1937-03-22

[Stage Direction]
Mr. A. E. MacLEAN (Prince) presented the second report of the standing committee on marine and fisheries, and moved that the report be concurred in.
Motion agreed to.

[Stage Direction]
Mr. A. M. YOUNG (Saskatoon) presented the third report of the standing committee on railways and shipping.
He said: With the consent of the house, I move, seconded by Mr. Hanson:
That the estimates referred to and approved of in the third report of the standing committee on railways and shipping owned, operated and controlled by the government, viz: items 96, 97, 293, 361 and 362, be referred to the committee of supply.
Motion agreed to.

Mr. D. G. ROSS (St. Paul's) moved:: That the petition of the Premier Trust Company, presented on the eleventh of March, praying for an act to authorize an increase of capital stock, together with the report of the clerk of petitions thereon, be referred to the standing committee on standing orders for the purpose of considering the suspension of standing orders 92 and 93(3) (a) and (b).


[Stage Direction]
Motion agreed to.

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

Mr. POULIOT:: 1.	During the present fiscal year, did the weights and measures inspection service inspect for shortweight on loads of coal delivered in the city of Ottawa?
2.	If so, how many loads were delivered: (a) overweight; (b) correct weight; (c) short-weight ?
3.	If any delivery was shortweight, what was the greatest individual case of shortage, and also the total shortage on all inspected loads?
4.	Referring to the above paragraphs, what action, if any, was taken by the weights and measures service as a result of this test, against companies or individuals selling shortweight coal?
5.	Over what scale or scales are the weight deliveries of coal on government contracts or purchases ascertained in the city of Ottawa?
6.	How recently have these scales been inspected?
7.	Was there any error found on the scale or scales used to weigh the government coal, and, if so, what was it?
8.	Were any scales: (a) rejected; (b) condemned; or (c) sealed, as a result of any inspection?
9.	If so, when, how many, and where are they located?
10.	Did the government take action to secure the reimbursement for shortweight deliveries ascertained over any scale found defective on an inspection during the period mentioned in paragraph 1?


Mr. RINFRET:: 
Mr. POULIOT:: 1.	Are the scales used in weighing coal purchased for government buildings in the city of Ottawa suitable for size and nature of loads weighed on same?
2.	How are weights obtained for truck loads of coal when the truck is larger than the scale platform?


Mr. ROGERS:: 1.	Yes, but there have been occasions when these scales were used to weigh loads for which they were not suitable.
2.	Three methods are practised to obtain the weight of truck loads of coal when the truck is larger than the scale platform, as follows:
A.	To weigh the load in two drafts, the first draft by placing the front end of the load on the scale, and the second draft by placing the rear end of the load on the scale, and taking the total of the two drafts as the gross weight of the load.
B.	To extend the platform of the scale on each end to accommodate the increased length of the truck.
C.	To attach extension skids to one side of the scale platform and run the front wheels of the truck on these skids until the rear wheels rest on the scale platform, and thus clear the load.
TOBACCO CULTURE, i/ASSOMPTION, QUEBEC


Mr. FERLAND:: 1.	Did the Department of Agriculture attempt to grow cigarette tobacco at the experimental station at L'Assomption, province of Quebec, during the past years?
2.	If so, what were the results?


Mr. GARDINER:: 1.	Yes.
2.	Good yields were obtained but the quality of the tobacco was not high. The results obtained in the year 1936 were fairly satisfactory both from the standpoint of yield and quality, but this may possibly have been due to the fact that the tobacco was grown on stronger soil than is customarily used.


SASKATCHEWAN-ALBERTA BOUNDARY SURVEY
Mr. HAYHURST:: 1.	When was the original survey of the meridian between Alberta and Saskatchewan completed ?
2.	Has the government any immediate plans for the resurvey of the portion of the meridian between Alberta and Saskatchewan within the Cambrian Shield?


Mr. CRERAR:: 1.	The survey of the meridian between Alberta and Saskatchewan was completed to the south shore of lake Athabasca in 1913. The balance of the meridian is unsurveyed.
2.	No.


IMMIGRATION OFFICERS
Mr. REID:: 1.	What amounts of money were paid by way of overtime to immigration inspectors during the calendar years ending 1934, 1935, and 1936?
2.	What is the total number of immigration officers employed by the Department of Immigration in the various provinces?


Mr. CRERAR:: 1.	Calendar year 1934, $39,645.84; 1935, $46,426.63; 1936, $48,379.13.
Questions

2.	Prince Edward Island, none; Nova Scotia, 10; New Brunswick, 18; Quebec, 51; Ontario, 162; Manitoba, 16; Saskatchewan, 5; Alberta, 6; British Columbia, 37; total, 305.
The above figures include only immigration inspectors.


SWIFT CURRENT, SASK., EXPERIMENTAL FARM
[Stage Direction]
Mr. COLDWEiLL:
1.	Has the government purchased or agreed to purchase additional land for the experimental farm at Swift Current, recently?
2.	If so, how many acres?
3.	How is the soil classified under the soils surveys of the university of Saskatchewan?
4.	From whom was the land purchased?
5.	What did the government pay for the property?
Mr. GARDINER:: 1.	The government has agreed to purchase additional land for the experimental station at Swift Current.
2.	Approximately 480 acres.
3.	Mostly Cypress loam, but some Haverhill loam.
4.	The present owner is W. J. Sykes.
5.	The purchase price has not yet been paid. The agreed price is $9,000.


AUTOMOBILE TRAFFIC, CANADA-UNITED STATES, 1936
Mr. ELLIOTT (Kindersley):: 1.	What number of Canadian motor cars reported outward from Canada during 1936 for United States?
2.	What number entered Canada during the same period?


Mr. ILSLEY:: 1.	689,674 Canadian automobiles reported outwards for touring purposes during the calendar year 1936.
2.	2,880,265 foreign automobiles were re-oorted inwards for touring purposes during ;he calendar year 1936 for periods of 48 hours or less; 1,192,935 for 60 days; 1,323 for 6 months. 59,535 automobiles were reported inwards during that year for other than touring purposes.


ANTELOPE PARKS, ALBERTA
Mr. MITCHELL:: 1.	Is there an antelope park in southern Alberta?
2.	If so, where is it located, and what does it consist of?
3.	Who is the warden?
4.	W'hat are his duties?
5.	(a) Is he required to make reports to the government from time to time, and (b) if so, how often?
6.	(a) Is the park inspected regularly by an official of the paries department; (b) if so, how often, and (c) wdien was the last inspection made?
I Mr. Crerar.]
7.	What is the warden's salary?
8.	What was the itemized cost of maintaining the park during the last year of which the government has record?
9.	(a) When was this park opened, and (b) who was the first warden?
10.	(a) Does the government own the land;
(b)	if so, from whom was it purchased, and
(c)	what price was paid?
11.	How much money has this park cost the dominion since its inception?


Mr. CRERAR:: 1.	There are two antelope parks in southern Alberta-Nemiskam national park at Nemiskam, and Wawaskesy national park at Bindloss. (The remaining questions will be answered separately for each park).
Nemiskam National Park
2.	Nemiskam national park near Nemiskam, Alberta-comprised of 8-5 square miles of a fenced enclosure.
3.	Edgar McHugh.
4.	Responsible for the care and safeguarding of the antelope in the park, supervising the erection and repair of fences, the carrying out of precautionary measures against disease and predators, and the forwarding of reports and information to the department as required.
5.	(a) Yes.
(b) Monthly and annually and special reports when required.
6.	(a) Inspections are made when considered necessary.
(b)	Answered by 6 (a).
(c)	October, 1935.
7.	$1,740 per annum, less 5 per cent.
8.	Salary $1,653. Maintenance $50.
9.	(a) March 28, 1916. (b) Edgar McHugh.
10.	(a) Yes. (b) When the Park was established two and one-quarter sections had been patented and the owners selected other lands in lieu thereof. Title to the remaining area was still in the crown in the right of the dominion, (c) Answered by 10 (a) and 10 (b).
11.	$37,496.79.
Wawaskesy National Park
2.	Wawaskesy national park near Bindloss, Alberta, comprising those portions of townships seventeen and eighteen, range three, and township seventeen range four, lying north and west of the Saskatchewan river and township eighteen, range four, all west of the fourth meridian. Total area approximately 54 square miles-not fenced.
3.	J. W. Smith.
4.	Responsible for the enforcement of the Parks act and regulations and the maintenance of the park as a game sanctuary-the forwarding of reports and information to the department as required.

Questions
5.	(a) Yes. (b) Annual and special reports as required.
6.	(a) Inspections are made when considered necessary, (b) Answered by 6 (a), (c) May, 1935.
7.	$200 per annum.
8.	Salary $200. Maintenance nil.
9.	(a) May, 1914. (b) W. J. Little.
10.	(a) Yes. (b) Title to the park area contained in the description in answer (2) was still in the crown in the right of the dominion when the park was established, (c) Answered by 10 (a) and 10 (b).
11.	$1,471.53.


TRANS-CANADA HIGHWAY, QUEBEC
Mr. LACOMBE:: 1.	Did the dominion government discuss with the former provincial government of Quebec the construction of a section of the trans-Canada highway in the county of Laval-Deux-Montagnes?
2.	If so, were plans and specifications prepared with that object in view by the engineers of the former provincial government?
3.	Were estimates prepared in connection with this proposed project either by the former provincial government of Quebec or the dominion government?
4.	If so, who asked for the suspension of the execution of the project?
5.	Has the construction of the new bridge at Boulevard Pie IX, at St. Vincent de Paul, been substituted for the construction of a section of the trans-Canada highway in the county of Laval-Deux-Montagnes?


Mr. ROGERS:: 1.	P.C. 1945 of August 4, 1936, authorized the Minister of Labour to enter into an agreement with the province of Quebec under the terms of The Unemployment Relief and Assistance act, 1936. The agreement thus authorized was duly executed under date of August 6, 1936. This agreement provided that the dominion government would contribute 50 per cent of the cost of certain projects listed in schedule "C" including project 24:
" Travaux preliminaires fondation, stabilisation, et lapis., St. Augustin-St. Eustache.*' The maximum dominion contribution toward the cost of this project was set at $143,883.75.
2.	No information.
3.	Not by dominion; no information regarding province.
4.	By P.C. 2840, November 3, 1936, a new agreement was authorized between the dominion government and the province under the Unemployment Relief and Assistance act, 1936, in which an entirely new schedule of works
proposed by the provincial government was incorporated and which did not include the project set forth in the answer to No. 1 above.
5.	Included in the schedule to the agreement authorized by P.C. 2840 of November 3, 1936, is project No. 12 providing for the building of a bridge on Pie IX Blvd., at St. Vincent de Paul, maximum dominion contribution $300,000, but there is nothing to indicate that this was substituted for any particular project authorized by the earlier agreement.
st. ann's Ontario, mail service, r.r. no. 1


Mr. LOCKHART:: 1.	Have tenders lately been invited for performing mail service, R.R. No. 1, St. Ann's, Ontario?
2.	If so, what are the names of those who submitted tenders, and what is the amount of each tender?
3.	In what places was the advertisement calling for tenders posted?
4.	Has the contract been awarded, and, if so, to whom?
5.	Who recommended the letting of the contract?


Mr. ELLIOTT (Middlesex):: 1.	Yes. Tenders received January 8, 1937.
2.	John Iv. Sauchuk, St. Ann's No. 1, $500; Stephen Ribbecon, Box 44, St. Ann's, $525; Milton Crown, St. Ann's No. 1, $600; Albert S. Morley, St. Ann's, $612; Harold E. Cocks, St. Ann's, $744; Geo. R. Garner, Fenwick, $895.
3.	In conspicuous places at St. Ann's.
4.	Yes. John K. Sauchuk.
5.	Contract awarded to lowest tenderer in conformity with Post Office act.


ROUND HILL, N.S., POSTMASTERSHIP
Mr. BROOKS:: 1.	Has the postmaster at Round Hill, Nova Scotia, recently died?
2.	If so: (a) has his successor been appointed; (b) who is such successor; (e) is he a returned soldier?
3.	How many persons applied for the position?
4.	What are their names?
5.	Were any of the applicants returned soldiers?
6.	Has the location of the post office been changed within the past few months?
7.	If so, how many years was it maintained at the former location?
8.	What was the revenue of the post office for the calendar year 1936?
9.	What compensation did the postmaster receive for the calendar year 1936?


Mr. ELLIOTT (Middlesex):: 1.	Yes. '
2.	(a) Yes. (b) William Charles Lorimer Dargie. (c) No.
Questions

3.	Four.
4.	W. C. L. Dargie, V. Paul Bailey, Wm. Raeside, Miss E. Fraser Tupper.
5.	Applicant Wm. Raeside states he saw military service. This candidate was eliminated, on examination, as lacking in education.
6.	Yes. This was unavoidable when Dargie was appointed.
7.	Since July 1930, when a change of 50 feet was made.
8.	$703.11.
9.	$498.83.


B ALLAN TYNE PIER-VANCOUVER
Mr. GREEN:: 1.	Has any shortage in the accounts of the BaHantyne pier in Vancouver been discovered within the last eighteen months?
2.	If so, what was the amount of such shortage?
3.	Has the official responsible been discharged?
4.	Was such official bonded?
5.	If so, with what company?
6.	Who are the agents in Vancouver for such company or companies?
7.	Has such shortage been made good, and, if so, by whom?
8.	What attempts have been made to collect the amount of such shortages from the company or companies bonding such official?


Mr. HOWE:: 1.	Yes.
2.	$5,587.40.
3.	Yes.
4.	Yes.
5.	Canadian General Insurance Company and Hudson's Bay Insurance Company.
6.	Canadian General Insurance Company; Parsons, Brown & Winckler Limited for Hudson's Bay Insurance Company.
7.	No.
8.	Demand made on bonding companies.


ICE-BREAKER, &quot;MIKULA,&quot; ST. LAWRENCE RIVER
Mr. BOULANGER:: 1.	Does the government own an ice-breaker called the Mikula on the St. Lawrence river?
2.	Is such boat now used m ice-breaking? If so, where?
3.	How long has this boat been in the service of the government, and of what department?
4.	If the said boat is not now in operation, since when has it been out of commission, and for what reason?


Mr. HOWE:: 1.	Yes.
2.	Not since 1935.
3.	Thirteen years, from 1922 to 1935, under ;he Department of Marine.

4.	Has not been in operation since 1935 owing to her efficiency not being commensurate with the high operating costs, and as the services can be adequately performed by the other ice-breakers of the department.


ROYAL MILITARY COLLEGE-PURCHASES OP HORSES AND OATS
Mr. TUSTIN:: 1.	How many horses have been purchased for the Royal Military College since January 1, 1936, to date?
2.	From whom were they purchased?
3.	At what prices?
4.	How many horses have been sold during the same period?
5.	To whom were they sold?
6.	At what prices?
7.	How many bushels of oats were purchased for the Royal Military College from January 1, 1936, to date?
8.	From whom were they purchased?
9.	At what price per bushel?


Mr. MACKENZIE (Vancouver):: 1. Three.
2 and 3. Mr. Murray Scott, Sharp's Corners, Ont., November 5, 1936, one at $125. Coulter Brothers, Toronto, Ont., February 2, 1937, one at $200. Mr. James Boviard, Brampton, Ont., February 2, 1937, one at $200.
4.	None.
5.	Answered by No. 4.
6.	Answered by No. 4.
7.	3,100 bushels.
8 and 9. (i) W. P. Peters, Kingston, Ont., 750 bushels at 34 cents per bushel-period January 1, 1936, to March 31, 1936. (ii) Greenlees Brothers, Joyceville, Ont., 1,000 bushels at 38 cents per bushel-period April 1, 1936, to September 30, 1936; and 1,350 bushels at 65 cents per bushel during the period October 1, 1936, to March 19, 1937.


MANITOBA FEDERAL RELIEF AREA
Mr. WINKLER:: 1.	Have any requests been received from the province of Manitoba since February 8, 1937, for the inclusion of any rural municipalities in the federal relief area?
2.	If so, what are the names of these municipalities?


Mr. GARDINER:: 1.	Yes.
2.	Argyle, Wallace, Cameron (north half), Lome, Strathcona, Rhineland, Stanley.


MAJOR GENERAL A. G. L. MCNAUGHTON
Mr. POULIOT:: Before July 4, 1936, did Major General A. G. L. McNaughton pay anything for his military pension, and if so, how much?


Mr. MACKENZIE (Vancouver):: Yes.

Questions as Orders jor Returns


Mr. POULIOT:: 1.	Did Major General A. G. L. McNaughton, C.B., C.M.G., D.S.O., M.Sc., LL.D., president of the National Research Council, make any scientific discovery, from the date of his appointment, June 1, 1935, until now?
2.	If so, what was it?
3.	If not, what has he been doing as president of such council?


Mr. ROGERS:: Mr. Speaker, this appears to be a rhetorical question and does not admit of an answer in its present terms. I would ask that it be dropped.


Mr. SPEAKER:: Dropped.


Jean-François Pouliot: I have no complaint to make as to meeting the objections of the minister. I am ready to go to the limit, and this is the next step within the limit.


Walter Edward Foster: Order.


LIEUT. COL. W. ARTHUR STEEL
Mr. POULIOT:: 1.	Referring to sessional paper No. 213 of March 11, 1937, did Lieutenant-Colonel W. Arthur Steel pay anything for his superannuation between October 1, 1931, and January 17, 1933?
2.	If so, how much?
3.	If not, why?
4.	Before October 1, 1931, did he pay anything for his military pension, and, if so, how much?


Ian Alistair Mackenzie: 1, 2 and 3. $267.59, under the provisions of the Militia Pension Act.
4.	$2,151.34.
CORONATION DAT:	COMMEMORATIVE PLANTINGS


Mr. PURDY:: 1.	Is it a fact that a quantity of acorns from the Royal oaks will be sent to Canada for distribution to various points in order that they may be planted on coronation day in the hope of producing trees to commemorate the day?
2.	If so. in what manner and through what agency will the distribution be made?


Mr. RINFRET:: 1. A press dispatch concerning the distribution of acorns was called to the attention of the government. Inquiries were made through the high commissioner for Canada in Great Britain, who advised that he had been informed that an organization known as "Men of the Trees" had shipped 10,000 acorns, collected in New Forest, consigned to "Men of the Trees, President, F. E. Robson, Yonge street, Toronto." A subsequent press despatch stated that acorns also were presented to the Ontario motor league by the Automobile Association of Canada with
which the Ontario motor league is affiliated, but the government has no official information concerning this shipment.
2. Answered by No. 1.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. ELLIOTT (Kindersley):: 1.	What has been the increase in the price of the various minerals mined in Canada in 1933, compared with the present price?
2.	What has been the increase in wages of the miners during the same period?


Mr. CRERAR:: Return tabled herewith.


RECRUITMENT FOR ROYAL AIR FORCE
Mr. ELLIOTT (Kindersley):: 1.	What number of recruits presented themselves for examination before the Department of National Defence for the Royal Air Force, since January 1, 1935?
2.	How many have been accepted?
3.	How many were rejected?
4.	How many applications in any allotted time can be handled?
5.	What qualifications are necessary for this service?
6.	What is the duration of the service and remuneration?


NIAGARA CAMP AND NIAGARA-ON-THE-LAKE EMPLOYMENT
Mr. LOCKHART:: 1.	How many men were employed during 1936 on work in connection with Niagara Camp grounds aDd the rifle ranges at Niagara-on-the-Lake?
2.	How many were returned men?
3.	What was the rate of pay?
4.	Were any of the men employed American citizens?
5.	What are the names of those employed?
6.	AYhat were their earnings during the year 1936?


VANCOUVER HARBOUR COMMISSION EMPLOYEES
Mr. GREEN:: 1.	What persons were in the employ of the Vancouver harbour commission, or the National harbours board at Vancouver at any time during the period from the 1st day of April, 1932, to the 31st day of December, 1936?
2.	What were the total earnings of each of such persons for such period, or the part thereof during which he, or she, was so employed?
3.	What were the total deductions, if any, made from the salary or wage of each of such persons under the Salary Deduction Act, 1932, and amending acts, for such period, or the part thereof during which he, or she, was so employed ?

Business of the House
4.	Did any of such persons receive a refund of such deductions, and, if so, what persons, and in what amounts respectively?
5.	Which of the persons in such employ, if any, did not have any deductions made under the said Salary Deduction Act, 1932, and amending acts, and what was the reason in each of such eases that no deduction was made?


CANADIAN FARM LOAN BOARD, EDMONTON, EMPLOYEES
Mr. HAYHURST:: 1.	What are the names of the present staff of the Canadian farm loan board at the Edmonton office and what is the salary of each?
2.	What are the names of the permanent appraisers employed by the Edmonton branch of the Canadian farm loan board and the salary of each?
3.	What are the names of the temporary appraisers employed during the season 1936 by the Canadian farm loan board at Edmonton and the salary of each?
4.	Are there any temporary appraisers employed at the present time?
5.	Are there any representatives of the Canadian farm loan board in the Vegreville area?
6.	If so, what are their names, positions and salaries?



MOTIONS FOR PAPERS


Mr. FAIR:: For a copy of the complaint or charge laid against Mr. H. B. Walker of Wainwright by Mr. Francis H. Moreom. Also a copy of the evidence given at the investigation held by Mr. Gariepy at Wainwright in September, 1936.



APPROPRIATIONS FOR SASKATCHEWAN HIGHWAYS, 1936

Mr. MacNEIL (for Mr. Coldwell):: For a copy of all correspondence and memoranda regarding appropriations for the hard surfacing and gravelling of highways in Saskatchewan during the year 1936.



C. W. STIRLING, SAANICH, B.C.

Charles Grant MacNeil: For a copy of all correspondence, letters, telegrams, reports ard other documents relating to Cyril Warren Stilling, of Saanich Peninsula, Vancouver island. British Columbia, in connection with efforts to obtain support for him from the dominion government, by an annual grant for his researches in pea breeding.



ST. HYACINTHE-BAGOT, QUE., PUBLIC WORKS

Mr. GLEN (for Mr. Fontaine):: For a copy of all reports, correspondence, resolutions and other documents exchanged, since October 15, 1935, between the federal government and the government of the province of Quebec, concerning the municipalities of the county of St. Hyacinthe-Bagot. in connection with the carrying on of public works for unemployment relief purposes.

st. Ann's, ont., mail service, r.r. no. 1
Mr. CLARK (York-Sunbury)	(for Mr. Lockhart):
For a copy of all correspondence, letters, telegrams and other documents from and after January 1, 1935, with respect to rural route No. 1, St. Ann's, Ontario.



ST. PIERRE LES BECQT7ETS, QUE., POSTMASTERSHIP

Mr. CLARK (York-Sunbury) (for Mr. Wermenlinger):: For a copy of all correspondence, telegrams, evidence, judgment, reports, and other documents, concerning the dismissal of Mr. Olivier Archambault, postmaster at St. Pierre les Bec-quets, Lotbiniere county, province of Quebec.



CANADIAN FARM LOAN BOARD, REGINA, DISMISSALS

Mr. PERLEY (Qu'Appella):: For a copj' of all letters, telegrams and other documents, passing between the Regina branch of the Canadian farm loan board and the head office of the board, and between any ministers and departments of the government, relative to the dismissal of Messrs. Fitzgerald. Roper, Woodman, Scott, Dodds and Wenans from the Canadian farm loan board at Regina.



BUSINESS OF THE HOUSE


[Stage Direction]
On the order,, "Government Notices of Motion":
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I rise not for the purpose of moving that the house go into committee of the whole to consider the resolution respecting the soekeye salmon fisheries convention, but rather to point out that it is customary to discuss resolutions of the kind with the Speaker in the chair. I am informed that when the notice was handed in to the clerk it did not contain the words "in committee of the whole," but that those words were added. It would 1 think be better to hold to the practice that is customary in these matters, unless the house has a desire to go into committee on the resolution. It may do so if so desired. If, however, the house is agreeable to proceeding in the regular manner I suggest we do not go on with the resolution to-day, and that it appear to-morrow on the order paper without the words "in committee of the whole." The same would apply to the resolution with respect to the Canada-United States income tax convention.


Right Hon. R. B. BENNETT (Leader of the Opposition):: With respect to the first resolution, it seems to me obvious that it should be discussed in committee of the

Old Age Pensions
whole, for there are many questions to be asked and answered and under our rules that could not be done with the Speaker in the chair. In my opinion a resolution of this kind should be discussed in committee of the whole. It is the only opportunity that will be afforded hon. members of asking certain questions in connection with it, as, for example, what will be the effect upon the treaty as a whole of what are referred to as "understandings," but which, I think are more properly described as "reservations."
The same may be said with respect to the resolution regarding income tax. Under our procedure there would be no possible method, unless the resolution were sent to. a committee of the house, to ask for and receive detailed information which may be important to a clear understanding of the provisions of the agreements.


William Lyon Mackenzie King: As I have stated, the government has no objection to having the resolution discussed in committee if hon. gentlemen opposite so desire. I have thought it advisable to point out what the practice has been, in order not to have the course proposed considered as a precedent with regard to subsequent resolutions of the kind. In the circumstances the resolution might stand until to-morrow.
Motion stands.



OLD AGE PENSIONS ACT


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved the second reading of and concurrence in the amendment made by the senate to Bill No. 42, to amend the Old Age Pensions Act.
He said: I think an explanation is necessary before the motion is carried. The amendment was introduced in the senate at the instance of the government after reconsideration of the feature of the bill, as it passed this house, which developed clearly, I think, in the committee stage in answer to questions from my hon. friend from Vancouver North (Mr. MacNeil) relating to the total permissible income of two blind persons married before the passing of this act, before any deduction could be made from the maximum of pension. Further discussion of the matter not only by the government but with those who speak for the blind in these matters resulted in the suggested amendment in the senate, which adds as paragraph (c), subsection 3 of section 8a, the following:
In the case of a person married to a blind person receiving a pension under this section, by the amount of the income of the pensioner in excess of two hundred dollars a year.
That will have the effect of avoiding the doubling up of the incomes for a second time. The result then will be, if this amendment carries, that in the case of two blind persons married to each other before the coming into force of this act, each could receive a pension of $240 and each would be allowed a maximum permissible income of $200, so that the maximum total income of the couple before any deduction from the amount of the old age pension would be $880. In the case of two blind persons married to each other after the coming into force of this act, each could receive a maximum pension of $120 and each would be allowed a maximum permissible income of $200, so that the maximum total income of the couple before deduction from pensions would be $640. This scale maintains that advantage over the ordinary old age pension features which I emphasized on the second reading of the bill and in committee, as being necessary to take care of the extra expense to which blind persons are put bv reason of their infirmity.
Before moving concurrence I should also remark on the questions that have been addressed to me by many members and also by correspondents from all parts of Canada as to the date at which pensions to the blind can be actually effected. It is important that we should be clear on the matter. The old age pension law is a joint dominion and provincial undertaking and anything we do here with respect to the federal act must have provincial legislative sanction before it can become operative. In some of the provinces legislation already existing would permit the province by regulation to adopt the provisions of this amendment respecting the blind. In some other provinces, I am advised, legislation will be necessary. The reason I urge the adoption of this amendment to-day, although it was not one of the bills mentioned on Friday night, is that some of the legislatures are in session and those interested desire to move in the matter as quickly as possible. It is difficult to say accurately when the pensions will be actually in force; they may be in force in some provinces before they are in others. Provincial legislation must be enacted if it does not already exist and the necessary regulations agreed to between the dominion and the provinces with respect to administration. I am sure hon. members will appreciate this information because many of them are receiving inquiries.
Motion agreed to; amendment read the second time and concurred in.
Harbours and P-iers Act


[Stage Direction]
Hon. C. D. HOWE (Minister of Transport) moved the second reading of and concurrence in amendments made by the senate to Bill No. 9, to amend the Government Harbours and Piers Act.
He said: These are minor amendments. One is to insert, before the words " such works " in line 3 on page 2, the words "each of." The purpose is, as was the original intent of the bill, to make it clearer that the funds collected at one dock may not be applied to another. The second amendment is similar. In line 5, after the word " collected," it is proposed to insert the word " thereon." I have no hesitation in moving concurrence.
Richard Bedford Bennett: The senate has added the word " thereon." The dues are not necessarily collected " thereon "; there may be side wharfage as well. It is therefrom as well as thereon. The minister made it clear in his explanation in committee of the whole.


Mr. HOWE:: I think the word should be more properly " therefrom," but I doubt whether thereon is misleading.


Richard Bedford Bennett: As it reads now it says, " be retained from the tolls and dues collected." The senate have added the word " thereon." Surely it must be " therefrom," which includes both side and top wharfage.
Motion agreed to; amendments read the second time and concurred in.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
Hon. C. D. HOWE (Minister of Transport) moved that the house go into committee on Bill No. 12, to provide for revision of the accounting set-up of the Canadian National railway system.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
On section 1-Short title.
Mr. STEVENS:: Has this bill been before the special committee?


Clarence Decatur Howe: It has been before the committee and has been reported back unanimously, as I understand it.


[Stage Direction]
Section agreed to.
Sections 2 and 3 agreed to.

On section 4-Minister to surrender to Canadian Northern certain of its capital shares.
Richard Bedford Bennett: What is meant by "cancellation" and "surrender" to Canadian National Railway? The shares are outstanding. There will be difficulty about surrendering and cancelling.


Clarence Decatur Howe: The shares of the Canadian Northern Railway Company are held by the Minister of Finance. They were purchased at a cost which would amount for the whole issue to $18,000,000, and it is proposed to cancel the rest of the shares and to exchange the $18,000,000, the balance of the common stock issue of the Canadian Northern Railway for Canadian National Company stock.


Richard Bedford Bennett: It struck me, looking at it after the last sitting, that what we are doing is reducing the capital.


Clarence Decatur Howe: That is true.


Richard Bedford Bennett: Well, should we not
state that this is a reduction of capital? As it appears here it is an arbitrary cancellation, but in fact it is not that; it is a reduction of capital from $100,000,000 to $18,000,000. The board having decided that the value of the 600,000 shares of the stock was SI,000.000, this gave a value of $18,000,000 to the total issued stock, and what we are doing is reducing the value of the capital stock from $100,000,000 to $18,000,000. "Cancellation" is an inept term for that purpose. The section provides:
The minister is hereby authorized to surrender to the Canadian Northern Railway Company, for cancellation, eight hundred and twenty thousand and six shares of the outstanding capital stock of that company, having the par value of eighty-two million six hundred dollars.
I suggest that what we should provide is that the capital stock of the company is hereby reduced from $100,000,000 to $18,000,000, and the remainder is hereby cancelled. To surrender the shares to the company for cancellation is, I think the minister will admit, contrary to all the rules of corporate practice. In reality all we are doing is merely reducing the capital, which in the ordinary course, assuming that the appropriate procedure is followed, could take place by any corporation.


Clarence Decatur Howe: In this case "the minister" refers to the Minister of Finance, who now holds 8100,000,000 of stock. I think this is more a direction to the Minister of Finance to effect the reduction in capital by surrendering that amount of stock.


Mr. DUNNING:: That is the intention.


C.N.R.-Accounting


Richard Bedford Bennett: It certainly is very poorly done.


Mr. CAHAN:: That would not complete the transaction.


Richard Bedford Bennett: No, the capital still
stands at $100,000,000. It really requires a combination of this provision and another reducing the capital stock to $18,000,000; otherwise you will have the anomaly of the minister surrendering stock for cancellation and the capital stock still remaining on the statute books at $100,000,000. In corporate practice, the power to cancel is never exercised in that way; it is done by reducing the capital by appropriate proceedings.


Clarence Decatur Howe: If I am not mistaken the Canadian Northern company disappears from the consolidated balance sheet as a corporate entity in this bill, and I think this is only preserving the value-that is the true value of the stock-it is the device adopted for preserving the value of the stock according to the report of the arbitration.


Charles Hazlitt Cahan: But does the minister intend after the enactment of this clause that the appropriate proceedings shall be taken under the railway act to reduce the capital stock of the company?


Clarence Decatur Howe: Quite.


Charles Hazlitt Cahan: Is this merely an ancillary
or preliminary provision, or is it intended by this provision to deal with the matter of surrender as well as the matter of the reduction of capital? That is the point raised by the leader of the opposition.


Mr. BOTHWELL:: If we understood this
matter in the committee, this is simply a direction to the Minister of Finance to surrender stock held by him. What happens to that stock afterwards will depend upon subsequent sections of the bill.


Richard Bedford Bennett: Look at the next section. Section 5 covers it.


Charles Edward Bothwell: It is simply a direction to the Minister of Finance.


Richard Bedford Bennett: It does not stop at that. If it did, there might be some point to the observation of the hon. member for Swift Current (Mr. Bothwell). This places in the hands of the minister this $80,000,000 odd of stock and says, "for cancellation," and the next section provides that the $18,000,000 shall be exchanged for stock of no par value. So that the corporate structure of the enterprise is entirely changed. The Canadian Northern system came into being by statute of this parliament, and that statute is now being 31111-126
altered. It is upon the statute that we depend for the consolidation of the Canadian Northern system, and the capital was fixed at $100,000,000. That $100,000,000 is in the hands of the Minister of Finance. It is now provided that $82,000,000 odd shall be handed over to the Minister of Finance for cancellation -


Charles Edward Bothwell: If I may interrupt, not handed to the Minister of Finance, but surrendered by him.


Richard Bedford Bennett: Yes, surrendered by him for cancellation. How can the company cancel stock when the whole corporate life depends on that statute? We are dealing with the Canadian Northern system, a system of consolidated roads, I think some one hundred odd railway systems, small and large. With that system dependent for its corporate existence on a statute of the parliament of Canada, we now say to the minister: You will surrender to that railway company its own capital stock for cancellation. Surely that is not an adequate expression of what is intended. It would be regarded in most places, I think, as a very singular thing if we did that. Of course it is not for me to do more than point it out; the government has a majority.


Clarence Decatur Howe: It seems to me that there
will be, as the hon. member for St. Lawrence-St. George (Mr. Cahan) suggested, an ancillary action by the railway company itself to deal with the Canadian Northern Railway Company under the railway act. That is, that company may disappear later; it does not disappear through this bill but it does disappear from the consolidated balance sheet of the Canadian National Railways.


Some hon. MEMBERS:: Carried.


The CHAIRMAN:: Shall clause 4 carry?


Richard Bedford Bennett: No. I protest against
it; that is all I can do. I cannot bring myself to support that.
Section agreed to on division.
On section 5-C.N.R. and Canadian Northern exchange of stock.


Richard Bedford Bennett: Clause 5 is open to
more serious objection still. The minister is authorized to transfer to the Canadian National Railway Company the 180,000 shares he has. That is understandable. But what we are going to do is to amend the statute that created this enterprise, the Canadian Northern system, and make these shares of no par value. We are not purporting to amend the statute as we should be doing, but are

C JV .R.-Accounting


Richard Bedford Bennett: I suppose there is no question about our having power to do this. This is an ante-confederation claim. I assume there are no questions affecting the older provinces in regard to a matter that arose prior to confederation in connection with the old Grand Trunk. I have never been able to get to the bottom of why it has been carried in the books continually. The only explanation that was ever suggested to me was that it was essential to do so because of the possible rights of the provinces in connection with the matter. I only point that out for what it is worth, because I have never been able to understand why the claim was continued in our books.


Charles Avery Dunning: That is the only reason that was ever advanced to me.


[Stage Direction]
Section agreed to.
On section 8-Adjustment of differences between public accounts and National Railway System accounts.
Richard Bedford Bennett: Mr. Chairman, this raises the whole question again. The minister continually talks about duplication. There has been no duplication; none whatever, and when he talks of duplication he does violence to language, as I think he will have to admit. The accounts of the country and the accounts of the railway company are not the same.

The railway company merely shows what its indebtedness is. The accounts of the country show what are its issued securities. One shows securities on which cash is obtained, and that cash was paid over to the railway company. The railway system therefore carries on its books a statement showing that it received cash from the government of Canada, while on its books the government shows that it issued securities from the sale of which the money was obtained.
Shortly that is the story. I might speak for a day and I could not say anything further than that. Nevertheless this section says:
.	.	. the minister may adjust the certain
current differences between the public accounts of Canada and the accounts of the National Railway System relative to the government railways and the Hudson Bay railway, in accordance with the terms of schedule B of this act.
I certainly protest against changes being made in the public accounts that fail to show the true state of the accounts of the country. It is just as bad to do it by statute as it is to do it in some other way. When you have to say you are doing something that the audit act does not permit, you say something which on its very face carries its own condemnation. When you have to bar the operation of the Consolidated Revenue and Audit Act, 1931, for the purpose of doing something with the accounts of this railway company, what you do carries its own condemnation. Why should the audit act be disregarded? Why should it be set at naught? Why should you endeavour to get around it? Why should it not be observed with respect to this as with respect to other matters? On the one hand there were the loans from the public; on the other band there are the receipts by the company. The company shows those receipts; the country shows an issue of securities. On the one hand cash was obtained; on the other hand cash was received, so there can be no such thing as duplication.
Since this bill was introduced I have looked at the accounts of other enterprises. Take, for instance, the accounts of the Canadian Pacific Railway Company, published today. They show how the company got its money. They show that on the leased properties the company has expended some $97,000,000. On the one hand the leased properties received the cash, $97,000,000; on the other hand the company issued its securities to obtain the money. There is the cash from the sale of securities and there is the receipt of this cash so obtained. The lessee advanced the money to spend on the leased property; the same lessee obtained the money from the public by the sale of its securities.

C.NJt.-Accoun ting
In this case it happens to be a railway company, and these operations come under a statute, the audit act. Now the minister is asking this parliament to set aside the operations of the audit act in order that he may do something to the accounts that otherwise he could not do. Why should he ask that. He has given no answer; no one has given any answer. If the audit act should be observed, let it be observed. If it should be set aside, at least better reasons should be given than so far have been advanced. Why should we say that the audit act, which has been in force in various forms, though the principle has remained the same, since confederation, should be set aside for this transaction, and why should we endeavour to say that the full expenditure of money that we have put into an enterprise should not be shown?
I have no interest in the matter; I am not concerned about it personally, but every time a man suggests to me that we should say something which is different from the fact, I ask why. Well, no reason is given. We are told that it looks better, and that is all. One man says it is for clarity. We know perfectly well that is not so, because we are asked to set aside the audit act to enable it to be done. If a private individual were to come to this parliament and say, "I want to set aside the provisions of the Companies Act in order that I may do so and so with my accounts," we would say that was juggling the accounts, but when the minister says, "I want to set aside the audit act; I do not want that act to apply at all; I want a separate dealing with this," I think it gets down to the elementary discussion of a single question: Is it right to show on the one hand the receipts and on the other hand, in the public accounts, the sale of the securities that produced the sums thus received? As I said the other day, if these sums had been received from Morgan Grenfell and Company, they would have to be so shown, but now we are asked to set aside the provisions of the audit act in order to say they were not received from the country. I do not understand it.
I make these observations in advance of another section which deals at greater length with the principles mentioned here, in regard to the government railways and the Hudson Bay railway. In connection with the government railways all you have to do is say that we spent so much money on them. Dear knows, any man who was bom in the maritime provinces has heard enough of that story. From my youth up I have never ceased to hear of the amount of money that was spent on the government railways; in
31111-126$
fact Sir Richard Cartwright once described the maritimes as the shreds and patches of confederation, speaking in reference to the sums of money that were spent. When Mr. Blair brought the Intercolonial into Montreal there were still further discussions of the matter. Then when the National Transcontinental was built to Moncton it will be remembered that Mr. Fielding and Sir Wilfrid Laurier said it was going to cost the country some 813,000,000. I think the figure stands at the moment at something over $200,000,000.
That is not the point at issue, however; it is the question of accounting. When we ask parliament to set aside the audit act in order that we may set up new accounts I must say we are doing something very serious; I think most governments would hesitate a long time before taking any such action. The audit act, after all, has stood the test of a good many years and has been regarded as a reasonably sound safeguard of the interests of the people. Notwithstanding that, we are going to do something by statute that serves no useful purpose that I can see.


Clarence Decatur Howe: Mr. Chairman, I believe no one has claimed that there is duplication between the railway debt and the public accounts. The statement has been that there is duplication between the railway debt and the net debt of Canada.


Richard Bedford Bennett: The public accounts.


Clarence Decatur Howe: The accounts dealt with here are set up as deferred assets in the net debt. Through the act we propose to set them down in one lower category, that is the consolidated accounts. I see no violence here. So far as the principle of the thing goes, I believe that was very definitely admitted in 1932 when the Canadian Pacific-Canadian National bill was passed in the house. That bill provided that operating deficits should not be funded.


Richard Bedford Bennett: By a railway.


Clarence Decatur Howe: Should not be funded as a debt against a railway by a government. In other words, that we should not put into our treasury a piece of paper which said that on a certain date a railway must repay to the government of Canada certain deficits.


Richard Bedford Bennett: It does not say that; look at it.


Clarence Decatur Howe: I think it does say that.


Richard Bedford Bennett: That is not what the statute says at all.


Clarence Decatur Howe: In any case, that is the way it works.


Richard Bedford Bennett: No, no.	.
C.N Jt.-Accounting


Clarence Decatur Howe: If we accept that principle, ninety per cent of what this bill does can be achieved by making that same law retroactive. It is simply a matter of going back over the years and taking the amounts paid to the railways to cover deficits, and removing them as capital obligations. I see nothing new in the principle. It seems to me that principle was definitely accepted in 1932, and should logically be applied.


Richard Bedford Bennett: The minister is in error when he states that the 1932 statute makes any such provision as he suggested. The report did suggest, and the statute in terms provides, that the railway company shall not issue its securities for its deficits. That is, it shall not fund its deficits. The railway company can no longer fund its deficits. But the country has to fund the deficits and provide the money. I still say that the accounts of the company should show that the deficit was paid by the dominion government. The 1933, 1934 and 1935 reports do not show that, and I think they should have shown it. I was then of the opinion, and I still am. If the law prevented a public utility company from funding its deficits, and the public utility company could secure from the municipality the money to fund its deficits, it is quite obvious that on the books of the municipality it would show as a debt, unless in fact they had the cash in the consolidated fund of the city with which to pay. The Dominion of Canada borrowed the money with which to liquidate the deficits. The obligations are those of the country, not to the railway but of the country generally, and of those who bought securities. Out of the moneys thus obtained by the sale of the securities of the Dominion of Canada a sufficient sum was paid to the railway company to meet its deficits. It therefore follows that the railway company, which is a public utility enterprise, would owe the Dominion of Canada the amount of these deficits. No magic words can be used which will enable the company to pay its debts merely by providing that it cannot fund them. The debt is still there; it is still owed by the company to the people of Canada. The position taken that this is not a debt but new capital, and that it is really a payment by the country on account of capital obligations, would involve a complete change of the Canadian National statute, under which we operated.
Thus far the Dominion of Canada has been in exactly the position a municipality would hold with respect to a street railway owned by private enterprise. We have advanced the money to enable deficits of opera-

tion to be paid. As I pointed out, there are three deficits. There is the income deficit of $49,000,000; there is the deficit of $83,000,000 in the consolidated account, and the deficit of $115,000,000 shown by the bureau of statistics. The bureau shows the Canadian Pacific deficit of 86,000,000, in the same way, because it involved the setting aside of properties having no value. It so happens that the deferred maintenance equipment became so great, in the case of the Canadian National, that the sum of $20,000,000 was set aside in 1935 for maintenance purposes. So that the total deficit offered by the bureau of statistics is 8115,000,000. For the same year the Canadian Pacific Railway shows one of 86,000,000. But there the similarity ends. The $115,000,000, the third deficit shown, represents the amount of money paid by the taxpayers of Canada to enable their enterprise, if we may call it such, to meet its obligations. The 849,000,000 and $115,000,000 are deficits on income. The balance represents the amount of money paid as interest by the Canadian people on the securities on which they borrowed money that they might lend it to the Canadian National Railways.
There can be no such thing as the duplication of railway and government accounts in connection with anything of that sort, any more than there is in private enterprise. If on one side you show the authority for my borrowing and on the other side you show from whom I received the money, you do not in any sense affect the facts. When the minister suggests it has nothing to do with the net debt of Canada, or any other debt of Canada, it is on the assumption that the people do not read the report. I do not think the people who lend the money to Canada are in any confusion in the matter. I have never seen any application of it, and I have had a great deal to do with it from time to time. The Canadian National accounts as audited by Touche and Company and by Clarkson in 1935 more clearly indicate the position; they show the authorization, by statute for the borrowing of the money received from time to time. In every case that is set out at length; in every case the authority is given.
In the accounts of the railway there are moneys which came into their hands, from the Dominion of Canada, or from passenger or other traffic. There is the money which came from the Dominion of Canada, which borrowed the money and lent it to them. Surely no person could confuse the debts of the railways and of the country. My only difficulty is as to why we should have to set at naught

C .N .R.-Accoun ting
statutory safeguards to do something that serves no purpose, except to cover up something that should be apparent to anybody who desires to know the financial history of the enterprise. Surely no purpose is being served by it, because the people ultimately must get to know it.


Charles Avery Dunning: Is the right hon. gentleman quite sure that those remarks apply with respect to schedule B? Schedule B is the important factor, and from the point of view of the Department of Finance-


Richard Bedford Bennett: It has been amended,
has it not?


Charles Avery Dunning: I have it as it appears
in the bill; I have no knowledge of its amendment. I think if the right hon, gentleman will look over the adjustments, possibly he may think differently. There is the first item:
Capital expenditures by Canadian National Railways from funds provided through loans by the dominion on wharves now transferred to public works.
That is to say, the government now owns the assets.


Richard Bedford Bennett: We have said there is no difficulty about that.


Charles Avery Dunning: Those are the only items to which references are made in section 8.
Mr. B'ENNETT: But I was anticipating the other section, as I said a minute ago.


Charles Avery Dunning: So far as section 8 is
concerned, I am quite sure my right hon. friend will agree that every item there indicated is a perfectly proper adjustment of accounts in the ordinary business way. It would have to be done by estimate if it were not done by this bill.


Clarence Decatur Howe: I think the Minister of
Finance has not the amendtd bill, because in it there is a slight difference.


Richard Bedford Bennett: No one has ever objected to schedule B, in part. It is when we get down farther in schedule B that the trouble
arises.


Frederick George Sanderson: Schedule B has been
amended.


Richard Bedford Bennett: Yes, I was going to mention that to the minister. If he has the amended bill before him he will observe that so far as schedule B is concerned there is, as I said on the second reading, no difficulty. The items which have disappeared from the assets are properly withdrawn. However, when we get down to the other items I find a recapitulation-has the minister the revised bill?


Charles Avery Dunning: Yes, I now have the revised bill which includes the recapitulation.


Richard Bedford Bennett: Certain changes have
been made.


Clarence Decatur Howe: There is no change down to the figure "$15,748,921.60" to be found on the lower part of the page.


Charles Avery Dunning: Does the recapitulation on page 10 still remain?


Clarence Decatur Howe: It is revised to some extent. There is a further recapitulation.


Charles Hazlitt Cahan: Has the revised bill been printed?


Clarence Decatur Howe: Yes, and it was supposed to have been distributed.


Richard Bedford Bennett: If the Minister of Finance will direct his attention to schedule B he will see that the difference arises only after you reach the point where you begin to deal with what are spoken of as non-active assets. As the Minister of Transport says, there is no difficulty about this until you get into the realm of what are more or less non-active assets.


Charles Avery Dunning: The view I take of it is this: At the present time the public account? show these assets as amounts due by the various railways making up this system, and in future they will show the indebtedness by the securities corporation.


Richard Bedford Bennett: I have kept away from that phase of it. It will be seen that the amount of $15,748,921.60 is made up of three items, Canadian government railways, open accounts; Canadian government railways, stores accounts, and another stores accounts item.


Clarence Decatur Howe: That is correct.


Richard Bedford Bennett: I do not think there is much difference between those two. I do not think the difference there causes a great deal of worry at the moment. If I have stores on hand-


Charles Avery Dunning: It is working capital.


Richard Bedford Bennett: -they are working capital. We know that stores on hand are visible and tangible assets. When checks and inventories are taken, the term "working capital" might possibly be used.


Charles Avery Dunning: From the standpoint of internal accounting, "stores accounts" would be perfectly correct; from the standpoint of government accounting, "working capital" is a better general description.
C.N.R.-Accounting


Richard Bedford Bennett: So far as I am concerned the matter is unimportant. Up to that point it is purely a matter of a choice between experts. Some men may use the words "stores," and that is the way presumably it is carried on the books of the enterprise; then when the annual statement is made, it is shown that the working capital is so much, which working capital is tied up in stores or otherwise, as the case may be. I am not concerned about your calling it working capital, but when you get down to the item, equity value of loans to Canadian National Railways, amount 8643,860,558.26, transferred to securities trust in exchange for 5,000,000 shares of no par value capital stock, 8270,037,437.88; and equity value of 1,000,000 shares of Canadian National Railway Company no par value stock received in exchange for Canadian Northern Railway Company stock, 818,000,000, you are getting into a realm where it becomes necessary for you to repeal pro tanto the provisions of the consolidated audit act.


Clarence Decatur Howe: It is simply a matter of revaluing securities.


Richard Bedford Bennett: The point I am making is that you cannot revalue them so as to leave a true impression upon the public mind. If you say that the amount paid to the Canadian National Railways by the government of this country was only fifty cents when it was a dollar, no juggling or magic can change it from the dollar it was before. Why should we set at naught the provisions of the audit act and attempt to show that that dollar is not now equal to a dollar, that we will call it fifty cents or forty cents as the case may be? Who is hurt by calling it a dollar, if that is what it is? It really was a dollar because the people of Canada have had to pay a dollar for it. I can understand the question of interest, and I shall deal with that on another basis. I am now talking about the money the Canadian people have paid to the railway. Should we show this as it is, or should we show it as pieces of paper in securities corporation which is created by this statute? I think that is wholly wrong. Why is it being done? Why create a securities corporation? Why set at naught the provisions of a law which has stood the test of time? Why say that notwithstanding this we are going to do something else? Does it help the Minister of Finance or the credit of this country? It only makes it more serious and more difficult. People will say that up in Canada they are fixing up their accounts to make them appear to be different from what they are. No wizardry on the

part of the men who are instructing the minister can change the fact that we owe that money. That is number one. Number two, where did the money go? No wizardry on the part of the minister can change the fact that that money went to the railway. Does it confuse anyone to show that we borrowed and they received? Why should we say that what we borrowed is 600, what we paid is 600, but what we are going to show is only 270? I cannot make it any stronger or any weaker than by just stating the facts. For the sake of argument, let us say that over here the Canadian people borrowed 600; we are going to wipe it out and say that all these people owe is 270, and that is to be represented by pieces of paper in a securities corporation which is being created for that purpose. Is that fair to the Canadian taxpayer?


Charles Hazlitt Cahan: These figures represent millions.


Richard Bedford Bennett: Yes, I was using them just as an illustration. Is that quite fair to Canada? Is it not going to induce people to say:	They thought they were passing a statute to cover up something, but they have not covered up anything? All we need to do is just go back and find out what Canada borrowed. There is the whole story. Then we find out what she did with it. She gave it to the railway. Where is it now?


An hon. MEMBER:: Lost.


Richard Bedford Bennett: Oh no, not lost-it is just gone before.


Charles Avery Dunning: I am afraid it has gone to "the undiscover'd country from whose bourn no traveller returns."


Richard Bedford Bennett: I do not take that view of it. Part of it represents deficits which went for wages, interest and various other things.


Clarence Decatur Howe: Would the money paid out for deficits be properly capitalizable?


Richard Bedford Bennett: That is something which has to be considered in every reorganization plan. The minute you go into the hands of a receiver you stop paying interest on your bonded debt-it is a rule of law-and thereby save the money for the operation of the railway. The only reason that was given to me in opposition to the advocacy of a receivership of the properties was: "Oh, Mr. Bennett, you could not do that, because to do so would involve the credit of Canada, which has guaranteed the securities, and you

C.N.R.-Accounting
have to pay them anyway." There is no doubt what would have happened if we had not come into the picture: these roads would be in the hands of a receiver.


Clarence Decatur Howe: Quite.


Richard Bedford Bennett: I made as earnest a plea for that course as I ever made in my life, and it fell on deaf ears. Now we cannot do it because of our guarantees, but should we change our accounting system because of that? The minister asks whether they are capitalizable. I do not say they are capitalizable; I never did, nor do the auditors. All they do is to show where the money came from, and I think the consolidated balance sheet is the most effective way of putting the matter that has ever been attempted. What is the trouble with the present balance sheet?


Clarence Decatur Howe: The trouble with the present balance sheet is that it puts a wholly fictitious value on the assets of the railway, whereas, suppose we come out with a loss of some forty million dollars, that money is gone if we take it out of capital.


Richard Bedford Bennett: No.


Clarence Decatur Howe: Surely if the government for its own purposes wishes to put forty million dollars back into the system to keep it going, that is not capitalizable against the earning power of the railway. It represents no new value. This is the matter my right hon. friend settled in principle in 1932. He said, " This thing is wrong," and I admire him for it.


Richard Bedford Bennett: No, we simply said we will not capitalize the deficit as part of the funded debt of the enterprise.


Clarence Decatur Howe: What we are proposing here is not a new thought. It has been recommended by everyone who has had anything to do with the enterprise.


Richard Bedford Bennett: No; they have recommended the reconstruction of the capitalization, but they have not recommended this.


Clarence Decatur Howe: The elimination of government loans in the form of capitalized deficits, including interest, aggregating $904,000,000, is on the basis of (a) the report of the Drayton-Acworth commission of 1917 under the chairmanship of Sir Henry Drayton, which regarded the argument for capitalizing interest deficits on government owned railways as " somewhat fantastic"; (b) the 1925 report of two firms of chartered accountants-one, Edwards, Morgan and Company, and the other, Peat, Marwick, Mitchell and Company-as made to the board of audit under the Board of Audit Act of
1925, which recommended "that the practice of capitalizing operating deficits be discontinued " and that government advances for such deficits " be not added to the investment account, but be absorbed in the consolidated revenue fund of Canada "; (c) the report of the Duff royal commission of 1931-32, under the chairmanship of the Right Hon. Sir Lyman P. Duff, P.C., which made two significant statements on the writing-down of the capital liabilities of the national railways. In considering the earning power of the railway the commission said:
It is obvious that on this basis of earnings the capital liabilities would require a very drastic writing down.
In recommending the early attention of the board of trustees to the whole matter of the capital structure, the commission further emphasized the need of liability adjustment, as follows:
. . . this commission is of the opinion that it must be frankly recognized that a very substantial part of the money invested in the railways comprised within the Canadian National system must be regarded as lost and that its capital liabilities should be heavily written down.
Then the Canadian National-Canadian Pacific Act of 1933, to which I have referred, said "income deficits shall not be funded."


Richard Bedford Bennett: Quite so. I do not quarrel with that at all.


Clarence Decatur Howe: Then we have-which I can refer to, though I do not know that it is necessary-the practice in other countries. Australia has done exactly the same thing with every one of her railways.


Richard Bedford Bennett: No. I am glad to have the chance to correct that.


Clarence Decatur Howe: I shall be glad to give the right hon. gentleman chapter and verse.


Richard Bedford Bennett: I know all about that. I took the trouble to investigate the subject while on the ground. I intended to correct the statement when it was made by the minister the other day, so I went and looked at my papers. They did not write down depreciation of the properties. On the urgent demand of the commission they estimated a proper depreciation, and that depreciation represents the write-off; that is what is written off.


Clarence Decatur Howe: We write off no depreciation on the Canadian National Canadian lines. We might call it that, perhaps.


Charles Avery Dunning: We should reach the same place.
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Richard Bedford Bennett: An entirely different
thing.


Charles Avery Dunning: A different route.


Richard Bedford Bennett: No. It is done in an entirely different way. In the United States the Interstate Commerce Commission calls for depreciation of the physical structure; and the minister pointed out the other day that the Grand Trunk Western has depreciated physically-that is, the road bed and structures.


Charles Avery Dunning: Under that law.


Richard Bedford Bennett: Under the interstate
commerce law. In this country we have had no such thing as depreciation, because in the early days of the Canadian Pacific they used to replace every car that went out of existence with a new car and charge it to revenue. That is the way they kept up [DOT] equipment. On the question of the physical structure there never was such a thing as deferred maintenance. For instance, when they put in any new capital structure-when, for example, they substituted stone for earth ballast-it was not charged to any additional capital but was taken care of out of earnings. That has passed, because the Canadian Pacific Railway Company have no longer surplus funds enabling them to do that.


Charles Avery Dunning: The fat is exhausted.


Richard Bedford Bennett: Exactly. The Australian commission reported that their proper allowance for depreciation was so many pounds, and in Victoria and Queensland-I cannot speak from memory as to New South Wales-the appropriations were made by the government of the day, as they owned the railroads, assuming, as they wrote down the capital structure, the direct responsibility for the money.


Clarence Decatur Howe: 
Richard Bedford Bennett: Carried it as a direct liability of the state.


Charles Avery Dunning: Part of the consolidated fund.


Richard Bedford Bennett: The words used are "the treasury."


Clarence Decatur Howe: 
Richard Bedford Bennett: It is carefully pointed out that a record of it is to be kept in the treasury, separate from the state.


Clarence Decatur Howe: That is what we propose to do.


Richard Bedford Bennett: 
Charles Avery Dunning: It would be a simple matter.


Richard Bedford Bennett: As simple as A B C. But consider the situation. Take the Canadian Northern-there we start with a guarantee which the late Mr. Blair in the government of Sir Wilfrid Laurier put through, for the line to Edmonton, providing in the terms of it that there should be no amalgamation with the Canadian Pacific. I believe the rate was three per cent, though I speak subject to correction with respect to such a matter because my memoiy may be inaccurate. Go to Manitoba next; I wonder if anyone realizes how complicated the situation is there. You have the old Northern Pacific, Mackenzie and Mann lines, and some private lines, on which we pay interest.
Now the important reason why, I suggest to the minister, we should not alter the terms of the accounts lies in the fact, which the provinces wholly overlook, that we bear their burdens under their guarantees. The minister has not time to look into everything, but I suppose he realizes that Saskatchewan and Alberta both paid interest on their guarantees and that we refunded them the money when we consolidated the roads. We absolutely refunded it to them.


Charles Avery Dunning: Not for that reason, if my right hon. friend will permit me.


Richard Bedford Bennett: The minister was premier of Saskatchewan at the time. He got the money back.


Charles Avery Dunning: I got the money back
because the alternative was that the province had the right to take the railway at that time.


Richard Bedford Bennett: And it is a pity they did not.


Charles Avery Dunning: My right hon. friend's predecessor in his present position took the view that the railway was worth more.


Richard Bedford Bennett: The pressure from all
quarters for the dominion to assume that obligation is known to me. I was not in the house; I was not a candidate in 1917, and it happened between 1917 and 1921. If my memory serves me, it was in 1919 that there was a deficit in Alberta and Saskatchewan, though again I am only speaking from memory.


Charles Avery Dunning: Your memory is very
good.


Richard Bedford Bennett: I am not at all sure
about these things, there are so many details involved. But may I direct the attention of the minister to this situation. In Nova Scotia we are absorbing interest on the Halifax and Southwestern. We come to New Brunswick and we find an arrangement there by which we are carrying that load in the valley, to say nothing of the national transcontinental, built by the state. Then we come to Quebec and there is a small bit there. And what about the Canadian Northern in Ontario? Then we get into the western provinces and they are all in that position.
We cannot long delay the constitutional conference, and the great problem that will confront that conference, at whatever time it may be called, will be the financial problem; and when the provinces are once more faced with the possibility of having to pay interest on these guarantees we shall be dealing with an entirely different situation. It is true they can foreclose their railways, but I have not met anyone who regards them as a great dominion asset in these days. Whatever they may have been in days gone by they are certainly not so regarded now. But the question would be put to the provinces whether they would operate these railways or not, and our board of railway commissioners would be relieved of a burden which they could never bear, because there has never been any unity of sentiment in that regard. We know it has been said that about 4,000 miles of track should be taken up. All you have to do is to propose that and at least 400,000 people will assert themselves in vigorous terms; they will not stand for it.
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An hon. MEMBER:: They are right.


Richard Bedford Bennett: But suppose you transfer to the provinces, where it belongs, the burden with respect to all branch lines-what then? Wouid it not be desirable in the interests of the country to have it dealt with in that way? Is it not desirable in the interests of the country that the province of British Columbia should face the question with regard to the Canadian Northern Pacific in British Columbia, with its guarantees? The stringent provisions in connection with trusteeship would force that issue in a different way and they could not make the same demands on us, for they have never conceded that we have done anything in the way of relieving them from obligation.
As regards Alberta, as I have pointed out to the house the actual money to build the Canadian Northern from Calgary to Macleod was borrowed and put in the bank, and part of it is still there; all that was done was to build a great part of the way and then abandon it, and the rest of the money is there. The railway will never be built-I hope not-but the money was obtained and interest on that debt is being paid in Alberta. Part of the money is still in the bank as a trust fund.
I cannot speak in detail with respect to Saskatchewan, because their obligations were largely in connection with the Grand Trunk branch lines enterprise more than with respect to the Mackenzie and Mann enterprise. In Manitoba, however, we have a combination of circumstances that will enable us as a federal power to say to the provinces at the conference, "This is what you have to face; this is your liability, not ours." Part of the money, in defiance of the audit act and other acts of the country, we are now going to set aside as money we borrowed to pay interest on these provincial obligations. If anything could be more ill-considered than for us to take that step at this time and put ourselves in that position, I do not know what it is.
I apologize for trespassing so long upon the time of the committee. The government have the majority and are going to put this measure through, but in my judgment they are creating a situation which has never been faced in this country before, defying the audit act, which they say shall not have any application to us; and the consolidated balance sheet, which heretofore has shown a complete record of all the money borrowed by the Canadian people for this enterprise, is to be changed. The amount of money that we have put into this enterprise will not be shown in the annual report of the company, and 
lastly, and more important still, we shall have interfered by legislative action of the dominion with the guarantees of the provinces, because we have borrowed money, mark you, to pay those guarantees.	.


Clarence Decatur Howe: This bill does not change
the relations with the provinces.


Richard Bedford Bennett: I have not had time to look into the question of the dominion arbitrarily determining that obligations of other persons than ourselves, represented by money which we borrowed and paid into the enterprise, shall have a value much less than one hundred cents on the dollar, when you come to deal with those provinces and their relation to us. Suppose we are dealing with the provinces at a conference. The Minister of Finance represents Saskatchewan and I am for the federal power. I say to him: See what we have paid for you during all these years, and he says: You have not paid much; you say it is not worth-


Charles Avery Dunning: I am afraid you would not let me get away with that.


Clarence Decatur Howe: All the money represented
by funds that went into the property, which are the funds guaranteed by the provinces, is there, all kept at its face value.


Richard Bedford Bennett: That is not the point.


Charles Hazlitt Cahan: No, that is not the issue.


Richard Bedford Bennett: When the minister from Saskatchewan and I are dealing with this problem of the financial relations between us, he says: My subsidy is entirely too small; this is all I have received. But, I say: Look at what I have been paying for you; look at what I have paid for Nova Scotia, for British Columbia. Yes, he says, but you do not mean to attach any value to that; you took over this road as part of your national venture, and I see you are writing it down on the books to forty cents on the dollar, and some of it worth nothing. I do not think you had better talk that way much longer; you do not attach much importance to that.


Charles Avery Dunning: You would have a very vigorous reply to that argument.


Richard Bedford Bennett: But unfortunately the
political mind of the minister from Saskatchewan would be such that he would at once say: I do not think we will discuss it further, because you attach little value to it, you have said so. Notwithstanding the safeguards of the audit act, which have been there since confederation, you are going to disregard this altogether. You will find that it will add to the difficulty of the situation

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in the ultimate determination of the relations between the dominion and the provinces. For the life of me I cannot see why it is being done. The idea of setting up a securities corporation-did anyone ever hear of the like?


Charles Hazlitt Cahan: No, it is unprecedented.


Richard Bedford Bennett: It is not only unprecedented; if it were not that intelligent men do it I would use a much stronger word.


Charles Edward Bothwell: Has anyone in this country believed since 1919 that the provinces would ever be called upon to make good their guarantees?


Richard Bedford Bennett: I cannot speak for many people, but I can speak for one. He has never failed to point out at home and abroad the liability of the provinces.


Charles Edward Bothwell: Have the provinces ever been asked to make good their guarantees?


Richard Bedford Bennett: I cannot say, but I have always endeavoured to remind them of their liability. Certainly I did when I was in the Department of Finance.


Charles Edward Bothwell: Most of these bonds have been refinanced in some form. Have the provinces taken any part in that refinancing, or been consulted?


Richard Bedford Bennett: As far as I know not a single guaranteed bond has been converted. The rates on those guarantees were very low. The Minister of Finance can speak for his time, but I know of no single case in which there has been a conversion.


Charles Avery Dunning: Some have been converted.


Richard Bedford Bennett: Not the provincially
guaranteed bonds.


Clarence Decatur Howe: Practically all of Manitoba's have been refunded.


Richard Bedford Bennett: The ones I refer to as having been converted were bonds that had to do with the Grand Trunk Pacific. The late Sir Henry Thornton made an adjustment which was satisfactory to all parties, including the provinces, by which for the securities they had new securities were substituted at a lower rate of interest. But as to the maturities I have in mind, I am not sure whether one of them has matured.


Charles Avery Dunning: Yes, there have been refundings.


Richard Bedford Bennett: Not the provincial guarantees.


Clarence Decatur Howe: Yes, the provinical guarantees.


Charles Avery Dunning: Within the last five years.


Richard Bedford Bennett: Well, I know that when the late Sir Henry Thornton was dealing with those questions certainly the provinces were consulted. I am sure of that because it was done by joint arrangement with them all. I dare say the hon. member for Swift Current remembers that statute of receivership in connection with the Grand Trunk Pacific. Then there were the income bonds of the old Canadian Northern; that did not touch any provincial interest.
But I come back to the question. Has the minister before him the 1935 report of the Canadian National Railways? Why should there be a departure from that in principle?
I am not talking about the language; you can use different words if you desire. But if the minister will turn up the consolidated balance sheet of 1935, certified by the auditors, he will find that they gave a statement


Clarence Decatur Howe: If my right hon. friend will look at pages 12 and 12a of the old bill he will find the balance sheet of 1935.


Richard Bedford Bennett: 
Mr. KINLEY:: Reference has been made to the Halifax and Southwestern railway. Was not that railway in the days of Hon. George H. Murray declared to be a work for the benefit of the whole of Canada, and the province relieved of any responsibility?


Richard Bedford Bennett: For the purpose of making it part of the Canadian National system, like other works it was declared to be a work for the general advantage of Canada, just as a public elevator would be, but that had nothing to do with the legal liability.
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John James Kinley: The province was relieved of any further responsibility. Furthermore, with regard to the statement that in our dealings with the provinces we would be in a bad bargaining position by reason of the fact that these railways are not a good asset, I think we are in an infinitely better position than we would have been if we had taken over an asset which they now regard as valuable.


Mr. WALSH:: 
Charles Avery Dunning: No, out of non-active assets.


William Allen Walsh: That is what I said, but bear in mind that this huge amount is being transferred to the consolidated fund of Canada. When this bill left the house the principle involved was that we were going to adjust the balance sheet of the Canadian National, not the balance sheet of the dominion. I think the minister himself made a statement that was very clear and significant when, on February 5, he said:
I believe a schedule can be set up that will preserve the historical record, and this schedule can be made part of the annual report of the Canadian National railways. That perhaps will satisfy the purpose as to a record.
Instead of doing that, however, the minister now proposes to alter the balance sheet of the dominion as well as the balance sheet of the railways, altering the latter so that in future anyone looking at that balance sheet will not be able to tell the actual condition of the system from a financial point of view. I contended in committee, and I contend here, that the very principle of this bill has been very decidedly altered,. I cannot see any reason for such a vital change being made by a member of the government after a bill had been given second reading in this house and sent to a committee. No satisfactory explanation has been given me as to why that should have been done; as to why the balance sheet of the country is the one to be altered rather than

the balance sheet of the railways; as to why in future the balance sheet of the railway company is not to show the true situation of that company, and as to why this government should not give the people of Canada a clear picture in the balance sheet from year to year so that they may know exactly the amount of money they have invested in this government-owned enterprise.
I should like the minister to explain exactly what brought about this change, what gave rise to this vital alteration in the principle of this bill after it left the house.


Clarence Decatur Howe: There is no change whatever in the nature of the bill. The original bill contemplated an adjustment of the public accounts. Schedule B is exactly the same, down to the elimination of the present schedule, as it was in the original bill. There is no new principle involved. While the bill was before the committee, however, we were asked by the Department of Finance to provide at the same time for such change of position of certain items of the public accounts as would permit them to release certain securities to the securities trust. No item of public accounts has been changed, but there has been a transfer from one section to a lower section. For instance, the accounts affected here were included in the non-active assets, and some $360,000,000 of them are being moved from non-active assets .to the consolidated fund. That is the main change, and it is simply done here as a matter of convenience, at the request of the Department of Finance. As far as I can see there is no new principle involved whatever.


William Allen Walsh: But when you actually change the heading of the section from " Adjustment of certain accounts affecting government railways " to " Adjustment of public accounts," to my mind it does change the principle. You started out to adjust one account and you wind up by adjusting the other. I do not think that is a reasonable procedure.
At this stage I should like to take exception also to the development of the securities trust. I followed the argument of my leader, and I agree with the statements he made in connection with the securities trust. This is an intrusion which, to my mind, is going to make our railway situation worse confounded than it ever was, without doing any good. I feel that this section represents a development in connection with our railway problem that the people are going to find it very difficult to understand. I do not see why the minister should persist in legislation of this kind when, as he suggests, he was forced by certain influences emanating from the Department of

C.N.R.-Accounting
Finance, and, I suggest, by certain influence brought to bear in the committee, to alter his position and take an altogether different stand. The mere statement that the underlying principle has not been changed does not alter my point of view one iota. I think the principle has been vitally changed, and I do not see even yet why the minister has seen fit to make this important alteration in this bill, which I believe is not in the best interests of the Canadian National system.
We expected something better from this government. A week or two ago I quoted a suggestion made by a former member of this government, who said his party would deal with this problem courageously. Is this a courageous way to deal with the railway problem of Canada, by complicating the financial set-up to an even greater extent than was the case before this bill was introduced?


Charles Avery Dunning: It would be impossible to do that.


William Allen Walsh: Oh, no. The minister has often referred to the duplication that existed. That duplication could be noticed only when you compared the Canadian National balance sheet with the balance sheet of the country. There really was no duplication as such, but in comparing the two, if any person wanted to find the total debt of the country and was foolish enough to add the one to the other without doing a certain amount of subtracting, the result would be just too bad. Probably that had some influence on the financing of government loans, but does it require all that is contained in this bill to adjust matters of that kind? To my mind adjustments could have been made easily by certain statements, notes, appendices or whatever other method could have been adopted, at the end of the balance sheet of the Canadian National Railways, and at the end of the balance sheet of the Dominion of Canada, so that the items would be clearly and definitely placed before the public. That would have been better than a bill such as this, which will confuse the people more than they are now confused. There will be great difficulty when we try to place interpretations upon the balance sheets, or make comparisons between them, in order to arrive at the total debt.


Frederick George Sanderson: Shall the section carry?


Richard Bedford Bennett: No. I want the committee to look at pages 14 and 14a of the bill, where hon. members will find what is to be the balance sheet of the railway after the bill passes, then look at the balance sheet which we had in our hands. The assets are stated at $2,037,597,996.72. As a matter of fact, on
that balance sheet they were $2,300,000,000. From that sum $262,000,000 has been taken off. The sums which have been deducted or eliminated are sums which we have discussed, and which need not be gone into in detail. But just look at it, if we are talking about the application of the Victoria system. We find investments in road and equipment standing at $1,832,343,031.85. No one suggests that that represents anything like the present value.


Clarence Decatur Howe: It is every dollar that ever went in there.


Richard Bedford Bennett: Then, improvements on leased railway property, $4,248,964.14. I referred to the fact that the Canadian Pacific balance sheet in the paper to-day stood at $97,000,000. The value of that item is certainly problematical. That represents money, that is all it does-not the present day value of it. Then, look at the next item: Miscellaneous physical property, $59,814,644.23. Then we come down to the sinking funds, deposits in lieu of mortgaged property sold- that is in connection with the business on property covered by trust deeds from time to time, and the moneys held for the purpose of retiring the mortgages. Then we have investments in affiliated companies-and no one suggests that they are worth $31,642,437,30. If we had their value determined by arbitration, on the principle of the Canadian National Railways, they would not be worth half of that.


Mr. ROSS (Moose Jaw):: What principle was that?


Richard Bedford Bennett: On their earning power.


John Gordon Ross: Is that the way it was taken over in the first place?


Richard Bedford Bennett: The Grand Trunk arbitration said that the cost of physical reproduction was not a factor, and the evidence was not given. On earning power they decided the property was worth nothing-that is, there was no equity, beyond the securities. In connection with the Canadian Northern, three arbitrators decided that S10,000,000 represented the value of fifty-five per cent of it. A speech made in this chamber indicated that that was a very small sum compared with the earning power, because the $35,000,000 of income bonds had sold at a premium. To me it was ridiculous, but then I was said to be prejudiced.


John Gordon Ross: Is that not fundamental to the whole trouble?


Richard Bedford Bennett: I am coming to that. We have spoken of the assets. The words always used have been "active and non-active assets."
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Sir Henry Drayton still carried them as assets; they were non-active. He did not undertake to appraise the value of them. We have written them off, because if you will turn to the liabilities side of the ledger, appearing at page 14A of the bill, we have a most depressing situation disclosed. I do not wish to use language which is too strong, but we find that under the heading "liabilities" we have capital stock of subsidiary companies owned by the public to the value of $4,584,100. We have governmental grants of $3,013,748.90; long-term debt, public, $1,184,612,248.59. Then, "Dominion of Canada, current account, loans, active, $77,223,466.97" and "working capital for Canadian government railways, $16,771,980.54." Those are the stores to which we referred a while ago. The remainder of the table shows the following figures:
Current liabilities	$35,351,859	26Deferred liabilities	
3,331,771	52Unadjusted credits and reserves	
36,381,119	54
Whatever else we may say, is not the effect of that to eliminate debts due this country, for which we hold securities, as liabilities? Is that a true statement?


Clarence Decatur Howe: It is what?


Richard Bedford Bennett: I am glad the minister makes it clear that this is not a true statement.


Clarence Decatur Howe: It is a true statement, but it is not true that we are eliminating the debts.


Richard Bedford Bennett: This liability statement is not true; it is a liability statement.


Charles Hazlitt Cahan: You are eliminating the possibility of changing values.


Richard Bedford Bennett: The other feature is that you add a note in these words:	"These
amounts are included in the net debt of Canada." There is the answer to all the minister's talk about the debt of Canada, possible duplication, and everything else.


John Gordon Ross: But why charge it to the Canadian National Railways?


Richard Bedford Bennett: Because it says here the money did go to the Canadian National Railways.


John Gordon Ross: Of course it did, but they went broke.


John James Kinley: What about paying it back?


Richard Bedford Bennett: The question whether or not you can pay back your debt is not a determining factor as to whether or not it is a debt. The note says, "These amounts are

included in the net debt of Canada." That is, $676,327,701.40 is included in the net debt of Canada, but that is only a third of it. Why strike out the other part? It is included in the net debt of Canada, too. If you put anything in, why put in only part and leave out the rest?


Clarence Decatur Howe: The part we have here represents the money invested in the property, and the other represents money paid to cover operating losses.


Richard Bedford Bennett: But look at what is said here.


Clarence Decatur Howe: And it never would have been capitalized under any sane law.


Richard Bedford Bennett: It is not a question of
capitalization at all; It is a question of these words "Dominion government-proprietor's equity" represented by securities. If a private individual did that, he would go to gaol.


Clarence Decatur Howe: No, if a private individual
did what the government has been doing for years he would go to gaol-if he were to issue bonds against operating deficits.


Richard Bedford Bennett: Whose bonds?


Clarence Decatur Howe: Anybody's bonds.


Richard Bedford Bennett: But surely the minister
does not know what he is talking about, or he is saying something he does not intend to say. How else could the government deal with it, except to issue bonds and pay the debt? -because if it guaranteed the bonds of the company and there was a foreclosure, it would lose the whole enterprise. We had to issue bonds to pay the deficits. Either we had to become repudiators of our own responsibility and lose the property, or else borrow money and pay it.


Clarence Decatur Howe: Could a private individual
do that?


Richard Bedford Bennett: Yes, certainly; private
individuals have borrowed money for that purpose and are doing it every day. Only the other day I borrowed money from the bank to pay a guarantee I had given.


Charles Hazlitt Cahan: A public company cannot
transfer all its liabilities to a new company and retain all its assets. I have known of directors in this dominion being sent to the penitentiary for their attempt to do that.


Frederick George Sanderson: Shall section 8 carry?


Richard Bedford Bennett: No.


Some hon. MEMBERS:: Yes.


Richard Bedford Bennett: On division.


[Stage Direction]
Section agreed to.

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On section 10-Surplus earnings to go into consolidated revenue fund.
William Allen Walsh: The section contains these words:
The directors of the Canadian National Railway Company may cause to be paid over to the minister for the consolidated revenue fund all or any part of any such surplus earnings.
Why the word "may"?


Clarence Decatur Howe: We are giving the board of lirectors the privilege enjoyed by directors tn most companies, namely that of paying or not paying dividends as they believe the state of the property permits. In other words they have the option of paying or not paying a dividend as they think wise.


William Allen Walsh: And if they decide not to pay a dividend, what do you propose that they do with the money?


Clarence Decatur Howe: The money goes to build up the working capital of the property.


William Allen Walsh: It is reinvested in the property?


Clarence Decatur Howe: No, it is not reinvested. It is simply carried as cash. When there is enough to reinvest would probably be the time to pay a dividend.


Richard Bedford Bennett: Pay the debts first.


William Allen Walsh: It would be better if any surplus which might accrue from year to year was paid over to the government which had furnished the money to pay the deficits.
Should not the word "may" be changed to "shall"? If I, as a private individual, loan a person a sum of money and then find him in affluent circumstances, I expect him to start paying back the loan. The government has met the deficits of this railway from year to year, and if there should be a surplus I think it should be paid back immediately to the people who have paid the deficits.


Clarence Decatur Howe: That might be so if we look upon this railway as one that will usually be a loser, showing credit balances only occasionally, but I like to visualize this railway as some day more than paying its way. Lines which would have been abandoned if the general abandonment policy had been adopted in 1932 have since developed into very profitable branches; I refer to lines serving some of the new mining areas. I think the railway should be able to build up a working surplus which would allow it to withstand any bad years which might come along.


William Allen Walsh: I am glad the minister is in such an optimistic mood. He reminds me of a statement made in one of the first reports upon our railway system by the Drayton commission, which said:
For a system of 20,000 miles in a rapidly developing country should be able, before many years are out, to carry unaided bonded indebtedness, which would not, we estimate, need much to exceed $2,000 per mile.
That optimistic expression was given in 1921, and to-day, in 1937, we find the Minister of Transport in an equally optimistic frame of mind. I hope his optimism will be realized within my lifetime.


John Gordon Ross: I was wondering if some day the Minister of Transport could not give us a short statement setting out exactly what was paid for the Canadian National Railways; how many lines were taken over which no other railway company would take over; the actual facts in connection with the arbitration and whether or not it was a case of no one else in the world wanting to take over the railways which were taken over at that time; and any other information which might be of value to hon. members. I should like to know how many of the new lines taken in were foisted on the Canadian National because the other competing railroad would not take them in.


Richard Bedford Bennett: You can easily find the reason, but that is not it.


John Gordon Ross: I should like to know the exact position of the railway business in Canada. Someone who happens to be interested in railways has been going from one end of this country to the other making certain statements. I represent a considerable number of the employees of this system, and this gentleman has been telling the people of Canada and of the world that the business he is supposed to be running is not good and is going into the hole. This is what he is doing instead of endeavouring to find some way to make his company pay a dividend or gain business or cut down expenses. He seems to be wanting to run both his own railroad and the Canadian National Railways into the ground.
A moment ago the leader of the opposition stated that we had assumed certain debts in connection with the railways because the provinces could not carry them. Why should those debts be charged to the Canadian National Railways? They certainly were not the debts of the Canadian National Railways. We should have a clear picture of this matter so that ordinary laymen like myself could understand the situation.
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I do not think the minister is too optimistic. I think anyone in Canada, either in the east or the west, who talks of tearing np our railroad lines had better reconsider the matter very carefully. It may not be very long before we will be needing new railway lines. I think we should be given a dear picture of the railway situation, either by the Minister of Transport or by one of the former ministers of railways.


William Allen Walsh: If the hon. member reads the records of this house under the heading of railways he will get a full and complete answer to his questions.


John Gordon Ross: It would take me about five years to get it.


William Allen Walsh: I should like to suggest to the hon. member that no one is lacking in optimism, but we must face the cold facts. He is suggesting the expansion of our railroads, but he must not forget that in this country we have lines with only 250 people to the mile, whereas in the United States they have 500 people to the mile, and in England 2,000 people to the mile. Our trouble is that we have too many railroads and not enough people to support them. That is one point we should emphasize. The hon. member referred to a certain gentleman who has been going from one end of the country to the other trying to enlighten the people as to the real condition of our railways. I think that gentleman has been doing an honest day's work. If there were more like him the people of this country as well as hon. members of this committee would be more enlightened as to the actual railway situation in Canada. The railways of this country are in a serious position. There are few people who fully realize the seriousness of the situation. If we in this parliament, and the Minister of Transport in particular, do not do something to right present conditions, if we do not face this problem courageously, as Colonel Ralston said we should do, the railway problem will drag the country down. The sooner we get that fact in our minds, the sooner we will get down to a real effort to find a solution of our railway problem. It is no use talking about it: we must act. The action taken by the bill now before us is not the courageous action spoken of by Colonel Ralston in 1935. I was hoping that during his sojourn in office, the Minister of Transport would bring down to the house something really constructive in an effort to solve the railway problem which we must face sooner or later.


Clarence Decatur Howe: May I say just a word on that? I have had some experience along the lines referred to by my hon. friend, and if I brought down anything in this house which was a little bit courageous, I would have every expectation of the hon. member for Mount Royal (Mr. Walsh) voting against it. Further, he would not base his objection upon the optimism of any group, but would use as the basis of his objections the grain growers of western Canada, who have made no representations whatever in connection with this matter. That is what would actually happen if anything courageous was brought down.


Charles Hazlitt Cahan: The hon. gentleman has no right to make that assertion because in so doing he discloses that he has less knowledge of conditions in Canada than most hon. members of this committee. The minister should not expose his own ignorance by making an assertion of that kind.


Some hon. MEMBERS:: Order.


Charles Hazlitt Cahan: It is perfectly in order to say that.


Some hon. MEMBERS:: Withdraw.


Frederick George Sanderson: The word "ignorance " applied to an hon. member is out of order. The hon. member said " exposing his own ignorance."


Richard Bedford Bennett: Under certain conditions.


Charles Hazlitt Cahan: I suggested that he was disclosing his own ignorance of the matter he was discussing. If that is out of order I take it back; but still, in my own private opinion, it is ignorance.


Frederick George Sanderson: I am afraid the hon. member is not taking it back.


Clarence Decatur Howe: I accept it.


Charles Hazlitt Cahan: I have the right to say it conditionally, and I did say it conditionally.


John James Kinley: This section deals with surplus earnings of the Canadian National Railways, and why we should quarrel now over the distribution of future earnings of the Canadian National Railways seems to me to be at least-


An hon. MEMBER:: A little premature.


John James Kinley: I think so; a little premature. But whether they pay it to the government of Canada, that is the people of Canada, or use it in improving the system is only a splitting of hairs, because after all it is our baby; it has cost us a lot of money, and we have looked after it and shall have to look after it in the future.

C .N .It.-Accoun ting


Richard Bedford Bennett: I say the word should be "shall." All you have to do is to look at the balance sheet, and I think the minister will agree that for at least a period of many years to come the word " shall " would be of some value-that if we have any earnings at all, we shall get them.
The hon. member for Moose Jaw (Mr. Ross) desires to know something about the railway situation. If he will turn to page 14A of the revised bill he will find something that to me is a nightmare every day of the year-it may be I am unduly pessimistic, unduly fearful:
Loan term debt-public, $1,184,612,248.59.
So much for that. Then go a little further and add to it part of the debt of Canada, $676,327,701.40. That makes a total of nearly two billions of dollars of debt held by the public either directly from the railway or from this country. If that does not make the hon. member think, I do not know of anything that will. I confess that I never look at these figures without wondering what is going to happen to this country.


John Gordon Ross: I realize that there is a great amount of money owed by the dominion in connection with the railways and that it has been owed for many years. All I am asking the minister is that he show us the exact position of the railways, and for goodness' sake let us put the railways into the position where, on their actual value when they were taken over and what we have spent on them since, they will be able to carry on as a company showing either a deficit or profits. But let us not charge them up with some bonds which were guaranteed for Mackenzie and Mann or somebody else years ago. That belongs to the debt of Canada-that is right; but if past governments, either provincial or dominion, made a mistake in guaranteeing those bonds, surely those mistakes should not be charged up to a company that we formed as the Canadian National Railways.


Richard Bedford Bennett: I do not want to take up the time of the committee, but surely the hon. member realizes that these are obligations which must be paid.


John Gordon Ross: Of course.


Richard Bedford Bennett: And all you have to do is to add these two items together. Leave out the road, leave out its physical assets, leave out everything in the world: in the debt of the Dominion of Canada and in the debt held all over the world is a total of $1,860,000,000, upon which interest must be paid. All I suggested to the minister was that it should 31111-127
be made clear, as it has been heretofore, ho, progress has been made towards that end by showing how much money each year we have had to put into the enterprise. I still think that it is desirable to adopt that suggestion. The government takes another view. The hon. member for Moose Jaw (Mr. Ross) is a younger man than I, but how this country is to stagger along under a national debt of $3,000,000,000, plus $1,860,000,000, for any length of time and, with a population of only eleven millions, maintain its service and its integrity, is something that staggers the imagination and gives concern to every man who has any interest in Canada or holds a dollar's worth of its securities. The plain fact is that we have $1,860,000,000 upon which somebody must pay interest; if the railway does not earn it the taxpayers must put it up. This legislation obscures the situation from the gaze of those who desire to know the sums of money upon which we have to pay interest, the accumulations in days past. I cannot find the totals, except with great difficulty, and now nobody is going to be able to find it. Apparently it is going to be covered up.


Charles Avery Dunning: It is concentrated for the first time in one item. My hon. friend will admit that.


Richard Bedford Bennett: What, the $1,860,000,000? It is the consolidated balance sheet last year, 1935. I read the figures here in the committee.


Charles Avery Dunning: We are speaking of different things-if my right hon. friend will permit me-the amount that is being written off railway accounts is set out clearly on page 14a, $388,290,263 charged to the consolidated fund account, and therefore it does not appear any more as a non-active asset.


Richard Bedford Bennett: You have got the wrong item.


Charles Avery Dunning: That is the whole point of the bill.


Richard Bedford Bennett: If that were the point of the bill, it would just be agreed to and that would be the end of it.


Charles Avery Dunning: That is the only amount which disappears completely from the railway accounts, unless provision is made to insert it by way of note. The amount that is written off the non-active assets is the last item on page 14a.


Richard Bedford Bennett: I am sorry the hon. gentleman has the wrong figures. If he will look at page 13a of the revised bill he will find the sum total of $1,843,000,000 under the column of "eliminations."

C.N.R.-Accounting


Charles Avery Dunning: No more is eliminated than is charged to the consolidated fund.


Richard Bedford Bennett: Yes.


Charles Avery Dunning: There cannot be.


Richard Bedford Bennett: Certainly. That is the whole point. If we had merely eliminated these items about the old Grand Trunk and the Canadian Northern there would never have been any trouble about it, but this elimination is $1,843,000,000-total liabilities eliminated.


Charles Avery Dunning: But not so far as the liability to the government is concerned. The liability to the government is reduced only by that sum of $388,000,000 appearing on page 14a. I am sorry to differ with the right hon. gentleman.


Richard Bedford Bennett: I am sorry too, but the facts show quite the opposite. That is the whole difficulty. However, the other sections deal with the securities trust. I have been unable to find any precedent for action such as that which has been taken. I think the bill should provide that any surpluses shall be paid without question, and not leave it to anybody's option. If the eliminations were a small sum such as was mentioned by the Minister of Finance I would not be concerned, but the eliminations reach the tremendous sum of $1,843,000,000; the details of them are given.


Charles Avery Dunning: But not eliminated as respects moneys owing by the companies to the dominion.


Richard Bedford Bennett: Oh, they are eliminated from the accounts as shown, as due to the country by the company. That is the whole trouble. They are eliminated from the National Railway accounts. I know the Minister of Finance is astonished that they are eliminated, but there we have the details. I did not prepare this. This bill came to the house from the committee. That is what I started out this afternoon to point out.


Charles Avery Dunning: The various credits and charges are set out as between the railway, on the one hand, its own future accounts on the other, and finally the consolidated fund of Canada, and the only sum chargeable to the consolidated fund of Canada aggregates $388,000,000, representing the difference between the previous item and the total outstanding of the stocks and debentures represented by it.


Richard Bedford Bennett: I am sorry, the minister is wrong. That represents the sum of money spent on government railways. Surely the minister-


Charles Avery Dunning: I have the wrong page. The correct figure is $361,000,000 odd.


William Allen Walsh: On page 2 of the public accounts of Canada, 1936, there is an item of $655,527,455.83, and out of that the minister proposes to put into the consolidated revenue fund the sum of $372,539,149.07.


Charles Avery Dunning: Schedule B includes all the charges and credits contemplated by this bill. That is what I had reference to, and the charge there to the consolidated revenue fund is $365,823,120.38. There is no further adjustment except the item on the following page:
Credit - railway accounts
(old)	$25,607,393 53
Charge consolidated fund of Canada	 25,607,393 53
In the recapitulation which follows, credits and charges are set out, and the final item in that recapitulation represents a charge to the consolidated revenue fund of Canada of $392,206,534.16, which represents the amount the Department of Finance will have to take out of non-active assets as part of the debt.


Charles Hazlitt Cahan: We were dealing with the balance sheet of the Canadian National Railways. That was the point at issue. It appears on page 13 of the appendix to the revised bill, which shows that from the investment as now published there is being eliminated altogether the sum of $262,770,972.03. But on the other side there is being eliminated from the liabilities of the company the sum of $1,843,754,391.48, from which I suppose there is to be subtracted the $262,770,972.03. We were dealing with the company's own consolidated balance sheet presenting a real picture of its condition. We were not discussing the consolidated revenue account presenting a picture of the dominion treasury's position, because in the ordinary financial statement, whether you add to it the liabilities in connection with guaranteed bonds which have not accrued, or indicate that as a collateral-


Charles Avery Dunning: As a contingent liability.


Charles Hazlitt Cahan: Or as a contingent liability, the public accounts of Canada will state the net effect.


Charles Avery Dunning: We are talking about different things. I am naturally interested in the treasury point of view, and from that point of view the write-down is precisely the figure I gave. It represents the transfer of that amount from non-active assets to a direct charge against the consolidated revenue fund.

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Richard Bedford Bennett: I should like to ask the minister this question. On page 27 of the annual report of the Canadian National National Railway system for the year ended December 31, 1935, the following words appear:
Funded Debt-Principal and Interest-
Name of security	
Issuing company	
Date of issue	
Date of maturity	
Principal outstanding at Dec. 31, 1935	
Interest accrued 1935	
Total issues guaranteed by dominion government.
Then there appear various guarantees:
Guaranteed by province of New Brunswick. Guaranteed by province of Ontario. Guaranteed by province of Manitoba. Guaranteed by province of Saskatchewan. Guaranteed by province of Alberta. Guaranteed by province of British Columbia. Total issues guaranteed by provincial governments.
Carried forward.
Then appears the same heading-"Funded debt-principal and interest (continued)." Then under the name of the security there appear, under "Equipment trust issue," series U.S.R.A., E, F, H, J, and so on; and the total of "Equipment trust issues" is set out. Then "Other issues" are given-four per cent Canada Atlantic; Wellington, Grey and Bruce; Northern railway third preference bonds, and so on. Then the total of these other issues is given. Then there appear these words: Total debt held by public (including therein $11,792,798.65 par value held in special funds and accounts) as per balance sheet, $1,154,779,000.78.
The interest payable for the year under review is given, 853.468,792.22.
The question I wish to ask the minister is this: Will that appear in the balance sheet hereafter?


Clarence Decatur Howe: Yes.


Richard Bedford Bennett: That answers my question. Now I turn to page 29, "Loans from Dominion of Canada"-and this will give my hon. friend from Moose Jaw his answer if he will read it. The loans with respect to the Canadian Northern railway, Grand Trunk railway, Grand Trunk Pacific railway, Purchase of railway equipment, Canadian National railway, are set out in detail, the total being $679,873,935.08. Then there is a heading: Temporary loans from Dominion of Canada for redemption of funded debt, pending refunding-interest paid by railway.
The total is $74,726,975. Will that appear also?


Clarence Decatur Howe: Part will and part will not.


Richard Bedford Bennett: That is the point.


Clarence Decatur Howe: The part that was invested in the property to create earning power will appear, not as a loan but as proprietor's equity, which is the proper position as between the dominion and the railways. The part that was advanced for deficits will disappear.


Richard Bedford Bennett: As a matter of fact, it will be recalled that the deficits did not show after 1933. While I disagree with what is being done, my difficulty disappears to some extent. I direct attention to these words at the top of page 29:
Loans from Dominion of Canada.
That is the caption. Then under Canadian Northern railway we have all the loans set out, eleven. Some have been converted since. Then the same for the Grand Trunk railway; then the Grand Trunk Pacific-loan, bonds, loan, loan, loan, receiver account, interest guaranteed by Dominion of Canada, interest guaranteed by provinces of Alberta and Saskatchewan. Then we come to purchase of railway equipment, the amount being $59,926,000.82. Then we have the Canadian National Railways, and all the loans are given. The total is 8679,873,935.08.
That, I submit, should appear and should have added to it, merely for purposes of information-that is all I am pointing out- the additional sums that have been paid by the country since that time.


Charles Avery Dunning: Since 1932?


Richard Bedford Bennett: Yes. I wish to assure
the minister that as an individual I am not concerned about this-not a bit. I should like to feel, however, that any friend of mine who might happen to pick up that report and read it would know exactly what the financial position of the system was; that is all. There is no confusion in respect to the dominion because the minister in his report proposes to say: "Note. This is part of the national debt of the country." The debt of the state is to be given.
I can summarize my position by asking the minister merely to do this: to provide

and I think it should be done in the statute itself -that the annual accounts of the railway company shall show; (a) what I have read; (b) loans from the dominion government, giving the date of such loans, and the amounts and when payable; (c) loans guaranteed by the dominion government, with date, amounts and when payable; (d) amounts advanced for deficits, 1932, 1933, 1934, 1935,
C.N.R .-Accounting

1936, all on that page. Then such notes as the minister or the company may desire to have inserted, to make it clear, as at page 14A:
These amounts are included in the net debt of Canada.
If that were done my objections would largely disappear. My objections are not important; they are the objections of one person who is anxious only that everyone should know; that he who runs may read, that the wayfaring men, though fools, shall not err therein. Ear be it from me to suggest that there is any purpose in doing it otherwise. All I am anxious about is that the public accounts should make it clear that this money was borrowed for the purpose of putting it in the railway. I am concerned about just what the hon. member for Moose Jaw (Mr. Ross) mentioned; he said, I want to know about this. I say that if he will take the trouble to read that annual report he will find all he wants to know about it. He knows that following an arbitration we took over the Mackenzie and Mann property subject to existing liabilities, guaranteed by the dominion in some instances, and in some by the provinces. The Grand Trunk was in the same position. It is not generally known that we pay an annuity to the holders of the senior securities of the Grand Trunk. The others were worthless. Then we come to the Grand Trunk Pacific. Some think it was bound for bankruptcy. Nevertheless the obligations of Canada were there.


Charles Avery Dunning: The receivership cleaned that up.


Richard Bedford Bennett: 
Charles Avery Dunning: My right hon. friend ought to have some dominion guaranteed bonds to help out the situation.


Richard Bedford Bennett: Well, I have not. I have no interest there. But I plead with the minister with the earnestness at my command that those particulars should be continued in the balance sheet for the purpose of enabling anyone with that report in his hand to know just what Canada has put into the enterprise.


John Gordon Ross: Also how much belongs to the actual enterprise, and how much to something that is of no value.


Richard Bedford Bennett: That will be shown in
the report itself. On page 14A, as the minister says, you do the same thing, state that the national debt covers part of this. I am anxious that that should be shown. I would agree with the minister if he made it more ample than that, and said: Of the above items the following represent part of the national debt of the country, and the interest payable thereon amounting to so much money is paid out of the consolidated fund. But what I am concerned about is that the story itself should be apparent from the reading of the report.


Mr. BEAUBIEN:: It can be found in the public accounts.


Richard Bedford Bennett: But the public accounts are not the report of the railway.


Charles-Philippe Beaubien: There will be an appendix that will be clear to anybody.


Richard Bedford Bennett: If it is not clearer than it is to me-it may be my unfortunate inability to understand-unless the appendix makes it more clear than it now is, it would not cover the point I am endeavouring to make.
As to the shareholders' equity, I think that is not only a misnomer but it introduces into the accounts this securities trust company. I put this to the Minister of Finance as well as the Minister of Transport: Has he ever heard of a security company being created under the conditions under which this is created?


Charles Avery Dunning: We had never before dealt with any such conditions.


Richard Bedford Bennett: Oh yes, we had.


Charles Avery Dunning: Except by the normal process of receivership.


Richard Bedford Bennett: I wonder if hon. members have forgotten the trouble with the old Grand Trunk before confederation. Perhaps the minister will say that I shall now begin to give the names of all the ministers of that government, but I have no intention of doing so. I plead with the minister, before he commits this country to that form of balance sheet of the railway, that he realize in full what its implications are. Who is hurt? That is the first question, and I think we have answered that. Who is bettered? I think we have answered that. Now it has become more and more apparent that the idea is getting abroad that the Canadian National Railway is the government of the country, and that if one ventures to offer an observation he is not only criticizing the

C.NJi.-Accounting
government-the minister indicated that in his answer to the hon. member for Mount Royal (Mr. Walsh)-but the other night I picked up a newspaper in Hamilton, and one of the reasons offered why support should be given to the Liberal candidate was that the dominion government is spending some $10,000,000 on equipment there. Now the dominion government is not spending any money on equipment there:	the Canadian
National Railway is.


John James Kinley: But in the last analysis it is the government.


Richard Bedford Bennett: No, not in the last
analysis. They provide the money with which the railway does it. If we are to treat the railway as being the government, then of course we have an entirely different set of conditions. It imposes upon the minister a terrible responsibility when he says: I set at naught this audit act which has been in force since 1868 being brought down to date in 1931; I set at naught all the provisions of the old railway act and acts affecting the Grand Trunk; and I simply say, I now create willy-nilly a securities company and put a value on these shares, if some day there is any money for them, well and good; but that is the way I take to get around the statutes of Canada. That is not my conception of ministerial or governmental responsibility. I would think that most of the Canadian people, if they ever took the trouble to study or realize it, would like to have a continuance of what has been given from the beginning, namely, a complete report. Even the private railroads in the United States have to do that under the Interstate Commerce Commission; they have provision for depreciation, which we have not. The privately owned railway in this country has to show its outstanding securities. Get the Canadian Pacific Railway Company report published this morning, and in that you will find set out a full statement of the debenture stock, preferred stock, common stock, and where the money came from; Then there will be set out the rentals of leased lines, how much they-have to pay each year. This asks nothing more than that.
I have taken a tremendous amount of time dealing with a matter which to me is of no personal importance, but which I conceive to be of the utmost importance to the people of this country, and I would be failing in my duty if I did not express my view, so strongly held. I can only protest against this usurpation of power by the government with its majority, to create a new situation entirely different from that heretofore prevailing in Canada, and the setting up of conditions which
I believe cannot but be inimical to the public weal for the reason that hereafter in this document, the report of the Canadian National Railways, there will be nothing which indicates its entire liability. I plead that the whole of it should be shown. If it is shown as it is here to-day, while I differ as to some of the methods used, I still think it would accomplish the purpose.


Charles Edward Bothwell: I think the leader of the opposition has sized up the whole situation in two questions: Who is to be hurt by the proposed set-up? Who is to be benefited? I believe the answer to the first question is, no one. Answering the second I would say that any investors in the bonds of Canada henceforth will be benefited by having before them a simplified set of accounts from which they learn what the situation is.


Richard Bedford Bennett: Where?


Charles Edward Bothwell: In the public accounts of Canada.


Richard Bedford Bennett: But it is there now.


William Allen Walsh: May I ask a question?


Charles Edward Bothwell: Just a moment. It is a duplication between the accounts of the railway and the public accounts. In addition, I believe that the general public of Canada will be benefited, practically all of them. Instead of having the mistakes of preceding governments and organizations over a great many years waved before them day by day, they will have an opportunity to forget those mistakes and start out on a new basis, with the hope of some day seeing this railway in the position of at least being able to pay its debt to the public. My hon. friend from Mount Royal wished to ask a question.


William Allen Walsh: I wanted to ask the hon. member this question: If he was interested in the Canadian National railway and wanted to get a clear picture of the financial position of that company, as a layman where exactly would he first think of looking for that clear picture?


Charles Edward Bothwell: Most certainly I would look at the annual statement of the railway company, and from there I would be directed to the public accounts of Canada, in which I would find what is really the historical record of the Canadian National railways.


William Allen Walsh: One further question. Why is it necessary to issue a statement for the Canadian National railways which contains a reference to another statement, when the whole thing might just as well be given in the annual statement of the railway company?
C.N.R.-Accounting


Richard Bedford Bennett: Where it properly belongs.


William Allen Walsh: That does not properly belong to the balance sheet of Canada. Why not have it in the financial statement of the Canadian National railways? That is what we are contending for.


Charles Edward Bothwell: In reply to the last
question, I believe the hon. member for Mount Royal was a member of the committee. I am not going to repeat what was said, but that question was answered very clearly by the deputy minister of finance, who stated why he believed it was necessary-in order to have these accounts clarified and not have the same amounts of money appearing in both the Canadian National accounts and the net debt of Canada.


Richard Bedford Bennett: I have only one word to say to my hon. friend, and I thank him for his statement. I think probably he has given the real reason for this action, anxiety to forget something.


John Gordon Ross: And the anxiety of others that it should not be forgotten.


Richard Bedford Bennett: No, the anxiety for truth as against deception; the anxiety to have facts placed upon the record as against covering them up. The hon. member for Swift Current (Mr. Bothwell) says it is better to forget it. Forget what?


Charles Avery Dunning: No.


Richard Bedford Bennett: That was what he said was the purpose of the bill. That means that we are to forget that the Dominion of Canada invested so many millions of dollars in a publicly owned enterprise. I say that heretofore we have recited the facts; and having done that in the past, is there any reason why we should cease to do it? Have we been given any good reason why the balance sheet should be set up in any different form? I certainly agreed to the elimination of those values for common stocks, but for years the auditors have shown in their statement from whom the money was borrowed and when, when it was repayable, and so on; but that is to be done no more.


Clarence Decatur Howe: They stopped doing it in 1932.


Richard Bedford Bennett: No. They stopped putting in the deficit in 1932, but they continued the rest of it.


Clarence Decatur Howe: This statement which my right hon. friend values so highly is not an accurate statement of anything to-day.


Charles Avery Dunning: It does not include anything since 1932.


Richard Bedford Bennett: Yes, it does; it includes all moneys that have been paid to the road that are covered by securities guaranteed by the country, or the securities issued when the country borrowed the money direct.


Charles Avery Dunning: No, it does not .include the money borrowed for the deficits.


Richard Bedford Bennett: It does not include the deficits as such, but here we have an item: "Nine year guaranteed bonds, Canadian National, dated May 1, 1935, date of maturity, May 1, 1944. Outstanding principal, $35,000,000; interest accrued, $698,000." What about that?


Charles Avery Dunning: That is not a deficit account at all.


Richard Bedford Bennett: But it is a loan made to this company. Then the next one: "Three year guaranteed bonds, Canadian National, May 1, 1935, $13,400,000."


Charles Avery Dunning: They will all continue to appear.


Richard Bedford Bennett: The minister says not, and that is just what I am asking. These are the ones that are to disappear.


Charles Avery Dunning: My right 'hon. friend is wrong there; they must appear.


Richard Bedford Bennett: I just took this list and went over it page by page, asking whether or not each item was to be continued, and the minister said yes, in some cases, and no in others, giving his reasons. Presumably the minister knows his own bill as well as the Minister of Finance knows it.


William Allen Walsh: In the report of the committee, No. 5, Tuesday, March 9, we have the condensed balance sheet of the Canadian National, the public accounts and so on. Could the minister point out where those items for which I asked as a member of the committee, and which are printed in the balance sheets to which I have just referred, appear under the bill now before the committee? Where are the items that were read in this balance sheet as set out in this bill?


Clarence Decatur Howe: Where are they in the present balance sheet? They are a schedule to it.


Charles Avery Dunning: And will continue to be, of course.


William Allen Walsh: I asked for that in particular in committee, in order to judge as between the balance sheet of 1936 and the

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balance sheet as it will be made up in 1937, but according to this statement I will not be in a position to judge, because I cannot -ompare the two clearly.
There is another point I should like to make. I have already made reference to the statement made by the minister on February 5. In committee I contended, and I still make the contention, that what the minister proposes to do with the balance sheet of the Dominion of Canada is what we wanted done with the balance sheet of the Canadian National railways. The minister promised to let us have that, when he stated in the house, as appears at page 597 of Hansard for February 5:
I believe a schedule can be set up that will preserve the historical record, and this schedule can be made part of the annual report of the Canadian National railways. That perhaps will satisfy the purpose as to a record.
I should like to ask if the minister proposes to do that.


Clarence Decatur Howe: In my statement I said it could be done. I still say so, but I think my hon. friend was present when the committee voted by a very large majority to do it in the way proposed under this bill. That amendment is the work of the committee; it is not the work of the minister.


William Allen Walsh: The amendment in committee was made after considerable insistence on the part of certain members of the committee in connection with this very item. We were insisting that the balance sheet of the Canadian National railways should present a true picture of the situation of that railway each and every year. After considerable contention on our part the minister agreed to bring in an amendment to section 8 of the bill, and at the next meeting he brought in an amendment. But instead of covering the point for which we were contending the minister brought in an amendment which did not affect the balance sheet of the Canadian National railways but did affect the balance sheet of the Dominion of Canada. We were contending for a clear picture in the balance sheet of the Canadian National railways. The minister turned around and further complicated the situation by amending, if we may use that term, the balance sheet of the dominion. I do not think that is what we were asking for; I do not think that is what Was in the minister's mind. I believe he is playing on words when he suggests that this record "can" be set up. I believe at that time he had in mind the thought that he could do it and would do it. Now the bill is back in the house, however, we see that has not been done, and we find ourselves in the position
of having to present our views to a house which we know will adopt this bill, which we do not think is iD the best interests of the railways or the people of Canada.
There is another point I should like to make. The Minister of Transport proposes to take out of the non-active assets of the Dominion of Canada the sum which I have already indicated, roughly $370,000,000, and put it into the consolidated revenue fund. Each year since 1932 we have been doing that, as I understand it. There have been deficits, and this year the deficit is $35,000,000.


Charles Avery Dunning: Because there is no asset against it, either active or non-active. That is the accounting principle upon which it is based.


William Allen Walsh: The $35,000,000 deficit this year is being taken by the government and put directly into the consolidated revenue fund; is that correct?


Charles Avery Dunning: It is directly out of the fund. There is nothing going in, I am sorry to say.


William Allen Walsh: Here is an amount which has been voted annually, in different sums, since 1932, amounting altogether to about $370,000,000, and which is being lifted bodily out of the non-active assets and put into the consolidated revenue fund of Canada.


Charles Avery Dunning: My hon. friend is wrong there.


William Allen Walsh: Made up of amounts, exactly as $35,000,000 is made up this year, representing deficits which have accrued from year to year and which the government has paid out, but booked as non-active assets. Yet we are being asked to do that this year, without the item appearing in the estimates or being referred to in the budget. It is being done indirectly through a bill which, in the first place, has no relationship to the consolidated debt of Canada.


Charles Avery Dunning: If the hon. member would permit me on that point, the $300,000,000 to which he now refers represents deficits which did accumulate and were treated as assets prior to 1932. What we are doing is to treat the deficits prior to 1932 in the manner in which deficits since 1932 have been treated, both by our predecessors and ourselves. That is the thing in a nutshell. There is no asset back of either of them, and they are being treated in the same way.


William Allen Walsh: But why not treat this $300,000,000 exactly as you have treated each deficit in the years since 1932?
C.N.R.-Accounting


Charles Avery Dunning: That is precisely what is being done.


William Allen Walsh: No; instead of coming to the house and asking that that be done, you are doing it indirectly through a bill which pertains to the Canadian National Railways.


Charles Avery Dunning: I do not know how it [DOT]could be more direct than by this legislation.


William Allen Walsh: It could be done exactly
as you handled the $35,000,000 this year. How did you handle the $35,000,000 deficit this year.


Charles Avery Dunning: The hon. member answers his own question beautifully. The $300,000,000 to-day is in the non-active assets of Canada. How did it get there? It was taken out of active assets about 1920-I believe it was about that time, although I am not certain as to the year. Why was that done? Because there was no return on it; it was considered to be a yearly inflation of the accounts of Canada to keep it on the active assets. In the adjustment of 1920, when removing it from active to non-active, it was necessary actually to include that sum in the budget for that year. That is already authorized by parliament. It is already out, so far as being a charge as an active asset is concerned.
We are now going a step farther, and may I point out to the hon. member that the step we are now taking is not nearly as big as the one taken in 1920. We are going a step farther now, and treating it as it should have been treated always; in the same way, that is, as hon. members opposite provided it should be treated after 1932. We are applying the principle which has operated since 1932 to deficits accumulated prior to that year. In doing so there is very little difficulty, because the big step was in 1920 when that amount was taken out of the active column, and transferred by authority of parliament to the non-active assets.


William Allen Walsh: But the minister forgets that in 1920 it was not removed from the assets; it was removed only from active to non-active assets.


Charles Avery Dunning: Correct.


William Allen Walsh: It still remained an asset. To-day you propose to take it out of nonactive assets and put it down one grade lower into the consolidated debt. The point I make is this: In the estimates for this year the amount of $35,000,000 is provided to meet the deficit. That amount is there. From 1932 on there has been a similar vote each year, varying only with the deficit.


Charles Avery Dunning: Since 1932.


William Allen Walsh: Yes. Between 1920 and 1932 it was treated in a different way. It accumulated, until now we are taking $300,000,000 out of the non-active assets and putting it into the consolidated revenue fund of Canada. That amount of $300,000,000 has never appeared, as the $35,000,000 appears this year. It has never appeared in that way.


Charles Avery Dunning: Yes.


William Allen Walsh: I might not be able to see it; perhaps I am not very good at figures. Fortunately, however, I am not financially interested in the matter.


Charles Avery Dunning: I might simplfy matters by telling the hon. member that prior to 1932 the amount was in the railway budget, and passed by the house.


William Allen Walsh: Where is the $35,000,000 this year? Why is the Minister of Finance dealing with it differently? This $300,000,000 was never in the estimates in the same way.


Charles Avery Dunning: Not in the same way, no.


William Allen Walsh: I cannot see why this year we are working indirectly, through a bill, when each year since 1932 it has been done directly through the estimates.


Charles Avery Dunning: And will be each year, in the future.


[Stage Direction]
Section agreed to.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.
On section 11-Accounts of National Railways system; how to be shown.
Charles Hazlitt Cahan: Just a word of personal explanation. I wish to say clearly that there was no intention on my part to give any sinister or covert meaning to the words I used in the short altercation I had with the Minister of Transport (Mr. Howe). I certainly had no intention of reflecting upon his intelligence or his wide experience; I wished merely to suggest that he was not fully informed as to certain aspects of prevalent public opinion. If my words seemed to you, sir, or to any hon. member to have a sinister implication, I desire now unreservedly to withdraw them.


[Stage Direction]
Section agreed to.
On section 12-Corporation-Securities trust, constitution.
Charles Hazlitt Cahan: This section seems to imply that a new corporation to be known as the Canadian National Railways Securities Trust

C.N.R.-A ccounting
is to be incorporated and organized. Is that corporation to be incorporated by the express terms of section 12? If so, I think it should be stated distinctly. The mere declaration that there shall be a corporation to be known as the Canadian National Railways Securities Trust does not give legal incorporation to such a trust, nor does it provide for the organization of the trust. Therefore, I think the wording of this section should be considered carefully if we are now constituting a separate distinct corporation. May I discuss other sections of the bill in order to make my meaning clear, or am I confined to this section?


Clarence Decatur Howe: Certainly.


Charles Hazlitt Cahan: When this corporation is
once organized it is to take over certain claims and certain collateral securities. In other words, I infer that after the corporation is incorporated and organized, certain claims for principal of loans, as set forth in appendix 6, certain claims for interest on loans as set forth in the same appendix, and certain collateral securities are to be assigned to the corporation. Is it intended that this statute shall vest these claims and these securities in the corporation which is contemplated? In compensation, the five million shares of no-par value stock are to be issued and become the liability of this proposed corporation?
Then it is suggested that these shares, or the securities which underlie these shares and which are vested in the corporation, shall be valued by the statute. I suggest that that is not the proper procedure. Appendix 6, to be found on page 15A, states that the 5,000,000 shares of no-par value stock are to be outstanding. The initial value is stated as the total amount of loans to the railways by the government and transferred from the government to the securities trust-by this statute or by separate transfer, I do not know-[DOT] 8643,880.558.26. There is deducted the amount lost by the railways in operation, $373,823,120.38, leaving a net value of $270,037,437.88. Then there is an acquisition surplus, amounting to $904,655,718.05. That is, by this statute, or by a separate transfer and conveyance, certain assets which are now not regarded as being valuable, certain claims in respect of Canadian Northern, Grand Trunk, Grand Trunk Pacific and Canadian National, amounting to 8643,860,558.26, are to be transferred. Then certain claims for interest on loans in Canadian National Railways accounts, et cetera, are to be transferred to the extent of $530,832,597.67. Then there are certain claims for interest on loans which are not in the Canadian National Railways
account. Will these assets have any distinct value or are these values being placed upon them merely for the purpose of fictitious accounting? Are the liabilities being reduced?
Of course the capital stock is a liability when it is outstanding, but it has no par value. It might as well be a thousand shares or a hundred shares. The initial value is stated, less the amount lost by the railways in operation, to be $270,037,437.88. I contend that if a public or private company which was in fianancial difficulties were to transfer to another company, organized and controlled by it, all these claims and to offset them with capital stock, declaring a value for such stock which has really no value, it would be regarded as purely fictitious accounting. In other words, I am suggesting that the same object could be attained without organizing a fictitious or factitious company. It could be attained by placing in a branch account or a subsidiary account of the Canadian National Railways these claims which are not valued, and these assets which are valued but which really represent a loss or which represent no present value. Why should a new corporation be constituted for the purpose of carrying through a mere matter of nominal bookkeeping? Would it not be far better to reduce the value of your assets and of your liabilities, recite that the Minister of Finance of Canada has certain claims of no value and certain assets of no value, and state that in some subsidiary account of the Canadian National Railway, without going through all this form of organizing a fictitious company? The explanation is that:
The securities trust is established for the sole purpose of preserving the priority rights of the dominion and for its protection against any contingencies of the future having to do with potential interest and other savings in respect of
(a)	unguaranteed securities held by the public and ranking junior to or pari passu with present dominion loan claims;
(b)	capital stock held by the public in subsidiary companies;
(c)	collateral securities now in possession of the dominion ranking senior to or pari passu with securities held by the public.
The same end would be fully attained if these securities, instead of being vested in this corporation and controlled by these trustees, were to be vested in the finance minister of Canada. He may not be aware of the fact, but certain other claims arising out of the war which were administered by the Department of the Secretary of State, were transferred under an order in council to the finance minister, and the finance minister by virtue of his office owns and controls
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those securities for whatever value they may have now, but it is assumed that they will in the future have a more definite value because now they cannot be realized upon. If this transfer were made to the Minister of Finance the same object would be attained without this complicated method of organizing a company whose assets are nominal, and whose liabilities are really actual, for the purpose of reducing the accounts of the Canadian National Railway pro tanto. I suggest that this complicated method of dealing with these matters is not necessary, that it is confusing, and that, as it is deemed necessary that these securities shall be held for the government against possible exigencies, the end would be fully attained if the Minister of Finance were made trustee, and if in that capacity he held and accounted for them.


Clarence Decatur Howe: Mr. Chairman, I think the comment of my hon. friend divides itself into two parts. First, is the stated value of the securities in the securities trust a real or a fictitious value? It is real to this extent, that we stated at the beginning of this discussion that we were writing down the value of the property to the actual amount of the funds invested in the property.


Charles Hazlitt Cahan: Quite so.


Clarence Decatur Howe: That balance in the securities trust, the stated value, that is, of the securities trust, does represent the portion of the funds which went into the building of the railroad. That is the reason why that is stated: as such, that balance has a definite value, and not a fictitious value. It is the value as we are determining it for the purpose of this write-down.
It is obvious to anyone that there are several ways in which we can determine value. We could have had a physical valuation made of the property, or we could have had a report made on its capacity to earn; but we are not doing that. We are simply leaving in the property all the funds that went into its construction; that portion of the funds which is the stated value of the securities trust is funds that went into the building of the property. Whether some simpler way of holding these funds could have been devised, I am not sure, but I cannot think of anything much simpler than this. It is a trust wholly owned by the dominion government, and operated by three deputy ministers and two officers of the railway, none of whom draws any salary or creates any expense. It seems to me a very simple and logical way of dealing with these securities, which have no immediate value other than that

they do preserve certain priorities, which may be useful in the case of litigation or something of that sort. I am not suggesting for a moment that there is no other way of achieving this purpose, but I think this is a fairly simple way, and it is the best that the officers of my department have been able to devise.


Charles Hazlitt Cahan: I still think, Mr. Chairman, that a simpler way of dealing with these assets would be to transfer them to the Minister of Finance as minister. They have no real value at present; it is quite possible that they may have no real value in the future. Would it not be quite sufficient to state that these securities are of uncertain value but, for the purpose of preserving any equities that may hereafter accrue in respect of them, they are transferred* to and administered by the Minister of Finance? At least that would relieve the Minister of Transport from dealing with them or being anxious about them for the future.


Clarence Decatur Howe: If the hon. member will pardon me, the Minister of Transport has nothing to do with this in any way. The shares are owned by the Minister of Finance.


Charles Hazlitt Cahan: That may be so. Why then, should he not hold them? You get rid of all complications by vesting them in the Minister of Finance, who is a corporation sole and would be the sole trustee. If, in the future, adjustments should be necessary with the provinces, or some assets should subsequently appear which are realizable, he would then be in a position to realize upon them in exactly the same way that the previous government transferred to the Minister of Finance, as I mentioned-I do not wish to go into details now-a very considerable amount of securities, some of which now might be realized upon but which I think should be held for future increment in their value, when, in the discretion of the Minister of Finance, acting of course in accord with his colleagues, they will be finally dealt with.
But this clause certainly does not incorporate the Canadian National Railways securities trust. There is no incorporation here. It is simply a declaration that there shall be such a corporation. Are you going to organize that corporation under the Canadian Companies Act? Are you going to organize it by a special act of incorporation? As it stands, it might be necessary for that corporation, once organized, to have the right to sue in order to realize some of these values. But this corporation has no right to sue, no right to recover upon realizable assets, no right to deal with them, in fact. The corporation

C.NJi.-Accounting
simply takes over certain securities and assumes a certain indebtedness, and that could be done far more simply by the Minister of Finance acting in that capacity.
Then, so far as management is concerned, he could act very simply with the approval of the governor in council in dealing with such questions. No by-laws would be necessary; no quorum of trustees would be necessary; no powers would necessarily be given- to the deputy minister of finance. In fact, the deputy minister of finance is not the proper person to deal with these matters, nor is the deputy minister of transport a proper person to deal with these financial questions; nor is the deputy minister of justice. If the assets were vested in the Minister of Finance and the liabilities assumed by him as minister, then, upon consultation with his colleagues, he might do anything that may be necessary to preserve any equities that might hereafter arise in connection therewith. But certainly if it is presumed by this bill to incorporate the trustees, that purpose is not effected by such language as is used in this bill.


Clarence Decatur Howe: I am sure that if the only difficulty is in regard to the incorporation, that could be attended to separately.


Charles Hazlitt Cahan: But, first, you must organize it.


Clarence Decatur Howe: Yes. This bill says that it shall be done, and if it is not done here it will have to be done separately.
* Mr. CAHAN: But why not deal with it now? How will you do it separately? Does the minister intend to introduce a separate bill of incorporation at this session? And if he should introduce a separate bill, then I submit that it would be difficult to provide by statute for such incorporation, consistently with some other provisions of this bill.


Clarence Decatur Howe: All I can say is that we have had a corps of high-priced legal talent working on this legislation for at least two months, including the chief counsel of the Canadian National Railways and several officers of the Department of Justice. I should be sorry to think that they had let us down.


Charles Hazlitt Cahan: That may be so, and I am not assuming any special knowledge in the matter; I have to confess my ignorance of many things in connection with the administration of corporations, though I may be allowed to say that I have had considerable experience. But I am not bound to accept, nor is this committee bound to accept, the opinions of counsel who have never heard
the other side of the case, opinions that may have been given without a full appreciation of all the underlying facts with which we as a parliament have to deal.


Richard Bedford Bennett: If the minister, who is not a lawyer, will look at the section he will see how unanswerable is the criticism of the hon. member for St. Lawrence-St. George (Mr. Cahan). "There shall be a corporation to be known as 'The Canadian National Railways Securities Trust'." The explanatory note clearly indicates that whoever drafted this clause assumed that he had thereby created a corporation. As a matter of fact, it cannot be said to create a corporation. It would be competent, if the government so desired, to say, "There shall be, and is hereby created a corporation," and so on. Personally, I should not like that way of doing it, but at any rate that would be sound in the sense of creating the corporation. As it stands here, however, it does not create a corporation, and I am sure the minister sees the point. A corporation can come into existence only if it is created by one of several methods, and for our purposes this corporation is being created by legislative action. There must be something declaring that these five persons together shall constitute the corporation; there must be that declaration before you can have the corporation.


Clarence Decatur Howe: Will my right hon. friend do me the favour of writing an amendment to that effect?


Richard Bedford Bennett: I hardly think that would be proper in view of what the minister has said as to the number of highly talented legal gentlemen who have advised him. I am a mere volunteer.


Clarence Decatur Howe: I should have added that I took no responsibility from a legal point of view, because I am not a lawyer.


Richard Bedford Bennett: If I did rewrite the section I would word it differently. At any rate, that is my view. There is a great deal to be said for the proposal to vest it in the Minister of Finance, for it gets away from the necessity of calling meetings, and avoids the question of trusteeship and all these other difficulties if the Minister of Finance is the persona designata. In that event you have continuance in office; it is not the Hon. Charles Dunning; it is the Minister of Finance; and although he might think it impossible that there should be another to fill that office in his lifetime, still, whoever that person might be, he would be Minister of Finance. The promotion might not take place nearly
C.N.R.-Accounting

so early as anticipated, and in that event it would still be the same gentleman. I make the proposal, however, as something that is desirable, providing as it does for continuity, and continuity without the holding of meetings. The Minister of Finance has been the person who has been selected for the purpose during the days that are past, and it does seem to me that he is the person in whom the continuity should be preserved.


Clarence Decatur Howe: I would point out to my right hon. friend that this is a balance sheet that is incorporated in the balance sheet of the Canadian National Railways, and I suggest that an individual cannot very well be designated a corporation within a corporation; I do not see how it would be workable if these things were vested in an individual. How would it appear in the balance sheet?


Richard Bedford Bennett: I thought of that, and I would refer the minister to page 14A of the bill:
Dominion government-proprietor's equity (represented by)'-
1,000,000 shares of no par value stock of the Canadian National Railway Company . . .
. . . advances, claims for unpaid interest and collateral security now held by dominion government.
Dominion government capital expenditures for Canadian government railways.
According to the statement made this afternoon, it is largely a matter of having some name in which to hold these securities. They have no practical value at the moment when there is no immediate interest, but they will be added to as the days go on. Deficits will also be added. Suppose the deficit is $35,000,000; proprietor's equity securities will show in the balance sheet next year $35,000,000 more than it is now. There might have seemed to be a difficulty on that score, but frankly I see none at all. In days gone by we have had no difficulty in that respect when all our securities were held by the Minister of Finance. If we alienate a piece of land to the government of Alberta the money value of the right of way covered by mortgage goes into the trust fund, but the Minister of Finance executes it because he is the proprietor of the shares and the equity of redemption is in him. I cannot think that there is any difficulty about it, though there may be because I will admit that I have not given the matter that intensive study which the officials of the department have. But surely proprietor's equity could be held by the Minister of Finance. If the intention is to set up a corporation, it must hold meetings and there must be a statute incorporating it. Un-
doubtedly the draftsman intended by this to incorporate it, but he has not done so. All he says is that there shall be a corporation, but he does not say when the "shall" is to take effect, whether by a subsequent statute, by letters patent, or by some other method. What he intended was undoubtedly to create the corporation by this act itself, and I merely point out that he has not carried out that intention; and it strikes me that, as he has not done so, it would be a simple matter to vest it in the Minister of Finance.


Mr. STEWART:: Might I ask the minist-cr to clear up a point, because of something stated in the special committee on railways and shipping? Take the annual deficits paid, say, in the last three years out of consolidated revenue fund, under the statute; would the amount of those deficits appear in the equity?


Clarence Decatur Howe: No.


Hugh Alexander Stewart: It was stated in the committee, as I recall, that these would not appear in the statement of the securities.


Clarence Decatur Howe: That is true. The act says -they shall not be funded; therefore they could not appear as securities held by the securities trust. But they appear in the statement of the position of the railway.


Hugh Alexander Stewart: They are, as it were, lost and forgotten, gone with the wind.


Clarence Decatur Howe: No, we are keeping a permanent record.


Hugh Alexander Stewart: You have them in the public accounts, but not in the railway accounts.


Clarence Decatur Howe: That is according to the statute.


Richard Bedford Bennett: That statute does not touch anything but funding by the company.


Clarence Decatur Howe: They are charged against consolidated revenue. They are not to be funded by the company, so what happens?


Richard Bedford Bennett: The consolidated revenue fund gets the money by borrowing it. The minister had to borrow the money; he put through the legislation to do it. The money goes into the consolidated fund, and the minister pays it out to the railway. The railway cannot fund it; the prohibition is against funding by the railway; but there is legislation standing in the minister's name to provide for $35,000,000 now.


Charles Avery Dunning: That is the cash deficit?


Richard Bedford Bennett: Yes.

C.NJt.-Accounting


Jean-François Pouliot: As a resume of all this,
I wonder what is the raison d'etre of corporation lawyers.


William Allen Walsh: I was not here in time to take exception to the term used applying to the equity. I was going to suggest to the minister the use of a term such as "dominion government capital investment," rather than "proprietors' equity." However, it is too late, as the clause has passed.
Coming to the next clause, the securities trust, it was urged upon the minister in committee, that the creation of such a corporation under similar circumstances would not be tolerated in general business. The minister replied that he could name four or five out of fifty companies with a set-up of securities trusts similar to that proposed in the bill. I was not quick-witted enough at the time to ask for names. I still feel, however, that the securities trust is not a good precedent to be established by the government of Canada, and I would ask the minister if he can name any corporations or companies that have a similar set-up in general business.


Clarence Decatur Howe: Does the hon. member mean securities trusts?


William Allen Walsh: A similar set-up to this, with the dominion government as parent company, the Canadian National Railways as a subsidiary, and a securities trust as a second subsidiary. Can he name where there is a situation equal to that in private enterprise?


Clarence Decatur Howe: I think the Hollinger mine has one. I am sorry the hon. member did not ask for the names in committee, because I could have looked it up, but there are several companies which carry their surplus in the form of an investment trust.


Charles Hazlitt Cahan: That is an entirely different thing; they have investments of value. But here the minister is attempting to relieve a corporation of its liabilities by gathering together all its worthless securities and vesting them in- a new corporation. It is a purely factitious arrangement for the purpose of reducing the capital account of the Canadian National system. I suggest that deputy ministers are not the persons to form such a trust or act as trustees. This is not a valid corporation. It is an arrangement whereby, realizing that these assets while of no immediate value may possibly have some contingent value in the future, or because certain interrelated liabilities with respect to these securities should be preserved, the minister is attempting to set up a special trust. Now the
Minister of Finance, as such, can do competently all things which this trust is supposed to do. He can act in his official capacity. He is authorized to act in regard to all such securities which are held by the government through his department or departmental officers, whosoever they may be. Why depart from that established precedent.


Richard Bedford Bennett: I suppose the minister notices that this corporation has no shareholders.


Clarence Decatur Howe: The Minister of Finance is the sole shareholder.


Richard Bedford Bennett: There are no shareholders.


Charles Avery Dunning: Five million shares, which capital stock, by section 14, shall be issued to the minister.


Richard Bedford Bennett: But look at the language of section 12:
There shall be a corporation to be known as "The Canadian National Railways Securities Trust," hereinafter referred to as the "securities trust," consisting of five trustees. . . .


Charles Hazlitt Cahan: Can he turn out the trustees by virtue of holding the stock?


Clarence Decatur Howe: I do not see why not. You can change them at any time.


Richard Bedford Bennett: There is no company, no shareholders. I do not want to criticize these high-power lawyers to whom reference has been made, but it is quite obvious that there are no shareholders except one. The trustees have no shares; there is no provision for them holding shares. There is one shareholder, and he apparently cannot organize himself in such a way as to deal with any one of the five people.


Charles Edward Bothwell: Is not the situation simply that we are here setting up a body of five men-I do not know whether the term "corporation" is a misnomer-and naming them trustees, and authorizing them to issue five million shares of stock? It does not come under the companies acts, either federal or provincial; it is simply parliament itself creating a corporation, which it has power to do, for the specific purpose of handling the stock which is to be issued in connection with the securities to be taken over. Is not that all it amounts to?


Richard Bedford Bennett: No. If it were, there would not be much difficulty. That is the reason the hon. member for St. Lawrence-St. George (Mr. Cahan) has said it would have been so simple to name the Minister of Finance as trustee. But the section merely
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names five persons as trustees of a corporation, using the word "corporation," which under section 14 has a capital of five million shares all held by one person, there being no provision in the statute for any other shareholder. One shareholder cannot be a corporation, unless it be a corporation sole.


Charles Edward Bothwell: Are we not getting
things confused in talking about shareholders? Is it necessary for the parliament of Canada to create shareholders in what we are pleased to call a corporation? It is true that the term "corporation" has received a certain interpretation through common use, but personally I do not see why it should not be possible for us to use that term to describe a certain body that we are setting up under this bill.


Richard Bedford Bennett: Surely my hon. friend
from Swift Current, who is a lawyer, hardly puts that forward seriously. Look at the sections. Section 13 defines the objects of the corporation. There is one shareholder and five trustees. The shareholder is the Minister of Finance. Necessarily he must have all the powers of a corporation; presumably he is a corporation sole. The hon. member for St. Lawrence-St.George suggests that the simple method is to follow the procedure that we have followed all these years, namely, to insert the name of the Minister of Finance as the holder of these securities. That is all. Suppose something happens as a result of which the title disappears of vice president of the National railways in charge of finance; who is to take his place? You have all those questions which must be considered.


Charles Edward Bothwell: That title would disappear only as a result of legislation.


Richard Bedford Bennett: Quite so, but you must
have some provision for continuance. Continuity is what the minister tells us he is aiming at; first of all, a corporation to hold the securities, and secondly continuity. The minister very properly says that he is not a lawyer nor the draftsman of this bill. This is not his job; he is only here to tell us what the government desire to accomplish, and he says this is the method they have adopted. The hon. member for St. Lawrence-St. George points out that parliament has said there should be a corporation; it does not say when, and the word "corporation" has a definite meaning. There must be three people to constitute a corporation according to the general law of this country. A corporation sole consists of one person. To all intents and purposes the Minister of Finance has been a corporation sole all these years. This

statute says the five trustees are to have no relationship to the corporation, strange as it may seem; under section 13 the shares are all to be held by the Minister of Finance. He holds these shares for the equity of the proporietors in the property, namely, the people of Canada.
Surely we must do a little better than that. The minister says "This is what I must do; there shall be a corporation, and a corporation is hereby created, to be known as so and so. Then you have to say something to give it a local habitation and a name. They have given it a local habitation, the city of Ottawa; they have given it a name, called it the securities trust. Then they name the trustees. The Companies Act provides for the appointment of trustees, and here five trustees are appointed, designated not by their names but by their positions. They hold office until when, and under what conditions? Obviously they hold office under such conditions as may be determined by the shareholders, and there is only one shareholder, namely the Minister of Finance.


Mr. DUPUIS:: But parliament is not bound to follow the Companies Act; parliament is supreme.


Richard Bedford Bennett: Far be it from me to suggest the contrary. I did not for a moment suggest that parliament was bound to follow the Companies Act, but I am pointing out that in the absence of any provision to the contrary the Companies Act governs with respect to a corporation, and there is no provision here to the contrary. I thank my hon. friend for directing attention to the matter if I did not make my point clear. If he will look at the statute he will see the difficulty. There is no provision for shareholders, just one shareholder. There is no provision for the creation of the corporation; there is merely the statement that it shall come into being. When or how that is to be done we do not know. The hon. member for St. Lawrence-St. George asked two questions. He said: Do you propose to do it by letters patent under the Companies Act or do you propose to pass a special act of parliament? Obviously the draftsman thought this was good enough, for he defined the objects of the corporation in section 13. In section 14 he defined the capital, and in the next section he said the capital stock should be shown in a certain way on the books. Section 16 defines the powers of the trustees. They have power to make the by-laws, although they are not shareholders, and provision is made for quorums and so on. Then it is provided that

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the local habitation shall be Ottawa, and provision is made for the first meeting and so on.
I should like to know this: How can you create trustees of a corporation when you have only one shareholder who really has had nothing to do with the matter? Parliament in its supreme power may create trustees, but certainly it is at variance with any known theory of corporate law or practice, as it stands now. Under these provisions the minister himself has no power; the Minister of Finance has no power, although he is to be the holder of all the shares.


Charles Avery Dunning: With the approval of the governor general in council.


Richard Bedford Bennett: That comes under the regulations, but the regulations are passed by the trustees.


Charles Avery Dunning: And approved by the governor in council.


Richard Bedford Bennett: Quite.


[Stage Direction]
Section agreed to, on division.
Section 13 agreed to, on division.
On section 14-Securities trust capital stock, to be held by minister.
Richard Bedford Bennett: I think I should place on record just one word, and it is this: These three sections do make us seem ridiculous. I am not going to say any more than that.


Clarence Decatur Howe: Do you mean both of us?


Richard Bedford Bennett: I mean all of us. That is why we want to dissociate ourselves from it.


Clarence Decatur Howe: I like to let the lawyers fight these things out.


Richard Bedford Bennett: I should like to hear any lawyer vindicate that position.


[Stage Direction]
Section agreed to, on division.
Section 15 agreed to, on division.
On section 16-Trustees' powers-by-laws.
Richard Bedford Bennett: Same objection.


[Stage Direction]
Section agreed to, on division.
Sections 17 and 18 agreed to, on division.
On section 19-Secretary.
Richard Bedford Bennett: This appears to make provision for the creation of another office. Whoever is secretary of the corporation known as the Canadian National Railways should be secretary of this commission, obviously.


Charles Avery Dunning: There is no salary attached to the office.


Charles Hazlitt Cahan: But the secretary keeps the record of proceedings; there is no treasurer, and therefore the whole financial set-up is handled by the secretary. Certainly this is all unprecedented. First you take in the deputy minister of finance. Why take him rather than the Minister of Finance? Then there is the deputy minister of transport, and in addition there are two officers from the National railways. Once this statute is passed the National railways are absolutely devoid of all interest in any further proceedings; in their capacity as officials of the National railways these men have no further interest in this company. Then you appoint a secretary to look after the whole financial set-up and keep the accounts in order, and he is not under the control of the Minister of Finance, who is the real owner of all the equities. One cannot say very much more without using language that would sound extreme.


[Stage Direction]
Section agreed to, on division.
On section 20-Exchange of indebtedness for stock.
Richard Bedford Bennett: This raises the question again. You see what is to be done. I do suggest to the minister that provision should be made in these sections that the amounts paid for deficits be also included, for they represent an indebtedness of the railway to the country. As the Securities Trust is carried by trustees, provision should be made that on the payment of deficits out of the consolidated fund an adequate acknowledgement should be issued by the railway and held by the Securities Trust among its assets. I believe that would meet some of the difficulty, because then the provision would be apparent.


Charles Avery Dunning: It would completely
change the procedure which has been in vogue since 1932.


Richard Bedford Bennett: No, it would not completely change the procedure. There has been since 1932 a prohibition against the railway's funding the indebtedness. There has not been anything which prohibited or in any sense restricted the right of the railway company to indicate its indebtedness.


Charles Avery Dunning: But it has not, in fact, done so.


Richard Bedford Bennett: Yes, it has done so.


Charles Avery Dunning: There is provision for
it in section 24.


Richard Bedford Bennett: But before we come to that, meeting the point made by the hon. members for Chambly-Rouville (Mr. Dupuis) and Swift Current (Mr. Bothwell), "The
C.N .It.-Accounting

Securities Trust is hereby declared for the purposes of this act to be a company comprised in the national railways."


Clarence Decatur Howe: That is to consolidate the
balance sheet.


Richard Bedford Bennett: But we have to have a company somewhere. In my judgment it is essential, with this changed set-up, that the section provide also that the deficits be included because they must be a part of the owner's equity. If the country owns the railway it follows that the owner's equity, that is, the equity of the people of Canada, is represented by what they put into the railway for any purpose in the world-for capital, for interest, for deficits, or for any purpose which we may possibly conceive of. That is the owner's equity. The owner's equity is going to vary from time to time in accordance with the amount of money which has been put up by the country for any purpose. With the changed set-up it does seem to me essential that that be stated here, so that there may be no question about it. I cannot see how the minister would have any difficulty about it.
I do point out again that section 22 does make us both a bit ridiculous; we have not any company. The language of the hon. member with respect to the word "corporation" was that it might be used in its generic sense. The words "company" and "corporation" under our interpretation act have the same meaning. Certainly that meaning has not been the one urged to-night.


[Stage Direction]
Section agreed to, on division.
On section 21-Securities Trust not to dispose of indebtedness except with approval of governor in council.
Richard Bedford Bennett: Except that there is no company to sell. This section deals with the prohibition against the company selling its securities. The company is one person, namely the Minister of Finance. He owns all the shares. How can this be possible? The section states:
The Securities Trust shall not sell, pledge, release or otherwise dispose of any of the indebtedness to His Majesty transferred to the Securities Trust or the collateral securities held in respect thereof, except with the approval of the governor in council.
How can he sell them? Suppose he is authorized to sell them; how can he do so?


Mr. ELLIOTT (Middlesex):: With the approval of the governor in council.


Richard Bedford Bennett: How is he going to make his initial sale? There is only one shareholder, and one shareholder cannot do it.


Mr. MARTIN:: The measure gives him the power.


Richard Bedford Bennett: No, it does not. It provides for only one shareholder in the company; obviously there cannot be a meeting of one shareholder.


Charles Avery Dunning: In section 12 the Securities Trust is defined as being five persons.


Richard Bedford Bennett: Those are trustees; they do not sell.


Charles Avery Dunning: It is described as The Securities Trust, consisting of these individuals. The same words are used.


Richard Bedford Bennett: It says "Hereinafter referred to as The Securities Trust, consisting of five trustees being" so and so. Then later there is reference to a company; but there is only one shareholder. Surely, to say the least, you have then conditions which are contradictory.


[Stage Direction]
Section agreed to, on division.
On section 22-Securities Trust declared a company in national railways.
Charles Hazlitt Cahan: Why should the Securities Trust be declared to be a company comprised in the national railways? What have the national railways to do with it? What possible interest have the national railways in the new set-up? What possible interest have they in any equity?


Clarence Decatur Howe: The company is a liability of the Canadian National Railways, and should be consolidated in this way.


Charles Hazlitt Cahan: There is no liability in connection with it. By this set-up the Canadian National Railways are exempted from liability to the extent of hundreds of millions of dollars-exempted from it entirely. All that is left is some possible equity which may arise out of future exigencies, and such value as may accrue at any time is the property of the government of Canada by virtue of the liabilities which the Dominion of Canada has assumed. Why should the Securities Trust first be declared to be a company when, in fact, it is not; and secondly, if it is a company why should it be incorporated with the National Railways Company? The national railways have no interest. They are exempt from liability and have transferred all these assets, worthless or otherwise. As in many other cases, why should not the Minister of Finance be the corporation sole. If you wish that there be a corporation, why should it not be entirely under his management and his administration, so as

C.N.R.-Accounting
to realize if possible from this bankruptcy- because we are dealing with a bankruptcy- such values as at some time in the future may possibly arise? This bill is so complicated that one can scarcely follow it.


Charles Avery Dunning: I questioned myself concerning this section, and naturally I had to consult lawyers. The information given me was that it was desirable to have the company declared to be one comprised within the Canadian National Railways because of the character of some of the securities which would pass to it from various constituent parts of the Canadian National Railways, and in connection with possible claims with respect to certain classes of securities. I am not a lawyer and I can merely convey to the hon. member the answer the lawyers gave me with respect to the necessity for section 22.


Charles Hazlitt Cahan: I know that if the minister will look through his records, as undoubtedly he has, he will find that as Minister of Finance he is in exactly the same position with regard to other claims. No claim can be made against him except by petition of right, and no claim can be settled under petition of right except with his consent, which is subject to the approbation of the governor in council. Why should we depart from that practice, which is so simple, so easily followed, not at all complicated, and quite satisfactory?


[Stage Direction]
Section agreed to, on division.
On section 23-Securities Trust to report annually to parliament.
Richard Bedford Bennett: I should like to refer to page 6, schedule A, "summary of indebtedness transferred to Securities Trust, as at December 31, 1936." It deals with loans for capital purposes amounting to over $270,000000. and loans for deficits over $373,000,000, making a total of more than $643,000,000. The accrued interest is set out at $574,000,000. In connection with that item there are the words "See note." Then you turn over. The Chateau Laurier will now become a property of the Securities Trust because it belonged to the Grand Trunk Pacific Development Corporation. On looking down the list we find the indebtedness to be transferred to the Securities Trust. In other words, we have made a selection; we have picked out of all the securities that have been issued in connection with the enterprise certain ones that we hand over to the Securities Trust; and certain ones we keep in the treasury. That is what it gets down to. I ask the minister to look at pages 7 and 7A.


Charles Avery Dunning: I would like the right hon. gentleman to tell me what will be left in the hands of the Minister of Finance other than the stock of the securities trust.


Richard Bedford Bennett: That is what I have pointed out. You have picked out certain things. Look at the set-up of the railway itself that is to go to the Minister of Finance. This will be found at pages 14 and 14A.
Under assets we find investments in road and equipment, improvements on leased railway property and miscellaneous physical property. That is the whole story, plus sinking funds, deposits in lieu of mortgaged property sold, investment in affiliated companies and other investments. There are ten items there covering the new set-up.
On the other side we have the liabilities made up of capital stock, governmental grants, long-term public debt and so on.
You have picked them out. Why? If the minister will look at page 14A he will find governmental grants, $3,013,748.90, and long term debt, public, $1,184,612,248.59. Then in schedule A, to be found on page 7, we find the three railway systems, Grand Trunk, Canadian Northern and Grand Trunk Pacific. In connection with the Canadian Northern we find 31 per cent loan, chapter 6, 1911. This is the charge on premises mortgaged October 4. 1911. Then we have a 4 per cent loan, a 5 per cent loan, a 6 per cent loan, a temporary loan, repaid, and so on to the item "mortgage covering loans above." These have been picked out to be put in the hands of the securities trust instead of being included in the liabilities of the railway. Why? I have asked that so often that I am weary. Surely there must be some reason.
Further down on the page we find the Grand Trunk Railway, 6 per cent loan, 6 per cent loan, 4 per cent loan, and so on. The total in this case is $118,582,182.33 Then we, come to the Grand Trunk Pacific, with a total of $116,006,589.08. This last item includes the capital stock of the Grand Trunk Pacific Development Company, $2,999,000 held by the Minister of the Interior. Running down the last column on page 7 we find $668,000 in the hands of the Continental Illinois National Bank and Trust Company, Chicago; $24,573,539.90 in the hands of the railway treasury, Montreal. That is an entirely different matter and concerns another phase of this financial structure. Then we find $20,721,191.12 in the vaults of the Royal Trust Company, Montreal. Why pick out some and leave the others? You see, they are all long-term debts.

C .N.R.-Accounting


Charles Avery Dunning: You will find the Canadian National over the page.


Richard Bedford Bennett: I should have mentioned those.


Charles Avery Dunning: They go down to 1932.


Richard Bedford Bennett: Total loans, $645,527,455.83; less adjustments authorized, $1,666,897.57, leaving a total of $643,860,558.26. In the last column we see the list of those held in the railway treasury at Montreal. The other ones are the ones in which we are interested, namely, the Canadian Northern, the Grand Trunk and the Grand Trunk Pacific, including the development company. The Canadian National Railways have in their treasury certain of these securities, which were exchanged for collateral securities and upon which money was raised to retire obligations. That is not important. I hope the minister does not think I am too insistent, but I really am curious to know why this is done. I have asked myself why, and I have no doubt the minister has in mind the answer given in the House of Lords when a member said he had asked himself a question.


Charles Avery Dunning: We will not be so unkind as that.


Richard Bedford Bennett: Under liabilities, which are to be found at page 14a, we find longterm debt to the public, $1,184,612,248.59. That is picked out and put in there. Why is the process carried on in this way?


Clarence Decatur Howe: As I suggested before, we are attempting to eliminate duplication between the debt of Canada and the debt of the railway. We do not want to have the same securities appearing in the net debt of Canada and in the net debt of the railways. Through one process or another these securities have been moved into the net debt of Canada, while still remaining in the net debt of the railway. They are now being taken out of the net debt of the railway and put into the securities trust. If they are still active assets of the dominion, they are left as they are in the railway balance sheet. I think that explanation is complete.


Richard Bedford Bennett: I am sorry to say that does not answer my question.


Hugh Alexander Stewart: Schedule A shows the loans for capital purposes totalling $270,037,437.88. The amount for deficits is shown as $373,823,120.38. Does that amount include what has been paid out of consolidated revenue fund for deficits in the last three or four years?


Clarence Decatur Howe: Not at all.


Charles Avery Dunning: Those amounts are shown on succeeding pages.


[Stage Direction]
Section agreed to.
On section 24-Appendix to public accounts showing total assistance to all railways.
William Allen Walsh: This section reads:
The minister shall include annually as an appendix to the public accounts of Canada a statement showing the total assistance, whether by way of cash outlay, land grant, loan, advance, guarantee or otherwise, given by the dominion to all railways.
This section was included in the bill after a rather heated debate in committee. It has a decided political tinge. The section is unfair to the Canadian National Railways and unfair to the Canadian Pacific Railway company. It was not included in the original bill and has been included in the amended bill only because of the insistence of certain members of the committee. The minister will remember the turn the discussion took in the committee when the suggestion was made that an appendix should be added to the public accounts of Canada to show everything that had been granted to the two railway systems from their inception. There could be no motive other than political in a suggestion of this nature.


Clarence Decatur Howe: What is the political motive in that?


William Allen Walsh: If the minister will refer to the minutes of the meeting at which' this section was discussed he will find the term "political motives" more or less defined.


Clarence Decatur Howe: I wish you could define it for me now.


William Allen Walsh: I do not think it needs
any defining, particularly by those who are sitting at the present time on the treasury benches. Here we have intruded into a railway measure of vast importance, dealing with approximately $1,800,000,000 worth of assets, a statement of this nature, asking that an appendix be added to show everything that was granted to the Canadian National Railways and to the Canadian Pacific Railway.


An hon. MEMBER:: Why not?


Some hon. MEMBERS:: What is wrong
with that?


William Allen Walsh: Hon. members realize as
well as I do that many kinds of grants have been made to the railway systems of Canada, three in particular: first, grants in aid of construction; second, those made to meet deficits; and third, those which have been made recently in aid of unemployment. How

C.N.R.-Accounting
are we going to show in that appendix the reason or purpose for w.hich loans were made to the two railway systems? It is presenting a radically unfair picture of them both. Only one side of the picture is being given for in most cases there was a quid pro quo, a return given by the railway companies for what they received. If one side is to be presented, surely in fairness to both companies the other side should also be shown.


Vincent Dupuis: Well, show the other side.


William Allen Walsh: If the hon. member who
has just spoken would go into the records a little more carefully he would not be so ready with his suggestions. For instance, here is one. A grant was made to the Canadian Pacific Railway in connection with the construction of the Crowsnest pass, in which both railways were interested. That grant is to be shown against the Canadian Pacific Railway Company. The other side of the picture was a reduction in the railway's freight rates. Is that fact also going to be stated in this appendix? Is it fair to record one and not the other? I consider this procedure is most unfair to both the railroads.


An hon. MEMBER:: I hope they show it.


William Allen Walsh: If I loan a sum of money
and receive a favour of some nature in return, surely if I am going to record the one I should also report the other.


Clarence Decatur Howe: Is the hon. member saying
that he objects to this clause going in, that he does not want any record?


William Allen Walsh: I object to this clause
going into the bill.


Charles Hazlitt Cahan: It has nothing to do with
the bill.


William Allen Walsh: It is not accomplishing anything. It is not a part of the bill. It sticks out like a sore thumb. It does not belong here or anywhere else.


Clarence Decatur Howe: Will my hon. friend move to
strike it out?


William Allen Walsh: I would ask that it be
struck out.


Clarence Decatur Howe: Let the hon. member move it.


William Allen Walsh: I will move accordingly, and I thank the Minister of Transport that to this extent he has confidence in me. I move:
That clause 24 be struck out of this bill.
Is it the wish of the committee that I should state my reasons?


Some hon. MEMBERS:: No.


Some hon. MEMBERS:: Question.


Frederick George Sanderson: Shall clause 24 carry?


Charles-Philippe Beaubien: Mr. Chairman, before the clause is carried-


William Allen Walsh: I have not taken my seat yet. I was asked by the minister if I would move to strike out the clause. I am willing to do it if the minister is satisfied that I should move it.


Clarence Decatur Howe: I am willing to vote against it, but it might be a quick way of testing the opinion of the committee.


William Allen Walsh: May I point out that I wish this clause struck from the bill because it is quite unfair to the two railway systems.


Mr. RYAN:: Would the hon. member permit a question? Is he suggesting that any member of the committee played politics in connection with this clause?


William Allen Walsh: Certainly I do.


William Michael Ryan: From what standpoint? Where was politics raised in this committee?


William Allen Walsh: The hon. member was a member of that committee.
Mr. RA'AN: I was.


William Allen Walsh: Can the hon. member state his reasons for voting in favour of this clause?


William Michael Ryan: My reasons are the section itself. It speaks for itself.


William Allen Walsh: State them.


William Michael Ryan: In order to show the people of this country what has been done for all railways, not merely the Canadian National Railway. The clause speaks for itself.


Charles-Philippe Beaubien: The hon. member for Mount Royal (Mr. Walsh) has accused members of the railway committee of playing politics. Probably if I were as unkind as he, I would accuse him of the same sin. Ever since this bill has been introduced in the house by the Minister of Transport, the leader of the opposition and the hon. member for St. Lawrence-St. George have impressed on the members of this committee the necessity of giving the Canadian people a clear idea of what they have put into the railways of this country. If the people are to be properly informed either through this bill or in the public accounts, there must be a true picture showing all the grants that have been given to all the railroads in Canada. I have no brief either for the Canadian National railways or the Canadian Pacific railway. The
C.N.R.-Accounting

clause is inserted with the sole object of satisfying my hon. friends and of giving the Canadian people a true picture of the situation. That cannot be done if contributions to the Canadian National Railway system are shown and grants to the other railroads of Canada omitted.


William Allen Walsh: This gives the Canadian people a picture, but not necessarily a true picture.


Charles-Philippe Beaubien: I was the one who suggested to the minister that a statement of all the land grants should be included. I assure the hon. member that I have no political motive, and I hope he will be kind enough to retract the suggestion of political motive, because if anyone tried to play politics in the committee he did. I think he was playing to the board of trade in Montreal and probably some other institutions.


William Allen Walsh: I would rather play to that body than play to the gallery.


Charles-Philippe Beaubien: If the hon. member wants a true picture of what the Canadian people have contributed to the railway systems of Canada, let us put into the public accounts in this appendix everything that has been given to the Canadian Pacific, the Canadian National, and every other railway, including land grants which were very valuable to the railroads-not excepting the Canadian Pacific Railway. The railroads have made a barrel of money in selling lands that were granted to them by the Canadian people.


Mr. YOUNG:: As a member of the committee, I am surprised that the hon. member for Mount Royal should say that any heat was displayed in its debates. I attended all the meetings and from beginning to end I thought the discussion of this bill was very amicable. If any heat at all was shown, perhaps the hon. member himself might lay claim to having had not too frigid a temperature on one or two occasions. I do not think he can charge any member of the committee with having displayed anything but a desire to thresh out the bill carefully and thoroughly. The hon, member said that this particular clause was inserted from some political motive. Again, may I say that as a member of that committee I listened very carefully all through the discussions for political motives, and only once during our debates was such a motive ascribed to anyone. That was done by the hon. member for Mount Royal: it had nothing to do with this resolution, but with another, and the crime he thought had been committed was that some hon. member who happened to be a Liberal moved a resolution, which was seconded by

another Liberal. To this the hon. member for Mount Royal took objection, saying that it was highly political.
There was not the remotest suggestion of a political motive in connection with this clause. Why was it inserted? That is easily explained. My hon. friend insisted not only with regard to this but on every other section of the bill from beginning to end that the picture be not altered as presented in the annual statement of the Canadian National Railways. Throughout the discussion it was quite apparent that he wished to have brought into the Canadian National picture every bit of dead wood that we have been trying to eliminate in order to do away with duplication of accounts. He *was never satisfied; he wanted to have the worst possible picture painted in the annual statement of the railways.
Then, at my right hon. friend's suggestion, hon. members took this view. They said, "If you really wish to have a true picture of the Canadian railway situation, if you want to have all the facts included in the public accounts, then by all means let us have the true picture; but instead of dealing only with one railway in Canada let us show what the dominion has done for all the railways in the country." That seemed quite reasonable to all the members of the committee and the suggestion was heartily accepted. I do not recall that even my right hon. friend offered more than a passing objection at the time. As a member who attended every meeting and witnessed the whole performance-if you want to call it a performance-I can tell the committee that it was as a result of the right hon. gentleman's insistence upon having a complete picture of the Canadian National railway situation presented to the people that this clause was inserted in the bill.


Mr. GRAYDON:: I was surprised to hear the hon. .member for Provencher (Mr. Beaubien) speaking as he has done with regard to playing politics in this matter. I do not think there is very much wrong with the statements that have been made with regard to the political aspect of the discussion, and I have no less an authority than the Minister of Agriculture who on Friday night made this statement, as reported at page 1977 of Hansard of March 19:
The statement has been made that we should not introduce politics into the discussion. . . . I often wonder why men want to come to this parliament who do not want to discuss politics. I have always understood politics to be a business of the people of the country.
Perhaps that will clarify the matter for some of my hon. friends.

C.N.R.-Accounting


Charles-Philippe Beaubien: As far as that is concerned, the hon. member for Mount Royal accused us of playing politics in the committee, and he is entirely wrong there. I think he will admit that.


William Allen Walsh: The objection I have made is, I submit, substantial enough to merit the consideration of the committee, apart from the outburst there has been at the suggestion of a political motive. If hon. members will consider for a moment, section 24 sets up in a way a credit and debit account of the railways of Canada, and we are filling in all the debit items against the railways but leaving blank the credit side, so that there is nothing on that side to offset the other.


Charles Edward Bothwell: Is not that the situation in connection with the Canadian National Railways and in the accounts that have been set up for them in years past?


William Allen Walsh: I do not think so. As my hon. friend will remember, what I urged before the committee at every meeting was a genuinely true statement of the Canadian National system so that when anyone picked up the balance sheet from year to year he would know exactly the state of the system's finances, either from the balance sheet itself or from the appendix. The minister will remember that I said I did not care which method was adopted in that connection, though personally I prefer the appendix; I think that is better than cluttering up the balance sheet itself with a mass of figures that mean little or nothing. In season and out of season I urged the presentation of a clear and true statement of the affairs of the Canadian National Railways, so that if I picked up a balance sheet of the system I should not find a footnote to the effect that if I wanted a true picture I should have to go to the balance sheet of the Dominion of Canada, where I might get it if I were clever enough to dig it out.


Charles-Philippe Beaubien: If the hon. gentleman will read the speech which his leader made when the bill was introduced he will see that the right hon. gentleman insisted that the true statement of the Canadian National Railways should be presented to the public. I do not believe the right hon. gentleman meant just one railway; I think he meant all the railways.


William Allen Walsh: I am referring to both railways, and I agree with my leader's words on that occasion.


Charles-Philippe Beaubien: Then the hon. gentleman cannot disagree with the clause.


William Allen Walsh: I do not disagree with it if the idea is carried to its logical conclusion. What I am arguing for is the presentation of the other side of the picture, so that the public will know why certain grants have been and are being made from time to time. The people should know that certain grants have been made for certain specific purposes. Take the situation last year. We made a grant of some $10,000,000 to the two railways for the purpose of giving work to a certain number of unemployed young men on their roadways so as to make them a little more presentable-they had been neglected. We are going to show that $10.000,000-


Charles Avery Dunning: It is not $10,000,000.


William Allen Walsh: I do not know how much it was; I am merely using that figure by way of illustration. At any rate we are going to show that sum, whatever it was, against the railways. Are we simply going to leave that against the railways and not show why we made the grant? Is it fair to mislead the public, making them believe that we in this parliament are handing money to the railways and getting nothing in return?


Charles-Philippe Beaubien: Will not the railways
get the advantage, through improved road beds, of that two or three million dollars or whatever it was?


William Allen Walsh: Then why not show that? If you are going to show anything, do not stop half way. Half a truth is worse than no truth, and this is a half truth, because the other side is not shown. That is what I am insisting on, and I am sure that if the minister will give this clause proper attention he will be willing to adopt my suggestion. I am sure that my hon. friend who sits back here-I do not know his constituency, but he is from Nova Scotia-has the same idea that I have, and that is that if we are going to present a picture of the railways we ought to give the whole of it and not just a part.


Charles Avery Dunning: That is what the section says.


William Allen Walsh: The section does not say that.	*


Mr. GRAY:: Read the last sentence.


William Allen Walsh: The sentence reads:
Such statement shall also show the manner in which such assistance has been dealt with in the public accounts of Canada.
That does not suggest that the reasons shall be given for the grants that have been made. It does not suggest, for instance, that the reason shall be shown for the grant of money for the Crowsnest pass, which resulted

C.N.R .-Accounting

in a decrease in freight rates in western Canada. This clause does not intend that such things shall be shown, and I contend that they should appear in the statement.


Charles Avery Dunning: The very words "Crows-nest pass" would bring to the mind of everyone the Crowsnest agreement.


William Allen Walsh: They bring that agreement to my mind now, but two years ago they did not, because at that time I was an average member of the public of Canada. I should like the minister either to amend this section so as to ensure that the whole statement of affairs shall be given, or take it out and put it where it belongs.


Charles Hazlitt Cahan: Does this section 24, which includes all grants, include the grants paid to the railways for post office services or for other services, in connection with the carrying of mails throughout all these years? There certainly are cash outlays of that kind.


Charles Avery Dunning: They are not "assistance" within the meaning of this section.


Charles Hazlitt Cahan: Where is the word "assistance"?


Charles Avery Dunning: The third line, "total assistance."


Charles Hazlitt Cahan: But we have granted mail subsidies, which have been stated frequently to be by way of assistance.


Richard Bedford Bennett: The Calgary and Edmonton- railway got $80,000 a year. It was the basis of its financing.


Charles Hazlitt Cahan: Furthermore, I have no objection to the government publishing every year a statement of all the expenditures made upon each and all the railways of Canada, branches and others.


Clarence Decatur Howe: We do that anyway.


Charles Hazlitt Cahan: But I say that in a bill relating to the Canadian National Railways such a provision cannot properly be made. The amendment which the minister has brought in is entirely contrary to the proper practice of the house, it seems to me, because the effect is that we are confronted with a new bill as amended by the committee. The committee to which this bill was sent had no authority to amend it, but it has drafted a new bill, and in this bill as now printed it is not disclosed what the original provisions were and what are the amendments which the minister is adopting. If any hon. member of this house had moved section 24 in an amendment to the bill as originally introduced, it would have been declared out of

order, because it has no relevance to the main object of this bill; it has no reference whatever to the Canadian National Railways nor to the revision of its accounting system. An amendment respecting all bonuses and payments of every class and description made since railways were first built in Canada should not be incorporated in a bill which essentially has to do with the Canadian National Railways. The amendment should not be in this bill if it applies to any other railway system which is not now incorporated in the Canadian National system.


Richard Bedford Bennett: 
Charles Edward Bothwell: But the 1933 deficit
does not appear there.


Richard Bedford Bennett: I am showing that it
does; I have just read it.
Mr. BOTHWEiLL:	Does it not appear in
the annual report, but not the accumulation?


Charles Avery Dunning: That is the point. My
.point was that it is not any longer accumulated from year to year; it is shown in the accounts of the railway each year as a balancing item which is paid by the dominion government, but nowhere is the previous year's cash deficit which was paid by the dominion government brought forward as a liability of the railway.


Richard Bedford Bennett: On the contrary. I took the year 1933, being the next after 1932. At page 10 you have the debit balance, the accumulation including the deficits carried forward. At December 31, 1933, it amounted to $748,412,638.47, which includes the deficit of
31111-129i
$52,263,819.05, and it shows the change during the year. That is set out for that year and the preceding year, the accumulated deficits.
Now I turn to the next year, 1934, the profit and loss account, remembering that the sum total I mentioned included the deficits, and at page 14 are found the figures I have already given:	The sum total balance at
December 31, "debit balance" $789,040,675.42 as against a figure of $748,412,636 for the year before, which included in both cases the deficit.


Clarence Decatur Howe: If my right hon. friend will
excuse me. I think he is entirely wrong as to what that figure is. The contribution of the government is deducted from the amounts charged on the railway books, and the rest carried forward.


Richard Bedford Bennett: No, it shows the cash
deficit to which the hon. gentleman referred. I asked him to explain three things; the cash deficit of $48,000,000, the bureau of statistics deficit of $115,000,000. and the deficit shown by the accounts, which includes the payment made by the government on its bonded debt plus the cash, making the $83,000,000 alto-together. At page 14 of the accounts of 1934 the net loss is shown and compared with the figure for the previous year, and in both cases the cash deficit is included. Let there be no misunderstanding about that; in both cases the cash deficit is included.


Clarence Decatur Howe: But it is not carried forward.


Richard Bedford Bennett: I come now to the next year, 1935. On page 18 of the accounts for that year we find these words: "System net loss, $115,281,689.79." Less the contributions made by the government for deficits, as follows:
1935	1934
C.N. Railways.. $41,795,757 24 $42,589,824 96 Eastern Lines ..	5,265,373 20	5,434 133 74
P.E.I. Car Ferry
and Terminals. 360,334 36	383,942 00

Then there is shown a change during the year, in profit and loss account, of $67,233,811.78, as against $40,628,038.95 the year before. The balance at December 31st is shown_ at $85,274,487.20, as against $789.040,675.42. That includes accumulated deficits.


Charles Avery Dunning: My right hon. friend spoke of deducting.


Richard Bedford Bennett: Certainly, so as to arrive at the cash deficit.


Clarence Decatur Howe: Perhaps I might explain those figures.
C.N.R.-Accounting


Richard Bedford Bennett: Just a moment; I am not finished. I come now to the annual report for 1936, and at page 10 I find these figures: System net loss	$92,311,037 88
The figures for the previous year are also given, $115,281,689.79. Then:
Deduct

Contributions for deficits from the government-	^	^C.N. Railways .. $37,449,321. 57 $41,795,757 24 Eastern Lines ..	5,550,632 36	5,265,3(3 20Pfnd Terminals.	303,439 89	360,334 30$43,303,393 82	$47,421,464 80
That is in order to get the change in the position, which is the figure I gave and the figure I am sticking to. According to this report the change during the year in the profit and loss account was $48,381,230.85, against $67,233,811.78 the year before, showing a betterment. But the balance at January 1 is given, carried forward as I said.


Charles Avery Dunning: That balance is modified in each case by the amount paid by the dominion.


Richard Bedford Bennett: Oh, no. The deficits are set out and then the balance is struck as of the 31st December, and here are the figures of the balance. He who runs may read. The figures are: $856,274,487.20. That is for the year ending 31st December, 1935, carried forward in the account of 1935 as the debit balance on the 1st January of last year. At the end of December that amount had risen to $904,655,718.05. There is the record of the deficits, cumulative, without interest, and the deficit standing against the Canadian National railways on the 31st December, 1936, was $904,655,718.05, which includes the deficits of 1932, 1933, 1934, 1935 and 1936.


Some hon. MEMBERS:: Oh, no.


Richard Bedford Bennett: It does; there can be no argument about it.


Clarence Decatur Howe: It does not.


Richard Bedford Bennett: It says here distinctly that it does.


Charles Avery Dunning: It is deducted each year.


Richard Bedford Bennett: Pardon me; it is not deducted each year. It is deducted in order to ascertain the cash position, but that is stated, and the change in net position is indicated by these figures. Here are the figures: December 31, 1934, $789,000,000 odd; December 31, 1936, $904,000,000 odd.


Clarence Decatur Howe: Would my right hon. friend allow me to explain where those figures come from?


Richard Bedford Bennett: Yes. They are there, anyway.


Clarence Decatur Howe: I have here the report for the year ending December 31, 1936. If my hon. friend will look at that report he will see that the system's net loss figure for the year 1935 was $115,281,689.79. The system's net loss for that year was that amount.


Richard Bedford Bennett: Yes. for 1935.


Clarence Decatur Howe: Yes. For 1936 it was $92311,037.88. In each case there was deducted from that figure the cash contributions by the dominion government in respect of cash deficits, and a non-cash item representing some $67,000,000 in the one case, and $48,000,000 in the other, was carried forward into the cumulative deficit, but the amount that was paid in cash by the government to cover the cash deficit was not carried forward. It. was deducted, and the remainder was carried forward.


Richard Bedford Bennett: But the point I made was that these annual reports distinctly show the amount of money the dominion has paid for deficits. Is that so, or is it not?


Clarence Decatur Howe: Only for the current year and the previous year.


Richard Bedford Bennett: Certainly; the annual
report shows the cash deficit paid by the government of Canada every year. It appears in the profit and loss statement, where you would expect to find it.


Charles Avery Dunning: But they are not cumulative.


Richard Bedford Bennett: But the point I am making is this:	The Minister of Transport said
this afternoon that we had not shown the deficits in the annual reports since 1932. and the Minister of Finance has repeated that statement. I said I did not think that was so, but 1 sent out and secured the reports. Surely I can read. Hon. gentlemen opposite probably will deny that I can do a great, many things, but at least I can read and write, and here the deficit is set out, as compared with the preceding year. I sent out and got the reports for the last five years, and I have read them into the record. I was very anxious that these deficits should appear, and when I was confronted with the statement that they had not appeared I sent out to make sure.


Charles Avery Dunning: In the sense in which my right hon. friend is now using the figures I never doubted that they were there. We are merely talking about different things.

C.N.R.-Accounting


Richard Bedford Bennett: I would think not. I
would not think we were talking about different things at all. We are talking about the same thing; we are talking about whether or not in future the record of the Canadian National Railways is going to show these deficits. I am getting back to my original point. All I have ever asked of the Minister of Transport, from the day he started this discussion until to-day, is that as this is a publicly owned utility of the Dominion of Canada, I should be able, by reference to its accounts, to ascertain what money we have put into our utility. That is all I have ever asked, nothing more or less, and I have suggested that the form used heretofore was sound because it did indicate these deficits. I was confronted with the argument that it did not show the deficits of these years. My memory is not infallible; I thought I might be mistaken about that; so this evening I sent for the reports. There they are, showing the deficit paid by the government of Canada every year.


Charles Avery Dunning: They must continue to appear in that form.


Richard Bedford Bennett: But this afternoon I asked what was to appear. The minister would agree up to a certain point, and from that time on he said, "No, there is a new setup, and this is now going to this new securities trust, and the public will not get it in this report." When this new set-up is made, all you have to do is to look at the appendix to the bill now before the house and you will see that this item disappears. The new set-up wipes it out. It is no use to shake one's head about it; there it is. The minister has been very frank about it; he says it is going to disappear, and the schedule to the bill says so. I am weary of repeating this, and if I did not feel that I had a duty to perform I woidd not do so. My duty is to say that as this is a publicly owned utility there should appear in the records of that utility a statement of every dollar the Canadian people have put into it. That is all I ask. I have been very careful to say with respect. to the Grand Trunk capitalization and other matters they should be wiped out. but when I come to the c-a-s-h that is put into the enterprise, I do not care how it is kept, but I want to be able to read it when I look at the report.
Now I find in the new set-up of the Securities Trust about 1,000,000 no par value shares. Then there is the other item of 5.000,000 shares owned by the Minister of Finance. The two together will be added up and make a sum of money, and I will
know no more about how much money the taxpayers of Canada put into the enterprise than I will know about the railways in Manchuria.
That is the real position; do not let us get away from it. Let us have it straight, I ask the Minister of Transport and the Minister of Finance to remedy that difficulty before this bill leaves parliament. There is the new set-up, and the Minister of Transport was perfectly frank with me this afternoon when he said: Yes, that will appear. But the new set-up will disclose only this- and it is shown by the appendix to the bill- 1.000.000 shares of no par value stock of the Canadian National Railways Company issued in exchange for Canadian Northern Railway Company stock, to the value of S18.000.000. Then we have 5,000.000 shares of no par value capital stock issued by the Securities Trust Company to the government'-the law says to the Minister of Finance-in consideration for the securities, advances, claims for unpaid interest and collateral security now held by the government, to the amount of $270,037,437.88; then dominion government capital expenditures for Canadian government railways, $388,290,263.52, making a total of $676,327,701.40.


Charles Avery Dunning: But this is not a profit and loss account; it is a balance sheet.


Richard Bedford Bennett: Certainly; I took the consolidated balance sheet, and read over the item, in order that there might be no misunderstanding. The Minister of Transport was frank enough to say that under the new set-up these would disappear. All I want in the balance sheet and profit and loss account of the railways-it is indifferent to me how it is done, whether it is a profit and loss or a consolidated balance sheet, so long as it is there-


Charles Avery Dunning: I will say it will appear-


Clarence Decatur Howe: It must appear.


Charles Avery Dunning: Yes, it must appear, just in the same manner as my right hon. friend read it.


Richard Bedford Bennett: That is inconsistent with the statement heretofore, and it relieves me of great anxiety. Because if it appears in the profit and loss it must appear on the consolidated balance sheet. That statement renders nugatory this legislation. The minister (Mr. Dunning) has not been following this as carefully as the Minister of Transport. He knows exactly what the difficulty was.
C.N.R -Accounting


Clarence Decatur Howe: I understood the difficulty.
Most of the deficits appeared in the profit and loss as deductions, and the non-cash item is carried forward into the balance sheet. That will be the case always. It has been the case since 1932.


Richard Bedford Bennett: That is not the point, at all.	[DOT]


Some hon. MEMBERS:: Carried.


Richard Bedford Bennett: I can only say "on division." Does the government desire to pass section 24 of the bill? I just ask a reasonable government if it desires to protect its own reputation, or if it wishes to add to this bill an amendment which will render necessary printing for the third time what is now printed in (a) the public accounts and in (b) the report of the Minister of Railways and Canals? If any hon. member is curious enough he can get the information. You might as well say that on an agricultural bill yau add an amendment providing that the Minister of Finance shall publish a statement showing all the moneys spent in connection with all agricultural societies of the country in the last twenty years.


[Stage Direction]
Section agreed to, on division.
Section 25 agreed to.
Schedule A agreed to, on division.
Schedule A1 agreed to, on division.
Charles Hazlitt Cahan: These are all carried, on
division.
Schedule A2 agreed to, on division.
On Schedule B-Adjustment of public accounts of Canada.


Richard Bedford Bennett: Look at schedule B. I
assume that there is still left a little sense of fairness in the committee. Look at the language at page 9A, where it says:
Elimination of the present schedule "railway accounts, non-active," and the substitution of the following accounts.
Bear in mind that the minister has used the words "non-active assets." The Drayton report treated them as assets. They may have been non-active, but they were still treated as assets. No one in the committee on behalf of the government has suggested the reason why we should not carry them as they now stand, as non-active assets, valued at so and so, rather than to speak of the equity value of these loans as $270,037,437.88 and $18,000,000, for the purpose of creating a company that has not been created, and conferring upon it, when it does not exist, powers to hold shares, it having no power to hold [Mr. Bennett.J
anything. There is no explanation given of that. There is no company. The statute does not make one. It says there is going to be established a company, and that is all it says. Then we find:
Adjustment in public accounts:
Credit-Railway accounts nonactive	$653,860,558	26
Charge - Canadian National Securities Trust	stock
account	 270,037,437	88
Canadian National	stock
account	
18,000,000	00Consolidated fund of Canada.	365,823,120	38


Charles Avery Dunning: And there is another
$25,000,000 over the page.


Richard Bedford Bennett: There is the Grand Trunk Railway debenture account, the interest account, and the special interest account making a total of $25,607,393.53.


Charles Avery Dunning: The summary follows.


Richard Bedford Bennett: Yes. The next heading
is "Recapitulation of changes in public accounts," and under it	we	find this item:Railway accounts	$697,473,479	34
And then the following:
Charge - Canadian National Securities Trust	Stock
account	$270,037,437	88
I ask any reasonable member this question: Why should we endeavour to create a trust company to hold something which we say is worth over $270,000,000 at some time in the future? It is not active at this time. Then we have the Canadian National stock account of $18,000,000, and the investment in the Hudson Bay Railway, amounting to $457,526.76 Just why we differentiate there, I shall not ask any hon. member of the committee to explain, though I suppose there is an explanation of it.


Charles Avery Dunning: There was reference to
it this afternoon in the adjustment of accounts.


Richard Bedford Bennett: Yes, that is correct. We
have dealt with the Canadian government railways working capital. Then we have the consolidated fund of Canada standing at $392 206,534.16. making in all a total of $697,473,479.34.
I do not wish to worry any more, Mr. Chairman, about this matter; I have worried myself as much as I propose to. But I should like to know how we justify or seek to justify a substitution of shares in the Securities Trust, called an owner's equity, for S697,-000,000, and adjustments, that could easily be put in a single sentence in the following

Trans-Canada Air Lines
terms: "Owner's equity represented by various forms of securities "-if you wish to shorten it-" held by the Minister of Finance of Canada." That's all there would be to it. But instead of that we deal with it in a manner which I venture to say was never heard of before, and state that this trust company, which is not yet created, shall form part of the Canadian National Railways system, which to me makes it even more difficult to understand. When it comes yjto existence it has only one shareholder, and five trustees, who hold office persona designata, and not as individuals. That is the story. All afternoon I have sought, and sought in vain, for some explanation, and not having received it, I venture to say that the government must have had some purpose in deciding that they would not do this. But that purpose has not been disclosed.


[Stage Direction]
Schedule agreed to.
Frederick George Sanderson: Appendix number 1.


Clarence Decatur Howe: The appendices are not.part of the bill.


Charles Hazlitt Cahan: If these appendices are not included, how can you set up the new accounts?


Richard Bedford Bennett: Number five was the allimportant one.


Charles Hazlitt Cahan: If they do not form part of the bill, were they put in simply for amusement?


Clarence Decatur Howe: They are put in for explanatory purposes; they are not part of the bill.


Charles Hazlitt Cahan: There is no statutory authority with regard to them?


Clarence Decatur Howe: No.


Charles Hazlitt Cahan: They simply constitute a prospective set-up?	.


Clarence Decatur Howe: The bill states how these items shall be set up, and the appendices merely show the set-up so that people may see it.
Bill reported.



TRANS-CANADA AIR LINES ARRANGEMENT WITH CORPORATION RESPECTING LINES AND SERVICES FOR TRANSPORT OF PASSENGERS, GOODS AND MAILS

[Stage Direction]
Hon. C. D. HOWE (Minister of Transport) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to introduce a measure to incorporate a corporation to be known as trans-Canada air Lines with authority to establish and operate air lines and services across
Canada and matters incidental thereto, also to authorize the government to enter into a contract with the corporation providing for the organization and operation of such lines and services including the transport of passengers, goods and mails, and for the payment of a sufcidy to the corporation and for the operation and maintenance by the government of emergency landing fields and other specified services, and also to authorize the government at its discretion to acquire and pay for all of the shares of the capital stock of the corporation, and further to authorize the Board of Railway Commissioners to fix the rates to be paid to the corporation for its services.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
Richard Bedford Bennett: Perhaps the minister will give us a reasonable explanation. By reasonable I mean reasonably long, so that we can understand the purpose of this resolution.


Clarence Decatur Howe: The purpose of the bill to be founded upon this resolution is to form a company to operate a first-class air service from coast to coast. I think most of us are aware of the necessity for such a . service. Canada is perhaps one of the few countries in the world without a national scheduled air service. The air services from our centres of population to areas not otherwise served by transportation take second place to none, but we are woefully behind other countries in air services between centres of population. During the calendar year 1936 over 1.000,000 people travelled in scheduled air flights in the United States. Many Canadian citizens when travelling from one point to another in Canada find they have to use the air lines in the United States, and they have been very insistent in demanding the establishment of a direct Canadian service.
Air mail stamps are sold in Canada and much of our mail is routed across the border, transported by the air services of the United States, and then brought back across the border at the point nearest to destination. The volume of this air mail is sufficient to warrant the establishment of a direct service in Canada. I believe such a service would prove of immense value for national purposes. Canada is a country of vast distances and sparse population, and the time needed to travel between the west and the east is considerable under present circumstances. If that time could be cut in three or four by a new air service, the people living at the extremes of this country would be able to travel more frequently to the centres of government business, and industry, and the inter-relations of the country would thereby be facilitated. The need for a service of this kind has been
Trans-Canada Air Lines

recognized for some considerable time. As a means of relieving unemployment the construction of airports was commenced from coast to coast.


Richard Bedford Bennett: Those were the camps.


Clarence Decatur Howe: The work on the airports has been continued since the camps were closed. It is expected that the airports from Winnipeg westward will be entirely completed by July 1 next, and the other fields by the end of the present year. The time has now come to undertake the flying of this route, and the government has been faced with the question how itr can best be done. Numerous applications have been received from companies willing and anxious to perform this service. Pressure has been brought to bear on the government on behalf of several of these companies, and also on behalf of companies which are performing similar services in the United States. We had several examples to guide us. We had the example of Britain and its development of air services through Imperial Airways.


Richard Bedford Bennett: How much of Imperial Airways does the British government own?


Clarence Decatur Howe: Twenty-five per cent of the capital stock; in addition, all the operations undertaken by direction of the British government are subsidized by the government. The method is to estimate in advance the deficit for the year and the money to cover the estimated deficit is paid over in advance to the company.
The United States have developed air services along different lines. There it has been a matter of competition, extending over some ten years. In the early days mail subsidies were granted which would now be considered very large indeed; they amounted to about four times the present mail subsidies. Companies were authorized to fly certain services and the lines were built up in that way, the only form of subsidy being the contracts awarded for the carriage of the mail. This led to a somewhat chaotic experience. Companies have been formed, and have disappeared or been merged with other companies. Three or four years ago there was a general writing-down of mail contracts; they were suspended for a time, and the United States government undertook to perform the service with its own planes, because the contract arrangement was not considered satisfactory. Subsequently new contracts were made with private firms, and to-day, I think, the United States is operating on a very efficient basis-as efficient perhaps 
as any country in the world. But it seems to me that this mode of arriving at the end desired could be bettered by a country like Canada, able to profit by the experience of others.
The company contemplated by this bill is to be organized as a private corporation. It is not the intention of the government to own directly any stock in the company. The agency for organizing the company is to be the government's existing agency for the conduct of transportation business, namely, the Canadian National Railways. The Canadian National Railways will underwrite, in the first instance, the stock of this company and distribute it among firms at present engaged in aviation in Canada which wish to participate.
It might be argued that the government should do this direct, but I think everyone here will appreciate the impossibility of working out a plan involving a great number of competitors when the government itself does not and cannot know the plan until it has been approved by parliament. The government has therefore decided that the proper course is to determine the form that the company shall take, place the underwriting in the hands of the National railways, ask those who desire to participate to signify the degree to which they are interested after the terms of the arrangement are known, and to state what they can contribute towards the enterprise in the way of experienced personnel and possibly equipment, and then allow the personnel problem of the company to be worked out after the bill has been passed.
This company will fly only the main artery of traffic across the country, and such other arteries of traffic as are designated by the government as being of national importance. It is not the intention to interfere with any existing operations. The company will not undertake other than interurban services. It will be given an exclusive contract to carry mails, passengers and express over the specified routes. In the initial stages of the company, in addition to its having an air mail contract at a rate competitive with similar services on this continent, its deficits will be paid by the government for two years, during which period we anticipate the personnel will be perfected, and at the end of that time it can reasonably be expected that an efficient service will be in operation. Subsequently the company will receive an air mail contract the basis of which will be determined by the operations of the previous year. The setup is such that the company will be protected against loss, but its profits will be very strictly limited. In other words, it is organized to

Trans-Canada Air Lines
perform a certain national service, and it is expected that that service will be performed at or near cost.
As hon. members know, this government is obligated to share in the proposed service now being organized between England, Ireland, and Canada to cross the north Atlantic. In that connection we have undertaken to be prepared to fly the mails across Canada connecting with their flight across the Atlantic. For that reason it is urgent to form this company and get the organization under way, and obtain the necessary equipment to undertake the service.
It is estimated that the capital required to purchase the equipment necessary to perform the service in Canada is about $1,750,000. In addition, about $1,250,000 is required as part of Canada's capital for the transatlantic service. The balance of $2,000,000 is provided to be called upon as required for the expansion of the services as national needs may indicate. The cost of operation of the service *-the coast to coast service-is estimated at about $1,000,000 a year.


Richard Bedford Bennett: Is that the deficit or the operating cost?


Clarence Decatur Howe: The total operating cost. It is thought that from the start the mail contract and such passenger and express business as is immediately available should cover the cost of the service. We have made provision, however, for a subsidy to protect the service in that period. After 1940, as I have said, the subsidy provision expires, and the mail contract will be on the basis of cost of the service. I think that outlines fairly well the intention of the bill. The whole matter can be more fully considered when the bill is brought down.


Richard Bedford Bennett: It must be apparent from the explanation given by the minister that the measure contemplated is one of a very far-reaching character, and can only be thoroughly understood when the measure based upon the resolution has been introduced into the house. That we should have an air service across the northern half of the continent goes without saying, I think; but our ability to finance such an undertaking is something also that should be considered. Keeping up with the Joneses has been one of the curses of Canada. On the other hand, we had a mail service across Canada as far as Edmonton and Lethbridge and across the southern part of Canada to Vancouver. We discontinued it, strictly in accordance with the terms of the contract, because with the crop failure in western Canada, and with
300,000 of a population receiving some form of relief, there was very little gratification in seeing an aeroplane passing by day after day when the unfortunate owner of the soil could hardly see the aeroplane because his crop had gone up in dust. No apology is offered for having discontinued the service under the financial conditions that obtained.
With more buoyant revenues, and with the expansion of an air service across the Atlantic ocean, the country is confronted with the necessity of providing some form of service between the Atlantic and the Pacific.
The problem at once arises how it shall be done. The minister has not made abundantly clear just how he proposes to do it. He says that the government will not itself own any of the capital stock of the enterprise, but that the Canadian National Railways will be charged with responsibility for the underwriting of the stock, and that those who have heretofore been engaged in aerial operations will have an opportunity to subscribe for the shares.
The Canadian National Railways put $250,000 into Canadian Airways, and the Canadian Pacific Railway an equal amount. The $250,000 was recommended by the late Sir Henry Thornton, and the president of the Canadian Pacific Railway agreed with that recommendation and paid a similar sum on behalf of that railway. The Canadian National Railways may be said to have at least some claim, both because of the $250,000 which they put into the capital stock and because of the fact that they had mail contracts which, during the days of the depression, were cancelled strictly within the terms of the contracts. Unfortunately, however, they did not anticipate the events that followed in quick succession necessitating the cancellation of the contracts.
I am clear in my own mind that we should make some efforts towards establishing an air service; I have no doubt about that. But I should like to see in great detail the conditions under which it is proposed to organize it. I confess that I have not been quite able to follow the minister in his statement that while we shall own none of the capital stock, the Canadian National Railways will be charged with responsibility for the underwriting of the stock, because under those circumstances it might well be that the control of the enterprise would pass entirely out of the hands of the government, and a franchise, the value of which cannot easily be overestimated, would pass out of our control. I gather that the minister is desirous of having the control at least rest either in the government itself or in a government agency such
Feeding Stuffs

as the Canadian National Railways. That, however, will be made quite clear when the bill founded on the resolution is introduced.
In order to expedite matters, and without attempting to traverse the subject at this time, I should be willing to have the resolution reported and the bill introduced, without prejudice to discussion in detail of the terms of the measure about which at the moment we know very little, and which, as the minister has properly remarked, we can fully understand only when it is introduced; for I can conceive of a bill somewhat in the terms indicated by the minister as being very objectionable for many reasons. On the other hand, he has left himself sufficient latitude to bring down a bill that will be acceptable to all, and in that hope and with that reservation I shall be glad to see the resolution reported and the bill introduced.
Resolution reported, read the second time and concurred in. Mr. Howe thereupon moved for leave to introduce Bill No. 74, to establish a corporation to be known as Trans-Canada Air Lines.
Motion agreed to and bill read the first time.



FEEDING STUFFS


[Stage Direction]
Hon. J. G. GARDINER (Minister of Agriculture) moved the second reading of Bill No. 64, to control and regulate the sale of feeding stuffs.
Richard Bedford Bennett: In view of the explanation made by the minister the other day it does not seem necessary for him to make an explanation on the second reading, if we reserve our rights in the matter, and then we may read the bill to see what it contains. It is obvious that any explanation the minister might give now would have to be a lengthy one inasmuch as it would cover details. The essential purpose would be served, I think, if with the understanding I have indicated the second reading were given and the bill printed, so that we might have an opportunity to read it and get a more thorough understanding of its provisions. With that understanding, explanations could be given in committee as we proceed section by section with the bill.


Mr. GARDINER:: As I indicated to the house the other day on the resolution, it is my intention to move that this bill go to the committee on agriculture. With the understanding that it can be fully discussed there, I think the suggestion made by the leader of the opposition is a proper one.


Hugh Alexander Stewart: The minister might perhaps answer on the second reading the question which I asked when the resolution was introduced, as to the appointment of officials under the bill. As I recall it, the bill provides that the minister may make the appointments. On the resolution I asked whether the appointments were made at present by the minister or under the Civil Service Act, and he said he thought that some were made by the commission and others by the minister. Has he any further information on that point?


James Garfield Gardiner: I thought that was in connection with Bill No. 65.


Hugh Alexander Stewart: Possibly it was the other bill.


James Garfield Gardiner: I believe so, but the matter can be fully discussed in committee and I shall have no objection to bringing down the information.


Hugh Alexander Stewart: Section 9 of the present bill reads:
Such inspectors and analysts may be appointed as the minister may consider necessary for the effective carrying out of the provisions of this act.


James Garfield Gardiner: That is an entirely new provision.


Hugh Alexander Stewart: I was trying to find out from the minister how they are appointed now. There must be officials discharging duties of this kind now. Are they appointed bj' the civil service commission or by the minister? I think the provision now is that they shall be appointed in the manner provided by law, which would appear to be by the civil service commission.


James Garfield Gardiner: I take it this is an entirely new section. I would have to get information as to whether this is a different set of inspectors. I will get the information for the committee. Probably one explanation is that these analysts may be of a particular kind who would have to be chosen because of special qualifications.


Richard Bedford Bennett: This is an obvious attempt to circumvent the Civil Service Act, and it will not succeed.


James Garfield Gardiner: Replying to that remark may I say that if it were so I would have more information about it.


Richard Bedford Bennett: No, the minister would
not disclose it.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on agriculture and colonization.

New Brunswick National Park

[Stage Direction]
Hon. J. G. GARDINER (Minister of Agriculture) moved the second reading of Bill No. 65, respecting the testing, inspection and sale of seeds.
Richard Bedford Bennett: In addition to what was said a moment ago with respect to Bill No. 64, I suggest to the minister that it might be very desirable to have the Department of Justice carefully consider the question of our constitutional right to pass legislation dealing with the sale of these commodities. If the language of the privy council is to be relied upon, property and civil rights are affected. I mentioned that when the resolution was before the house.


James Garfield Gardiner: I have already had that done. I have before me a very careful review of the act and also an opinion given in regard to it, in which it is claimed by the law officers that the bill as drafted is within the powers of this parliament.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on agriculture and colonization.

[Stage Direction]
Hon. T. A. CRERAR (Minister of Mines and Resources) moved that the house go into *committee to consider the following proposed resolution:
That it is expedient to introduce a measure to set aside lands in the province of New Brunswick as a national park and to withdraw from the national park and revest in the province of Nova Scotia a portion of the lands set aside by the Nova Scotia and Prince Edward Island National Parks Act, 1936.
Motion agreed to and the house went into *committee, Mr. Sanderson in the chair.
Richard Bedford Bennett: The minister made quite *clear what it is proposed to do when the resolution was up, but might I ask whether [DOT]or not it is proposed in the bill to define the *area of the park in New Brunswick at this time, or merely define it in such general terms as to enable it to be hereafter settled?


Thomas Alexander Crerar: It is impossible at present to define the area, because the area has not yet been selected.


Richard Bedford Bennett: I thought the minister might have selected my old county!


Thomas Alexander Crerar: That, I can assure my right hon. friend, will have very careful consideration.


Richard Bedford Bennett: If it is not better than usual, there is not much chance for it.


Thomas Alexander Crerar: I suggest that my right hon. friend may still live in hope. The difficulty in New Brunswick is that there are several sites under consideration. Under the parks act the provincial government has to give to the federal authority with clear title the area set aside for a park. In the older settled provinces it involves the acquisition of the site. I had hoped to be in a position to state to the committee when this measure was brought down that a particular site had been selected and what its boundaries would be, but unfortunately I am not in that position. We desire to get a start made on the park in New Brunswick, and we are asking in the bill for authority to define the area by order in council.


Richard Bedford Bennett: Orders in council are very handy when in office, are they not?


Thomas Alexander Crerar: I believe my right hon. friend found them so.


Richard Bedford Bennett: Yes, I did.


Thomas Alexander Crerar: There have been some changes in Nova Scotia in the boundaries of the park as defined a year ago, the provincial government having discovered that it would be put to considerable expense to acquire some of the area included in the boundaries as defined at that time.


Richard Bedford Bennett: They would have to pass special legislation to expropriate.


Thomas Alexander Crerar: There are certain problems of mineral rights which they had not considered before, which might lead to an uncertain financial liability. But we are adding an area to the park which, in the opinion of the parks officials who have examined it, will add to the usefulness and attractiveness of the park.


Mr. BARRY:: Will the minister state upon whose recommendation the site in New Brunswick will be selected?


Thomas Alexander Crerar: Sites are examined first by parks officials from the parks branch of the federal government. But my hon .friend must remember that the area has to be given to the federal government by the provincial government free of charge with a clear title. That means that the provincial government has to be a consenting party to the area set aside. As I stated, the problem arises in New Brunswick of repossessing certain private properties that may exist in the area proposed to be set aside, and that matter is now
City oj Ottawa Agreement

under consideration by the provincial government. We have given to them the report of our federal parks officials who have examined several different sites.


John Patrick Barry: Will the minister assure me that the selection of this site is within the purview of the powers of the provincial government?


Thomas Alexander Crerar: I do not think there is any doubt of that, if they have the money to get it.


Richard Bedford Bennett: The minister need not take what they offer; that is all.


Thomas Alexander Crerar: No, not necessarily.
Resolution reported, read the second time and concurred in. ' Mr. Crerar thereupon moved for leave to introduce Bill No. 75 respecting the establishment of a national park and to amend the Nova Scotia and Prince Edward Island National Parks Act, 1936.
Motion agreed to and bill read the first time.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
Hon. C. D. HOWE (Minister of Transport) moved the second reading of Bill No. 56, respecting the appointment of auditors for National Railways.
Motion agreed, bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1-Appointment of auditors.
Hugh Alexander Stewart: Could the minister tell us for how many years this firm has been acting as auditors for the Canadian National Railways?


Clarence Decatur Howe: Since the formation of the railways in 1919, I think, except for an interlude of one year when it was replaced by another company.


Hugh Alexander Stewart: And how are the audi-
:ors selected? Are they chosen from a panel if eligible auditors?


Clarence Decatur Howe: This is highly technical work, and familiarity with railway accounting is the prime requisite. Because of the fact that Touche and Company have had such special experience in this particular work it is felt by the government that they are the logical people to carry it on.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.
[Mr. Crerar. 1

[Stage Direction]
Hon. P. J. A. CARDIN (Minister of Public Works) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to introduce a measure to authorize the Minister of Public Works on behalf of His Majesty to enter into an agreement to pay to the corporation of the city of Ottawa the sum of $190,000 for the year ending July 1, 1937.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
Mr. CARDIN:: Mr. Chairman, this resolution contemplates the introduction of a bill to permit the government to enter into an agreement with the city of Ottawa, continuing an agreement which was entered into several years ago. At that time, if I remember correctly, the agreement was made for five years, and for the last three or four years it has been continued year by year. This agreement with the city of Ottawa was entered into in settlement of a claim made by the city for compensation in lieu of taxes, and so on. The claim, as I explained last year, was for a very large amount, and after some negotiation the Department of Public Works came to an agreement with the city under which the government agreed to pay 8100,000 a year for a period of five years. That agreement lapsed several years ago, but has been continued by legislation each year since.
Resolution reported, read the second time and concurred in. Mr. Cardin thereupon moved for leave to introduce Bill No. 76 to authorize an agreement between His Majesty the King and the city of Ottawa.
Motion agreed to and bill read the first time.


Walter Edward Foster: When shall said bill be read a second time?


Hugh Alexander Stewart: Mr. Speaker, with the unanimous consent of the house I do not see any reason why the bill should not be put through all its stages tonight. The minister has explained its purpose, which is simply to continue an existing arrangement which I think is favourable to the dominion. I know that for several years, as the minister will confirm, the city of Ottawa has been claiming a larger amount than that specified in the bill, as compensation for certain services which they render. I am convinced that since there is nothing new in this bill as compared with the arrangement that has existed for many years, no valid objection can be taken to it. I believe it is in the

Fisheries Research Board
interests of the dominion and at the same time I think it is a fair arrangement for the city.
It will be noticed, however, that we are a year behind time. We are only paying now until July 1, 1937, and unless a new arrangement is made the government will have to come back next year for authority to pay up to the end of 1938. Usually our estimates cover the coming fiscal year to its end, but this agreement extends only to July 1, 1937, so to a certain extent we are in arrears every year.	*
Mr. CARDIN moved the second reading of the bill.


[Stage Direction]
Motion agreed to, bill read the second time, considered in committee, reported, read the third time and passed.


[Stage Direction]
Hon. J. E. MICHAUD (Minister of Fisheries) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to introduce a measure to repeal the Biological Board Act and to provide in its stead for the creation of a Fisheries Research Board to have charge of the fisheries research work carried on by the dominion; and to provide for travelling and other expenses of the members of the board and any emolument that might be deemed necessary to pay the chairman and secretary of such board.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
Mr. STIRLING:: Mr. Chairman, several
years ago certain excellent reasons existed for setting up a biological board, and it has been carrying out valuable work in connection with fisheries throughout Canada. Would the minister intimate the reasons why it is now necessary to do away with it, and substitute a branch of his department?


Hon. J. E. MICHAUD (Minister of Fisheries) :: The Biological Board of Canada was first organized by order in council in 1898, and subsequently by statute in 1912. It has been found by the board itself that the present title is misleading, because their work is confined to research in connection with fisheries. The term "biological board" has been misleading to the layman, and the board has felt it advisable that the name be changed.
The other change proposed has to do with the manner of selecting the members of the
board. The act of 1912 provided that the members should be selected by the minister, and there were specifications as to the types of people who should be on the board. As the act now stands we find that:
The board shall consist of five members appointed by the minister, and one additional member appointed by such universities, to be named by the minister, as may engage in the work of biological research.
As presently constituted, the board has become cumbersome. It has been found that it is not workable. Some universities gave no attention to research work in connection with fisheries and should not have the privilege of appointing members to the board.


Grote Stirling: Would the minister tell the committee how the members of the existing board were appointed?


Joseph Enoil Michaud: They were appointed as specified under the old act.


Grote Stirling: From which the minister has quoted.


Joseph Enoil Michaud: Yes; they will remain so appointed until January 1, 1938. At that time those who are on the board and are working without pay will remain, and the universities which have research departments performing the work now under consideration will be invited to send representatives. The board is composed of scientific men who give their time voluntarily and without pay to research work.
The board have found it would be better to have more representatives from the fishing industry. All the more important branches of the industry have their own research laboratories and carry on their own research work. It has been thought advisable to have more representatives from industry on the board, so that they may give their attention to the work. In future, when a vacancy occurs, the selection of members to sit on the board will be left to the minister. He will not be bound to have representation from any particular university, but may select representatives from universities specializing in research work in connection with the activities of the board.
Resolution reported, read the second time and concurred in. Mr. Michaud thereupon moved for leave to introduce Bill No. 77. to repeal the Biological Board Act and to create the Fisheries Research Board of Canada.
Motion agreed to and bill read the first time.


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