New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-05-14
Government to Guarantee
S45,OOO,O00 Northern
Bond Issue.
TO TAKE $33,000,000
OF ROADS SECURITIES
Virtual State Ownership for 1926
Miles of Track-Company Needs
More than S100,000,000.
rRy Telegraph to The Tribune.l

ottawa. May 1S.-The Canadian North
srn Railways financing bill providing
government guarantee Of $45,ooo,OoO of
the company's bonds, the government TAX
ing So. 900. 900 interest in the company.
VAS introduced in the House OF Commons
to-day. Premier Borden. in introducing
The resolution upon which the govern
ments bill is based. said.
Lack Of courage in dealing with this
Great problem would be a national dis
Grace. Every dollar of the proceeds from
these bonds will be used TO complete the
system. II has been suggested that the
road should be allowed 20 so into liquida-
ton for the purpose Of cutting down It's
uncuaranteed securities. This never COM
mended itself TO me- To save S25,00O,OOO
or $4,000. 600 i'm this way would result in
tenfold loss 20 the credit Of Canada. II
Sir William Mackenzie and Sir Donald
Mann. the proprietors of the road. had as
ISOLATED themselves with large financial
interests they might have avoided the
condition in which they now find them
selves
II is generally recognized that this lat
est step In Canadian Northern financing
and the action Of the Borden govern
nent in indorsing the plan announced in
the House Of Commons to-day by the
Prime Minister open new era in Cana
ds's railway history. The resolution
moved in the House Of Commons to-day
hv Mr. Borden states the terms Of the
bin. which is unQuestionably the most
.onplex and original piece Of railway
and financial legislation ever attempted
on this continent by any government II
is conceded that 1t is likely TO prove
long step in the direction Of government
ownership or control Of railways In
canada, and that in any event it com
nits Canada 10 a long period Of alliance
with the Mackenzie and Mann projects
bv making the Dominion partner In The
roultifarious activities OF Sir William
Mackenzie and Sir Donald Mann.
Reeeivership Hinted At.
THAT receivership would follow re-
fusaI BY the government was more than
limited ct. and 1t was pointed out that
such q thing would terribly injure the
credit of Canada. Equipment notes to
the extent Of some twenty-odd millions
are held in the United States and further
ISSUES Of this character are likely TO so
% that market.
The Canadian Northern has now in op-
Grafton 1886 miles. 15i2 miles OF track
laid. but not in operation, 50 miles OF
completed grade and 23o miles uncom-
rleted. but under contract. The company
states that TO complete its system. in
Guiding additional rolling stock for when
f. proposes TO spend S27.441 .0s6, it will re-
guire 1o0379.o 99 Proceeds Of securities
cash subsidies, etc, will yield, the com
pany tells the government. S5S,iIS'SS2' leav-
ing TO be raised by means Of the sale OF
the proposed government guaranteed
bonds sl.sO5.117 The company has al
ready received In cash:
From the S2l$ q =, 30 80
From provincial governments. 6'S'6,3oO
Total ............................. S25,254,7S4
Federal guarantees amount 10. .lsa 'l96 6 d d5s
Provincial guarantees............. 'o'oJV'-Vo
Total government cash and -, ,o-
guarantees ...................S-os,Z4 al, 4oo
Yhe company had in the West 4'cO2 SiS
acres of valuable land and in the East
it will receive from Ontario 100000 acres
and from quebec nearly 10000 acres. 1t
has also received $4,000 cash subsidies
from Western municipalities 1t has sold
al OF its Western lands except S7535
acres for sl6,524,SOj. The Ontario and
Quebec lands have not yet been located
and no financial assistance or advantage
has been derived from them.
Heavy Interest Charges.
The outstanding securities Of the Cana
dian Northern are S11,276S22, upon which
the present annual interest charge is
S8.u6O24. The interest charge upon the
proposed $l5,O0O.OOO bond issue will bring
the annual interest charges up TO Sl4,-
sl6O24
There has been paid out for construc-
ton, betterments and equipment s395.Sos.-
$50. Adding TO this the amounts required
10 complete and equip the system. the
total cost OF the system will evidently be
upward Of 100000.
The terms on which the government
proposes to guarantee S45.OOO0OO Of Cana
dian Northern bonds are set forth IN -
days resolution, which authorizes the
Dominion OF Canada 10 laid the con-
struction, completion and equipment Of
tho Canadian Northern system" The
bonds are to bear per cent interest, pay
able seml-annually the principal to BIS
payable in 1884 The government agrees
TO pay the interest on these bonds for tire
first three years. which interest shall be
added to the principal amount. and the
Canadian Northern is to pay interest on
these interest payments till maturity.
The company is TO execute TO the Domin-
ion, subject TO the existing perpetual con-
solidated stock deed, a first mortgage
upon It's shares in eighteen subsidiary
companies.
Government Gets Mortgages.
The company is also 20 give 10 the gov-
eminent a mortgage on the mortgage Sc
ourities and shares held by It in eleven
public utility companies. These aggregate
IT, par value SIS 925, 600. Another mortgage
is TO be given by the company TO the gov
eminent upon the Canadian Northern and
its properties. rights and franchises.
In addition there is to be transferred
absolutely 10 the Minister OF Finance and
Receiver General for Canada in trust for
the government Of Canada So, 600 Of the
capital stock of the Canadian Northern.
The government took 100000 of the COM
pany's stock last year. when II gave the
company a $l6.O0O,O00 cash subsidy. The