The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-07-01
STILL NEGOTIATING
WITH GRAND TRUNK
Sir Thomas White Tells Par
lament Proceedings Are
Not Abandoned.
QUESTIONED BY LEM1EUX
Proposal to Lease System by
Canada Preferred to Out
right Acquisition.
QUESTIONED BY LEM1EUX
BY a STAT corresponden. Of Tur Sun.

informed Parliament this morning that
negotiations are proceeding with the
Grand Trunk, through President Kelly
of Montreal, for taking over the Grand
Trunk system.
Negotiations stopped last January
when Chairman Smlthers insisted on
London being the centre Of negotiations
The Hon. Rodolphe Lemieux pressed
for information and urged that IL the
Minister of Finance would only state
"that the Government does not intend
to carry out the negotiations which were
SO much talked of at the beginning Of
the session about the Grand Trunk, he
would certainly enhance the credit of
Canada.
~ am told that in England the bond
holders of Grand Trunk and others who
are interested in the Grand Trunk. have
In the press and even in Parliament
questioned very much the proposed legis-
lation of the Government We have not
heard anything on the subject for some
weeks, and konsider that II that project
is Abandoned an announcement to that
effect from what little / know of the
fair name of Canada abroad, from a
financial standpoint. would certainly help
the Minister In negotiating any future
loan"
Progress Of Negotiations.
But Sir Thomas White would not give
out to Parliament the facts respecting
the condition or stage of negotiations
l Nl,a, liz mo- sol
I'VE have had several interviews with
Mr.. Kelly. representing the Grand Trunk
Railway board. We had n proposal from
| the Grand Trunk Railway Company, and
have been making certain Investigations
as to allegations that in some respects
| the findings of Messrs. Drayton and
Acworth were not entirely accurate, par
| ticularly with regard to the amount set
aside for depreciation by the Grand
| Trunk from year to year and the amount
| accumulated in reserves of subsidiary
| companies.
| "I stated In the House on more than
one occasion that the Government de-
sired to be fair, but the Government is
the trustee for the Canadian public and
II Is it's duty to see that IL the Grand
Trunk Railway is taken over 1t shall be
on terms that will not only be fair to
the Grand Trunk company but fair also
to the Canadian public. whom we repre-
| sent.
| However, am in a position to state
on good authority negotiations are pro-
ceeding In the direction of a permanent
long term lease OF the Grand Trunk
system. with guaranteed rate of interest
on all debenture securities of the Grand
Trunk. That debenture stock Is in the
trustee class of investments in England
and the arrangement will be such as TO
protect the holders Of the securities,
| The enterprise OF the directors led
them into the Grand Trunk Pacific under
Government leadership and assistance
| The Grand Trunk took $4,000 900 OF
stock in the new road and were later on
to take over the National Transconti-
mental from Winnipeg east to MonctOn
That never was done. II was found that
neither the Grand Trunk Pacific nor the
National Transcontinental Railway were
likely to pay for some time. The Ma
tional Transcontinental has been incor-
porated into the Canadian National Rail
way System. while the Grand Trunk Pa
! ctic is being operated under the MIN
lister OF Railways as receiver
Would Relieve Grand Trunk.
1t is understood that the proposed
: agreement between the Government and
7 the Grand Trunk will relieve that COM
pany OF all liability for the obligations
| OF the Grand Trunk Pacific, amounting
TO $s7 900 600. on the basis of its liabllI-
! ties. This road, with 2.s0S miles be-
tween Winnipeg and Prince Rupert. on
the Pacific coast, is valued at about
$215. 100000 The Government of Can
ada is a creditor to the extent of about
$90,000o0O. but in assuming this re-
I sponsibility there are assets TO repreSe nj
the liability
In taking over the Grand Trunk the
, Government will round off the national
railway system with 1867 miles OF good
paying roads in Ontario and Quebec,
thereby helping to overcome the loss
which will have to be provided against
| for some years. on the new lines.
! The question arose in connection with
a request by the Government for author
| ity TO make new loans to meet oblEa-
tons maturing on August next. The
criticism was all for economy. A capital
! expenditure of S92, 900. 600 has been pro-
! vlded for. large sum. 1t was pointed
out by the Liberal leader, ID. d. Mac
! kenzie. than was voted in pre-war years
! when Canada's national debt was only
about one-fourth of what 1t Is now.
The Grand Trunk Railway is valued
at $430,00O,O00. which. II added to the
national debt, would bring it up to near
/ the two and half billion mark next year
! A lease on good terms is therefore con-
Sidered preferable. The total mileage OF
the national system. including the Grand
Trunk, will be 1862 miles