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

Mr. SUTHERLAND:: 1.	Has the Government asked for an explanation or statement from the Board of Commerce regarding the statement alleged1 to have been made 'by W. F. O'Connor, vice-chairman of the board, at Hamilton on September 16, published in the Toronto Globe and other papers on September 17, as follows:
"This is not the time for an increase in prices. Prices should go down from now on. In this connection I wish to announce now that all vendors from the farmer who increase the price on milk or anything else will be guilty Of an indictable offence punishable by a fine of $1,000 and two years' imprisonment."
2.	If so, what explanation or statement has been given?
3.	If not, is it the Intention of the Government to ask for one?
4.	Did W. F. O'Connor, vice-chairman of the Board of Commerce, on or about September 16 issue a ruling, order or injunction regarding the price of milk?
'5. If so, did such ruling, order or injunction have the concurrence of the other members of the board?
'6. Did this apply to the whole of Canada, or to some particular part or portion thereof?
7.	Is same still in force or effect?
8.	If not, when was it repealed?
9.	If repealed, what is the condition or situa-ton at present in so far as the ruling, order or injunction of the board applies to the milk producers of any portion or province of the Dominion of Canada?


Hon. Mr. DOHERTY:: 1.	The Government has not asked for an explanation or statement as referred to, as this seems to have been simply a warning [DOT]of the commissioner with an indication of possible penalties for disobeying orders that may be passed by the hoard.
2 and 3. Answered by No. 1.
4. Mr. O'Connor, the vice-chairman of the Board of Commerce, did on September 16, 1919, issue a ruling regarding the price of milk, in which it was ordered as follows:
" Upon representation and1 proof made to the board that certain producers and
vendors of the above mentioned commodities within the above named province purpose demanding and exacting from their vendees within such province, enhanced prices upon the sale of such commodities, and
" In pursuance and under authority of the provisions of the Combines and Fair Prices Act 1919, and of a certain order of the hoard made at Winnipeg, Manitoba, the fourteenth day of September, 1919, whereby the commissioner above-named is vested, in addition to his general and other special powers, with power to make, sign and issue for and on behalf of the board this order, in the terms hereof- -
" It is ordered that the Wentworth Milk Dealers Association, the members whereof trade principally within the city of Hamilton; the Model Dairy, which trades principally within the city of Guelph; the Toronto Milk and Cream Producers Association, the members whereof trade principally within the city of Toronto; the City Dairy, Limited, and the Farmers' Dairy Company, Limited, which companies, firms or associations trade principally within the said city of Toronto, and all other companies, firms and associations which produce or trade in, or the members whereof produce or trade in either of said commodities, within said province of Ontario, and the officers, directors, members, managers, clerks, servants and employees of any of such or indicated associations, companies or firms, and all persons whomsoever who may produce or sell, whether as principals or as .agents, and whether by retail or wholesale or otherwise, within said province either of said commodities, are restrained, enjoined and prohibited from selling or offering for sale and from further continuing to sell or to offer for sale to any association, company or person either of said commodities .and from combining or agreeing, any one of them with any other or others of them, to sell or to offer for sale or to further continue to offer for sale, either of said commodities at sale prices greater than those whereat such associations, companies, firms or persons customarily sold or offered for sale said commodities respectively, on the fourteenth day of September 1919, until the further order of this board to be made within forty days after said fourteenth day of September, 1919.
"And it is further ordered that any sale made in contravention of this order shall be deemed one made for an unreasonable and unjust price."
5 and 6. Answered by No. 4.



7. On September 26 the following order was passed, the Chief Commissioner and Mr. O'Connor being present:
" In the matter of milk prices in portions of Ontario.
" Upon reading the order made by the board herein on the sixteenth day of September, 1919, -and upon hearing the various parties concerned and it appearing that with regard to the city of Toronto an arrangement has been made, by means of a representative local committee as follows:
That for the period of two months ending 30th November, 1919, the wholesale price of $3.10 per 8 gallon can of milk delivered .at the dairy in Toronto may be made, and that the retail distribution price for that .period may be thirteen pint tickets for one dollar.
The board therefore orders that said prices shall not be deemed unfair or to include excessive profits, but reserves the right to declare that any higher price shall be excessive.
That .after the 30th day of November, 1919, application may be made for a declaration that the price is then unfair at which time may be considered inter alia the then prices of. animal feed and other costs entering into milk production.
That the injunction contained in the said recited order be and it is hereby dissolved.
That any person may at any time apply to this board by way of complaint against milk prices elsewhere in Ontario notwithstanding this order or the dissolution of the said injunction."
8 and 9. Answered by No. 7.


AMNESTY TO (M.S.A. DEFAULTERS.
*Mr. ETHIER:: 1.	Since the 18th day of September last, did the Honourable Secretary of State for the Dominion receive a co.py of a resolution, adopted by the city of Montreal, on the 8th of September last, concerning an amnesty in favour of those who failed to comply with the Military Service Act?
2.	If so, what steps have been taken by the Government in this connection?
3.	Does the Government approve or disapprove such resolution?


Hon. Mr. GUTHRIE:: <
1.	A copy of such a resolution was received by the Government. It was in the nature of a request to H. R. H. the Prince of Wales. No action was taken upon it.
2.	No steps have been taken by the Government in this connection.
3.	The Government neither approves nor disapproves of such resolution.


STATUS OF CANADIANS IN IMPERIAL FORCES.
Mr. DEMERS:: Does the Government intend to take the necessary steps to insure that British subjects naturalized in Canada who, when war was declared, enlisted in their native country, and who returned to Canada after being demobilized, shall receive the same treatment as if they had enlisted in the Canadian Expeditionary Force?


Hon. Mr. MACLEAN:: It is understood this matter is receiving the attention of a special Committee of the House.


KING AND QUEEIN OF BELGIUM.
Mr. LAVIGUEUR:: 1.	Has an invitation to visit Canada been extended by the Government to Their Majesties the King and Queen of Belgium, and their son, Prince Leopold, actually in the United States?
2.	If not, is it the intention of the Government to invite the heroic sovereigns, who are now the guests of the American Government, to come to Canada?


Hon. Mr. DOHERTY:: An invitation has been extended to Their Majesties the King and Queen of Belgium, but a formal and definite answer has not yet been received from them.


CAR SHORTAGE.
Air. LAVIGUEUR:: 
Hon. Mr. REID:: 1.	According to statement issued by Canadian Railway War Board on October 2, 1919, there was a total of .59,671 Canadian owned freight cars in United States, and a total of 38,069 United States owned freight cars in Canada, the excess of cars in United States being 21,602. Included in the above there were 44,019 Canadian owned box cars in United States and 20,650 United States owned box cars in Canada; the difference in this case being 23,369. We have received very few complaints about shortage of cars for lumber shipments to points within the Dominion, or for export overseas, but it has [DOT]been found impossible to secure an adequate supply of United States owned cars to take care of shipments of lumber, pulp and paper from Canadian to United States points. It is impracticable to furnish Canadian owned cars freely for such traffic inas-

much as the cars are not promptly returned to Canada, and such action would immediately result in producing a shortage of cars for Canadian internal traffic. The Minister of Railways has taken the matter up with the authorities at Washington and every effort possible has been made to secure a balance of equipment.
2.	The standard per diem or car rental charged by one railway to another for the use of freight cars, is at the present time sixty (60c.) cents, per day, per car, this rate being established by the American Railway Association, and we are not aware of any proposal to change the rate, neither [DOT]would a change in rate materially effect the question referred to.


CANADIAN OFFICIAL RECORD.
Mr. DUFF:: 1.	When was the Canadian Official Record first published?
2.	When did its publication cease?
3.	What was the total cost to the country of the Canadian Official Record, including salaries paid?


Hon. Mr. ROWELL:: 1.	October 1, 1918.
2.	August 28, 1919.
3.	$40,134.36.	,


DR. A. T. SHILLINOTON.
Mr. DUFF:: 1.	Was Dr. A. T. Shillington, of Ottawa, engaged in any service overseas during the war?
2.	If so, what duties did he perform, and how much per day was he paid?
3.	Up to the present time, what amount has been paid to Dr. Shillngton?
4.	Has his pay ceased, or is he still on the pay roll? .


Hon. Mr. ROWELL:: 1.	Yes; proceeded overseas with the 1st Contingent.
2.	(a) On the strength of No. 2 Stationary Hospital, France; Assistant Director of Medical Services, Bramshott; Transferred to office of Director of Medical Services, London; Assistant Director of Medical iServices, Canadian Training Depot, Shorn-cliffe; Officer Commanding Kitchener Military Hospital, Brighton; Returned to Canada September 10, 1917.
(b) Pay and allowances of his rank, viz., $6.25 per diem.
3.	Up to the present time, the amount paid to Dr. Shillington is $13,379.82, including $1,503,75 War Service Gratuity; and also $2,430 Separation Allowance.
4.	Pay ceased December 23, 1917, and this officer is not now on the pay-roll.
64}


DREDGING AT LANORAIE.
[Stage Direction]
Mr. G-ERVAIS:
What was the cost of the dredging work executed during the summer of 1912 at Lanoraie, county of (Berthier?
Hon. Mr. SIFTON:: $4,949.40 for dredging and $144 for inspection.


TANLA'C PATENT MEDICINE. -
*Mr. GAUVREAU:: Is it the intention of the Government or the Department of Public Health to order an analysis of the patent medicine called Tanlac, so as to ascertain if it contains 16.4 per cent ' alcohol?
Hon, Mr. ROWELL: An Advisory Board has 'been appointed by the Government to comply with the requirements of the "Act to -amend the Proprietary or Patent Medicine Act," Chapter 66,	9-10, George V,
passed last session and it is the intention of the Government to ask this board to report on Tanlac.


CANADIAN .'FISH IN ENGLAND.
Mr. DUFF:: 1.	Is it a fact that a large quantity of fresh or frozen fish, owned by the Canadian Government, was given away free of charge to the populace of London, England?
2.	If so, what was the quantity in pounds so given away?
3.	What did said fish cost the 'Canadian Government?
4.	Why was this fish not sold to the highest bidder or bidders, and the proceeds paid over to the Receiver General of Canada?
5.	If the said fish could not be sold, why was it not brought back to Canada in steamers containing refrigerator compartments, and distributed free to the Canadian people?


William Findlay Maclean: This information is not available in Canada, but a cable is being sent overseas for the same.


MR. FRANK YEIGH.
Mr. DUFF:: 1.	Was Mr. Frank Yeigh, of Toronto, employed by the President of the Privy Council in the Department of Public Information or in some other branch under the minister's direction?
2.	If so, what were Mr. Yeigh's duties and salary ?
3.	Was Mr. Yeigh so employed in February, 1918?
4.	While so employed in February, 1918, did Mr. Yeigh 'attend the Sportman's dinner of the Canadian 'Camp at New York?
5.	How much was paid out of the public treasury for Mr. Yeigh's trip? Has the amount so paid been returned to the public treasury, or has any demand for its return been made?


Hon. Mr. ROWELL:: 1. Mr. Yeigh was employed in the Department of Public Information which is under the President of the Council.

2.	Secretary and travelling organizer, War Lecture Bureau, $300 per month.
3.	Yes.
4.	The Government has no information.
5.	Nothing.


QUESTION PASSED AS ORDER FOR RETURN.
Mr. BURNHAM:: 1.	What is the share of the Canadian Expeditionary Force in the $30,000,000 canteen profits of the British Expeditionary Force now being dispensed by Sir Julian Byng for the benefit of the British soldier?
2.	What has become of the Canadian Expeditionary Force, the Y.M.C.A., and other canteen profits arising from all sources in the Canadian Expeditionary Force?
3.	What are the amounts of those profits respectively?
4.	Has any one been appointed to see that canteens within C. E. F. areas at which the Canadian soldiers made purchases shall hand over their profits for the benefit of the Canadian soldier? [DOT]


TEMPERANCE LEGISLATION.
[Stage Direction]
On the Orders of the Day:
Mr. D. D. McKENZIE (Cape Breton North and Victoria):: Mr. Speaker, I
would like to direct the attention of the Minister of Justice (Hon. Mr. Doherty) to the fact that two important Bills on the Order Paper, namely, Bill No. 26, an Act to amend the Canada Temperance Act, and Bill No. 27, an Act to amend an Act in aid of provincial legislation prohibiting or restricting the sale or use of intoxicating liquors, were in line for moving forward yesterday. Can the Minister of Justice inform us if there is any good reason why these Bills were not then taken up? We had plenty of time and could very well have devoted it to a consideration of these measures.


Charles Joseph Doherty: I did not happen to be in the House yesterday at the adjournment. Replying to the hon. gentleman's question-I do not know that there is any good reason, except that there are good reasons always for what this Government does and for what it refrains from doing.


GRAND TRUNK RAILWAY SYSTEM.
[Stage Direction]
Hon. J. D. REID (Minister of Railways and Canals) moved that the House go into Committee to consider the following proposed resolution:
WTiereas the present capital stock of the Grand Trunk Railway Company of Canada, consists of the following:-

Four per cent (4%) guaranteed
stock	 £12,500,000
First preference five per cent (5%)
stock		3,42*0,000
Second preference five per cent
(5%) stock	 2,53,000
Third preference four per cent
(4%) stock	 7,168,055
Common stock	 23,955,437
£49,573,492
And whereas the present outstanding debenture stocks of the Grand Trunk Railway Company of Canada consisting of :-
Five per cent (5%) Grand Trunk
debenture stock	 £ 4,270,375
Five per cent (5%) Great Western debenture stock		2,723,080
Four per cent (4 % ) Grand Trunk
debenture stock	 24,624,455
Four per cent (4%) Northern
debenture stock	 308,215
£31,926,125
(herein after called the "present debenture stocks") are entitled1 to certain voting powers at meetings of shareholders of the Grand Trunk Railway Company of Canada;
And whereas it is expedient that His Majesty should acquire the whole of the capital stock of the Grand Trunk Railway Company of Canada except the four per cent (4%) guaranteed stock above referred to;
It is therefore resolved that it is expedient to provide as follows:-
1.	That subject to the provisions of these
resolutions His Majesty the King, represented by the Minister of Railways and Canals of Canada, acting under the authority of the Governor in Council (hereinafter called the "Government"), may enter into an agreement (hereinafter called the "said agreement") with the Grand Trunk Railway Company of Canada (hereinafter called the "Grand Trunk") and with such other companies and interests as the Government may think necessary for the acquisition by the Government of the entire capital stock of the Grand Trunk, except the four per cent (4%) guaranteed stock of the Grand Trunk, amounting to £12,500,000, the-latter being hereinafter called the "present guaranteed stock."	-
2.	That the said agreement shall contain provisions for the defining of the companies, properties and interests, comprised in the Grand Trunk system, and, including the terms and provisions hereinafter set forth, may contain such other terms and conditions as the parties may agree upon.
3.	That as part of the consideration for such acquisition the Government may agree to guarantee the payment of :-
(a)	Dividends payable half yearly, at four per cent per annum, upon the present guaranteed stock;
(lb) The interest upon the present debenture stocks as and when payable, in accordance with the terms thereof.
These guarantees to take effect upon the date of the appointment of the Committee of Management hereinafter mentioned.
(c) Dividends payable half yearly at four per cent per annum from the date of the appointment of the Committee of Management hereinafter provided for, upon an issue which is hereby authorized by the Grand Trunk under the terms of the said agreement of

non-voting capital stock (hereinafter called the "new guaranteed stock"), not exceeding the amount determined by the Board of Arbitrators, as hereinafter set forth.
Provided that concurrently with such guarantee of dividends and interest upon the present guaranteed stock, and the present debenture stock, respectively, the voting powers at meetings of shareholders of the Grand Trunk now vested in or exercisable by the holders of the said stocks respectively shall cease and determine absolutely.
4.	That the present guaranteed stock and the new guaranteed stock or any part thereof may be called in or redeemed iby the Government, at par, at any time after thirty years from the date of the appointment of the said Committee of Management on six months' notice, by advertisement, to the holders thereof.
5.	That the value, if any, of the first, second and their preference stocks and the common or ordinary stock of the Grand Trunk now issued and outstanding to the face values above mentioned (hereinafter together called the "preference and common stock"), shall be determined by a board of three arbitrators, one to be appointed by the Government, one by the Grand Trunk, and the third by the two so appointed, or, failing agreement, by judges to be designated in the said agreement. New guaranteed stock, to an amount not exceeding the value, if any, so determined, carrying a dividend as hereinbefore authorized shall be distributed among the holders of the preference and common stock, upon the transfer to or vesting in the Government of such stock, in proportions which shall be determined by the arbitrators.
6.	That as soon as said agreement has been ratified by a majority of the holders of the stocks enumerated in the preamble to these resolutions present in person or by proxy and voting at a special general meeting of such stockholders duly called for the purpose of considering such agreement;
(a)	A Committee of Management shall be formed consisting of five persons, two to be appointed by the Grand Trunk, two by the Government, and the fifth )by the four so appointed, to insure the operation of the Grand Trunk system (in so far a3 it is possible so to do), in harmony with the Canadian National railways, the two systems being treated in the public interest as nearly as possible as one system. The committee shall continue to act until the preference and common stocks are transferred to or vested in the Government, when. it shall be discharged.
(b)	The books, minutes, reports, documents and other records, and all the railways and properties of the companies comprised in the Grand Trunk system, shall at all times be accessible and open to inspection and examination by any person or persons named by the Minister of Rail-wavs and Canals of Canada, or by the Boaid of Arbitrators; and all proper aid and assistance shall, on request, be rendered to such person or persons toy the Committee of Management and by the officers and employees of the Grand Trunk and its allied companies, including the making and giving of extracts, copies and statements.
7.	That the Government may lend to the said Committee of Managament, upon the notes or other obligations of the Grand Trunk, such sums as the Government may from time to time deem necessary for the carrying on of the operation or improvement of the Grand Trunk system.
8.	That the said agreement shall provide , among other necessary and usual provisions for:-
(a) The appointment of the arbitrators, the control of the arbitration proceedings, the administration of oaths, the procuring and admission of evidence, and the making of the award;	.
(to) The transfer to or vesting in the Government or its nominees of the preference and common stock upon the issue of new. guaranteed stock in exchange therefor;
(c)	The resignation or vacating the offices of the Board of Directors of the Grand Trunk and of each company comprised in the Grand Trunk system upon the preference and common stock being transferred to or vested in the Government.
(dl The entrusting to the said Committee of Management by the Minister of Railways and Canals as Receiver of the Grand Trunk Pacific Railway system, on terms to be approved by the Governor in Council, of the exercise of such of his powers as Receiver as the Governor in Council may deem requisite in order that the operation and management of the said Grand Trunk Pacific Railway system may ibe conducted in harmony with the operation of other railways and properties under the control of the said committee.
(e) The continuation and administration of the Grand Trunk Railway of Canada Superannuation and. Provident Fund Association the Grand Trunk Pension Fund, and the Grand Trunk Railway Insurance and Provident Society, in accordance with the terms to be set forth in said agreement.
9.	That the Government and the Grand Trunk, and each company comprised in the Grand Trunk system, and all persons interested therein, be hereby respectively authorized to enter into the said agreement upon and subject to the terms herein set forth, and to do and perform all such acts and things as may be deemed necessary to observe, perform and comply fully with the terms and conditions of said agreement.
10.	That any orders of the Governor in Council which the Government may deem requisite to vest 111 the Government, any of the preference or common stocks not transferred to the Government or its nominees under the terms of these resolutions, or requisite to vacate any office of director, or otherwise to carry into effect the terms and provisions of the said agreement may be made and passed with the effect specified in any such Order in Council.
11.	That upon the transfer to or vesting in the Government of the preference and common stock as herein provided for, the Government may, by Order in Council, provide for the discharge of the receivership of the Grand Trunk Pacific Railway system and the termination and withdrawal of the proceedings in the Exchequer Court of Canada relating thereto.
Mr. SPEAKER:: Ts it the pleasure of the House to adopt the motion?


Some hon. MEMBERS:: No.


Mr. DEVLIN:: Mr. Speaker, I would like to ask the minister-


Edgar Nelson Rhodes: The motion is not debatable. Of course, if hon. members desire

that a vote be taken on the motion, that *would be quite in order. Is it the pleasure of the House to adopt the motion? .


Some hon. MEMBERS:: No.


Some hon. MEMBERS:: 'Carried.
The House then divided on the motion of Hon. Mr. Reid, which was agreed to on the following division:

Messrs.
Allan,	Maclean ( Halifax),
Andrews,	McGregor,
Argue,	Mclsaac,
Armstrong (Lambton),	McLean (Royal),
Ball,	McQuarrie,
Blair,	Manion,
Blake,	Martin,
Bolton,	Meighen,
Bowman,	Mowat,
Boyce,	Myers,
Buchanan,	Nesbitt,
Campbell,	Nicholson
Chaplin,	(Queens, P.E.I.),
Charlton,	Redman,
Clark (Bruce),	Reid (Grenville),
Clements,	Reid (Mackenzie),
Cowan,	Rowell,
Crerar,	Shaw,
Cronyn,	Sheard,
Davidson,	Sifton,
Foster (York),	Steele,
Guthrie,	Stevens,
Hal lad ay,	Stewart (Hamilton),
Harold,	Thompson (Weyburn),
Harrison,	Thompson (Hastings),
Hay,	Thompson (Yukon),
Henders,	Tweedie,
Johnston,	Whidden,
Lang,	Wigmore.-58.
Mackie (Edmonton),	


Edgar Nelson Rhodes: Under our rule, a vote once given must stand.


[Stage Direction]
Motion agreed to, and the House went into Committee on the resolution, Mr. Boivin in the Chair.
Mr. J. D. REID (Minister of Railways and Canals) said: Before asking the Committee to pass this resolution which stands in my name, I wish to make a few statements in regard to the railway situation. Let me first say that the statement made by the Minister of the Interior (Mr. Meighen), on Friday last, explains fully the negotiations which took place in connection with taking over the Grand Trunk railway. The resolution which is now submitted to the Committee contains the Bill which I will introduce on the passing of the resolution. It may be well for me to state what has led up to the present position and the

decision/ to take over the Grand Trunk Railway system.
The Committee will remember that the Grand Trunk Railway Company, under the management of the late Charles M. Hays, decided in the year 1903 that the Grand Trunk Railway Company, in order that it might be able to compete on an equal basis with the Canadian Pacific railway, must extend their line into the territory of the Great Northwest. Accordingly, they applied to Parliament for and received a charter to build a railway from Winnipeg to the British Columbia coast. The Government of the day decided that they would construct a road from Winnipeg to Moncton and hand it over to the Grand Trunk Railway Company by way of lease. The facts in connection with this transaction have been discussed so often in the House that I do not intend going into any further details except to say this, that on the completion of the Grand Trunk Pacific railway and the Transcontinental railway, the Grand Trunk Railway system, or what is known as the old Grand Trunk Railway Company, held themselves responsible for the cost of operation and all liabilities that might be incurred in connection therewith. They refused to take over the Transcontinental between Winnipeg and Moncton, and the Government have been operating that railway since its completion at an annual loss of several millions of dollars.
On the completion of the Grand Trunk Pacific railway, the Grand Trunk Railway Company became responsible for the operation and fixed charges of the Grand Trunk Pacific. The Grand Trunk Railway Company on February 1 last refused to continue paying interest on bonds guaranteed by them, and- accordingly the road had to go into the hands of a receiver. Let us see what assistance the Government of Canada had given to them up to that date over and above the original agreement that was made in connection with this railway. These are the items:
1 year-1909-loan $10,000,000
1913	"	15,000,0001914,	"	6,000,0001914	further
guarantee 16,000,000 of their bonds
1916	loan	8,000,0001917	"	7,500,0001918	"	7,500,000
[Stage Direction]
It will thus be seen that a total of $70,000,000 has been advanced to the Grand Trunk Pacific railway.
Of course, mortgages were taken on the road, but what good was that security if the road was losing money? Was it not better either to take over the road, or make some disposition of it that would stop further enormous yearly losses such as I have mentioned?
Why did the Government advance these loans to the Grand Trunk Pacific? It was because they believed it would be a national calamity to create a financial crisis while the war was on, and that so long as the road was able to meet or nearly to meet operating expenses it was better to defer final action until the war was over or the end in sight. However, when the Government decided that they would not consider any further advances to the Grand Trunk Pacific the whole railway question had to be considered. It was decided that the Grand Trunk Pacific should be operated under the direction of a receiver. The falling of the Grand Trunk Pacific into the hands of a receiver made the Grand Trunk system directly responsible for the securities guaranteed by them in respect of the Grand Trunk Pacific Railway. It was impossible for tne Government to assume the Grand Trunk Pacific liabilities and release the Grand Trunk Company from their obligations. There was no question what would happen if the Grand Trunk were compelled to meet the obligations they had guaranteed-they could not possibly meet them. For this reason the Grand Trunk Railway has been pressing that negotiations be continued until a final decision had been reached.
The Minister of the Interior (Mr. Meighen) has already given the final results of the negotiations, and I wish now to refer a little more particularly to the position in which the Government will be placed. When the Grand Trunk system is controlled by and included in the Canadian National Railway system we will have the following mileage owned, operated, and controlled by the Dominion Government: Grand Trunk Railway system, 5,357 miles; Grand Trunk Pacific Railway system, 2,816 miles; Canadian Northern Railway system, about 10,000 miles; Transcontinental Railway system, 1,810 miles; Intercolonial Railway and branch lines attached thereto, 1,800 miles; or a total of 21,783 miles. That is, 22,000 miles, in round numbers, will be owned and operated by the Government ot Canada. That constitutes the largest railway system owned or controlled by any one corporation on the American continent.
[Stage Direction]
It has always been practically understood by the people of Canada that if wie wish to have a transcontinental system that could be operated economically and on a basis similar or equal to ithat of its great competitor, the Canadian Pacific Railway system, it was necessary that the Canadian Northern Railway system, being practically a western railway system, should be joined up with the Grand Trunk system, which was an Eastern Canada railway sysitem, and the two together would make a complete and economical system. The Canadian Northern Railway system having all its main lines and branch lines in the four western provinces, and the Grand Trunk *system having all its lines and branch lines in Ontario and Quebec, the two together *could be operated economically and would assist each other by interchange of traffic. Having taken over the Canadian Northern Railway system the Government was in this position: They had a splendid western railway system with a line from Port Arthur to Montreal'and Quebec without any branch lines, feeders or terminals from the great provinces of Ontario and Quebec, and they were unable to gather freight in Eastern Canada to pay its operating charges.
Now let me say what the Government must provide for its present railway system if we do not take over the Grand Trunk railway. The Government, and that means the people of Canada, must spend within the next three, four or five years an amount *of at least one hundred million dollars, and any amount between that and two 'hundred million dollars for providing terminal facilities, branch lines and connections with other roads in the eastern provinces, and when that was done they would still have -as competitors not only the Canadian Pacific railway, but also the Grand Trunk railway. Now, if the country must supply at least one hundred million dollars to provide terminals and branch lines and connections for its present system that would not be necessary if we took the. Grand Trunk railway over, may I ask is it not in the interest of all concerned that we save spending that hundred million dollars, and save the interest on the same, which would probably be five and one-half million dol-. lars, and save also the extra expense rn operation and duplication of lines and terminals?
I notice that some of the newspapers take the. position that an additional liability of about twelve million dollars will be added to our railway losses if we take over the Grand Trunk Railway system. They are

wrong in coming to that conclusion, and I hope they will correct the error and place the matter properly before the public. It is true the Grand Trunk Railway system have the following interest bearing first-charge stocks:
5% <3. T.	Debenture Stock .. ..£	4,270,3755% Great	Western	"	....	2,723,080'4% G. T.	"	....	24,624,4554% Northern	"	....	408,215Total	£32,026,125
The total interest on this would amount to about seven, million dollars per annum.
Honourable members will note that the issues I have mentioned are the original debentures in connection with the building of the Grand Trunk and the taking over of the Great West railways. The Grand Trunk always earned this interest of $7,000,000. In addition to that there is the guaranteed stock, £12,500,000. The interest, on this is equal to about two and one-half million dollars. The interest on this has also always been earned and paid, no default ever occurring in these several issues just mentioned.
Therefore the seven millions of dollars that I have mentioned and the two and one-half millions of dollars interest on debenture and guaranteed stock, the Grand Trunk Railway system during the *yhole time of operation were not only able to pay, but in addition to that they always had an amount over and above this for distribution among shareholders of other later issues of stocks; and they were able to pay, if not all, a portion of the dividends on the additional securities outstanding other than those mentioned, which are as follows:
1st	Preference	Stock	5%	[DOT][DOT]	[DOT][DOT]	£3,420,0002nd	Preference	Stock	5%	..	. .	2,530,0003rd	Preference	Stock	4%	. .	. .	7,168,055On	these three stocks	the	profits distributed between them and over and above the fixed charges on the debenture stock and guaranteed stock averaged during the last ten years, prior to the war, an amount equal to about one million dollars per annum. So that I say in taking over the Grand Trunk Railway Company, the Government may become responsible for, in round numbers, some twelve millions of dollars, interest charges, annually. It will not, in my opinion, incur a liability because the Grand Trunk system has always earned those amounts in the past and will be in a better position to do so in the future when joined up with the Canadian Government National system, and in this I am backed up by railway experts. There is in addition the common stock, £23,955,436, on which no
dividend or interest has been paid since the issue of same, and therefore I do not consider it of any material value other than for voting purposes.
Railway experts also say they feel that the saving in the cost of operation and the amount that will not now be required to be invested in terminal facilities, and on which interest would have to be paid annually, is one that should very materially assist in making both ends of the several railways meet that will now be connected as one railway system.
As I have now discussed the Canadian Government Railway system's position in connection with this matter, let me say a few words as to what position it puts the Grand Trunk bondholders and stockholders in. There is no doubt in my mind that the Grand Trunk railway would be compelled to carry on its operation without being able to pay one cent of interest on its debenture or any stock, if it had to continue and assume the liability of the Grand Trunk Pacific Railway system. The losses on that system must necessarily be for a number of years some five or six millions of dollars, and perhaps more. If the Grand Trunk has to pay this amount out of its earnings and maintain the Grand Trunk Pacific, I cannot see how the dividends that have been paid the Grand Trunk railway shareholders for so many years could be continued. However, in addition to that, with the Government owning such a large railway mileage system, a system almost equal to the Canadian Pacific railway, how could the old Grand Trunk railway with its much smaller system compete or expect to live with the competition from these two great companies and with no Western Canada connections? Surely it is to the advantage of the shareholders and debenture holders in England to be able from this time on, without any worry or anxiety, to know they will receive annual dividends they have enjoyed for so many years in the past.
I may say that when the arbitrators are considering the amount we should pay in connection with the taking 'over of the road they must consider the losses now being made by the Grand Trunk Pacific railway and its undertaking, and if they come to the conclusion that the Grand Trunk Pacific's future is not likely to be better" than it is at the present, then it is altogether likely the arbitrators may not agree to pay the amount the Grand Trunk railway has been able to distribute among its shareholders in the past.
May I also add that, in my opinion, the contract for building the Grand Trunk Pacific* railway and the Transcontinental railway was an arrangement between the Government of that date and the Grand Trunk Railway system. I was a member of the House at that time, and I remember well that the late Mr. Hays did not want to build the Transcontinental system. He did not want to build the road to British Columbia; he merely wanted connection with the wheat fields of Alberta and Saskatchewan. But the Government of that date insisted on the Transcontinental and British Columbia lines being built, and that was the cause of the Grand Trunk Railway system's failure to carry out to a successful conclusion the scheme originated by Mr. Hays. The arbitrators will no doubt take into consideration the fact of the Grand Trunk railway being the pioneer railway of Canada; and believing as I do that the people of Canada wish to deal generously with the Grand Trunk shareholders, they will not be too severe when making their award.	[DOT]
There is another matter I wish to mention in connection with this great railway undertaking. When these two railway systems are operated as one system it will be absolutely necessary for the Government to select a management and a staff of the best men that can be found no matter where they come from, to operate this whole new complete system; and those who are decided upon must assume this responsibility. Unless they have a free hand, unhampered by political interference, or by interference or pressure from the outside public, they cannot and will not make it a success.
There is only one ending and the people of Canada might as well know it now before we start the operation. The Canadian Pacific railway, its opponent,-is one of the best managed railways in the world. It is operated on purely business principles. They will not tolerate interference, nor are they influenced by any individual. They will not allow any employee to remain on their staff unless he works in the interest of the railway, and does not allow himself to be influenced by any one. That is the way the Canadian National railways should be operated; and, so far as I am concerned, I have been carrying out that policy with the system we now have. I am pleased to be able to say that so far I have had very little interference or requests or suggestions, either from any member or from outside, to do other than carry out that policy with regard to our present system. I am afraid
[Stage Direction]
sometimes that a little outside influence is being used when I see certain questions on the Order Paper, the answers *dthen given disclosing to our opponents information detrimental to our system. But when we get the Grand Trunk railway and add it to our present system then a policy of absolute confidence in management must be continued. Therefore, I appeal to every member of this House, ais well as to every citizen of Canada, to assist the Government in carrying out the operation of this great railway, owned by the people of Canada, on the same basis as that of our Canadian Pacific Railway system.
Now, Mr. Chairman, the Canadian Pacific Railway system is a great one. It has done great work for Canada, and the fact of the Government owning and operating a system equal to that of the Canadian Pacific railway should not in any way allow any influence, or advantage to be exercised against the Canadian Pacific Railway. The operation of this system must be put in the hands of men who must carry it out on the same lines as though it were a private corporation. They must compete for traffic. They must prove they are able to satisfy the public, and must not take improper advantage of any powers they might have by being owned and controlled by the Government of Canada. I believe there is plenty of room for the two systems, and plenty of room for them both to be prosperous; and all systems, whether private or Government-owned, will be under the jurisdiction of the Board of Railway Commissioners. No preference in any way will be given to the Government railway systems. There is no doubt the Canadian Pacific Railway are against the Government taking over the Grand Trunk Railway system. They were opposed to the Government taking over the Canadian Northern railway; and much greater will be their opposition to the Government taking over the Grand Trunk system. They fear this may lead eventually to complete public ownership of the railways in Canada. They no doubt realize and know the Government could not do otherwise than take over the Canadian Northern system, no private individual or individuals could take over the Canadian Northern under the conditions. They realize that no private individual or individuals could take over the Grand Trunk Pacific and realize the Grand Trunk railway can do nothing other than join up with the Canadian Government system.
The only other alternative would be to hand all our presently owned Governor. J. D. Reid.]
ment railways to the Canadian Pacific, and I do not believe for one moment the people of Canada would stand any such suggestion. During the war the three Canadian railways, namely, Canadian Pacific, Canadian Northern and Grand Trunk carried on their operations most harmoniously. Then in addition there was what has been known [DOT] as the Canadian Railway War Board, which really means co-operation in every way to assist each other, and in the public interest. They have worked so well together that 1 sincerely hope and trust the good work they have done so harmoniously will continue.
When the House goes into committee all information required by every member of this House will be furnished. I think this matter is one that requires the most serious consideration of the House so that all the facts may be known. For that reason while members of the House expected to get away within a day or two may I hope and trust that they will take a great interest in this matter-discuss it thoroughly-give us the benefit of their advice. I am sure after it has been thoroughly discussed the House will pass the resolution and pass the Bill. Documents containing a large amount of information have already been laid on the Table, and other information necessary will at once be furnished. Let us then join together and do all we can to try and work this railway situation out of the great tangle which it has got into and let us try and make it one of the greatest assets that Canada has.
Mr. VIEN:: Did I correctly understand
the minister to say that the Grand Trunk Pacific was taken over because the Grand Trunk was in default with respect to the interest on the bonds?


Mr. REID:: What I wished to say was
that the Grand Trunk railway is taken over because it is found that it is in difficulties on account of the position that it is in with respect to the Grand Trunk Pacific. The Grand Trunk Railway Company guaranteed a large amount of the bonds of the Grand Trunk Pacific railway. They must pay the interest on those bonds, they are liable for it, but if they had to pay the interest on those bonds it would prevent them from paying dividends to their shareholders because the interest is a first charge on the earnings of the Grand Trunk.


Thomas Vien: My question was not that. I understood the minister to make a statement in his opening remarks to the effect that the cause of the receivership which was instituted by Order in Council last

March was that the interest on the Grand Trunk Pacific bonds was not paid. Did the minister make that statement?


John Dowsley Reid: At the time of the receivership last session, when the Bill was passed, the Grand Trunk Railway Company served notice on the Government that they could not meet the interest that fell due, I think, on February 1, and they not being able to meet the interest as it fell due, the road would of course have gone into the hands of a receiver. An Order in Council was passed putting the road under a receivership.


Thomas Vien: Even that is not the question. The minister made a statement a minute ago, if I understood him correctly, to the effect that at the time of the receivership the Grand Trunk Railway was in default with respect to the interest upon the bonds of the Grand Trunk Pacific.


John Dowsley Reid: No, I did not say they were in default. I said they notified us that they could not pay and that they could not continue to operate the Grand Trunk Pacific road. They were not in default at that particular time, but they would have defaulted a few days later if we had not appointed a receiver.


Thomas Vien: If the minister corrects his statement I am willing to accept it.


Mr. CAMPBELL:: Are the roads at present owned by the Government now under the jurisdiction of the Railway Commission?


John Dowsley Reid: Yes',' I think they are.


John Archibald Campbell: All of them?


John Dowsley Reid: They are in this way: The Canadian Northern was always under the jurisdiction of the Board of Railway Commissioners and we passed an Order in Council placing the Intercolonial in the same position as the Canadian Northern. Therefore, they are all under the Board of Railway Commissioners.


Thomas Vien: Would the minister allow me a further question? The minister knows that quite .an extensive mileage of the Grand Trunk system is in United States territory. Has the Canadian Government taken any steps to ascertain what the action of the United States Government would be if the Canadian Government became the owner of these lines on American territory? I think it would be an unprecedented thing if a government would allow a foreign government to own railway systems on its territory.


John Dowsley Reid: That is a legal question. Perhaps my hon. friend the Minister of the Interior (Mr. Meighen) would answer it.


Mr. MEIGHEN:: I think the hon. member (Mr. Vien) knows the answer himself. We are not taking the road. We are at the present time one hundred per cent stockholders of another system that owns anid operates roads in the United States. This is simply a repetition of what we have done before, and the American Government presumably would have no more objection to the one course than to the other.	*


Thomas Vien: Does the minister say that the Canadian. Government is not taking over the Grand Trunk Railway system? Is it not, in effect, state ownership of the Grand Trunk Railway system and will the Canadian Government not in the future toe the owner of the Grand Trunk Railway system and its connections on American territory?


Arthur Meighen: What I said is precisely right; the hon. member can state it in any way he likes. We are the owners of the stock of the system which owns these roads and controls others through one connection or another just as in the case of the Canadian Northern system we are the owners of the stock of the system which owned and controlled roads in the United States. There is nothing in this ease in .principle that is not present in the other case, and presumably the American Government would have no more objection to one course than to the other.


Thomas Vien: Of course, the American Government at the present time is managing all these roads under the Railway Board of the United States. I do not put the question as a catch, but simply to obtain information as to what will be the position of Canada when it becomes the 4 p.m. owner of the railway and when the American Government decides to hand over the railway systems of the United States to their former owners. Has the Canadian Government inquired and ascertained whether the American Government will allow the American connections of the Grand Trunk Railway system, or of the Canadian Northern system, to. revert to their owners, if the owners are the Canadian Government?


Arthur Meighen: The hon. gentleman did not listen to my reply.


Thomas Vien: I did.


Arthur Meighen: The American Government have been aware for almost two years that the Canadian Government were the owners of a system which controlled, owned, or operated-or all three together-lines in the United States. They are now the owners of another system; by means of the same process, stock ownership, they do the very same thing. The American Government has not felt concerned about the first case, and I do not see any reason why they would feel concerned about the second, which is absolutely the same.


Thomas Vien: The reason is very clear and apparent. It is because these connections, such as those of the Canadian Northern system and of the Grand Trunk Railway system, are at present in the hands of the American Government. The American Government is not concerned as long as it does not hand over these railway lines and connections to their private owners, but they will be concerned when the time comes to hand them over. It seems to me that it is a fair question to inquire whether the Canadian Government has ascertained what would be the attitude of the American Government if it took such a step.


Arthur Meighen: The hon. gentleman is wrong again. The lines of the Canadian Northern system, the stock of which is . owned by the Canadian Government, are operated by the system, not by the United States; nor have they ever been operated by the United States.
The hon. gentleman is misinformed on that; the United States Government did not see fit to take them over. But they took over and are still operating certain line; of the Grand Trunk railway. When the American Government hand those lines back, if they do, they will be in just the same position that the Canadian Northern American lines are in now. So I am still (unable to see why the American Government wquld feel concerned as to one situation any more than as to the other in which they were not affected at all.


Mr. J. E. ARMSTRONG:: Would the Minister of Railways be good enough to furnish the House with a statement of the amount of interest that has already been paid by [DOT]the Government since the Grand Trunk Pacific was taken over by him as receiver, *and of the annual amount of interest that will be necessary for the Government to pay from this time forward on that portion of the system?


John Dowsley Reid: I will give that information a little later-I had it here yesterday -but I could not give the exact figures. I think since the first of February something like $2,500,000 has been advanced for interest charges in respect of the Grand Trunk Pacific.	*


Joseph Elijah Armstrong: Annually?


John Dowsley Reid: That is since taken
over by the receiver.


Mr. FIELDING:: Before leaving the question of American mileage, could the hon. gentleman (Mr. Meighen) tell us from memory what is the mileage of the Canadian Northern in the United States?


Arthur Meighen: There are two Canadian Northern lines in the United States, neither of them very long. One is a connecting link south of the Lake of the Woods of the main line from Winnipeg to Port Arthur; the other, known as the Duluth and Western, is all in American territory. Speaking from memory, I do not think the total mileage would be over one hundred miles.


William Stevens Fielding: They are probably small sectipns running through portions of the United States, but practically not in any degree serving American territory, and the question might not come up so prominently as it would in the case of the Grand Trunk linesi, which have quite an expensive mileage in the United States. It may be that the American Government have no definite policy against allowing foreign Government owned railways within their jurisdiction, but if they have any objection, they will certainly have the same objection when they are told that a foreign government owns 100 per cent of the stock. If there be any such objection, I do not think the device of stockholding will satisfy the American Government.


Mr. GAUTHIER:: Referring to the same question, is the Government aware that last week the representative of a syndicate was with the officials of the Grand Trunk system bargaining to take over the American lines, namely, the old Central Vermont, the New London line, the steamship line running from New London to New York, all the branch lines in the peninsula of Michigan, and the line running from Chicago to Detroit and Port Huron, subject to the understanding that these lines would be handed over by the American Government to the former owners?


John Dowsley Reid: I never heard of anything of the kind. Did the hon. member

say a representative of the American Government?


Louis Joseph Gauthier: No. The representative of a syndicate was in conference with the Grand Trunk authorities -in Montreal.


John Dowsley Reid: The hon. gentleman must get his information from a source that is not open .to us.


Louis Joseph Gauthier: I had it from a reliable source.


Mr. J. H. SINCLAIR:: The policy of the Grand Trunk, as I understand it, has always been to make Portland, Maine, the Atlantic terminus for their traffic. What is the view of the Minister of Railways in regard to that? Does 'he intend to continue that policy?


John Dowsley Reid: So far as I am concerned, as I stated a few minutes ago, when we take over the Grand Trunk Railway system we will have one great national system of railways, and we must get the very best men available to manage the system, and they must of course adopt whatever policy they ithink is best to insure .successful operation. I could not express an opinion on the question put by my hon. friend. The manager to be appointed will be the only person in the position to answer such a question.	[DOT]


John Howard Sinclair: I asked the question because the Government is .making a bargain to take over the road, which ends in Portland, Maine, and if that port is not to be used as the winter terminus the road iwill be of very little use to us and it should not be purchased. I presume from his answer that ithe minister does intend to continue the policy that the Grand Trunk management has always pursued and maintain Portland as the Atlantic terminus.


John Dowsley Reid: I can only say that
whatever is the best course in the interests of the railroad will be adopted. I could not give any opinion as to what particular policy will be pursued.


Mr. ARCHAMBAULT:: Has the Government a list of the shareholders of the Grand Trunk Railway Company with the dates when they acquired their holdings? If so, will the Government table that list?


Arthur Meighen: I will not disappoint
the hon. gentleman by giving any other answer than No. I am informed that the shareholders of the Grand Trunk number about 180,000. The shares are on the market from day to day, and if a list could be given for one day-it could not be obtained even
the next day. Personally, I do not know as to the ownership of one single share of Grand Trunk stock.


Thomas Vien: Personally, the minister may not; but does he know officially?


Arthur Meighen: Nor officially.


Mr. DENIS:: Is the minister in a position to tell ns what is the present market value of Grand Trunk Common Stock and first, second, and third Preferred Stock? If I remember rightly, it used to be quoted on the New York Stock Market, but I have not noticed any quotations for several years.


Arthur Meighen: I have no information as to what the shares are worth. I -did hear a figure quoted recently as to the value of the guaranteed shares at somewhere in the neighbourhood of 60 to 70. I do know that Grand Trunk shares were at one time at 12, but I have not any information as to their present value.


Jean-Joseph Denis: When the minister says
the " guaranteed shares," he means the 4 per cent Guaranteed .Stock, I presume?


Arthur Meighen: Yes.


Jean-Joseph Denis: 
Arthur Meighen: That is, on the market quotations?


Jean-Joseph Denis: I am talking of the actual market quotations of these shares.


Arthur Meighen: I was not aware of that. If it is so, however, we will probably pay very little for it.


Joseph Archambault: It was the same
with the Canadian Northern stock.


Thomas Vien: What, in the opinion of the Government, is the value of these shares which are to be submitted to arbitration? Surely the Government must have made up its mind on that point; it is an important factor in the consideration of this matter.


Arthur Meighen: The Government made an offer for the five classes of shares-that is to say, made an offer by way of rental, the corresponding value of which would now be the interest on the stock that would he issued. That offer was, as the hon. gentleman knows, $2,500,000 for three years, $3,000,COG for five years and $7,600,000 thereafter. That was what the Government con-

sidered a fair offer as to the rental value; if that were concurred in it would mean that we would pay a sum corresponding to that by way of interest on those five classes of stocks, inclusive of the guaranteed stock. That is the only action the Government have taken in the way of estimating what would be a fair offer. Now that it is submitted to arbitration the Government makes no estimates; that is for the Board of Arbitration.


Mr. CAHILL:: Why did the Government change its mind about that original offer? Why does it make a different offer at this time? The arbitration was to include five stocks; now it is including four. There is one stock-which was not a guaranteed stock, only so far as the Grand Trunk shareholders could guarantee it-that the Government are now making a four per cent Dominion Government guaranteed bond amounting to 160,833,000. What induced them to take that out of the original arrangement and to make it a guaranteed stock so far as the Dominion is concerned, thus enhancing the value of stock which had been quoted on the market at 45 and which is now quoted at 60? This represents an advance of fifteen points or an enhancement in the value of the stock in one day to the extent of $9,000,000. In other words, when the Dominion Government guarantees that stock at six per cent it will be worth 80, or $20,000,000 more than its market price. The Government at the outset claimed that they were going to offer only a certain sum for all the five stocks, but now they make $60,000,000 worth of this worthless stock worth from 80 to 85, on account of the Dominion Government's guarantee.


Arthur Meighen: The hon. member has the ability to crowd more mis-statements into a short speech than any man in the House, I think. In the first place, if I gathered his point, he says that the Government has altered its position in that in the first proposal of 11th July, 1918, it was proposed that the Government would arbitrate the value of the five stocks, namely, the guaranteed stock, the three preference stocks and the common stock. That is my hon, friend's first mis-statement. If he will look at the letter of 11th July, 1918, he will see that the Government offered to treat the guaranteed stock as an obligation just the same .as we treat the debenture stock or bonds. That is exactly what we are doing; there is no variation whatsoever. The hon. member's next mis-statement was that the -worthless guaranteed stock would be

worth 80. Well, what can he be thinking about? The guaranteed stock has a four per cent dividend. That dividend has always been paid; it never has missed in the whole history of the Grand Trunk.


Frank S. Cahill: Was it paid last year?


Arthur Meighen: Last year, and every
year. The guaranteed stock has always carried its dividend and that dividend has always been paid. That guaranteed stock never was worthless and is not worthless. That is the stock to which I referred in answer to my hon. friend (Mr. Vien) as having been quoted to me-I heard the value of it some days ago, a considerable time before the negotiations reached a conclusion-as 60 to 70. The hon. member says it is that to-day. I assume it would be; I do not know anything about it. This stock has always borne that dividend; that dividend has always been paid. There was no reasonable expectation or fear that it would ever fail to be paid; consequently, the Government, originally, as now, proposed- that that be treated merely as a debenture stock. It is on the other four stocks that the arbitration takes place, just as was proposed in the original letter.


Thomas Vien: What is the object of giving to the shareholders of the Grand Trunk these present guaranteed stocks as well as the new guaranteed stocks, instead of giving them bonds? This is a most unprecedented method of dealing with a case of this kind.


Arthur Meighen: The hon. member asks why we do not propose to give bonds for the arbitrated value instead of stocks?


Thomas Vien: As well for the present guaranteed stock -as for the new guaranteed stock.


Arthur Meighen: Well, the present guaranteed stock is a stock; it is not a bond. We do not change that; there seems to be no reason for changing it. If we did make it a charge on the road-and making it a bond would, I assume, be making it a charge on the road-if that had any effect at all it would add to the value of the bond. We do not want to do anything that is unnecessary; there would be no object in the world in doing it.


Thomas Vien: In what w,ay would it add to the value of the bond?


Arthur Meighen: I do not know that it would; if it did anything, I said, it would do that, because it would, I suppose, give an additional security. But there would

be no object in doing that. The Government do not propose to charge this new stock on anything. It will simply be a new nonvoting stock and the guarantee of the Government will be given that the four per cent interest will he paid. Nothing else is necessary, consequently nothing else is done.


Frank S. Cahill: I thought that the minister was making an error in his statement. -I wish he would be good enough to follow me now, because he has a sort of hazy idea about figures at any time. I quote from one of the letters sent by the minister:
The Government to make annual payment of $2,500,000 for the first three years, $3,000,000 for the succeeding' five years, and 23,600,000 annually thereafter: such sums to be distributed by the Grand Trunk management as they might determine, among holders of 4 per cent guaranteed and other stocks.
That was what the Government originally proposed to arbitrate. But now you do not propose to arbitrate that; you propose to give them the four iper cent, or $2,500,000 in interest, before you start to arbitrate anything. I wish the minister would answer my question.


Arthur Meighen: I will, and the hon. member will be sorry he got annoyed so soon. That is not the arbitration proposal at all. The hon. member is quoting a reference to the cash proposal, and if they had accepted the cash proposal there would have been no arbitration. The reference to the arbitration proposal is later on in the letter. I quote from page 8 of the correspondence:
Should such terms not be accepted,-
That is, the cash offer.
-It Was suggested'-
That is, in the previous cable I referred to.
-rthat the amounts in question might be submitted to arbitration. These proposals met with no acceptance.
The next paragraph is immaterial. I quote the succeeding one:
We are now prepared-
It reads " not prepared," but that is a misprint; it should be " now prepared."
'We are now. prepared to abide by the proposals submitted to you in February last as to acquisition or we are prepared on behalf of the 'Government to submit the entire question of remuneration to a Board of Arbitration on the following general terms: [DOT]
1.	The board to consist of three persons-
And so on.	.
2.	The board to have full power as to the procuring and acceptance of evidence.
3.	The award to be by way of annual rental for a term of 999 years-
And so on.
4.	Conditions arising or that have arisen out of the war not to be taken into account-
And then:
Should the company desire the guaranteed stock may be treated as an obligation in the same way as the company's bonds.
That is the original proposal. That as now lived up to in the present proposals.


Frank S. Cahill: That practically takes up the $2,500,000?


Arthur Meighen: Yes.


Frank S. Cahill: On what basis does the Government then purpose to arbitrate the rest of it?


Arthur Meighen: We arbitrate the value of the other four stocks.


Frank S. Cahill: But you have changed from the original view that you would give $2,500,000?


Arthur Meighen: Certainly.


Frank S. Cahill: Now you give that outright and start to arbitrate 'Something else?


Arthur Meighen: The arbitration proposal then was this: If you care we will either pay the dividend amounting to $2,500,000 on your guaranteed stock as a bond and arbitrate for the rest, or pay you this amount which means you will get so much for the rest; you will get nothing for it for three years; then you will get $500,000 a year, and thereafter you will. get $1,100,000 a year for all time. If you do not care to take that, we will arbitrate on the whole, and that arbitration proposal they have now accepted. There is no mystery about the matter.


Emmanuel Berchmans Devlin: In other words, do I understand the minister to say that with the exception of the four per cent guaranteed stock, the company is simply leasing the balance of the other stock for 999 years?


Arthur Meighen: No, we are not doing that at all. As I explained last Friday, we want to pay an annual amount, that is, if we >are called on to pay anything. We thought first of having that annual amount decided as the rental value of the road. Finding that impracticable, we sought another way of submitting virtually the same thing to arbitration, and we say: We will take these stocks, the three preference and the common, and we will pay four per cent on the value of them, but we will become absolute owners of these stocks; we will substitute

in their place a new one, a non-voting certificate.


Emmanuel Berchmans Devlin: No lease about this?


Arthur Meighen: No.


Emmanuel Berchmans Devlin: 
Arthur Meighen: 
Emmanuel Berchmans Devlin: I asked the question
simply because the Minister of Railways in making a statement a few minutes ago said that in his opinion the common stock was worthless except for voting purposes.


John Dowsley Reid: I think I said " of little value except for voting purposes."


Emmanuel Berchmans Devlin: Perhaps I misunderstood the minister. Then I take it-and I do not think there will be very much dispute about the matter-that the common stock, since it pays no dividend, and is not likely ever to pay any, is practically worthless stock-v'atered stock, or any other name you like to call it, while it may be very useful along with preference stock for voting purposes, as an asset to Canada it will not be considered as of very great value. Then we are left simply with the first preference 5 per cent, the second preference 5 per cent, and the third preference, 4 per cent. Those are what we are actually going to acquire.	.


Arthur Meighen: Yes, and the common
stock. I should point out to hon. members who may possibly be misled by another hon. member who spoke-


Emmanuel Berchmans Devlin: That is not the Montreal Gazette the minister has in his hand, is it?


Arthur Meighen: No, it is the London
Times of the 18th of September, in which quotations are given of Grand Trunk Railway Company of Canada Consolidated of

9J, $Wig>
9i, and so on. That is the common stock.


John Howard Sinclair: 
Arthur Meighen: I am told that the percentage is just the same; it is so much on the hundred of par value, so it is just the same whether you quote it in pounds or in dollars. I am not familiar with the stock market so I have to be informed, but those are the quotations. Then Grand Trunk 4 per cent guaranteed stock quoted as worthless by the hon. member for Pontiac

 .


THE ROYAL ASSENT.
[Stage Direction]
A message was delivered by Colonel Ernest J. Chambers, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the. Deputy of His Excellency, the Governor General desires the immediate attendance of this honourable House in the Chamber of the honourable the Senate.
Accordingly, the House went up to the Senate.
And having returned,
The Speaker informed the House that His Honour the Deputy of His Excellency the Governor General had been pleased to give, in His Majesty's name, the Royal Assent to the following Bills:
An Act to amend The Dominion IBy-Elections Act, 1919.
An Act to amend The Naturalization Act, 1919.
An Act to amend The Board of Commerce Act.

[Stage Direction]
Consideration of the resolution (Hon. Mr. Reid) resumed in Committee, Mr. Boivin in the Chair.
Arthur Meighen: I was referring to certain quotations in The London Times. I find that on September 18 Grand Trunk common stock was quoted at 9{, 9 i%o>
and so on, that the 4 per cent guaranteed stock was quoted at 491, 49J, 50i, that the 5 per cent first preference stock was quoted at 51, and up as high as 52J. I do not see any quotations for the second preference stock, tout there are some quotations of the debenture stock, that is, the bonds. Then I see in The Montreal Star of last night corresponding quotations as follows: 4 per cent guaranteed stock, 61 i on October

13, and 65 on October 14. Apparently there was an appreciation of 3i points. First preference stock is quoted at 50 and 55, practically what it was quoted in London on September 18. The ordinary common stock is quoted at 9 and 11, so it is a little lower than the quotation in London on September 18.


Mr. McMASTER:: Not if it is 11. The London quotation was 9 i%8.


Arthur Meighen: I was mistaken in that. The London quotation was 91, 9 i%6, and so on.


Emmanuel Berchmans Devlin: Is there not a footnote explaining that in view of the intention to purchase by the Canadian Government the Grand Trunk stock has gone on increasing? Several papers have put that in. I would not advise the minister always to purchase stocks uipon quotations in newspapers. I do not think my hon. friend would do that. It has been noted in the newspapers, however, that since the Government has taken very active steps to purchase the Grand Trunk the stock has taken on a few points in the London market; but that is no true test of the real value of the stock.


Arthur Meighen: I thoroughly agree. It is quite possible that these people who think it means a likely added value to the stock in the arbitration award may change their minds. The stock may go down. I want to correct an error I made a short time ago. Inadvertently I stated that the guaranteed stock had always paid its dividend. That is not true with respect to the last two or more years. Prior to that, back even to preConfederation days, I think, the stock always paid the full 4 per cent. This 4 per cent guaranteed stock arose originally from the purchase of the Great .Western Railway, the stock being given as the purchase price of that railway. It has been added to since for other purposes, and has always paid the dividend up to 1917, with the exception of one-half per cent off in 1915.


John Archibald Campbell: Who was that stock
guaranteed by?


Arthur Meighen: By the Grand Trunk.
That is all the word " guaranteed " means. There was no guarantee, except that the stock took priority over all other stock issues of the Grand Trunk, and they called it a guaranteed stock. In the event of liquidation it was a charge on the assets next to the debenture stock.
Mr. J. H. ISIN'GLAIR: The minister has quoted from the London Times that the guaranteed stock is selling on the market at 61J. On what principle then are we going to pay 100 for it? The resolution provides for the taking over of that guaranteed stock, and our paying interest on it perpetually until the stock is redeemed at par. On what principle can we be justified in paying 100 for stock that is selling on the London market at 61i?


Arthur Meighen: We are not paying for it. We are simply guaranteeing to pay the 4 per cent on the guaranteed stock. We do not take that stock. It stays just where it
is,	but the holders surrender their voting power. It should be explained to the committee that the voting power is an element of value in this stock; I do not know how great an element but it is an element of value prized, I am told, by the holders of this stock. I do not know just what the proportion is, but that stock has a higher proportion of voting power, dollar for dollar, than later issues. The holders of the stock give up that voting power, and the Government then adds its guarantee to the Grand Trunk guarantee which they now have.


William Stevens Fielding: A four per cent stock guaranteed by the Government of Canada is par value stock in the English market under normal conditions. Of course at present, under war finance, conditions are not normal, but this circumstance will have passed shortly. So that when we undertake to pay four per cent on that stock " hich for two years has paid no dividends we are practically giving it a par value, and people buying it to-day around sixty and advancing i.t to higher figures are making an excellent speculation and one which is perhaps natural under the circumstances.


Arthur Meighen: They may or may not.


William Stevens Fielding: There is no doubt about
it.


Arthur Meighen: It is value to-day that counts. The stock is not worth par to-day. Perhaps before the war it was, but I understand it was not. Now, we pay for these four stocks just what they are worth. The arbitrators say that these stocks are worth so much. We do not give them cash for that but we give them a new certificate of four per cent, which in the market to-day could not possibly sell for one hundred or near one hundred. So that there is a great advantage to us in that respect; at least I so regard it. As to .this stock, dt is very likely that the fact of the Govern-



ment's guarantee upon it will add a little ito its value in the market, and to that extent the holders' will he advantaged if they choose to sell. But in practical negotiations there is no way toy which that can he avoided. It is impracticable for a government to go into the market, however careful or adroitly it may do so, and seek to get hold of this stock. Even if there is >a small depreciation of value, in lieu of that we get the surrender of the voting power and thereby the absolute control of .the whole proposition.


William Stevens Fielding: The small increase my hon. friend speaks of is surely a mistake. Stock that has not paid any dividend for two years and, which 'has nominally a guarantee, not of the Government but of the Grand Trunk company, is weak stock and of very small value; and when, you convert that into .stock guaranteed by the Government of Canada at four per cent you are .raising it from its present value, whatever it may be, to something equivalent to par. It may be unavoidable. I am not criticising the machinery, but I point out the fact that the value of the stock at least is largely enhanced by the effect of this arrangement.


Andrew Ross McMaster: Would it not be possible to treat the four per cent guaranteed stock in the same way as the preference stocks are treated-to arbitrate its value, as well as the value of the preference stock, and then t-o issue new stock to take its place?


Arthur Meighen: I should say the Government would rather have preferred that, and that was the original offer in the message of March 5 from the Prime Minister for Mr. Smithers' information across the seas. But in order that we might go one step to meet them, in the letter of July 11, we offered to treat the guaranteed stock as an obligation, and we are living up to that. It was not accepted even then; it was considered anything at all but a concession and consequently we did not succeed in getting anywhere. But now they have come to our terms in that regard and we are living up to the .proposal we made.


Jean-Joseph Denis: Are the three preferred voting stocks together with common stock?


Arthur Meighen: Yes, they are all voting stocks, but I think the preferred have an advantage over any others in their voting power.


Jean-Joseph Denis: The minister has said that
the dividends have been paid on the 
guaranteed stock except for the last two years. Have the dividends been paid on the first, second and third preferred stock, and also, on the common stock? I should like to have some detailed information, too, about the payment or non-payment of dividends on all these stocks for the last ten years, say.


Arthur Meighen: That is all found on page 56 of the statement given to the House yesterday. They paid dividends for most of the years; first preference for all but two up to 1917; second preference the same; third preference the same, but the third preference never paid over 3 per cent and one year the second preference paid only 2J per cent.


John Dowsley Reid: And there have never been any dividends paid on the common stock.


Jean-Joseph Denis: It is well known that a company which does not pay dividends on its preferred stock that bears four or five per cent interest is liable for the payment of arrear dividends. I am subject to correction, but I believe that is the fact.


Arthur Meighen: I do not think it is cumulative, but even if it were that would be an obligation of the company's. It would go a long way towards robbing other stocks of any value, but I do not think the dividends are cumulative.


Jean-Joseph Denis: I do not see any difference between a company and the Government in a matter of this kind. The Government acquires common stock and first, second, and third preferred stocks. It buys voting stock and says: "The company owes the interest; it has its responsibilities and liabilities but we are not a company." I heard that argument advanced by the minister with regard to the passing of the road through the United States. As I view the matter, when a person owns the whole of the voting stock in a company that person is virtually the company; consequently in this connection the liabilities of the company would be the liabilities of the Government. For this reason I think we are interested to know what will be the responsibilities of the Government in regard to the back dividends.


Arthur Meighen: I do not think there are any responsibilities at all as to unpaid dividends, but I will let the hon. member know definitely either to-day or to-morrow.


John Howard Sinclair: How was the
Grand Trunk financed? W'as the common stock of no value or did it represent money?


John Dowsley Reid: It represented thirty million dollars.


John Howard Sinclair: Or was it like the Canadian Northern stock, which was well known to be watered?


Arthur Meighen: My information is that the proceeds of the common stock sales to the extent of thirty million dollars went into the Grand Trunk.


Daniel Duncan McKenzie: Will the Government name a date upon which the value of those stocks should he fixed?


Arthur Meighen: Yes.


Daniel Duncan McKenzie: The Government is now proposing to take over this road and these stocks may acquire a certain value greater than under old conditions when they were not paying any dividend and had practically' no commercial value. When we begin to arbitrate some definite date should be fixed for the arbitrators to consider the value of these stocks at that time. In connection with railway right of way matters, the value a man can get for his land will be the value of the land before it was known that the railway would run through it. He is not entitled to any extra value by reason of the fact that the railway crosses his land.
He is not entitled to get any extra value for his land brought to it by reason of the railway and the arbitrators should not take into consideration any value that is brought to this stock by reason of the fact that the Government is taking over the road. What I want to know is if the Government is fixing any date as and when these values shall be considered. I think the Government-although they would not know the names of all the owners-should know as nearly as possible the conditions surrounding the outstanding stocks, bonds, etc., and their present value, or their value on the last day of August, 1919, before possibly it was known to the outside world that these negotiations were taking definite form. In that way we would be protecting ourselves against paying more money for these stocks by reason of the fact that we are talking about taking them over.


Arthur Meighen: There necessarily must be a date fixed as of which the value must be found. Should it be a date later than about the date the hon. gentleman names I think there should be no appreciation 65J
owing to the taking over, or probable taking over, of the road by the Government. That can be provided for, and I think, I may say, will be provided for in the agreement. It may be that the date might be fixed as he suggests, about the end of August, in which event there would be no need for such a provision.


William Stevens Fielding: Would that apply also to the four per cent stock?


Arthur Meighen: No, the Government undertakes to pay the interest on that.


William Stevens Fielding: You are making a fine' present to somebody on the London stock, market.


Thomas Vien: Has the Government ascertained the amount that will be involved for urgent repairs to the road in order to-put the road and rolling stock in good, working order?


John Dowsley Reid: I will try and get some information on that a little later.


Thomas Vien: Is the Government informing the House that it has not this information in its possession now?


John Dowsley Reid: I will make inquiry and find out if we have any further information in addition to what has already been laid on the Table. I could not say off-hand that we had any official information. Of course the hon. gentleman knows that official reports are sent every year to the Railway Department as to the condition of the road.


Thomas Vien: The answer of the minister is not an answer to my question. I know that every year every railway company in Canada makes a report to the Department of Railways and Canals on which the railway statistics are compiled; I know that the railway statistics are published; I know that the capital expenditure of every company is therein contained, but the point of my question is this: To the knowledge of the Government, for years the Grand Trunk Railway Company has neglected to a great extent to keep its roadbed and rolling stock in good working order. I refer to the Drayton-Acworth report in which it is stated that $21,000,000, which was paid to the-shareholders of the company, was- not earned by the company but was paid at the expense of the maintenance of the road and rolling stock. If the information is in the hands of the Government that the road' and rolling stock are in poor condition,, surely before the Government enters into pourparlers with the officials of the company as to the valuation that is to- be put

upon the railway, it should ascertain what expenditures it will be obliged to ask Parliament to vote to make up for the deficiency in the maintenance of the road and rolling stock.


John Dowsley Reid: The hon. gentleman is quite right; the Drayton-Acworth report makes a statement of that kind, and the Government feel that probably some money will have to be expended on the road. On the other hand, the Grand Trunk Railway management assure me that the road is in good condition and that it will not require large expenditures to put it in shape.


Mr.   VEIN@: They are 'the sellers.


John Dowsley Reid: I admit that, but evidence will have to be brought before the arbitrators to prove that it is in good condition. The physical condition of the road and equipment must all be examined by experts and evidence to the satisfaction of the arbitrators must be presented as to the physical condition of the road and equipment. That will be the kind of evidence that the arbitrators will want, and of course it will have something to do with their decision as to the value that is put upon the stock.	.	^


Thomas Vien: I quite agree with the minister that in the valuation of the first, second and third preference stock, as well as the common stock, the arbitrators will
5 p.m. have to take into consideration the physical condition of the road; but suppose they come to the conclusion that the stock is worthless, and suppose that they even come to the conclusion that the road does not warrant the expenditure of $60,000,000 on the four per cent guaranteed stock, 'as 'well as the undertaking of paying all the liabilities of the company, surely the Government, before entering into an agreement 'to pay not only the interest on the bonds, but also on the four per cent guaranteed stock, has taken the trouble to acquire information? That is the information that I ask the Government to lay before the House.


John Dowsley Reid: The Government felt justified in taking over the Grand Trunk Railway system and to guarantee the stockholders. They have always paid dividends amounting to a million dollars and more on the guaranteed stock. No matter what may have to be done to improve the condition of the Grand Trunk, if anything, we are perfectly safe in making the agreement for that reason. I think that railway officials will admit that the physical condition of 
the Grand Trunk is not serious. No doubt the Grand Trunk, as well as all the other railways, is not in the same position as it was prior to the war. All railways had to economize and not maintain their properties in the same condition as they were in prior to the war. But they have been putting the road into condition since. They have been carrying on maintenance equally as well as any of the other railways in Canada since the war, and we are perfectly justified in assuming the guaranteed stock. If the road and the equipment were in a serious condition the arbitrators might not allow anything on the first, second and third preference stock or the common stock.


Thomas Vien: Then the answer of the
minister is that he does not know and he is not in a position to give to the Committee the information I require. If the minister is not in a position to say what expenditure will be involved in putting the railway and rolling stock in good working condition,
I will refer the minister to page XCIX of the Drayton-Acworth report, where Mr. Smith in his minority report states:
My colleagues have recommended that the stockholders of the Grand Trunk Railway Company he paid am annuity, which is to be a "moderate but substantial portion of $3,600,000, the average dividend payment for the last ten years." This recommendation is In spite of the facts noted in the report that there are arrears In maintenance, which require the expenditure of $21,000,000, and that the company has charged to capital items which should properly have been charged against income, these facts indicating that there have been some dividends paid which have not been earned.
So the Government is not in a position to tell us what will be required from the Treasury to make good the default of the company to maintain its Toadbed and rolling stock in good working order?


John Dowsley Reid: I can get information from the Grand Trunk management as to the present condition of the system; but this I do know of my own knowledge, that the main line between Toronto and Montreal is being relaid with new ties and new rails, and that roadbed in my opinion is equal to any in Canada. I have travelled over it and seen it myself, so I know what I am talking about.


Thomas Vien: A few sections only.


John Dowsley Reid: Toronto to Montreal is the main line. The other parts of the system, I am informed by our own railway officials, in discussing it with them, are in as good condition as any other lines. The company have properly maintained the system in Canada. So far as the portion of

the system in the United 'States is concerned, I suppose we can get information from the Grand Trunk officials, but I have understood in reading the newspapers that the American Government, which is now operating the railroads in the United States, must put them in the same condition as they were when taken over, and at that time the Grand Trunk system there was in good condition. Therefore, knowing that the United States section must be put in good condition, and having the verbal opinions that I have mentioned from our own officials who have travelled over the road, and having travelled over it myself, I am quite satisfied that the Grand Trunk system is in at least fair condition. At all events, as I stated a few minutes ago, the condition of the Grand Trunk System is such that the Government are, in my opinion, perfectly safe in paying the interest on the guaranteed stock. I think if the honourable member consults railway experts they will express the same opinion.


John Howard Sinclair: 
John Dowsley Reid: Perhaps I did not explain myself quite clearly when I mentioned the guaranteed stock. The interest on the debenture stock, $7,000,000, and the $2,500,000 interest on the guaranteed stock the Government have agreed to pay absolutely and in perpetuity. So far as that is concerned, I wish to say that I feel the Government are perfectly justified in assuming that responsibility, for the reasons I gave when I mentioned the guaranteed stock. As to the Government not having any reports, the honourable member knows that we have the Drayton-Acworth report, and even in that report all the Commissioners admit that if we were taking the system over at that time we should pay not orily $7,000,000 on the debenture stock, but also an amount not equal perhaps to the $3,600,000 that had been the average amount paid for the previous ten years, but they certainly recommend-I have not the report before me, but if the honourable member will read on he will see that Sir Henry Drayton and Mr. Acworth recommended that if we took over the Grand Trunk we should pay them a portion at least of that $3,600,000.


Thomas Vien: That is what I read.


John Dowsley Reid: We are guaranteeing only the $7,000,000, and in addition a portion of the $3,600,000, just as Sir Henry Drayton and Mr. Acworth recommended.


Thomas Vien: It .is a very big portion of the amount.


Mr. ROBB:: A few days ago the Acting Prime Minister (Sir George Foster) made the statement to this House and the country that he expected we would have prorogation last week, and now in the last days of the session, after the country had been led to understand that no more legislation would be brought down, the Minister of Railways comes along with a proposition to take over a vast system of railways extending from Chicago, Illinois, through Canada to Portland, Maine. And yet the Minister of Railways, the guardian of the rights of the people so far as railways are concerned, coldly tells the House and the country this afternoon that all his information is based upon newspaper reports so far as the condition of the road in the United States is concerned. I submit that under these circumstances the Minister of Railways could very well lay this legislation over so as to give the House and the country an opportunity to look more carefully into the condition of the road, and in order that the minister himself might send out some of his experts so that next session he would be in a position to give us some better information than that which he now presents based on newspaper reports.


Arthur Meighen: The hon. gentleman has quite mis-stated the minister's position. He did not base his information upon newspaper reports.


Thomas Vien: Verbal evidence.


Arthur Meighen: The Drayton-Acworth
report is before us, the very best expert opinion that could be adduced. That report has been before the House and the country for some three years. There is no reason to believe that, comparatively speaking, there has been any material deterioration of the road since that report was made. Hon. members themselves know of the general condition of the system about as well as they know of any physical fact in Canada. We all travel over the road regularly; we have grown up with it. We have before us, then, as well-founded, as thoroughly considered, as mature and as reliable report as any Parliament ever acted upon. We ourselves know the condition of the road as to Canada-not as experts, but, speaking generally, as ordinary intelligent citizens. As to the United States, we know that the American Government is bound to hand back in the condition in which they got it that part of the line which is in their territory^ when they choose to deliver up the possession of the railroads which have been under their administration. It is altogether impossible to assume that the American Government, operating that portion of the line which is in the United States is letting it go back and get into such a condition that it would be unsafe to operate or that its value would be so substantially detracted from as to render undependable for us the fundamental principles and features laid down in the Drayton-Acworth report.
It is true that when it did not appear that there was probability of a conclusion of the negotiations this session, an earlier prorogation was contemplated. But how does that affect the question? It is not com templated now. We are here; we have as much time as we shall ever have; we have the whole fall before us. There is no reason why any hon. member should hurry himself in the least. The Government are not asking any hon. member to hurry himself. We will take all the time that is necessary to the fullest possible consideration of this question. Of course, if any hon. member or any person is opposed to a project, his first method of opposing it is to say: " Don't do it now; this is the wrong time." There never is a right time for the bringing on of an enterprise, in the opinion of any one who is opposed to it. Then, of course, the Opposition will say:	"You are jamming it
through; we are in the dying hours of the session." Well, let us be in the living hours. Let us get in the noon-day. There is plenty of time ahead

for the fullest consideration. It is not as if the proposal were new; it has been before the whole country since August, 1918-I am pretty sure that I have stated the month correctly. The proposal that is before us for acceptance has, in every substantial feature, been known to this Parliament through two sessions. We are here because the Grand Trunk at this moment has accepted our terms; we are here for the consideration of the matter as a Parliament. There is no surprise. To the best of my memory, not a. single criticism has been offered in this House from either side to one single element or paragraph or sentence of the proposal offered to this- House on the 11th July, 1918. Certainly Parliament has never 'been asked to pass unfavourably upon that proposal or upon either alternative suggested in it. It has never been suggested to Parliament or to the Government that the offer then made should be withdrawn or modified in any way. If ever a Parliament, therefore, came to deal with a question having had the amplest opportunity for consideration of it, that is the position of this Parliament at this time on this question. The Government's attitude is to invite-not only to invite, may I say, but to urge-the most studied deliberation of every feature of the proposal. Any information that it is possible for us to bring before Parliament-and we can bring all the necessary information-will be brought before it and the amplest time will be given for the review of that information and to enable hon. members to arrive at a conclusion thereupon.


Thomas Vien: Yes, but when I put two questions bearing distinctly upon the main question at issue, I get evasive answers. My first question was this: If the American Government does not release the American connections of the Grand Trunk Railway system, where shall we be? Has the Government taken any steps to ascertain what the American Government is going to do? The minister says:	"The hon. member
knows that this is a private company; there is nothing changed in its ownership; it continues to be the Grand Trunk Railway Company and the American Government is not going to do anything so nasty as to cause us embarrassment." The House is not put in possession of the information that is necessary to an intelligent discussion of the matter now before it. We do not know what the American Government is going to do. If the American Government refuses to hand over the American connections of the Grand Trunk Railway system

we shall find ourselves in this position: We shall have made a payment in respect of the full value of the whole system-a system which, as my hon. friend (Mr. Robb) said a moment ago originates in Chicago and ends at Portland-and we shall be left with only the Canadian portion of it. I challenge the minister to quote me a precedent where a foreign Government has been allowed to own or take possession of railway lines within its territory but belonging to another Government. The disguise which the hon. minister tries to put upon the transaction will not fool the American Government. It is childish to pretend that the American Government will think that this line is still the old Grand Trunk Railway system. As soon as the Canadian Government takes over the shares that it now proposes to purchase, what has been known as the Grand Trunk Raiway system will form part of the Canadian National Railway system, owned and operated by the Canadian Government. This is a serious question, and one which has an important bearing upon the value of the road to the Canadian people.
The Government invite questions. They invite us to study the matter, but they fail to give us the information that we require. I imply from the answers given by the minister that members of the Government themselves do not know what is going to be the action of the American Government. All that the minister tells us is that the American Government is not going to do anything nasty.
The other question which I put to the Government was this:	What expenditure
will the Government find themselves obliged to ask the House to vote in order to make up for the failure of the Grand Trunk Railway Company to maintain properly and keep in a good state of repair its road, equipment, and rolling stock?
The Minister of Railways says: I gather from verbal information; I gather from newspaper accounts; 1 have travelled over the Grand Trunk, and I know that it is in good condition. It is childish to say that any man in this country, even the Minister of Railways, can, by travelling over a section of the Grand Trunk from Montreal to Toronto, tell us what amount will be involved in making up the deficiency in the rolling stock and the maintenance of the roadbed. We all know that this section of the road from Montreal to Toronto, and, indeed, to Chicago, is one of the best sections of the Grand Trunk Railway system, and that the equipment which is used by the Grand Trunk Railway from Montreal to
Chicago is the very flower of their equipment. But when a commission of which the present Minister of Finance (Sir Henry Drayton) was a member, tells us-and I read the report to the committee-that the Grand Trunk Railway failed to maintain its roadbed and rolling stock in first class condition; when the three commissioners agree on that; when, as early as 1916, when their report was finally concluded, they said that the company were at that time $21,000,000 behind, which should have been put into the maintenance of the roadbed and rolling stock, but which was attributed to dividends, and when negotiations have been going on since then between the Government and the company for the purchase of the system, we know that the Grand Trunk officials would not be likely to advise their company to go into any further expenditure for maintenance of roadbed or rolling stock pending the negotiations. The verbal information that the Minister of Railways has given to the committee is not the kind of information to which the committee is entitled. And when the Minister of the Interior (Mr. Meighen) says to the committee: We are ready to give you the information; we invite you to ask for information; I say that it is simply fooling the people of Canada and' endeavouring, through the press gallery, to carry to the people the impression that all the information is contained in this little book which was printed yesterday and distributed to-day to the members. In this little book you will find, it is true, a copy of the correspondence and some statistics, but it gives no further information than can be found in the Blue Book on Railway Statistics published last year by the Department of. Railways. As to the exact expenditure that the country is now asked to assume and to which we commit the country, there is no information forthcoming, and we get to our queries evasive answers. That, I say, is not the proper way to treat the committee and the people of Canada. If we must carry this through now, if we must study it, we are entitled to more good faith-some further information and clearer 'answers than those which have been given this -afternoon.


Arthur Meighen: Of course, if we stayed here for half a century, hon. gentlemen would have ingenuity enough to ask for something that would keep us here for another half century.


Thomas Vien: You cannot complain up to now.


Arthur Meighen: We 'have been asked this afternoon as I recall the questions, for three things. The first is >a list of the 100,000 or 180,000 shareholders of the Grand Trunk; the second is to know what the American Government think of this proposition, and the third is to know how much money we think it will take to put the road into, as I presume the hon. member means, reasonable condition. I have already dealt with the first, and as the suggestion has not been advanced a second time, I presume it is quieted. As to the second, as to what the American Government think of our proposal at some time to operate a road in the United States, I will say another word beyond what I said a moment ago. 'The hon. member (Mr. Vien) thinks this is wholly unprecedented and that we should have asked the American Government what their attitude was going to be before we ventured1 to own any stock in the Grand Trunk Railway Company.


Thomas Vien: To own all of the stock.


Arthur Meighen: To own all of the stock. I suppose they would be content for us to own a piece, but they would not stand for our owning any more, is that it? Where was it ever known before, he said, that one government operated a railroad in a country under the jurisdiction of another? I told him one instance precisely the same as this, not certainly where the mileage was so great, but exactly the same in kind. We operate now through the Canadian National Railway two lines in the United States. That does not satisfy the hon. member as an instance; he does not, T suppose, accept that as a precedent, so I will give him one or two more. He does not seem to be aware, although he poses as a critic here,-


Thomas Vien: I am not posing at all.


Arthur Meighen: Not posing?


Thomas Vien: No.


Arthur Meighen: Well, the hon. gentleman put an interpretation to that word that I did not intend. He is really a critic. It is not a matter of pretence; it is a reality.


Thomas Vien: I am putting questions; I
am not criticising.


Arthur Meighen: The hon. member says: Where is the precedent for the Government's operating railway lines in another country? I gave him one before; now I will give him a few more. Is he not aware that the American Government are operating not one but several lines in Canada to-day?
fHr. Vien.]


Thomas Vien: The American Government?


Arthur Meighen: Yes. They did not ask us for permission; they did not ask us what we thought of their action; they just went to work and operated them. They are operating the New York Central into the city of Ottawa.


Thomas Vien: That is a temporary arrangement.


Mr. JACOBS:: They have running rights over the line.


Arthur Meighen: The hon. member
draws a distinction again. I suppose he thinks that the American Government would let us operate a few lines a long time or many lines a short time.


Thomas Vien: Does the minister contend
that the American Government own the railways they are managing now? The American Government have temporarily taken over the management of a few lines with the intention, very often manifested, of handing them back to their private owners afterwards.


Arthur Meighen: The hon. gentleman
has shifted his ground. A few moments ago it was not the ownership that was worrying him at all. He said: When you own the lines, how are you going to operate them; once you begin operating them, the trouble is going to come." It was the operating he was afraid of. When I show him that the American Government are now operating line after line, the New York Central into Ottawa, the Michigan Central in Ontario, the Great Northern in the West-


Samuel William Jacobs: Is it not true that these are merely running rights they have over the lines?


Arthur Meighen: No, the American Government are actually operating the railways as a Government, not through a company at all. The American Government did not say "by your leave" to this country.


Samuel William Jacobs: The lines belong to Canadian railways, do they not and the American Government have running rights?


Arthur Meighen: To what Canadian railway does the New York Central belong?


Samuel William Jacobs: I understand they are
running over the Grand Trunk.


Arthur Meighen: No. What Canadian
railway does the Michigan Central belong to, or the Great Northern? Those are

American lines operating here just as the Grand Trunk operates in the United States.


Samuel William Jacobs: Were those lines built in Canada by American companies?


Arthur Meighen: Certainly, the Michigan Central was and the New York Central. What does it matter who built them, the American Government are operating them.


Joseph Archambault: Is it not a fact that these lines are privately-owned lines, only taken over temporarily by the United States Government?


Arthur Meighen: Very good. I am discussing operation now, because that is what the hon. member was on until he shifted off.


Some hon. MEMBERS:: Oh, no.


Arthur Meighen: Then it is ownership that is the trouble? All right. We have owned lines in- the United States. Is it not just as harmful to own 100 miles of railway as 1,000?


Samuel William Jacobs: It is ten times more harmful to own 1,000.


Arthur Meighen: Would the hon. member say that we should ask the American Government's permission when we are getting 1,000 miles, and that when it was a case of a hundred miles it did not matter? What is the difference? If the hon. member had a point at all he should have stuck to operation. It is operation that the American Government and the American people [DOT]are concerned with. The American Government wants to see the road operated in the interests of their o-wn people. If there is any objection at all that you can conceive of, it would be with respect to operation and not to ownership. Ownership does not matter to them. There is precedent after precedent on their part, and at least one or two precedents on our part. Surely those are enough precedents to satisfy the hon. member. Does he think we should have gone to Washington and suggested to the American Government that it might take exception to bur going through with this transaction? I can conceive of nothing -I was going to say, more absurd. At all events, it would be most inexpedient and unwise. If the American Government has any representations to make it will make them.


Thomas Vien: And you will have paid for the road.


Arthur Meighen: He says we shall have paid for the whole system and will only
have a part of it. Does he think the American Government may steal roads over there?


Mr.   VEIN@: They might pay nothing for them.


Arthur Meighen: Will they not pay for them if they keep them?


Thomas Vien: They might pay nothing for them.


Arthur Meighen: They are not going to steal any roads, so how shall we be paying for the whole road and getting only a part of it? The American Government, presumably, would be just as honest in dealing with a company whose stock was owned by the Dominion Government as in dealing with any other company. Would *the hon. member suggest that they would not? If negotiations subsequently take place with . the American Government we, as the shareholders of the *Grand Trunk, will be in the same position as the present shareholders are to-day. There is no difference in the world. Now, referring to the last question, how much money will it take? In the opinion of the authors of the Drayton-Acworth report it would take the amount the hon. gentleman stated.


Thomas Vien: In 1916.


Arthur Meighen: At that time. The Grand Trunk Railway asked to be heard before the Government in protest against the finding in that respect, and produced what they believed-and what appeared strong reasons for believing-that it would not take that amount, and that their road was in fair condition. They claim to be fully convinced that that is the case. In order to acertain which is right a thorough investigation will be necessary. We are satisfied that the margin between the two is not very great; there may be some difference. That investigation must precede the Board of Arbitration, and our evidence must go before that board just as it went in the case of the acquisition of the Canadian Northern stock. Our evidence will go before the Board of Arbitration in thorough form. The hon. member says that we cannot form a conclusion ourselves as to the condition the road is in.


Thomas Vien: That has a bearing on the compensation to be paid, but it does not bear on the amount that the Government will find itself obliged to ask Parliament to vote.


Arthur Meighen: When we ask Parliament to vote a sum we will give full details.

We are not asking that now. It bears on the compensation to be paid.


Thomas Vien: But we commit ourselves to come to that.


Arthur Meighen: Certainly we do. I said that evidence would be produced to show what would be required. My hon. friend argued that we as members do not know anything about the condition of the road. He said that we could not tell simply by travelling over one line. " We all know," he said, " that the Toronto-Montreal road is good, and is one of the best equipped roads." If we all know that, cannot hon. members who travel over other lines know something about them? Surely we are as competent to judge of one line as another. We are not experts, but we know enough to know that there has been no substantial variation in upkeep [DOT]from the condition in 1916, and that is sufficient for our purpose. We will go before the Board of Arbitration and endeavour to establish our contention that owing to insufficient upkeep there should be a smaller amount paid for the stock. That is the place to bring forward those details.


Mr. FOURNIER:: What amount has been expended on the Grand Trunk for maintenance per mile in 1916, 1917 and 1918, as compared with the Canadian Pacific expenditure?


Arthur Meighen: If that information is not in this memoranda, it will certainly be given.


Andrew Ross McMaster: 
Thomas Vien: What I mentioned, and what I think I said, was that $21,000,000 which should have been used for the maintenance of the road and rolling stock was diverted for dividend purposes. That appears on page 99 of the report.


Arthur Meighen: My own recollection is
the same as to the figures, and that is the amount we really ought to be discussing at this point. It may take more money for the road's requirements, but that extra money will all be represented in value in the road; that is to say, a terminal may be needed here and something else there, but that is not due to depreciation, but simply to the development of the concern. The figure which the hon. member (Mr. Vien) quoted is the figure that ought to be used when we are arguing on what sum the Drayton-Aoworth report finds should be spent in order to bring the road as it is now into a reasonable condition of upkeep. The Drayton-Acworth report says that that sum should have been used on the road in order to keep it up to a reasonable degree of maintenance, instead of being paid out in dividends. That is the amount in question in this connection.
My hon. friend (Mr. Fournier) will find the answer to his question on pages 48 and 49 of the memoranda. If he will look at the bottom of page 49 particularly, he will see that the maintenance of equipment figures are given as follows: 1918, $14,434,684, as against only $9,380,688 the year before, an increase of about 40 per cent; 1916, $7,329,455; 1915, $6,847,059.


Charles Alphonse Fournier: Will the minister
complete the answer to my question by bringing down the railway statistics showing the Canadian Pacific Railway expenditures per mile?


Arthur Meighen: Yes.


Charles Alphonse Fournier: The same expenditures -as the Grand Trunk Railway.


Arthur Meighen: I can give those figures for I remember seeing them myself.


Joseph Archambault: I must persist
in my previous question which the minister seems to treat lightly, that is, as regards the list of shareholders. The

minister says that it is very difficult to get that list because the list of to-day may be changed to-morrow. Surely it is easy to obtain the list of shareholders in the books of the company on the 9th of October. I hope the minister will get that list and table it.


Arthur Meighen: I doi not know how easy it will be. I have never made any inquiry regarding a single shareholder, and I do not think we are in the least con-'cerned as to that.


Mr. ARCH  A MB A TILT@: Public opinion
is under the impression,-to use a popular expression,-that there is a "nigger'' in the wood-pile, and we want to know who he is.


Arthur Meighen: You will have toi hunt throught a hundred and eighty thousand sticks in the wood-pile to get at that nigger. Perhaps my hon. friend will mention the name of the individual. If he does we can the more easily find the nigger.
Mr. V1EN:	The minister knows his
name.


Joseph Archambault: The minister is in a far better position than I am to mention the name.


Arthur Meighen: ilf my hon. frientd
depends on me for that information, then the name cannot be mentioned and we are done with that subject.


Daniel Duncan McKenzie: Can the minister tell us the direct obligation of the Grand Trunk Company to the Canadian people by reason of guarantees given by that company in connection with the Grand Trunk Pacific? How much money would the Grand Trunk Company owe to the people to-day if we should insist upon their paying up all their obligations? Is it the intention of the Government that the money represented by those obligations shall be a credit in favour of Canada upon the award?


Arthur Meighen: Any indebtedness owing by the Grand Trunk to the Government will certainly be a credit to the Government in the award. Any indebtedness of the Grand Trunk to the Government will have to be paid by the Grand Trunk before any of the shareholders can get anything.


William Stevens Fielding: Do you mean its loans?


Arthur Meighen: Yes, certainly; all
indebtedness owing by the Grand Trunk. As to the Grand Trunk's obligations to the
Grand Trunk Pacific, that will be treated as an obligation on the part of the Grand Trunk Company and will be a liability the same as any other liability, to be considered by the arbitrators before any award at all is made in respect of this stock. The Grand Trunk Pacific obligations will be considered the same as all other obligations.


Daniel Duncan McKenzie: Will the minister give the exact figures as to how much the Government is claiming from the Grand Trunk to-day on account of these obligations?


Arthur Meighen: The direct obligati ms
of the Grand Trunk to the Government are not very high.


Daniel Duncan McKenzie: Direct and indirect. They guaranteed .some bonds which we guaranteed afterwards and which we did not pay, and we fall back upon them for their guarantee. I should like to know how much is involved directly and indirectly.


Arthur Meighen: These figures will be
given exactly. I think they can be found in the book, but I will make a note of the question. I understand my honourable friend to ask for the amounts of money paid by the Government directly in respect of which the Grand Trunk was liable ahead of the Government. That is to say, supposing the Grand Trunk Company failed to pay the obligations in respect of the Grand Trunk Pacific in regard to which it was liable ahead of any liability we might be under, and we paid the liability, the question is; what is the amount that the Grand Trunk owes us in the result? These figures can be given. But I want my honourable friend to understand this: the Grand Trunk made certain engagements in respect of the Grand Trunk Pacific but did not meet them. They were not made by the Government direct. The loans were made by the Grand Trunk in aiding the Grand Trunk Pacific to pay the obligations itself. That is the way in which the main policy was pursued. So that no obligation direct from the Grand Trunk to the Government arises out of that. But the Grand Trunk's obligations in respect of the Grand Trunk Pacific aggregated about five million dollars a year two years ago, and will aggregate about seven million dollars a year three years hence.


Thomas Vien: Do the officials of the Grand Trunk acknowledge that liability?


Arthur Meighen: Certainly. They never disputed their liability on account of the Grand Trunk Pacific.


Thomas Vien: They did not acknowledge it at the time the Drayton-Acworth report was made. They contended that the fact that the Government did not live up to the agreement of 1903 relieved them to a certain extent.


Arthur Meighen: They claimed that because of the Canadian Northern running through Northern Ontario, thus raising the cost of labour to them constituted a moral obligation. I do not think they seriously contend that they are relieved of their legal liability in regard to the Grand Trunk Pacific.


William Stevens Fielding: The minister says that the Government will claim in the award the payment of all obligations of the Grand Trunk. I accept the assurance that the Government intend to make that claim, but will the minister make it clear in the resolution that that claim is to he regarded as a set-off?


Arthur Meighen: I do not see how it could he anything else.


William Stevens Fielding: That is the more reason why it should be made clear.


Arthur Meighen: If it is clear already there is no reason why it should be made clearer.


William Stevens Fielding: There is such a thing as making assurance doubly sure.


Arthur Meighen: If the hon. gentleman can show that there is any doubt on the subject it will be made clear. Certainly any obligation of the Grand Trunk to the Government will be taken into account. If the arbitrators were to find that these stocks were worth fifteen million dollars but that the Grand Trunk owed the Government ten million dollars, then the stock would in reality be worth only five million.


William Stevens Fielding: The arbitrators would not he called upon to determine the claim of the Government but only the value of the stocks, unless there is a clear understanding that there is a set-off there will be trouble. It is not clear that the arbitrators are to sit in judgment upon the justice of the Government's claim.


Arthur Meighen: Every claim that is made has to be established before the Board of Arbitrators, who musit be convinced that it is a good claim before they consider the determination of the value of the stock.


William Stevens Fielding: Does this contemplate that the arbitrators shall enter into the question of a set-off? They are only called

upon to fix the value of the stock. That is the beginning and end of their duties and I do not think they would have any right to enter into the other question. The Government would have to have recourse to some other means of establishing that claim as a set-off.


Arthur Meighen: I do not agree with the hon. gentleman at all. The Government will claim every dollar that is owed them by the Grand Trunk.


William Stevens Fielding: But that is not before the arbitrators.


Arthur Meighen: Yes it is, everything is before the arbitrators that affects the value of the stock; the hon. gentleman will agree to that?


William Stevens Fielding: Yes.


Arthur Meighen: Is not one thing that affects the value of the stock the debts of the company? Consequently, every debt of the company is before the arbitrators. A debt to the Government is just the same as any other debt and must 'be before the arbitrators. But let me say to my hon. friend, I will have the point he has raised looked into from the legal standpoint, and if there is any doubt it will be cleared uip.


Thomas Vien: Suppose the arbitrators value this stock at $15,000,000 and they find that the company is indebted to the Government to the extent of $20,000,000 there will be $5,000,000 coming back to the Government. But they could not value and arbitrate upon that if the arbitration is along the lines of the resolution. If the arbitration is along the lines of the resolution they can value the claim of the Government only by way of set-off to the valuation which they put upon the shares. If the claim of the Government is in excess of the value they put on the shares they must have some jurisdiction to give to the Government .a further judgment against the company.


Arthur Meighen: The Government can
take steps to protect itself without their jurisdiction. In so far as the arbitration is concerned, the most favourable verdict the Government could get would be a declaration that the four stocks were worth nothing. Suppose the four stocks are in the view of the arbitrators worth nothing, the company will still owe us all the money they owed us before and the debt will be the same as it was before.


Thomas Vien: It may be doubtful if you enter into an agreement that closes the whole of the negotiations that have been

taking place between the Government and the Grand Trunk.


Arthur Meighen: The hon. gentleman knows better than that, because he is a lawyer. We are arbitrating on the value of the shares. The Government is an entity on the one hand and the company is an entity on the other. The value is one thing and the debts owed to the Government are owed to the Government still. We may not be able to collect them, but we will be just as able to collect them as we are to-day. The company will not be worth one dollar less or one dollar more; it will be just in the same position exactly.


Thomas Vien: The minister does not wish to convey the suggestion to the committee that this arrangement that is proposed does not close the transaction between the Government and the company?


Arthur Meighen: It does not close them or open them up; it leaves them exactly as they are. We are arbitrating the value of the stock owned by the shareholders and not the value of anything owned by the company.
At six o'clock the Committee took recess.
After Recess.
The 'Committee resumed at eight o'clock.


Frank S. Cahill: Does the Government intend to hold the Grand Trunk liable on the Grand Trunk Pacific agreement?


John Dowsley Reid: The guarantees of the Grand Trunk Company with reference to the Grand Trunk Pacific have been mentioned two or three times to-day. Of course, the Grand Trunk will be held responsible for those guarantees in the arbitration proceedings. That is one of the things that the arbitrators must take into consideration.


Frank S. Cahill: What annual expenditure would it involve on the part of the Grand Trunk to live up to those guarantees?


John Dowsley Reid: In the papers that have been submitted there is a list of the bonds guaranteed by the Grand Trunk Railway, showing the total amount of interest liability. I quoted the list this afternoon. If the hon. gentleman will refer to page 51 he will read the following:
Guarantees by the Grand Trunk Railway Company have been made for the Grand Trunk Pacific of $97,301,253-$62,422,000 for principal and interest and $34,879,253 for interest only. Detail of this is in an attached statement. $25,000,000 of the foregoing total of
$6'2,422,000 is guaranteeing loans made by the Dominion Government.
That is the answer.


Frank S. Cahill: How docs the Government arrive at the conclusion that the Grand Trunk is able to pay this liability of something like six or seven million dollars interest annually in respect of the Grand Trunk Pacific, also to discharge the interest on the debenture stock and on the 4 per cent guaranteed stock, and still leave an equity to be arbitrated? Where does the minister get his figures from?


John Dowsley Reid: The hon. gentleman
will remember from the discussions that have taken place from time to time with reference to the loans made to the Grand Trunk Pacific that the Grand Trunk Railway Company has never paid out of earnings of the Grand Trunk Railway system any of the interest on the Grand Trunk Pacific guarantees. The interest on the guaranteed mortgages of the Grand Trunk Pacific have always been paid out of loans from time to time advanced by the Government. So that the old Grand Trunk system always had its full earnings to pay the interest on its debenture stock, its guaranteed stock, and its first, second, and third preference stock; and, <as has been shown, it always earned sufficient money to pay the interest, say $7,000,000 in round figures, on the original debenture stock issued for the construction of the old Grand Trunk railway and the purchase of the Great Western railway.


Frank S. Cahill: What does the minister mean by always? The Grand Trunk Railway was incorporated in 1851.


John Dowsley Reid: From 1851 onward the Grand Trunk Railway system always earned sufficient to pay interest on the debenture stock issued for the construction of the old Grand Trunk railway. Some years later-the date will be found in this sessional paper-the Grand Trunk Railway Company purchased the Great Western line and issued further debenture stock. From the time the company purchased that line it always earned sufficient to pay interest.


Frank S. Cahill: On what?


John Dowsley Reid: On the debenture stock issued for the purchase of the Great Western. Later the guaranteed stock was issued. Therefore, after having issued that guaranteed stock for other construction and improvements, 'the company was always able to earn a sufficient amount to pay the $7,000,000 interest on the stocks that I have

mentioned and t'he $2,500,000 interest on the guaranteed stock.


Frank S. Cahill: Since when?


John Dowsley Reid: Since the guaranteed stock was issued.


Frank S. Cahill: When was that issued?


John Dowsley Reid: I could not give the date offhand, but it will be found: in the sessional paper. I will look it up and inform the hon. member a little later. But I say the Grand Trunk Railway Company was always able to pay that interest and still have- a surplus. The company then issued the first, second, and third preference stock, .the details of which are set out on page 56 of the sessional paper. The hon. member will see, starting from 1906, that the Grand Trunk Railway Company paid the interest on the guaranteed stock of 4 per cent; on the first preference stock of 5 per cent; on the second preference stock of 5 per cent; and on the third preference stock	of	3 per cent, or a total
of a little over $4,000,000. If the hon. member will refer to that statement, he will see that between 1906 and 1917 the Grand Trunk Railway Company paid the interest on its guaranteed stock annually, and also the interest on the first preference stock except in 1914 and 1910; and on the second preference stock it also paid the interest with the exception of those two years. On the third preference it paid the interest in 1906 and 1907, and also in 1910, 1911, 1012 and 1913. On the common stock, of course, it never paid any dividends at all. That stock was issued practically at the time the Grand Trunk Railway was built.


Frank S. Cahill: Let us get back to this 4 per cent guaranteed stock. The official reports of the London Stock Exchange show that the Grand Trunk did not pay 4 per cent on the guaranteed bonds all the time during the last ten years. Before that time it paid the interest in various amounts ranging from 2 to 3 per cent. What I want to know is how the Government arrives at the conclusion that this 4 per cent guaranteed stock has a value to-day, if we are to hold the Grand Trunk Railway Company liable for the Grand Trunk Pacific guarantee? In otheT words, how does the Government figure that there is any equity in this 4 per cent guaranteed stqck?


John Dowsley Reid: The honourable member I think stated that the Stock Exchange reports showed that the Grand Trunk Rail-
way Company had not paid any interest on the guaranteed stock for the last ten years.


Frank S. Cahill: Not all the time.
Mr. 3. D. REID:	Well, we have the
official document submitted to the House showing that the interest on the guaranteed stock was paid from 1906 down to 1916. There is not any doubt whatever about that.


Frank S. Cahill: How about 1914?


John Dowsley Reid: In 1914 the Grand
Trunk Railway Company paid 3i per cent instead of 4 per cent; in other words, they paid $2,129,166.67 dividends on the guaranteed stock instead of $2,433,333.33, or i per cent less. So that, during that ten year period they did pay the full interest with the exception of the i per cent in that particular year when the war started.
Now, the Grand Trunk Railway Company is liable in this way: it guaranteed the interest on a certain portion of the Grand Trunk Pacific Railway bonds, and, as I understand it, the company agreed that it would not pay any dividends out of its earnings, until this bonded interest had been first paid. In other words, it defaulted in payment of that interest, it could not pay its shareholders any .dividends on their stock. That is where of course the company is in a very awkward position. If the company took the earnings that would ordinarily go to the shareholders in order to pay the interest on the guaranteed stock of the Grand Trunk Pacific Railway,' then of course it would not have anything left for its own shareholders. That is why the company is pressing us to get a settlement so that it can be put in a position to pay dividends to its own shareholders.


Frank S. Cahill: Is it the intention then
of the Government to hold the Grand Trunk Company to its undertaking?


John Dowsley Reid: 
John Dowsley Reid: So far as the debenture stock and this guaranteed stock is concerned, the Grand Trunk have always paid the dividends.


Frank S. Cahill: Not always.


John Dowsley Reid: Well, as I understand it, they have practically always paid them. During the last ten years anyway, with the exception of the last two war years, the old Grand Trunk has been paying the interest. Now, a large amount of money went into this railway for the first, second and third preference stock, as well as some $30,000,000 for the common stock. The Government agree to pay the dividend on the guaranteed stock, because it has been earned, and more besides. But if the arbitrators should decide not to allow the Grand Trunk any interest on the first,
second and third preferred stock and not to allow them anything for the common stock, the Company would certainly be paying a very heavy penalty for entering into the Grand Trunk Pacific arrangement.


Frank S. Cahill: Where do you arrive at the information that the Grand Trunk were able to pay this four per cent, or that they earned this four per cent? On what basis are you offering to pay, or did you offer to pay in the first place the $2,500,000, $3,000,000 and $3,600,000?


John Dowsley Reid: The basis is this: The interest has actually been paid for so many years; and the Drayton-Acworth report admitted that the company had earned and paid not only the $7,000,000, but also the average of $3,600,000 per annum-$2,500,000 of it on the guaranteed stock and $1,100,000 on the other. That statement in the Drayton-Acworth report is evidence for us, as is the statement of the Grand Trunk that they actually paid the dividends, not from capital but from actual earnings.


Frank S. Cahill: Then I understand the
minister to say that the Drayton-Acworth report is the basis upon which he is arguing; that is his starting point. He knows, of course, that the Drayton-Acworth report affirmed that those dividends should not have been paid; that they had been paid out of what should have gone to betterments and improvements; that the road did not earn dividends on the debenture stock and the cost of upkeep and maintenance of way. If that is the case, where does my hon. friend's argument land him?


John Dowsley Reid: The Drayton-Acworth report says that a portion of this amount that was paid out by way of dividend-not all-should have gone into the road. However, the Grand Trunk Railway Company take issue with that; they say that this statement in the report is not correct. But all of that will have to be brought before the board of arbitrators. If the company can convince the arbitrators that the report is wrong, the arbitrators will, of course, act accordingly. The Government will have their solicitor to take issue with them.


Frank S. Cahill: Where does the minister start from? What is the basis that he is working on? He does not accept the Drayton-Acworth report; he does not accept the Grand Trunk statement. On what information does he come to the conclusion that this $60,000,000 is valuable at all, and that after that is taken into consideration there might be something left to arbitrate? This seems to me to be a most absurd argument.


John Dowsley Reid: I do not think I can explain it more fully than I have; I have tried to explain the situation as well as I could. All I can say is that when the matter comes before the board of arbitrators the Government will take every possible step to put up their case and to secure whatever evidence they can to make the arbitration as lair as possible in the interest* of the Government.


Frank S. Cahill: On the same basis as the Canadian Northern arbitration?


John Dowsley Reid: Personally I feel that
the solicitors who acted for the Government on the Canadian Northern arbitration were as good as there are in Canada.


Jean-Joseph Denis: Perhaps I shall be told that the answer has already been given, but it appears to me that the statement of affairs between tihe Government of Canada and the Grand Trunk Railway system has not yet been established, and that so far all the figures have not been given indicating what is actually due by the Grand Trunk Railway Company to the Dominion of Canada. In my opinion, the indebtedness of the Grand Trunk towards the Dominion of Canada is under three headings: First, the Grand Trunk has guaranteed the obligations of the Grand Trunk Pacific, and as the Grand Trunk Pacific is now the property of the Dominion of Canada


John Dowsley Reid: It is not yet.


Jean-Joseph Denis: Well, it is practically the same thing, and for the sake of argument, I take it for granted that it is, and the minister himself brought forward the argument that it is this .afternoon when he said that the .country would have control *of 22,000 miles of railway, for in that mileage he included the Grand Trunk Pacific.


John Dowsley Reid: That is, after the arbitration.


Jean-Joseph Denis: For the sake of argument, I am taking it for granted that sooner or later the Dominion of Canada will become sole proprietor of the Grand Trunk Pacific railway. Starting from that point, I state first that the Grand Trunk Railway has guaranteed the obligations of the Grand Trunk Pacific to the amount of $97,301,253. I find this on page 51-and before going any further, I should like to ask the minister if I am correct in this.


John Dowsley Reid: I take it for granted that is correct, because those are the official statements that have been handed to me

and accordingly have been placed before the House.


Jean-Joseph Denis: Consequently, the first point is established, as to the liability of the Grand Trunk to the Grand Trunk Pacific and thence to the Dominion of Canada; that is, $97,301,253. Second, what is actually due directly by the Grand Trunk Railway to the Dominion of Canada? I do not know that an exact answer has been given this afternoon on this item. Third, what is due by the Grand Trunk Railway indirectly to the Dominion of Canada and on what account? It is only after these three items have been placed before the House that we shall be in a position to say exactly what is actually due by the Grand Trunk Railway to the Dominion of Canada. After these figures have been made available, I shall have something more to say about the matter.


John Dowsley Reid: The hon. member asks for information as to what the Grand Trunk actually owe the Government, and also what they are liable for as far as the Dominion Government is concerned. I was just looking to see if I have that information here, but if not, I will furnish it. If I cannot look it up before we adjourn this evening, I will have it here to-morrow. The Minister of the Interior (Mr. Meighen) tells me that the information is to be found on pages 51 and 52, where it says:
Besides the guarantees to the Grand Trunk Pacific, the 'Grand Trunk Railway Company have guaranteed the following:-
Then on page 52, we find:
Grand Trunk Railway Company, outstanding June 25, 1918:-
There is a list showing all their liabilities.


Thomas Vien: On page 51 are given the liabilities of the Grand Trunk Railway Company in respect of the Grand Trunk Pacific, but the liabilities of the Grand Trunk in respect of the bonds of the Grand Trunk Pacific guaranteed by the Government are not given. If I understand the maJtter aright, there are two classes of debentures of the Grand Trunk Pacific Railway. There is a class of debentures guaranteeed first by the Grand Trunk and second, by the Government, and there is a class of debentures guaranteed by the Grand Trunk Railway only.


John Dowsley Reid: Yes, hut the Grand Trunk Railway Company is not liable for the bonds guaranteed by the Government on the Grand Trunk Pacific.


Thomas Vien: Is not the Grand Trunk Railway Company guarantor to the Government of the bonds guaranteed by the Government for the Grand Trunk Pacific?


John Dowsley Reid: No, it is not, it is liable only for what it guaranteed itself. The Grand Trunk Railway system is not liable for the bonds that were guaranteed by the Dominion Government.


Jean-Joseph Denis: Would it be possible to get from the minister an approximate figure as to the liabilities of the Grand Trunk to the Dominion of Canada?


Arthur Meighen: The Grand Trunk Railway Company owes the Dominion of Canada some comparatively small amounts, and there are, I believe, counter accounts against that.


Jean-Joseph Denis: Do they run into tens of
millions?


Arthur Meighen: No. I look over the
Grand Trunk accounts and I do not find it so. I do not say that there is no obligation; I think there is; but it is not in large figures at all.- The Grand Trunk Railway Company did not borrow from the Government of Canada; it was the Grand Trunk Pacific Railway Company that borrowed, and the Grand Trunk in respect of those borrowings did not give its guarantee. I think it did in respect of one, and I am sure that will foe found in this pamphlet although it is difficult to trace it just at the moment. I find this on page 53:
$15,000,000-4 per cent Government loan, due July 1923, secured 'by Grand Trunk Pacific debentures and guaranteed Grand Trunk Railway.
That is one. On the same page I find:
$10,000,000'-4 per cent Dominion Government loan, due 'May, 1919, guaranteed by Grand Trunk Railway, secured by Grand Trunk Pacific bonds.
That is guaranteed by the Grand Trunk also, and that, I understand, was not paid.


Thomas Vien: That is what I mean,


Arthur Meighen: That is an outstanding liability by the Grand Trunk to the Government secured on the Grand Trunk Pacific.


Jean-Joseph Denis: Outside of the 597,000,000 owed by the Grand Trunk to the Dominion of Canada?


Arthur Meighen: No, it would not be right to say that the Grand Trunk owes this money to the Government. The Grand
Trunk Pacific owes it to the Government, and it is secured by bonds on the Grand Trunk Pacific. But the Grand Trunk is in the position of an obligor, as a guarantor of that debt, and consequently inability to collect from the Grand Trunk Pacific gives us right of recourse as against the Grand Trunk, and once we choose to exercise that right of recourse the Grand Trunk will then be compellable to pay, and this liability will, of course, necessarily be considered by the Board of Arbitration in deciding whether there is any value in the stock to be arbitrated upon. There are the liabilities of the Grand Trunk on 'bonds on the road that were initially guaranteed by the Grand Trunk. The first mortgage bonds are guaranteed by the Grand Trunk, the second mortgage bonds by the Government.


William Stevens Fielding: The first mortgage bonds by the Government.


Arthur Meighen: The first mortgage bonds by the Government, the second mortgage bonds by the Grand Trunk, and then those others come after that.


John Howard Sinclair: If the minister will look at page 26, there is an amount of $15,142,633 which is described as "exclusive of Government loan to Grand Trunk Railway." What does that mean?


Arthur Meighen: I think that is the original loan made about the time of confederation or before.


John Howard Sinclair: Will that be paid back?


Arthur Meighen: That has never been considered. I think the people of Canada have pretty much come to the conclusion that that sum was a subsidy, although as far as I know it still stands in the position of a loan even legally at the present time. But, as I understand the matter, neither interest nor principal has even been requested from the Grand1 Trunk Company. That represents all that the Grand Trunk Company has secured in the way ol subsidies on its lines.


John Howard Sinclair: Has the Grand Trunk admitted its liability in respect of the guarantee of the Grand Trunk Pacific, or is it a matter of dispute as to whether they are legally liable to pay anything in respect of that guarantee?


Arthur Meighen: I could not say that the Grand Trunk has admitted its liability. It has not done so in express documentary form, at all events. At the same time I could not say there is any question about



it. If I am asked my opinion I would say there is no question whatever about it. The Grand Trunk liability is absolutely intact.


Frank S. Cahill: About what would that liability amount to?


Arthur Meighen: It all appears in these papers. That information will be found about page 50 and the next two or three pages.


Frank S. Cahill: That is the $97,000,000?


Arthur Meighen: That is on page 51.
Guarantees by the Grand Trunk Railway Company have been made for the Grand Trunk Pacific of $97,201,253-$62,422,000 for principal and interest, and $34,879,253 for interest only. Detail of this is in an attached statement. Twenty-five million dollars of the foregoing total of $62,422,000 is guaranteeing loans made by the Dominion Government. That $26,000,000 covers the $10,000,000 and the $15,000,000 to which I have just referred. In so far as guarantees in respect of the Grand Trunk Pacific are concerned, that would appear to be all.


Frank S. Cahill: Suppose the Government were to hold the Grand Trunk to their obligations in respect of the Grand Trunk Pacific, about how much money would it take to settle their obligations?


Arthur Meighen: It would take the whole thing to settle it.


Frank S. Cahill: The $97,000,000?


Arthur Meighen: Yes, of course, because that is the liability. But the Grand Trunk will naturally claim: "We have security for that, we have the Grand Trunk Pacific." And, if they are able to show that that security is a commercial asset and affords ample protection, the arbitrators may find that that liability amounts to nothing. But in our opinion, in my opinion certainly, the arbitrators would not likely so find. If the security in the Grand Trunk Pacific was equal to the obligations against it, the'Grand Trunk would not have announced themselves two years ago at the end of their tether, nor have stated a few months ago that they could not operate the road any longer.


Frank S. Cahill: If the Grand Trunk were able to pay $30,000,000, would that relieve them of their obligations?


Arthur Meighen: It would not to me.


Frank S. Cahill: What I want to get at is this. According to the stock exchange reports the total value of the first, second and

third preference and the common stock, on September II, 1919, was $28,000,000. That is all the assets that is left in the Grand Trunk to arbitrate. My hon. friend claims that $30,000,000 would not offset their obligations. Then why do you guarantee the $27,000,000 worth of what is called guaranteed stock? Why do you guarantee that stock and put it out of your reach if you are going to hold the Grand Trunk to their obligations?


Arthur Meighen: Does not my hon. friend see that the $28,000,000-I do not know whether he has figured it rightly-is the value as reflected in the market, and in that reflection the Grand Trunk's liability was taken into account. Does he imagine that anybody who buys Grand Trunk stock pays no attention to Grand Trunk liabilities, including its liabilities to the Grand Trunk Pacific? So if the reflection in the market is a correct reflection-and personally I do not think so-the Government would have to assume the liabilities, including the Grand Trunk Pacific, and pay this besides.


Frank S. Cahill: Certainly not.


Arthur Meighen: The hon, member
shakes his head and smiles as if I did not understand it.


Frank S. Cahill: Quite so.


Arthur Meighen: We will hear my hon. friend at it.


Frank S. Cahill: The minister said this
afternoon he did not understand much about stocks. I can believe that. The total value of these stocks as reflected by the stock exchange is $28,000,000. The minister just stated that he would not consider $30,000,000 a sufficient sum to settle the Grand Trunk's liability to Canada. But there is another asset in the Grand Trunk at the present time, and until this legislation goes through, amounting to $27,000,000 more, and that is the $60,000,000 worth of guaranteed stock quoted in the market at 45. That makes its value $27,000,000. In the last few days it has gone up to 60, which means that my hon. friend has made it possible for some persons to gain $9,000,000 on account of this legislation. My hon. friend takes precautions to make this $60,000,000 worth of stock safe from the actions of the Canadian Government in respect of the Grand Trunk's liability to the Grand Trunk Pacific, and he only leaves himself about $28,000,000, if that is the worth of the stock, to cover the total obligations of the Grand Trunk with respect of the Grand Trunk Pacific. I do not see

how my hon. friend can get away from the fact that he is giving away the assets of the people of Canada when he guarantees pay-,ment on a stock that has paid 4 per cent at times, less at other times, and has- failed to pay a dividend in the last two years, on the ground that the people who own that stock own something. As a means of getting even with them we are going to guarantee this stock. I cannot understand my hon. friend's process of reasoning.


Arthur Meighen: I thoroughly agree that the hon. gentleman does not understand it. It is difficult to tell where to start to disentangle the lot of absurdities that the hon. gentleman puts before the committee.


Frank S. Cahill: You said that last year.


Arthur Meighen: He says that $28,000,-
000 is the market value of the three preference stock and the common stock, and $27,000,000 the market value of the guaranteed .stock. Now we- are arbitrating on what we should pay for these three preference and the common stocks. He says that they are only worth in the market $28,000,000, and the company's liability is $30,000,000 in respect of the Grand Trunk Pacific. I told him a moment ago, and I am sure if he will give his mind a chance he will see it, that those who are estimating the market value of Grand Trunk stock estimate it less because of its Grand Trunk Pacific liabilities. Is not that so? Does my hon. friend mean to suggest that if the Grand Trunk had not its Grand Trunk Pacific entanglements its stock would not be worth more in the market-I will go step by step slowly and give the hon. gentleman every chance-Is not that correct? Of course, it would be worth more. That is to say, it is worth less to-day because of those liabilities. So far as the estimate of the market buyers is concerned, we can afford to pay $27,000,000 for the three preference stocks and the common stock, assume the Grand Trunk liabilities and come out exactly even. Is not that correct? So we have $27,000,000 to come and go upon if their estimate is correct. I would refuse to accept their estimate. I think it is high. But we leave it to the arbitrators; that is all there is to it.


Frank S. Cahill: But before you leave it to them, you take away this $60,000,000 of stock which they might have to pay over to the Dominion Government.


Arthur Meighen: Oh, no.


Frank S. Cahill: They have ninety-seven million dollars of a liability and in order to make them safe you guarantee this stock
66*
and convert it into practically Dominion Government bonds and then you only leave them this twenty-eight million dollars of more or less worthless stock to arbitrate upon. You do not mean to say that you are going to take a mortgaged property to meet all this liability. Of course, not. You know better than that. So you virtually make this sixty million dollars a mortgage, *or bond, or debenture-whatever you wish to call it-and place this in their hands, and it only leaves $28,000,000 worth of stock to deal with. So that if their obligation is $30,000,000 you know you are $2,000,000 short to start with, but you' will arbitrate to see if there is a value still in the $28,000,000 worth of stock. You say that $30,000,000 would be less than you would expect to settle the whole undertaking. There is absolutely no reason in the argument, and I venture to say that when my hon. friend is through with the transaction he will find that he has let the Dominion of Canada in for a vast sum of money, releasing the Grand Trunk Pacific from their obligation as far as this $60,000,000 is concerned. All the Dominion may take is $28,000,000 of more or less worthless stock for an obligation of $97,000,000.


Charles Alphonse Fournier: If I understood the Minister of Railways correctly this afternoon, he said that in taking over the'Grand Trunk we were assuming the bonded debt of the Grand Trunk Pacific.


Arthur Meighen: 'Well, no. There is no specific assumption of that liability.


Charles Alphonse Fournier: Is there not $70,000,000 worth of Grand Trunk Pacific bonds which are guaranteed by the old Grand Trunk?


Arthur Meighen: There is a large amount.


Charles Alphonse Fournier: Do we not become responsible for the payment of those bonds?


Arthur Meighen: No more than we are to-day.	[DOT]


Charles Alphonse Fournier: The minister said that for ten years the Grand Trunk had been able to distribute a million dollars a year in dividends. Was not this because the Government paid interest on Grand Trunk Pacific bonds which were guaranteed by the old Grand Trunk?


Arthur Meighen: No.


Charles Alphonse Fournier: If the Grand Trunk had paid interest due on Grand Trunk Pacific bonds would it have been able to pay dividends to its shareholders?


Arthur Meighen: It would not have been able to within the last two or three years. The Grand Trunk Pacific paid its own dividends, but it paid them because we lent them .money, on the security of the Grand Trunk Pacific, to do so. Now, the Grand Trunk has its own liabilities in relation to the Grand Trunk Pacific. If, in the minds of the arbitrators, those liabilities are greater than the Grand Trunk Pacific is .security for, the award will be reduced accordingly. But we will certainly argue- and I think correctly-that if the Grand Trunk Company is called on to discharge its liabilities to the Grand Trunk Pacific, the fact being that the Grand Trunk Pacific cannot discharge them itself, then they would be in a position to pay dividends on these four stocks.


Charles Alphonse Fournier: If the Grand Trunk Pacific went into liquidation or failed to earn its fixed charges, would not the old Grand Trunk have to pay about $3,000,000 a year interest on the Grand Trunk Pacific bonds which are not guaranteed?


Arthur Meighen: Yes, or more than that.


Charles Alphonse Fournier: If it paid interest on these bonds would there be any possibility of its paying dividends upon any of its preferred stock?	,


Arthur Meighen: There would be a possibility, of course.


Charles Alphonse Fournier: If it did not pay, then what would be the value of the preferred stock?


Arthur Meighen: I would not be a very good judge of that. One reason that would make it difficult to judge of that would be that the common stock lies there for which $30,000,000 was paid but on which no dividend has ever been paid, and the prospect has never been darker than the last year. But it has always had a value. It would be impossible for me to say that the preferred stock would have no value.


Charles Alphonse Fournier: My hon. friend must have all the information. Would he read to the Committee the letter written by Sir Alfred Smithers to Sir Robert Borden three years ago in which the statement was made that the Grand Trunk was at the end of its tether?


Arthur Meighen: I have read the letter.


Charles Alphonse Fournier: Will the Government say that it is possible for the Grand Trunk to earn enough to pay a dividend upon its debentures and guaranteed stock and also 
to pay the interest upon the Grand Trunk Pacific bonds which it has guaranteed?


Arthur Meighen: We certainly would not say it could. We will argue that it could not. The Grand Trunk, on the other hand, say: "We ought to be permitted to make a revenue, and we certainly cannot make it unless we are given rates which are reasonable under conditions such as now obtain." In a word, everything depends on rates. It would be possible for them to do it if the rates were higher, but the Government will argue that to keep the rates at a reasonable figure, having regard to all conditions, they could not discharge their obligations to the Grand Trunk Pacific and pay dividends on the preferred stock or any stock. That is our contention.


Charles Alphonse Fournier: Will the minister say, in view of its commitments in respect to the Grand Trunk Pacific, that the Grand Trunk Railway Company of Canada is a solvent concern?


Arthur Meighen: Well, we will argue that they could not pay dividends and discharge all their obligations. But I am sure the Grand Trunk will argue very strenuously that they could. I am not in the position of a judge in the matter; that will be for the arbitrators to decide.


Charles Alphonse Fournier: If it is not a solvent concern how can either its preferred stock or any stock have any value, and what is there to arbitrate?


Arthur Meighen: If the judges find that it is not solvent they will find that the value is nothing; that is all. My fion. friend must see that the long series of questions he has asked rests on the answer to one, and when that answer is given there is not very much object in answering the rest.


Charles Alphonse Fournier: The minister will
pardon me if I put another question. Could not the Government obtain the Grand Trunk by liquidation without paying anything for dither preferred or common stock?


Arthur Meighen: That is something
which, to answer with certainty, would require the gift of prophecy as well as of business judgment. It would depend upon many circumstances. It would depend upon the action of the Railway Commission with regard to rates, and also upon the attitude and intentions of other railway people as to the Grand Trunk. It might well be that there are railroad people in the

world-perhaps in Canada-who could save the Grand Trunk from the position by enlarging their own system.


Jean-Joseph Denis: 
Arthur Meighen: So is the debenture stock.


Jean-Joseph Denis: duce something from nothing. What you are adding in the present instance is the guarantee of the Dominion of Canada, which is worth money. You are making a present to the Grand Trunk Railway Company outside of the fact that you are buying the concern. It is all right to buy the concern if you want to, but you should not buy the concern and make a present to the holders of the debenture stock and the four per cent guaranteed stock.


Mr. ROWELL:: My hon. friend has overlooked one important fact in the argument he has made, and it is this: The guaranteed stock is in a real sense a preference stock. It is a prior charge on the assets of the company in a winding up of the company over the first, second, and third preference stocks and the common stock. If the company were liquidated the guaranteed stock would have to be paid in full before a dollar would go to the holders of any of the preference or common stocks. My hon. friend will agree with the further proposition that the first, second and third preference and common stocks are not a charge upon the assets


Frank S. Cahill: Neither is the guaranteed stock.


Newton Wesley Rowell: -in the distribution ot the property. If they are not a charge upon the assets then they have no value whatever until all the debts are paid and no value until the guaranteed stock ^s paid. Then take the figures given by the hon. member for Pontiac (Mr. Cahill). He said that at present market quotations the value of [DOT] the first, second and third preference and common stocks is $28,000,000. With the Grand Trunk in default on its guarantee, with respect to the loan made by the Dominion of Canada of $10,000,000, and with the property of the Grand Trunk Pacific in the hands of a receiver, the rifar-ket value of these stocks, after all debts are paid, is $27,000,000 or $28,000,000. What is proposed by the Government is simply to arbitrate the value of these stocks which on a market basis, with all liabilities discharged, have a value of $27,000,000 or $28,000,000. Is the Government under these conditions making a bargain that is unfair to the Dominion of Canada?


Frank S. Cahill: Yes. .


Newton Wesley Rowell: I do not think my hon friend really means that; I am quite sure he does not. If the Government of Canada is taking over the property of the Grand Trunk, is it unfair to arbitrate as to
fMr. Denis.]
whether these stocks have any value or not representing as they do an investment of over $200,000,000.


Frank S. Cahill: I am sure the minister does not wish to mislead the committee. The total issue at par of the first, second and third preference and common stock is only $180,000,000. So the holders could not have paid $200,000,000 for it.


Newton Wesley Rowell: 
Frank S. Cahill: Oh, yes.


Newton Wesley Rowell: 
Joseph Archambault: Just a trifling
difference of $100,000,000.


Newton Wesley Rowell: It is near the $200,000,000 par value of that stock.


John Howard Sinclair: But the minister will recollect that the common stock is included in that total, and it was not sold at par.


Newton Wesley Rowell: I said a moment ago that in my original statement of $200,000,000 I was in error because I had the larger figure of the debenture stock before me. The actual money put into the stock would not be so much as $200,000,000. The par value of the stock is $185,000,000, but it is all stock that was sold, as I understand it; none of it is watered stock.


Thomas Vien: That is including the water.


Newton Wesley Rowell: I am informed that it was not watered. True, the common stock did not bring its par value, hut it was all sold on the market and represents, according to my information about $100,000,000; I have not' the figures here. But the point is, it does represent about $100,000,000 of money actually put in the road by the Grand Trunk Railway shareholders. And the Government is arbitrating with the Grand Trunk the value of the stock, which to-day is quoted on the market, according to the member for Pontiac (Mr. Cahill), at $27,000,000 or $28,000,000, and rwhich represented an actual cash investment of about $100,000,000. I submit that on that showing

the proposal) is not only a reasonable one but an exceedingly fair one from the standpoint of the country. The 'Grand Trunk think that they have been very harshly dealt with; but from the standpoint of the .country I submit it is a complete answer to the remarks of my honourable friend.


Thomas Vien: The Minister of Railways (Mr. Reid) stated a short time ago, in answer to the question which was put to him, that it was the intention of the Government to hold the Grand Trunk Railway Company responsible for all their liabilities in respect of the Grand Trunk Pacific. The Minister of the Interior (Mr. Meighen) subsequently stated that for a few years past the Grand Trunk Company would not have been able to pay any dividend even on the guaranteed stock if all their Grand Trunk Pacific liabilities had been taken into account, nor could they do so now.


Arthur Meighen: No.


Thomas Vien: I gathered that the minister stated, in answer to the hon. member for Bellechasse (Mr. Fournier), that if the Grand Trunk Company were called upon to pay the interest on the Grand Trunk Pacific bonds guaranteed by them, as well as their other liabilities, they could not pay any interest on those bonds.


Arthur Meighen: I did not say that at all. I understood the question to be: Could the Grand Trunk pay interest on the three preference stocks and the common stock? My answer was: The Government would argue that they could not. On the contrary, the Grand Trunk contend that they could, and they urge that it would be the duty of the institutions that have control to allow such rates as would enable the company to do so. But I stated that the Government would argue that, as to those stocks, the Grand Trunk Company could not pay any interest if they met all their other obligations. I did not presume to say that they could not do so. It will be the Government's contention that they .could not; the Grand Trunk contend the opposite; so-it is for the arbitrators to decide.


Thomas Vien: I accept the correction of the Minister of the Interior. But at any rate, if the Grand Trunk Company were called upon to meet all their liabilities in respect of the Grand Trunk Pacific Railway, it is highly .questionable whether they could pay any interest on what is called the four per cent guaranteed preference stock. It is so highly questionable that for the past two years the Grand Trunk have not met the
interest obligations on their Grand Trunk Pacific liabilities, nor were they able in 1917 and 1918 to pay any interest on that guaranted preference stock. Therefore I think we may fairly assume that the Grand Trunk Company, if held to account for all their Grand Trunk Pacific liabilities, would not be able at present, any more than, they have been able for the past few years, to pay any interest on that guaranteed preference stock. The point raised by the hon. member for Pontiac (Mr. Cahill) and further raised by the hon. member for Joliette (Mr. Denis), and which has not yet been fully .answered, is that the Government, notwithstanding the fact that the guaranteed stock does not pay any dividend, undertake in the agreement to guarantee four per cent on that account. That guarantee, therefore, is. a pure gift from the Government to the stockholders. But, moreover, the Minister of the Interior (Mr. Meighen) said this afternoon-I think I quote him rightly-that the Government do not give up any portion of their claim against the Grand Trunk Company, and that in valuing the first, second and third preference stock, as well as the ordinary or common stock, the arbitrators will be called upon to estimate the value of such stocks in view of the obligations, of the Grand Trunk in respect of the Grand Trunk Pacific. Well, it is possible that the claim of the Government against the Grand Trunk Company will more than offset whatever valuation the arbitrators may put on that first, second and third preference stock. They may say that the Grand Trunk Company are indebted to the Government by reason of the obligations undertaken in respect of the Grand Trunk Pacific in .a larger amount than they are entitled to on the valuation of their stock.
This claim of the Government against the Grand Trunk, if it is greater than the amount that the Grand Trunk are entitled to on the valuation of their stock, should be accounted for by deduction from the other amounts that the Government now undertake to pay them for the guaranteed stock. But the Government sets aside this guaranteed stock, puts it with the bonds of the company, and then proceeds to value the rest of the stock, and that valuation may be much lower than the amount representing the claims of the Government against the Grand Trunk in respect of the Grand Truqk Pacific. We do not know at present what will be the claim of the Government against the Grand Trunk in respect of the Grand Trunk Pacific. Last year the

Minister of Railways was, by Order in Council, appointed receiver of the Grand Trunk Pacific, but no liquidation took place. We do not know what assets there are to meet the liabilities of the Grand Trunk Pacific. The Government is not in a position to-day to tell by what amount it will be in disbursement in respect of the guarantee of the bonds of the Grand Trunk Pacific. Nor is the Government in a position to tell us what will be the claim of the receiver of the Grand Trunk Pacific against the Grand Trunk in respect ot their guarantee of the bonds of the Grand Trunk Pacific-whether in his capacity as receiver or as representing the Government which is guarantor of the bonds. Well then, how can we say what will be the amount of the claim of the Government against the company?


Arthur Meighen: Against the Grand
Trunk?


Thomas Vien: Yes.


Arthur Meighen: What have the expenses of receivership to do with our claim against the Grand Trunk?


Thomas Vien: The Government is guarantor of certain debentures of the Grand Trunk Pacific. When the Grand Trunk Pacific is fully liquidated, the Government will be able-because the Grand Trunk Pacific is now in its hands through the receivership of the Minister of Railways-to claim from the Grand Trunk a fulfilment of their obligations in respect of the Grand Trunk Pacific.


Arthur Meighen: That has nothing to do with the expenses of receivership or the moneys advanced by the receiver for the management of the railway.


Thomas Vien: I am not speaking of the moneys advanced by the receiver; I am now speaking of the value of the shares, whether guaranteed or preferred, of the Grand Trunk. This value cannot, be properly ascertained until we know what amount the Grand Trunk will be called upon to pay in respect of their guarantee of bonds of the Grand Trunk Pacific. The receiver has a claim against the Grand Trunk because the interest on the bonds guaranteed by the Grand Trunk has not been paid for the last two years. Moreover, the receiver has a claim against the Grand Trunk in respect of the capital represented by these bonds, if the assets of the Grand Trunk Pacific are not sufficient to meet the bonds. This has to be settled before we can esti-

mate properly the value of the shares of the Grand Trunk. But the point .that the Government does not submit to .arbitration is the value of the guaranteed stock of the Grand Trunk Railway Company. The Government guarantees the payment of the capital and the perpetual payment of interest at four per cent on .such guaranteed stock, although that stock may be worthless. As my hon. friend (Mr. Denis) says, it may be worth 50 cents on the dollar; it may be worth 40 cents on the dollar-but the Government undertakes to pay 100 cents on the dollar in respect of that stock. The minister shakes his head as a denial; but virtually the Government guarantees the perpetual payment of an interest of four per cent on it, and the reimbursement or possible conversion-.


Arthur Meighen: How can you guarantee a possible conversion?


Thomas Vien: I will split hairs with the minister; I will try to discuss on fine points, although my imperfect command of the English language does not permit me to discuss them as finely a.s he does. I will try, however, as far as it is in my power to do so, to make myself understood.
The Government guarantees the perpetual payment of an interest of four per cent on the guaranteed stock of the Grand Trunk and reserves to itself the right to buy outright by reimbursing the holders of the guaranteed stock to the extent of twenty-five times the annual payment which is to be made in lieu of dividends. That amounts to the same thing-


Arthur Meighen: Oh, no.


Thomas Vien: -because it gives a value to that stock; .a.s has been .shown this afternoon, it has already given an enhanced value on the stock exchange. We say it is poor policy; it. is. a bad deal, it amounts to a pure gift to the holders of the guaranteed stock, to fix a guaranteed payment of dividend in respect of a stock on which there has been no dividend for two years and on which there might never be a dividend in the future if the company is called upon to meet .its obligations in respect of the Grand Trank Pacific.
The President of the Council (Mr. Rowell) said that we must not he harsh with the shareholders of the Grand Trunk because they had put over 3200,000,000 into the enterprise. But the tenderness, of the President of the Council is extended to only one class of the shareholders of the Grand Trank; it does not go out to the shareholders of the first, second or third preferred

Stock; it covers only the holders of the guaranteed stock. But these friends in the ring around the Government-we must protect them; we must guarantee the interest; we must see that they lose nothing.


Arthur Meighen: Does the hon. gentleman not see that the preference stocks, on which we do not guarantee anything at all, have risen in value rather more proportionately than the guaranteed stock?


Thomas Vien: Yes, but the minister said this afternoon in that very respect that those that buy on the stock exchange might regret their action.


Arthur Meighen: Certainly.


Thomas Vien: That the value on the stock exchange is an inflated value.


Arthur Meighen: I did not say it is inflated. It may go down, as may the advance on the guaranteed stock. That would indicate that it is just the report of the transaction that has had that effect. That is something we cannot prevent. They may lose on the transaction; they may gain; hut we do not know now.


Thomas Vien: That is a distinction on a fine point. The minister says that it may go down in value. That is to all intents and purposes the same as saying that those who buy it at the present time might ultimately regret the transaction. I do not find any difference as to that; but at any rate, even if the first, second and third preferential stocks have augmented in value on the stock exchange, they are in no way guaranteed by the Government; whereas the Government, by the deal which it is asking the House to sanction, guarantees the interest on the guaranteed stock, and that is a pure gift for which there is no reason, because the Government will have no recourse whatever to be reimbursed the balance that may (be owing to them after the accounts of the Grand Trunk and the Grand Trunk Pacific have been settled by arbitration. The minister said this afternoon, just a minute before recess: Well, we do not give up any of our claim; if our claim against the Grand Trunk is in excess of the value put on the preferential stock by the arbitrators, we shall have our claim against the Grand Trunk just the same. But the minister surely knows that the Government will be put in the place of the shareholders of the Grand Trunk Railway Company by the deal that is now proposed. The Government will have recourse against the Grand Trunlk Railway Company, and the
company will, to all intents and purposes, be the Government itself. Therefore, by putting aside that $60,000,000 worth of that guaranteed stock on which the interest is now guaranteed, we have purely and simply guaranteed a payment which the arbitrators, if that class of stock had been left to arbitration like the preferential stock, might have valued at may be fifty cents on the dollar or under.


Newton Wesley Rowell: My hon. friend's argument seems to be predicated on a certain view of the position of the Grand Trunk Pacific. Does my hon. friend think that the building of the Grand Trunk Pacific was a gigantic blunder and that it is not worth the cost of building?


Thomas Vien: No, I never contended that. I approve, as the peope of Canada have several times approved, the building of the Grand Trunk Pacific railway.


Newton Wesley Rowell: Then, if my hon. friend admits that the building of the Grand Trunk Pacific was a wise thing in the national interest, and that it is worth the cost of building, what is the use from his standpoint of all this argument about the liability of the Grand Trunk as guarantor of those bonds?


Thomas Vien: There are two clearly distinct points involved. The advisability of building the Grand Trunk Pacific railway is one thing, and on that point I fully agree with the minister as well as those who fathered that project. The minister himself at that time, I understand, highly approved the project. But there is another point-and this is the second point on which the minister questioned me-the value of the Grand Trunk Pacific railway in respect of the liabilities that are put upon it. In respect of that, I have no opinion to give. I do not know; the Government does not know; the Government is not in a position to tell the committee whether as things stand today the obligations of the Grand Trunk Pacific railway will he met by the assets of that company. A receiver has been in charge for a year, and he has not taken the trouble to liquidate the whole thing. He has not made any reports to this House. He is not in a position to tell the arbitrators that he has a claim against the Grand Trunk, to call upon that company to live up to their obligations and to pay the difference, if the assets are not sufficient to meet the liabilities of the Grand Trunk Pacific. I am no more in a position to tell that than is the President of the Council (Mr. Rowell). The President of the

Council asks me if, in my opinion, the assets of the Grand Trunk Pacific railway are sufficient to meet the (liabilities, I cannot say that. It is up to the Minister of Railways, the receiver, who has been in possession of all the books and the details, to tell the committee and the country. But that is not the point at all, and it has no reference to the question which has been raised by the hon. member for Pontiac (Mr. Cahill), the hon. member for Joliette (Mr. Denis) and the hon. member for Bellechasse (Mr. Fournier).


Arthur Meighen: Does the hon. gentleman say that the Minister of Railways should sell out the Grand Trunk Pacific and see what could be got fo-r it,. in order to find out if it is liable for the liabilities against it?


Thomas Vien: It is not necessary for the
receiver to sell out.


Arthur Meighen: Then, how will he find out?


Thomas Vien: An arbitration might be held by the arbitrators.


Arthur Meighen: That is what we are
providing for now.


Thomas Vien: No, you are not providing for that.


Arthur Meighen: Arbitrators?	.


Thomas Vien: You are providing for arbitrators who, under the terms of the resolution, will be called upon to value the first, second and third preferential stock and the common stock.
. Mr. MEIGHEN:	Certainly.


Thomas Vien: I understand the fine point
the minister is going to make, but I will ask him to be patient for a minute, and then I will gladly answer his question. The question that has been put to the Government several times and that has not been answered by the Government-and I think before putting other questions the minister should first answer our questions-is: Why is not that guaranteed stock submitted to arbitration the same as the first, second and third preferential stock and the common stock? Why make a distinction between the shareholders of the guaranteed stock and the shareholders of the common stock? Why not submit the whole thing to arbitration? Why give an enhanced value to the shares that may have been collected by a few friends of the Government; just to speculate on? We do not know anything about the matter. It is possible that the valuation. put on it by the Government in

guaranteeing the payment of the interest on that stock may not be equal to what the arbitrators might give if they had been put in a position and been given jurisdiction to arbitrate on it. I do not see why the Government should give a value and should undertake to pay such an amount when they could do otherwise, when they could submit the whole thing, preferential and guaranteed stock to arbitration.


Arthur Meighen: The hon. gentleman is
very free, as he always is, in trying to leave a slur on the members of the Government as endeavouring to make-


Thomas Vien: It is not a slur; it is a question.


Arthur Meighen: Not a slur? The hon. gentleman intimated that friends of the Government were owners of guaranteed stock. I have told him that we do not know the owner of a single share of stock.


Joseph Archambault: Give a list of the shareholders then.


Arthur Meighen: We do not know the
name of a single owner. If the hon gentleman does, we shall be glad to hear from him.


Mr. TOBIN:: That is public property


Joseph Archambault: Surely, it is easy for the Government to get a list of the shareholders or the books of the company at any date and to table that. I do not see why there is an objection to tabling such a list.


Arthur Meighen: Just a minute. I will
let. the hon. gentleman know to-morrow. I have never made an inquiry as to how long it would take to get a list of the shareholders as of any fixed date. I will find that out from the Grand Trunk officers and let my hon. friend know. I have never made inquiry, and I do1 not think any other member of the Government has ever made any inquiry as to a single owner of stock, guaranteed or otherwise. Now if the hon. gentleman has anything to back up his allegation or his slur the time to do it is now.


Thomas Vien: I object to the word "slur." We can surely say what we have in our minds without being accused of casting slurs. I say that it is at least suspicious to see the Government make a distinction in that respect without any apparent reason. We have tried to obtain the reason and have asked the Government why the distinction was made, but have not received a satisfactory answer. So we say there is something suspicious, and when any mem-

ber -of this Parliament finds something suspicious he has a right to speak of it without being accused of casting slurs on anybody.


Arthur Meighen: In using the word "slur" I used a word that was not quite equal to the occasion. The offence of the hon. member was much worse than I denominated it. I told this House this afternoon the reason, and the only reason, why in the arrangement that has been come to we undertook to pay the interest on the guaranteed stock, and all I can do now is to repeat that reason. The Government offered to value, by arbitration, all the five stocks. That is what the Government was anxious to do, but we could make no progress whatever. In the meantime we were being called on to assume obligations, and the situation was getting more and more difficult. We then offered, in July, 1918, to treat the next stock in order, namely, the guaranteed stock, as an obligation. Had the arbitration been on the basis of the whole five stocks the award would have been applied on the guaranteed stock first, because it had prior claim-prior claim in respect of dividends, prior claim in respect of its capital, and prior claim in the event of liquidation. So in order to meet the company, and in the hope that we could make some progress, we offered to take the first call standing next to the debentures as a liability. That offer stood from the eleventh day of July, 1918, until the tenth day of October, 1919, without acceptance. It stood without much show of acceptance until about the 1st of October, 1919, or at all events until the month of September, 1919, without progress being made. Now the ' company has come to our terms. That is the reason and the only reason for our action. We would have preferred the other way, to arbitrate all the stocks, but we were not able to get that. But because we were not able to get that, and because we were anxious to make some progress in this matter, for it is of great importance, is surely no reason why an hon. member who knows nothing about it, and who has not the faintest reason in the world to back up his slur or allegation, should stand up here and tell us we are endeavouring to make money for the friends of the Government. I say again, if he has in the back of his head the thought of any friend of this Government or any body else that we are trying to make money for, now is the time to produce the evidence, and we will give him a chance to do it every day until this discussion closes. If he fails to produce the evidence before the end of this discussion, I hope he will arrive at the same opinion of his conduct as the rest of the House now has


Thomas Vien: It is for my electors and the public to judge, in view of the action of the Government in refusing to answer the question that we put this afternoon. The minister has made a subtle distinction. He has taken the sidetracts, probably some of those belonging to the Minister of Railways, and has not answered the question why this guaranteed stock has been treated differently from the preference stocks. He has stated that he could not obtain better terms. That is no reason. If in the opinion of the Government the Grand Trunk officials were not reasonable, the Government could call them to account for their liabilities in respect to the Grand Trunk Pacific. But there is nothing to show that the Government called the Grand Trunk to account for their liabilities in respect of the Grand Trunk Pacific. There is nothing to show that the Government tried to compel them in any way. The answer of the minister amounts to this:	We had to put it that
way because the shareholders of the company would not agree to anything else; we have thrown ourselves into the hands of the shareholders. That is the only reason the minister gave, and I do not think it is satisfactory.


Newton Wesley Rowell: My hon. friend (Mr. Vien) has not put the case as the Minister of the Interior put it. My hon. friend wholly ignores the statement made this afternoon both by the Minister of Railways and the Minister of the Interior. My hon. friend knows that the Government made a cash offer in the proposal of July, 1918, to pay $2,500,000 for the first three years, $3,000,,000 for the succeeding five years, and $2,600,000 annually thereafter. Now the offer of $2,500,000 was the minimum sum which the Government believed the system was worth to the people of Canada. It was the minimum amount which they were prepared to pay to start with, and they were prepared to increase the amount in succeeding years to the figures I have mentioned. The Government would have liked the Grand Trunk to accept the proposal. We would have preferred the cash offer to arbitration. But what does that $2,500,000 mean? It is just the amount of the interest on the guaranteed stock. By guaranteeing the interest on the stock we are not adding one dollar to the amount the Government was prepared to pay in cash as the minimum amount.


Andrew Ross McMaster: Only in the event of the arbitrators finding the other stocks are worth nothing.


Newton Wesley Rowell: No, quite apart from the arbitration. We offered $2,500,000 in cash for three years, $3,000,000 for the succeeding five years, and $3,600,000 annually thereafter. The minimum .amount which the Government was prepared- to pay was $2,-
500,000.	Now, that is the amount of the interest on the guaranteed stock, and not a member on the other side of the House from the day that proposal was laid before it has ever suggested that that was too high a price.


Thomas Vien: It never came before the House.


Newton Wesley Rowell: It has always been before the House.


Thomas Vien: It has never been before us.


Newton Wesley Rowell: The proposal was read by the Acting Prime ^Minister last session.


Thomas Vien: Yes, in connection with the receivership of the Grand Trunk Pacific, but the matter could not then be taken up in the shape the minister suggests.


Newton Wesley Rowell: If my hon. friend thought it was too great a sum he should have objected.


Daniel Duncan McKenzie: That offer was not accepted by the company, and it never came in business shape before this House; so how could we discuss it?


Newton Wesley Rowell: It was stated in- the House that that was- the offer made to the Grand Trunk. If my hon. friend or any of my hon. friends on the other side thought the Government of Canada was offering too much it was their duty to point that out and to urge that the Government should withdraw from the negotiations on the ground that they had made too high an offer. But not an hon. member suggested that; there was no suggestion of it whatever. What the Government has done now is simply to guarantee the interest on that stock, which only amounts to the minimum offer, and we are arbitrating as to the balance.
My hon. friend the Minister of the Interior has given the House the reason we have agreed to this. We could not get on with arbitration without putting in that proviso. That proviso was in the letter of July of 1918, and my hon. friend will see it there. From 1918 up to this time no one has sug-

gested that this should not be done. That proviso is as follows:
Should the company desire, the guaranteed stock may he treated as an obligation in the same way as the company's bonds.
It has been before the House and the country for more than a year and no one has suggested that there was any objection to the Government making this agreement.
Now I desire to refer again to the Grand Trunk Pacific. My hon. friend's whole argument falls absolutely to the ground unless he considers the Grand Trunk Pacific a gigantic blunder and a venture that should never have been started.


Mr DEVLIN:: It should never have been degraded.


Newton Wesley Rowell: The Grand Trunk Pacific is from Winnipeg to the Pacific Coast, and if that railway should have been built, then the Grand Trunk will argue-and I think with great force-that it is worth at least the amount of money put into it, and that therefore the Grand Trunk's obligations or guarantee upon it should not greatly depreciate the value of their stock. That will be' their argument.


Daniel Duncan McKenzie: Why not clean up all the obligation and business in connection with the Grand Trunk Pacific first, and then we will know where we are?


Newton Wesley Rowell: You can clean it up if
you want to liquidate the Grand Trunk Pacific and sell it under the hammer.


Daniel Duncan McKenzie: Does the President of the Council say that we are going to have perpetual receivership?


Newton Wesley Rowell: Certainly not.


Daniel Duncan McKenzie: Why not bring it to an
end now?


Newton Wesley Rowell: How can you bring it to an end now? You can do it only in one way, by liquidating it, or you can continue it until this arbitration is concluded and the property taken over. Do the leader of the Opposition and the men who stand behind him want to see the Grand Trunk Pacific, which Sir Wilfrid Laurier considered one of his crowning achievements, sold at auction?


Some hon. MEMBERS:: No, no.


Newton Wesley Rowell: That is what your argument leads to.


Daniel Duncan McKenzie: Not at all. The President of the Council as a member of the Government put it in the hands of the

receiver and we say that was a disgraceful and unbusinesslike thing to do. But once it is in the hands of the receiver it must be dealt with in a businesslike way.


Newton Wesley Rowell: I shall take up both of the hon. gentleman's points. The Grand Trunk Pacific was in default. They said they could not operate the roadway any longer for lack of funds. What could the Government of Canada do,-continue to pay millions of dollars of the people's money for the benefit of private stockholders? The people would not stand for any such policy any longer. We pursued it too long. And when the Grand Trunk Pacific took this position, the Government of Canada took the proper course of putting a receiver in possession, and if the Government had not done so and made clear to the Grand Trunk Railway and its shareholders that they were no longer going to pay out the money of the country for the benefit of private stockholders we would not have had the agreement that is before us tonight. The Government took a firm stand that it was bound to see the interests of the people of this country protected in connection with railway matters, and for that reason it has been possible to conclude the satisfactory agreement that has been reached with the Grand Trunk. My hon. friends must face the issue. Either the Grand Trunk Pacific was a proper undertaking, or-I repeat- it was a gigantic national blunder and should not have been built. If it should have been built then it should be worth to the people of Canada what it cost.


Daniel Duncan McKenzie: That is not an argument.


Newton Wesley Rowell: You must support one oi other of these contentions. If it should have been built, then it should be worth to the people what at cost. Now, my hon. friend said that I supported its building. I did.


Thomas Vien: So did I.


Newton Wesley Rowell: We	both believed it
should have been built. But I do not believe that the Canadian Northern should have been allowed to parallel it by means of guarantees and grants made by this Government and the provincial governments.


An hon. MEMBER:: That is another question.


Newton Wesley Rowell: Both governments are responsible for the Canadian Northern, and three transcontinental railways built by
Government assistance under private ownership are largely responsible for the trouble in connection with'our railway situation at the present time. It is nothing short of a national crime to isee railways paralleling each other for hundreds of miles in some sections of the country. We have built away beyond our population and capacity to provide traffic to make them pay at the present time. Only by the development of the country and the increased traffic due to settlement and colonization will the railways be brought into the position of earning properties, and so I say to my hon. friend that to suggest that we should liquidate the Grand Trunk Pacific and to ascertain, when it is liquidated, the amount of obligations, is to suggest (that one of the crowning achievements of Sir Wilfrid Laur-ier's political career, as he always claimed, should be discredited and the railway sold on the market. That is not in the national interest, which will he best served by our acquiring the Grand Trunk railway, which carries with it the Grand Trunk Pacific, and unifying the whole into a national system as this agreement proposes should be done, and as the Minister of Railways and the Minister of the Interior have outlined to-day. That is what the people of the country want. That is what is needed if the present system of railways is either to be made efficient or to be brought within the region of a paying transportation proposition.


Edmund William Tobin: Do I understand the minister to say that the people want what he says?


Newton Wesley Rowell: That is what the people want.


Edmund William Tobin: Then I am very much surprised.	,	1	[	' I


Newton Wesley Rowell: I know there are two classes of people opposed to this proposal, and one is the other great transportation system of this country.
Mr.-TOBIN: Who is that?


Newton Wesley Rowell: The Canadian Pacific Railway.


Edmund William Tobin: The Canadian Pacific Railway don't bother about it.


Newton Wesley Rowell: I do not know whether it bothers or comforts my hon. friend. Possibly it may comfort more than bother him.


Edmund William Tobin: They are not worrying about it.


Newton Wesley Rowell: I do not blame the Canadian Pacific Railway for being opposed to the proposition; they are within their rights in being opposed to it. But I do not agree with their opposition. The men interested in the Canadian Pacific railway know that public ownership of national railways in this country cannot be made a success unless we have the Grand Trunk associated with our Government system of railways to provide feeders in the east for it, and a national system-whether you call it public ownership or a Government investment in the railways-would not prove satisfactory without the addition of the Grand Trunk system. Naturally the Canadian Pacific Railway is opposed. I find no fault with their opposition, but it is no reason why the Government should not do what it believes to 'be in the interests of the country because one large corporation is opposed. There are others opposed to it because they are opposed to the principle of public ownership. The principle of public ownership does not necessarily enter into the consideration of this proposal.


Thomas Vien: Not at all.


Newton Wesley Rowell: I believe that quite apart from the principle of public ownership it is in the national interest, if we are to make our present railway properties paying and satisfactory, that we should acquire the Grand Trunk railway. I do not think that those who are opposed to public ownership should let that opposition carry them to the extent of imperilling the country's existing railway investments. Personally, I believe in the public ownership of this great system of railways, and therefore I support it on that ground as well as on the ground that it is in the national interest to acquire the road. Others may support it solely on the ground that it is in the national interest that we should take over the road, but I support it on 'both grounds. This agreement is in the public interest and as far as I have been able to ascertain the trend of public opinion, the people of the country strongly and cordially support it. I know there are a group in Montreal who are opposed to it. There are interests there opposed to it, but I am quite sure that west of Ottawa river three-fourths of the people are in favour of it, and I imagine that if you got a little east of the city of Montreal you would find three-fourths of the people of the east in favour of it also.


Thomas Vien: I might answer the Minister .with his own words. He says that they did not want to protect certain shareholders by advancing the Grand Trunk Pacific further amounts of money. Why does he now propose to protect a class of shareholders? The question I put to the Government is this: Why is the Government not submitting to arbitration the valuation of the guaranteed stock as well as the valuation of the other stock? The minister did not answer that question.


Newton Wesley Rowell: I can only answer it in the way that my colleague has already answered it-because we could not get an agreement with the Grand Trunk to do so. The only way we could get an agreement was in this way. We believed that the road was well worth our paying that money. We had already made a cash offer in excess of that amount; therefore, we did not feel that we should block an arbitration, especially in view of the fact that we had already offered something in excess of the amount for the road.


Frank S. Cahill: Why not expropriate it?


Newton Wesley Rowell: We could not expropriate the Grand Trunk system. We cannot expropriate railways in the United States. We could not get control of that road except bv negotiation. If ever a government has worked hard, if ever a Minister of Railways and those associated with him have worked hard to acquire this road on a basis that is fair to the people of Canada, the Government, the minister, and those associated with him, have done so in this case.


Emmanuel Berchmans Devlin: I would like, before asking a question of the Minister of Railways, to refer my hon. friend the President of the Privy Council to a letter signed by Alfred Smithers, dated July 22, 1918, and following a letter written by the Minister of the Interior to the said Alfred Smithers, 'the first being the letter referred to by my hon. friend in connection with the offer made by the Government to purchase the Grand Trunk railway during negotiations carried on in London by the Minister of the Interior. Mr. Smithers writes to Sir Robert Borden in this way:
London, July 22, 1918. Dear Sir Robert Borden,-*
I received a letter from Mr. Meighen dated July 11, which was not, however, delivered here till July 15. I acknowledged the letter to Mr. Meighen immediately, and said I would submit it to my hoard for consideration. This I did at the meeting of the board on Friday, July 19.

A question has been raised' as to what really are the terras offered in view of the offer made in the last paragraph hut one of the letter.
It is quite apparent that when the Minister of the Interior had made his offer to the Grand Trunk Railway Company they did not quite grasp what the offer was. That is followed by another letter written by the same Mr. Smithers, addressed to Sir Robert Borden, and dated August 2. It is as follows:
Dear Sir Robert Borden,-
I received a letter from Mr. 'Meighen dated July 11, on July 15th. I acknowledged the letter to Mr. Meighen immediately, and said 1 would submit it to my hoard for consideration. This I did at the meeting of the hoard on Friday, July 19. A question was then raised as to the interpretation of the last paragraph but one of Mr. Meighen's letter. As Mr. Meighen had left for Canada, I asked you for an explanation which I have received in a letter from you dated the 29th July.
It was therefore apparent that the Grand Trunk Railway Company did not really understand what the Minister of the Interior was referring to as the terms of the Canadian Government. I think that it may be said as an added remark of congratulation to the Minister of the Interior that he was apparently putting it all over the Grand Trunk Railway Company in London. Then, coming down to the resolution in question, there is one thing that is bothering me at the present moment. I am not going to put this question to the Minister of the Interior (Mr. Meighen) because it has not a legal bearing; I am going to ask the Minister of Railways and Canals (Mr. Reid)-if he is not overworked-because it is a question of fact. Why is it that apart from the guarantee by the Government of the debenture stocks and the four per cent guaranteed stock, he is now preparing new stock to be called the new guaranteed stock? What is the object of that?


John Dowsley Reid: I was going to say to my bon. friend that this is really a legal question. However, even if I am not a lawyer, I may perhaps be able to give an answer that will explain it. The new stock that is to be issued is to replace the first, second, and third preference and common stocks. For whatever award is made with respect to these different stocks, new stock will be issued and these other stocks will disappear.
Mr". DEVLIN:	Then I understand the
minister to say that the arrangement of the Government is simply to continue guaranteeing the guaranteed stock, drop the first, second and third preference and common stocks, and issue new guaranteed stock?


John Dowsley Reid: No, to issue new non-voting stock. First, second and third preference and common stocks would come into the possession of the Dojninion Government, and then new guaranteed stock of a nonvoting character would be issued to the amount of the award.


Emmanuel Berchmans Devlin: How will that new guaranteed stock be allotted?


John Dowsley Reid: The arbitrators will decide
the value of the holding of each stockholder.


Emmanuel Berchmans Devlin: The arbitrators decide the value, but how will the new stock be allotted?


John Dowsley Reid: The board of arbitrators will allot it.


Arthur Meighen: That is provided for in the letter of the 9th of October that finally closed the arrangement, subject to Parliament. It was intended to arrive, if possible at some arrangement prior to the arbitration; that is to say, to leave it in some way to the holders of these stocks, but fuller consideration convinced the officers of the company that it would likely be very difficult, if not impracticable, for the holders in any reasonable time to agree on
10 p.m. the apportionment, and so finally they asked that it be submitted to the arbitrators under the belief that the shareholders would agree to submit their respective and, in part conflicting, claims to the board and thereby finally determine the whole question.


Daniel Duncan McKenzie: I am not quite satisfied with the argument of the President of the Privy Council with respect to the Grand Trunk Pacific^ His argument is that if it was good policy, proper and right, to build the Grand Trunk Pacific, it must be worth whatever claims are against it, whatever claims have been saddled upon it.
Now, that is an absolutely groundless and almost a ridiculous argument. The minister (Mr. Rowell), with his usual facility for stirring up enthusiasm to carry him over a difficulty, made an effort to arouse his friends and the press of the country by saying: " Then this railway, having been built, it is all right and we must stand by it." That is no argument. This is a cold-blooded proposition in dollars and cents as to whether or not the Grand Trunk Pacific is worth in money the claims standing against it, and it must be ascertained entirely apart from sentiment. I do not see where there is room for sentiment here; it is a 'business proposition. The Grand Trunk Pacific Railway 'Company is an entity, and it is cer-

tainly closely allied with the Grand Trunk Railway Company, for they were practically together in the building of the Grand Trunk Pacific railway from Winnipeg to the coast. Therefore the obligation of the one is practically the obligation of the other. The Government hadi nothing to do with those companies beyond assisting them in building that railway. The Grand Trunk Company have fallen down in the business they undertook to carry out; they have not been able to meet the obligations which fell to them by reason of the bonds and other securities which they floated in this country. They have, purely as a corporation, borrowed large amounts of money from the Government, with no sentiment about the transaction at all. Now they have arrived at the stage where they should ipay back that money. The people of Canada, through the Government, lent the company hundreds of thousands of dollars, and also, through the Government, endorsed bonds which they must ultimately pay unless they are discharged in some otheT way. To say that instead of insisting upon dealing with this matter on business principles, it is sufficient to come to this Parliament and state: "Why, the late Right Hon. Sir Wilfrid Laurier thought this would be a great enterprise, and it would be a reflection upon his good name if this company failed to meet their obligation," is not business, I say to the President of the Council (Mr. Rowell) and to this Government that it is not in the power of a company like the Grand Trunk to come to this Government and dictate terms. The Grand Trunk are obligated to this Government to the full amount of the indebtedness of the Grand Trunk Pacific. They are not able to pay it. They evidently have obligations of their own that they are not able to meet. Are we, then, to be told that the Grand Trunk, crippled in that way and on the verge of receivership, as we are told by hon, gentlemen opposite, can come and dictate terms to this Government, and in effect say: " You must guarantee certain preference' stocks, you must do this, you must do that, you must do the other thing; otherwise we won't deal with you at all"? And they argue with the Government:" Why, what did you do with the Canadian Northern? You knew the Canadian Northern had stock to the tune of $60,000,000 which was not worth a dollar, hut you gave them $10,800,000 for it. You must do the same thing for us." That is the line of argument that is put forward. And the President of the Council, who presides over the wisdom of 
the Government in Council, comes here and is in entire contradiction with the Minister of the Interior (5vir. Meighen). The latter gentleman tells us: Yes, we are going to figure down to the last cent every dollar that the Grand Trunk Pacific owes this country, and we are going to see to it that it is the first slice that comes off the award. That is the position taken, and that is the business position, if followed up. But immediately after that comes a pathetic speech from the President of the Council, in which he brings in the late lamented Sir Wilfrid Laurier, and in -an appeal to the sympathies of the people, he -says: The poor Grand Trunk Pacific, like the -man Who was going down from Jerusalem to Jericho, fell among thieves, and we must help them along and not ask them to pay -anything. Now, which of those hon. gentlemen- is expressing the views of the Government? The Minister of the Interior encourages us by saying that we will have a big balance against this road, and we will not -be so very badly off because the company will have to pay us our hill. But, according -to the President of the Council, we are not going to get a cen-t, because we have got the railroad, and the railroad is worth all its obligations.
No-w, I say to the Government, and particularly to the President of the Council, the first thing is to clean up the private transactions between the Grand Trunk railway, the Grand Trunk Pacific railway an-d the Government. Let the Grand Trunk Railway Company pay the money that they owe us.


John Dowsley Reid: Then you want to put them into liquidation?


Daniel Duncan McKenzie: I am not afraid of liquidation. The Grand Trunk would not be the first railway that has gone into liquidation. When railway companies become tap heavy through overtaxing themselves with bonds and stocks, the proper place for them is liquidation;-let them be shaved down to proper running weight; then we will know where they are at. The difficulty with this 'Government is that all a railway company has to do- is to load itself down with debt, sell everything that can be sold, get the money and put it somewhere, and then when it is in -a helpless -and hopeless condition come to the Government and threaten: "If you don't take us under your wing, we will go into liquidation." To which the Government respond: "Oh, no; anything under the heavens rather than that! Come under our shelter."

And the company avails itself of the proffered refuge absolutely regardless of the condition it is in. That practice has been established by this Government, and advantage has been taken of it, and that is the trouble. Every railroad in the United States that is worth talking about as a railroad has gone through a receiver's hands. There are railroads in Canada that have gone through the same experience, because they got into trouble; and I assure the Minister of Railways that he will not get a black eye from our people by allowing any concern that is not able to carry on to go into the hands of a receiver in order that its affairs may be investigated and settled. We have an appropriate Act on our statute book for that purpose, and we have a regularly established practice in ,our courts for dealing with such matters. But the Government has no such equipment, because it was never intended that ^t should be put in the position of exercising the functions of receivership.
I come back to the same point again, that if we want to deal with this matter in a clean, business way, let us settle our accounts between the Grand Trunk Company, the Government and the Grand Trunk Pacific Company. Let us know exactly where we are at, and then we will know what is the obligation of the Grand Trunk to us. After we have done tha't, if it is good business to buy the road,- that i.s another matter. But to leave this jiiatus about the Grand Trunk Pacific simply means that we will not know where we are at in regard to it. The receiver, (Mr. Reid) will not give us any light about it apparently he does not know anything about it. Nobody can state how much the Grand Trunk owes us by reason of the obligations of the Grand Trunk Pacific. I hope that the ministers will recognize that that is the proper system to pursue: Do first things first, and clean up as you go. And let me tell my good friend the President of the Council, that I have just as much regard for the memory of my late revered ohief as he has, but I submit to him that I cannot allow the business of this country to suffer by reason of the fact that the name of my late honoured chief ,might in a remote business way be connected with something that did not pan out as well as he expected.


John Dowsley Reid: The leader of the Opposition (Mr. McKenzie) urges that we clean up the matter of the Grand Trunk Pacific before we deal with the Grand Trank. He, therefore, urges delay. The Grand Trunk
Railway Company owe 810,000,000 in respect of certain debentures that were guaranteed by the Dominion Government; the hon. member contends that the Government should sue the Grand Trunk for that $10,000,000 and make them pay. He urges that we take action against the Grand Trunk Railway Company for default on the bonds of the Grand Trunk Pacific. What that really means is this: Do not buy this road; force it into liquidation, make it go under the hammer or compel it to enter into other arrangements. And what would that mean? My*hon. friend is really advocating to-night that the Government delay any action in this matter and thus put the Grand Trank in such a position that it will be taken over and owned by the Canadian Pacific Railway Company. No one could put up a stronger argument than he has to show that he wants the Grand Trunk to go into the hands of the Canadian Pacific. If we let the Canadian Pacific Railway Company get the Grand Trank, there will be no future for the Canadian National railway. If the Canadian Pacific owned or controlled the Grand Trunk either directly or indirectly, what chance would the Canadian National railway system have in competition with such a system? If we do not want to continue the operation of the Canadian National railway, then let the Grand Trunk go into liquidation and let the whole system, Canadian National, Grand Trank and all, go over to the Canadian Pacific.
Now, the offer made by this Government to the Grand Trank has been before the people of Canada for a year or more, and outside of a few newspapers in eastern Canada, the press and the public are in favour of the Government taking over the Grand Trank and of our having just two complete railway systems in Canada. I believe that it is in the interest of Canada that we should have two railway systems, and two only. Let us either say, therefore, that we are going to have a complete railway system owned and operatedi by the Government-and let us say that by adopting this resolution and proceeding along the lines which it sets forth-or that the whole system, Canadian National and Grand Trank, should be- allowed to come under the control of the Canadian Pacific, directly or indirectly. Let us come out in the open; let us have a decision one way or the other, and let the public know of it.


Thomas Vien: The Minister of Trade and Commerce (Sir George Foster) did not appear to think that this question was one



of such urgency when he stated on W ednesday last that he thought that the House might close on Saturday of that week. The Minister of Railways himself has not been in much of a hurry; although for almost a year he has been receiver for the Grand Trunk Pacific, he has _ taken no particular steps in connection with obtaining a valuation of the assets and liabilities of that road. If the Government could not agree with the Grand Trunk Pacific as to a valuation of its assets and liabilities, the matter could have been referred to arbitration. The Minister of the Interior (Mr. Meighen) said a moment ago that the whole thing is to come up in the arbitration proceedings. But this is done after $60,000,000 worth of stock has been put aside to be released from the valuation of the arbitrators. W7e do not even know what are the liabilities of the Grand Trunk. It is not necessary to liquidate by means of an auction sale or by putting the road under the hammer; the amount of the liabilities and assets could be ascertained by arbitration. The receiver of the Grand Trunk Pacific had over eight months in which to do that, but he has not done it. So, if there is any hurry now it is entirely due to the action of the receiver himself.


John Dowsley Reid: The hon. member says that a week or two ago we were in no hurry. He knows that the Grand Trunk Railway Company have for a year or more been urging that we settle this matter either by arbitration or otherwise. Sir Alfred Smithers has been here for two months. We did not believe that there was any chance of his accepting our offer until a few days ago; but when he did accept our terms, what were we to do then? Were we then to say: We will not bring it up this session; we will wait until next year? Surely hon. members will agree with me, that it was the duty of the Government, having accepted the terms, not to delay, not to pigeon-hole the matter for several months, but to submit it at once to his House for its consideration. We are here to legislate in the interest of the country, and I believe, for reasons which I explained a few minutes ago, it would be suicidal for the Government to hold off for several months. Therefore, having accepted and acknowledged the letter of acceptance, the first thing we did was to submit the matter to Parliament, and I believe it is not in the interest of our great railway system nor in the interest of the country to keep public opinion in an unsettled condition as to the settlement of this great rail-

way proposition. For that reason, I say that we, of course, had to reconsider the question of the House closing at an early date.
o


Mr. H. H. McLEAN:: May I ask the
Minister of Railways a question? The answer to this question is one in which the people of the ports of Saint John and Halifax are personally and deeply interested. If the Minister of Railways is not prepared to give an answer this evening, I do not ask for one now; but when the Bill is under discussion, I should like a statement from the minister if he cannot give an answer now. My question is this: Is it proposed by the Government to utilize the ocean terminals of the Grand Trunk at Portland, Maine, in the shipping and receipt of ocean freight?


John Dowsley Reid: Of course, when we are on the Bill, I shall be glad to discuss that matter, but I might say this evening that the ports of Saint John and Halifax have been and are being still further developed for our own Canadian ocean terminals, and the Government intend using those ports to their fullest capacity. There is no doubt about that. We have now the Transcontinental which was originally built for that purpose right into Saint John. But Portland is a portion of the 'Grand Trunk system and the hon. member will understand that a large portion of the Grand Trunk is ' in the United States. There is the Central Vermont and other portions of that line, so that Portland will have to be used to a certain extent for portions of the Grand Trunk railway system. But I want to impress upon the hon. .member that there is no intention of not carrying out the policy of the Government in the past of developing and keeping our traffic in our own Canadian ports so far as it is possible to do that.


Hugh Havelock McLean: The Minister of Railways will understand that our people in the East feel that ocean freight gathered by the Grand Trunk Pacific in the West and other points should be shipped through Canadian ports, and that ocean freight destined for points on the Grand Trunk Pacific in the West should be received at Canadian ports.


John Dowsley Reid: Certainly that is so.


Hugh Havelock McLean: Not only have we in the city of St. John very fine terminals, but the Government is spending enormous sums of money there in developing 'the port and in providing additional terminals.

We would say that we would he able to handle ait the ocean terminals in St. John and Halifax all the freight that is carried from one .part of Canada to the ports that I have mentioned.


Joseph Archambault: The President of the Council (Mr. Rowell) stated that we could not expropriate the Grand Trunk railway because we could not expropriate a line in*the United States. I quite agree with him, but I would go further. I believe that Canada cannot operate railroads in the United Stales. Tire reason for this is, in my opinion, that if we operate railroads in the United States, we become subject to American railway laws. I think everybody will agree on that point. When we ,say that Canada owns and operates railroads in the United States, that means that His Majesty the King owns and operates railroads in the United States. Now, certainly my hon. friend is too loyal1 to contend that the King could become subject to the American law, and I believe this reason is very serious.


Arthur Meighen: I discussed this point at some length this afternoon. Even although the Government of Canada as a government owned the road, there would surely he no more objection to the road being owned and operated directly by the Government 'than there is now to the American Government operating roads directly in Canada.


Joseph Archambault: If my hon. friend will allow me, I do not believe that the American Government now owns any roads which are operated in Canada except roads such as the New York Central and the Delaware and Hudson which are privately owned roads, only operated temporarily, if I am not mistaken, by the Government of the United 'States.
Mr. MEIGHEN1: I know that. The hon. gentleman was balking of operation. That is all that he mentioned in his first statement. Does he say that it is all right for the Government to operate a road in another country providing that it doesi not own the road? The nonsense of that will appear to him at once


Joseph Archambault: I do not believe that Canada can operate any railroads in a foreign country.


Arthur Meighen: Then the foreign country cannot operate any railroads in Canada, but it is doing that every day, and so are we in that country.
67 J


John Howard Sinclair: Temporarily.


Arthur Meighen: Temporarily, it is true.


Joseph Archambault: Privately-owned railways.
. Mr. MEIGHEN: It may be temporarily or it may not, but I do not see any more objection to the United States operating a road in this country for ten years than to their operating it for one year. I do not see where the legal phase is in any way altered; it is all the same in the one case as it is in the other. As to the advisability of it, that is a matter for them to decide. Direct operation by Government in its most objectionable form from the standpoint of the hon. gentleman takes place now. The United States Government directly operates railroads in Canada in at least four different instances.


Joseph Archambault: Not owned by the United States Government.


Arthur Meighen: Does the hop. gentleman argue that it is all right for the Government to operate roads in a foreign country providing that it does not own them?
Mr, ARCHAMBAULT: Yes.


Some hon. MEMBERS:: Oh, oh.


Arthur Meighen: I will have to let the hon. gentleman's answer expose his own fallacy, because it really becomes so patent an absurdity that nothing more can be said on it. In this case, the Government does not propose directly to operate the line. The Government will only be stockholders of a company which operates. It will he said that that is only a change of method. That is all it is, but it is a very important change, for this reason, that if there is any breach of law in operation of the country operated through, then the action lies against the corporate entity, and the fact that the Government owns, the stock does not affect the matter in one way or the other. The corrective agent will be applied against the corporated entity, the Grand Trunk Railway Company or the Canadian National Railway Company, and not against the King in the right of Canada.
While it is only a change of form, from the point of view of any possible legal, constitutional or international objection it is a very important change, very important indeed. I do not see the slightest objection to the Government operating the line direct-fy-. f- cannot see that there could 'be any objection to operating for three years, that would not be quite as valid to operating for

one year. Consequently, if there would be no objection to operating directly, thejn in multiplied form there could be no objection do operating merely when we are holders of stock in a company which operates, and that company stands there to answer .all the [DOT]claims and obey all the obligations resting on them under American law.


Joseph Archambault: If I understand
my hon. friend rightly, Canada by this agreement does not become the proprietor of the roads belonging to the Grand Trunk that are in the United States.


Arthur Meighen: She becomes the owner or controller, or whatever else the Grand Trunk now is in relation to those roads. That is to say, we become the stockholders in the company, which, after we become stockholders has just the same ownership or control over these American lines as it had before we become stockholders. There will be no change in that respect whatever.


John Howard Sinclair: 'On page 51 of the Memoranda I notice a long list of railways, such as the Atlantic and St. Lawrence, the Buffalo and Lake Huron, the Central Vermont, the 'Southern New England Railway, and others. I presume that some of these railways are altogether in the United States. When we become the owners of all the stock of the Grand Trunk we will then be in a position to appoint the directors. Shall we be able to appoint Canadian directors?


Arthur Meighen: I do not know that we shall be able to appoint directors at all jn every case.


John Howard Sinclair: Will you not
maintain these incorporated companies?


Arthur Meighen: All I can say is this:
At the. present I know of no reason for changing the policy with regard to these roads that has hitherto been pursued by the Grand Trunk. There would be no reason apparent to me for changing the policy The Grand Trunk now either owns the stock of these roads or has leases of them-perpetual leases, I think, where there are leases. Now whatever policy the Grand Trunk pursues with relation to these roads now, I see no reason for changing that policy merely because we become the stock holders of the Grand Trunk. That is all I can say. It would be, of course, for the new Grand Trunk directorate, after the discharge of the Committee of Management, to say what is the best policy to pursue in relation to these American interests.


John Howard Sinclair: There is another
question. We have been talking all this evening about the guarantee given by the Grand Trunk in respect of the Grand Trunk Pacific, but the Grand Trunk has also guaranteed the bonds of all this long list of railways. What will happen to those guarantees when we assume control of the Grand Trunk system? Shall we have to implement those guarantees which the Grand Trunk has given to the stockholders or bondholders of these roads?


Arthur Meighen: WTe shall not have to
do anything. The Grand Trunk will have to do then just what it has to do now.


John Howard Sinclair: That will be the Government?.


Arthur Meighen: The Government wilL be the owners of the stock. The company will be under exactly the same obligations it has always been under. Hon. gentlemen must remember that the Grand Trunk is not guaranteeing the 5 per cent on the capital stock of the Atlantic and St. Lawrence Railway, for instance; that is the rental the Grand Trunk pays for that road. Of course, if we are going to run the road we shall have to pay the rental, and that same argument applies to each of these other companies. The Grand Trunk will be under the same obligations after we are stockholders as they are now while 180,000 people are stockholders-, but that does not say that the obligations are onerous. The obligations^ were entered into for the advantage accruing^ to the system, the Grand Trunk acquiring these subsidiary roads by leasehold, stock control or stock ownership.


Daniel Duncan McKenzie: The minister speaks
about us owning the stock, and says that a company is an entity, but owns nothing.


Arthur Meighen: I did not say that.


Daniel Duncan McKenzie: The physical assets, at all events, of the Grand Trunk Railway will remain the property of the Grand Trunk.


Arthur Meighen: Yes.


Daniel Duncan McKenzie: Is it the intention that the Grand Trunk, for instance, to mention only that company, will remain in perpetuity under its present name and not lose its identity under the ownership of the Government ?


Arthur Meighen: I cannot say that any fixed determination of policy has been come to, but I would say that itf was entirely probable, after the acquirement is completed, that the road would be merged in the ,

Canadian National system and thereby lose its name.


Daniel Duncan McKenzie: What would become of this stock on which we are guaranteeing the interest if the company disappears altogether? Suppose, for instance, the company is wound up and goes out of existence?
Mr. ME1GHEN: The company does not need to become extinct to have the system merged. For instance, the Canadian Northern system owned, I think, twenty-nine separate companies, all of which were distinct entities and had stock issues. They were creations of the Canadian Northern, and became a part of the system. The stock issues still remain. The Grand Trunk stock may still be outstanding; that is to say, the non-voting certificates, as it is better to call them, may still be outstanding, although the system as a system is merged in the Canadian National railway system, and run as part of that system. That answers the question fully. These non-voting certificates, or as you may call it, this non-voting stock, will be held by the owners of the present stock, and they will cash their dividends just as Victory Loan certificates are cashed, while the Grand Trunk will be merged with the Canadian National railway and be known as such.


Daniel Duncan McKenzie: I can see no utility or purpose in having so many different companies and so many names when we own the property. The Intercolonial, for instance, which is a Government property nearly fifty years old, has no incorporation of any kind. It has no stock and never had any stock. It is owned by the Government, but it is no more owned by the Government than is the Canadian Northern. The Canadian Northern is also owned by the Government except for a few outstanding shares here and there. I think the man in the street would prefer that we shoulu own the Canadian Northern as we own the Intercolonial, and that if we are going to own the Grand Trunk we should own it in the same way as we do the Intercolonial. If we are going to own the Grand Trunk let us own it in unison with the other properties we have. There is no use in having a number of different names and a variety of stocks and bonds and debentures. If we are going to own the whole road the simpler way would be for the Government to own all these properties and deal with them, so far as book-keping and management is concerned, just as we deal with the Intercolonial.
However, that is a matter of detail. The member for Royal (Mr. H. H. McLean) asked the Minister of Railways something about the policy of the Government in regard to the port of Portland and the ports of St. John and Halifax. The minister will remember that when the scheme of building the Transcontinental railway and the Grand Trunk Pacific was being considered, a part of the bargain, so far as the people were concerned, was that any freight that was not routed by the owner was to be routed by the Government. The present Government was not in power then, but the principles of governments do not die and obligations of one government must [DOT] ndbessarily be carried on by the other; it is the King's business, which must be carried on. I would remind the Minister of Railways that it is an outstanding policy of the Government of this country that all freights originating in Canada which are not Touted by the owner must go by Canadian ports. It i.s desirable to know if the Government is going to stand by that principle. Of course, there was no written agreement between the Canadian people and the Government, but that was announced as the policy of the Canadian Government, and I never heard that this Government had in any way departed from [DOT]the policy established by their predecessors. Now that there is talk of acquiring an American outlet for Canadian products, it would be interesting to know if it is the [DOT]intention to depart from that policy.


John Dowsley Reid: I do not know that I oan give any more complete answer than I gave to the hon. member for Royal. When we build our Canadian poTts we certainly intend to use them. We have made a short connection to St. John by taking over, I think, the St.. John Valley line; and we all know that thei shortest ]rail and oc/ean route between Liverpool and Canada is via Halifax. The Government will use its own ports and give them preference.


Mr. TURGEON:: Is the minister prepared to tell the people that all the traffic collected on the new Grand Trunk line from Western United States and Western Canada, having reached Montreal, will be forwarded direct to St. John and Halifax instead of being diverted from Montreal to Portland? The people of Canada, and more particularly the people of the Maritime Provinces, are interested to know what will he done in the future.


John Dowsley Reid: I do not know that 1 can add anything to what I have said. We

will use our own road to St. John and Halifax. The Government are not changing the policy laid down since we came into power in 1911. We are developing the ports of Halifax and St. John and we shall certainly use them.


Joseph Archambault: I have made a cursory examination of the memorandum distributed and I fail to see any statement showing the total amount of subsidies or assistance given by the Canadian Government to the Grand Trunk Railway.


Arthur Meighen: It is on Page 26.


Daniel Duncan McKenzie: I am afraid we shall be very late if we attempt to pass the resolution to-night, and I would suggest to the leader of the Government that we report progress.


Charles Joseph Doherty: Mr. Chairman, I move that the Committee rise and report progress and ask leave to sit again.
Progress reported.


John Dowsley Reid: I beg to lay on the table of the House some maps showing the location of the Grand Trunk System.


Daniel Duncan McKenzie: Is there any possibility of distributing these maps?


John Dowsley Reid: There are a good many of them but I do not think there are sufficient to provide one for each member. There are a dozen or more, some with regard to the Grand Trunk Pacific and the others with regard to the Grand Trunk. If more are required I shall be glad to get them.
On the motion of hon. Mr. Doherty the House adjourned at 11 p.m.
Thursday, October 16, 1919.