New-York tribune., 1920-02-06
Shareholders to Act
On Naturalization
Of Grand Trunk
Canadian Government to Fix
Purchase Price of Shares
by Arbitration: Will Issue
Non Voting Certificates

LONDON, Wednesday. Feb. 4, Cana-
Canadian Government would take over
the Grand Trunk Railway System, in
cluding lines controlled by the Grand
Trunk in the United States, will be laid
before stockholders of tho company by
Sir Alfred Smithers, chairman Of the
board, February 49, With his call for
the meeting. sent out o-day. Sir Al
fred issued a circular stating the board
Of directors advised acceptance Of the
proposals, which were in the form of
an agreement approved by the Cana
dian Parliament last October.
Rate increases granted the Grand
Trunk have been inadequate to keep
pace with the enormous expenses in
CURED during the last Few years, the
circular says, and the situation Of the
company is declared to have been
greatly aggravated 1t Is pointed out
that the United States government
saved shareholders from loss by guar
anteeing incomes to the companies,
while British railroad companies had
a similar guaranty for 1914. This as
sistance was not given the Grand
Trunk, it is declared.
What Government Proposes.
when the Canadian Government be-
comes the owner OF the SYSTEM" the
circular continues, at speedily can
bring about such reimbursement of
rates as will permit a fair return on
the capital invested"
The government agrees to assume
the debentures of the company, and
also an issue of per cent. "guaran-
teed stock" the holders OF the latter
receiving in exchange for their stock
per cent. non-voting certificates.
The common stock and the several pre-
ferred issues Of the company are to be
purchased by the government at a
price to be fixed by arbitration. The
iyolders will receive pro rata 4 per
cent. non-voting certificates, redeem
able at par any time after ten pears.
As soon as the shareholders agree to
accept the agreement management of
the road will be taken over by board
of five members, appointed partly by
the government and partly by the com
pany. When the sale is finally con-
cluded the Grand Trunk will formally
become part Of the Canadian National
System, which includes the Intercolo-
NAL the National Transcontinental and
the Canadian Northern.
Difficulties Started in 1903
The difficulties of the Grand Trunk
date back TO 1903, when the late
Charles NJ. Hays, then president OF the
company, undertook to extend the sys-
tern westward to the Pacific Coast. BY
arrangement with the Canadian gov
ernment the Grand Trunk Pacific was
constructed from Winnipeg TO Prince
Rupert on the Pacific by the Grand
Trunk, the government and Grand
Trunk guaranteeing the construction
bonds, At the same time the govern
ment constructed the National Trans
continental from Winnipeg east to
Moncton, New Brunswick. on an agree
ment with the Grand Trunk 10 lease
and operate the road when built. The
government built road cost so much
that the Grand Trunk could not meet
interest on the guaranteed bonds. The
government came to the aid of the
company year after year until 1918,
when it was decided TO hold the Grand
Trunk TO its 1908 bargain. Negotia-
tions FOR the taking over of the sys-
tenn then began.