per sixty seconds. That, I think, should afford hon. gentlemen a clearer appreciation of what is involved.
The question of what has been put into these properties is dealt with in paragraph 37 of the report:
It will be observed that the dominion treasury has expended on or furnished to these publicly owned railway properties cash amounting to one billion two hundred and one millions of dollars ($1,201,000,000) exclusive of the Hudson Bay railway.
That was in 1931. It will be remembered that when the report was presented it indicated that we should no longer issue and guarantee railway securities to capitalize deficits but that the nation itself should bear the deficit incurred. It will be remembered also that in the statute this provision was included. If hon. gentlemen are interested in that provision it will be found in section 12, which provides that-
Income deficits shall not be funded. Amounts provided by parliament to meet capital expenditures shall not be diverted to cover deficits in operation unless with the express authority of parliament.
But the important words are "income deficits shall not be funded." So that under the law as it now stands we have since 1933, that is during the years 1934 and 1935, been providing for the capital expenditures of the system and for its deficits as a part of the debt of the Dominion of Canada, recalling that in 1931, exclusive of the Hudson Bay railway, to which reference will presently be made, we had $1,201,000,000 invested in cash in these three properties, and the deficits that have been incurred since have been added to the nation's debt, because they may not be funded as they were during part of the previous period. For instance, if the railway
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required $100,000,000 the dominion guaranteed securities and they were sold, part of the proceeds being used to pay deficits and part used for additions to rolling stock and equipment, roadbed and so on. I will not do more than take a few words of summary from the Duff report, section 42:
Net income available for interest and dividends is the significant factor in the economic life of a railway system. In the case of the two Canadian railways there has been a marked fall in net income in the years since 1928. That the true picture may appear, figures are appended for the nine year period, 1923 to 1931 inclusice. These show in separate columns tlie net earnings from railway operations after taxes have been met, the net income receivable after charges for hire of equipment, joint agreements, et cetera, have been met, and, finally, the interest demands.
Now, there is a misunderstanding that I find on the part of many with whom I discuss these matters as to the relation of gross to net earnings. When my friends pick up a newspaper and find that the gross earnings of the Canadian Pacific or Canadian National have been so many dollars for the week and the net earnings so much, they think that the difference is left with which to pay interest. The average man on the street thinks that. But it is not. Before a dollar of it may be utilized for that purpose the railways have to pay rent of leased lines, wheelage rights, rent of other properties, rent to car equipment trusts if chargeable to revenue, and all the hundred and one things that enable a system to function. If hon. gentlemen are interested they may turn to the report of the Canadian National Railways for the year ended December 31, 1935, at page 19 of which they will find the following figures:
Railway operating revenue..
Railway operating expense..
Railway operating revenue..
Railway operating expense..
.$164,902,501 66 . 151,936,078 56
173,184,501 82 158,926,248 66
Leaving net revenue from railway operations	$ 12,966,423 10
Leaving net revenue from railway operations	$ 14,258,253 16
But let us see what the first charge against that is. It is railway tax accruals. The average man, I repeat, reading these reports in the newspapers, thinks the "net earnings" are available to pay interest, and I have suggested, although I believe it is the custom of the Interstate Commerce Commission of the United States in the preliminary reports to treat it just as we do, that it would be well

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so to make the report that the Canadian people from week to week would realize whether or not the railway had any money left to pay interest or had gone behind after paying what must be paid before there is any money available for interest. The railway tax accruals for 1935 were $5,209,133.04. a little less than in 1934 when they were $5,241,857.95.
Then uncollectable railway revenues. These were in the traffic receipts because they expected to collect the money, but last year the Canadian National was unable to collect $94,037.6il, and the year before $46,813.24. The effect of those and other items was to reduce the net railway operating income of the Canadian National last year to $7,424,121.25 as against $6,324,680.25 in 1934.
But you are not done yet. You add your revenue from hotel operations, and expenses of hotel operation including taxes on hotel properties, and these result in net hotel operating income of $101,770.76. That is a highly commendable result; after paying operating costs, which in the case of a hotel include maintenance of furniture and equipment "in their integrity," I think are the words used by auditors, as well as payment of taxes, the hotels earned last year $101,000, Then we come to such items as separately operated properties, showing a loss, and we reach the figure showing income available for fixed charges as $8,014,635.82 in 1935, which is less than the amount in the year before

$8,616,760.98. But from that there is to be deducted the following items: rent for leased roads, $1,372,712 in 1035 and an almost identical sum in 1934. Then you add amortization of discount on funded debt, that is the charge made each year because securities were sold at a discount. That took over a million dollars. Thus you had a situation develop where you had between five and six million dollars left to pay interest. The interest that had to be paid last year on long term debt was $53,468,792 as against $55,811,745 the year before. But there was also the interest on unfunded debt, which means interest payable to the banks for temporary borrowings, which amounted to $182,125 last year, and $211,058 the year before. So that the net income deficit, before interest on dominion government loans, transferred to profit and loss, amounted last year to the sum of $48,878,181 as against $49,605,719 the year before.
I have taken the trouble to go into that in a little detail because I have friends who are unable to understand why there was a deficit of $48,000,000 on the Canadian National Railways last year, when they pick up reports

in the newspapers from week to week and see that the gross earnings so far exceeded the net earnings. I have given these facts in order to remove any misunderstanding there may be in the minds of those who may take the trouble to read what is being said.
There we have the situation brought down to date, indicating the amount of deficit on the system last year. That is the amount of money, apart from capital expenditures- the income statement only-that had to be found by the Canadian people to pay the interest due to the public, not to the government. I am told by many people that it would be manifestly unfair to deal with the moneys due the government, because that represents capital invested by the Canadian people in the road, and unless a dividend is paid on it they must be prepared to accept the loss as part of the incidence of public ownership. The argument is not unfair. But leaving that entirely out of the question., there remains the interest that has accrued on securities held in Great Britain, in the United States, in Canada, in almost every country in the world; held by insurance companies, by trustees, by private investors, by banks, by almost every type of investor in the world. Last year to pay the interest on these securities $48,000,000 was required of the Canadian people. Obviously they could not bear that burden of taxation, and so we went on the markets of the world and borrowed the money with which to pay it. The Minister of Finance the other day referred to what he had to do because on the thirty-first of December last it was necessary to make adjustments in dealing with this matter. There is the situation that has accrued to the Canadian people by reason of the venture in which they embarked.
The amount due in connection with maritime freight rates I have left out of this discussion, because I have left out entirely what are called the eastern lines.
I shall not take time this afternoon to analyze the capital expenditures made, but I recall that many years ago, when I voted against the government of which I was a supporter and said that to make the Canadian Northern of any value would require an expenditure of one hundred million dollars, I was jeered at for putting at so high a figure what was required to rehabilitate that road and make it part of our transportation system. I shall hot do more this afternoon than to direct the attention of the people to what is said in the report as to expenditures on capital and how large these capital expenditures have been made both for the construction of branch

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lines and for the improvement of the main lines.
So far as branch line construction is concerned any man living in western Canada knows how strongly the people urged that immediate action should be taken to provide them with facilities for sending their grain to market, and we have all endeavoured to do something along that line. The government in 1929 brought out a great plan of branch line construction to which reference is made in the Duff commission report, and the Canadian Pacific followed that comprehensive plan of branch line construction, involving, as is pointed out in paragraph 50 of the report, the construction of 4,161 miles of road and the buying of 857 miles, the major portion of which, according to paragraph 53, was in the western provinces, and at a cost per mile, according to the same paragraph, much larger than it had been believed would be necessary for the purpose. I am not going to do more than read paragraphs 58 and 59:
58.	To sum up, it is clear that there was intense rivalry between the two systems in new territory, particularly in the provinces of Saskatchewan and Alberta. The construction program of one company was responded to by an equal or greater program of construction of the other. The development of this territory did not meet expectations, and the railways now find themselves with additional traffic mileage and an increased burden of capital charge.
59.	It would be fruitless at this stage to apportion the blame for the competition in branch line construction, but there is no doubt as to the disastrous effects of this competition, and it is imperative that conditions be imposed that will make impossible a repetition of the rivalry in the extension of railway mileage that marked the period from 1923 to 1931.
In the bill before us there is no provision of that kind. In the first days of this first session of 'a new parliament there has been nothing suggested of that kind in the declared policy of the administration. I take it that inasmuch as the authorization of branch lines will not be given, therefore the necessity for it is not so great.
Then I come to the acquisition of branch lines by purchase. I am not going to indict, as I readily might, the former Liberal administration, now the government, for the cost of those lines. There is not a member of this house who does not believe they cost more than they should, and who does not know that some of them are not worth anything like the amount that was paid for them. I leave that entirely out of the question and point out that the railways taken over by the government prior to 1918 cost $9,559,686, and from 1918 to 1920, $6,641,659.
Those are the particulars given on page 22 of the cost and rehabilitation of the railways taken over by the government.
The report proceeds to give the purchases by the Canadian Pacific Railway and the Canadian National Railways of other lines, divided into separate classes. Then it deals with the cost of hotels. It says:
63.	The Canadian National and the Canadian Pacific railways own twenty hotels and twelve summer resorts, and are financially interested in a number of other hotels and pleasure resorts. In the ease of the Canadian National the hotels and resorts are operated as part of the railway organization; in the case of the Canadian Pacific they are separate organizations.
64.	The Canadian National hotel investment, at December 31, 1931, amounted to $31,828,234, and the Canadian Pacific, $71,148,772, a total of $102,977,006.
65.	The following statements show the total investment in hotels at December 31, 1922, and also the investment at December 31, 1931. It will be seen from this statement that the Canadian National increased its investment in hotels during that period by 229 per cent and that the Canadian Pacific increased its investment by 193 per cent.
I shall only say with respect to hotels that they never have themselves been profitable adjuncts to railroads. In a broad and general way they are supposed to assist in the adjustment and maintenance of traffic, and railways have accordingly engaged in their construction and in their purchase and operation, but in some countries the view has been held that that should no longer prevail and that railways should not be permitted to operate and maintain hotels. At the moment I express no opinion on the subject, except to point out the enormous sum that has been expended in railway hotels, which is referred to in paragraph 67:
67. An analysis of investments in hotels reflects similar results from competitive conditions to those which prevailed between the two railways in the larger sphere of operations, with practically similar results-the Canadian National steadily increasing its investment despite increasing losses, and the Canadian Pacific adding to its investment to an even greater extent than its competitor, without commensurate return on the investment.
One point as to competition which I think the people of this country should keep before them is this, which is stated in paragraph 69 of the report:
69. The Canadian Pacific has stated that in no ease has that company bnilt an hotel in any city where an hotel had already been erected by its competitor. This cannot be said of the Canadian National, but, in fairness to that company, it should be mentioned that their hotel at Winnipeg was constructed in connection with the Grand Trunk Pacific venture, and taken over with that property.
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Then the commission proceeds to take the year 1929 as an illustration:
149.	Possibly the year 1929 affords a striking example of what political and public pressure, presumably, were able to accomplish.
150.	The Canadian National Railway requirements authorized by parliament during the fiscal year 1929-30 were as follows:
Canadian National Railway Budget
for 1929	$ 53,750,000
Canadian National eastern lines deficit (1929) and 20 per cent
reduction in tolls	 6,808,172
Prince Edward Island car ferry
construction	 2,500,000
Branch line construction (19291932)	 30,136,325
Montreal terminals (construction) 50,000,000
Acquisition of railways	 31,247,500
New equipment issue	 18,000,000

In addition, construction programs were proceeding under prior legislation, the unused
authorities being for:
Branch lines construction	$ 9,482,021
Toronto terminals construction. ..	3,583,863

Total expenditures authorized.. $205,507,881
151.	The actual cash expenditures during the same year covered by these authorizations amounted to $113,859,777, the balance, $91,748,104 being chargeable to subsequent years as construction work proceeded or obligations on account of roads purchased matured.
The foregoing does not take into account other legislation which provided for the refunding of $18,000,000 of maturing securities, nor $6,396,000 voted for the Hudson Bay railway and terminal development, in the same year.
152.	The net increase in funded debt of the Canadian National due the public for the year 1929 amounted to $144,670,459; whereas the annual increase for the previous six years had averaged $28,897,648.
153.	Annual interest on the funded debt in the hands of the public, which, at the end of the year 1928, was $41,810,880, increased to $55,587,145 at the end of the year 1931, due largely to the expansion policies of 1929.
I was going to put the figures on for last year but they are now well known to the house.
Under those circumstances I think every hon. member will agree that the government was warranted in taking some steps to endeavour at least to give effect to the report of a commission of that calibre, which investigated the matter as thoroughly as I have indicated.


Mr. FINN:: In what year and what month was that statement made by Sir Henry Thornton and Sir Edward Beatty which the hon. gentleman has quoted?


Richard Bedford Bennett: Those two statements
were made to the commission itself in 1931

during the progress of the investigation. The commission then dealt with the contributory causes of the railway problem, dealing with excess mileage, which I think must give every member of the house pause-why? Because we all find it difficult to bring our minds to the conclusion that we can agree to the lessening of railway mileages in the communities we represent. Shortly put, that is the position. This is the way in which it is dealt with:
156. In the earlier part of this report emphasis has been laid on the excess mileage of Canadian railways. The policy of branch line expansion in the period 1924 to 1930 has also been dealt with. It has been pointed out that the population per mile of steam railways in the United States is more than double that in the dominion, and competent railway authorities in the United States concede that there is a great excess of mileage in their country. Reference has been made to the low traffic densities prevailing upon the greater part of the Canadian mileage. The traffic density maps, which accompany this report, tell the story in graphic form. In the interests of sound railway practice, a careful examination of all light traffic lines should be undertaken forthwith by both railways to determine what should be retained and what should be abandoned. Where the decision is for abandonment, operations should be promptly suspended, and the salvaged material recovered then or later. Thought should be given to the operation of a considerable mileage during a portion of the year only. Radical reductions, not only in the service on these light traffic lines, but also in the mileage of this group is essential if economic security is to be restored to the railways.
Various estimates have been made as to the number of miles involved. Some have gone so far as to say that to carry out that report in terms of the recommendation would involve the abandonment of 4,000 miles. Has any member contemplated what that means? Can it be accomplished by hon. gentlemen opposite? Does the minister say for a single moment that he can accomplish that? That is the question. Just look at that in the light of the figures which were given as to the number of miles of road we have in this country as compared with other countries. Some hon. members will recall the figures. I passed them by, but perhaps I should read them now:
95.	Of all the countries of the world Canada has the smallest population per mile of railway. In the United States the population per mile of railway is more than double that of the dominion.
96.	At December 31, 1930, the total railway
mileage of Canada was as follows:
First main track	 42,075
Additional main tracks	 2,690
Industrial tracks yard tracks and sidings	 11,877
56,642

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The increase over the preceding year was 774 miles. In addition, there was under construction 713 miles, chiefly in the prairie provinces.
At present it may be said that the mileage is nearer 57,500. These are the figures. Let us think of it and ask ourselves whether we can effectively deal with this problem in the manner which the minister has indicated. Having regard to the speech made by the minister in Toronto, I was awaiting with great interest the enunciation of the government's program with respect to railways. After his highly inspiring observations at Three Rivers I waited with greater interest and anxiety. It all gets down to this, however: We will substitute directors for trustees and having done that we will provide for a nearer approach to parliament and all will be well. I have no desire to discourage the optimism of any new statesman; on the contrary I desire to do everything in my power to encourage him in his laudable ambitions. But although some recommendations of this commission may be lacking in common sense, as he suggests, I believe he will find that their review of the facts is warranted not only by observation but by experience of at least two of them in dealing with colossal problems in countries other than our own.
May I go further now, leaving that for a moment, to look at the remedies suggested. It was not a popular thing to introduce the legislation of 1931. It was realized that our political opponents would seize upon it for the purpose of arousing the animosities of the employees of the railways. And how successfully they did so. No wonder my hon. friend laughs! I have no quarrel with those who were appealed to in the way in which the railway employees were. Their response was certainly effective, and it was immediate. I daresay the hon. member for Saskatoon (Mr. Young) recalls the observations made by the steward in the dining car on wnich he was travelling west. I mention this just to let him know that I knew about it.


Mr. YOUNG:: My right hon. friend must have a secret service that is the best in this country.


Richard Bedford Bennett: It is a fairly good one.


Alexander MacGillivray Young: I may tell my right hon. friend that his information can come from only one source, and I think he does not do himself full justice in mentioning that gentleman's name to me.


Richard Bedford Bennett: I did not mention the name. I do not know who he is.


Alexander MacGillivray Young: Well, I do, and he will know that I do.


Richard Bedford Bennett: And I do not.


Alexander MacGillivray Young: I may say, Mr. Speaker, just in that regard that I quite agree with him that railway men perhaps should be a little more discreet than he was; and I so said.


Richard Bedford Bennett: Yes. It was not his indiscretion that gave me any concern. I was merely pointing out how effective had been the appeal. Human nature being as it is, I am not here to blame the hon. gentlemen who now sit on the treasury benches for having succeeded in their appeal, but I do say that you have to get beyond that or you will not solve this problem. You cannot solve it in that way. When I point out to the minister the net result of this measure of his, I do so in the most kindly spirit and with the most earnest desire to better conditions. Look at what happened in the house the other day. On April 20, as reported at page 1964 of Hansard, a question was asked by the hon. member for St. Boniface (Mr. Howden) about employment in the shops at Transcona. The Prime Minister (Mr. Mackenzie King) answered:
The hon. member used an expression which I do not think is justified. He spoke about the government laying off men from the railways. I am sure he did so inadvertently.
Mr. Stewart: We used to hear that every day.
Mr. Mackenzie King:	Well, it is unfortunately true that the government gets the blame for pretty nearly everything, but in this particular case the government is wholly innocent. The government had nothing to do with laying off men.
Mr. Howden:	The government is getting
the blame for it just the same. The Canadian National is a government road and it is felt by these men that the government could use its influence to see that the work is carried on.
The people of this country will read with alarm what appears in the next paragraph, from the Prime Minister of Canada:
Mr. Mackenzie King: There is on the order paper notice of a bill which it is believed will give the government a little more authority as well as responsibility in these matters. I hope the house will be responsive in its support of the measure.


Some hon. MEMBERS:: Hear, hear.


Richard Bedford Bennett: I can understand the cheers. I certainly understand them, because hon. members are going to get a little more power to deal with the question of unemployment. That was the point to which the question was directed. Let me show what has happened since this government came into office. I hold in my hand a copy of a newspaper which is published in, I think, Riviere



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du Loup or St. Laurent. In it appears a notice. The hon. member for the constituency is leaving to go to parliament. He writes: Ottawa, 5th February, 1936. Monsieur H. Cote,
Roadmaster, C.N.R.,
Riviere-du-Loup Station, P.Q.
I beg to include a list of members of a committee which in future must transmit to you the recommendations for those who will desire to work in shovelling the snow along the Canadian National route.
The work that I have to do during the session does not permit me to look after the details. I am very much obliged to my friends that are willing to render me this service.
I desire them to pay special attention to the ones who are mostly in need.
Yours very truly,
Jean-Frangois Pouliot.


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: I regret that that should be considered a subject matter for laughter. One can only say this, that the hon. member for Temiscouata (Mr. Pouliot) was open about it; he did what he did publicly. That cannot be said of everybody. I happen to know of efforts that are being made right at this moment by men connected with collieries and coal, who, when they are told that there are existing contracts, and that to start a new coal mine would be undesirable in view of the present supply, say: Wait till this bill gets through; then we will be able to bring pressure to bear and get a new mine developed and the coal taken out of it for the Canadian National roads. I happen to know of a case where a man, employed in a position, was about to be transferred from one point to another. A member who sits on the government side of this house said, "No, that must not happen. He is one of my most valuable supporters. He has to stay here." I could multiply such instances.
Not for a moment am I trying to say that the Liberal party is any worse than any other party with respect to that practice. That is not my point. But I do say this, that under the control of this system by a board of trustees it was not possible effectively to do that.


Some hon. MEMBERS:: Oh, oh.


An hon. MEMBER:: Page Manion.


Richard Bedford Bennett: I say that with respect
to employment. I know the story about the ties; I am entirely familiar with it, and the minister was of opinion that people along the line should, regardless of their political views, have some opportunity to supply ties. But leave that out of consideration for the moment.

There is abroad in this country on the part of those who support the Liberal party the view, the very strong view, that to substitute for this board of trustees a board of directors is to go back to the good old days of 1929. There is no doubt about that. If men were under oath and speaking their honest opinion I could call, one after another, practically all Liberals who are interested in patronage and matters of that sort to say that this is going to restore those good old days.
The minister has referred to the president of the Canadian National system. I have a high regard for him. He was in Calgary, working with the Canadian Pacific Railway, when he was taken by Mackenzie and Mann as master mechanic, and he has risen to a position of importance. But it is m.y duty to say this, that, temperamentally, he cannot resist pressure. He cannot, in that sense, say no. The pressure of politicians, members of this house, members of the government, is such that he cannot resist it; that is the pressure, not of the opposition, but of the powers that be. I say that with the best intentions in the world, and I say it because I know whereof I speak.
I will not discuss the chairman. Before the committee he will have an opportunity of speaking for himself. But this bill certainly should not be given second reading, should not be allowed to leave the committee stage, without affording the trustees an opportunity to be heard, because the provisions and the terms of the statute are that the chairman was appointed for a period of seven years, and that he should not be removed without an address. By section 7 of the act:
No trustee shall he 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.
It must be taken, of course, that this measure is practically removing the chairman from office, and the reasons assigned are such that he has not yet had an opportunity to answer them.
We come to the question of the selection of the personnel of the board of trustees. The act came into force on July 1, 1933. It was regarded as impossible to split the year, so to speak, and during the succeeding six months an effort was made to secure three trustees. It may be that three trustees are too few. It may be that" they have all the weaknesses to which the minister has referred. But if they have, his harbour commission has just the same weakness. That commission touches the life of the people

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more intimately and under less control than does the railway, because the railway is governed by the Railway Act, the decisions of the railway commission and the many provisions that have now become part of the public law of the country. But for the harbours board he was content to have three members; he thought three were sufficient, but that number was wholly inadequate, he says, when applied to the railways. The investment in the latter is more than in the former, but the matter of harbours touches the public-Halifax on the one hand, Vancouver on the otheT. Of course it does not touch the inland part of the country at all. Although he talks about the necessity for a certain type of man to administer this vast railway system, he is content to take three civil servants for the purpose of administering the harbours board.


Clarence Decatur Howe: May I interrupt my right
lion, friend to state that I took three civil servants to bridge over a gap. That was necessary.


Richard Bedford Bennett: The minister very properly points out that it does not follow that they will be permanent appointees, and I quite agree with what he says. But I point out that he was quite content to give them the powers of all the harbour boards throughout Canada, and three is the number provided for in that bill, so three cannot be such a bad number after all.
Now let us go further. We had that period of time in which to endeavour to secure these men. The commission recommended that we should secure a certain type of men, and we endeavoured to do so. If we are to have full time men the minister will find it very difficult to get men of this type to leave their present businesses and devote themselves to the interests of the railway for any compensation that we may be ready to offer, and now you have taught them this lesson, that an act of parliament does not mean anything; that a man -who has a position may be removed at the caprice of any government with sufficient majority to do so. There is no certainty of tenure whatever; yet you expect the best men of this country to devote themselves to this job. I may say that from the Atlantic to the Pacific we canvassed every section; we endeavoured to induce men, possibly through a sense of public duty, to undertake this responsibility, but they all had businesses of their own. Take a man who is general manager of a great enterprise; what time has he to give to the railway? We 12739-141i
did secure what the minister describes as a company director, but I think if the minister will look at the traffic that the company in which that man is interested supplies to the railway, my hon. friend will realize how disinterested that man has been, serving without compensation, how willing he has been and how earnest have been his efforts to seek some solution for the problems before us. Starting at the Atlantic and going to the Pacific we asked this business man and that, pointing out the public duty and responsibility, but they were not prepared to undertake the work, and this bill was one of the reasons they gave.
Finally Judge Fullerton was asked to undertake this duty. First of all he had a good legal training and had been on the bench for fifteen years. He had acquired a considerable business experience while he was at the bar and, beyond all that, as chairman of the railway commission he had an intimate knowledge of the operations of the railways. I am not dealing at the present time with the human factor, because from the moment he was appointed he was subjected to attacks by the then opposition; from the moment he was appointed he was being held up as being unfit for his job; from the moment he was appointed those who now ask for the support of the Canadian public were loudest in denouncing him as being unfit for the position which he assumed. In such circumstances how could you expect to get results? How can you expect to get results under the bill which is now before the house, if as soon as the names of these men are announced we begin to point out that this man has a drag here and the other has a drag there; that this man has a pull here and he desires this for this or that purpose? You cannot appoint men to positions of great responsibility and say: Behold, they hold great wealth or administer great properties, as one reason why they should be fit for the job. The position of chairman of this board of directors is one of the greatest difficulty, involving the possession of qualities which very few men have, and knowledge which is possessed by still fewer men. These men now are, mark you, not trustees with a certainty of tenure but directors appointed by the governor in council, which is by the government of the day, politically, if you like, knowing that those who hold allegiance to the government and those who support the government must come to them demanding this, that and the other thing. Are these men going to be able to administer this system

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bo fearlessly, impartially and effectively as to ensure an equilibrium between income and expenditure? Does the minister really think that is possible? Does he think for a moment, with the experience he has had, that it can possibly be so? All you have to do is to realize what is meant by the letter I have read or the other matters to which I have referred and you will have no difficulty in appreciating the situation as it exists.
I am sorry to say that, in the light of the minister's speeches at Toronto and Three Rivers, I do not think he realizes what those forces are to which the commission referred. I do not mean that a member of parliament is going to take the minister by the throat. That is not the point. I have in mind what the report said as to the terrible effect of what is described as the pressure of communities, the pressure of circumstances, if you like. Let me put this to the minister: Does he believe, for instance, that a board of directors will be as able to withstand pressure for the construction of the Montreal terminal-I use that as an illustration because it is not likely to be done-as would a board of trustees? I saw what took place in this house, you see. Does the minister think a board of trustees would have yielded to pressure with regard to the Halifax hotel? Does he think a board of trustees would have done what was done by a board of directors with respect to the Vancouver hotel? Does the house recall the appointment of Mr. Fife-Smith of Vancouver as a director of the Canadian National Railways, and the reasons given by the minister from that province for that appointment? These are some of the factors which ar.e influencing my mind in trying to arrive at a sound conclusion, for I am as interested in this problem as any man in this community, even as much as the minister himself, and in trying to see that what we do shall not bring disaster upon us. What Sir Henry Thornton said about political pressure cannot be denied by any observing man. What Sir Edward Beatty said is equally true, and who of us, reading the history of hydro in Ontario during recent months, can overlook the fact that "politically minded" is a proper description of those responsible for administration?
What I fear, I say to the minister frankly, and what I think everyone fears is, on the part of those entrusted with responsibility at head office, a state of mind, unconscious if you like, that expresses itself in a desire to please those who are in office. How many executives have sufficient strength of character and of decision to take an opposite attitude to that taken by the government? I recall what took place in connection with the
JMr. Bennett.]
Montreal terminal. If I had time to tell this house the whole story in that regard I am sure the minister would understand just what I mean. Consider the National Transcontinental; how did that come into being, and why? No one suggests for a moment that it was ever built to meet a national necessity.


Robert Emmett Finn: To shorten the distance.


Richard Bedford Bennett: I am sorry that it does not shorten the path of the hon. gentleman to an understanding of the situation, but that had nothing to do with the undertaking. We all know the story in that connection; everyone knows it. Then there was the construction of the Grand Trunk Pacific to Prince Rupert, paralleling the existing facilities between Edmonton and Winnipeg, and we know how that came about. There was the projection of the Canadian Pacific, throwing its line in before the Grand Trunk Pacific could be built, by the extension of the old Canadian Northern Edmonton line from Wetaskiwin down to Winnipeg. Knowing all these things one cannot but realize that today we are being asked to make possible the exercise of that unconscious influence, if you like to call it that, upon the executives controlling the situation at head office which will result in politically minded action. Does anyone, for instance, say that the purchase of the Southern Counties railway was that high type of business that commends itself to the experienced and trained executive? Does anyone suggest that the Gaspe and Oriental was of such transcendent use to this country as a supplier of traffic that it was necessary in a business way to acquire it on the terms we did? Hon. members know the reports as to values. Some of those old branch lines served little communities in the east, we understand, but when you get into the other field you cannot for a moment say that it was other than considerations, not necessarily party, but political in their character, which brought about the result.
What we are asked to do now is to perpetuate that sort of thing. I think the hon. gentleman at one time would have been quite well satisfied, unless rumour does him a great injustice, if the present chairman would have resigned, to appoint another chairman and another board, and been content with the board of trustees. But the chairman felt that he could not resign, so we are to have seven directors.
I go a step further. On capital expenditure can you have any greater safeguard than we have now? Is it realized that this house has to vote every dollar of capital which is spent? Will it do anything more under this

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bill? This house has a discretion to exercise now; it will have none greater under the new bill. If it is intended that the government shall project itself more intimately into the administration then, that is the very thing which the commission said should not be done. If not, the control of parliament is complete at the moment, because nothing can be paid for deficits or capital expenditure or anything that this parliament does not approve; this must be done by appropriation. The board as it stands to-day has not a dollar to spend for capital purposes unless we give it to it; it has not any money to meet deficits except as we provide it. We must provide capital, whether it be for locomotives or cars or rails or roadbed, and under the new bill that will still be so.
You are going to have seven men meeting together, and the will of the majority prevails. The reason the chairman has a casting vote, was such would sometimes be necessary in order to carry any measure. The assumption was that the chairman would have such a sense of responsibility that political considerations would in no way govern. I can speak feelingly; I have been accustomed all my life to write to railway executives, whether of the Canadian Pacific or the Calgary and Eastern or other roads, when I was interested in some man who had met with a hardship. I have done this all my life; I never thought of it in any political sense; I did it both when I was in the house and when I was out, perhaps more when I was out than in. But if I wrote to the chairman of the Canadian National with respect to any matter Judge Fullerton would not for a moment consider it; in fact he charged it as political interference because I suggested it.
And when the minister talks about the two railways coordinating their efforts before the trustee board came into being, I can only say that this is true. In 1931, before the board was appointed at all, I sent a letter to both the president of the Canadian Pacific and the then president of the Canadian National asking them to cooperate in view of the serious conditions in which we lived and the financial obligations we were under. That is no new thing, successive governments have done it. But where in this bill have we any assurance that the evils which this commission fearlessly pointed out are not going to recur? If a board of directors under the conditions to which this commission refers dealt with this property in the manner indicated and brought about
the results that have been expressed, then we know if we know anything that the appointment of another board of directors will bring about the same results. The minister says that the question is one of personnel. So it is, but no personnel that you can get in this country, unless you pay them more than we are prepared to offer them, will leave their present positions for the purpose of serving this railroad. Take the United States; take the history of their railroads; take the salaries they pay. Hon. members know perfectly well we cannot get these men. You cannot get the president of a bank or of a great organization to leave his organization and come and serve the railway. And we know if he gives it part time he gives just such time as he can afford having regard to his other duties. A day and an hour are fixed when they shall meet together. They meet together. They carry out-what? The will more or less of the president, just as this .commission pointed out. That is all. Look at their expenditures: The hotel in Jamaica, these three steamships I have mentioned. Take the Montreal terminals, the hotel at Vancouver, the hotel at Saskatoon, the hotel at Halifax, every one of them; you can just put your finger on it and say: That is the reason. That is the report of the commission; that is what they found. There is their decision. I think no one would question that these men had no personal object to serve; in fact, if anything, they were more friendly disposed than otherwise with respect to the matters with which they had to deal.
I say to the minister that he has not made out a case. The only case he has made this afternoon is that in his opinion the chairman has not done his duty and is unfit for his position. But instead of taking action under section 7 and indicting him so that he would have a chance to be heard, he removes him, although the statute requires that he remain for a period of time. He gives him no opportunity to be heard, except before the special committee, and substitutes directors for trustees although the report of the commission is that under the service of directors, whether under a Conservative or a Liberal government, there was faulty administration and the red thread of extravagance running through the whole of the operations. And, more, there is the effect of politics, exercised not individually with respect to individual persons, but by the pressure of circumstances, of communities, of members of parliament en masse for the purpose of promoting their own political fortunes, and human nature being


Richard Bedford Bennett: Mr. Speaker, when the house rose at six o'clock-I had intended to conclude before that hour-I was asking the minister what he hoped to do by this legislation that could not be accomplished under the existing statute. I thought it well to point out in that regard1 what the commission had to say in their proposals and remedies, commencing at paragraph 195 of the report. They referred1 to the necessity for disregarding such amalgamation, long lease of the property as well as short leases of fifteen years and over. Paragraph 203 reads:
Three trustees should be appointed by the governor in council, in whom should be vested all the powers of the present board of directors of the Canadian National Railways, both in respect of the parent and all subsidiary corporations of the system; and any and every power and authority necessary to enable them to administer the property and operate the system and every part thereof.

C.N.R.-Board o] Directors
I put this to the house: In the face of a finding such as that to which I have referred, can it be said that this house as it is now constituted is better able to recommend an adequate remedy than were those commissioners? Does the minister with his limited experience in dealing with this problem suggest that at this very short date he is so well qualified himself as to be able to speak with more authority than are those men who gave so much time and trouble to dealing with the problem? In regard to the appointment of the trustees, I mentioned this afternoon that the government of the day had full appreciation of the value of the report in connection with the type of men who should be appointed. The report recommends that all should be persons of proved business skill and capacity. I think most will admit that Mr. Morrow is a man of proven business ability and capacity. Mr. Labelle had had considerable experience, not so much in the practise of his profession as in dealing with business transactions for one very important client whom he represented in Montreal. He brought to bear upon the problems that he had to consider a trained mind not unaccustomed to dealing with business problems of the greatest magnitude. In the case of Mr. Morrow, as I say, I think his capacity is known to all those who have any knowledge of the business of this country.
I have mentioned already the considerations that brought about the appointment of Judge Fullerton. I should mention that it was regarded as absolutely essential that there should be some measure of continuity in management between the outgoing board1 and the new trustees. Both Mr. Morrow and Mr. Labelle had been on the board and they were continued so that continuity might be maintained. For the life of me I oannot understand just what difference there is between the suggested proposals and those embodied in the statute itself. Paragraphs 205 and 206 of the report provide that the budget requirements of the system are to be made known. These paragraphs read:
The annual budget of the railway should be under the control of the trustees. Amounts required for income deficits, including interest on railway obligations, for capital and for refunding, should first be submitted to the treasury board for its approval and presentation to parliament by the Minister of Finance.
Since the debt of the system in the hands of the public is now very large and more than the railway can carry from its earnings even under improved conditions, sums which are required to meet deficits should be voted by parliament annually and not raised by the issue of railway securities as has been done in recent years. This recommendation does not apply to capital for improvements and betterments nor to amounts required for refunding.
These recommendations are embodied in the report and it is somewhat difficult to understand what will be the difference between the new board of directors considering the situation and making recommendations as to what is required for capital, for other purposes and for the deficit, and the present board of directors, which now considers these very problems, making recommendations as provided for by the statute. According to the provisions of the statute parliament deals with the matter and provides the money and the week before last we voted substantial sums to the railway for that purpose. There is now standing on tihe order paper a bill which contemplates the voting of a potential deficit before it is known. All of this is a negation of tihe principles that governed in connection with this matter, under either the report of the commissioners or the provisions of the statute itself.
With relation to the chief operating officer, I confess I was unable to follow the minister. The statute distinctly and positively states that the operating officer shall have to do with the operation of the road, the administration in the broad sense being entrusted to the chairman and the trustees. If, as has been said, the chairman segregated certain activities; for instance, if he said that he would undertake to be the executive officer with respect to hotels or with respect to the law department, tihe fact remains that the president was responsible for the operating. I cannot see that that division of duties could in any sense lessen or limit the field. For example, it is well known that the vicepresident in charge of traffic may have certain obligations. It is well known that the vice-president in charge of accounting may have certain obligations and the chairman of the law department may have to do with certain other phases. If, as chief officer of the road, the chief executive or the chairman says, "I am willing to undertake responsibilities that link executive action to administrative action in connection with several activities," to which reference was made this afternoon, I can only point out that as a result of his efforts, he brought about surpluses where there had been deficits. I think the minister mentioned this afternoon a surplus in connection with hotels, and in connection with the steamship lines the same condition prevailed. Of course, the law department is not a revenue producing department, but one would expect that a former justice of the Supreme Court of Manitoba would be well qualified to assist in the administration of problems which had to do with law. Therefore I find it difficult to understand why the

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attack was made in the form in which it was, unless the minister understood the chairman to indicate that he regarded himself as the chief operating officer of the railway. The statute says that he is not and the recommendation of the commissioners in that regard has been followed. As I say, I find it difficult to understand what is meant by that attack.
With respect to cooperation, I stated this afternoon that the commissioners recommended the closest cooperation. In paragraphs 210 and 211 of the report they embodied this recommendation in terms which have found expression in the statute itself. I say once more to the minister that there can be no useful cooperation if there are two considerations always before one or both of the parties cooperating. There can be no such thing as real cooperation if each is waiting for the other one to suggest that there shall be the taking up of lines on his road or on the other man's road. These considerations must be overcome by mutual understanding that there may be lines taken up on both roads.
Lastly, and more important, is the second consideration. Last fall I heard appeals being made to the railway employees that amalgamation or unification might involve a possible loss to some of them. This afternoon the minister talked about human relations between the president of the road, who had worked up to that position from the mechanical department, and the employees. Is it proposed that because someone suggests that some proposal may have a temporary effect upon someone, the Canadian taxpayer is to be taxed forever? Is that what the minister means? The facts would certainly indicate that that is so.
Someone pointed out that the roundhouse in Ottawa was in a disreputable condition, was no longer capable of serving the purpose for which it was constructed. It was pointed out also that across the bridge there could be found in Hull a recently completed roundhouse owned by the other road and quite capable of meeting the requirements of both. If meaning is to be given to the words of the minister, it will be extremely doubtful, because of attention having been directed to what might result with respect to the employment of some people, whether an effort will be made to bring about the ultimate use of the Hull roundhouse when the Ottawa roundhouse falls into obsolescence. I want to make it perfectly clear that I think it would be far better for the people who are

employed to be employed by a solvent system, by a system not in the hands of a receiver, than by one no longer able to maintain its services efficiently and effectively. In other words, more people will ultimately be engaged in more stable and certain employment if there is a realization that there should be cooperation between the two railways. I think it is axiomatic that this must be done to secure efficiency on the part of both. If, in the approach to cooperation, there is a combination of the two qualities or factors which I have mentioned, the inevitable result will follow that there will be no cooperation under this board, for the simple and obvious reason that if there is the haunting spectre of a political result following at the end of administrative action, the inevitable consequence will be a continuance of the very conditions which we have in this country. How could Judge Fullerton function, with the conditions prevailing which have been made apparent to this house, neither road willing to move its tracks, each waiting for the other to suggest that the other man's track? should be moved, and with the realization that there is more trackage than this country can possibly support, as is admitted by every one? In that condition of things, how is the change from trustees to directors going to effect an improvement in the situation? For the responsibility of the government, of the country and of the taxpayer has not been changed one tittle from the recommendations of the commission as embodied in the act. They were stated in somewhat different terms, and that is all that can be said.
A point to which the minister did not direct attention and which I had thought would be in his mind is this: This system of railways has been made up out of not one but many systems. May I read paragraph 84 of the report:
Representations have been made with respect to the capital structure of the Canadian National Railways. This problem presents several aspects. One is the very large number of companies whose corporate existence must be maintained. Another is the large number of different bond issues and mortgages with different rates of interest, expiring at different periods and with all sorts of different clauses in them. It has been stated that included in the National Railway system there are 251 different bond issues and mortgages; that there are 80 different issues of certificates in the hands of the public; that there are 139 companies whose corporate existence must be maintained; and that 42 separate income accounts and 90 separate balance sheets have to be prepared each year.

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Obviously the suggested changes are not going to improve that situation, and so far as capital structure is concerned, no change except by parliamentary action can in any sense deal with that condition. Therefore, so far as that outstanding point is concerned- and we have met it by the appointment of trustees-much will have to be undone that has been done and in the end there will be no progress in that direction. I point this out, because it has its effect upon the situation as a whole.
Then there is a third point, the last one which I desire to discuss in this connection. It must be within the knowledge of the house that when parliament declared that there should be no more funding of deficits it meant that the Canadian taxpayer had to find the money and that thereafter there would be no charge for interest appearing in the Canadian National report. So that the report for 1934 and the report for 1935 do not disclose the real condition, because the interest upon the deficit for 1934 and 1935 is being paid by the country as part of the national debt. Those who are interested will find, at page 19, that in 1935 the interest due the public on long-term debt was $53,468,792.22, whereas in the preceding year it was $55,811,745.85. There has been an economy effected by refunding operations carried on by the government. The interest upon the deficit of 1934 is now part of the national debt of Canada, and the interest on the deficit for 1935 is also a part of that debt. The appointment of directors cannot improve or change that condition unless the government is prepared to capitalize against the railways the deficits from year to year. I would point out further that last year we had to find over $48,000,000, which, added to the income available for interest of over $8,000,000, made the payment on interest account the sum of $56,000,000. That is a very large sum of money.
I wonder whether the members of this house realize that it represents over $1.75 a second. Do they realize that when I speak of something over a million a week it is a large sum of money? Few men have taken the trouble to reduce it to the smallest unit of time. But when I point out that while we sit here, as every second goes by, there has to be provided from some source, either from traffic or from the Canadian people by taxation or by means of an addition to their debt, about $1.75 a second, the house will appreciate the astonishing sum of money which is charged against the people.
During the last few years, especially since 1931, my friends opposite were content to
endeavour to throw discredit upon the administration of the railways, to assert that the party in power at that time was anxious to bring about the destruction of the system, whereas in point of fact, day and night, we were labouring to provide the wherewithal to maintain its integrity and solvency from the standpoint of those who held its securities. And in that we succeeded. Hereafter fair minds, those who are able to take a less prejudicial view, will realize that the task we undertook and discharged successfully was a great and difficult one. During the election, it is quite true, as the minister has stated, that the government said they proposed to change this condition. They did undoubtedly so state to the Canadian people; they did state to them thiat the government of that day was responsible for the condition which had been brought about and that it was intent upon the destruction of the Canadian National system. I can only reiterate that, as the records in that regard indicate, such was not the case; they speak for themselves. It will be found that the appeal which was successfully made to the railway men of the country, the appeal which secured their support in overwhelming numbers for the government now in power, was based upon a wholly inaccurate appreciation of the difficulties of the problem and an unreal understanding of just what was involved. There is no government in any country at any time that is not concerned about employment being made possible for every man within the borders of that country. Every government desires that. But when one is faced with a situation such as we have here; when the statute itself declares that neither amalgamation nor unification was intended or proposed or possible until parliament should speak; when one finds further that the mere suggestion that there should be a lessening of expenditure in connection with express and telegraph systems raised in this house such a cry against the administration of the day, such an upheaval of prejudice and an appeal to the public against the taking of any action, does the minister say that he does not intend now to take action; that he does not propose in any sense to give effect to at least three of the suggestions of these coordinating committees of the two roads? Is there to be some unification of action with respect to express and telegraph services? Are rents to be paid every year for two places where one might suffice? Does this mean to say that while provision is made for these things they shall not be carried into effect lest, peradventure, some
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man will find his interest temporarily affected? It must not be forgotten that when the very suggestion was made with respect to these two matters that had been dealt with by the two systems carefully, with much detail and over long period's of time, the result was as I have indicated.
There is still another point to which attention might be directed. So far as my memory serves me, wherever there was a suggestion that certain roadbed be abandoned there went up the cry that this was an effort on the part of the government of the day to destroy the system. One piece of road a few miles in length has been successfully abandoned. The rest of them have not been so treated, although the two roads were of the opinion that some action of that kind might be taken. I do not know to what extent they arrived at conclusions as to total mileage that might be dealt with, but this I do say, that unless the Canadian people are told frankly that there can be no carrying into effect of the recommendations made by the commission; that that cannot be done, they must continue to pay and pay and pay. If it were a question only of paying one would not be so vitally concerned, but there is a limit to the powers of the Canadian people to pay. There is a limit to the power of taxation against our people, and that limit has been reached. If one is not familiar with the history of taxation in other countries; if one does not realize wbat eleven million people scattered over half the continent are able to bear, one may continue to say: Pay, pay, pay. But the obligation is a direct one. It is imposed upon the people; it must be paid by the taxpayer in the form of interest upon increased securities issued by the country itself and not by the railroad. Unless this commission is entirely mistaken; unless we are so remarkable a people that rules which govern other countries have no application to us; unless it be true that one Canadian can produce as much traffic as two people in the country to the south of us; unless it be true that we are able to operate our railroads more cheaply than any other country, unless it be true-and we have a climate which makes this impossible-that we can operate the railway on a ratio of gross income to operating costs more easily and better than any other country, then of course this legislation can have no purpose and can effect no good. All it means is that you have drawn nearer and nearer politics and business^ business administration and .political action; that you are that much closer to the demand that clean, frank, honest administration shall be the creature of political considerations and not

of business rules and principles. These things are brought nearer and nearer by the legislation which is before us.
I do not know to what extent the members of this house can respond to what they conceive to be a national crisis. I do not believe for a single moment that this country has reached the limit of its powers of expansion or development. But I know that we have provided in this country facilities for a population nearly if not fully twice as great as the present one, much larger, in fact, than that. And our transportation system is threatened by the bus on the one hand and the aeroplane on the other. The number of passengers being carried by air from some of the great western cities to the south of us to the Pacific coast shows a very large increase. I know that the other day four extra planes, carrying twelve passengers apiece, went from one city to the Pacific coast. On the other hand we have the bus system and all these are the products of the internal combustion engine. Yet to-day, notwithstanding the condition that confronts us, one may hear men demand air-cooled trains, stream-lined trains, increased facilities of various kinds, regardless of cost. I wonder whether the minister thinks for a single moment that to put these powers into the hands of these seven men is going to change these conditions for the better. I think not.
I can only say this, that having induced the Canadian people to believe that the late government was the enemy of the Canadian National system, although through the stress and strain of the greatest depression the world has known that government, with great difficulty, maintained the system in its integrity; having succeeded in creating a public opinion hostile to the government of the day on the part of the employees of the roads because they feared that if certain action was taken they would find themselves for the moment with less employment; having succeeded in doing these things, the government now finds that the responsibility rests with it to promulgate a policy. That policy, after all this careful1 consideration on the part of the minister, consists in the substitution of seven directors for three trustees, and no real change in any other feature, so far as governmental action or control is concerned, except that implied in the statement made the other day by the Prime Minister as to what the effect of this bill was in providing an opportunity to exert power and pressure upon the administration of the road to secure the ends of particular individuals. Apart from that, this bill does not contemplate any change that I can see, anything that makes for the benefit of the road or

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for lessening the burden upon the taxpayer. That policy will not solve our railway problems. That suggestion will not in the end help the employees. It will still leave fixed charges to be met. It will still leave the Minister of Finance to worry, as did his predecessors in office, amid stress and strain to find the money with which to meet the continuing deficits of a system which now has fixed charges of upwards of twenty million dollars greater than they were in the glorious days of what was assumed to be prosperity.
It is all right for Mr. Fairweather, at Moncton, to enlarge upon what he says can be accomplished with a gross income of so many dollars and a net income of so much. All I can say is that until there is a clear realization of the obligation of parliament to deal with this problem as one of business and not of politics, there can be no clear-cut solution. It has not come to-day. After listening to the speech of the minister I say that it has not come by this legislation. It will not come until Canadians of all classes, in every walk of life, and of all political faiths, have a clear understanding of what is involved, for with the people themselves rests ultimately the remedy. As long as they are content, without a clear appreciation and understanding of this matter, to keep on making new and fresh demands upon governments for new money, for fresh capital, for better facilities, for improved trains, and for better pay. there will be no solution of this problem. Those who sit to the left of the Speaker and know something of this matter, having been through it, who know the anxiety which attends the maintenance of the system, who understand all too well that man is but a fallible creature and that as long as he desires to promote his own interests in the political sphere he is not very likely, whether he be Liberal or Conservative, to devote too much of his time to a consideration of the fundamental questions themselves, realize that there will come a time, as in every country there has come a time, when the problem will become so acute, the danger so imminent, the risk so great that men will bestir themselves, forget their personal animosities and political difficulties, and rally to a common cause to save from disaster that which they cherish and love. I believe, judging from the resolution which has been produced here to-day, that that day has not come, but some day it will come, and when it does, those who now sit to the left of the Speaker will be found ready and prepared to make such sacrifices as may be demanded for the salvation of the country and the saving of the taxpayer from ultimate ruin.


Mr. R. S. WHITE (St. Antoine-West-mount):: I will trespass upon the patience
of the house for but a few minutes while I express my regret at the character of the bill, now under consideration, purporting to be a solution of the railway problem of Canada. I do not intend to indulge in recriminations or to stir up the mess that was made some twenty years ago in connection with this railway question, a mess so odorous that it stinks to high heaven. Both parties have to bear a share of the blame; if one overbuilt, the other overbought, and the regret is that in recent years no serious attempt has been made by any party to solve what is to-day the most perplexing and most important subject before the Canadian people, a question upon the solution of which depends the credit and, I venture to say, the solvency of this country.
Now let me cite a few figures to show the serious depths to which we have fallen in the mismanagement of this problem. In 1935 the total cash deficit of the Canadian National Railways exceeded $47,000,000 and the net loss on the system, as set forth in the report, amounted to more than $115,000,000. The debt of the road is $2,809,000,000. If a proper business policy, one that commended itself to men of sense, had been adopted in 1921 when the Canadian Northern and the Grand Trunk Pacific got into difficulties; if these roads had been put upon the auction block and had been taken over by their creditors, more than one billion dollars of the debt of this dominion would have been avoided and no impairment of railway service would have occurred,, because wherever roads were necessary they would have been continued in operation by the new proprietors. When the railways were formed into the Canadian National system the total debt was $1,336,000,000. In 1933 the total debt was $2,745,000,000, an increase of $1,409,000,000 in the short period of thirteen years. Since then, that is to say in 1934 and 1935, a further sum of a little more than $200,000,000 has been added to the capital debt. The cumulative deficits of the Canadian National railways between 1923 and 1933 amount to $663,000,000 including interest on loans from the government, or to $303,000,000 exclusive of that interest.
I ask hon. gentlemen: How long can this country continue to meet these deficits without imposing a taxation repressive of trade, and thereby hampering the rehabilitation that we all hope is in the not too distant future? The bill before the house is not even skin deep. You, sir, may remember the story of
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Mrs. Partington, as related by that eminent wit, scholar and essayist, the Reverend Sydney Smith. Mrs. Partington was an elderly lady who occupied a humble cottage on the seashore. One day a violent storm came up, causing a tidal wave. The tide approached closer and closer to Mrs. Partington's house whereupon the old lady, who was of a resolute, determined character, rushed to her kitchen, seized a broom and came out and fought the incoming tide. The battle went on, but needless to say poor Mrs. Partington was vanquished and had to give up the contest. The bill before the house will be no more effective in meeting the rising tide of debt and taxation occasioned by Canadian National railway deficits than was Mrs. Partington's broom against that tidal wave.
We sometimes hear of a reconstruction of the capital account of the railway. I have heard in this house and I have read in the newspapers proposals that the capital structure should be written down. What nonsense I You could write it down to one dollar and you would not save a penny of taxation for the people of Canada. Why? Because that is a debt of the dominion government, represented either by bonds issued directly by the government or by bonds guaranteed by the government. To transfer that debt to dominion account from railway account would not lessen the burden upon the people by one iota, but this is what it would do: It would make the position of the railways very much more precarious, because without any interest charges our western friends, and our eastern friends too, for that matter, would sing out for a reduction in rates because of the apparent surplus, and even the employees of the company would begin an agitation for higher wages.
I have always thought that only by some process of unification or amalgamation shall we ever escape from the dilemma which faces us. But I realize that this house, and apparently the electors of Canada, are set against a course of that kind. What then remains? Cooperation with a view to economy. It is true, as the right hon. leader of the opposition (Mr. Bennett) has said, that the railway men of this country did not show confidence in the Conservative candidates in the last election. I think it fair to say that perhaps ninety per cent of the railway employees of Canada are supporters of the present government. Why? Because of their fear that the Conservative party is inclined to a policy of amalgamation. My contention is that by cooperation, if you will, the cost of operation can be gradually and in increas-

ing ratio every year reduced without a single employee in any department of either railway suffering. That economy will be brought about in two ways, by old mortality-Death- and by the pension bill. There will be an increasing number of present employees who every year will disappear by one or other of these means. In that way, with reduced mileage one can in the course of a very few years bring the numerical strength of the railway staff to a parity with the operating needs of the railway.
I was glad to hear the minister intimate that Mr. Hungerford of the Canadian National Railways will probably be chairman of the new board of directors. The leader of the opposition had a complimentary word to say for Mr. Hungerford, though he feared that he lacked back-bone, the ability to say no, a weakness with which I most cordially sympathize, which I attribute to the kindness of his heart. Of his ability as a railway executive there can be no manner of doubt. The late Sir Donald Mann a few years ago told me that in his opinion-and he had some knowledge of railways-Mr. Hungerford is the equal of any executive operating manager on the continent of America. Knowing him as I do, having the high opinion of him that I have, I am extremely glad to learn that he is to be chairman of the board of directors.


Richard Bedford Bennett: And president.


Robert Smeaton White: But I regret that I cannot pay the same compliment to the Minister of Transport (Mr. Howe) who entered public life with a very high reputation for business ability, and with wide experience, and was elevated to one of the most important positions in the government, when he comes to this house with so feeble a measure as the bill before us to cope with so great and momentous a question. He does not do himself justice. He lacks the courage that I expected from him, and allows "I dare not" to wait upon "I would." None the less we shall never get anywhere in the solution of this question by skirting round the circumference of it. We have to get to the core, to apply drastic remedies. In no other way is it possible to avoid what I think it no exaggeration to say is almost impending disaster.
I have spoken on the point that the railway employees have nothing to fear. I have referred to the absurdity of the suggestion that by cutting down the capital account of the railway a surplus can be made to appear.
I would say this to the minister:	Is there
not some lack of consistency in his policy by

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land and his policy by sea? He found when he came into office a number of harbour boards upon which were local businessmen, familiar with the needs of the particular ports in which they were residing. He wiped them out and named three gentlemen who are to reside in Ottawa to manage these ports. But when it comes to the railway it is somewhat different; he wants more or less local, certainly sectional direction, and not a commission. I think there is some element of inconsistency there.
But, after all, that is a small matter. What I w'ould plead for is this-and I wish I had more force with which to do it-that this house should apprise itself of, should realize, as the Minister of Finance well does, the seriousness of the situation with which this country is faced in connection with the Canadian National Railways, and that we should shed our party politics. Now, in this first session of a new parliament, is the time in which we should have drastic legislation.. Wait a year or two and it will be too late. At least let the government insist-it is going to take the power through this board of directors-upon serious and drastic cooperative steps with a view of reducing these dreadful deficits with which we are faced. Something can be done. And remember this, that to-day if you deprive a community of a nun-profitable railway line, the situation is not as it would have been fifteen or twenty years ago when there were no motor cars or motor buses or motor trucks. These are competitive forces that are playing the very mischief with the earnings of the railways to-day, and they are here to remain. So it should be borne in mind, when this question of closing down non-profitable branch lines is under consideration, that communities will not suffer by their closing. Remember, too, that the whole is still greater than the part, and if it becomes necessary for the treasury of Canada to hold out a helping hand to a larger number of people or to continue the present assistance for a yet longer time, its ability to do so will be materially increased by measures of drastic economy in connection with the Canadian National Ralways.


Mr. JEAN FRANCOIS POULIOT (Temis-couata):: Mr. Speaker, you are familiar with the French saying, "Ne reveillez pas le chat qui dort," or as we say in English "Let sleeping dogs lie." I have not taken much part in the debates of this house or occupied much of its time since the beginning of this session, and now I have just a word to say in reply to what was said by the right hon. leader of the opposition (Mr. Bennett) this afternoon. He mentioned me by name and
praised me for being frank in acknowledging that I recommended some men for shovelling snow along the track of the Canadian National railway. Well, sir, I do not know if that is an offence mentioned in the criminal code of Canada, but here are the facts.
Last winter snow fell in more abundance than in, previous years, and a great many men were to be hired on extra gangs by the Canadian National Railways to shovel snow. A great many of them wrote to me here, asking me to give them recommendations. I started to do so, but the number was so large that finally I aked some friends of mine to form a committee for the purpose of giving the work to those who most needed it, as the right hon. gentleman has been fair enough to say. It was not a pork barrel matter at all. It was simply a question of giving help to those who most needed it. This committee, which was composed of prominent citizens in my home town, has done excellent work in classifying according to their needs those who wanted work at shovelling snow. They were classified as, first, supporters of families; second, married men without families; third, boys who were supporting families; and fourth, unmarried boys. That was a fair classification, and in fact the town has been most satisfied with the arrangement because less money has been paid out in unemployment relief while these men have been shovelling snow along the track of the railway. I mention this not by way of excuse or justification but simply in explanation of what happened. My political correspondence is an open book, a big book possibly, but I have nothing to hide in it, and I am very much surprised that the right hon. leader of the opposition did not enjoy the same clear conscience when I asked him to produce papers. He refused and said that it was a confidential matter. But I say to him that he can come and look through my files, provided nothing disappears, from A to Z. I have nothing to hide. What I say to him I say to my people, and what I say to them I say here in this house.
I can tell the right hon. leader of the opposition that if my home town of Riviere du Loup has suffered so much for lack of employment in the Canadian National railway shops it is because of the dirty patronage of the Tories when Sir Robert Borden came into power. As the right hon. gentleman has spoken, let me speak in my turn. There was a man now dead who was Postmaster General in Sir Robert Borden's government. I shall not identify him any more plainly than that. He was a Conservative. There was another gentleman here, a Liberal, a lieutenant-governor of the province of Quebec, and in
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order that there may be no mistake he was not of the privy council at Ottawa. These two gentlemen met together in the early nineties in Quebec and invested a small capital of $5,000 in a company called La Compagnie des Terrains sans Bruit, or The Noiseless Land Company. That important company, with a capital of $5,000, and comprising some of the big men of both parties but who should be disowned and denied by all respectable men of all parties, bought a swamp on the outskirts of Quebec at St. Malo as land for railway shops. There were other prominent Tories with them, and they bought this swamp for $5,000 and tried to sell it to the Liberal government when the Liberals were in power. Sir Wilfrid Laurier refused to agree to this, but as soon as the greedy Tories came into power one of their first deeds was to buy that swamp, for which $5,000 had been paid, for the huge sum, comparatively speaking, of $160,000. Some profit, eh, for a swamp! And then what was done? The Tories built a railway shop on that swamp and called it the St. Malo shops.
After the shop had been built they had to bring down men and machinery, and they brought good men from Temiscouata to work in that shop. They brought machinery from the shops at Riviere du Loup. If any member of the house wants to have more information about the matter he has only to look at the Hansard of the session of 1925, my first session, and he will see enumerated there the number of pieces of machinery, important and expensive machinery, which were transferred under Tory rule from Riviere du Loup to St. Malo, and the number of men who were deported from that beautiful city of Riviere du Loup to that swamp on the outskirts of Quebec at St. Malo. That was done by the Tories. Let them rest in peace-but I wonder about that! That is what was done. It was just for graft, and Tory graft, that these good workingmen of the Canadian government railways were deported from Riviere du Loup to Quebec in order to justify that graft of $150,000. It was done at the expense of my home town of Riviere du Loup. That is what the Tories have done, and I am not surprised that the right hon. leader of the opposition turns crimson. He must be ashamed of what his party has done to my dear home town of Riviere du Loup. That is one thing the Tories have done, one thing which they cannot justify, and those who have wrought damage must make reparation. It seems to me that the government of the day was responsible for that wrong done to my home town of Riviere du Loup. It is up to the government of Canada to repair that wrong. I feel quite at 
home when I complain about the way in which my home town has been treated, and this is the place where I should complain.
There is a lot of hyprocrisy in connection with this matter. We hear it said:	Leave
the Canadian National Railways alone; do not touch it. I hear some so-called important business men say: Do not touch the Canadian National Railways. Does the right hon. gentleman suggest that the people of Canada, who have an interest in this system valued at more than two billion dollars, should not be interested in its operation? If I have an interest in a two million dollar concern and am walking down the road and this concern is on the right, am I to keep my eyes left? Am I to do that when by looking through the windows I can see what is going on? We are 245 members who represent the people of this country, and to whom the people have said: You are to look after the future of this country for the next five years; you are to support a government that will express the views of the people for the better management of this country. You are to be just rubber stamps; you are to give powers of attorney to a certain number of men who will do the business, who will look after the railways and the other business of ithe country and you will not have a word to say about it. A business worth over two billion is worthy of consideration. Are we to give a blank cheque in connection with this? Are the members of parliament to be criticized because they want fair play in connection with the management of the Canadian National Railways, because they want fair play for the men, for the passengers and for the management, even when they do not realize it themselves?
The hon. member for St. Antoine-West-mount (Mr. White), one of the two deans of the house, a gentleman much respected, has said that Mr. Hungerford was weak. One has to communicate with the management of the railways. If I write to the Minister of Railways and Canals (Mr. Howe), asking for information about expenditures in connection with which the railways come here for assistance, I am told I cannot have it. This is the same information as I received last year. There must be a nigger in the woodpile. How is it that I cannot have the information asked for? It is because of the legislation brought down last year and the year before. It would be better if the leader of the opposition did not smile ait that because he will remember that t/he suggestion was made in the house that the Canadian National-Cama-dian Pacific bill should be submitted to the committee on railways in order that the mem-

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bers of that committee might have an opportunity to examine Mr. Hungerford and Sir Edward Beatty and obtain the information necessary properly to discuss the bill. This request was denied me by the previous Minister of Railways and Canals, Mr. Manion, on the plea that it would be too expensive. After plenty of trouble on the part of an hon. gentleman in the senate, I was able to obtain the information that the cost of summoning witnesses before the senate committee in connection with this bill was the enormous sum of not a single cent. Yet the previous Minister of Railways and Canals was bold enough to say that because of economy he must refuse the members of this house the privilege of asking questions of these witnesses.
When the hon. member for Bellechasse (Mr. Belanger) was asking questions about the tremendous expenditures on strawberry jam, he received no answer. It was absolutely impossible to get an answer to a query about this man Laforce who has done more than anyone else to place settlers upon the rocks in impossible places. We are told that these things are not in the interests of the country. How is it they are not in the interests of the country? We are here to discuss Canadian National business and when we ask for information we should receive it. This information was refused in the past, but we must have it if we are going to correct these things.
We hear a lot about the so-called business men of this country, but I think it is time the truth was told about the millionaires of Canada. Most of them are short-sighted. If the country is in trouble, it is because of the silly experiences of these people. If it has survived, it is not because of the millionaires; it is because of the small traders who have more business acumen than most of these other fellows who have become rich at the expense of the people through watered stock.
These are the facts. From the way in which discussion is being carried on in this house, in the senate and in the press, one would think we are making a political joke of the Canadian National Railway and the Canadian Pacific Railway. This is most absurd. If they come here for money, we must know for what that money is intended. If we are to investigate the business of the Canadian National Railways, we must do the same in connection with the Canadian Pacific Railway. It is only fair that this be done. The number of men unemployed has been increased enormously because of the increase in unemployment, brought about in the ranks of the employees of the railways by the policies of the last government. When the
bill was discussed in 1932 and 1933 the Liberal members stated very clearly that the best way to bring about a revival of business and prosperity in the country was to bring about a revival of trade. Two years later the then Minister of Railways and Canals and the right hon gentleman who is now leader of the opposition repeated the same thing. They did not realize that it was because of their stupid tariff policies that trade had decreased bringing about a decrease in the income of the railways.
I do not intend to speak at great length about this matter and I rise in order to prevent the house from forgetting about these things. The right hon. gentleman's policy was a complete failure and fiasco, but he is ready to give advice to all-take it or leave it: I am the only one who is right. He takes himself quite seriously. This is most extraordinary as what he should do is to hide himself under his desk. He has not the least sense of responsibility for what has happened during the last five years. No one in this country has forgotten it, but he comes to this House of Commons just as though he had received a mandate from the people in the last elections. Oh, stupendous! Has he no calendar? On the calendar for last year there is one word in particular, and there are two numbers, in flaming letters. There is the month of October and there are the two figures "1," "4"-October 14, the day on which the people of this country passed judgment on the last administration, which was making an effort to survive its period of five years from July 28, 1930, to July 28, 1935. August passed; September passed and two-thirds of October passed before the right hon. gentleman handed over the reins of power to another administration. Think, sir, of the misery, the anxiety and the worries that have been experienced in every house during the last five years. The country was getting weaker and weaker though the voice of the right hon. gentleman was still strong, assuring the people that there was no depression. Most incredible! I do not want to be hard on any one and this speech is most lenient, but we must think of the responsibilities we have here. The right hon. gentleman has his own responsibilities, and they are great, but they are not greater nor are they less than those of any of his colleagues in this house; they are the same. He must therefore face the facts as they are and must not build skyscrapers on the head of a pin, nor can he build skyscrapers on nothingness.
Here are the railways. The Canadian Pacific Railway was favoured, in spite of the fact that it was a private company. Let us

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remember the letter signed by the right hon. gentleman in his own hand and under his own seal before the matter was submitted to his colleagues, pledging the responsibility of this country for $60,000,000 for the Canadian Pacific Railway.


Richard Bedford Bennett: I am sorry to interrupt,
but that must be withdrawn; it is inaccurate.


Jean-François Pouliot: Well, sir-


Richard Bedford Bennett: I ask that the statement be withdrawn; it is not true.


Walter Edward Foster: I ask the hon. gentleman to withdraw the statement.


Jean-François Pouliot: Withdraw what? The
thing has been published in the reports of the banking committee. You, sir, were a member of the banking committee and you remember very well-


Richard Bedford Bennett: Is the power of this
parliament and of this house entirely gone? Is the Speaker to be entirely disregarded?


Jean-François Pouliot: Sir, I will call for a
copy of the reports of the banking committee and I will see the whole thing. If I am wrong I will withdraw; if I am not wrong I will not withdraw, because I remember distinctly that at the time the right hon. gentleman gave a guarantee to the railway for $60,000,000 before an order in council was passed. I wonder whether the right hon. gentleman can deny this now.


Richard Bedford Bennett: I have already indicated that the statement made by the hon. gentleman is inaccurate. The facts are, of course, well known and there was never anything about the matter that was unknown. The facts were published, as he says; they were made known to the house. I in my place made them known to the house. There is no doubt about a letter having been written, but it was not a letter of which my colleagues had no knowledge; on the contrary it was discussed with them. I do not think this house should permit itself to be entirely deprived of its authority at the instance of one man.


Walter Edward Foster: The hon. gentleman
should take the word of the leader of the opposition.


Jean-François Pouliot: I accept the word of the right hon. gentleman inasmuch as it is in conformity with the report of the banking committee. But, sir-


Richard Bedford Bennett: That is not good enough ; that cannot possibly be good enough in this house.


Jean-François Pouliot: I surely will not do more
than that.


Walter Edward Foster: I think the hon. gentleman should withdraw the remarks he has made.


Jean-François Pouliot: Well, without prejudice.
Now, to sum up-


Richard Bedford Bennett: I must say that I have
no greater interest in this house than has every other of its two hundred and forty-five members in seeing that order is maintained. But can this house maintain its position with that sort of conduct?


Walter Edward Foster: I ask the hon. member
for Temiscouata to withdraw the remark.


Jean-François Pouliot: Mr. Speaker, I want to
tell you that I have heard very little of what has been said either by the right hon. gentleman or by yourself, and I regret it very much, but I am not going to give a blank cheque either to the right hon. gentleman or to yourself,' with all the respect that I have for you. When I cannot catch what is said by the Chair and by the right hon. gentleman it is very difficult for me to give my own views of what has occurred. In fact, sir, you know very well that I always stand by the rules, although at times they are wrongly interpreted.


Mr. DUNNING:: I am sure my hon. friend is correct in what he has just said; he does desire to abide by the rules of the house, I know. One of those rules is that upon a member denying something within his own knowledge and relating to himself that denial must be accepted in an unqualified manner by any member of the house who is speaking. The right hon. leader of the opposition has denied in unqualified terms a certain allegation made by the member for Temiscouata. The Speaker has requested my hon. friend to withdraw, and I suggest, in the interests of maintaining the dignity of the house, which I know he desires to do as much as any of us, that that withdrawal should be entirely unqualified.


Jean-François Pouliot: Well, sir, I will tell you
how I understand it.


Walter Edward Foster: Order. I have rendered
my decision and asked the hon. member for Temiscouata to withdraw.


Jean-François Pouliot: I will see the book before withdrawing. Au re voir, sir. If I am right I will not withdraw and if I am wrong I will withdraw.


Mr. A. A. HEAPS (Winnipeg North):: Mr. Speaker, I have listened most attentively this afternoon and evening to the speeches made in connection with this very important measure, and I realize, with those who have already spoken on the question, the magnitude of the problem that confronts parliament. This is one of the most important matters that parliament has to deal with. May I for a moment or two deal with some of the statements made by the Minister of Railways (Mr. Howe) in this chamber in introducing the measure. I was sorry in a way to note what the minister had to say with respect to the board of trustees; I felt as he was speaking that he was not doing justice either to himself or to this house. Here we have a board of three trustees who, being appointed by parliament, are in a sense employees of this house. Their lips are sealed; they are not in a position to answer the criticism that has been made of them by the minister in charge of the transportation system of this country.
I notice that he pointed out that two of the trustees are members of the legal profession. He inferred that for that reason they were not qualified to deal with matters pertaining to railways. There may be something in the minister's contention; in fact I think that, as a general criticism of lawyers, he may be entirely correct. But I suggest that before he levelled that criticism against the board of trustees he should have looked immediately round him and seen what position he was in. For what do I find? The Minister of Public AVorks (Mr. Cardin), whose [unction is to look after buildings and to erect buildings, is not an architect, an engineer or a builder; he is merely a lawyer. The Postmaster General (Mr. Elliott, Middlesex), is also a lawyer. I wonder what lawyer knows about the work of a post office. Another lawyer, the Minister of National Defence (Mr. Mackenzie), is in charge of the defence of this country. According to the same maxim of course he should not be occuying that position; we should have some one who really knows something about military affairs. Then take the Minister of National Health (Mr. Power); I wonder what lawyer knows about health. In the past it has been customary for successive governments to appoint a doctor to the ministry of health, but now we have a lawyer. This all makes me wonder how the Minister of Railways can manage to sit in with all these lawyers and still believe that they are capable of fulfilling functions for which they are not trained. Further, we have another lawyer, as Minister of National Revenue (Mr. Ilsley), in charge of a department of the government which deals with [DOT]customs and matters of that kind.
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Charles Avery Dunning: Are not lawyers good collectors?


Abraham Albert Heaps: Sometimes. Then the Minister of Fisheries (Mr. Michaud); what does a lawyer know about fishing? Somebody says that he knows how to look for suckers. May I say in conclusion that the Minister of Agriculture (Mr. Gardiner) is also a lawyer.


Some hon. MEMBERS:: Order.


Mr.   POAVER@: Take that back.


Abraham Albert Heaps: I withdraw it. But I notice that the one farmer in the cabinet is the Minister of Mines.


Charles Avery Dunning: The Minister of Agriculture is a farmer.


Abraham Albert Heaps: Is he not a lawyer too?


Charles Avery Dunning: No.


Abraham Albert Heaps: So much to his credit. I was merely suggesting that before the Minister of Railways criticized the board of trustees because it contains a couple of lawyers, he might look round in his own cabinet and see how well lawyers are represented in the present government.
It has been claimed that this problem is probably the greatest that the present parliament has to face. My personal feeling is that the railways are suffering from the same economic depression as is the whole of the rest of the dominion. I do not think there can be a prosperous railway structure while the country as a whole is in a depressed condition. AA'hen this government has solved the economic problems of the time; when it has brought about a condition of prosperity in the country, we shall probably not hear so much about railway deficits as we are hearing at the present time. I do not believe that any economies we may effect can entirely solve the railway problem. The minister, speaking this afternoon, appeared to chide the existing board of trustees because in the eighteen months or two years that they have had charge of the railway transportation systems of this oountry they have not brought about sufficient economies. He and those who succeeded him this afternoon were unable to tell this house how savings were to be effected excepting in one direction, namely through a process of amalgamation or cooperation or pooling of the sendees of the two main transportation systems. That would involve laying off vast numbers of men who are to-day employed by the railways. I contend that the government will not solve this or any other of our national problems by aggravating the unemployment situation. If it is the avowed intention of the government to force upon a new board of directors a method



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by which there will be greater cooperation between the two railways, the first thing the government should do is to protect the men who will be affected by such a process. It was claimed, I think by an hon. member who spoke a few moments ago, that there would be no further unemployment of railwaymen if we had a greater measure of amalgamation of the two railway systems. He said that the normal mortality among railway employees and the pensioning of older employees would be sufficient to take care of the situation. 1 do not accept that as being a correct analysis. It might hold good if there were no births in this country, but as the older generation passes away there is always a younger generation looking for employment, and if employment in the railway shops is reduced this will prevent the younger people from being absorbed into what are, after all, useful occupations.
The minister also stated that the trades unions of Canada were strongly opposed to the act of 1933. That is perfectly true. Those who represent the railway trades of this dominion object to the continuous tampering with the management of the Canadian National railway system. It is less than two years since we put in the present board of trustees, and now, for no apparent reason, a new board is to be appointed in their place. How in the name of common sense can we expect anything in the way of confidence on the part of the railway men or any one else in the management of the railways if we are going to have these continual changes, without any apparent reason? It has been suggested by the leader of the opposition that if the board of three trustees had retired there might have been no necessity for the introduction of a bill of this kind. I cannot speak as to that, of course, but I do think that if it is the intention of the government to appoint a new board, consisting of seven men, it should be selected in such a manner that there shall be something in the way of permanency for the men who are to be given that new and very responsible position. I suggest to the minister and to the government that, if it be at all possible, the leaders of the various parties in this house should get together and see whether they could not agree among themselves on seven names to be submitted to parliament as the board to take charge of the Canadian National railway system.
It was suggested that the railway employees were opposed to the changes made under the act of 1933. Well, I can speak for some of the railway organizations and I want to say that they are just as much opposed to the changes

being made by the government now. I want to say further that if the government had been as frank in expressing its intentions last October as it is at the present time a good many votes that were cast in favour of the government probably would have been cast against it, because I have personal knowledge of large numbers of men who voted for the Liberal party because they believed that by doing so they were safeguarding to the utmost the entity and integrity of the Canadian National railway system, just as in 1930 vast numbers of employees of the Canadian National system voted for the slogan, "Competition Ever, Amalgamation Never." We are asked to keep this question out of politics. Well, some of us are very anxious indeed to keep the matter out of politics in order to give the Canadian National system a fair opportunity to make good and to give the people of this country the service they have a right to expect from a nationally owned public utility.
In addressing the house this afternoon the minister also spoke of the human element. In 1933, we in this corner moved amendments asking that the employees on the two railways who might suffer as a result of closer cooperation between them should be given that measure of protection which they have a right to expect. If we bring in a similar amendment this year I wonder whether the government will be prepared to afford that protection. In 1933, when we made that proposal, we were glad to receive a large measure of support from members of the Liberal party. I hope we will receive the same measure of support when we propose a similar amendment in connection with this bill.
So far this question of the deficits of the Canadian National seems to have baffled the best brains we have been able to gather together in the Dominion of Canada. Let me refer for a moment to the commission that was appointed in 1932, the Duff commission. On that commission there were gathered together some of the best railway experts it was possible to secure; yet when the report was summarized and analyzed and presented to the house we found that they really had no solution for the problem of transportation in this country, except the solution of economies and cooperation between the two railways. I do not believe that is sufficient to give this dominion what might be called a sound financial structure for the national railway system. It may be said that I am indulging in negative criticism, and I may be asked what we are going to do about the

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matter. The fact is that the railway problem is not one of our own making; it is something that was created by people of generations gone by, but it is something with which we must presently deal as best we know how. On this railway commission, as was pointed out this afternoon, we had the chief justice of the Supreme Court of Canada ; one of the most experienced railway men of the United States; one of the most experienced railway men of Great Britain, and, among others, Sir Joseph Flavelle, who is one of the best known business men in this country. As a matter of fact we had on this commission some of the most hard-boiled business men in Canada, but after they investigated this problem from all angles they were unable to find a real solution. They brought in a report to which I believe the existing board of trustees has been doing its best to give effect, but without avail. It appears to me that, even though economies may be effected here and there, there is at the present time no solution, with the possible exception of the one to which the government is pledged, which is to increase the trade of this country both internally and externally in order that greater revenues may accrue to one or both of our railways.
There is one point which I should like to drive home with all force possible, and that is the question of the men who are employed on these railways. I will protest as forcibly as I can if efforts are made to amalgamate the services of the. two railways unless at the same time provision is made for the men who will be affected. Large numbers of men were affected by the cooperation between the two railways in the Montreal, Toronto and Ottawa services; those men were laid off with very little consideration, though in many cases they had seniority amounting to ten, fifteen or twenty years. I remember when the matter was raised on the floor of this house at that time; the then Minister of Railways said that if it could be shown that any injustice was being done in the way men were being laid off, with no provision being made for them, the government would consider what action should be taken, and the government would be sympathetic to a proposal which would provide compensation to the men thus laid off.
I should like to point out to the minister that men who are laid off as a result of an act of this kind are in a completely different position from those who might be laid off as a result of slackness of work or for similar reasons. Men employed by the railways will lose their jobs because of an act of parliament; they will lose their livelihood because of something done by parliament, and in that 12739-142$
case parliament has a responsibility to the men so affected. Because of that fact we of this group in the last parliament moved certain resolutions which at that time were defeated, but which we hope will receive a more sympathetic reception when the proper time comes.
There is very little more that I wish to say in connection with this bill, though I may have something to add when we are in committee. I hope, however, that when the bill is in the committee stage we shall have a more detailed statement from the minister as to his intentions and those of the government in regard to this matter. He has not told us very much thus far. He said, of course, that the government desired to change the provision concerning the board of trustees because it had not gone far enough in the direction of economies on the Canadian National system and in bringing about a greater measure of cooperation between the two railways. When we are in committee I want that part of the minister's statement amplified to a much greater extent, and I trust that we shall receive a great deal more information than the minister vouchsafed to the house this afternoon.


Mr. T. L. CHURCH (Broadview):: Mr. Speaker, if there is one thing for which you can give the late government credit it is the way in which they handled this railway problem. On the second rending of this bill, no doubt, under the rule of anticipation members will be forbidden to deal with the whole railway problem as it should be dealt with in this house; we can deal only with the amendments proposed to the act of 1933, and I have particular reference to the establishment of a tribunal as between the two railways by the 1933 act as it has been amended by the government of the day.
Notwithstanding the pronouncement made by the government and members of the cabinet in the last election and the one hundred and seventy members elected, the action of the government on the railway problem as found in this bill is very unsatisfactory. The government so far refuse to state their policy. As I see it they are going back to the "big I" days of 1921 to 1930, when this tremendously extravagant expenditure such as was never before known in the British empire went on: Hotels, golf courses, useless duplications, needless branch lines and waste. This bill is a going back to t'he old days of the lack of control of parliament over these expenditures. On April 6 last, without any notice from the government, without any mention of the matter even in votes and

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proceedings, with sixty per cent of the members not present in this chamber, the most important motion of the session was passed, handing, over the head of parliament, to a select committee known as the committee on railways and shipping owned and operated by the government the whole budget of the Canadian National Railways. This railway never was under public ownership. Two railway systems are dealt with in this bill, the Canadian National and the Canadian Pacific; one is supposed to be publicly owned and the other privately owned, although the privately owned -one received grants, bonuses, subventions and subsidies by cash and land grants and guarantees. The Canadian Is ational was never under public ownership; it was a number of privately owned roads that were not able to succeed and were amalgamated under the Canadian National system. The mistakes of that system were almost entirely due to private ownership. Throughout its whole history the Canadian National was never under public ownership. After it was taken over by the government the first board under Mr. Hanna made a real effort to take the road out of politics and succeeded. Since then two commissions have been appointed and both commissions have recommended something in the way of a tribunal to hold the balance between the two railways.
In 1917 in the days of the Union government parliament had the Drayton-Acworth report. When the Liberal party took office in 1921 they entirely ignored that report. In the first place the railway commission were supposed to be the arbitrators, but they had no control at all. Then the government of that day decided to appoint a sort of star chamber committee known as the committee on railways and shipping, and that committee was substituted for the commission. The minister would rise in the house and nominate the committee and that would be the last heard of the railway problem for the session, parliament handed the problem over to this star chamber committee, whitewash committee I call it, and I attended it many times. I was summoned before the committee once to give some evidence about a national coal policy, and the head of the railway told me that I was proposing an unscientific system of freight rates or lunch counter system of freight rates for coal, and the railway officers opposed that policy for three or four years and then swallowed it. Both these reports recommended some kind of tribunal to coordinate the railways. The management of the Canadian National Railways in 1922 moved the head office from Toronto to Mont-

real, starting off badly, because the old Grand Trunk which formed the best part of the system was a good, solvent railway, and made its money in Ontario. It went into bankruptcy owing to the ''big I's ' of the Liberal party. I assess the blame for the railway situation for fifty years about eighty per cent to the Liberals with their Grand Trunk Pacific and Canadian Northern, and twenty per cent to the Conservatives.	_
The government and the Minister of Railways from 1922 to 1930 were never in favour of public ownership. They launched out on a policy of extravagance in the building of branch lines and useless duplications, spending over the head of parliament, more than $590,000,000; wuth interest added it would go away over that amount, parliament having no control whatever of this expenditure. In that connection they violated almost every line of the Drayton-Acworth report which recommended that there should be no building of branch lines or extensions, and no renewal of charter should be granted by parliament until a report had been made to the Minister of Railways by the railway committee and the board of railway commissioners as to whether these branch lines were in the public interest. That policy was ignored and the result was that a great many expenditures were made which should not have been. Matters got into such a bad state that in 1931 the government appointed a royal commission of which the present chief justice of the Supreme Court of Canada was the chairman. That Duff commission made a very fine report. I do not know where this country would have been to-day if the late government had not passed in 1933 the Canadian National-Canadian Pacific Act to implement the Duff report. That proposed some measures of coordination. The commission recommended that the identity of the two systems should be maintained; that the management of the Canadian National should be emanicipated from political interference and community pressure. But we had this body of fifteen men called directors before; it was a little larger in number; one would almost think they were selected as a campaign committee of the Liberal party, a board of directors who did not direct, who knew nothing at all about railways. They were brought here and would meet round the table of this celebrated committee on railways and shipping, where everyone was smoking. They passed the first item and the last and parliament knew nothing about the matter; it was whitewashed in this committee and we could not ask a question about the railways.

C.N.R.-Board oj Directors
As to the second recommendation, that the management should be emancipated from political interference and community pressure, under this bill the government is going right back to where things were seven years ago. The third recommendation was that machinery should be provided for cooperation between the two systems for the elimination of duplicate services and facilities and the avoidance of extravagance. One of the best equipped and most honest men appointed on any commission in Canada was F. K. Morrow of Toronto, a brilliant and most popular and gifted young business man who served without salary, and spent almost his entire time in an attempt to carry out that recommendation with great success for the entire system and the taxpayer. The fourth recommendation was the attainment of a scale of economies which would bring the burdens of the national system within reasonable dimensions, and effectively check extravagant and costly operation; and, lastly, there was recommended reasonable protection for the privately owned undertaking against arbitrary action on the part of the publicly owned undertaking, a very wise recommendation. They recommended strongly against amalgamation, and the jurisdiction of this proposed arbitral tribunal and what its powers should be, were set forth very fully, but by the proposed amendments in this Bill No. 21, the powers are going to be vetoed. The old board from 1931 to 1936, tried to run this railway on a commercial basis, but now this board of seven is to be set up to undo the good work. The government should announce who the board are before we pass the bill. We had one "sevenfold amen" commission announced the other day, on unemployment; now we have a second commission, and probably men associated with the big St. James Street interests will make up this tribunal.
I have very little faith in the amendments which this bill proposes. The Duff report goes into the question of the jurisdiction of the arbitral tribunal. It recommended that it should have jurisdiction in relation to the following matters:
(a)	Joint use of terminals.
(b)	Running rights and joint use of tracks where there are actual or functional duplications, or where such may be avoided.
(c)	Control and prohibition in respect of the construction of new lines and provision of facilities and additional services where no essential need of the public is involved.
(d)	The joint use of facilities where this would promote economy or permit the elimination of duplicating or unremunerative services or facilities.
(e)	Abandonment of lines, services or facilities.	_
(f)	Pooling of any part or parts of freight traffic or of passenger traffic.
(g)	Things necessarily incidental to the above enumerated matters.
There is a wise provision for a tribunal that is to sit and decide on questions of coordination between two railway systems, one privately owned and the other publicly owned. The three gentlemen who composed the board of trustees for four or five years did their utmost and effected a great many economies along the Lines of the Duff recommendations.
I fail to see how this new board can act efficiently if we are to go back to the old order and have politics enter into the administration of the railway. On page 67, in paragraph 226, the Duff commission makes this recommendation:
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 lijnits 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.
But by this bill we ignore the recommendations of the Drayton-Acworth commission of 1917, and the Duff commission of 1931-32, and are going back to the administration we had in the old days, because in my humble opinion you will not be able to keep politics out of the railway. If we are going to elect directors by sections and from classes, the sectional aspect is bound to be looked at instead of the commercial aspect, and you are going to have politics back in the administration of the railway. I was confronted with the same kind of situation when Toronto took over the city's street railway in 1921. We had clamours and agitations from all classes of citizens, from labour and capital, wanting to be represented on the board that was to administer Toronto's transportation system. But we selected a board of three men; by statute their powers were limited, and they were able to administer the city's street railway from the commercial aspect and to effect economies. That is the kind of board we
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should have to administer our publicly owned road and the privately owned road in this country. If politics had been kept out of the administration of the railway, hundreds of millions of dollars would not have been wasted. The time has come when the Canadian National Railway must be given a chance. It has not had a chance so far. The offices should have remained in the city of Toronto, in Ontario, a public ownership province, instead of being moved to Montreal, because the effect of that was that when the Canadian Pacific Railway wanted to do something the Canadian National from the years 1922 to 1930 used to say: Me too. The failure of the national railway to act in its own interest and in the interest of the public is one of the reasons for the present railway situation.
As I say, Mr. Speaker, in some respects Bill No. 21 ignores the Duff report and the Drayton-Acworth report and puts the administration of the railway back where it was for ten years, when politics entered in. Questions that might well have been taken up by the board were such matters as suburban services, commutation tickets, cheaper fares for weekends and holidays, the problem of the inroads made by bus and motor car competition, but the political directors of the national railway simply stood still and did nothing to meet this competition.
I would like to know what is going to happen to parliamentary institutions in this country when almost every day the government is appointing some commission or another, taking away the powers, prerogatives and privileges of members of this House of Commons and turning them over to a commission. Parliament should be safeguarded against the star chamber secret methods of the committee on railways and shipping. The people have a right to know what is going on in the publicly owned road; they have a right to know how it is being run. Are we again going to allow the management to run up bills of four or five hundred million dollars, as the management did from 1925 to 1930, before parliament can find out anything about the expenditure, and then have us hold a post mortem on it? We have full publicity in some things. The newspapers give great publicity to murder trials, sport and many other things, but most of them at the present time seem to have forgotten that parliament is even sitting. Some of the largest newspapers do not give half a column daily to the proceedings of parliament. I do not know whether we deserve more space or not, but I find page after page of the newspapers devoted to murder trials, sport, and many other things, while, with the exception of
IMr. Church.]
four or five newspapers, hardly a line is devoted to a debate on the deficit of forty or fifty million dollars on the nationally owned road. Few newspapers pay any attention to the sittings here.
I have been very much disappointed with the committee on railways and shipping. Attend one of their meetings and you will see the directors and officials sitting round a table. The committee takes up one item, asks a few questions and then goes on to the next. They might just as well not meet at all. It is nothing but a whitewash. I have attended meetings of the committee for five or six years, and I have never seen the committee conduct its affairs. They let the officials and directors of the road run the whole committee over the head of parliament. We have no control over them whatever. I am absolutely opposed to secret discussions and that sort of committee meetings. It is not Liberalism as I see it. They pass the buck to a committee without any notice of motion. Nobody knows what the policy of the government is on this particular problem or if they favour a merger or not, and the final result will be that the committee on railways and shipping will bring in a report and we shall not be able to ask any questions. What right have the public and members of parliament? Why should the members be ignored in this way? The whole problem will be sent to a committee of this house, and the last state of the Canadian National Railways will be worse than the first.
The heads of the Canadian National Railways in 1924 and 1926 told the railway commission that they had nothing to do with the administration of the railway. They ignored the railway commission and started on a spending bee, the like of which has never been seen in any other country, building golf courses, hotels and branch lines all over Canada under the direction of the " big I," and building hotels extra-territorially. They sold for $50,000 some ships which had cost one or two million dollars and which could have been converted for use in carrying coal from the maritime provinces to the head of the lakes. With a slight change in construction they could have been utilized to carry coal from the head of the lakes to central Canada and from the maritimes to the head of the lakes. Last year 2,800,000 tons of maritime coal were carried to the head of the lakes. Why did they sell these particular boats for such a trifle? The government may have 170 members but the rank and file seem to have no chance at all in this house. Just the other diay three private members asserted the rights and privileges

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of a member of parliament. If these rights and privileges of private members had been asserted twenty or thirty years ago we would not have had the Grand Trunk Pacific or a third transcontinental known as the Canadian Northern foisted upon the people of this country. This would not have happened if the private members had asserted their rights and privileges and fulfilled the functions which they were sent here to perform. We have got to the same state of affairs where last week three government members rose to criticize a bill to appoint another commission. As I say, if we had had a little more independence in the house, if private members had asserted themselves as being opposed to this secrecy in connection with railway administration, we would not have the spectacle which we have to-day.
There is one thing for which the previous government and the leader of the Conservative party deserve credit. When the present leader of the opposition (Mr. Bennett) came into office in 1930 he decided to have a survey made of this problem. For years he had sat in parliament and had seen hundreds of millions of dollars being voted for these railways by the government of the day, from 1921 to 1930, some of which money was being spent without the authority of parliament and without parliament being aware of the expenditure. The result was the Duff report which was presented to parliament in 1932 and which was implemented in 1933 by chapter 33 of the statutes of that year.
The old board of directors in 1926 consisted of fifteen members and the government is now suggesting a board of seven. If the board consisted of only three members it would be closer to the mark. This board proceeded immediately to run the railway in a manner similar to the way in which some of the railways in the United States were being run. A group of the Van Sweringen railways in the United States consisting of the Nickel Plate, the Big Four and the Chesapeake and Ohio recently went into bankruptcy and were bought back for a sum less than $3,000,000. When the head of this Canadian National Railways took office he carried out policies similar to those which had been carried out by these roads by the Van Sweringen brothers. Sir Henry wanted to place 1,000,000 more grain growers into the Peace river district. Parliament knew very little about this, but it objected. Where would we be in these days of depression and reduced traffic on the railways if this had been carried out?
The more I see of this thing, the more I realize that we have no opportunity to deal properly with it. Only the other day this
whole problem was shunted off to a select committee without one word being said or without any notice being given in the votes and proceedings. I have very little faith in the proposed board of directors of seven to be appointed. They are going to have this railroad back to where it was ten years ago- in politics. This board of seven will be merely figureheads because they will know no more about railroads than they do about shipping. We must not blame public ownership for what will happen, as public ownership will have nothing to do with it. That type of ownership has shown what it can do in the municipalities and the provinces and it could show it here if given a chance. But public ownership will have no chance in Ottawa as long as we conduct our affairs the way we do.


Frederick Cronyn Betts: Mr. Speaker, I should like to add a few brief remarks to this debate. First of all, I should like tc direct the attention of the minister and the house to what I consider to be a somewhat important omission in the present bill. It will be recalled that in our Canadian National-Canadian Pacific Act, 1933, there was a clause inserted to provide for the protection of the employees. Despite the fact that the constitution of the board of management was being changed through the substitution of three trustees for seventeen directors, this was to have no effect upon those who were employed by the road. I shall read the section to make it abundantly clear. Subsection 5 of section 9 of the act of 1933 reads'
Subject to the terms of this act, and until otherwise provided or directed under its authority, every operation and service of national railways shall continue and be continued by all persons now concerned therewith as if this act had not been passed.
The main function of the present bill is in a sense to bring back matters to the status quo, that is, to substitute a board of seven directors for the three trustees. I cannot help feeling that if the subsection I have just read was proper in the act of 1933. it is eminently proper in the bill we are now considering and I cannot understand why it should have been omitted. If it has been omitted through inadvertence, I suggest respectfully to the minister its utility. On the other hand, if it has been omitted in order to remove what would be a restriction upon wholesale political dismissals, then in the interests of the employees of the road I want to deplore this -omission and put myself on record to that effect.
I cannot help being struck by the action of the government in increasing the board of
management from three to seven. If there

Board of Directors

ever was a party that manifested the need of economy in its election campaign, it was the Liberal party. Frankly, I do not see any justification for increasing the board of management to two and a half times its former size. I do not know where the minister of Railways and Canals (Mr. Howe) got the idea of doing this, but I am sure that there is one of his colleagues whom he did not consult. I refer to the Minister of Trade and Commerce (Mr. Euler). When reading over the debates leading up to the passage of the act of 1933, I was very much struck with the manner in which the Minister of Trade and Commerce led off for the Liberal party. At that time he used these noble words:
I support the bill for the second reason that the establishment of a small body of trustees of three or four, as the ease may be. will promote efficiency in the conduct of the Canadian National Railways.
Later on, referring to the parliamentary committee on national railways and shipping, of which he was a member, he said:
-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 would hate to think that the Minister of Trade and Commerce was in favour of a small board when we were in power and doing the appointing, but is in favour of a large board when he and his friends are in that position. I hate to think that, but I do not know what else to think. I have to try to get wdiat comfort I can get out of the statement that the effect of this legislation will be to bring the operations of the railway more closely under the administration of the government of the day. I take it that is one of the functions of the bill, and if it achieves that function I would ask the Minister of Railways to pay some attention to the conditions under which some of the men are now forced to work. I will give a concrete example to show what I mean. In the car shops in my riding-and I fancy this applies to other ridings as well-before cars are repainted they are subjected to a sand blasting process. The old paint is removed by means of sand forced under pressure through a hose. That raises a most dense and suffocating cloud of very fine dust which in the opinion of medical authority tends to bring about the disease known as silicosis. I visited the shops in London to see the process in operation and made careful inquiries, and I must say that it seems to me these men are working under conditions to which they should not be compelled to submit. I found that they were equipped with masks, and I was told

that the masks were the best that science provides at the present time. The main criticism, to my way of thinking, is that although this operation is performed in an enclosed space and not on the outside of a building where all dust is blown away, is done in an enclosed shed, there seems to be no proper draft system. This is something which is of great importance and something which I would direct to the attention of the minister. It is a matter that should be carefully considered before any more refinements and luxuries are introduced into passenger trains. For example, I read in the Mail and Empire of April 13 last this news item:
Air-Conditioning Making Progress Canadian National Railways Announce Plans to Extend Service Dust Is Eliminated
Montreal, April 12.-Good progress is being made with the air-conditioning of equipment for use on the lines of the Canadian National Railways, according to C. W. Johnston, general passenger traffic manager. A number of air-conditioned pullman sleeping cars are now in service between Montreal, Toronto, Windsor, Detroit and Chicago, Mr. Johnston said to-day, and it is expected that the International Limited, and other Canadian National trains on this route will be air-conditioned by June 1st, before the hot summer weather starts. Air-conditioned cars are also in use on several of the other international trains of the company.
I doubt whether there is any class of men -at any rate there are very few classes- who make more use of the sleeping cars on the Canadian National Railways than do the members of this house, and I doubt whether there is any class that likes to sleep in comfort more than do we. But I venture to say that if hon. members could see the conditions which prevail where that sand blasting process is in operation they would say with emphasis that no more money should be spent on luxuries such as air conditioning on pullman cars until that situation is corrected.
I trust-and I should like to put myself on record in this regard-that although the initial act of the government has been to multiply by two and a half the expenses of the board of management of this railway, a real policy of economy will be instituted. It is not pleasant work economizing; it is not popular work, but it is very necessary work. I heard to my amazement on Friday last a statement made in this chamber by a supporter of the government to the effect that the late Sir Henry Thornton was one of the greatest national assets that Canada ever had.


An hon. MEMBER:: Hear, hear.

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Frederick Cronyn Betts: I hear that statement
applauded. I do not wish to make any personal attack on a man who is gone, but I will say this-and I shall continue to say it whenever I rise to my feet to discuss railway matters-that if the railways are so deep in the red as to raise a doubt in the mind of every thinking man and woman as to whether they will ever get out; if the taxpayers are groaning under a burden which is doubling them up as a result of extravagant railway expenditures, it is because for the eight years during which the present Prime Minister (Mr. Mackenzie King) and many of those who sit with him on the treasury benches were in office, they spent money on the railways, during the regime of the late Sir Henry Thornton, on a scale which has never been equalled in any civilized country in the world.


Thomas Langton Church: He was the greatest asset the Canadian Pacific ever had.


Frederick Cronyn Betts: I express the hope, therefore, that we shall see a real regime of economy now, and that when the board of directors is being appointed there will not be imported into it any free-spending American friends of the government.


Mr. W. A. WALSH (Mount Royal):: Mr. Speaker, it was not my intention to precipitate myself into this debate at this late hour. I had assumed there might be, from the other side, a defence of the bill introduced by the Minister of Railways (Mr. Howe), apart from the belated attempt made earlier in the evening with such disastrous effects. The railway problem, as has already been pointed out, is of national importance. The solution that has been suggested by the Minister of Railways in the measure which he introduced this afternoon hardly meets a situation of such gigantic importance. A few years ago there was appointed at the behest of the government then in power a select commission to study the railway problem of Canada and to bring in a series of recommendations on which the government of the day could formulate a policy and proceed to action. I think every member of this house will agree with me when I suggest that the members of that commission were able men who understood their duty and discharged it as commissioners on that occasion. They brought before the government, and ultimately before this house, a report which is worthy of every consideration by every hon. member, and one which should be given very careful study by any hon. gentleman who is at all interested in a solution of this national problem. I do
not think there is a member of this house who does not recognize the magnitude of the problem we are facing. I have before me many articles from which I could quote figures to show the tremendous debt that is being piled up by the Canadian National Railways. The measure that was introduced this afternoon contains in my estimation nothing that will in any way stem the tide towards a greater deficit.
The recommendations brought forward by the present government do not in any way fit in with the recommendations of the commission that was appointed and brought in its report, 1931-32. I cannot see why any government should appoint a commission of able men who go throughout the length and breadth of this country accumulating information, hearing witnesses, getting expert testimony, and filing a report, and then, having received this -report, should put it into the archives merely for reference of future generations of Canadian citizens who may be interested in developing material for debate on some railway problem that may exist only in their own minds. The compilation of this report must have cost the country a tremendous sum of money. It is printed, and no doubt has been in the hands of members since 1932. Yet we find that the present government, having such a report before them, having facts and figures compiled since that report was issued, despite all this wealth of information and experience, come down today with a measure which merely reestablished conditions as they were prior to the inauguration of this special commission to inquire into this national problem. '
The government -that has just gone out of office did their duty as they saw it. They acted on the report of this commission. I am not going to say that those who were appointed and have acted as the three trustees for the Canadian National Railways during the past four years are the best men who could have been secured for their particular positions. No doubt they are men who have faults. But there is no doubt in my mind that the government of the day thoroughly canvassed the situation and did their utmost to secure the best men available at that time.
The only criticism I have to offer of the government of the day in appointing such a trusteeship is that, in my estimation, it was appointed according to a wrong practice. To appoint trustees for a period of years does not commend itself to me, because when there is a change of government, or if those who are appointed are not -acceptable even to the government that appoints them, there they
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are, saddled with positions and salaries for a stated length of time, and any government which tries to make those men give up those salaries and appointments has its work cut out; the task is almost if not altogether an impossibility. If any mistake was made by the past government in carrying out the recommendations of the report of the commission, it was that of appointing the trustees for a definite period of time instead of during pleasure.
I read a few days ago a speech delivered in this house by the right hon. the Prime Minister (Mr. Mackenzie King) in which he commented rather vigorously upon such appointments, characterizing them as a restoration of the feudal system as it existed in Europe in days gone by. I quite agree with him in that respect, and I was going to criticize a similar proposal of the minister in another bill he brought in; in fact I handed him an amendment that I was prepared to move, if I had been in the house, in connection with the harbours board, which is to be appointed for a period of years. I do not believe in that kind of appointment, and I believe that in that respect the government of former years made a mistake in connection with -the appointment of these trustees. I believe that if they had been appointed during pleasure we should not now have before us a bill asking for a directorate of seven members. I assume that the government would have taken advantage of the existing legislation and changed the personnel slightly in order to harmonize it with their own line of policy, rather than maintain the present personnel intact. Apparently they are not giving satisfaction either to the government or to the people of this country. In making that statement I do not wish to be misconstrued. I am not criticizing any one individual. But possibly at the present time there are certain members on the board of trustees who can be replaced to advantage, who have not worked in the spirit of the recommendations of this report, a spirit that suggests cooperation between these two great national railways,, the Canadian Pacific and the Canadian National. If such a person is on the board and is not giving effect to that suggestion of cooperation, he has, I thank, been negligent in his duty, and for that reason that person should be removed from that important office. I am not passing judgment; I merely make the suggestion as a possible reason why the government must introduce legislation such as we have under discussion.
It seems to me that the minister must agree that the measure he has introduced is a
I Mr. Walsh.]
retrograde step. I do not believe that to appoint a directorate of seven members will assist in any way in solving the railway problem of Canada. I have not heard him say or any member from the government side suggest exactly in what way this new directorate is going to bring order out of chaos, to stop the piling up of deficits, to do anything that will affect to the advantage of the Canadian people the conditions which exist at the present time in connection with our railways. I wish to read from the report before me the items which suggest the principal contributory causes of Canada's railway situation. Those causes are summed u,p in seven statements. I desire to read them and to ask the Minister of Railways in what respect his solution meets those suggestions. Is any one of the conditions outlined under those items likely to be eliminated as a result of the measure introduced by the minister? I leave it to the judgment of the house; personally I do not think so.
The principal contributory causes are:
1.	The overdevelopment of railways beyond the immediate needs of the country.
Is the appointment of seven directors to the Canadian National railway system going to eliminate that fault?
2.	Aggressive and uncontrolled competition between two nation-wide railway enterprises, and competition the more disastrous in that one of the competitors was publicly-owned and supported by the full resources of the dominion.
Is the minister's measure going to overcome in any degree that unfortunate condition?
3.	The reactions of the world trade repression which began in 1929 and has progressively increased in its severity with each succeeding year.
The seven members of the board of directors will not improve that condition
4.	Competition from other forms of transport, notably road transport.
In- order to bring the report down to date we might also include air transport.
5.	Inelasticity of freight rates and railway practice generally which prevents prompt action in the meeting of falling revenues and dealing effectively with competition from other forms of transport.
6.	Contractual arrangements with labour organizations which set up a rigid wage scale and inflexible labour practices generally.
7.	The special disabilities of the Canadian National railways due to: -
(a)	assumption, through government action, of liabilities of insolvent railway systems for reasons of national credit.
(b)	large capital expenditures for improvement of the physical condition of the absorbed systems.
(c)	political and community pressure on the management arising out of direct government control.

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None of those seven contributory causes is going to be satisfactorily handled by the measure which has 'been introduced; in fact I fear that at least one of the causes suggested here is going to be severely aggravated by appointments such as these. I fear that the Minister of Railways (Mr. Howe) has erred. He is bringing the Canadian National system back to the realm of political control. I know he has not that in mind; I think possibly that is the thought furthest from his mind.
I am sure it is his hope and desire to administer the railways as he would administer a business of his own. Because of his lack of political experience, with which lack I can associate myself, no doubt that is his outlook, as it would be mine under similar conditions. But I want to assure the minister of this fact, that he is surrounded by a large number of men who are looking to the Canadian National Railways as a source of political influence. Through the Minister of Railways, who is to become the minister of transportation, and these seven directors who are to be appointed, these men hope to gain that political ascendancy that will help re-elect them from election to election and maintain the present government in power. I know the minister has not that in mind; I know he feels that I am exaggerating a possible condition, but I want to assure him that after having studied the measure he has introduced I can see on the horizon no other possibility than political control of our national railways, and the result is going to be worse chaos than we have at the present time. If the minister hopes and expects that the injection of a bit of business experience into the management of the Canadian National system will carry him through to a successful administration of these lines, I am afraid that he is labouring under a misapprehension; that within a reasonable length of time he will find that the criticism from this side of the house was well justified, and that he should have acted more in conformity with the recommendations contained in the Duff report than is the case with this bill.
This report urges cooperation.	That
cooperation has not so far been forthcoming. It also urges the elimination of competition, but competition has not been eliminated. It is a disgrace to this country to have two railway systems piling up deficits, unable to meet their current expenses and at the same time carrying on competition to the death, at the ultimate expense of the Canadian people. Many solutions have been suggested for our railway problem, but there is one point I want to make absolutely clear; other hon. members have emphasized this feeling and I want to stress it on my own behalf as
well as on behalf of hon. members on this side of the house. There is absolutely no thought in my mind of the amalgamation of our two great national systems. Of course I feel, as many other hon. members do, that we have in this dominion many, many miles of railway that we actually do not need. We are overdeveloped in that respect. The twentieth century was to be Canada's, and we built for Canada's century. But Canada's century, through no fault of our own, was stunted in its growth, and as a result we find ourselves with railway facilities adequate to meet the requirements of forty to fifty million people while we have a population of only eleven million to meet the cost. It is no wonder that we are piling up deficits, and I want to say to the minister that I do not think this bill is going to help in any way to solve this great problem now on our hands.
The government have suggested increased export and import trade as one means of overcoming this problem. That will help to a certain extent, but there is not enough import and export trade carried on by eleven million people to support the mileage that we have built and are operating at the present time. The only solution is to break down this competition by means of which the railways are gradually exterminating each other. Some of the great railway men of Canada have suggested solutions. I have emphasized the fact that I am unalterably opposed to amalgamation, and I think I speak for every member of the official opposition. I do not think there is anything on record to suggest that the Conservative party at any time stood for the amalgamation of these two great systems.
May I say, Mr. Speaker, that knowing the Minister of Railways as I do, knowing his past experience in the business world and his immense capabilities as an executive, I expected that he would introduce into this assembly not a measure such as we have before us but a measure that would give leadership in the solution of this railway problem. I expected him to introduce a measure that would be commented upon for its boldness, but instead we have merely a return to the situation as it existed previously, a situation that was condemned not only by the Duff commission but by others interested in the solution of this great problem. I think what I hoped for was expected also by the people of this country, knowing the railway problem as they do. It has been suggested by some that the people of this country do not understand the railway problem, but that is not so; they do understand it. They are beginning to realize the seriousness of
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that problem, and I believe the Canadian people are ready for bold leadership looking to its solution. We are not going to return to prosperity unless we find a solution to this problem. We cannot continue to pile up debts at this rate, $85,000,000 in a single year. We cannot continue to have these millions of debt mounting up and survive. The government should give the leadership. The people of Canada did not expect such a measure to be introduced by this government. The Liberal party got the confidence of the people at the election last October; they were given the powers of government, the power to regulate and to legislate, but they have not used those powers to advantage. The Canadian people are disappointed; they were looking for courageous leadership and instead they are handed a dry bone, one sucked dry many years ago.
I expected the Minister of Railways to suggest to the house and to the country some great measure that would lead to the amelioration of the distress which we suffer in connection with our railways. I expected him to analyze carefully the recommendations made by our great railway men. I expected him to make some reference at least to the solution suggested by one of his colleagues, the Minister of Trade and Commerce (Mr. Euler), but I heard no reference to that solution. To my mind the Minister of Trade and Commerce offered a reasonable solution, one that would at least lead somewhere, not back to where we were in 1930. I think it was the Minister of Trade and Commerce who suggested the possibility of unification of these two great railways. Do not confuse unification with amalgamation; no one in his proper senses is suggesting amalgamation, but unification has its merits, and I expected that the Minister of Railways would at least discuss that phase of the subject so that the country at large and this house in particular would understand the government's position in regard to that possible solution. The people of this country are disappointed; they wanted to know what the government proposed to do and how they were going to solve this railway problem. If unification would solve it, why do the government not take the lead in that respect, particularly when they have at least one member in the cabinet who is definitely committed to such a solution?


Alexander MacGillivray Young: Would the hon, member be good enough to explain the difference between unification and amalgamation?


William Allen Walsh: Yes, it is very simple. The hon. member could have asked that question

of the Minister of Labour (Mr. Rogers) who was professor of economics at Queens; he could have given a more satisfactory answer than I. Amalgamation means the disappearance of both into a new unit; unification means the continuance of both units under one management until such time as this country grows and develops so that it can support the two separate railways. No great reasoning power is required to see through a plan of that kind. Of course there are difficulties in the way; I grant that. Any solution of any great problem has difficulties. I could name scores of difficulties in the way of unification of these railway systems, but I emphasize the seriousness of this railway problem; this country cannot continue to pile up deficits of $85,000,000 a year and survive. We have to find a solution, and that solution has to be found by the members of this government. They cannot allow this country to drift and drift into despair. Some people will suggest that unification of these railways would mean the possible elimination of a large number of men from their positions. If I thought for one moment that one man would lose his job on either railway through a process of unification I would be absolutely opposed to it. But I believe that a scheme can be worked out whereby under unification not one man would lose his job, whereby every man now employed with the Canadian National or the Canadian Pacific would be retained in his position. It is on that account that I advocate a careful and close study on the part of the government of that suggested solution.
I could advance many statements in support of that idea, but as I do not want to take up the time of the house in doing so, I shall resist that temptation. I think I have made my position quite clear. The Minister of Railways has introduced a measure which is a reactionary and retrograde step. He would reestablish the board of directors in place of the board of trustees; that is running contrary to the recommendations of the Duff report. He is introducing again into the administration of the national railways the possibility, yes, the probability, of political patronage, and if there is anything that will continue to make our railway deficits higher and higher it is the meddling of politicians in appointments and in the way in which the railway is run.
Before this measure finally goes through I ask the minister to see if he cannot develop something that will give this house and this country more courageous leadership than we find in the measure at present before us. I know exactly his criticism of the present

C.N.R.-Board of Directors
personnel of the trustee boards; I know he has objections to certain individuals on it. But this is no solution for the trouble; he is only preparing for himself two and one-third times the trouble that he is probably experiencing at the present time. This is not a solution that the people of Canada expected from this government or from the present minister; it is a proposal1 that is most unacceptable to anyone who has made a careful and minute study of our railway problem. It is	a	stupendous	problem.	We shoulddivorce politics from railways entirely, look at it	as	a national	problem,	get togetherand find a solution. I do not see any reason why the government cannot invite the assistance of people on this side of the house to assist	in	solving the	problem.	The more Istudy	it	the more I	realize its	gigantic importance. Unless we can find a solution it is going to carry us down, so I hope the minister will realize the possibility that is before him at tihe present time to be hailed as a great liberator, not as the man who merely introduced a slight change in the management of our national railways in order to get rid of certain persons on the board of trustees. The people of Canada will be grateful to the minister if he can at least blaze a new trail that will lead us out of our present chaotic condition in connection with our railway and transportation system.


Clarence Decatur Howe: Mr. Speaker, I want to thank hon. members in all parts of the house for the very fair discussion which this measure has received. I think everyone here is. impressed by the gravity of the situation with which we are dealing. I can assure hon. members that there is nothing with which I have ever had to do that has impressed me as being a more difficult and more serious problem than the one now before us. If anyone has the thought that the measure we have now before the house is the first step towards a program of extravagance, I ask him to dismiss it from his mind because that surely is not going to be the outcome.
Hon. members have expressed surprise that in bringing down this bill I have not offered a solution of the Canadian National Railway problem. Surely that is a little too much to expect from any man who is a layman, and in addition facing this problem at first hand and for the first time. There is no royal road, as I see it, to the solution of the Canadian National Railway problem. The trustee act was founded upon confidence in cooperation. Cooperation has been tested now for over two years, and it has not produced the results
which were expected from it. I am sure that everyone in this house regrets very much that more progress has not been made. But let us face the situation fairly. We have had the trustee system for the years 1934, 1935 and a small portion of 1936. In 1934 the cash requirements from the dominion government to keep the railway in operation, that is for deficits and capital expenditures- I make very little distinction between the two-was 856,000,000. In 1935, in spite of an increase of 88,000,000 of gross revenue, the requirements were $55,000,000. The budget first submitted for 1936 called for a further appropriation of $55,000,000 for this purpose. I am told that I set a precedent when I called the trustees to Ottawa and told them that as Minister of Railwaj's I must ask them to take a more optimistic view of the year 1936. We discussed the matter at some length, and as a result the requirements were cut down slightly below $50,000,000. Viewing the situation, it seems to me that 1935 was surely a good deal better than 1934 from every aspect, traffic as well as others, and surely 1936 will be a better year than 1935. Are we prepared to accept the view that the Canadian National Railway must draw in cash from the government of Canada some $50,000,000 or $55,000,000 every year? I think not. I think we must at least attack the problem in a different way.
The trusteeship, as hon. gentlemen know, was described as a bankruptcy situation. Well, the bankruptcy situation does not seem to be a solution, and in that respee' it is not much different from most bankruptcy situations. What happens in a bankruptcy situation is that a concern demonstrates that it cannot pay its way and is dissolved, or it demonstrates that it can pay its way and it is reorganized and is allowed to go back into normal business procedure. What we are doing by this bill-* and I believe it is a very important step- is bringing the road back out of bankruptcy and into business vitality. In doing so we are going to establish the ordinary business set-up of successful concerns in this country and elsewhere. We are going to restore management by experts in the railway business, with experience and qualifications that, we believe, will give the road expert technical direction. We are going to surround that expert direction with a board of directors which in business experience and in national respect, we believe will be the equal of the board of any other corporation in this country. In other words we are going to give the Canadian National Railways a chance as a business to go out and build. I say that we are going to give it a chance. We are going to give it the same chance that any business firm in Canada has.
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The leader of the opposition (Mr. Bennett) said that we can solve this problem by tearing up four or five thousand miles of track.


Richard Bedford Bennett: I said that is what the
commission said.


Clarence Decatur Howe: Yes, pardon me. I was
speaking merely for the purpose of reference. But if that is the solution, it must involve tearing up not only the track but also the mortgage that built the track. I think the saving is lacking if only the rails come up without the mortgage that built them. I agree fully that if there are any further savings to be made in the way of economies that are practical-and after all tearing up four or five thousand miles of track is not practical-these savings should be made. I believe that the direction in which to look for the solution of the Canadian National Railway problem is on the constructive side, the building up of traffic and the pumping of vitality into the railway. That is the purpose of this legislation.
It has been said that the purpose of this legislation is to dismiss the present personnel of the board. That is not true. It is true that I do not think the personnel directing the road to-day has the proper business experience which was intended by the Duff report. However I may say that I tried to avoid the very thing I am facing to-day, this discussion of personnel. I saw each of the trustees soon after I came into office and explained to them the position as I see it to-day. I suggested that this unpleasantness could be avoided if they cared to resign. I have great respect for Judge Eullerton, who is a westerner like myself; at least we have often worked together in the same field. Mr. Morrow is a former client of mine, and in justice to him I .must say that when I put the situation to him he was quite willing to resign. However I saw no purpose in accepting one resignation unless all were prepared to do the same thing. The change in set-up would have gone on just the same, but this personal reference I have had to make would have been avoided.
Motion (Mr. Howe) agreed to, on division, and bill read the second time.
Mr. HOWE moved that the house go into committee on the bill.


Richard Bedford Bennett: I object to going into
committee now. I want to make some observations on the motion for going into committee. In view of what was said this afternoon I do not think the bill should go into committee unless the chairman of the

board is afforded an opportunity to present his position before the special committee. Further, this bill refers to the Minister of Transport, and as there is no Minister of Transport the bill would prematurely be in committee.
Motion stands.
ADJOURNMENT-BUSINESS OF THE; HOUSE


Richard Bedford Bennett: What will be the business to-morrow?


Mr. CRERAR:: Special supplementary
estimates, the committee stage of the bill we have been considering, and if we finish with that, the ordinary estimates of Immigration and Defence, though possibly not in the order named.


Richard Bedford Bennett: If this bill could not
properly go into committee in view of -the fact that it refers to a Minister of Transport and there is none, then do I understand that the estimates will be proceeded with?


Thomas Alexander Crerar: That clause of the bill might be dealt with in the same way as a similar clause in the harbours board bill.


Richard Bedford Bennett: This is to some extent
different from that.


Thomas Alexander Crerar: Not in respect to the point my right hon. friend raises.


Richard Bedford Bennett: But there is a special
committee outstanding.


Thomas Alexander Crerar: I think we shall probably
proceed with the committee stage of this bill -I do not know the wish of the Prime Minister; we might consider the matter tomorrow-leaving the sections that refer to the Minister of Transport standing for the time being.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Tuesday, April 28, 1936