The sun., 1919-09-28
GRAND TRUNK AIDS
GOVERNMENT PLAN
Negotiations to Round Off
Canadian National System
at Final Stage.
SALE OR LONG LEASE2
No Pressure of Public Opinion
Behind Transactions For
or Against.

~ BfdG Correspondent OF The SuN
OTTAWA, Sept. 27.--The Grand Trunk
negotiations have reached the final stage
Of decision. The Government wants the
Grand Trunk lines to round of the Ca
madam National system. The Grand
Trunk Company is under obligations for
the Grand Trunk Pacific which cannot
be avoided, and no effort has been made
by the company to do so. But to con-
tinue to operate the Grand Trunk Pa
cihc would mean an end to dividends
for years to come for the bondholders
OF the Grand Trunk; hence the willing
ness OF the company's agents to nego-
tiate for a sale or long term lease and
let go the future potentialities.
The Government is willing to first de-
benture stock of y17S,313575 as at De-
cember 81. 1918, and to add to the fixed
charges the S62500,000 OF 1 per cent.
guaranteed stock, but for the remainder
Of the Grand Trunk securities there Is
difference OF position between the nego-
tiators. There Ia some s29.750,000 Of
first and second preferred per cent.
stock and s35,s43,s0B third preferred 4
per cent. stock about which conclusion
may be possible but the Grand Trunk
ordinary or common stock. on which 1t
Is claimed there has been an actual in
vestment Of $s0.0o0.000. but which the
Government is slow to appreciate. No
dividend has ever been paid on this or
dinary stock, but the preferred stock
made a good showing for the decade be-
fore the war.
There is no pressure OF public opinion
behind the negotiations for or against.
They are the subject OF some editorial
comment, but otherwise not much is said.
Even Parliament Is silent on the sub
ject.
The opinion prevailing in Government
circles is that the Canadian National
Railways Corporation will be able to
operate the Grand Truik lines in Ameri-
can territory under the same rights and
privileges as any other corporation. But
the question has not reached the stage
where that point has called for an Off
cial decision.
Canadian Pacific Operation.
The Canadian Pacific Railway Com
pany operates 1S.625 miles of railway,
Of which 1853 miles are in the United
States That heavy investment in
American territory acts as a hostage.
and is a standing guarantee of fair
banding Of through traffic from sea to
sea. The Canadian Pacific has capacity
for heavy traffic over the American lines.
and the north shore main is a counter
guarantee Of security against any at
tempt at unfair restrictions on the
American lines Of the company.
The original plan OF the Grand Trunk
for transcontinental traffic in the nego-
tiations of 1907-0s was to build n line
from Winnipeg to the Pacific coast, the
Grand Trunk Pacific and have a line
from Winnipeg to Fort william for the
lake traffic only. For the winter traf-
fc II was proposed to build or acquire
a line from Winnipeg to Chicago. con-
Meeting there with the main line to Mon
treai and Portland. The advantage Of
| that plan was that the Grand Trunk
would have had several big towns along
its own lines at which there would be
market for the western Provinces,
grain and livestock.
But the policy OF the Canadian Gov
eminent would not admit OF that plan
The National Transcontinental was
projected across the northern stretches
of Ontario and Quebec and on to the
Atlantic through an undeveloped terri
tory where the local traffic amounted to
little and where there was no local mar
ket for the western products. The
| Or and Trunk consented to an agreement
| 20 take over the Transcontinental on a
basis of capital expenditure explicitly
otated and to pay interest at 8 per cent.
or the capital invested by the Govern
ment. But the actual cost of the road
vastly exceeded the sum mentioned in
the Grand Trunk agreement and the
company declined To carry the burden.