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

*Mr. ANDREWS:: What action, if any, does the Government propose taking- regarding the adoption of Proportional Representation?


Sir GEORGE FOSTER:: As has been intimated by the Prime Minister, it is proposed to call a Speaker's conference to deal with the question of proportional representation.,


EXPORT OP NICKER.
Mr. PEDLOW:: 1.	Was there an investigation, ordered by the Dominion Government, by a representative of the Government, regarding the export of nickel during the years 1916, 1917 or 1918?
2.	If so, by whom?
3.	What was the finding?


Hon. Mr. MEIGHEN:: 1.	On the outbreak of war in 1914, the Government ordered a full investigation with respect to the export of nickel and the putting in force of an effective system of control which would ensure that Canadian nickel did not reach our alien enemies.
2.	G. A. Bell, Deputy Minister, Department of Railways and Canals.
3.	A system of control was established, approved by the Imperial authorities, which enabled the Canadian Government to direct and control the output of nickel, and to establish beyond doubt the purpose for which every pound of nickel was used.


RETAIL DISTRIBUTION OP SUGAR.
*Mr. PEDLOW:: 1.	Has the Government been officially notified by the Secretary of the Board of Trade of the city of Winnipeg that the retail merchants of Winnipeg, because of an order of " The Board of Commerce " limiting the gross profit to retail merchants to one cent per Pound m sugar, had decided to cease handling sugar?
2.	Has the Board of Trade of Winnipeg requested the Dominion Government to take over the retail distribution of sugar in that city and district?
3.	If so, what method of distribution of this commodity has the Government decided to adopt?


Sir GEORGE FOSTER:: 1.	No.
2.	No.
3.	Not necessary.


DYNAMITERS-LORD ATHOLSTAN'S RESIDENCE.
Mr. LANCTOT:: 1.	Did the Government promise a reward in connection with outrage committed at the residence of Lord Atholstan at iGartierville on August 9, 1917?
2.	Has the reward been paid? If so, to whom?
3.	Did the Minister of Justice receive a request for permission to take legal procedures against the Government for the recovery of damages amounting to $5.00 0 ?
4.	Has such request been refused?
5.	If so, for what reason?


Hon. Mr. DOHERTY:: 1.	Yes.
2.	No.
3.	No such request was received by the Minister of Justice.
4 and 5. Answered by No. 3.


GUELPH NOVITIATE INQUIRY.
Mr. TURGEON:: What is the total cost of the investigation into the charges preferred against the Jesuit College of Guelph, Ontario, on the alleged evasion of the Military Service Act by the directors of said college?


Hon. Mr. DOHERTY:: Amount paid to date by Department of Justice, $440.97. Some accounts remain to be adjusted.
MONTREAL, POST	OFFICE-RETURNED


SOLDIERS.
Mr. DESLAURIERS:: 1.	Is it true that about a thousand returned soldiers employed chiefly at the Post Office of Montreal have been discharged?
2.	If so, for what reason?


Hon. Mr. ROWELL:: 1.	No, but the services of 140 temporary employees who were taken on in the Montreal Post Office to replace members of the regular staff on summer holidays have been dispensed with, as the summer holidays have been completed and the regular staff has returned to duty. 'The services of these temporary men were, therefore, no longer required. 115 of them were returned soldiers.
2,	Answered by No. 1.


GRAND TRUNK RAILWAY-MONTREAL BOARD OF TRADE.
[Stage Direction]
On the Orders of the Day:
Mr. 6. W. JACOBS (George Etienne Cartier) :	Mr. Speaker, I should like to ascertain from the Government if it has received any communication from the Council of the Montreal Board of Trade suggesting that the Government defer the acquisition of the Grand Trunk railway; and, if so, what answer has been made?
Hon. J. D. REID (Minister of Railways):: Mr. Speaker, as Minister of Railways I have mot received any communication from the Montreal Board of Trade. If I had, I would have answered that the resolution is now before the House and that we intend asking the House to pass the Bill founded on it at the present session.


Mr. JACOBS:: The question I put secondarily was whether the Government had made any answer to the council of the Montreal Board of Trade.
Right Hon. iSir GEORGE FOSTER (Acting Prime Minister):	Two or three communications have been received conveying the sentiments of the Board of Trade with reference to the question under discussion, which I have acknowledged-simply that and nothing more.


WERNER HORN.
[Stage Direction]
On the Orders of the Day:
Mr. PIUS MICHAUD (Restigouche and Madawaska):: Is the Government aware
that a self-confessed German agent named Werner Horn, who boasted that he blew up the C.P.R. bridge across the St. Croix river in the province of New Brunswick in February, 1915, was brought to New York yesterday by two Canadian officers, who will take him into Canada for trial? If so, where will he be tried, and when?
Hon. CHARLES J. DOHERTY (Minister of Justice):	I was not aware of the exact
stage the proceedings had reached.
Proceedings have been pending for some time for the extradition of the person referred to. Their progress was delayed by the fact that he was convicted of different offences committed in the United States and underwent sentence there. Whether the statement referred to by the hon. member is accurate or not I am not aware, but I shall make inquiries.


RAILWAY MAIL SERVICE.
[Stage Direction]
Mr. AIME MIVILLE DEClHENE (Mont-magny):	In some parts of Quebec, Mr. Speaker, we have asked for an improvement in the Railway Mail Service, and I understand from the official reports that the matter is delayed on account of the proposal to increase the rates received by the railway companies for transporting the mails. Is the Government about to settle that increase and so improve the service required?
George Green Foster: The matter is
under the consideration of the Government.


Air. DECHENE:: Alay I ask further when the matter is going to be settled?


George Green Foster: After it has been duly considered.


GRAND- TRUNK RAILWAY SYSTEM.
[Stage Direction]
House again in Committee (from October 15) to consider resolution providing for acquisition by the Government of Canada of the Grand Trunk railway system. (For resolution see page 1059 of Unrevised Hansard.) Mr. Boivin in the Chair.
Hon.   S@: It had been my intention to speak upon the motion for the second reading of the Sill which will be brought in after this resolution has been

adopted, because it appeared t-o me that the policy of the Government would then be brought under formal and deliberate review. But as the debate upon this resolution has taken a general character, it has occurred to me that I can say what I desire to say upon the question at the present time. At the outset 1 desire to say that the policy of the Government in acquiring the Grand Trunk Railway Company of Canada has my hearty and unqualified support. It does not appear to me that the Government could properly take any other course, if they are to have due regard to their duty respecting the existing railway situation in Canada, and the transportation needs and requirements of this country. This matter cannot be discussed without reference to the general railway situation of this country. It is not my intention to detain the House at any length by going into details of the finances of the several railroad systems of Canada. Those matters were so fully discussed during the past few years that it would seem to me that I would be trespassing unduly upon the indulgence of this House if I attempted to go into details. I think the House is sufficiently acquainted with the position of the several transcontinental railway systems of this oountry, and my observations will, therefore, be of a general character with regard to the policy which has now been disclosed by the Government in their proposed acquisition of the Grand Trunk railway system.
There are certain salient features of the railway situation to which attention may be usefully directed in arriving, at a wise conclusion as to the action which should be taken at this time with regard to the Grand Trunk Railway Company. In the first place, I think every one in this House would be disposed to agree with the general proposition that Canada lias been seriously over-built with respect to transcontinental railways. That is abundantly evident in the duplication of extensive and expensive lines which have been constructed during the past fifteen or more years. One has only to consider the situation from Winnipeg west to the Pacific coast, or for that matter, from Toronto to Montreal in which three lines parallel each other for great distances, almost within a stone's throw of each other, to reach the conclusion without doubt or hesitation that there has been most serious duplication in the construction of Canada's transcontinental railway systems. It is idle to inquire what political party, if any, is responsible for that, state
fSir Thomas White.]
of affairs. It is also idle to inquire what share of responsibility should be borne by political parties, and I have said in this House before that a share of the blame, if blame is to be imputed, rests upon both political parties in this country. This is, however, to be said for the action which was. taken. It was a period of great expansion in Canada, and, at least, a majority of the people, were practically consenting parties to the railway policy which was adopted during the past twenty years, and any one who did not seriously object to the policy which was adopted by previous governments at the time that policy was adopted, can hardly be heard now to complain as to the serious existing situation, because the situation is a serious one.
I think this committee will .agree with me that, having regard to the momentous questions which have been before Canada during the war and which now are before Canada as -a result of the war, we might better not waste discussion in seeking to impute degrees of blame for any national situation which may exist. The proper course for us as public men to consider is: What is the existing situation? Does it require remedy, and, if so, what is the appropriate remedy? That is the problem before the House and the country.
1 have said that Canada's transcontinental railway systems have been built on too extensive a scale. Let us consider what the situation was fifteen years ago, or let us say, at the beginning of the present century, nearly nineteen years ago. Canada was then served by one splendid transcontinental system, admirably managed, the Canadian Pacific railway, which was the only transcontinental system at that time Then we had the old' Grand Trunk Railway Company of Canada, one of the pioneer roads which had much to do with the development of old Canada. Its lines were principally in Central Canada with most important connections to Chicago and to points in the Eastern States. Then we had in Manitoba and in the two provinces immediately to the west the Canadian Northern railway system with its several branches. It must not be forgotten in connection with the Canadian Northern railway that it opened up immense territory which otherwise might not andl probably would not have been opened up to-day. I think myself 'that- the construction of the Canadian Northern railway through the Canadian Northwest was the means of immensely increasing the productive capacity of those three Prairie Provinces. One has

only to consider the quantity of g-rain carried by the Canadian Northern railway, to agree with the statement which I have made. That was the situation which confronted Canada fifteen or twenty years ago. My view is-and I put this forward not at all dogmatically, I hope I may never be accused of that in this House-that it would have been wise if the Canadian Northern railway with its extensive connections in the Canadian Northwest should have been joined up with . the Grand Trunk railway system in Central Canada. Then we should have had two transcontinental railway systems, the Canadian Pacific, which already existed, and which has been widely extended, and the Grand Trunk-Canadian Northern system, which then would have had the lines of the Grand Trunk in the East with their connections, as I have mentioned, ih the United States, and the Canadian Northern Railway system in Manitoba, 'Saskatchewan and Alberta. But that was not done. The Grand Trunk Pacific Railway system was gone on with under the agreement which was entered into between the Government and the Grand Trunk Railway Company in 1903. The eastern division of the National Transcontinental, that is the line between Moncton and Winnipeg, wras also gone on with. Now it is only fair to say that those proposals were before the people of Canada, and the Government which brought them forward in 1904 and 1908 was supported by public opinion. The result was the building of the National Transcontinental from Moncton to Winnipeg at a cost of $160,000,000 or $170,000,000, and -the construction of the Grand Trunk Pacific from Winnipeg through to the coast, in competition with the Canadian Northern and -the Canadian Pacific. It also resulted at a lateff date in the extension of the Canadian Northern Railway system easterly.
I submit that the seriousness of the existing railway situation in Canada is due to the fact that the Grand Trunk Pacific railway was extended through from Winnipeg to the coast, -and that the Canadian Northern was extended through Ontario -and Quebec to the east. That has resulted in an enormous additional expenditure of capital, and in great and mo-st wasteful duplication of lines, to the detriment of the entire country, because freight rates have an undoubted relation to the cost of operation of railways, which includes, of course, their fixed charges.
The serious railway -situation which I have mentioned was by far the most important problem in this country before the war broke out. The war during its course of four and more years overshadowed that issue, but it is only natural that the railway problem, which, next 'to the war, was the most serious question before Canada, should -again take its proper place in importance -before this House. The result is that we -find ourselves to-day discussing this important transaction; the acquisition by the Government of the Grand Trunk Railway .system of Canada. In 1911, it will be remembered, the Government of the day, the late Liberal Government, introduced legislation guaranteeing the bonds of the Canadian Northern Railway Company to the amount of $35,000,000, covering the line, roughly speaking, from Montreal to Port Arthur. So far as I am aware, there was -no strong opposition on the part of the Conservative -party to that guarantee, so it would a-ppear that both -political parties -consented to the giving of that -guarantee, which really determined the character of the Canadian Northern railway as a transcontinental system.
When the Conservative Government took office in 1911 we found, therefore, this situation: The Eastern division of the National Transcontinental railway, that is the section between Moncton and Winnipeg,
* partially completed, and the Canadian Northern Railway line between Montreal and Port Arthur partially completed and being financed or about to be financed from the proceeds of the bonds which, as I have stated, were to be guaranteed by the Dominion Government. The Grand Trunk Pacific was uncompleted. That was the railway situation when the Conservative Government came into power in 1911. I desire to say on behalf of imyself, and I think also on behalf of my late colleagues ' in the Government, that it was the desire-of us all to deal as fairly as possible with the railway situation. I think that was the right course and the course which was in the national interest. I know for myself that the money that was needed to complete the Grand Trunk Pacific railway was found and found not unwillingly. In 1909 the Liberal Government had given a guarantee of $10,000,000 in order to secure funds to enable the Grand Trunk Pacific to go-forward with its enterprise. In 1913, the second year after the Conservative Government came into power, we appropriated a further sum of $15,000,000, and in 1916 a further sum of $16,000,000. In 1916 we also set aside $8,000,000 in the Estimates in order that the Grand Trunk Pacific railway might

be enabled to carry on. We also placed an estimate of $7,500,000 in the Estimates of 1917 and again in 1918, The point, therefore, I am making is that sp far as the Grand Trunk Pacific is concerned the policy of the Dominion Government was that it should be completed in accordance with the original plans and specifications. Now that was done. We also finished the National Transcontinental from Moncton to Winnipeg. With regard to the Canadian Northern, we found an uncompleted situation. First an additional subsidy was granted, and afterwards there was a guarantee of $45,000,000 of bonds, and later a loan-I am speaking from memory-of $15,000,000.
With regard to the obligation of the Grand Trunk Pacific to take over the Eastern division of the National Transcontinental from Moncton to Winnipeg and pay a rental after seven years of three per cent upon the total cost, it was apparent to me, and I think the Government, that it would be quite impossible for the Grand Trunk Pacific, no matter if successful beyond the utmost expectations which could then be formed of it, to pay such a rental, because the cost for various reasons had been so much larger than was originally contemplated. The Government therefore took the position that whatever loss there might be in connection with the Eastern division of the National Transcontinental would fall upon the Government and the people of Canada.
That brings me down to 1916. We were then in the midst of the war. There were heavy demands upon the national Treasury and there had been so many applications made to the Dominion Government on behalf of the Canadian Northern and the Grand Trunk Pacific that it was determined the Government could not continue to pay out these large sums and allow these *systems to remain in private hands. That was the decision come to by the Government, and that decision, I am sure, was strongly supported by public opinion throughout this country. After a very full statement to the House we decided that a commission would be appointed to investigate the entire railway situation in Canada, and to make such recommendations as they might deem proper.
That commission, as the House knows, consisted of three very eminent gentlemen- Sir Henry Drayton, who was then chairman of the Board of Bailway Commissioners for Canada, Mr. Smith, president of the New York Central Bailway company, and Mr. Acworth, a distinguished financial and 
railway authority of Great Britain. The report which they brought in is an historic document, and I believe its recommendations have on the whole met with accept-a/nce throughout the country. It is true that the report I refer to was a majority report; Mr. Smith dissented. What they recommended was precisely what it appears to me they were bound to recommend, having regard to the financial condition of these railway companies and to the necessity of keeping our railway systems in such physical and financial condition ,as would enable them to discharge their duties to the Canadian community. They recommended practically the taking over the Canadian Northern Railway, of the Grand Trunk Railway and of the 'Grand Trunk Pacific Railway. They recommended that these railways should be joined up with the Intercolonial Railwtay, that old link which bound together the Maritime Provinces and Quebec and Ontario. They further recommended that a commission should be appointed of competent men entirely free from political influence who should administer the affairs of that national railway system. The result of their recommendation if carried out would be two transcontinental railway systems in Canada. That, I submit, would have been a desirable thing if it had been accomplished, by the method which I mentioned, in 1904. They aimed at two systems.
It was not proposed that the Canadian Pacific Railway Company should be taken over, and personally I am opposed to the taking over of that company because I believe it is rendering a most admirable service to the people of this country. It is a railway of which we are all proud. Its management is of the highest character and quality, and its achievements both before and during the war have commanded the admiration not only of the people of Canada but of the wdiole world. The Dominion Government, feeling that the recommendations of the Drayton-Acworth report were sound, proceeded to carry them into effect. It could not be done at once. As a result, the Canadian Northern Railway Company was taken over and it is being operated through a Board of Directors; and there is associated in its management the Intercolonial Railway of Canada. The policy of acquiring the Canadian Northern and joining it up with the Intercolonial was the following out of the recommendations of the Drayton-Acworth report.
Now we come to a later stage. We had furnished the Grand Trunk Pacific Railway Company with some seven and a half or eight million dollars per year to enable it

to carry on its operations, and there came a time when the Government considered that public opinion in this country would not sustain it in advancing further large sums-seven millions, eight millions or ten millions, which would have been required during the past year to carry on the Grand Trunk Pacific railway, the ownership of whose stock was in the Grand Trunk Railway Company and whose securities were guaranteed in large part by the Grand Trunk Railway Company of Canada. It is within the memory of the House, (because it is comparatively recent, that the Grand Trunk Pacific Railway Company, being unable to go on, was placed in receivership by the Government of Canada. That occurred in February or March last. During the preceding summer the Grand Trunk Railway Company had made an application to the Dominion Government for assistance. It was clear that the Grand Trunk Railway Company was in a serious position by reason of its beiing involved in guarantees, to so large an extent, of the securities of the Grand Trunk Pacific Railway Company. I think the indirect liability of the Grand Trunk Railway Company to the Grand Trunk Pacific Railway Company was in the neighbourhood of $100,000,000. On the other hand-and it is very pertinent to the discussion of this question-it is to be borne in mind that the Dominion Government has direct and indirect liabilities in respect of the Grand Trunk Pacific Railway Company to an amount of some $140,000,000 or more-say $145,000,000.
Now, Mr. Chairman, the placing in receivership of the Grand Trunk Pacific railway in my judgment, made inevitable the acquisition of the Grand Trunk railway of Canada. The Grand Trunk Railway Company of Canada, in order to continue conducting its operations, would have been obliged to make good its guarantee upon the securities of the Grand Trunk Pacific Railway Company which were outstanding. Ten million dollars of these securities issued in 1909 were guaranteed by the Dominion Government. The Grand Trunk, like any other transcontinental railway system, would have been obliged to make needed extensions and improvements of a capital character in order that its system might be properly and adequately maintained. It would appear, therefore, that the Grand Trunk Railway Company, with the Grand Trunk Pacific Railway Company in receivership, must inevitably seek assistance from the Dominion Government and as I have
pointed out, in 1908, although the Grand Trunk Pacific was not then in receivership, application had been made for assistance and the question was then raised in the correspondence between the Prime Minister and Mr. Alfred Smithers as to the liability of the Grand Trunk upon the Grand Trunk Pacific's securities. It was an obvious situation, and I shall not dwell upon it because it seems perfectly clear. The Grand Trunk was so involved with the Grand Trunk Pacific that it would be exceedingly difficult for .it to continue to maintain its efficient condition and equipment and take care of its liabilities in respect of the Grand Trunk Pacific's securities.


Mr. McKENZIE:: Will the hon. member pardon me? I should like him to tell the committee what was the character of the assistance asked for by the Grand Trunk on that occasion.


Sir THOMAS WHITE:: I am speaking
from memory-it was, I think, in order to enable them to meet certain maturities upon their own obligations which were about to become due in London.


Daniel Duncan McKenzie: How much money did they ask for?


William Thomas White: I am sorry I am unable to give the hon. gentleman that information, but I have no doubt it can be given to him by the Government. It was not a very considerable sum in terms of railway finance, but still it was a substantial amount. Now, just let me recapitulate the different steps which have brought about this situation, inevitable if the Government is to discharge its duty in regard to the serious railway condition that exists in this country and in regard to the transportation needs and requirements of Canada. The necessity for further assistance to the Canadian Northern Railway Company and the Grand Trunk Pacific Railway Company became evident.
The Dominion Government, in giving its guarantee in 1914 of the securities of the Canadian Northern Railway system to the extent of $45,000,000, insisted upon receiving $40,000,000 of the common stock of the company. They took the view that if they were to be called upon to give such a large guarantee of the securities they must obtain a substantial interest in the road. They obtained, with the amount of stock which they had received the year before, in respect of the subsidy they granted, a total sum of $40,000,000 out of the $100,000,000 of the capital stock of the company. That

gave the Dominion Government an interest in the Canadian Northern Railway system. Then, the further loans which were made to the Canadian Northern Railway and to the Grand Trunk Pacific brought about the commission to inquire into the railway situation in Canada. The result was the Dray-ton-Acworth report under which the Government has since acted, and under which, Mr. Chairman, it is acting in bringing down 'the resolution now before the House.
I desire to dwell for a moment upon certain financial aspects of this transaction and indeed relating to the taking over of any railway system. It is often put forward that the Dominion Government in taking over a railway system is increasing the public debt by the amount of the securities which have been issued and are outstanding of such railway company. Well, one can understand what is in the minds of persons putting forth that view. They say: "If you acquire a railway company which has very large obligations to be met, you increase the national debt of Canada by the amount of those obligations." I think it must be perfectly clear to the House-and I desire to dwell upon this point a little- that in taking over any railway company the liability assumed is a marginal liability. It is not a liability to the full extent of the securities outstanding of such system. Let me take a simple case. Suppose the Dominion Government were taking over the Canadian Pacific railway to-morrow, does anybody suppose that we should be in the least degree anxious about the outstanding debenture indebtedness of the Canadian Pacific Railway Company? It would be said: "True, you are taking over the stock .of the Canadian Pacific Railway Company . and there is this outstanding liability, but on the other side you have the assets of this splendid system; you have net revenues which are adequate to pay the interest upon all the outstanding securities and give you a large surplus besides." That is so obvious that I do not propose to labour it.
But that is not the case in regard to the Canadian Northern Railway system; it is not the case in regard to the Grand Trunk Pacific and it is: not the case in regard to the Grand Trunk Railway Company of Canada. But the point I am making is that the liability which the Dominion Government will assume in taking over the Grand Trunk is a marginal liability. Each year there will have to be found the amount of the deficit, if any, between the net railway returns and the amount which the Gov-1,Sir Thomas White.]
ernment is obligated to pay under the award of the arbitrators. If, for example, the Grand Trunk railway should show in any year a surplus of $3,000,000 and the award' of the arbitrators obligated the Dominion Government to pay $3,000,000 a year, of course, there need be no anxiety in regard to the liability in respect to the securities of the company because the net revenues are adequate to take care of the fixed and operating charges.
There is no man in this House who is more sensible of the serious financial position of this country at this time, immediately succeeding the greatest war in history in (which from the very beginning Canada has been a belligerent, than I am. I do not in the least degree desire to minimize the importance of this question or to put forward the view 'that it merits only light consideration. It is an exceedingly important transaction meriting the very best deliberation that this 'House can give to it. I submit that it is an urgent and immediate question and that the Government would have been derelict in its duty if it had delayed bringing down this resolution to the House.
This is not a new question; it has been to the fore ever since the Drayton-Acworth report. It has been almost immediately before Parliament ever since the Prime Minister made his offer to the Grand Trunk Railway Company in England in 1918. The correspondence is now before the House. As Finance Minister and Acting Prime Minister I announced during last session that we should acquire the Grand Trunk Railway Company of Canada. It seemed to me inevitable, just as it seems inevitable now. I see no other course, if, as I say, we are to deal with the railway situation, and it must be dealt with if we are to meet the transportation needs oif this country. A large railway system is very different from a private business. Communities depend upon the operation of the railway and its general efficiency. There is no question that in this country, largely on account of the size of the country and its peculiar physical formation, that is so concerned with the Government as the question of transportation. The Government therefore was in this position: In 1918, the Prime Minister ma.de his offer on behalf of the Government !to Mr. Alfred Smithers, President of the Grand Trunk Railway Company of Canada. That was the offer of the Dominion of Canada. The Prime Minister said: "We will take over the Grand Trunk railway system." What was then in view was a lease for 999 years. He said: "We will pay $2,500,000 for the first 'three years;

we -will pay $3,000,000 for the next five years and we will pay $3,600,000 per year thereafter." That was the offer made by the Government of Canada *through its Prime Minister. However, the Grand Trunk Railway Company did not accept that offer, and just here I desire to say that it is a little difficult for me to understand some of the criticisms which have emanated from London in respect to the attitude of the Government towards the Grand Trunk Railway Company. The offer of the Prime Minister was in the alternative. He said: "We offer you $2,500,000 a year for three years; we offer you $3,000,000 a year for five years and iwe offer you $3,600,000 a year thereafter. In the alternative we offer you arbitration." Now we hear from some of the London press that they are very glad the Government has taken a different attitude in the matter. Arbitration was open to the Grand Trunk Railway Company from the first. There has been no change in the Government's policy. Once Sir Alfred Smithers, President of 'the Grand Trunk ^Railway Company said: "I accept your offer, Mr. Prime Minister"; it became dhe bounden duty of this Government to bring the matter before this House as they have *done.
If may be unfortunate that this is at what we thought would be the close of the session, but I would submit that that is not the fault of the Government.
The Grand Trunk Railway Company had not hitherto given its consent, although negotiations had been proceeding. Once Sir Alfred Smithers, on behalf of the Grand Trunk Railway Company, gave his consent there was nothing for the Government to do, in pursuance of their public duty, but to bring the matter before this House and ask the House to endorse the policy which, it had adapted as long ago as 1918, namely, to acquire the Grand Trunk Railway of Canada. So that I do not believe any just complaint can be made for bringing in this legislation at this time. I have no doubt the Government would very much rather, having regard to many considerations which I need not mention, postpone the consideration of this matter until another session; but I would submit that they would be derelict in their duty if they did so. Further than that-and I am speaking now to myself as well as to my fellow members of this House-I believe that Parliament would be derelict in its duty if it were unwilling to sit whatever time may be necessary to consider and deal with this
matter now that the Grand Trunk Railway Company has said: We do accept the offer of the Prime Minister.
Now let me deal with one other objection that has been brought. I have not followed 'them all, but there is one objection which has been brought, and which, on the face of it, seems to be important. It is said: You have guaranteed the guaranteed stock of the Grand Trunk Railway Company of Canada. Now, if you will look-I have looked at it only hurriedly before coming in-at the letter of the Minister of the Interior written to Sir Alfred Smithers in London, you will find that the offer was $2,500,000 yearly for the first three years- $3,000,000 for the next five years, and thereafter $.3,600,000, to be disposed of, I think, as the directors of the Grand Trunk Rail- ' way Company might see fit, among the holders of the guaranteed stock, the preference stocks, and the common stock. Very good. Now, the point I make here-and it seems to me it settles the matter absolutely as far as that objection is concerned-is this: That the $2,500,000, the $3,000,000, and the $3,600,000, the amount that was offered by the Government was more than sufficient to take care of the interest upon the guaranteed stock. That being so, that stock was clearly guaranteed-if the directors of the Grand Trunk Railway Company desired to apply it in respect of that stock. They have always treated that stock like debenture stock or bonds, as though it were an obligation of the company instead of a stock in the ordinary sense-that is to say, shareholders' stock, guaranteed by the Grand Trunk Railway Company; they have always regarded that a's an outstanding liability of the company rather than as representing a participation by shareholders in the ordinary sense. Well now, if-and I just repeat this to fasten it in the minds of the House-the offer was sufficient to
4 p.m. take care of that interest upon the guaranteed stock of the Grand Trunk Railway Company of Canada, why do we bother if that company now say to us:
" We would like you to guarantee * that stock "-because the offer of the Government is a continuing offer and could have been accepted in its terms by the Grand Trunk if they desired to do so.
Now, Mr. Chairman, I have covered a good deal of ground. What I desire 'to point out is that mistakes have been made in the past in the railway policy of this country, and that as a result of those mistakes action has had to be taken from time to time by the Government, including this present

action. I should not like to leave my statement just at that. This is a difficult country to administer. We have a sparse population, .scattered over a territory as large as the United: States, as large as Europe. We have very large stretches of territory that are not productive. Our railway policy has had to be conceived and carried out under considerable difficulties. We hadi it1 from the very beginning. The Intercolonial railway had to span very considerable distances in order to carry out the scheme Of Confederation by linking np the Maritime Provinces with old Canada. No one .supposed that the Intercolonial Railway would be from the beginning a commercial success. The Government had to lose a certain amount of money on the operation of the Intercolonial railway in order that Confederation might be possible, to join up the maritime portions of Canada with Quebec and Ontario. When the Canadian Pacific railway was projected very large subsidies had to be given in land, and otherwise, in order that the Northwest Territories and British Columbia might be joined up with Ontario and Quebec. There is a great gap of a thousand miles of wilderness between Ontario and Manitoba, and there is the great barrier of the Rooky mountains between the Prairie Provinces and British Columbia. Now these had to be overcome. Not only that; .it was vital .to this country that immigration should be got in and railways cannot wait on population. The Governments of this country in the past have had to build in advance of immigration in order that the land might be accessible to the incoming immigrants. I thank we should bear these matters in mind and should rather prepare ourselves for this result, inevitable I think; that the Government, if there had only been two transcontinental railway systems instead of three, might have had to provide considerable assistance until the increase in population would come and with it the earning power which would enable these railways to carry on with profit, or at- least without serious lo.s9.. Any money that was spent by the Government of Canada in liquidating deficits in operation of the Intercolonial railway, any subsidies that were granted to the Canadian Pacific or to the Canadian Northern or Grand Trunk Pacific railway might be regarded properly by this country as sums of money which the nation had to spend, having regard to its. future welfare, in order to overcome the geographical and physical difficulties with which we have been face to face in. Canada. Now what is 
the trend of my argument? It is this: That the liability upon the Canadian Northern .system, the Grand Trunk .system, and the Intercolonial system is a marginal liability. It is not correct to say that the Government- assumes all the indebtedness of all these lines; it is correct to say that the Government will have to meet whatever deficit there may he on the operation of them. Now to put the past aside, and recognizing .the futility of recriminations as to the degree of responsibility for the railway situation, is not this the position? What is the wise thing to do in this situation? We must enable these railway companies to maintain their physical position -their roadway, their plant., and equipment-if they are to minister to the needs of this country.
And just in that connection let me say this: Canada's railways played a very splendid part in this war, and on the credit side of our railway .situation-I have spoken of the other side-I think we should place this fact, that the railway systems of Canada, with their fine equipment and capable .staffs, enabled us to play a much greater part in the war than would otherwise have been possible. I think we should put that on the credit side of the account.
Now, the liability we will assume is a marginal liability. I think it may be reasonably heavy for many years to come, but considerable will depend upon freight rates, upon volume of traffic, and upon efficiency of administration. Personally-and I am always disposed to take a hopeful and optimistic view of our future, because I believe in the Canadian people and in the wonderful resources of this country-I have always been disposed to look optimistically upon the railway situation of the Dominion. The country will be able to bear whatever marginal loss there may be in the operation of these roads, which are not on a profitable basis as is the Canadian Pacific railway, until such time as they are placed on a paying basis. It may be a considerable time, I do not desire to place a false view before the House, but however long that marginal loss continues it will have to be borne by the country as a penalty for mistakes which we have made in the past, and in the general interest of the efficiency of tlie Dominion's transportation systems.
Personally, I would like to look with pride upon the establishment of a national transcontinental railway system in honourable competition with the Canadian Pacific railway, to which I have already paid my tribute. And it seems to me that if we can

keep the railways we have taken over out of politics, if we can keep their administration clean and in the hands of the most efficient administrators, we shall get that condition of affairs which will go a long way towards solving this problem. I have this to say, however, that I regard it as absolutely vital that there should be no interference of a political character. And further than that, I think there should be no influence of a quasi-political character- I mean sectional influence. Speaking with the freedom of a private member-for I have been promoted-if I were giving advice to the Government I would say: When you are considering your final commission that is to administer all the railways taken over under a national system, you must choose only the best operating men you can engage, and not bother very much whether you get a man to represent British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and each of the Maritime Provinces; because every man, no matter how honest he may be, is bound to be under the influence of his section, and he will use his influence almost unconsciously to have extensions made that should not be made, to order rolling stock that should not be ordered, and to have contracts given that should not be given in his home section. My advice therefore would be that when you get all these railways in hand you appoint officials of the highest efficiency and reputation. Their standing with the Government and the country will depend absolutely upon the efficiency with which they administer these roads, and therefore they should not be hampered in any way.
I must apologize to the House, Mr. Chairman, for taking so much of its time, but the matter is important, and my excuse, if not my justification, is that for many years I had much to do with the railway policy of the Government and was brought in contact wdth the problems which were involved in that policy, and although I say it myself, I regarded my duties with a very high sense of responsibility. I feel a continuing responsibility with regard to this matter, and I desire to say that the course which has been adopted by the Government appears to me to be the proper and inevitable course, and that in the resolution which they have placed before the House they have, as I stated at the outset, my entire and cordial sympathy and support.


Mr. DEVLIN:: Would the ex-Minister of Finance allow me to ask him a question? It was urged in March of this year that the then Finance Minister was opposed to the
granting of any further loans to the Grand Trunk railway or to the Grand Trunk Pacific railway out of which the Grand Trunk Railway Company mignt pay the interest upon the obligations of the Grand Trunk Pacific. Am I right or am I wrong?


William Thomas White: If I understand .ny hon. friend correctly, he asks me if I was opposed to the Dominion Government continuing its subsidies to the Grand Trunk Pacific. I was opposed to that course, because I thought, as I then stated, that public opinion was decidedly against it.


Emmanuel Berchmans Devlin: Then I want to follow up that answer with this other question. Is not the whole substance of this resolution to give power to the Government to loan money to the Grand Trunk Railway Company out of which they may pay their operating expenses and the interest due upon the Grand Trunk Pacific, and, further, to guarantee the debenture stock and the new stock, to be called guaranteed stock, and nothing else; that there is no acquisition of any property at all, it is simply a loan?


William Thomas White: My hon. friend has for years been so much in the habit of addressing his questions to me that it is difficult for him to get over it. But I am very glad to give him my own view, which is not necessarily the view of the Government at all, because, as I have said, I am now a private member of this House. The Government upon acquiring the Grand Trunk railway's stock will administer the road, will make good any deficits on its operation, and will provide for the taking out from receivership of the Grand Trunk Pacific Railway Company. Now, my hon. friend askedme if I was in favour of making further grants to the Grand Trunk Pacific Company. I said that I was not. I pointed out before that the Grand Trunk Railway Company owned the stock of the Grand Trunk Pacific .Company and were therefore the proprietor. I was unwilling that the Government of Canada in 1914 should guarantee $45,000,000 of stock of the Canadian Northern without getting $40,000,000 or as much more as we could although that was all we were able to get-of common stock. I was unwilling that the Government after 1916 should make any further advances to the Canadian Northern railway while it remained in private hands; but I was not unwilling that the Government should take the railway over and make whatever advances might be necessary to carry it on. I take the same view in regard to the Grand Trunk Pacific. I would assist the Grand Trunk Pacific railway, provided its stock,


V072 COMMONS
[Stage Direction]
owned by the Grand Trunk Railway 'Company, would become the property of the Government together with the stock of the .Grand Trunk Railway Company of Canada. That would mean that the Government of Canada has taken the place of the shareholders of the Grand Trunk Railway Company of Canada. I do not believe, iMr. Chairman, that the people of this country putting it on no other basis, will consent to this Government continuing to make large advances to privately owned railways; but they Will agree to make whatever advances are absolutely necessary to railways that are owned by the' Government.
Hon. W. S. FIELDING:: Mr. Chairman, in the last part of the very moderate and very interesting speech of my hon. friend ('Sir Thomas White) he gave us a. very pretty picture of a condition which he expects to arise in relation to the management of the public affairs of this country. He gave us the picture of a condition in which the biggest interests of the people of Canada, the subjects of most consequence to them, should be taken absolutely out of their own control. He says that in order to make this great enterprise successful you must keep it out of politics; and he -expects that to be accomplished. Does my Iron, friend not know as well as I do that politics in its proper sense means the business of the people of this country? When you .provide that the great business of the people of this country is going to be taken out of politics, that means that you /are going to take it out of the control of the people and to put it into the hands of irresponsible parties.


William Thomas White: Would my hon. friend think it 'advisable in connection with .a commission or board administering the Government-owned railways of Canada, the Minister of Railways or the Minister of Finance, or both, should ex-officio have a seat or seats upon that board?


William Stevens Fielding: entirely mistaken. Well, then, suppose you lay aside that question.
I have already said .that even if we should feel that this arrangement was more meritorious than I have described it-if we could feel that there was no criticism of the agreement on its merits, we would still have reason to complain that at this late stage of the session it is utterly improper to introduce this legislation. What possible justification can there be? Urgency there is none. The Grand Trunk, in all this transaction, does not appear to have been anxious to have its property taken over. If I have read the correspondence correctly, the Government from beginning to end seems to have been trying to invent a ground for taking it over. Once the negotiations were opened for taking it over ,the Grand Trunk people would naturally desire to get the best price they could, and no blame can be ascribed to them. But no reason of urgency has been shown why this transaction should be undertaken now. Suppose the letter of Mr. Smithers had been written ten days later and we had had to wait until another session, what possible harm could have ensued ? What interest could have suffered? Wherein would the people of Canada have been injured ? Wherein, indeed, would the Grand Trunk or anybody else have suffered ? But for some strange reason the Government seem determined to push this matter through in the face of what I do not hesitate to say is a strong opposition on the part of independent public opinion. I know there are members listening to me, sitting on both sides of the House, who cordially agree with me. I am facing hon. gentlemen who I am sure agree with everything I am saying but who are influenced by party considerations. I am throwing no stones on that score. I used to be a party man years ago, and I shall not quarrel with hon. gentlemen on that score, but I do know that if we could get at the independent thought of the members we should find a strong opinion that this Bill ought not to be passed during the present session. There are various reasons, one of which is the gravity of the financial situation. My hon. friend the ex-Minister of Finance, in his speech today, has said very frankly that the situation is one of great gravity. Indeed, he has stated the same thing in public in another place even more forcibly, and I shall give him the benefit of his more forcible statement, On ia recent occasion- 
where or when is of no consequence-the Inn. gentleman said:
I do not want to magnify the seriousness of the position of Canada. In my War Budget speech I aimed to give the exact facts to the House and to the public. I aimed to scrupulously point out the facts as I saw them, without any holding back of the unpleasant side of the situation. I said that an obligation had been incurred which would be a burden for generations to come, but I nevertheless struck, as I have always done during the war, an optimistic note, because I believe that, notwithstanding the heavy burdens which we have incurred, with the policy of retrenchment

they had notice that in four days the road would cease operating, but surely with 14,000 miles of railway now in the hands of the Government, it has a good opportunity of giving the thing a test. It is being tested elsewhere and not with great success. Public ownership was popular in the United1 States three years ago. To-day public ownership is discredited in the United States by the most responsible men. I doubt if the United States to-day could be induced to accept public ownership as they were *willing to but a few months ago. I do not ask the House to condemn public ownership. I do not even ask-apart from the particular transaction that I have been obliged to criticize-the House to pass judgment upon the merits of the scheme, but I know that the most sober minded men in this House, some of whom are sitting on the opposite side, feel that this is a grave and dangerous experiment. I submit that there is no urgency which requires us to put this thing through to-day; that there is no excuse for railroading it through to-day, and that it will be the part of wisdom, over which the Government themselves will later on rejoice, if they agree that this matter should not be proceeded with during the present session.


Mr. MEIGHEN:: Mr. Chairman, there is this to be said as to the speech of the hon. member (Mr. Fielding), who has just sat down, that it leaves no doubt as to the attitude of His Majesty's loyal Opposition, or of what is called the Liberal party of Canada to-day, on the proposition now before this House for the acquirement of the Grand Trunk Eailway Company's lines. They are opposed to it, because, first of all, they do not believe in the purpose of this legislation; they do not believe in the acquirement of the Grand Trunk lines and the adding of those lines to the Canadian National railway system. They are opposed to it on every ground that the ingenuity of the hon. member for Shelburne and Queen's can devise. According to them, there is nothing right about it; the object is wrong, the method is wrong, the plan is wrong, the principle is wrong, the time is wrong; everything about it is wrong.
And what grounds do they give for their professed belief? First of all, is it in the interest of Canada that the Grand Trunk system should be added to the Canadian National lines? Is that wrong in itself? Is that* not an object to be desired under present conditions? Is that not an object to be desired! aside from the proclivities of

any hon. member as to the principle of government ownership ?
The hon. member (Mr. Fielding) is opposed to any addition to the present Canadian National railway system. He knows, and every member knows, that the Canadian National system as it stands to-day is an incomplete, inchoate system, a system cut in the middle, a system which cannot itself succeed, and which, if left to itself as it stands, must make a failure of government ownership in this country. Consequently any hon. member who does not seek to add to the system, round it out and complete it, seeks the failure of government ownership. That indeed is the primary, the real object of the hon. gentleman.
He says we are going about it the wrong way; he says that, first of all, we try to stampedle it through Parliament. That was about the first verb he used. What is the meaning of "stampede"? What are the ear-marks of a stampede? What is the evidence of a stampede in the introduction of this legislation? Will the hon. gentleman be good enough to answer me or to suggest what he has* in *his mind? Has* any. hon. member seen any evidence of stampeding or railroading the project through? We heard talk of stampeding and railroading things through years ago. I know of no railroading through or stampeding in this case. He said we had anticipated the close of the session. That does not close the session. The session is still on. He says that we are not enough of us here, yet only yesterday when a catch vote was brought on at a time when there could be ,no discussion, when it was never anticipated* and no notice given, 38 on one side and! 58 on the other were here and voted upon the question. This week many hon. members are absent taking part in the provincial elections in Ontario, and yesterday many hon. members were attending the j ploughing matches'. But, we are not going to end this thing this week. We will be here next week and we will be here the next week after, if hon. * members want it. Hon. gentlemen are not absolved from the discharge of their duty to remain here, take part in this discussion, and come to an intelligent conclusion upon the question. Can the hon. gentleman suggest any condition more auspicious, fairer, better fitted for deliberation? Can he suggest any other occasion when we tyill have more time than now; can he suggest any other occasion when it will burden the convenience of hon. gentlemen less than it does

now; can he suggest any single constituent part of a situation that would be more favourable for the consideration of this measure than that which is now presented.
Well if he cannot, what excuse does he give this Parliament and this country for endeavouring to throw out the impression that there is a railroading process on, that there is a stampeding going on in the House of Commons of Canada? He knows there is no stampeding, he knows there is no railroading, and no hon. member knows it better than he.
Now he tells us there has been stockjobbing somewhere across the Atlantic ocean with regard, to the stocks of the .Grand Trunk Railway Company. I did not hear him read any evidence of stock-jobbing; I presume he got the report from the hon. member behind him who talked-


William Stevens Fielding: I did not use the expression "stock-jobbing." However, it is not important. There have been transactions reported in the public press which I mentioned and quoted the price up to 70.


Arthur Meighen: If the hon. gentleman
used words-*


William Stevens Fielding: Anyhow the word is
not wrong.


Arthur Meighen: If the word is not
wrong I do not know what the purpose of the interruption was. The hon. gentleman says there have been transactions in_ this stock. I do not know what the transactions have been, I do not know what his evidence is that the guaranteed stock has gone to 70. I read yesterday in the Montreal Star-which is not going to put an aspect on this transaction too favourable from the Government side-that the stock was 55. Those were market quotations, there was nothing else quoted by the hon. member, and he gave the stock, I think, at 46 some time in the month of February-a tremendous advance? He says that evidences something wrong, that somebody on the inside has made, or is going to make, some $20,000,000. Now let me inquire. The hon. gentleman told us there was a report in a London paper-some tip had been given there that had reached nowhere else. He made that statement-no one here 'he said knew anything about it., but that a tip had been published in London on September 18 that this stock was going to be valued by arbitration, and! that as a consequence the stock went up-there was a " burst," as he called it, in 'London. Now I want to tell the hon. member that the very same report that had been published in London on that
date was published in the following papers in Canada; in the Montreal Gazette, in the Toronto Globe, in the Toronto World, and in other Canadian papers-simply a press report given out by nobody, published here and open to everybody here just the same as over there. What evidence is there in that that somebody over there-where alone and in New York, as I understand it the stock can be bought-some one over there made a great deal of money out of this transaction? No Government transaction can take place, having to do with acquirement 'by the Government, but the psychological effect of it is .some advance in the stocks of the company concerned. Anything else is an impossibility, and if we understand human nature we know why it is an impossibility. Why, when the hon. member himself-and he was one of the leading men in that great drama that took place in 1003-when the hon. gentleman projected the Grand Trunk Pacific Railway and it became known that there was a government transaction on for the building of that line, a government transaction with the Grand Trunk, the stock of the Grand Trunk railway advanced on the markets of New York and London, but did the hon. gentleman tell the House that was evidence of stock-jobbing, that was evidence of some tip being given in order that friends of the Government could make money?


William Stevens Fielding: Excuse me, I made no reference to "friends of the Government." I quoted statements from newspapers. I made no statement from my own knowledge; I quoted the statement from the Canadian Gazette of London and Canada of London; I made no allusion to "friends of the Government-"


Arthur Meighen: I think the hon. gentleman did make an allusion to "friends, of the Government."


William Stevens Fielding: I made no allusion to "friends of the Government."


Arthur Meighen: -but in view of what was said last night in the House, the ordin-. ary listener would take it 'to mean that the hon. gentleman this afternoon was lending colour to the assertion made last night, " that friends of the Government had made a profit out of this transaction."
Mr. . FIELDING: I made no such statement.


Arthur Meighen: Nothing whatever was known in London because it was not known here. It was not even expected here ten days ago, otherwise the leader of the Gov-

We would have preferred to have had everything made the subject of arbitration, but we could not secure that result. We told the Grand Trunk representatives to accept one offer or the other. We allowed them to wait. We told Parliament that we had-made an alternative off er, and every hon. member understood that that was a ^continuing offer, for no other inference could possibly be drawn from the speech of the hon. member for Leeds (Sir Thomas White) who was then Minister of Finance. Further, Parliament understood from the date that that letter of the 11th of July, 1918, was read, and long before that date, that negotiations were going on; and ever since the writing of that letter that negotiations were continuing, with intermissions a't times it is true, but that the negotiations had never been closed with the Grand Trunk Company. Why, in the early part of this session the Prime Minister told this House that negotiations with the company were going on. Last session, more than once, members of the Government told the House that negotiations were continuing. Hon. members opposite knew quite well that those negotiations were continuing and that a basic foundation offer had -been made the company on the part of this Government, whiqh offer was the basis of the negotiations. If they objected to that offer, if they thought it was unjust to Canada, what was their duty? The letter was read in this House and they knew every line of i't. Their duty was to move [DOT]a resolutionj asking the Government to withdraw the proposals- made to the Grand Trunk Company. Does any hon. member suggest that that course was not open to the Opposition? Well, I heard one hon. member say last night that such a course was out of order. I know a little about the rules of procedure, and I am certain that no hon. member knoks so very little as [DOT]to think for even a minute that such a motion would be out of order. He could have moved such a resolution any day of the week ever since that letter was read. It-was open to any hon. gentleman opposite to have moved in this House that the duty of the Government was to withdraw those proposals, or either of them, as being unfair to Canada and over-generous to the Grand Trunk Company. But that was not done. They say: "We wonldl have been told 'by the Government that the negotiations were closed when our offer was not accepted." How do they know they would have told [DOT]any such thing? We never told the House or the Country any such thing; on the 	.
contrary, we had been constantly telling them the negotiations were on. Even if they hadi secured a .statement from the Government that the negotiations were [DOT]closed, would not the resolution have been worth while then? There was no reason in the world for hon. gentlemen opposite,-if they objected to any phase of the offer made to the Grand Trunk,-not having moved this House and asked Parliament whether the Government were taking the right and the just course in making the offer they did 'to the Grand Trunk Railway Company. Having sat here through two sessions and come to this hour with that offer unobjected to on the part of hon, gentlemen opposite, and unobjected to by the press of this country, with no evidence whatever of objection on the part of the people, what position are hon. gentlemen opposite in to come now to Parliament and say: "Your proposals having been accepted, it is your duty now to back down."


Emmanuel Berchmans Devlin: Would the minister permit me to call his attention to the fact that the letter of which he speaks is not under consideration at the present moment, because the company did not accept the conditions offered by the Government? The sole question is contained in the resolution which comprises an absolutely new proposal, not at all contained in the letter, not one word.


Arthur Meighen: I am glad I have got the hon. gentleman to that point, because it shows that he realizes that as long as we are proceeding on the basis of the letter, we are not only justified in proceeding, but bound in honour to proceed.


Emmanuel Berchmans Devlin: But we are not proceeding on the basis of the letter at all.


Arthur Meighen: But the hon. member's question indicates clearly that he realizes
that if we were proceeding on the basis of the letter, we would be bound in honour [DOT]so to proceed.


Emmanuel Berchmans Devlin: No, I am not agreeing to the terms of the letter, nor am I considering the terms of the letter; I am considering simply the resolution which is now before the House. They are two totally different things.


Arthur Meighen: I was giving the hon. gentleman credit for an intelligence that perhaps his comment diid not warrant. It must he clear to a gentleman like the hon. member for Wright that upon the acceptance of an offer that stood open and known

to the world as well as to this Parliament for fifteen months, the duty of the Government- is to do its constitutional part, to stand up to its offer and to go through with the transaction.


Emmanuel Berchmans Devlin: If the minister will allow me, in order that I may understand his intelligence, the question as contained in the letter was the purchase by the Government of the Grand Trunk railway with all its branch lines, and the Grand Trunk Pacific railway, the acquiring of the assets and the assuming of the obligations of both companies. The question with which we have to deal now is simply the guaranteeing of. certain stocks, the guaranteeing of the four per cent stock, the debenture stock, and the fulfilment of certain conditions as to assuming the pensions under the Grand Trunk Railway system and under the Grand Trunk Pacific Railway system, and further by clause 7 of the resolution, a loan by the Government to the company; but we are not acquiring any of the assets of the Grand Trunk Railway Company. Under section 7 we are simply guaranteeing stocks and undertaking to advance a loan.


Arthur Meighen: I am afraid the hon. gentleman is further behind in understanding what is going on than I thought. In the first place, the letter of July 11, 1918, does not look to the acquisition of the Grand Trunk properties at all; it looks to the leasing of the Grand Trunk properties for 999 years at a rental to be determined in one of two years-not an acquisition o'f the property


Emmanuel Berchmans Devlin: 'That is playing upon words.


Arthur Meighen: -in one of two ways the leasing of the property for that length of time.


Emmanuel Berchmans Devlin: Perpetually.


Arthur Meighen: The intention being that an annual sum would be paid to the shareholders of the company, such as would be fair, whether arrived at on a cash basis or by arbitration. The present method looks to the same end, hut by a different and more complete plan, more complete because it provides for the acquisition, not the leasing, but the absolute ownership of everything the Grand Trunk has, by means of the ownership of all the stocks of the Grand Trunk, because that means ownership of the property.


Emmanuel Berchmans Devlin: But is not the Government bound, the moment it assumes that stock, to hand it back, except the stock that is called in at the end of thirty years?


Arthur Meighen: Hand it back! We will never hand it back in this world. I do not know what the hon. gentleman has in mind. What would we hand the stock back for? We get the stock and we own it. There is a difference only in method. The present method is more complete, more definite, more advantageous to the country in every way than the method suggested in the letter of July 11, 1918. We get everything by this method. The hon. member said: You are not abiding by your letter of July 11, 1918; you are departing from it, and the point under discussion was the guaranteeing of the dividend on the guaranteed stock. I answer him that in the letter of July 11, 1918, we undertook to guarantee the dividends on the guaranteed stock.


Emmanuel Berchmans Devlin: Yes, that is an obligation.


Arthur Meighen: The hon. member agrees to that. So that in that respect we are upon exactly the proposal contained in the letter of July 11, 1918, and, therefore, why should there be any opposition from hon. gentlemen opposite when they did not show any opposition to that proposal for fifteen months during which it was before the country?


Emmanuel Berchmans Devlin: Is the minister serious in saying that, because in the letter of July 11, 1918, there is a clause by which the Government is prepared to treat the 4 per cent guaranteed stock as an obligation of the. company, because of that one thing, with all the other elements different, the letter of the 11th July is simply carrying out, so to speak the terms that are now before Parliament? My hon. friend is not serious.


Arthur Meighen: I do not know if I have caught my hon. friend's point, but I am sincere in saying that in respect of that feature of the letter, there is no change whatever. Whatever may be wrong in it now-I do not say that there is anything wrong; I believe there is nothing wrong in it; I believe it is fair and reasonable- was wrong in it then. If it was objectionable then, it is objectionable now. Then, what is the objection to it now if it was not objected to then? I think I have made my point as clear as any words can make it. n	i


Daniel Duncan McKenzie: Does the minister say
to this committee that his proposition of July 11, 1918, was accepted by the company, and that that is the matter we are discussing?


Arthur Meighen: Yes, it- was accepted. The form of it is changed.


Daniel Duncan McKenzie: That is not the point. .Were the exact terms of the letter accepted, and is that what we are discussing now?


Arthur Meighen: It is not a lease; it is better in every respect for the Government of Canada.


Daniel Duncan McKenzie: It is a different proposition.


Arthur Meighen: It is not different; there is no substantial difference at all.


Daniel Duncan McKenzie: Is it the same?


Arthur Meighen: We get into a far better position, and therefore there is all the more reason for accepting it, and it would be all the more disgraceful if we retired from it. Because it is better for us is surely not a reason why we should retire from it. Would the leader of the Opposition (Mr. McKenzie) have us say to the Grand Trunk: We made you an offer in the month of July, 1918; we let it stand open until now; now you come forward and accept it and give us a little better terms. If you had accepted it before, we would have taken it, but as you did not accept it before, and now that you give us a little better terms, we will not accept it.	[DOT]


Daniel Duncan McKenzie: That is neither law nor business. The moment the Grand Trunk people refused the offer of July 11, 1918, that was the end of the transaction, and we were not bound by it any longer.


Arthur Meighen: I do not contend that
we were bound.


Daniel Duncan McKenzie: Then, why is the
minister saying that we should take it?


Arthur Meighen: Because we left the offer open. We could have retreated or withdrawn from it at any minute.


Daniel Duncan McKenzie: It was closed. We made an offer; it was not accepted; that is the end of it; it is not open any longer.


Arthur Meighen: It is not open unless
we leave it open.


Daniel Duncan McKenzie: It is not open.
We made them an offer; that is all we could do about the matter. The company refused it; that is the end of it in law.	i


Arthur Meighen: It is, unless they know that we are keeping it open, and they knew it by the negotiations. The hon. gentleman knew that, and I will tell him why. In the speech of the Minister of Finance of that day, he made it clear that the position of the Government at that time was

represented in the letter of July 11, and ithat was months .afterwards. Therefore, the hon. gentleman knew that the offer was open.


Daniel Duncan McKenzie: I have stated my position ar.d my position is right; that is the .end of it.


Arthur Meighen: There is more Scotch finality than Scotch logic in the hon. member


Emmanuel Berchmans Devlin: Now that that point is settled, will the minister allow me to revert to my question of a moment ago, in answer to which he said: We are not going to transfer any of the stock that the Government is going to acquire. Did I understand him to say that?


Arthur Meighen: That is right.


Emmanuel Berchmans Devlin: Then what is meant by clause 5 of the resolution:
That the value, if any, of the first, second and third preference stocks and the common or ordinary stock of the Grand Trunk now issued and outstanding to the face values above mentioned (hereafter 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. No 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.
Then by a subsequent clause the Government may call in at par, after thirty years and1 upon six months' notice, any of the stock it desires. 'The purpose of the Government in taking over this stock is simply to turn it into a new form of stock to be called the new guaranteed stock, which the Government intends to guarantee and1 then transfer it to the holders of the common, first, second and1 third preference stocks.


Arthur Meighen: I have no objection at all to the hon. gentleman asking me a question but he should not make so long a speech as to half empty the House before I get through with inline.


Emmanuel Berchmans Devlin: Thank you, I will come back.


Arthur Meighen: What 'the hon. member asked me first was whether we were going to' transfer to somebody else the stock that we acquired.


Emmanuel Berchmans Devlin: No. The minister said a moment ago that the Government was not

going to transfer any of the stock that they acquired.


Arthur Meighen: That is absolutely true. We acquire the voting stock, the controlling stock that makes us the owners of the whole Grand Trunk system. We keep that right here in the possession of the people of Canada. The holders of that stock, if they are awarded anything 'by the 'arbitration receive from us new non-voting certificates, or non-voting stock. But, surely, issuing a new stock is not transferring the old stock. The new stock is a different one altogether. We only issue a 4 per cent stock, which *to-day would sell in the neighbourhood of 70, and we issue it only for the value of the stock we acquire. The difference is clear profit to the people of Canada. I hope the hon. member understands that. He surely sees that the issue of the new non-voting stock to men who were the holders of the controlling interest-hearing stock is not transferring the old controlling interest-bearing stock-far from, it.


Mr. CAMPBELL:: How is it proposed to get the holders of the guaranteed stock to release their voting power?


Arthur Meighen: They must do that before the transaction is binding upon the Covernment. The guaranted stockholders must themselves surrender that power, and until they do so the guarantee of the Government does not go into effect.


John Archibald Campbell: There is a great number of them.


Arthur Meighen: Yes, and it is a difficult matter. The voting power is an element of value highly prized, I am advised, by the holders of that stock, and the same is true* of all the stocks in connection with the road. In lieu of surrendering this voting power they get the guarantee of the Government only for their 4 per cent dividend.


John Archibald Campbell: What would be the
situation if some of them refused to surrender t'heir voting power?


Arthur Meighen: Until that is done the agreement would not take effect. As I apprehend the legal position, it must all be surrendered before the agreement can take effect. We could not agree that we would go ahead and guarantee in respect of those who surrender their voting power and leave others in partial control of the road.


John Archibald Campbell: One man might hold up the whole deal?


Arthur Meighen: He might, I -could- not say: but I do not think it is probable.


Samuel William Jacobs: Is provision made for any delay?


Arthur Meighen: Not yet, but that will be a ' subject to be taken care of in the agreement itself. Hon. gentlemen will see from the very pertinent query of my hon. friend (Mr. Campbell) that it is important that some special inducement be given to the holders of the stock who have this special element of value in it, the voting power, in order that the transaction will not be impeded or wholly destroyed by the obstinacy of some shareholders. Any voting power that is now resident in the holders of the debenture stock must also be given up. They in turn get perhaps a slight accretion to their stock, because it also is guaranteed. So the transaction is fair in every respect. Those men who inevitably get a little accretion of value to their stock have to give up in lieu thereof all the control they heretofore exercised in connection with the enterprise. That control is much more highly valued in the Mother Country than it is in Canada.
Now I come to another phase of the remarks of my hon. friend (Mr. Fielding). He is afraid, he says, of arbitration. Well, what plan does he suggest to get at the value when we cannot agree upon it? He is afraid of arbitration. Arbitration is not only the method employed in the past in similar transactions, one of which he referred to, but it is the method embedded in the legislation of this country everywhere in the case of acquirement of land or property. It is universally and historically recognized as the best, fairest, and the only way for determining disputed claims. Why is he afraid of an arbitration in connection with the Grand Trunk? What is the special reason attending the acquisition of the Grand Trunk railway that makes arbitration unsuited for the solution of the problem?
Mr. JACOBS- Why not liquidation instead?


Arthur Meighen: Liquidation? Well, the leader of the Opposition told us yesterday that it was a shameful and disgraceful thing to let the Grand Trunk Pacific go info a receivership. If that was disgraceful, what would he say of letting the Grand Trunk go into a receivership?


Daniel Duncan McKenzie: I said the methods by which it was done were disgraceful, not the letting it go into a receivership. If my hon. friend will read my statement he will see I said I was not afraid of a receivership.


Arthur Meighen: I have repeated exactly what he said, that letting the Grand Trunk go into a receivership was disgraceful.


Daniel Duncan McKenzie: Not at all.


Arthur Meighen: My hon. friend (Mr. Jacobs) says, why not let the Grand Trunk go into a receivership? Well, if hon. gentlemen will take that stand, and we know exactly where they are at, it is worth discussing. Why not let the Grand Trunk go into a receivership? Does the hon. gentleman know what would almost inevitably result if it did?


Samuel William Jacobs: It would save us many
millions of dollars.


Arthur Meighen: It would for us at the moment, and perhaps make many millions for the Canadian Pacific Railway. That would be one very probable result.
Mr. JACOBS': We would acquire the company.


Arthur Meighen: Why would not the Canadian Pacific acquire it?


Samuel William Jacobs: We could acquire it better.


Arthur Meighen: We can pay more for it than they?


Samuel William Jacobs: We are the Government of the country.


Arthur Meighen: We would acquire it by main force?


Samuel William Jacobs: No, by law.


Arthur Meighen: That is main force. Before discussing that further I said a moment ago that I quoted the leader of the Opposition correctly, when he said that, letting the Grand Trunk Pacific go into a receivership was disgraceful. Here is what he said:
Mr. Rowell:	That is what your argument
leads to.
Mr. 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.
There is nothing about method there. The hon. gentleman said that putting it in the hands of the receiver was a disgraceful and unbusinesslike thing to do.


Daniel Duncan McKenzie: If the hon. gentleman will read further he will see that I said the Government bad not the machinery to deal with such a matter and that it should have gone into the courts where there was
[Mr McKenzie.]
proper provision for it. The whole drift of my statement w-as that the Government should not appoint the receiver.*


Arthur Meighen: The Government was the principal creditor and consequently it was the proper thing that a member of the Government should be apointed receiver,
Mr, McKENZIE:	The receiver was
appointed under the War Measures Act. At least, we were told so a thousand times by the Government.


Arthur Meighen: Certainly, but it went through the courts, and the whole transaction and administration of the Grand Trunk Pacific is done through the Exchequer Court just the same as any other receivership.


Daniel Duncan McKenzie: The	receiver was
appointed hy the Government themselves, which is absolutely without precedent in the history of any country.


Arthur Meighen: Does the hon. gentleman suggest that the Government of, Canada, -which was not only the majority creditor but by far the greatest creditor of the Grand Trunk Pacific, should have sat by and let some one else be appointed receiver, responsible for the operation and management of the Grand Trunk Pacific? What kind of Premier would he make who would allow that to be done?


Daniel Duncan McKenzie: Does the hon. minister think that he can play on conditions of that kind? Supposing there are two creditors of any concern in Canada-and we have an Insolvent Act to-day-one of them with a claim of 510,000 and the other $100. Does my hon. friend mean to say that the creditor with, the claim o,f $10,000 can appoint himself receiver?


Arthur Meighen: No, but I say the courts would appoint him receiver 'ahead of the other whose claim was $100.


Daniel Duncan McKenzie: The court would appoint him receiver, certainly.


Arthur Meighen: In this case, the right receiver is the Government of Canada, is it not?


Daniel Duncan McKenzie: Not at all.


Arthur Meighen: Again I compliment the obstinacy of the leader of the Opposition. Now, I was going on to the 'Statement of the hon. member (Mr. Jacobs). His idea is that we should have let the Grand Trunk proceed into liquidation.


Samuel William Jacobs: I was merely asking the simple question why it was not done in that

way. I shall express my own views later without the assistance of the minister.


Arthur Meighen: Perhaps the hon. gentleman will answer my question. I shall answer him first: I am not in favour of that proposition. Is he in favour of it or not?


Samuel William Jacobs: I will express my opinion in regard to that later on. I am trying to marshall my arguments.


Arthur Meighen: So that the House has very little information a.s to where the hon. gentleman stands on the question of a receivership for the Grand Trunk.


Samuel William Jacobs: And I do not think that the House has any information as to the minister's position either.


Arthur Meighen: I stated my position; I said I am opposed to it. What more does he want?


Samuel William Jacobs: Because the minister is Afraid of the Canadian Pacific Railway acquiring the road?


Arthur Meighen: That is one powerful reason.


Samuel William Jacobs: That was not the reason that actuated my hon. friend when he took over the Canadian Northern.


Arthur Meighen: It was one powerful [DOT]reason there as well. Is that- frank enough?


Samuel William Jacobs: I beg your pardon, I meant *to say the Grand Trunk Pacific.


Arthur Meighen: There is no danger of the Canadian Pacific Railway acquiring the Grand Trunk Pacific alone. The hon. gentleman knows more about the business [DOT]acumen of the Canadian Pacific Railway *Company than to think that they would *acquire a limping, halting, utterly bankrupt institution like the Grand Trunk Pacific and leave the Grand Trunk free of obligations.


Samuel William Jacobs: Inasmuch as the minister, [DOT]as I understand, used to act as solicitor *for the Canadian Pacific railway he would *know more about their methods than I do.
' Mr. MEIGHEN: On no occasion in the [DOT]world have I ever acted' as solicitor for *the Canadian Pacific railway. I am afraid there are very few more holes for the hon. gentlemen to fall into. Now my hon. friend evidently has in the back of his head exactly the practical business objections to a receivership of the Grand Trunk railway. The same objections obtained in the case of the Canadian Northern, but
they obtain with greater force in the case of the Grand Trunk. The policy of standing by and letting the wreck proceed was a policy of drifting the whole institution into the mouth of the Canadian Pacific Railway.	_
Now, it is said that this is too favourable for the Grand Trunk's shareholders. Well, it will appeal to any one of ordinary forethought and independent opinion that if *this was a very favourable proposition for the Grand Trunk Company they would not have waited1 sixteen months to accept it. I should1 like hon. members to read the *comments of the president of the Grand Trunk-comments dictated by and undoubtedly in accordance with the sentiments of the Grand Trunk directors' and shareholders-on the offer made by the Government on the 11th July. Did they think it was a favourable offer? Throughout Great Britain the cry of confiscation was raised, and at a meeting of the shareholders of the Grand Trunk-indeed at [DOT]more than one,-.the epithets hurled at the Government of Canada for their parsimony, unfairness and lack of generosity to the [DOT]shareholders of the Grand Trunk were far from complimentary to this country. They were, in my opinion, wholly unjustified. But whatever may be the ideas of hon. gentlemen opposite in regard to the generosity of the offer, now that it is accepted, they are very, very antithetical to the opinions of the Grand Trunk Company,-president, directors and shareholders alike. The *company waited eighteen months before giving even an intimation that there was a probability of acceptance. One condition after the other was tried, and does any one suggest for a moment that indications were that the transaction was closed ? I recall myself an editorial in the Toronto Globe- and in newspaper after newspaper throughout the country the same thing was urged calling upon the Government to stand firm by its offer. The Government were called upon not to move. They were told: "All you have to do is to stand firm; your offer is fair; stand right to it and the Grand Trunk will have to come to terms." Did that indicate that everything was closed ? Never for one day was there any intimation given or impression left that negotiations with the Grand Trunk were closed or that any offer made by the Government was modified or withdrawn.. The country knew, and has known since July, 1918,-yes, and before-that negotiations were proceeding and that the Grand Trunk turned them over time and again, and that there was no modi-

fication in the position of the Government. The hope was universally expressed that there would be no modification, and the hope of the people of Canada is realized to-day; and


Samuel William Jacobs: Can the minister tell me if the Grand Trunk was ever in negotiation with the Canadian Pacific Railway looking to the acquisition by that company of the Grand Trunk?


Arthur Meighen: I know of no negotiations. It would not likely be through the instrumentality of a member of the Government, nor would such negotiations be even known to a member of the Government. That is not the way in which great companies negotiate. They do not negotiate through the medium of a competitor.


Samuel William Jacobs: I am asking my hon. friend if he has any personal knowledge.


Arthur Meighen: I have no personal knowledge. It would be wholly improbable, indeed, wholly inconceivable that I should have.


Samuel William Jacobs: As a purchaser the minister,
I should think, would have obtained some information as to whether this company was being offered to another concern.


Arthur Meighen: The Canadian Pacific Railway never vouchsafed me any information on the subject. I do not know whether they favoured my hon. friend with information.


Samuel William Jacobs: Mr. Smithers did not?


Arthur Meighen: Now, the hon. member for Queen's and Shelburne (Mr. Fielding) is very distrustful of arbitration, and in the course of his remarks to-day he made some reference to the procedure of the Government in referring the Canadian Northern outstanding shares to arbitration some two years ago. He told us that the Drayton-Acworth report found these shares tfT be valueless and he said: that we should not have paid anything for them.
The Drayton-Aeworth report recommended the Government to submit the value of these shares to arbitration. The Government pursued the recommendation of the Drayton-Aeworth report. In any event would the hon. member suggest to this House that the Government would be justified in taking the report of officers appointed and paid by themselves upon evidence respecting which the Canadian Northern had no right and no duty to appear and show the value of the shares; in other words-, to take an ex parte report, as far as the shareholders 
were concerned, and, acting upon that report, to declare that there was no value in these shares? To do so would' be to put the Government of Canada in a position that they never could defend to the shareholders, to the country, ~or to the world at large. When a man's property is taken a fundamental principle ot British justice is that he shall have a tribunal before which he may go and prove the value of his property if he -can. There was no such tribunal until the board of arbitration was appointed. The Drayton-Aeworth -commission was no such tribunal. The shareholders cut no figure and had no place before that commission. It was not within the purview of the commission to hear the shareholders as to the value of their shares and they did not hear them. Consequently it would have been a flagrant and gros-s injustice on the part of the Government to have declared no value and to have expropriated by brute force the property of their citizens. Instead of doing that they appointed a board of arbitration and a board of high standing. My hon. friend does not for a moment impugn the high standing and probity of any member of that commission through whose examination and determination the amount to be paid was arrived at.
The same thing will be done in this case. The same procedure is proposed in this resolution. It is honourable procedure; it is British procedure; it is fairness; it is justice and it is no more.
If these resolutions and the Bill are passed this country will have a real system; it will have a rounded system; it will have a complete system; it will have a system one-half giving its tribute to the other half, ane gathering traffic in one part of Canada which will be transported over the road of the other and the other gathering traffic in the other part of Canada for interchange.
It will save this- country in capital investment $100,000,000 in five years. The interest on this that will be saved, at even the present rates, will be far more than sufficient to take care of the obligations in all probability that we will be under as a result of the award of the board of arbitration. With respect to the money that will be saved to Canada by amalgamation, the money that otherwise we must invest in additions to the present Canadian railway system, the money that will be invested in duplication and. consequently wasted, the money that will be saved by reason of the acquisition of the Grand Trunk railway, this country

will save in annual interest more than will be sufficient to pay the award of the arbitration and the interest on the guaranteed stock and1 besides in all human probability, it will possibly save the country some millions more. Is that not a good transaction? Is that not fair business? Is it not right and proper that economies and amalgamations should be made? Is it not right and proper that duplicate capital investment should be avoided? Is it not right and proper that an inchoate system should be made complete? Is not arbitration the proper way? That is in a nutshell the proposal of this resolution and with the utmost confidence I commend it to the consideration of the House at this session of Parliament. This is just as valid, just as good a session as any other; it is a session in which every hon. member who draws his indemnity from the country should feel it his duty to give a reasonable proportion of his time to the public business. At this session it is only right and just that hon. members should give their attention to this question and devote to it all necessary time to enable them to come to a just conclusion.


William Stevens Fielding: I commend 'the lecture of my hon. friend respecting absentees to the men who should occupy the seats behind him. There are one or two points in the observations of my hon. friend to which I should make a passing allusion. First in regard to arbitration. The point I made concerning arbitration was that when a stock, known to be not worth any money, was capable of being adjudged for the reasons presented by an honourable board of arbitration as worth $10,000,000 or $11,000,000 we had some reason for anxiety as to what might be the outcome of an arbitration in respect to these voluminous stocks of the Grand Trunk Railway Company which had some money value at some time. Therefore I suggested that the House ought not to be left in doubt as to the extent of the obligations and the risk we are assuming under those obligations and that the award of the arbitrators should be subject to the approval of the House of Commons of Canada.


Arthur Meighen: Will the hon. gentleman suggest that it .should be subject to the approval of the shareholders?


William Stevens Fielding: They are not bound to accept it if they do not want to.


Arthur Meighen: But they are.
69	I


William Stevens Fielding: I would not force it on the shareholders. I would not force the shareholders to take any value for it that they did not want to take.


Arthur Meighen: Then what is the good of arbitration?


William Stevens Fielding: Well, my hon. friend can answer; he is proposing arbitration. What is the good of the whole proceeding in view of the understanding which has been arrived at?


Arthur Meighen: An arbitration held under such conditions that the result is binding on nobody has no sense at all, but an arbitration on the principle that the result binds both is an arbitration that is final and has some object in view.


William Stevens Fielding: My answer is that the people of Canada, through their representatives, will say that Parliament should be called upon to vote for any necessary sum of money with a full knowledge of what that sum is.


Arthur Meighen: And the shareholders should not be given the right to say whether they would accept it or not?


William Stevens Fielding: I have no objection to the shareholders standing out for a different report.


Arthur Meighen: Then you will have no arbitration.


William Stevens Fielding: With reference to the 4 per cent guaranteed stock, if my hon. friend wants to buy anything and he finds what the market value is he will be doing no injustice to anybody if he gets it at that value. The market value of that stock in London was 45. There would toe no injustice to anybody if you had arranged with a broker and he had bought that stock at 45, 46 or 47.


Arthur Meighen: That was considered and found to be absolutely impossible.


William Stevens Fielding: There was nothing impossible about it at all.


Arthur Meighen: The dealing in the stock of the Grand Trunk during the last five years has been almost infinitesimal. I have that from the officers of the Grand Trunk themselves. Because of the market conditions in Great Britain to-day it is impracticable. The proportion of these stocks that has been dealt in during the last five years is negligible. The ratio to the whole amount of the stock is very small and these stocks are owned not by thousands but hundreds of thousands of people.


William Stevens Fielding: 
Arthur Meighen: We do not.


William Stevens Fielding: We are going to convert the stock into a stock guaranteed by the Government of Canada and paying four per cent. In normal times a four per cent government guaranteed stock is worth par. I do not think it would 'be worth that at this moment. Even with the guarantee of the Government of Canada I have estimated it at something less than 85 or even 90. I assumed it might go to 90 not long after this thing is consummated, but suppose we take it at 85, the difference between the 40 quoted a few days ago and the 90 or 85, say, that the stock should be worth at no distant date will be 40 points.


Arthur Meighen: Will my hon. friend
permit a question?


William Stevens Fielding: Yes.


Arthur Meighen: Without the impression produced by the Government's guarantee at all that stock stood at 1061 not long ago.


William Stevens Fielding: How long ago?


Arthur Meighen: It was at 1011 in 1904 and in 1902 it was at 106|.


William Stevens Fielding: What has that- to do with the question?


Arthur Meighen: In 1906 the first preference stock stood at 123. It is a matter of the rate of interest.


William Stevens Fielding: It is a matter of market value. Here is stock which the Government desire to secure quoted on the money market at 45, later on at 48, and hon. gentlemen opposite, by this legislation, are causing it now to Teach a value of 85 or 90. Does my hon, friend say that the guaranteed four per cent bonds of Canada are not worth 85? Will he say that?


Arthur Meighen: I do not think the stock has sold. for that at all.


William Stevens Fielding: The hon. gentleman thinks it may reach 85?


Arthur Meighen: Without the guarantee at all it was worth that much. Then if money comes down in value-


William Stevens Fielding: If it was worth that much before the guarantee it will be worth more after the guarantee.


Arthur Meighen: It depends on the rate of interest.


William Stevens Fielding: 
Arthur Meighen: It is an easy matter
when you have a small road to merge it because you do not in any way detract from the earning power of that road, but where you have -a great system, and where it prob-

ably will be necessary to dismantle lines, you do detract from the earning power-


William Stevens Fielding: It is a matter of common notoriety in our railway circles that you have to take certain sections of the road and keep separate accounts as to their earnings. For example, the Minister of Railways has entered into an agreement with a railway company down in New Brunswick which is going to be practically merged with the government system and going to be operated by the Government, and he has got to account separate and apart for the earnings of that company. If my hon. friend says it is utterly impossible, that the thing cannot be done, I must express my amazement, that one who has had such a long experience in railway matters as the hon. gentleman has, should make such a statement.
There is only one point more. My hon. friend finds it exceedingly difficult to discuss any question without introducing a little party politics. I have not made any allusion to party politics, and I have not sought to make any party capital. My hon. friend could not talk about this matter without bringing in the story of the original transaction with the Grand Trunk Pacific -" an utterly unsound and rotten proposition." He did not use the word " rotten," I forget what his term was; at all events, he denounced it. I am not going to spend any time at this hour, six o'clock, in defending that transaction, but the hon. gentleman can read the speech of his colleague, the President of the Privy Council, who yes-day declared it was one of the greatest triumphs in the life of Sir Wilfrid Laurier and for which he would be remembered.
At six o'clock the Committee took recess.
After Recess.
The Committee resumed at eight o'clock.


Mr. CAHILL:: Would the minister in charge inform the committee what, exclusive of the arbitration award, will be the total_ obligations to be assumed by the Dominion when the transaction is completed?


John Dowsley Reid: 
Frank S. Cahill: I mean the total bond obligations against the undertaking?


John Dowsley Reid: We do not assume any bonds at all; they are a charge against the road.


Frank S. Cahill: That is what I mean, the bonds against the road.


John Dowsley Reid: But those bonds continue in perpetuity, so the only liability we assume is the interest on them.


Mr. J. H. SINCLAIR:: But the interest falls due.


John Dowsley Reid: Yes. We assume that, but we do not assume the principal. For instance, the bonds on the Grand Trunk Pacific fall due in a certain number of years, but these other bonds of which we. have been speaking are in perpetuity.


Frank S. Cahill: But, Mr. Chairman, there' is a statement in this book giving the total amount of liabilities, and it is useless for the minister to quibble in that way. Can he tell me the amount of obligations the country will assume, without taking into account the amount the arbitrators may award?


John Dowsley Reid: The only amounts that we assume or are liable for are interest-


Frank S. Cahill: Interest on how much?


John Dowsley Reid: 
Frank S. Cahill: Will the country also assume this item of unsecured notes payable amounting to $35,000,000, and equipment trust notes amounting to $6,000,000?


John Dowsley Reid: The equipment bonds are against the equipment-cars, engines, etc. We do not assume them; they are liable themselves.


Frank S. Cahill: Who is "liable themselves"? Tlhe equipment is not going to pay out any money. The company will naturally have to pay interest on the equipment and pay off the (bonds. The equipment is not the company itself.


The CHAIRMAN:: Shall the resolution carry?


Frank S. Cahill: I think the minister is getting ready to answer me, Mr. Chairman.
I notice that $504,000,000 in one place and $707,000,000 in another place are given as the liabilities that are being assumed. I want to know whether the Government understands that that is the total obligation to be assumed by the country?


John Dowsley Reid: I must repeat that the only liability the country assumes is to pay in perpetuity the interest of $7,000,000 on the debenture stock and of $2,500,000 on the other stock. The other liabilities take care of themselves. For instance, the mortgage on the equipment; we are not assuming any liability in regard to that other than is covered by the equipment bonds. The interest, of course, becomes due on that mortgage, but we are not making the Government liable for the principal.


Frank S. Cahill: I think the minister will agree with me that the new company or the old company is liable for all the amounts set out here as chargeable to the company. In that connection there is an item of something like $210,000,000 in respect of the Grand Trunk Pacific. If we deduct from that the amount owing to the Dominion we arrive at one basis of ascertaining how much greater obligations the country is assuming in taking over this undertaking. We know that we are not getting it for nothing; we are assuming obligations. What is the sum total of the obligations as figured by the Government?


John Dowsley Reid: That information is given on page 37 of this sessional paper. It shows the assets and liabilities, but we are only assuming the interest on those liabilities. While it shows a total of $124,000,000 of guaranteed stock and 4 per cent first, second and third preference stock, that is to be the subject of arbitration. Whatever amount the arbitrators decide, if any, as the interest on that stock, we of course will assume. The funded debt I have just mentioned to the hon. member, we assume a liability of $7,000,000 on that. While it shows $155,000,000 as the total amount of that funded debt, yet we do not 
agree to pay that amount in any number of years hereafter, we only agree to pay the interest on it in perpetuity. Then, of course, we do the same in regard to the guaranteed stock. As to the equipment notes and these other items, they are loans against the equipment.
We shall have to pay interest on the equipment bonds, but that is not any permanent liability. I do not know how to explain to the hon. member in any more detail than is shown on this statement which was made out by auditors and which to me is as plain as it can- be made and easily understood.


Frank S. Cahill: As clear as mud. If it
is so plain to the minister, how does he get $74000,000 interest on $155,000,000 worth of bonds? The President of the Council (Mr. Rowell) speaks about $200,000,000 being spent in the first, second and third preference common stocks, and in these letters from the company we find they have spent less than $100,000,000. I am endeavouring to bring these wild statements down to something concrete. I should like from the Government a statement as to what they estimate from their own figures as the amount of the total liability on which interest will have to be paid, call it in perpetuity or what you will.


John Dowsley Reid: The hon. gentleman
wants to know what the principal is on which interest will have to be paid. If he will turn to page 38 he will find that the total stock, preference, common and guaranteed, amounts to $241,257,658.27, of which $60,833,332.51 is guaranteed stock. On the latter we shall have to pay in perpetuity interest at the rate of 4 per cent, and the arbitrators will decide as to the value of the balance of the $241,257,658.27. That is, they will decide the value of the first, second and third preference and the common stock, and on whatever valuation they place on those stocks the Government will pay 4 per cent interest. That disposes, so far as I can explain the matter, of the $241,257,658.27. Then we come to the funded debt $155,373,806.20. That is the original debenture issue for the construction of the Grand Trunk and the purchase of the Great Western and the Northern railway forty or fifty years ago. We shall pay on that interest which in round figures amounts to $7,000,000 per annum. Those two amounts represent the capital on which we shall have to paj7 interest, we shall not have to pay interest on any other capital in connection with the Grand Trunk railway. In addition to that there is a large amount of money in equipment, and bonds have been

issued against equipment. That is a part of the operation of the road and interest will have to be paid on the equipment bonds, together with the principal that falls due from year to year. That is explained in the statement, and I do not know that I could give it in any more detail nor explain it any better than it is explained here.


John Howard Sinclair: That is not included in the arbitration?


John Dowsley Reid: Yes, it is included. The arbitrators will have to take into consideration the physical condition of the road, equipment of all kinds, in fact, everything owned and controlled by the Grand Trunk Railway Company. The equipment is worth so much money less the amount that is against it. That is the way in which the equipment must be taken into consideration, just the same as any other liquid assets the company might have.


John Howard Sinclair: The minister is
endeavouring to be clear, but he is not very clear to the committee. To begin with, we all understand that the country pays interest on the guaranteed stock. It also pays interest, whatever happens, on the debenture stock of which there are four kinds. We stop there. The rest, my hon. friend says, is to be settled by arbitration. Supposing the arbitration is held, and the arbitrators, let hs say for the sake of argument, give the company $1,000,000 for the balance, and we pay that $1,000,000. Do we then become owners of the road without any mortgages or any claims of any kind, either on the road or on the common stock, excepting the interest to which I have referred in regard to the guaranteed stock and the debenture stock?


John Dowsley Reid: To me, the matter is plain, and I think it has been explained many times in this House.


John Howard Sinclair: My question can be answered toy "yes" or "no."


John Dowsley Reid: I do not know that you can answer it exactly toy "yes" or "no." The hon. member has, I understand, asked this question: Supposing the arbitrators decide to give an award of $1,000,000 over and above the $7,000,000 and the $2,500,000, what happens then? What happens is this? The first, second and third preference and the common stocks must all be handed over to the Dominion Government; they are our property. In return we issue non-voting stock to the amount that will give $1,000,000 per annum rental. We shall then have all
of those stocks, and we shall be the owners of the road, being the sole shareholders of the Grand Trunk Railway Company.


John Howard Sinclair: But have we a clear title?
Mr.-J. D. REID: Certainly we have a clear title, to this extent, that we are the owners of the stock subject to the payment of the interest in perpetuity.


John Howard Sinclair: What about the equipment?


John Dowsley Reid: The Grand Trunk Railway Company owns the equipment, and we are the owners of the Grand Trunk Railway Company; therefore, we own the equipment.


John Howard Sinclair: But the equipment is mortgaged.


John Dowsley Reid: Of course, we take the equipment subject to whatever may be against it.


John Howard Sinclair: Then we shall have very heavy liabilities in addition to the $1,000,900 that we shall have to meet when we begin to operate the road. The minister has the blue-book on his desk. Last night, I endeavoured to get some explanation about the contents of page 51, and I failed to get it. I should like to know from the Minister of Railways whether the stocks of the various subsidiary companies mentioned on page 51 will be transferred to the Government on the settlement by the arbitrators.


John Dowsley Reid: The stocks of those subsidiary companies are now owned by the Grand Trunk Railway Company.


John Howard Sinclair: On lease?


John Dowsley Reid: Some may be lease-owned, but as regards whatever interest in those companies rests at present in the Grand Trunk Railway Company, when we take the stock of the Grand Trunk Railway Company, we shall stand in the same position as that company does now. Therefore, we become owners in that way.


John Howard Sinclair: In some of these companies, the Grand Trunk Railway Company has guaranteed the principal and the interest on certain bonds. Will the Grand Trunk Railway Company, after the Government gets possession of it, be liable for the guarantees that have been given toy that company on those bonds?


John Dowsley Reid: The Grand Trunk Railway Company are liable to-day; they will be liable in the future just the same.

When we become the stockholders of the Grand Trunk we shall become liable.


John Howard Sinclair: How much will that liability amount to?


John Dowsley Reid: The hon. member will find the figures for each road on page 34 of the memoranda. I do not think the total is given.


John Howard Sinclair: It is not, and I should like to have that information.


John Dowsley Reid: I will get that.


Samuel William Jacobs: I have a clipping before me containing some figures which I should like the minister to confirm. The clipping reads:
In the proposed deal .the Government pledges itself to pay 4 per cent on all Grand Trunk debentures, 4 per cent on all guaranteed stock and 4 per cent on the arbitrated value of all other Grand Trunk securities.
Is that correct?


John Dowsley Reid: Interest on the debenture stock and 4 per cent on the guaranteed stock.


Samuel William Jacobs: It goes- on:
The first item means an annual interest charge of about $6,000,000 ; the second a charge of approximately $2,260,000. The third is a variable quantity. The nominal value of the unguaranteed Grand Trunk securities is about $170,000,000. Figuring on the basis of average stock market quotations for the securities, this value is reduced to less than one-quarter, requiring about $1,350,000 in interest charges. That makes a total of annual obligations in addition to running the road, of about $9,600,-
000.	Subtract the net earnings of the Grand Trunk under company ownership and you have an annual loss of $6,600,000.
If the Government fails to operate the road as economically as the company, this loss will grow. But even on the basis of the Government's own figures and hopes, the Canadian tax-payers are buying, not a profit, but another white elephant for the hungry herd fattening on their diminishing treasury.


John Dowsley Reid: Who wrote that out for you?


Samuel William Jacobs: It has been handed to me. I fancy it was in the Montreal Star, which is usually a pretty good Government supporter, but they balk at this. There are limits beyond which a newspaper supporting the Government cannot go.


Arthur Meighen: I should like the hon. member to ridicule that as it ought to be ridiculed. The idea of a man making a guess at what the arbitrators will award, without anything to go on, and taking that figure to be absolutely found and established, and then proceeding to argue what the deficit will be! More simpering non-

sense can scarcely be conceived, although I have read some in the press that compares with it almost identically. What is the value of reading that out to the Committee? There is nobody here so unintelligent and dense as to be influenced for a second by rubbish of that sort.


Samuel William Jacobs: From what I can gather, the minister is not in agreement with the article I have read.


Arthur Meighen: I should think not.


John Dowsley Reid: Nor anybody else.
Mr.-CAHILL: From my reading of these figures, I come to the conclusion that we are undertaking to pay interest on a total capitalization of $470,000,000 in connection with this transaction. Am I nearly correct?


Arthur Meighen: No, the hon. gentleman is wrong.


Frank S. Cahill: What is the correct figure?


Arthur Meighen: The hon. gentleman has been told it at least seven times, and three or four times this evening since eight o'clock.


Frank S. Cahill: 'I am asking the question again because I did not get it answered. You do not mean to say that you are going to pay interest on the $707,000,000. You say yourself you are going to arbitrate, and if you arbitrate you are taking.into account ' the whole $707,000,000. I am trying to make a deduction to arrive at what will not be arbitrated upon.


Arthur Meighen: The resolution that has been before the hon. gentleman for two days, indeed, since last Friday, sets out definitely in figures that a child could read the exact debenture stock and the rate of interest on it which we undertake to pay, also the exact guaranteed stock with the rate of interest. That is all there is to it. There is no deduction necessary. It is all there in black and white.


Frank S. Cahill: Where is it?


Arthur Meighen: It is in the resolution, and in the letter read in the House last Friday.


Frank S. Cahill: I do not' see any mention of it in the resolution at all.


Arthur Meighen: On the top of page 10 of to-day's Orders of the Day my hon. friend will find the debenture stocks, and on page 9 the present capital stocks. The letter that was read in the House last Friday says that we pay four per cent on the guaranteed

stock, and interest on the various debenture stocks set out at the top of page 10. There are no deductions to be made. Why ask this question fifty times over?


Frank S. Cahill: For the simple reason that there is no person in the Government with sufficient intelligence to answer the question as it should be answered. If the minister, who apparently does not wish to commit the Government as to the extent to which they are being obligated in this transaction, would look at page 39 of 'his own memoranda he will find that there are notes secured and unsecured amounting to $35,000,000. That is not mentioned in the resolution at all. Then there are the Grand Trunk Pacific bonds mentioned in the resolution, so if the minister has read the resolution and the list of other obligations he must know what should be deducted.


Arthur Meighen: When the hon. gentleman says "obligations," I hope he means obligations. The obligations I have already told him, and if I stood here six months I could not tell him any more plainly. It was just as plain as if I had told him that two and three are five. There are other debts of the company, and we take the assets subject to those debts. They are all set out on that page. We do not assume those obligations. The 4 per cent interest on the guaranteed stock becomes our obligation. We take the stock of the Grand Trunk. The company's properties are subject to certain obligations, which are all set out there.


Frank S. Cahill: What do they amount to?


Arthur Meighen: The figures are there. Cannot the hon. gentleman read? Do I have to read them over to him?


Frank S. Cahill: Cannot you total them up?


Arthur Meighen: It is all made up here, but if the hon. gentleman says he cannot read I will read it for him. It is in English, not in Italian or Greek.


Frank S. Cahill: Nor in code.


Arthur Meighen: The hon. gentleman
might be more familiar with it if it was in code. These are the figures.
Grand Trunk 5% debenture stock? 20,782,494.38 . Grand Trunk 4% debenture stock 119,839,012.69 Great Western 5% debenture stock 13,252,322.48
Northern 4% debenture stock. ..	1,499,979.65
Total debenture stock	$155,373,806.20
That is the debenture stock upon which we oblige ourselves to pay the interest, Let us proceed. On the same page we find 4 per cent guaranteed stock $60,833,332.51. That is the guaranteed stock on which we
pay interest. That is all we oblige ourselves to do. Then there are other debts which the company holds its property subject to, and when we are stockholders the company will hold its property subject to them the same as now. The hon. gentleman wants to know what these debts are. Well, I shall read them to him; they are in English :
Second mtge. equipment bonds
6%	$ 1,814,779.97
Northern third	mtge.	6%..	..	70,566.67Canada Atlantic 4%	bonds..	16,000,091.77
Wellington, Grey & Bruce
bonds		295,593.34
Matured bonds	unpaid	 3,406.67

Then there are other liabilities of the company. They follow in order and I may read them if the hon. gentleman thinks it *sounds better for me to read them than for him to read them himself. There are current liabilities, reserves and advances to *controlled 'Companies. I do not think reserves and advances to controlled companies could he described as liabilities, but the current liabilities are:
Interest on capital account accrued	$ 3,123,755.42
Sundry outstanding accounts 15,409,985.97 Wages unpaid at Dec. 1918. ..	3,132,851.84
Overdraft at bank	 1,134,881.12
Against those, all the assets on the other side of the balance sheet are the property of the company. What, then, is the difficulty?
Mr. 'CAHILL: Does the minister say that we are assuming a capital of $500,000,000 on which we must pay interest?


Arthur Meighen: No; not at all.


Frank S. Cahill: Then what is the amount? Surely that can be answered. I also want to know what amount is being assumed on account of the Grand Trunk Pacific.


Arthur Meighen: I do not know what I can do. I am afraid I must give it up.


Frank S. Cahill: Surely some member of the Government can answer the question.


Arthur Meighen: I have answered it.


Mr. J. R. WILSON:: The hon. gentleman (Mr. Cahill) is somewhat confused. He seems to view the matter as an outright purchase. If I understand the subject, we are assuming a liability of interest on a certain amount of securities which to all intents and purposes will be a rental. But there are these last-named securities mentioned by the minister. I understand that

that will stand as a claim against the stock that is still held by the Grand Trunk Pacific. That is what I understand.


Frank S. Cahill: Ask the minister if that is what he understands.


Mr. TOBIN:: He will not answer.


Frank S. Cahill: The hon. member (Mr. J. R. Wilson) states his view of the situation. Perhaps the minister will enlighten him.


John Dowsley Reid: The whole matter is very plain, and it has been explained so many times that I do not think there is anything that I can add. The Minister of the Interior explained the situation with regard to the Grand Trunk Railway. The Grand Trunk Pacific is a subsidiary of the Grand Trunk, and when we take over the system we shall assume the liabilities in connection with the Grand Trunk Pacific. When we take over the Grand Trunk railway we shall assume the interest on all the bonds.


Frank S. Cahill: Amounting to how much?


Mr REID:: I would have to look it up, but it is probably $6,000,000 or $7,000,000 per annum. Until the war the Grand Trunk Pacific was able to meet operating expenses; the loss has been practically on interest only. During the last two or three years, owing to the war, there has been some loss also on account of operating expenses. The loss on the Grand Trunk Pacific has been, in round numbers, $7,000,000 during the last few years, and that was practically on interest.


Frank S. Cahill: What capital amount does that represent? Surely you can tell us that. It is absurd to think that we are undertaking an enterprise of this -kind and no one can tell us what obligations we are assuming. The Government -is afraid t-o say that we are assuming obligations for fear that it might interfere with our credit. I am not asking them to say that. But what capital amount are we assuming?


Arthur Meighen: On page 38 it is given exactly in several items.


Frank S. Cahill: What is the amount?


Arthur Meighen: I have told the hon. gentleman half a dozen times that you cannot lump these figures all together unless you want to deceive the House. Whether the hon. gentleman wants me to do that I do not know. Certain of these obligations we assume and agree to pay; the rest we do not. I have read both. I told the Committee what we agreed to pay and what the Grand Trunk Company had to, which

we had not assumed at all. The totals are: Capital stock, $60,833,332.51. The interest upon that at 4 per cent we guarantee to pay. Funded debt, $155,373,806.20. The interest on most of that is at 4 per cent and -some at 5 per cent, which we agree to pay.


Frank S. Cahill: What is the total?


Arthur Meighen: I am giving it to you now, but I will venture the prediction that the hon. -gentleman will want it at least six times more before we are sure. I have stated what we agree to pay.
Now, the property is- subject -to the list of obligations, that I read in detail and that amount to $18,184,738.42, of the nature of bonds, etc., on properties they acquired. Then it is subject to other obligations amounting to- $5,344,,207.54 in the nature of trust notes on equipment; other obligations in the nature of short-term loans amounting to- $35,548,235.08, -and other obligations in the nature of current liabilities. The property is not -subject to these last. They belong to- another distinct clasa again that we do not assume in any way but which the fixed -assets must be liable for before there is any equity. These current liabilities amount to $22,801,474.35. To say that we must pay interest on all of that is merely to talk humbug, because on the other side of the balance sheet are current assets enough to discharge these obligations. Surely the hon. ^gentleman understands a balance sheet. It has been before him. There are current -assets, in the nature of sundry outstanding accounts amounting to $43,838,831.44 which, as- the hon. gentleman knows, stand off *against the current liabilities. There are outstanding traffic accounts, amounting to $1,581,852.15 and materials and supplies cn hand, $6,407,195.57, all standing against current liabilities. Then there are "advances to controlled companies", and so on,-that appears on both sides -and these items are mot liabilities,-"Traders sidings bearing interest", and so on;-the assets and liabilities are there, they stand against each other. What is important is: What are the assets upon which we assume liability? What is funded against the property? I have given to the hon. gentleman the actual figures three or four times tonight.	.


Frank S. Cahill: What about the Grand Trunk Pacific?


Arthur Meighen: I have given him the Grand Trunk Pacific. We find a balance sheet showing exactly the same thing in

respect to the Grand Trunk Pacific, page 42. As 1 have explained what a balance sheet means in regard t<* the Grand Trunk I need not add that it means exactly the same thing in regard to the Grand Trunk Pacific.


Frank S. Cahill: The minister is not proposing that we shall assume interest payments on our own loans to the Grand Trunk Pacific? What is the amount of our loans to be deducted from the obligations of the Grand Trunk Pacific that we assume?


Arthur Meighen: Our loans are all set
out on page 42 and the figures are just as plain as my words could be. The Grand Trunk Pacific is subject to all these liabilities. It has 'certain assets. In my opinion the assets are not at all equal to the liabilities but I am not responsible for that. So far did the liabilities exceed the assets on the Grand Trunk Pacific as a going concern that last year's deficit, including fixed charges, was over $10,000,000. There i& something in the nature of a monument. I would call it a monumental folly.


John Howard Sinclair: I presume the
Government intends to hold the Governments of Saskatchewan and Alberta liable for their guarantees of bonds ?


Arthur Meighen: These governments are liable in relation to certain guarantees. The Dominion Government has not relieved them. I do not know that the matter of their liability is a serious one as far as the provinces are concerned, for the reason that the Government, although it does not assume the liability as an obligation of the Crown, it does, as a matter of practice take care of the road as a
going concern. Consequently, I think these provinces are justified in believing that their position is improved by the Government taking over the road.


John Howard Sinclair: Have they paid any interest ?


Arthur Meighen: No. The Grand Trunk Pacific paid its own liabilities because the Government of Canada has lent it the money with which to pay. Consequently, the provinces have not been called upon to pay.


John Howard Sinclair: I understand the Grand Trunk Pacific defaulted some time ago. Have the provinces not been called upon since then?


Arthur Meighen: My hon. friend the
Minister of Railways (Mr. Reid) informs me that since the Grand Trunk Pacific went into the hands of a receiver the two Governments have had to pay the maturing interest.


John Dowsley Reid: The governments ot
Saskatchewan and Alberta have had to take care of the interest.


Mr. FOURNIER:: I asked the Minister
yesterday how much the Grand Trunk had expended per mile of road for maintenance in comparison with the Canadian Pacific during the years 1915, 1916, 1917, 1918. Is he able to give me the information?


Arthur Meighen: Yes, I have the information here. It will be remembered that yesterday the complaint was made that the road had not been maintained, and comparative figtires were asked for as to maintenance payments made by the Grand Trunk and Canadian Pacific in various years per mile of road. These are the figures:


COMPARATIVE STATEMENT OF ANNUAL EXPENDITURES PER MILE OF ROAD FOR MAINTENANCE OF C.P.R. AND G.T.R.
[Stage Direction]
Canadian Pacific Railway.
Year Ending.	Dec. 31, 1918.	Dec. 31, 1917.	Dec. 31, 1916.	June 30, 1916.	June 30, 1915.	June 30, 1914.	June 30, 1913.	June 30, 1912.	June 30, 1911.	June 30, 1910.	June 30, 1909.	June 30, 1908.Maintenance of Way and Structures	
Maintenance of Equipment	$ 1,690 2,111	[DOT]S 1,345 1,802	8 1,331 1,460	8 1,135 1,292	8 921 914	8 1,389 1,405	S 1,627 1,513	S 1,645 1,263	8 1,504 1,165	8 1,354 1,247	8 1,020 1,122	$ 1,104 993
Grand Trunk Railway Co.
Year Ending Dec. 31.	1918.	1917.	1916.	1915.	1914.	1913.	1912.	1911.	1910.	1909.	1908.$ 1,948 3,601	8 1,498 2,341	8 1,103 1,828	8 1,217 1,703	8 1,303 1,665	S 1,552 2,009	8 1,304 1,863	S 1,343 1,912	S 1,318 1,771	8 1,241 1,537	8 1,122 1,103
Now these figures would show that adding the two classes of maintenance together the Grand Trunk would be better than the Canadian Pacific for every year back to 1908. I do not want any one to gather from that that there was any failure to maintain on the part of the Canadian Pacific. I do not know how to account for it, but these are the official figures given.
Charles Alphonse Fournier: 
Arthur Meighen: The hon. gentleman is wrong.


An hon. MEMBER:: Who is right?


Charles Alphonse Fournier: I invite my hon. friend to look at page 92 of the Railway Statistics of 1915-16.


Arthur Meighen: Published by whom?
By the Railway Department? [DOT]


Charles Alphonse Fournier: Yes, published by the Government.


Arthur Meighen: All right.


Pius Michaud: From whom did the
minister get his information as to the cost per mile?


Arthur Meighen: The figures were handed to me by the Deputy Minister of Railways.


John Dowsley Reid: Taken from the official records in the department.


Charles Alphonse Fournier: I take issue with my
hon. friend. Then, if we refer to the statement of President Kelley submittted in 1917 to the Railway Inquiry Commission, we find that he declared that a
9 p.m. sum of about $21,000,000 and odd would be necessary to bring the railway up to par. My hon. friend will find it in the report of the Railway Commission at page 33. If this amount had been provided by the Grand Trunk Railway in the ordinary course of operation it would have been a charge against revenue. If the Government has to do it it will form part of its capital expenditure. The Commission in 1917 reported that the existing plant was inadequate for traffic requirements and that a capital expenditure of $30,150,500 was necessary to make the requisite additions. My hon. friend will find that in the report of the Railway Inquiry Commission at page 34. If we add these two amounts together we have $51,500,000 added to the above amount of the Grand Trunk Railways bonded obligations for itself and its subsidiary, or a total of $356,945,972 as the amount for which the Government would have to become responsible if it had taken over the Grand Trunk Railway at the
end of 1916. With the additional si*m required for the rolling stock now, it will represent an expenditure fully one half more than the programme would have cost before the war, and should the method of arbitration proposed be adopted as in the case of the Canadian Northern Railway, the amount will have to be increased and the Dominion Government will have to assume capital obligations to the extent of $400,000,000. I know, Mr. Chairman, that it is rather tedious to have to deal with figures, but I aver they are correct.
Let us now look into the annual capital charges which must be borne by the Government when it acquires the road. Changing the pound to dollars at the rate of one pound sterling to five dollars, we have:
1	For the Grand Trunk perpetual
debentures 5%	$1,067,594
2	For the Grand Trunk perpetual
consolidated debentures 4%..	4,924,891
3	Grand Trunk second annual
equipment bonds	6%	
111,8704	Great Western perpetual debentures 5%	
680,7705	Northern Railway of Canada3rd preferred debentures 6%..	4,3506	Northern Railway of Canadaperpetual debentures 4%..	..	61,6437	Canada Atlantic First Mortgage 4%	
657,5388	Grand Trunk equipment bonds4J%	
..	2158,9759	Grand Trunk Railway securednotes unmatured	51%	
687,50010	Wellington, Gray and Brucebonds	
12,855
The interest on these bonds varies, but I am giving the interest paid in 1917 as contained in the report of the Grand Trunk Railway Company for that year at page
10..
11	On matured bonds. (There is no interest
paid on them.)
12	Collateral car	trust 5%	 11,250
13	New England Elevator Co. First
Mortgage 33%	 9,375
14	Montreal Warehouse First Mortgage 4%	  40,000
There is also annual interest sanctioned but unexercised amounting to3(Kf500,513. These figures are taken from the Grand Trunk Annual Report for 1917, at page 11. This makes in all a total of $9,029,184, to which we must add:
(a)	Rental due for leased lines (Annual Report of the Grand Trunk Railway Company for
1917, page 32)	$ 776,030
(b)	Interest on $15,000,000 First
Mortgage 4%	 600,000
(c)	Interest on Grand Trunk Pacific bonds guaranteed by the Grand Trunk Railway as follows:-

3	per cent, first mortgage bonds (due 1962), bought by the government	$ 33,048,000.00
3	per cent, first mortgage bonds
(due 1962) outstanuing.. ..	34,992,000.00
4	per cent, sterling bonds (due
1962) outstanding	 8,440,848.00
4 per cent, bonds, issued and pledged to government in 1914 as security for a cash loan of $6,000,000	 7,500,000.00

Government loans to Grand Trunk Pacific on Grand Trunk Railway guarantee:-
1909..	$10,000,000 at 4 per cent
1913..	15,000,000 at 4 per cent 	 25,0000,000.00
Government loans to Grand Trunk Pacific, secured by Grand Trunk Pacific mortgage:-
1914	$16,000,000
1916		 8,000,000
1917		 7,500,000
1918		 7,500,000

Total guarantees of Dominion government and loans by the government to the Grand Trunk Pacific (i.e., total interests of the government in [DOT] the Grand Trunk Pacific. .$147,980,848.00 II. Saskatchewan government guarantees:-
4 per cent, bonds,
due 1939..	..$11,347,848.00
4i per cent. terminal bonds, due
1943	 1,832,240.00

 13,230,08S. 00
III.	Alberta government guarantees:-
4 per cent bonds,
due 1939	$ 2,430,000.00
4 per cent. coal branch bonds,
due 1942	 1,159,596.00


	3,589,596.00
IV.	Grand Trunk Railway guarantees for Grand Trunk Pacific :

4 per cent. Series A second mortgage bonds, due 1955	$10,206,000.00
4	per cent. Series	*
B second mortgage bonds, due
1955	 9,963,000.00
Dominion government loans to Grand Trunk Pacific on Grand Trunk Railway guarantee:- 1909.	.$10,000,000
at 4 per cent., due 1919
1913.	.$15,000,000
at 4 per cent., due 1923

5	per cent secured
notes (secured by pledge of 4 per cent, debentures), due 1925	9,720,000.00
4 per cent, perpetual debenture
stock	 34,879,262.86
4 per cent. Lake Superior branch
bonds	 7,533,000.00


$ 97,301,252.86 COMMONS
[Stage Direction]
Summarizing these, we find:-
Dominion government guarantees of Grand Trunk Pacific securities	$147,980,848.0-0
Dess amount of these guaranteed by Grand
Trunk Railway. . 25,000,000.00 Net amount of Dominion government guarantees	$122,980,848.00
Saskatchewan guarantees of Grand Trunk Pacific securi-
	 13,230,088.00
Alberta guarantees of Grand
Trunk Pacific securities.. ..	3,589,596.00
Grand Trunk Railway guarantees of Grand Trunk Pacific securities	97,301,252.86
Total guarantees of Grand Trunk
Pacific securities	$237,101,784.86
By taking over the Grand Trunk, the Government assumes a capital obligation of about $400,000,000 and annual charges of $20,000,000. In acquiring the Grand Trunk Pacific its capital obligation would he increased' by about $300,000,000, and its expenses toy at least $8,000,000. This means that by such a proposed course of government ownership, the enormous debt of Canada would be increased by one third of its present amount. When we take these facts into consideration, in connection with the annual deficit of at least $20,000,000 in the case of the Canadian Northern, which has been acquired by the assumption of $434,312,747 of liabilities, including a bonded debt of $327,000,000, and the deficit in operating expenses of the Canadian Government railways, 'amounting in 1916 to $6,000,000 and over, without the payment of any interest on capital, it can easily be seen that the drain upon the Dominion treasury will soon -make heavy calls upon the taxpayers of -this country.
'The ex-Minister of Finance (Sir Thomas White) stated to Parliament on April 3, 1919, that if the Government should exercise its right of foreclosure on the Grand Trunk Pacific on the basis of its first -mortgage, and offer the road for sale, it could buy it at a much lower price than is represented by all the securities which have been issued in respect of it (Annual Report to Department of Railways -and Canals, 1917, p. 6). *H-e acknowledged then that if the liabilities of the Grand Trunk Railway on behalf of the Grand Trunk Pacific were fully taken into account, the value of the Grand Trunk shares, that is, the shareholders' equity in the -property, would be practically nil (Hansard, March 20, 1919, p. 701). The Government, therefore, has come to the

conclusion that the value of the assets in these cases is not a determining factor in the proposed change from private to public ownership. In other words, the Government encourages the -allegation -that it is a case for generosity, and not for exacting the full pound of flesh. I may add that the full pound of flesh will be exacted from, Canadians.
The ex-Minister of Finance also said that if the Government should take over the -Grand Trunk, and the same thing applies to the Grand Trunk Pacific, it would take it on the same basis as the Canadian Northern, that is, it would still be a corporation with power to issue securities when necessary. As -a corporation, its object would be to finance itself as much -as -possible. In this way, it seems, the Government is endeavouring to make the people think that they will not be obligated to the extent I -have shown, but that all the financial strain will rest upon the existing corporation, -which is in control of the properties. This confusing of the issue, is wholly derogatory to democratic government, which rests upon full and -accurate publicity. Does the Canadian Northern still do all its financing by the issuance of its securities and their sale in New York and London? I pause for an answer.
John Dowsley Reid: It does part of its financing, selling equipment bonds, for instance, in Nerw York or any other -market it wishes.


Charles Alphonse Fournier: Far from it, and the
Government knows it well. Then, why should this blind be held out, as a consequence of which many of the electorate are deceived? I have not argued either for or against public ownership, but have sought to -give the figures and the financial status of the railways in an unprejudiced manner, and the people of this country can draw their own conclusions.
It is regrettable that the Government has seen fit to bring down this railway legislation. Sir, we met here to approve of the Peace Treaty, and we have approved of it, even the Austrian Treaty which we have not seen and which was never presented to us. However ridiculous this session has been regarding the Peace Treaty, we wanted to finish with the war junkers, and work again once more in peace and harmony. To me this session appears like a hopeless joke. It was only planned to fool the people with another railway deal. Just as soon as a glimmer of light was beginning to penetrate the war -gloom, -and at the very time when the country needs wise discernment and

patriotic endeavour in its counsels, more so than at any other time since Confederation, the Government sees fit to force Parliament to grant them a blank cheque to crowd huge financial obligations on this country, on top of our enormous debt which now runs into the billions.
Sir, this is not the first time that the Government has outraged decency. It is not the first time that this beautiful Unionist aggregation, with its majority, has sacrificed Canada's interest to enrich speculators and rescue imprudent backers of that Bol-shivish financial clique of Toronto. It is not the first time that the Canadian people have been swayed by the sophistries of this unscrupulous Government.
It is not very long ago that we had to listen to stock arguments of all hon. gentlemen on your right, Sir, telling us about the glorious memories of Vimy, Cource-lette, Ypres, and Passchendaele, the bravery of Canadians on the battlefields and their gallant fights for freedom. "The last man; the last dollar"-this wa* the war-cry. The soldiers have come back, and no more a sound shall we hear from those sweet lutes. Ofittimes have we heard even the ex-Minister of Finance, whom we delight to hear, as we heard him this afternoon, mention the soldiers. But that nightingale also has been silenced'. He went up to the soldiers' committee and told them that there was no more money for the boys. But, Sir, there is money for the Toronto clique. This legislation may go through or not by means of the gag-machine; it matters not. We know very well that this Government will never put railway legislation through without applying the gag rule. But, Sir, when the next Budget is made public the people of Canada will realize in a shocking way that we are navigating troubled waters and that the currents on which we *are drifting sweep over more debts and deficits to the rocks of calamity and disaster. Hon. gentlemen opposite may have shaken hands to carry on the war to a successful end. That was a noble cause, but if they have formed a sort of family compact to drive Canada to the rocks of bankruptcy to enrich speculators, then, I say to those hon. gentlemen that individual greed should not govern this country any longer. I crave your pardon, Mr. Chairman, if I have trespassed unduly on the time of the committee, but I have endeavoured to express in my humble way my opinions on this subject.


Mr. DENIS:: With the indulgence of the members of the Cabinet, there are two or
three more questions which I shall ask, and then I hope I shall be through. The first point I should like to have elucidated is this: Taking the present net earnings of the Grand Trunk railway and the interest which we shall have to pay upon the debenture stock and guaranteed stock, which amounts to between $9,000,000 and $10,000,000, what is the deficit, subtracting the net income for the year 1917-18 from the interest which we shall have to pay upon the debenture stock and guaranteed stock? Is my question clear?


Arthur Meighen: It is clear, but why does the hon. gentleman pick out two of the worst years in the company's1 history? Would it not be fair to pick out ten?


Jean-Joseph Denis: I am taking only the last two years.


Arthur Meighen: Yes, because they were war years when no railway in the world made anything. Then, again, they were the years in which the McAdoo award took effect, and in this country the increase in rates did not take effect until much later. The hon. gentleman will hardly argue that it was fair to any invested capital, be it Canadian or foreign, to assume that it would stay in such an abnormal condition as that, or that any country would be justified in allowing it to do so. If the hon. gentleman takes, as the Drayton-Acworth report asks should be done, ten years, and even includes in them certain war years, then there will be more than sufficient to pay all obligations, all debts, interest on guaranteed stock, and more besides.


Jean-Joseph Denis: Can the minister inform me why the Grand Trunk Railway has altogether suspended the payment of dividends on the guaranteed stock and debenture stock for the last two years, as appears in this booklet?


Arthur Meighen: They did not. They
paid interest on debenture stock. Guaranteed interest was not paid in 1917-18 for the reasons I have given, because there was no money to pay it with. There was a small surplus but they did not declare dividends for very clear reasons which I have given. The hon. gentleman should not assume that any company was a failure merely because it had paid no interest on certain portions of its capital stock last year and the year before. If so there would be scarcely a sound railway in the world; there would not be one in the United States or in England, as I am informed. There would be in Canada, on account of the tremendous land assets and the very strong position of the Canadian

Pacific railway, a position very largely due to the extraordinary generous treatment received at the hands of this Dominion.


Jean-Joseph Denis: I do not want the inference to be drawn that the company would be insolvent for that reason. I suppose the failure to pay interest must be attributed to the decrease in the earnings and the increase in the runing expenses.


Arthur Meighen: No. I think the hon.
gentleman will find that the earnings were the greatest then that they ever had and that the amount of traffic was the highest. The amount of service rendered this country was the greatest that the Grand Trunk ever rendered. But owing chiefly to the McAdoo award as to the wages* applying in Canada by virtue of our law, and to the increased cost of operation generally, due to increased cost of supply, the entire earnings of the company were eaten into except to the extent of a small surplus.


Jean-Joseph Denis: Is the minister taking any stock in the Drayton-Acworth report, which says that in 1917 the sum of_ $21,000,000. was necessary to put the road in good condition and for improvements generally?


Arthur Meighen: No. The Drayton-
Acworth report would not say that because it was published in 1916.


Jean-Joseph Denis: Well, whenever it was published.


Arthur Meighen: The hon. member wants to know if I am taking any stock in the report in that respect?


Jean-Joseph Denis: Yes.


Arthur Meighen: Our contention will be that the report is right. The Grand Trunk, however, strenuously contend that it is wrong, and brings considerable evidence forward to that effect. They certainly have not convinced Sir Henry Drayton, who was largely responsible for the report. As to where the exact line lies, I am not competent to say. The arbitration board will have to determine that.


Jean-Joseph Denis: The Minister of the Interior said a moment ago that we did not in any way assume the liabilities of the company. This is absolutely right. But, on the other hand, I think his statement calls for explanation. I shall express my view of the situation and should like to be corrected if I am wrong. Technically speaking the Dominion of Canada is not by any means assuming the liabilities of the company, but it is making an investment to the amount of $216,000,000 by becoming responsible in

perpetuity for the payment of the interest on the debenture stock and the guaranteed stock, which together represent a capitalization of $216,000,000. Now, in the agreement we say that we are going to pay forever the interest on this sum.
For the sake of argument we may say that we are making an investment of $216,000,000. Besides that we shall be making an investment to the extent of the amount of the award of the arbitrators. If the award is for $10,000,000 we shall invest that sum because we shall give stock for it. By making ourselves responsible in perpetuity for the payment of the interest on the debenture stock and the guaranteed stock we are making an investment of $216,000,000. If the award is $10,000,000 our investment in the Grand Trunk railway will be $226,000,000 and it is so much of an investment that, suppose through some calamity the Grand Trunk railway system should disappear from the face of the earth, we would be' losing $226,000,000. If the physical property should disappear we would owe the shareholders the interest forever just the same as we owe the interest on the mortgage on a house after the house has been burned. There is no getting out of it that we are making an investment of over $200,000,000.
Of course, there are on the other side, assets which we must take account of as the hon. the ex-Minister of Finance (Sir Thomas White) said this afternoon. We are not assuming the other liabilities of the company, but by becoming the most interested party in this concern, we are practically assuming the other liabilities because we could not afford to let the road go into liquidation or insolvency. Let us suppose that the $22,000,000 current liabilities, as they appear at page 39 of the booklet, should not be paid, and that the holders of these securities should ask the qompany to be put into liquidation and into the hands of a receiver; the Government could not afford to let the company go into the hands of a receiver because, if it should be sold far below its value, the Government would be in danger of losing the $226,000,000 which it has invested. Consequently, we are in the same position as the man who would take a second mortgage of $5,000 on a $10,000 house. He might very well say, " I am not interested in the first mortgage; I have nothing to do with it." That is true. He is not assuming any responibility as to the first mortgage, but in reality he is responsible for the first mortgage if he wants to save his own second mortgage. We are not assuming the other liabilities of the

company but because our interest goes with these liabilities, because we have to secure the interests of the company and because we have to save the company, we make ourselves responsible practically for the whole of the liabilities of the company. That is my point of view and if I am mistaken I should like to be corrected.


Arthur Meighen: The speech of the hon. gentleman convinces me that he very clearly understands the situation. I do not say that he expresses it quite correctly, but I believe that in his own head it is just as clear as it can be in the mind of any hon. member. While it is not quite correct to say as he says that we are making an investment of $216,000,000 because we are agreeing to pay the interest on that amount already invested, still the very statement of that shows that he understands just what we are doing. We are agreeing to pay interest on that money which is already invested. That differs from investing it in this very important feature that we do not have to find the money and we could not find it to-day without an expenditure of considerably more than that amount. It is much more advantageous to us than if we had to find $216,000,000 and invest it. If we had to find and invest it on a four per cent basis, it would cost us more than $216,000,000. It might cost us about $250,000,000. While the hon. member evinces a clear understanding of the situation he does not put it in a correct way, but I knoiv that he understands clearly that as I am stating it to him now I am putting it in the correct way. As to what he says about other obligations-obligations standing against the properties of the Grand Trunk Railway Company which we are taking over-his conception in that regard is quite correct. They do not become an obligation of the Government, but the Grand Trunk would have to take care bf them in order to protect its own interests, and the Government is the stockholder of the Grand Trunk. What the hon. member has in mind* is quite right. That is the position of the Grand Trunk has been in all these years. It is the position that every road in the world is in. There is not a road in the worljl that owns its properties subject to nothing. Against properties taken over there are perpetual obligations. We are going to be in that position when we take over the Grand Trunk. It is a pleasure to answer any question put by my hon. friend because there is some result in the answer.


Mr. CRONYN:: From the discussion last night I got the impression, which perhaps was an entirely wrong one, that the market price of the stocks of the Grand Trunk might play some part in fixing the value which the Government would be called upon to acknowledge by way of hew guaranteed stock. Reading over the report in Hansard, I am not certain that the inference is correctly drawn, but I believe that certain other hon. gentlemen in the House are under the same impression, and I thought it would be well to have it set right by a direct statement from the minister. To my mind the market prices of these stocks to-day, or six months, or a year from to-day, can have nothing whatever to do with the value of the property. I presume-I may be quite wrong-that the board of arbitration will inquire into the physical assets of this corporation, its right of way, terminal facilities, equipment and so forth, will set up against these various obligations that may exist in one form or another, and will strike a balance on this basis: After these obligations are met what is the equity to be assigned to the various preference and common stocks? It is well known that for .years Grand Trunk stock on the London market has been a speculative counter. The market has been rigged more than once more or less on current newspaper information, and it would be easy, particularly when there is such a large number of shareholders, to cause a violent fluctuation in any one class of these stocks. So that, to my mind, it would be entirely misleading should the idea go abroad that the market price of the stocks "has anything to do with their value.


Arthur Meighen: The view expressed by the hon. gentleman (Mr. Cronyn) is almost identically my own. The market value, in my judgment, if it is to be considered a factor at all-that is a subject for evidence -would be a very minor matter before the arbitration tribunal. It is quite true, as the hon. gentleman says, that market value on the stock exchange is a very poor guide as to what the real value is, because the quotations are influenced by speculative considerations so very largely that it would seem to me it would be next to valueless evidence as to what the stocks were really worth. While that is my opinion, the answer would not be complete unless I added that according to the resolution and according to the letters both of July 18th and October 10th, the arbitration tribunal necessarily must be itself the judge as to



what evidence is and as to what weight is to be attached to evidence when admitted. That is to say the arbitration tribunal is the judge as to what kind of evidence can be admitted to prove value. It would have power to wholly strike out all evidence as to market value, and if it decides that the evidence can be admitted it is the sole judge as to what weight can be given to it. So, while in my opinion, the arbitration tribunal should give very little, if any, weight at all to it, and perhaps should not admit it, that is altogether for it to say- the matter is in its hands, and rightly so.


Jean-Joseph Denis: Will there be an appeal from the award of the arbitrators?


Arthur Meighen: There will be if the award is not unanimous, but only on a question of law. If the other side claims that the arbitrators adopted a wrong legal principle in coming to their conclusion, then they have an appeal to the Supreme Court in the event of the award not being unanimous.


Jean-Joseph Denis: If the arbitrators are unanimous there is no appeal either on a question of law or on a question of fact?


Arthur Meighen: No.


Daniel Duncan McKenzie: 
Mr. ROWELL:: I must confess to a feeling of surprise at the principle my hon. friend (Mr. McKenzie) has laid down with reference to the ownership of property. I have always been under the impression that I owned a house, but I have never held it free from mortgage since I bought it. Notwithstanding that I have never had any doubt about my ownership, nor has anybody else so far as I am aware.


Daniel Duncan McKenzie: Does not my hon.
friend know, as a lawyer, that the legal estate in that house is absolutely in the mortgagee?


Newton Wesley Rowell: I know that, technically, the legal estate goes to the mortgagee.


Daniel Duncan McKenzie: Absolutely.


Newton Wesley Rowell: But that does not Change the fact as to who is the real owner of the property. The, mortgagee has only his claim upon the house, which may be paid when it becomes due. Therefore all that my hon. friend has said amounts to this, that we are buying a property which according to this statement represents an investment in road and equipment of $434,990,999; that there are certain charges and obligations upon that property; and that in acquiring the stock of the company we get the benefit of the equity, that is, the difference between the value of the assets and of the liabilities. That is perfectly true, and no one has said anything to the contrary. There is not a railway on this continent, I do not think there is a railway in Great Britain, that is not in exactly the same situation. I do not know of any railway that has not bond issues outstanding. The Canadian Pacific Railway has such issues. It is the regular method of financing a road. The result is that there are of course these obligations outstanding against the road; but, as my hon. friends, the Minister of Railways (Mr. Reid) and the Minister of the Interior (Mr. Meighen) pointed out so clearly yesterday, in valuing the stock the arbitrators must take into consideration the obligations of the company as well as its assets, because the stock has no value until all obligations are discharged.
If the company were liquidated, all these claims must be paid before the stockholders would receive a dollar. Therefore, in estimating the value of the stock, the arbitrators must take into consideration all the outstanding obligations, and they would find a value in the stock only if they reached the conclusion that, after considering the value of the assets, putting opposite

them the value of the liabilities, there was still an equity in the road which would be represented by the stock in the road, and they would fix the value of that equity. That seems to be a perfectly clear position as has already been outlined by my colleagues. That is the situation in this case. The arbitrators are to determine, after considering the assets and the liabilities, what value attaches to those stocks which give us control of the road, and they must consider every one of the items which are set out in this schedule. My hon. friend has referred to one particular item, and he has questioned whether that asset is worth a hundred cents on the dollar. I do not know the details of that item, but what I say to my hon. friend is that the arbitrators must go into that; they must look into those assets and those liabilities, and evidence will be submitted by the Government with reference to this. The agreement will provide that the Government shall have full access to all the books of the company, and to all its accounts, in order that the Government may prepare its case. In addition, during the period that intervenes between the execution of the agreement and the making of the award, the management of the company will be in the hands of a committee of management, two of the members of which will be appointed by the Government and two by the Grand Trunk, these four to appoint a fifth. Therefore, the Government will have the fullest opportunity to investigate the value of all these assets, every item in the schedule, to investigate all the liabilities, to check them up, to ascertain if they have been fully disclosed and to lay all this information before the arbitrators in order that they may find the value of the stock. Then a further provision has been inserted in the letter, and will be embodied in the agreement to protect the Government against any possible liability cropping up after the award is made. While the Government will have an opportunity of some months to investigate all the books, to check up every liability, to see that everything is fully disclosed, yet, even after the award is made, if they find within three months, when they are in full possession of the road, any liability which has not been disclosed-the matter is referred back to the Board of Arbitrators, which is kept- in existence for that period- for reconsideration, and it will be their duty to modify their award in so far as they feel that this liability calls for a modification. Therefore, the Government has protected

the situation on every point to meet the case which my hon. friend has suggested.
Just one word with reference to the evidence which would go before the arbitrators. My hon. friend has said that he thinks the arbitrators would be bound, I judge from his observations, to determine value on the market value.


Daniel Duncan McKenzie: I said that would be
evidence.


Newton Wesley Rowell: I think it is open to argument that it is evidence that can be submitted to the arbitrators. Personally I do not question that. I think it is open to the arbitrators, as the Minister of the Interior (Mr. Meighen) has said, to receive any evidence which they believe will enable them to ascertain value. But I point out to my hon. friend, in addition to the considerations presented by the Minister of the Interior, why that evidence would be unreliable, why that evidence would not be good evidence on. which to base an award. The price at which you can sell 100 shares or 200 shares or 500 shares of stock on a market is absolutely no criterion as to the price at which you can sell 5100,000,000 in shares. You * may have a market that will absorb a few shares; but if you commence to put tens of thousands of shares on the * market, you completely demoralize it, and the price sinks down, as any one who knows anything of the conditions of a stock market will realize.


Daniel Duncan McKenzie: My hon. friend knows
that you can glut any market of anything.


Newton Wesley Rowell: If you are selling a few shares of stock, say 100 shares, then I will concede to my hon. friend that the selling price on the stock market might toe a very important consideration; but when you are selling shares involving nearly 5200,000,000, you have a wholly different proposition. The price at which 10, or 100, or 1,000 shares might be sold on the market is no criterion of the market price of this larger block in case you put it on the market. What I would submit to my hon. friend is that the real evidence as to the value of the shares will depend upon two considerations; first, th$ value of the assets as against the liabilities, and second, the earnings of the company. Because it is only out of the earnings, present or prospective, that dividends can be paid. Therefore, the question of earnings would be the most important consideration which the arbitrators would be called upon to take into account in determining
the value of the stock, plus the value of the assets and the liabilities. As my hon. friend has mentioned, the arbitrators would be the judges of the evidence to be admitted to enable them to arrive at a determination of value.
Just one or two other observations and I am through, not in answer to my hon. friend, but in answer to an observation of the hon. member for Shelburne and Queen's (Mr. Fielding).


Daniel Duncan McKenzie: I understand the President of the Council stood up to answer my question. His speech is very nice, but I should like an answer.


Newton Wesley Rowell: I understood my hon. friend had finished.


Daniel Duncan McKenzie: I had finished, but I had finished by asking a question.


Newton Wesley Rowell: I was going to answer^ an observation of the hon. member for/ Shelburne and Queen's.


Daniel Duncan McKenzie: And come back to my question?


Newton Wesley Rowell: I thought I had answered my hon. friend's question.


Daniel Duncan McKenzie: My hon. friend must have forgotten what I said, or I must have been very stupid. What I asked my hon. friend was: How much money have we to pay to get a clear title to the physical assets of the road that we are going to buy?


Newton Wesley Rowell: If the Government wanted to clear off the obligations existing, so as to have a road wholly free from any obligations, and that no railway in this country possesses

	,


Daniel Duncan McKenzie: The Intercolonial is absolutely free. Put this road in the position of the Intercolonial.


Newton Wesley Rowell: My hon. friend will find the obligations set out on pages 38 and 39.


Daniel Duncan McKenzie: I am not paid for adding up those obligations, as the minister is.


Newton Wesley Rowell: I am under the impression that my hon. friend is better paid than the minister. I think if my hon. friend will undertake that addition, the compensation will be equal to the work, and he will find all the obligations set out on those pages.


Daniel Duncan McKenzie: That is the best answer the minister will give?


Newton Wesley Rowell: I cannot give any more. The liabilities are ail set out on those pages.


Daniel Duncan McKenzie: Any ordinary man looking over these figures cannot be sure he has .got them right, because things are so mixed up that there is danger of making a mistake, but if we can get the information from a member of the Government we can assume that it is right.


Newton Wesley Rowell: My bon. friend is just as capable as I am of reading English, and perhaps some other language in addition. Take the 4 per cent guaranteed stock, for instance. There is no necessity for our ever redeeming that. All we have to do is to pay the 4 per cent on it, but if we desired to redeem it we would have to pay such a price as the holders would be prepared to accept. We are entitled to redeem this stock at par at any time after a period of thirty years.


Daniel Duncan McKenzie: That is- not what I was speaking of. Take the first item on page 39, for instance, second mortgage equipment bonds. That is against the equipment, I suppose. What would it amount to if we had to pay off that?


Newton Wesley Rowell: My hon. friend will see that the first item of $241,257,000 we do not have to pay. We will have to pay, of course, 4 per cent on whatever amount the arbitrators fix for the first, second and third preference and the common stocks. That is all we will have to pay on these items. The funded debt of $155,000,000 is a permanent obligation. If we wished to retire it, and the parties were prepared to accept par for it, we would have to pay $155,000,000. It may be they would be prepared to take less than par; I cannot say. It is a funded obligation perpetual in its character, bearing a certain rate of interest. Nobody could say what we could get it for at the present time, but there is a provision in the agreement whereby we can retire it at par at the end of thirty years, or any time thereafter if we wish to do so. Then the next item, second mortgage equipment bonds, Northern third mortgage, Canada Atlantic bonds, and so on, amounting to $18,000,000 odd-we could redeem those in accordance with the terms of the securities. The next is an advance by the Canadian Government. That is an obligation of the company to us. The other obligations we coulu retire in accordance with the terms set out on the face of the securities. I cannot add them together without taking into consideration the character of each. You cannot give a total in that sense, because the nature of the obligation is different, as the Minister of the Interior so clearly pointed out this afternoon; but all the information is contained there.
IMr. Rowell.]
Coming now to the observation of my hon. friend (Mr. Fielding) he said Ije believed the people of this country were against the Government going on with this proposal. I notice in to-day's issue of the Toronto Globe a short editorial entitled " Liberalism and Public Ownership," and my hon. friend (Mr. McKenzie) and possibly some other members on the other side may be interested in hearing what the Globe says.


Daniel Duncan McKenzie: It has no effect on me.


Newton Wesley Rowell: The editorial says:
The general feeling of opposition to public ownership in Quebec, which is, largely responsible for the opposition of the Liberal party to the acquisition of the Grand Trunk, is utterly at variance with the feeling of Liberals in Ontario and the western provinces. The people of Ontario, irrespective of party lines, are strongly in favour of the coupling up of the Grand Trunk with the Canadian National system.
I believe that fairly represents the opinion of the people of Ontario and Western Canada.


Daniel Duncan McKenzie: That is the opinion of one man sitting behind a curtain at a little desk in the Globe office. We do not know who he is at all.


Newton Wesley Rowell: Quite so, but as the
paper supports my hon. friends on the other side of the House it is an indication of the feeling in Ontario. This is the feeling in Ontario and Western Canada-I do not profess to speak for the feeling of the province of Quebec


Daniel Duncan McKenzie: The Globe does not always speak for Ontario, I am sorry to say.


Newton Wesley Rowell: No, sometimes it is right, and sometimes it is wrong. In this case I believe it is right.


Edmund William Tobin: What about the Montreal
Star?


Newton Wesley Rowell: The editorial proceeds:
The country hae on its hands a great mileage of unprofitable railways on the borders of settlement which may not in our time earn interest upon the capital Invested. The only hope of preventing a continuous drain of the national revenue for the payment of railway deficits is by the incorporation in the National railway system of a road such as the Grand Trunk, which taps the rich traffic-producing areas of Quebec and Ontario, and has an established long haul traffic between the seaboard and the interior of the United States and Canada.
I believe that statement fairly represents the feeling of the great majority of the people of Ontario and Western Canada, ir-

respective of party. Liberals and Conservatives alike recognize the national necessity of acquiring this road, and are prepared to support the policy of the Government in acquiring it. There are only three possible alternatives. First, the liquidation of the road. The Grand Trunk could go into a receiver's hands as the Grand Trunk Pacific has, that is a possibility, because the Grand Trunk has admitted it cannot continue to discharge its obligations in respect of the Grand Trunk Pacific. I do not believe the people of Canada are prepared for that or desire to see it brought about. Second, there is the possibility of the road going into the hands of the Canadian Pacific. I do not believe the people of Canada are prepared to have their whole railway system in the hands of one corporation, no matter how efficient that corporation may be.


Mr. McCREA:: Why not?


Newton Wesley Rowell: The people of Canada
are not prepared to have the whole transportation system of this country from the Atlantic to the Pacific in the hands of any one corporation and be subjected to the control that that corporation might exercise over the people by controlling all our transportation system. The third course is government ownership, the taking over of this road by the Government. Those are the only three courses open, and the last one is the one in the national interest and I believe has the support of an overwhelming majority of the people of this country.


Daniel Duncan McKenzie: I asked, with the very best intentions and with a sincere desire for information to be enlightened, as to how much we have to pay in order to put this new road, if we are going to acquire it, in the same position as the Intercolonial. I mention the Intercolonial because there is no difficulty in understanding the situation there. The road is owned by the Government and there is no claim of any kind against it. My hon. friend (Mr. Rowell) made a very clever speech, as he always can make, but, as we say in common parlance in Nova Scotia, kept away from the pig as far as he could. On page 39, if I can trust my knowledge of figures, I find _ that we have to pay $504,629,211.93. We have to pay that anyhow before we have the road clear.


Newton Wesley Rowell: No, my hon. friend will
see that included in that figure is all the preference and common stock. There is $116,000,000 of the common stock alone, and the first, second and third preference,
amount in all to about $63,000,000 or $64,000,000. So that you commence with $184, 000,000 taken off. We do not have to pay that. All we will have to pay is whatever the arbitrators may fix as the value of that $184,000,000 or $185,000,000 of. stock. You take that off to start with.


Arthur Meighen: And then take off the current liabilities and the advances to controlled companies. All these things are balanced on the other side. They are just cross entries. Even in the case of the Intercolonial there are current liabilities, but there are current assets against them. The same is true here. There are current liabilities of some $22,000,000, and on the other side current assets of some $51,000,000. So that we do not have to pay out of the Treasury of Canada that $22,000,000. If we wanted to clear the road off, which we could not likely do as the bonds are perpetual, we would have to pay the $35,000,000 odd, the $5,000,000, the $173,000,000 and the $60,000,000.


Frank S. Cahill: What is this item of $43,000,000? Would that include the claim of the Grand Trunk against the Grand Trunk Pacific on account of advances?


Arthur Meighen: Scarcely, because it is an asset.


Frank S. Cahill: I am referring to the claim of the Grand Trunk against the Grand Trunk Pacific.


Arthur Meighen: I do not know what
the details of that $43,000,000 are but I presume it would include any claim provided it was not a set-off. It will also include cash on hand and amounts owing for other than traffic. In a word, the company's gross earnings in a year would be somewhere in the neighbourhood of $60,000,000. At any single time there are tremendous current assets. A detailed statement could be given of the $43,838,000 current assets, showing just what they are. Perhaps it is in the book, but if it is not the statement can be secured.


Frank S. Cahill: That is very important. It is quite an item, and if that $43,000,000 is merely an offset against the Grand Trunk Pacific it would not he considered as an asset in connection with the assets of the Grand Trunk, because there would be no possibility of collecting it. Another item is outstanding traffic accounts, $1,500,000. That would be freight receipts not in yet; but the $43,000,000 could not be current traffic items. It is a large amount. If it

means Grand Trunk Pacific obligations it is of very little value in this transaction, and when you talk about liabilities you must take into account the Grand Trunk Pacific liabilities.


Daniel Duncan McKenzie: 
John Dowsley Reid: The information that
the hon. gentleman asks for I will have for him to-morrow, but I hardly think it would be fair to take the last season's operations in connection with the Intercolonial, the Grand Trunk Pacific and the Canadian Northern and use them as arguments as indicating the position of any of these railways in normal times. During last year all of the railways were subjected to very high operating costs owing to the McAdoo award. The increased cost of labour was very high. It was not only the labour; it was fuel and every item- that one could mention in connection with the operation of railways, and the cost was very much higher than in normal times.
And the freight rates were not increased. In fact, if I remember rightly, part of the time, I think it was last year, as a result of the McAdoo award and other causes, the cost of operating the roads was increased, whereas the freight rates were not increased at all. It would hardly be fair to take the cost of the operation of those roads f-or the past year and on that basis judge what is likely to happen in the case of the Grand Trunk, the Canadian- Northern, and the Grand Trunk Pacific in the future. So far -as the Intercolonial is concerned, prior to the war it was doing very well. The same condition was true of the Grand Trunk and the Canadian Northern, but for reasons I have stated conditions last year were abnormal and it should not be taken as a fair year in discussing this matter.
With reference to the Grand Trunk railway I want to emphasize this point: I have taken the matter up with the president of that company personally and have had him

state in writing the condition of the Grand Trunk Railway system. That letter is as follows:
Montreal, October 16, 1919.
Replying to your Inquiry of this morning: the Grand Trunk Railway system, including both Canadian and American lines, is in excellent physical condition, in respect to track, bridges, and buildings, and will, in the immediate future, require only normal expenditures for its maintenance. The same remarks apply to the condition of its motive power and equipment. The condition of the Grand Trunk Railway system in these respects will compare favourably with that of any railroad, either in Canada or the United States, having the same character and density of traffic.
Yours faithfully,
OSgd.) Howard G. Kelly.


Daniel Duncan McKenzie: Did my hon. friend expect him to say anything else when he was selling the road?


John Dowsley Reid: This statement is in writing over his own signature, and he will have to prove it before the arbitrators. In addition to that, I may say that our own Canadian National railway experts have been travelling over the Grand Trunk and they report in verbal conversations to me that the system is really in good condition and would compare with any of our own systems. It must be remembered that the Intercolonial ran down during the last four or five years for the reason that we could not get rails or ties. Neither could we get the men necessary to keep the road in the condition in which it was prior to the war.


Daniel Duncan McKenzie: So much the worse for government ownership.


John Dowsley Reid: However, we kept the Intercolonial in as good a state as the other roads, which could not get rails either.
With reference to the information that the hon. gentleman has asked for, I can get it for him in a very short time in the morning, and I therefore wish to ask
11 p.m. if he entertains any objection to the committee reporting the resolution so that the Bill may be introduced forthwith. The measure has to go through its first and second readings and then be considered in committee when the matter, of course, can come up for discussion again, but by the acceptance of my suggestion the proceedings can-be advanced. That will not interfere with the getting of any information which has been requested; there is no desire at all to hurry the Bill; I merely make the suggestion with a view of advancing the proceedings.


Daniel Duncan McKenzie: I may say to the minister that I usually have a great deal of

trouble in getting any information after I have allowed him to cross the bridge.


John Dowsley Reid: Not intentionally, I
hope.


Daniel Duncan McKenzie: I allowed the Bill to go through the other day with the promise of the leader of the Government that I would get certain information from the Minister of Railways. I got some of that information, but only about five per cent of wnat I was looking for. Now I am afraid, if I put myself in the same position again and allow the resolution to pass there will not be very much rush in the minister's office to get the information sought.


John Dowsley Reid: The Bill will have to be considered in committee and we shall be exactly in the same position, as regards discussion, that we now are, because the measure contains the same clauses that are in the resolution. I think I can assure the hon. gentleman that I will send a messenger down by twelve o'clock to-morrow with the information he has asked for this evening. Moreover, I will not ask that the Bill be reported from committee until the hon. gentleman is perfectly satisfied that all the information he has asked for, or that he may want at that time, is given to him.


Mr. PELLETIER:: 
Daniel Duncan McKenzie: I want to have a distinct understanding from the minister as to when we may expect the information for which I am asking, and I would like to add to what I have already stated that I think it would be well to put in concise form the real obligations of the road under consideration, apart from the stock altogether, that is, the obligations that appear on pages 38 and 39, and also on pages 51 and 52 of the blue-book which was put into the hands of hon. members yesterday. What is the real amount in dollars and cents of the obligations we are assuming in connection with the other liabilities against the road, should this transaction go through? The minister will remember and will find in Hansard the otheT question that I asked. The minister said that it was not a fair comparison; that those were not favourable years. I am sure that he is submitting his evidence, at all events as far as the hon. gentlemen sitting on your right are concerned, to a favourable and sympathetic jury, and I am sure they will take fully into consideration every element in the facts that can be construed favourably to the minister. Whether the facts are agreeable or disagreeable, whether we are making money or losing money, nothing should be concealed from the House or from the people in regard to the business of the people, particularly as concerns those roads. If the case is bad, we ought to know it; if a patient is sick unto death, it will be well for him to prepare for his eternal rest and know exactly his position. If this country is on the verge of a smash by reason of bad financing, we might as well know it and prepare for the worst. I think it is only fair Ao let us know just exactly how we stand in connection with the information for which I am asking. If the minister will undertake that at the opening of the House to-morrow we shall have that information, I have not the slightest inclination to interfere with the progress of this Bill. Knowing all the time that I am against

it and purpose voting against it at every stand, I do not wish to take up time beyond what is necessary.


John Dowsley Reid: The hon. member is very clear in what he has just suggested, and I can assure him that I will get all the information and hand it to him before the House meets to-morrow; otherwise I will not ask him to proceed with the matter any further. He is absolutely right that the House is entitled to all information in connection with the operation of the roads that he has mentioned, or any other roads.
The information has all been made public, and it is simply a question of getting it from the records. It would take only a few moments' time. I would ask the hon. member if he has any objection to this: He will remember that I gave notice to-day of an . amendment to this resolution, as follows:
That the following proposed amendment he referred to the Committee of the Whole on the proposed resolutions in respect to the acquisition by His Majesty of the Grand Trunk Railway Company of Canada:-
''12. That the Government may make, out of any unappropriated moneys in the Consolidated Revenue Fund, any expenditure necessary in the preparation for, and conduct of, the arbitration proceeding herein provided for."
In the resolution as it stands we omitted to make monetary provision for the arbitration proceedings as we went along, and I therefore gave notice of the amendment I have just read. I am advised by the Deputy Speaker that in order to have this amendment embodied in the resolution now before us it will be necessary to move that the Committee rise, report progress, and ask leave to sit again this day, when I will move:
That the order of the House that the House do go into Committee of the Whole to-morrow to consider a certain proposed amendment to the resolutions in respect to the acquisition by His Majesty of the Grand Trunk Railway of Canada be rescinded.
If my hon. friend has no objection, I now move that the committee rise, report progress, and ask leave to sit again this day.


Daniel Duncan McKenzie: One very serious objection I have to the proposed amendment is that it provides for moneys being utilized by the Government without having first been voted by Parliament. Now we have always fought against that. We. have said that every dollar expended by the Government should appear in the Estimates and receive the sanction of Parliament. The minister will remember that a 
year or so ago he was obliged to withdraw a resolution of this kind and abandon the idea of getting money out of the consolidated revenue fund without it being specifically voted for the purpose for which it was to be expended. That, I think, is the right principle, that no moneys shall be expended except upon a vote of Parliament. The principle of the proposed amendment is that we should give a free hand to the minister to take money out of the consolidated revenue fund without any specific vote, and I am opposed to that.


John Dowsley Reid: Under the circumstances I shall not press the matter further, but will found the Bill on the resolution now before the committee.
Resolution to report progress withdrawn.
Resolution for acquisition of the Grand Trunk Railway system agreed to, on division, reported, read the first and second time on division, and concurred in.
Mr. J. D. REID thereupon move! lor leave to introduce Bill No. 33, respecting the acquisition by His Majesty of the Grand Trunk Railway system.


[Stage Direction]
Motion agreed to, and Bill read the first time.
On motion of Hon. Mr. Doherty the House adjourned at 11.35 p. m.
Friday, October 17, 1919.