HOUSE OF COMMONS STAFF

Mr. SPEAKER:: I have the honour to lay on the Table, for the approval of the House, copies of Orders in Council P.C. 2483, dated October 23, 1920, and P.C. 2652, dated November 1, 1920, in respect to changes in the organization of the Law
Branch of the House; and also, the recommendation of the Civil Service Commission with respect to the compensation for certain positions on the staff of the House; the whole pursuant to subsection (1) of section 45B of the Civil Service Act, 1918, as amended.	-



COMMITTEE ON PRIVILEGES AND ELECTIONS

Right Hon. ARTHUR MEIGHEN (Prime Minister):: Mr. Speaker, I move, seconded by Mr. Reid, that the names of the Hon. Mr. Murphy and Mr. Papineau be substituted for those of Mr. Lemieux and Mr. Devlin on the Select Standing Committee on Privileges and Elections.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Mr. JOSEPH ARCHAMBAULT (Cham-bly and Vercheres) moved for leave to introduce Bill No. 105 to amend the Act to revive and amend the Naturalization Act, 1914.
He said: Mr. Speaker, the purpose of the Bill is to remedy a grave injustice, now existing I believe through an oversight in regard to subjects of the Allied countries who went overseas and fought in the Allied armies. The Naturalization Act of 1914 requires of an alien a residence of five years, within the last eight years, in His Majesty's Dominions, the last year's residence preceding the application for naturalization having been in Canada. At the outbreak of the war, in order not to embarrass aliens who had enlisted in the Crown forces, the law was amended in such a way as to provide that the time passed in such forces should count as residence in Canada for the purposes of naturalization. Paragraph 6 of subsection 2, of section 3 of the Act, to revive and amend the Naturalization Act of 1914, reads as follows:
For the purposes of this section a period spent in the service of the Crown may, if the Secretary of State of Canada thinks fit, be treated as equivalent to a period of residence in Canada.
The service of the subjects of Allied countries in the armies of the Allies has evidently been overlooked, for they do not benefit by this clause, and the consequence is that the Belgian, or the Frenchman, or the Italian who resided in Canada before the war and who had to join the forces of Belgium, or France, or Italy, does not benefit by that service. He has to reside, after
[Stage Direction]
coming back to Canada, another five years, or possibly ten years, according to another amendment of last year, to the Naturalization Act. The time he spent in Canada before the war, or the time in which he was in the service of any Allied army, does not count. Furthermore, this fact does not enable the alien who served in His Majesty's Allied armies to obtain his patent for homestead, because to do so he must be a British subject. A case has been brought to my notice of a Belgian who came to Canada in 1910. He resided in this country four years, and when the war broke out joined the Belgian army, and when he came back in 1919 he had to start all over again. He had to begin the period of five years' residence-and possibly, because of the amendment to which I have referred, it may be ten years-before he can obtain his naturalization papers and have the right to apply for patent for homestead. The object of my Bill is to remedy this situation by adding after the words "Crown Forces" in paragraph 6, the words "or in His Majesty's Allied armies." I think this would remedy a grave injustice which, in my opinion, is just the result of oversight on the pa-rt of the Government.
Motion agreed to and Bill read the first time.

[Stage Direction]
Mr. Tolmie moved the first reading of Bill No. 84 (from the Senate) to amend the Migratory Birds Convention Act.
Motion agreed to and Bill read the first time.	!	I

[Stage Direction]
Bill No. 85 for the relief of Duncan MacDonald Oxley.-Mr. Glass.
Bill No. 86 for the relief of Rose Winifred Smith.-Mr. Fripp.
Bill No. 87 for the relief bf Evelyn Campbell.-Mr. Best.
Bill No. 88 for the relief of Margaret Thorne Acton.-Mr. Sheard.
Bill No. 89 for the relief of Lillian Florence Ansell.-Mr. Douglas (Strath-cona).
Bill No. 90 for the relief of Ellen Greenwood.-Mr. Smith.
Bill No. 91 for the relief of Edna Garnet Rabb.-Mr. Fripp.
Bill No. 92 for the relief of Gertrude Gladys Vernon.-Mr. Fripp.

Bill No. 93 for the relief of Stella Anna Jackson.-Mr. Mowat.
Bill No. 94 for the relief of Mabel Marshall.-Mr. Mowat.
Bill No. 95 for the relief of Margaret Marie Cook.-Mr. Clarke (Wellington).
Bill No. 96 for the relief of Jean Grey Holt.-Mr. Mowat.
Bill No. 97 for the relief of Harry Tolhurst.-Mr. Smith.
.Bill No. 98 for the relief of Rosetta Hood.-Mr. Fripp.
Bill No. 99 for the relief of Albert Edwin Gordon.-Mr. McQuarrie.
Bill No. 100 for the relief of Willie Hopkinson.-Mr. Fripp.
Bill No. 101 for the relief of Mamie Me-Killop.-Mr. Currie.
Bill No. 102 for the relief of Frederick Robert Studffolme.-Mr. Blair.
Bill No. 103 for the relief of Beatrice Osborne.-Mr. Fripp.
Bill No. 104 for the relief of John Ver-ner McAree.-Mr. Fripp.

[Stage Direction]
Bill No. 44, respecting The Western Dominion Railway Company.-Mr. Morphy.
Bill No. 58, for the relief of Hazel Galbraith.-Mr. Douglas (Strathcona).
Bill No. 48, for the relief of William John Bell.-Mr. Tudhope.
Bill No. 62, for the relief of Frederick Harold Walton.-Mr. Fripp.
Bill No. 63, for the relief of Mary Elizabeth Leonard.-Mr. Ball.
Bill No. 64, for the relief of Alexander LaRue.-Mr. Douglas (Strathcona).
Bill No. 65, for the relief of Maria Martin Morel.-Mr. Fripp.
Bill No. 67, for the relief of George Gour-ley.-Mr. Fripp.
Bill No. 68, for the relief of Thomas Edwin William Flower.-Mr. Fripp.
Bill No. 69, for the relief of Royland Stanley Morrison.-Mr. Douglas (Strathcona ).
Bill No. 70, for the relief of Arthur Ebenezer Sims.-Mr. Smith.
Bill No. 33, respecting the "Credit Fonder Franco-Canadien."-Mr. Chabot.
Bill No. 15, to incorporate North American Trust Company of Canada, and recommending that the title be changed to "An Act to incorporate Metropolitan Trust Company of Canada."-Mr. Mowat.

[Stage Direction]
On the Order: Consideration of amendments made by the Senate to Bill No. 14, an

Act to amend an Act to incorporate Gil-mour and Hughson, Limited.-Mr. Fripp.
Mr. BOIVIN:: The hon. member for
Ottawa (Mr. Fripp), who is in charge of this Bill, has not yet been able to submit the amendments to the promoters of the Bill, and is therefore desirous to have consideration of these amendments postponed.
Order stands.
PRIVILEGE-STATEMENTS	BY



MESSRS. LAPOINTE AND MACKENZIE KING

[Stage Direction]
On the Orders of the Day:
Mt.' ERNEST LAPOINTE (Quebec East) :	Before the Orders of the Day are
called I desire to rise to a question of privilege in regard to a statement published in the press which affects very seriously and is a reflection upon many members of this House, including myself. In both the Globe and the Mail and Empire of Wednesday, April 20, apears a report of a meeting held in Toronto which was addressed by a gentleman styled in the report "A. L. Davidson, M.P., for Digby and Antigonish" and who is reported as having made the following statement concerning the leader of the Opposition and his selection as leader of the Liberal party: "The Rockefeller interests of the United States thought it would be a good idea if they could have one of their former employees leader of a nation party in Canada, and they were willing to spend a little money to attain that end," said Mr. Davidson. Down in Quebec there were a number of young men who were willing to go to the Convention and support Mr. King if somebody else paid the expenses.
Mr. Speaker, the statement made there constitutes a foul, mean, despicable slander.
Some hon. MEMBERS:: Hear, hear.


Edgar Nelson Rhodes: I have grave doubt
whether it is competent for the hon. member to rise to a question of privilege with respect to a matter that does not affect himself personally. If the hon. gentleman feels himself aggrieved there is a well-known constitutional method open to him to follow. I hope that the hon. member will not continue in the manner in which he has just expressed himself.


Mr. LAPOINTE:: I need not remind
you, Mr. Speaker, that I was one of those at the convention referred to. I was a member of this House at the time and further I was one of "the young men" alluded to.


Edgar Nelson Rhodes: The point I had reference to was this: if there is any question
of privilege with respect to a matter which very seriously reflects on an hon. member of this House, there is a well recognized method of procedure, and I do not think it would be competent for the hon. gentleman to deal with such a matter as this on the Orders of the Day.


Ernest Lapointe: The hon. gentleman
who is reported to have made the statement is here and he has the opportunity to say now whether he made the statement or not.


Edgar Nelson Rhodes: It would be neither
competent nor desirable to put any hon. member of this House on his trial on the Orders of the Day. I think the good sense of the House will realize that there is a well-recognized method of procedure if the hon. member desires to take further action.


Ernest Lapointe: I must bow to your ruling, Mr. Speaker, but I think the proceeding of which I complain shows to what tactics the hon. gentleman in question will resort.


Hon. W. L. MACKENZIE KING (leader of the Opposition) :: This is a matter which reflects upon me personally and therefore I trust, Mr. Speaker, I shall be granted the opportunity of making a statement at the present moment. If it is permissible to say that the statement which has just been quoted, made by a member of this House outside the precincts of Parliament was made in the knowledge that it was untrue and false, I would say that the hon. gentleman who made the statement made it knowing that it was false and untrue. It is an absolutely false and untrue statement. I have never, at any time in my life, been in the employ of the so-called Rockefeller interests. I was, as the hon. members of this House know, engaged for a time in research work for the Rockefeller Foundation, a philanthropic corporation which has nothing whatever to do with the Rockefeller business interests one way or the other. What I did for the Rockefeller Foundation was research work in connection with problems of industry of public interest and the results of which have found a place in a book published by me entitled "Industry and Humanity," which is known, I think, to hon. members of this House and to the country. That is the only connection I have had at any time with any institution bearing the name of Rockefeller. I say that when any hon. member of this House, or any person in Canada, makes a statement such as this



one which appeared in the Toronto Globe and other papers, he makes it for a malicious and wrongful purpose well knowing it to be false and untrue.


Edgar Nelson Rhodes: I think it is perfectly competent for the hon. leader of the Opposition to say that a statement made with respect to him, and which is a matter peculiarly within his own knowledge, is untrue, but I do not think the hon. gentleman is in order in asserting that another hon. gentleman has made a statement which is deliberately false and untrue.


Mr. C. A. GAUVREAU (Temiscouata) :: He knows it is untrue.


Edgar Nelson Rhodes: For the hon. the leader of the Opposition to make such a statement as the one referred to is going far beyond the amenities of debate, and he would be well advised to withdraw that statement.


William Lyon Mackenzie King: Mr. Speaker, I said what I believed, that is all.


Edgar Nelson Rhodes: The hon. leader of the Opposition is not setting a good example when, in reference to a newspaper report of an hon. member's speech, he makes the statement that that hon. member deliberately stated something false and untrue. I think that remark the hon. leader of the Opposition should withdraw. It is, of course, perfectly competent for him to say that a given statement made with respect to him, and as to which he has special, and peculiar knowledge, is false.


William Lyon Mackenzie King: I stated from my place in this House some time ago in the hearing of all hon. members of this House what my connection with the Rockefeller Foundation was. My statement appears in Hansard, the hon. gentleman in question heard it, and he knows its precise terms. I say, therefore, that it was impossible for him to go to Toronto, or anywhere else, and make the statement Which he did without knowing he was stating something that was not true.


Edgar Nelson Rhodes: The newspaper report in question may be absolutely untrue, and I repeat it is not competent to conduct the trial of a matter of this kind on the Orders of the Day, but it is perfectly proper for the hon. member to say that a certain statement with respect to a matter which is peculiarly within his own knowledge is false and untrue. To say, however, that a certain hon. member of this House made

a statement knowing it to be false and untrue is certainly not in accordance with the amenities of debate or parliamentary decorum.


William Lyon Mackenzie King: If the statement that appeared in the press was not a correct statement of what my hon. friend said then, of course, I bow to your ruling. But if it is a correct statement of what he said, I have not one word to retract.


Mr. LEMIEUX:: Mr. Speaker, I would
say further, that if I were allowed I would characterize this statement as being cowardly.



CHIPPEWA POWER CANAL

[Stage Direction]
On the Orders of the Day:
Hon. CHARLES MURPHY (Russell) :: Mr. Speaker, for the purpose of asking a question, might I direct the attention of my right hon. friend the Prime Minister to a statement reported in the press of last week as having been made in the Ontario Legislature by the Premier of that province. The statement to which I refer related to a report by an eminent engineer, Mr. Hugh L. Cooper, of New York, on the Chippewa power canal, to the effect that publication of that report was, for the time being at any rate, withheld by the Ontario Government at the request of the Dominion Government, and it was suggested that this request was made because of the report relating to an international matter. May I ask my right hon. friend if he has any statement to make to the House with regard to the alleged request.


Arthur Meighen: As I understand from the hon. member, Mr. Cooper made a report on the Chippewa power canal to the Ontario Government. I think it is very unlikely that any request should have been made by this Government to the government of the province not to publish a report prepared on their instructions. I never heard of such a request, but I will make inquiries. I do remember the Premier mentioning something to me about the report, but at the moment. I cannot think why he did mention it.



JUDGE SNIDER'S REPORT

[Stage Direction]
On the Orders of the Day:
Rodolphe Lemieux: Might I ask the right hon. Prime Minister if it is his intention to lay on the table of the House the report of Mr. Justice Snider concerning the Printing Bureau?


Arthur Meighen: I stated nearly a week ago that an interim report had been presented and was being submitted to His Excellency the Governor General. I have not made inquiries since, and I do not know whether it is in the hands of His Excellency or not. Of course, that is where it must go first.


Rodolphe Lemieux: Will my right hon.
friend inquire?


Arthur Meighen: Certainly.



LAKE OF THE WOODS CONTROL

[Stage Direction]
Right Hon. ARTHUR MEIGHEN (Prime Minister) moved the third reading of Bill No. 23 (from the Senate). respecting the Lake of the Woods Control Board.
Motion agreed to, and Bill read the third time and passed.

[Stage Direction]
Right Hon. ARTHUR MEIGHEN (Prime Minister) moved the second reading of Bill No. 80, respecting the Grand Trunk Arbitration.
Mr. F. S. CAHILL (Pontiac) :: Mr. Speaker, before this Bill receives second reading I think we should have some further information from the Government in regard to it. About two weeks ago the Prime Minister laid on the table of the House the correspondence up to April 3 relating to the failure to complete the arbitration proceedings, but there must surely have been some further correspondence culminating in this Bill, otherwise this legislation would not now be engaging our attention.
I took occasion on April 13 to ask the Prime Minister if in his opinion, or in the opinion of the Government, the Canadian people were released from the agreement of March 8, 1920, by reason of the failure to complete the arbitration proceedings, but he did not see fit to give me an answer. I think that before this Bill is proceeded with the people and hon. members should have an answer from the Prime Minister as to just where we stand with regard to this arbitration. It is rumoured that if we drop the proceedings now we will be bound by the agreement guaranteeing the interest on certain debenture stock. On the other hand, it may be argued that if the agreement of 1920 is dropped in this particular it will be dropped in its entirety and that we shall be back to where we were before that agreement was entered into.
155i
That Bill was brought in originally in the last days of the session of 1919, and it was rushed through the House. Then again in the session of 1920 another enabling Bill was brought down, and that also was rushed through the House. Now we find the muddle has been continued, and it is necessary to come to this House with further legislation. But no explanation is given of why this Bill should be gone on with. There is an item in the Estimates of $89,000,000, presumably to be paid to the Grand Trunk stockholders. I am sure the people are interested in knowing just where we stand in regard to this Grand Trunk deal, and I think they and the members of this House should be enlightened on the subject. If we are released from the agreement by the Grand Trunk people failng to complete their case before the arbitrators within the time specified, then it would seem to me that the whole question is open for further negotiation, if it is desired to reopen it. I would like to know from the Prime Minister if it is the opinion of the Government that the responsibility of Canada ceased when the Grand Trunk directors failed to comply with the terms of the agreement in respect to getting their case before the arbitration board. If he feels that the Government is in honour bound to continue the arbitration, he would of course continue it under the original agreement of March, 1920. If that is not the case, the question should be debated on its merits as to whether we want to involve this country any further in railway transactions about which, apparently, we know very little-but we do know we will be called upon this year to pay some $89,000,000 in respect to this transaction on top of other financing that has been done in guaranteeing certain bonds of the Grand Trunk railway.
I would like to know if the Prime Minister thinks Canada can honourably wash her hands of the whole transaction, or if we are in honour bound to continue the arbitration. If we are, we should have an explanation from the Prime Minister, or the minister in charge of the matter, as to just what is the position of the shareholders of the Grand Trunk Railway. I quite agreed with the Prime Minister the other day when he said that they really had no grievance against the Canadian people. I would go further and say that if there is any grievance it is on the part of the Canadian people. The Canadian people have a grievance in that they have

been called upon to arbitrate and pay for a stock that is absolutely worthless. The proper procedure would have been to let the Grand Trunk company finance itself, but the Government saw fit to relieve the company from that obligation. We would like to know just what position we stand in now in consequence of that action by the Government. I might go further and say that the stock which is being arbitrated to-day is the minority stock, not the stock of the owners who agreed with the Government to arbitrate. What position are the minority and the majority shareholders in to-day? Are we still negotiating with the majority shareholders? I think this has been a stock-jobbing proposition from the start. I do not think any great responsibility can be laid on the Canadian people, but I do believe the Government is responsible for entering into these negotiations in the first place. I believe that Mr. Smithers is part of that stock-jobbing proposition. He was quite willing to sell out his interest. He was quite willing to co-operate with the Government in getting the majority stock vote to put through this transaction but he threw the minority shareholders out. Well, I would like to know just what position these people arb in to-day and whether we have any further responsibility in connection with this matter. I think we should have some additional information before we proceed with the second reading of the Bill.


Mr. D. D. McKENZIE (North Cape Breton and Victoria) :: Mr. Speaker, I think
we should have some explanation from the Prime Minister (Mr. Meighen) or from some other member of the Government- the Minister of Railways (Mr. Reid), for instance-with regard to the purpose and effect of this Bill. I say this now because when the Bill gets into copimittee we will be told that we have accepted the principle of the Bill and may not attack it except in matters of detail.
It is well known to the Prime Minister, who was in charge of the proposal in its early stages, that I was opposed to it. I was always opposed to the taking over of this railway and I now have more reasons than ever to be opposed to it. We were told by the Government, particularly by the Prime Minister, who was the Minister of the Interior I believe, that it was necessary to take over this system in order to make the rest of the Government-owned railways a paying proposition. If that could be brought about it would, be a very
fMr. Cahill.1
desirable thing, but we on this side could not see any evidence that that result would follow. Early this session the Minister of Railways announced a deficit for part of the year on operations alone of something like $25,000,000 in respect of the Grand Trunk, the road that was going to make us happy and wealthy. We are now so accustomed to talking in millions and billions that perhaps we do not realize what these large amounts mean. After less than an year's experience we find that we are something like $100,000,000 behind on the whole railway transaction, of which twenty-five millions is deficit in operation of the road which was supposed to be taken over as a source of income. In view of that experience I would be glad to help, if I could, in getting clear of this road altogether and letting it stay with the people who own it. I do not remember very clearly what the terms of the agreement were. The whole transaction was put through entirely against my judgment in the matter and the judgment of the party to which I belong, and so far as details are concerned I must confess that I have not been following the agreement very closely. But if there is any honourable way by which, even at this stage, we can do so, I would suggest that we say to the Grand Trunk people:	Keep
your railway; we have suffered loss in the transaction, but if you think we have been treating you unfairly, take your property back, utilize it as best you can, and let us go our way and take care of the railway properties that we already have. That, Sir, would be my position in connection with this road if it is a position that could honourably be taken.
The purpose of this legislation would seem to be to take charge of the property of the Grand Trunk, whether or not the owners are willing to give it up-in fact, to expropriate it, and take the consequences whatever they may be in a financial sense. I wish to point out that I have grave doubts as to the power of this Parliament to legislate in connection, with the very large section of this railway which is in the United States. I do not, think we have any power to enact legislation ^putting under the control of the Government property which is in a foreign country. I do not wish to elaborate the point, but I do submit that we are legislating against property that is not in Canada and against persons who are not Canadians and not living on Canadian territory. This we cannot properly do. And the same applies to stocks owned by persons beyond the jurisdiction of this

Parliament-residents of England, Scotland, Ireland and other countries than Canada. Those persons may have in their possession stocks affected by this agreement -stocks perhaps deposited with banks or put up as security or held by third parties.
I do not think we can legislate in such a way as to force whoever may be holding these stocks to deliver them up. I am stating these things in a general way, to indicate clearly what my own views are with regard to any legislation which we may pass here for the purpose of acquiring a property beyond the jurisdiction of the Canadian Parliament. This phase of the question was evidently had in mind by the Government during last session, for the Minister of Justice (Mr. Doherty) had a notice on the Order Paper last year the purpose of which was to give to this Parliament extra-territorial jurisdiction. It was evidently the feeling or the judgment of the Government at that time that it was necessary to extend the power of Parliament in that way in order to have this jurisdiction. That resolution, if I remember correctly, was not dealt with last session; no legislation of the kind was passed. If that legislation was necessary last year in order to complete the jurisdiction, it is still necessary, and if it can be brought about, we should have it as a preliminary step to passing legislation as far-reaching as this legislation is intended to be.
I do not propose to detain the House any longer. All I say is this, that the taking over of the Grand Trunk appears to me now as it always has done, a poor transaction, a poor piece of business, something for which we are undertaking to pay huge amounts of money and getting property which is not worth the money. The way to look upon these things is:	What
is the income?-what is the result? The money may he properly invested in the railways, hotels, bridges, coal mines and all that other property which is owned by the Grand Trunk Railway Company, but what is the good of all that unless it is productive? We in this country want to have property that will pay its way and leave some balance for betterments. If the whole transaction would show or indicate in any way that it is going to pay its way, that the people of Canada will not be called upon to put their hands in their pockets to back up this enterprise, all well and good; but there are no such indications to-day. And as I said before, if there is any way of getting clear of this and leaving the property with the people who own it, and getting along ourselves with the very disagreeable burden of railways which we-have apart from this and which we must deal with, I would feel very happy. I believe this Grand Trunk railway which we are talking about taking over is in a starved and wrecked condition. My belief is that the Grand Trunk Railway Company has been for years contemplating this sale and transfer, and the moneys which should have gone into the road and which would have kept it in condition, have been milked out of it in profits to the shareholders and the paying of dividends, in the hope that what has happened would happen and that we would be called upon to make up the deficiency. The Drayton-Acworth report, which we used to read so often in connection with the railway problems of this country, stated that about $50,000,000 would be necessary to bring this road up to a proper standard. That was some four or five years ago. I venture to think that not only is that condition present still, but it is two-fold what it was then or more than that; that to-day, when we are taking over this road, two or three hundred millions of money will be necessary to put it into shape, and after we have put it into shape, we shall likely have the experience which we are having now of having deficits running into twenty-five or thirty millions of money from year to year on the Grand Trunk alone. We have had experiences enough in the past with ventures of this kind to teach us to keep clear of any further such enterprises'if we can possibly do so. I would urge upon the Prime Minister and the Government to give serious consideration to that phase of the subject.


Arthur Meighen: Mr. Speaker-


Edgar Nelson Rhodes: I must direct the attention of the House to the fact that if the Prime Minister exercises his right to reply, the debate will be closed. Therefore, if any other hon. gentleman desire's to speak on this question, he should do so now.


Arthur Meighen: I did not address the House on the moving of the second reading, for the very obvious reason that on the introduction of the Bill I had given a statement that would ordinarily be made on a second reading. That was done then in order that hon. members would have, as early as possible in the debate, the Gov-

ernment's position and the reasons for it.
In the two speeches which have been delivered, there have been addressed to me certain questions which I am asked to answer, in relation to the measure itself. I shall endeavour to do so. I do not need to reiterate the reasons for.the Bill. The agreement that was entered into, by authority of Parliament on our part, by authority of the shareholders on the part of the Grand Trunk, provided for an arbitration. It provided that the arbitration should be completed and the award made within nine months from the appointment of the arbitrators. It stated that that time might be extended by approval-I think the word used is "approval"-of the Governor in Council; in any case it could only be extended by approval of the Governor in Council. That period expired on the 9th day of April., The Governor in Council had declined, and did decline to the last, to approve an extension. Consequently, the arbitration lapsed. That phase of the agreement falls and can only be revived, so far as we are concerned, by Parliament; the Governor in Council has no power to revive it. The purpose of the Bill is to revive it, and having revived it, to place the parties in the position to continue in which they were before; but the Bill provides that the Governor in Council can only revive the arbitration if certain stipulated terms are agreed to by the Grand Trunk. That, very briefly, is the purpose of the Bill. Of course, I know it will be my duty to give in committee any details that may reasonably be asked for.


Charles Murphy: Is action by the Governor in Council necessary, after the passing of the Bill, to revive proceedings?


Arthur Meighen: It is, in this sense, that the Bill authorizes an agreement to be made by the Governor in Council. Consequently, the Governor in Council must act to make the agreement. That is all that is necessary. The hon. member for Pontiac (Mr. Cahill) asked if there was any further correspondence. The only further correspondence-and there is some significance to this fact-is one letter received from Messrs Kelley and Phippen, written on behalf of the Grand Trunk, and my acknowledgement of their letter. Their letter was received the very day that the correspondence was laid on the table; my reply followed a day or two afterward, simply acknowledging the letter. No communication of any kind whatsoever has passed between us since. I will ask for that (Mr. Meighen.]
letter and my reply immediately, and I will lay them upon the Table when we are in committee. The letter consisted simply of a legal argument presented by Messrs. Kelley and Phippen; something to the effect that they had a right to the extension and that they could not hand over possession; also stating their opinion of what the obligations of the Government were. I felt that the whole matter that they urged in the letter had been covered sufficiently in previous correspondence, and that nothing was to be gained by continuing the correspondence.


Mr. FIELDING:: What was the date of that letter?


Arthur Meighen: It was the day that I laid the correspondence on the table. I will have it in a moment. There has been no correspondence since that I am aware of. The hon. member (Mr. Cahill) wants me to state the legal position as to the contract.


William Stevens Fielding: Do I understand my right hon. friend to say there was no correspondence beyond that to be brought down?


Arthur Meighen: That and the acknowledgment. There was other correspondence on other phases, I think, before, but I brought down all the correspondence relating to the extension.


William Stevens Fielding: There is nothing later?


Arthur Meighen: Except the letter I
have referred to, and my acknowledgment of it. That will be brought down.
I have just explained that there was a letter that arrived that day just a few minutes before I laid the correspondence on the Table. I acknowledged that a day or two afterwards. These two letters will be brought down when we are in committee.


William Stevens Fielding: Could they not have been brought down before now?


Arthur Meighen: They could, but I do not think it would have been of any advantage. The matter was covered in previous correspondence.
Now as to the legal position. It is a pretty general question to ask what are the rights of each party in respect of a contract of the extent and importance of this one and of its necessary complexity. Even if it were my peculiar duty, I would rather not answer without very, very careful inquiry indeed, and say just what I thought the rights of each were. Many of my hon.

friends opposite are lawyers; I was going to say, some of them are good lawyers; for the present I will say all of them are good lawyers. They can read the contract. It is our duty to state the facts, and they can come to their own conclusions. Where there may be any doubt I would be prepared to state it, if it would help put at all on any particular point, but it would clearly not be in the public interest that we should here in this committee or in this House make anything in the way of concession to the Grand Trunk by the way of admission of a position where there may be any doubt at all. That would appear to me to be a very wrong course in the public interest. This however, is clear. There is now no arbitration, and it can be revived in this way and in this way only. What the hon. member refers to is this: what is the obligation of the country in respect of the debenture and guaranteed stock. There may be doubt as to that but this I will say. This Government always has been, and is now, ready to take the Grand Trunk system and not request that it get it at a bigger sacrifice than the price of the underlying securities. We have always taken that position. We take it to-day; but if we attempt to take the Grand Trunk by force, to exercise the power of government to take it, or exercise our legislative jurisdiction to do so, whatever that may be, we should, I submit, have first armed ourselves by being able to show that we have 4 p.m. resorted to every possible defensible means to treat the holders of the other securities in absolute fairness. We consider this Bill one step in the way of arming ourselves with the proof that we did seek to do justice in this matter to those men, and not to be driven arbitrarily to assert the powers of government to extinguish those shares. I am sure that no one who has the real good of his country at heart, and values its reputation, would seek to exercise the powers of government before he knew for certain that he had exhausted other means, and put himself in a position to say that there was no just cause for any complaint.
The hon. member appeared to be under the impression that the Government had in some way relieved the Grand Trunk of the obligation to finance the system. That was not done. It may be that some of the correspondence would indicate such a feeling on the part of the Grand Trunk directors and shareholders. I do not know how that feeling arose; I do not know on what they
base that feeling, if, indeed, they have such an opinion.


Charles Murphy: They did set it up.


Arthur Meighen: They did at least
obliquely set it up. The agreement does not relieve them of any obligation to finance their system, not in any way whatever; that obligation still remains on them. Indeed, the Grand Trunk Pacific as yet is obliged legally to operate the Transcontinental. They were not able to do it, and we had to do it or see the thing crash. The same is true in relation to the Grand Trunk. They were obliged to finance their road, and are still obliged under the agreement to do it. They were not able to do it, and the country had to come to their rescue or see the thing dissipate, and take the consequences of that dissipation. That is the only sense in which they have been relieved. They are bound, as far as obligation goes, to finance the system just the same as before.
I have sought to answer questions put forward by hon. members. I do not know of anything in the way of question that was put in the very fair speech that was addressed to us by the hon. member for North Cape Breton and Victoria (Mr. McKenzie). He does, of course, take the ground that we should not have reached out and acquired the road. I am afraid he has not quite apprehended the pyschology of the Administration in this regard. We were not in the reaching-out business; we were simply endeavouring to find the least unfortunate solution of a very grave and complex difficulty into which this country by a course of policy had come. We chose this as calculated best to meet the situation that confronted us; that is all. We were not seeking it; we only got to it by a process of eliminating others that seemed to us to be worse.


Frank S. Cahill: What position do the
Grand Trunk people take now with regard to the arbitration? Would they be satisfied to let the arbitration drop now?


Arthur Meighen: I do not know, but if
this Bill passes, we will have to know, and know pretty soon.


Mr. CRERAR:: I have not the agreement before me, but my recollection is that it contained a provision to the effect that the period of arbitration could be extended by the Government by Order in Council. If that is so, I think it is rather at variance with the statement made by my right hon.

friend a moment ago, that this legislation is necessary to extend the arbitration. I would like some information upon this.


Arthur Meighen: The Government had
power to extend, but no power to revive. You can only extend while the time continues. We could have extended the arbitration past the ninth of the month, if we had acted on or before the ninth, but once it had fallen, then we were of the opinion that we had no power to revive it, that only Parliament had the power to re-establish the arbitration after it had lapsed. We could have extended it prior to the ninth.


Thomas Alexander Crerar: Am I in order in asking another question?


Edgar Nelson Rhodes: I have no objection, if the Prime Minister desires to answer. I hope, however, we shall not get to the position where questions will be submitted as if we were in Committee of the Whole. The debate has been closed by the Prime Minister.


Thomas Alexander Crerar: I think my point will
assist in determining the value of the principle of the Bill. I would like to ask my right hon. friend why the Government did not take action to extend the arbitration before its expiration on the ninth.


Arthur Meighen: Because, as the correspondence shows, we offered to do so on certain terms, with which the Grand Trunk did not comply. The Grand Trunk not having complied with the conditions that were laid down, the conditions upon which we would have extended the arbitration, we stood by our position, and the arbitration lapsed.


Rodolphe Lemieux: Was the promise of a renewal of the arbitration by Order in Council conditional?


Arthur Meighen: There was no promise of renewal at all. It was quite in our hands to renew or not to renew. Under the circumstances we felt that there should be these conditions, which they did not live up to.


Rodolphe Lemieux: While the session is on I prefer an Act of Parliament to an Order in Council. I thought it was not conditional.


Arthur Meighen: We did not have to extend at all.


William Lyon Mackenzie King: What were the terms on which the Government was prepared to continue the arbitration?


Arthur Meighen: They are set out very clearly in the correspondence that was brought down the other day. There has been nothing since to alter them in the slightest degree. In a word it was: Give us possession of the road, and then we will extend.


[Stage Direction]
Motion agreed to, and Bill read the second time, and the House went into committee thereon, Mr. Boivin in the Chair.
On section 1.-Governor in Council may extend time for arbitrators' award.
Frank S. Cahill: Will the Government
now give the correspondence which the Prime Minister has mentioned?


Arthur Meighen: I have sent for it; it
will-be here in a moment.


Charles Murphy: In the preamble, reference is made to section 8 of the Grand Trunk Railway Act of 1920, which reads as follows:
The award shall be made by the arbitrators, or a majority of them, within nine months from the appointment of the arbitrators, or within such further time as the Governor In Council may approve. The unanimous award of the arbitrators shall be final, but should the award not be unanimous, and should notice of appeal be given by either party to the other within thirty days after the making of the award, an appeal therefrom, upon any question of law, shall lie to the Supreme Court of Canada and or to the Judicial Committee of the Privy Council, if leave be granted by the said committee.
Is it intended to include a similar clause in the new agreement to be made?


Arthur Meighen: A subsequent section
of this Bill says, in effect, that the new agreement shall achieve the end set out here, and if it does, then it revives the arbitration, with the same rights to either party as the old agreement provided.


William Lyon Mackenzie King: Will the new agreement be submitted to Parliament for ratification?


Arthur Meighen: It is now being submitted to Parliament for ratification. The new agreement will provide certain things in accordance with this Bill. If Parliament so decides, these things, it can provide or if it desires other things, it can provide them; Parliament has full power-of course, Parliament takes the consequences of any legislation it does pass. We think that this is fair and just, and we ask Parliament to confirm us in that position. When that is done, and we say to the Grand Trunk "This is what we are ready to do" and they agree to it, we could not, after that, have any power to back out.


William Lyon Mackenzie King: Did the old
agreement provide certain consequences if certain clauses were not complied with, and particularly this clause with regard to the arbitration proceedings being completed within a given time?


Arthur Meighen: There was provision
that they should be completed within a certain time, which time could be extended if we saw fit. If they were not completed, then, of course, the Grand Trunk had to take the consequences of whatever Parliament might see fit to do under the circumstances.


William Lyon Mackenzie King: What does
the Prime Minister think now are the legal consequences of the arbitration proceedings not having been completed?


Arthur Meighen: One consequence is that if our proposals are supported by this House we shall have our property in the real sense, in the way we should have it. That is one consequence, and it is a consequence which the directors deem it of the utmost importance to them shall not ensue. The great difficulty in coming to the agreement before was in regard to this very question, and it was finally settled by a compromise with the committee of management. The question having been so settled, we insisted that there should be no delay beyond the nine months provided in the agreement. Had the Grand Trunk proceeded with the despatch which we though it should have shown, I would have thought it our duty to extend the time until the arbitration could be finished, and leave it in possession. in the meantime. But it did not proceed as rapidly as it should have done, and certainly was" not able to finance its business; so we take the position that it should abide by the consequences and give up the system at once.


William Lyon Mackenzie King: As in the case of all agreements, made as a result of legislation, there are certain legal consequences which can be determined in the courts as a matter of right, and which will leave beyond question and dispute any possibility of the parties being in any way imposed upon through additional legislation. Why is it necessary to come to Parliament for legislation now, if the Government is prepared, as the Grand Trunk must be, to take the legal consequences of its own agreement?


Arthur Meighen: The legal consequences in that respect would be-I do not know
whether you could call them legal consequences or not, but the practical consequences would be-that the Grand Trunk would stay there in possession of the road under the same obligation to run it that it always had, but not able to discharge that obligation. Then this Government would be in the position of having to find some means to run the system, and while we were trying to do that possibly another section of the system owned by a subsidiary company would be in liquidation and that section, possibly would be alienated. That is one of the practical consequences that might ensue. We do not want that practical con-sequnece to ensue if we can reasonably avoid it. By this mode we seek reasonably to avoid it; it may have to ensue anyway.


William Lyon Mackenzie King: Why should this road be treated differently from any other road, for example roads in the United States which, for obvious reasons, have had to go into liquidation? Let the Government acquire it then if it wishes to do so, or let other parties acquire it. Why should this road be dealt with otherwise than has been customary with regard to roads that have used any amount of public funds to no advantage?


Arthur Meighen: Of course, in. the
growth of the railway industry, the roads naturally started as small, railways, and with the evolution of capitalism, as the hon. member knows better than I, the tendency has been towards larger and larger units, until we reached, in Canada, say, three very great systems. In the United States they have not concentered as they have in this country'; they have not had as great railway systems or as costly. But while their roads were allowed to go into liquidation, they were isolated and comparatively small railways as compared with the whole United States transport system, and there were not the consequences to be anticipated to the country by permitting liquidation. The very size of the system, the length of its history, the tremendous amount of capital, of labour, and of investment involved-all these things add to the magnitude of the catastrophe in the event of liquidation, not to the shareholders alone, but to all concerned including Canada. But there are special reasons here. Portions of the system-and some of them vital portions if the system is to serve its purpose for this country-are in the United States.


Rodolphe Lemieux: And you seek to acquire them?


Arthur Meighen: What we seek to acquire is the stock that represents them. We feel that we can do that-in fact there is no question at all in the minds of our legal advisers but that we can.	.


Rodolphe Lemieux: Owned mostly in the British Isles?


Arthur Meighen: It is, as far as I know, in British hands, that is to say, it is owned there, but it is Canadian stock-it is a Canadian company although it is owned in the United Kingdom. The purpose of this Bill is to acquire it, and then we hold the system intact and keep it intact. Whether it can be held intact, or whether it is to slide down into liquidation or not, may be a grave question. We may have to consider that if this proposal is not accepted.


William Lyon Mackenzie King: Does not my right hon. friend's argument imply that, no matter what the cost, in order to save it and prevent any possibility of the road going into liquidation, we must continue to introduce new legislation and expend additional public funds?


Arthur Meighen: We will certainly have to expend funds if it goes into liquidation, but we want to avoid that. I do not say we should not do anything at all to prevent it-I say we must be very careful that we do everything reasonable to prevent it. I say that if the time ever comes when the liquidation of the Grand Trunk system is upon us, the people of this country will hold us very strictly answerable that we have done everything that was reasonable and fair that we could be called upon to do to avoid the catastrophe that would ensue. They would hold us strictly accountable for that, and it is in order to answer that accountability that the Government of the day has decided to take this step as one means to avoid it if it can be avoided. What, in effect, does it mean? It simply means "You can^ have the intent of the old agreement-you can have that
but you can have it only on giving us possession. And the reason we insist on possession is this: the way things are going you have no right to remain in possession with our Government supporting the road out of the money of the people of Canada. You have no right to keep away from us any longer the

advantages we sought when the Grand Trunk was acquired." It was not all advantage, there were a lot of disadvantages, but there were certain advantages-the union of the two systems, the working together of the Grand Trunk and the national system, the economies that could be effected only by the amalgamation of each of the systems, and which would be still greater by the amalgamation of the whole. We say, "You have no right to deny them to this country any longer when you are asking us to advance $95,000,000 to run your system." And especially we felt that we had to take that position because the company was laying the ground for an appeal. The Board of Arbitration held that they would not admit evidence of the reproduction cost of the enterprise and taking exception to that ruling the company were preparing for an appeal. Well, the time expired, and if it was extended say three months, after that they might appeal, staying in possession all the while and calling for funds to run the system or let it go into liquidation. Under those circumstances we felt we were justified in saying " You are not through with your arbitration. The power to extend is ours and ours alone, but before we extend we ask you to hand it over." That in so many words is the whole purpose of this Bill.


Mr. SINCLAIR (Guysborough) :: It is
not very clear to me that it is an advantage to have possession of the road at the present junction. As I understand it, there is a large deficit day by day in the running of the road. My right hon. friend has mentioned the sum of $25,000,000 a year. That, roughly speaking, is $500,000 a week. The road is going behind. As I understand the present situation the Grand Trunk is liable for that loss; not the Government, but the Grand Trunk is liable for the deficit up to the time that we take it over. Now we will not be in a very good position if we forcibly take the road from the Grand Trunk and deprive them of any interference on the directorate. We are dismissing their directors, we are taking the road from them forcibly, and when it comes to settle up the question of a deficit that is incurred during the time the arbitration is proceeding, it will not be very easy for us to impose that liability upon the Grand Trunk on account of the fact that we have assumed the liabilities ourselves and the full responsibility of running the road.


Arthur Meighen: I do not think my hon. friend quite grasps the legal position. In

the first place there is no deficit, I am safe in saying, on the Grand Trunk in operation. There is under recent condi tions a deficit when you add together operation costs and fixed charges. We have been called on to finance that. We have been called upon not because the Grand Trunk was not liable-the Grand Trunk is liable-but because the Grand Trunk could not get the money; that is all. There is no difference in that respect before and after acquiring possession: we are the equitable owners of the system to-day. We are the equitable owners of the system under an agreement to purchase. Now all that was withheld was this: in the case of the Canadian Northern acquisition we got possession and went right in. In this case they hold out and take the ground that if we insist on possession at once upon acquisition, and previous to the termination of the arbitration, they would be kept out from access to evidence, that they said was essential, because the fullest access, they said, was needed by them to prove their case before the Board of Arbitration especially as the shareholders were a long distance away-over in England. It seemed they would hold the view very strongly that we had taken their road and shut the doors on them and not allowed them to go in so that they had the same power of direction as before, and they would say: " We put hundreds of millions into this Canadian venture; we have served your people for fifty years; and now you come, and, because we are in difficulties at this time,"-due to causes that they would like to wash their hands of it if they could-"you arrange an arbitration, drag it upon us, and shut the doors and exclude us from our own offices."
* Well, that never had as much force in my mind as it had in theirs. But we finally compromised on the plan of a committee of management. That gave a very, very qualified right of uniting the systems, and running them as one-in fact, we could not run them as one at all. And now we say to the Grand Trunk company: "You have had sufficient time to get your evidence and you have no doubt got it; you have no longer a right to remain in possession and operate a system that you do not really own; you have no right to say to us that this system has to be operated separately from the Canadian National system. We are willing to pay whatever the arbitrators find is coming to you; and, consequently, it is time for you to release the possession of that property."


Thomas Alexander Crerar: Is the Grand Trunk
system at present meeting its operating expenses, and has it done so for the past year?


Arthur Meighen: Oh yes, and more; but not its fixed charges.


Thomas Alexander Crerar: I understand that.


William Stevens Fielding: Has the right hon. gentleman received the additional letter which he referred to?


Arthur Meighen: Yes, I have the letter.


Frank S. Cahill: What great harm does the Prime Minister think might come to Canada in the event of a receivership of the Grand Trunk railway system? If the Grand Trunk railway went into the hands of a receiver, he would issue receivership certificates, which would be a first security on the whole property, and the road would continue to be operated as it is now. The people who put their money into the company would lose some of it, but that is not any concern of ours; if these people made an investment which is not profitable to-day, it is not the business of Canada to take care of them. We have all made unprofitable investments, but we are not coming to the Government to help us. But I cannot see any force in the argument of the Prime Minister that any great calamity would befall the country if the Grand Trunk railway went into the hands of a receiver.


Arthur Meighen: There might be a receiver appointed of the Grand Trunk proper. Then, suppose next week somebody applied for a receiver of one of the American lines that is an essential portion of the Grand Trunk system and of vital importance to this country; where would the receiver get the money required?


Frank S. Cahill: From the public as receiver.


Arthur Meighen: From the public? How would the receiver get money from the public?


Mr. BELAND:: He means the travelling public, I suppose.


Arthur Meighen: He would get all he could from the travelling public, but I am
afraid


Frank S. Cahill: The receiver would sell receivership certificates to the banks, or to the Dominion of Canada if you will, but those certificates would become a first charge on the Grand Trunk system. He

could still sell those securities, for surely they would be as good as or better than our securities against the road, being a first mortgage against the property. The world is not entirely dry of money.


Arthur Meighen: I do not think the'hon. member would buy those certificates after a short time. In the first place, we have had to supply money for the receiver of the Grand Trunk Pacific, and we would have had to do the same in the case of the Grand Trunk.


Frank S. Cahill: We have not had to.
Where does the Dominion of Canada get its money?


Arthur Meighen: Those receivership certificates would be a first charge perhaps on the Grand Trunk proper, but not on the subsidiary companies. Then what happens when a subsidiary company goes into receivership?-who is going to protect and save it?


Frank S. Cahill: The same thing happens.


Arthur Meighen: The receiver would have to sell the road.


Frank S. Cahill: No.


Arthur Meighen: Never?
M. CAHILL: They rarely ever do.


Arthur Meighen: There is no use pursuing that further.


Frank S. Cahill: There is every reason to pursue that question further. Dozens of roads in the United States have gone into the hands of receivers.


Arthur Meighen: And been sold.


Frank S. Cahill: All right. Let them be sold. What is wrong with that? The buyers are not going to pick the road up and take it away.


Arthur Meighen: Very well; but if the road is sold and goes into the possession of another railway, is the hon. gentleman ready to face that contingency? And if he feels that the consequences are light and we can face them with equanimity, I suggest that he read a speech delivered in this House early in the spring of 1914 by the late right hon. Sir Wilfrid Laurier in relation to the consequences that would ensue from the Canadian Northern going into receivership. No one would suggest that the consequences would not be much worse in the case of the Grand Trunk. This system is far more compact and bigger, and the American part of it is far greater

proportionately. In every possible regard a'receivership would be far worse in its consequences. If he will read that speech he will easily come to the conclusion that that statesman at all events felt that it was well worth while to take every means in our power to prevent the consequences of a receivership even of the Canadian Northern.
I wish to read the letter, which is dated April 6-I was right as to the date-and is written by Mr. Kelley and Mr. Phippen to me:
Sir Alfred Smithers has requested us to reply to your cable to him of the 3rd instant. As you are aware, the subject matter of this cable has already been discussed at some length between the Hon. C. J. Doherty, Hon. J. D. Reid, Hon. J. A. Calder and Mr. E. i.. Newcombe, K.C., Deputy Minister of Justice, representing the Government, and the undersigned representatives of the company.
As discussed at that meeting, the arbitration agreement, which was entered into between the Government and the company and approved by a majority of the shareholders and afterwards ratified by an Act of the Parliament of Canada, provides that an award shall be made to determine the value of certain stocks which the Government undertakes to acquire, and that pending the making of this award, .certain powers usually exercised by the directors of the company shall be vested in a special committee to be appointed by the Government and the company, and that the remaining powers shall continue to be exercised by the directors until the final award is made. The agreement further provides that when this award has been made and the consideration paid, possession of the road shall be handed over by the company to the Government through the resignation of the directors and the appointment of a new Board. The agreement and legislation further provide that the holders of the outstanding debenture and guaranteed stocks of the company shall surrender their right to vote, and that the Government shall guarantee in perpetuity the payment of interest on these stocks. This guarantee, it may be noted, is not conditional on the com-' pletion of the arbitration, and would remain binding on Canada even if no award were ever made.
The agreement contemplates that the award will be made within nine months from the appointment of the arbitrators ; but as the length of time required for the completion of so complicated and important an investigation was necessarily a matter of conjecture, power was given under the legislation to the Council to provide any additional necessary time by an extension.
It is unnecessary to discuss the question of delay, which you appear to have raised in the House. Suffice it to say that the company absolutely denies any delay whatever on its part, either in the preparation or presentation of its case. The necessary preparation involved a detailed examination, listing and valuation of all of the physical assets of the Grand Trunk Railway Company of Canada and of each of its subsidiaries, and of the Grand Trunk Pacific Railway Company and of each of its subsidiaries. as well as a critical investigation of the accounts of all of these companies, past as

well as present. Immediately it was known that an arbitration would be held, the accounting was placed in the hands of Messrs. Price, Waterhouse and Company, and the examination and valuation in the hands of Mr. J. B. Berry, a most experienced and competent engineer in suf h matters. Messrs. Price, Waterhouse and Company and Mr. Berry, and their respective staffs, although working continually, and often rive nights a weeks, were not able to complete the information required until the taking of evidence on the arbitration had well started. Since the day set for the commencement of the hearing-February 1,-the company has presented its evidence continuously, with the exception of two slight interruptins; one for half a day and the other for two days, to allow the auditors to complete the last of their reports.
It was pointed out at the meeting above referred to that it was the obvious duty of the Government to permit the agreed award to be made, and for this purpose to grant any extension of time which may be necessary, without seeking co alter the terms of the contract.
It was further pointed out that, under the terms, of the contract, the directors had no authority to .hand over possession of the property entrusted to them by the shareholders and confirmed by agreement with Parliament, without at least consulting the shareholders. Indeed, counsel were compelled to point out to the directors that should they attempt to hand over tli* property without adequate authority, they might be personally liable.	,
At the meeting referred to the undersigned expressed to the representatives of the Government the earnest desire of the directors to meet the wishes of the Government in every possible way, so far as that could be done legally and without sacrificing the interest of the shareholders'. They offered at once to have a meeting of the shareholders called and to submit any changes or modifications which the Government might desire made in the contract to the shareholders for their consideration and approval, and expressed the willingness of the directors to carry through any amendment which the shareholders might agree to.
The Government cannot, by its own failure to extend the time and obtain an award relieve :tself from its accepted responsibilities. Under these circumstances, we submit there is no alternative but that the Government grant the necessary extension to permit the making of the award, and in the meantime, as the agreement with the Government limits the powers of the company to finance its requirements, that the Government should continue as in the past to protect the company from being injured by such limitation.
The attitude of the board can probably best he shown by the following extract from a cable from Sir Alfred Smithers just received by Counsel :
"I repeat we are most anxious to help Govern

ment, and I again beg them to pay April 1 liabilities and thus give us time to do our ut-anost to meet Government consistently with our .legal rights and the shareholders' interest."


Rodolphe Lemieux: Has that obligation
ibeen met?


Arthur Meighen: Not the April 1 obligation; the country was not liable on that. There was a payment on the 14th-I think it was-of April, upon which the company was liable. That was paid. There was
one in New York on a guarantee; that also was taken care of. Wherever we were liable, payment was made, but pending the transfer we have declined to do any Grand Trunk financing.
We have heen advised by cable from Sir A.lfred Smithers that with his approval it is your intention to lay all the correspondence relating to the Grand Trunk matter before the House this afternoon. We are sending you this letter by hand so that the file may be complete when tabled.
Howard Kelley,
F. P'. Phippen.
I replied to that as follows:
The letter sent by yourself and Mr. Phippen, dated April G, was duly acknowledged in mine of April 9. I have now only to add that the position of the Government in relation to the matters referred to in this letter is sufficiently set out in the antecedent correspondence.


Rodolphe Lemieux: I referred a moment ago to the American section of the Grand Trunk railway, at both ends, and my right hon. friend said that the Grand Trunk was a Canadian company and that there would be no difficulty in taking over the stock. Am I to understand that the American sections of the road are controlled by a Canadian company, not by American companies? I should like also to put another question to my right hon. friend. I have followed in the press the reports of the proceedings of the Arbitration Board. I noticed that there were some legal battles, but I could not help feeling that in a case involving millions and a property of immense extent, nine months was not such a long period of time within which to come to a decision. The reason why I mention it is that this morning I read in the Montreal Gazette about an arbitration case affecting the district of Montreal having reference to the famous Cedar Rapids on the St. Lawrence. 'I noticed that the award was made yesterday by Mr. Justice Tellier and by Professor Leleau, involving an amount of $125,000. Now, this is a case involving a large sum of money and an important question affecting riparian rights. The case opened several years ago and the arbitration has been in progress much longer than nine months. If the determination of a case of that nature, involving far less than the Grand Trunk question, occupied much longer than nine months, it seems to me that the Government might have extended at least a little longer the period within which the Grand Trunk Arbitration should be concluded. I know the right hon. gentleman will say that the Government are ready to extend the time, but subject to

their conditions. But does he not think that a limit of nine months is not such a long time for the consideration of a matter so important?


Arthur Meighen: It is a very important matter, one involving tremendous assets and tremendous sums of money, and, I understand, hundreds of thousands of people-


Rodolphe Lemieux: And a great responsibility.


Arthur Meighen: -and a great responsibility; there is no question about that. Ordinarily the Government should not be too exacting in the matter of just how many weeks should be taken to decide it. But the conditions were extraordinary. However, before I go on to that, I want to say that even though the number of shareholders, the amount involved, and the properties involved were immense, I do not think-giving my own personal opinion-that there was anything to prevent the arbitration being completed in the nine months. I say that deliberately after having the advantage of hearing argument between counsel on both sides and officials on both sides. One extra-. ordinary feature of it is this: The Government first of all, having had some experience in the matter, felt that six months would be sufficient. At the request of the Grand Trunk-I think they asked for something more at first; anyway, it was extended to nine; and that extension was made not merely as a start but in the belief on the part of both parties that that time would be sufficient. Now, the Government got its experts-chiefly engineers and expert railway men-and its legal staff, to meet the Grand Trunk's case. We knew that, naturally, there would be no resource and no skill purchasable that the Grand Trunk would not acquire, if they could, to make their case. We procured a legal and expert engineering staff sufficient to get the material and the evidence and finish the work in the time stipulated. If we had felt that more time would be necessary or would be asked for, we would have had a smaller staff and would have incurred less expense. After doing that, it was the conviction of counsel for the Government, and after hearing argument it was my conviction, that no serious attempt was made to complete the arbitration within the stipulated time. I am pretty sure that if the hon. member would read certain reports made to the Government by counsel connected with the case, he would come to that conclusion. I have here a report from Mr. Tilley to Mr. New-
combe dated March 31, and an earlier one dated March 19.


Rodolphe Lemieux: Could my right hon.
friend, without reading the letters, give the purport of them?


Arthur Meighen: Yes, I think I could
give that, subject to correction as to dates. The arbitrators were appointed on June 9. Previous to that it was known that the agreement was to be made, and the Grand Trunk naturally set to work-we know this-to	get their evidence ready.
This was a considerable time before we could do so-about a year before. They were in the offices; they had access to everything. We had to get what we wanted, merely by requisition, by going in and asking for it. Notwithstanding that, when the arbitrators met on September 1, our side was all ready to go on; but the Grand Trunk representatives came totally unprepared, and asked for an adjournment until November. They also requested a physical examination of the system and that request was yielded to by the arbitrators; but when November came, they were no more ready then, although our counsel had been ready in September, and they asked for an adjournment to February 1. It seems very hard to credit the fact that Government counsel, having started preparation many months later than the Grand Trunk, should be amply prepared by September, while the Grand Trunk counsel, who started many months earlier, could not be prepared by September, and had to have an adjournment to November and another adjournment to February. When February 1 came-I do not know that I would be justified in saying how their case was conducted; that would be a matter more for the arbitrators to say- but looking on from outside, and reading the reports that I got and from certain of the evidence that I saw, I was not impressed that the Grand Trunk was animated by any exceeding enthusiasm to expedite the arbitration. I do not know whether the description by Mr. Tilley of the way in which it was conducted was justified or not; I have no word of comment to make on that; but anyway it proceeded until April 9 was reached. And even then the Grand Trunk had not its case in, and not a day was left for the Government to put in its case. Under those circumstances, I think the fair conclusion is that no serious attempt was made to comply with the provisions of section 8 of the agreement in that regard, or, at least, no sufficient attempt.

What are the extraordinary circumstances that justify a refusal to grant an extension? We had agreed at once to a certain portion of the consideration, that is to say, to guaranteeing the underlying securities, and it was the remaining portion that was subject to arbitration. Whatever the arbitrators found, we were bound to pay. Under the ordinary law, the property should have been ours at first. We felt that even though the directors might possibly convince the arbitration board and others that they had proceeded sufficiently rapidly, they could not convince anybody that they needed to stay any longer in possession for the sake of procuring their evidence, and that they should then have consented to give us the property. They were informed in abundant time to have obtained consent from their shareholders; but instead of doing that and meeting the Government in as fair a way as we thought we had met them, they distinctly and promptly refused, gave no consideration to the matter at all. As April 9 approached, instead of an attitude of co-operation, there was more evidence of propaganda in England to create resentment in the minds of shareholders and others against the conduct of the Government. Under those circumstances we did not feel that we should step down from our position, merely because they then came along and told us that the shareholders had not been called; that April 9 had arrived and they had not the power and they argued from that that we were very unreasonable in asking them to give us possession when they had not power to do so. The circumstances are unusual for the chief reason that they were calling upon us to provide the money to finance the road and claiming that we had to do it because of the agreement. The agreement does not say that we had to provide the money to finance the road. The agreement says that we may provide the money if that is essential. The primary obligation is on them. They might have come with a pretty strong position if they had said: "We are running the road; we are taking care of it; there is no reason why you should not extend the arbitration." But they were not in that position.


Rodolphe Lemieux: What about the first part of the question as regards the American companies?


Arthur Meighen: The American roads are run by the directors of those roads, but the directors of those roads are nominees of the Grand Trunk. Some of the roads are held on long-term leases.


Rodolphe Lemieux: The directors are
nominees of the present company?


Arthur Meighen: Yes, and, in effect, the ultimate owners are the Grand Trunk.


Mr. MORPHY:: The first clause at line 31 reads:
The directors.... shall resign or vacate their offices as directors at such time or times and in such manner as may be requested by the Government.
There is nothing to show how that request is to be made or what notice is to be given, and it struck me that that might operate as a cause of delay unless something was inserted to show that, such as the filing of a request at the head office of the company in Canada, or some such wording as that.
In subclause (b) on page 2, there is clearly a clerical error. Subclause (a) reads:
Nominees of the Government shall be duly appointed to the vacancies caused thereby.
And so forth: Subclause (b) reads:
The directors of the company so nominated by the Government and their successors.
That is clearly a clerical error. It should read:	"so appointed." It would be absurd
to speak of men who are only nominated, and their successors. The word "appointed" seems to be required in place of the word "nominated."
I notice the phraseology in regard to the appointment of directors is not the same in subclause (c) as in subclauses (b) and (d). Subclause (c) reads:
That the meetings of the hoard of directors of the company for the transaction of any business may be validly held in Canada or elsewhere.
The other subclauses refer to the "said board" or the "board to be appointed." Therefore, I think the wording would be clearer and the agreement more intelligible if subclause (c) read:
That the meetings of the new board of directors of the company-
Or,
That the meetings of the board of directors of the company so appointed-
And so on.


Arthur Meighen: I will have the points looked into. As to the first, the Governor in Council would have to notify the Grand Trunk at its head office. The Governor in Council would act by Order in Council, and that would be sent at once to the Grand Trunk. That would be the usual way in which the matter would be carried

out. The second point seems to me to be well worth considering', and the third as well. I will have that done before we get through.


Mr. DAVIS:: As regards the point just
raised by my hon. friend (Mr. Morphy), I notice the wording "shall be duly appointed." I presume that means shall be appointed by the Government because by subclause (b) of the agreement the shareholders do not exercise any powers of voting or choosing after this agreement has come into force. The shareholders have abrogated all their powers of action by the agreement.


Arthur Meighen: "Duly" means simply
"in the proper way." If they are nominees of the Government, they could not be nominees of the shareholders. I do not see that "duly" is necessary. I think the only effect of it there is "to be appointed the way nominees of the Government should be appointed." I shall have that point noted too.


Daniel Duncan McKenzie: I have not read the Bill very closely, but if there is a mode of appointment provided in the Bill, they should be appointed in that way.


Thomas Alexander Crerar: The powers which the Government are asking under this Bill are certainly rather unusual. The Government is, in effect, saying that before these arbitration proceedings may be resumed the owners of the railway must hand over the control and operation of the road in its entirety to the Government. I think my right hon. friend the Prime Minister has presented a pretty strong case to the House why that unusual proceeding should be taken. Undoubtedly, we must assume that the Government have been in close touch with the situation. They are familiar with all the circumstances; they have been living with it from day to day in a manner that the ordinary member of this House has not had an opportunity to do, and I for one feel like taking the position that if they say this is necessary in the public interest, the responsibility is theirs, and I am not disposed to put anything in the way of their getting the powers they ask. The whole question is full of difficulties. I am bound to say that I can come to no other conclusion than that there has been a lack of frank co-operation, to say the least, on the part of the Grand Trunk Railway. I think that is a fair position to take. There is no doubt that if we go back over the history leading up to this whole difficulty
[Hr. Meighen.]
the Grand Trunk have, in a very large measure, indeed, their share of blame for the present situation. At the inception of the National Transcontinental and the Grand Trunk Pacific, the Government of the day undertook the consideration of that project, if my information is correct, and my authority is the Drayton-Acworth report, at the instance of the Grand Trunk Railway. Certainly, very generous assistance was given to that enterprise by the Government. It built the National Transcontinental, at a cost to this country of $160,000,000 or $170,000,000. It gave liberal guarantees on the Grand Trunk Pacific, which was the creation of the old Grand Trunk railway. As soon as the National Transcontinental was completed, the Grand Trunk, for reasons which we do not need to discuss here, declined to accept its responsibility of operating that road. It has, since the completion of the Grand Trunk Pacific, sought by every possible means to avoid its obligations in respect of that portion of the system. I am quite within the bounds of fact in making that statement.
It may be said that the proper course to have pursued in this matter was to have let the Grand Trunk Railway go into liquidation. I think there are serious difficulties in the way of that proceeding having regard to the public interest of this country, and I find myself a good deal in agreement with the statement made by the Prime Minister in that respect. If this Grank Trunk system was one company alone, then possibly that way might have been considered, but as a matter of fact, it is not one company; it is composed of many independent companies, linked up together by a system of finance that has gone on for two generations in its administration. Under those circumstances, if each of these individual companies was allowed to go into liquidation, when the whole proceedings were terminated and the liquidation was complete, the result would be that the entire system that has been built up in years would be disintegrated. The National Transcontinental and tire Grand Trunk Pacific enterprise was undertaken for the specific purpose of rounding out the old Grand Trunk Railway system in Eastern Canada. The one was complementary to the other, and I have always felt in respect of this matter that since we have the National Transcontinental on our hands, since by virtue of the guarantees this country gave on the Grand Trunk Pacific that road is also back on

our hands, there was only one course to pursue, if it could be pursued, and that was that the whole Grand Trunk system should be taken over to carry out the original intention of having a national system in its entirety. Under those circumstances, while the way has been difficult, while there have been a great many dark clouds overhanging the whole proceedings as far as its financial aspect is concerned, nevertheless, it does appeal to me that no other course is open to us in the best interests) of this country than by ,every reasonable means to secure control of the Grand Trunk Railway and incorporate it in the national system. Otherwise, we would simply have a transcontinental line, beginning at one end of the country and ending at the other, with nothing to feed it in Eastern Canada and no matter what disposition we may wish to make ultimately of our National Railway system this is vital. I have my own views on that subject, but I shall not give them to the House now except to say that there is no other course open to us to follow but to continue operating these roads as a National Railway system. To those who think we should dispose of the roads and turn them over to a private company, I put the question: What position would we be in if we at>-tempted to sell to a private company a transcontinental railway that began at the Pacific and ended near the Atlantic without any feeders to support it? We would be at a hopeless disadvantage in trying to dispose of it as a business proposition. So ho matter what final disposition we make of these roads, it is essential, indeed vital, that the whole be linked up together in one comprehensive system. While, as I said at the opening of my re-
5 p.m. marks, the Government are ask-in this legislation for powers that are to my mind quite extraordinary, nevertheless, from the .information they have given us, and from their intimate knowledge of the situation which possibly other hon. members cannot have, I feel disposed to put nothing in their way in the passage of this legislation, and, of course, the responsibility is the Government's for bringing this matter before the House.


William Stevens Fielding: I appreciate the very great difficulty of the Government in handling this railway problem, and I confess at the moment I have a great deal of difficulty myself in reaching a conclusion as to what is the best course to pursue. I



REVISED

[Stage Direction]
am rather more anxious to seek light than 'to offer suggestions or to criticise, and anything I say now is by way of offering a point for the consideration of the Government, and not as expressing any adverse criticism.
I am going to ask attention for a moment to the consideration of how this transaction will look in England. Some will tell us that they do not care how it looks in England. I grant at once that it is more important for us to be right, and to feel that we are right, than to consider how they do these things in England. Still, that is a view that ought to be expressed with some qualification, for this reason. In a general way we are anxious to stand well with all countries in the world, and particularly anxious to stand well with England, even in financial matters. I would not have it understood for a moment that I concur in the criticisms that are being offered in England to-day as to the attitude of this Government. I know that English shareholders, perhaps all kinds of shareholders, when they come to deal with the Government are easily persuaded that their condition is one of martyrdom, and that they are being harshly_ treated.^ I know the proneness of the English financial press to get behind the English shareholder and to put the notion in his head that he has a grievance. Therefore, I discount to a considerable extent what is being said today in the English press. I agree with the Prime Minister in this, that we ought to be sure that we stand on safe ground in this matter, that whatever the consequences may be, we will know that an effort has been made to make the best of the situation.
Now what is the point of difference between the Government and the Grand Trunk Company? In reality, it is a very small one. Again, I say, I am not agreeing with the Grand Trunk's position; I am inviting the attention of my right hon. friend to this particular thought, what is the point of difference to-day between the Grand Trunk and the Government? It is a matter of three months' extension. Is not that all?
Arthur Meighen: That might at first
sight appear to be all, but in view of the evident intention to appeal, it might be more a matter of years than of months.


William Stevens Fielding: The agreement of last year allows nine months for the arbitration, and I think there is force in the suggestion of the hon. member for Maison-



EDITION

[Stage Direction]
neuve (Mr. Lemieux), that that is not a long time, after all. I recollect, in the course of the long discussion of this matter, suggesting myself that a transaction of this nature would necessarily occupy a considerable length of time, and I did not think that nine months would be too long. I am not going to enter into the question whether or not the Grand Trunk, generally speaking, have been dilatory or otherwise, but I again point out the inadequacy of nine months. It must have been contemplated that there was a possibility that nine months would not be sufficient, because the Government included a clause taking power to themselves to extend the time. It is evident that they considered nine months would not be be long enough. And when the time came and the Grand Trunk asked for an extension the Government refused. There was a time when the Government, under my right hon. friend the late Prime Minister (Sir Robert Borden), probably treated the Grand Trunk harshly, hut I do not want to go into that. It raises old questions which are not relevant to his debate. But I do not say that the Grand Trunk were treated harshly in the last agreement, which, I think, was more generous to them than to the people of Canada. Nevertheless, the agreement was finally decided upon by the action of this Parliament. The only point of difference that has arisen since the passage of the legislation of last year is the request of the Grand Trunk company for three months' extension of time; there is no getting away from that. And the case will present itself to the shareholders in England in this way: The Grand Trunk Company were allowed nine months, and as that time did not prove adequate, they asked for three months' extension and the Government flatly refused it. Now, that is a pretty strong case t6 present to the English shareholders; it is a forceful case to submit to the editors of English financial papers, and I am a little afraid that when that case is presented in that form there will be a good deal of strong public feeling in England, for the shareholders will feel that the company have been treated pretty harshly. It is a purely technical question whether they should have nine months or twelve months, and it will be felt that the Government has acted rather severely in holding the company rigidly to the nine months. I think that if I were a financial journalist in London I could make a strong case against Canada on that point; and we are concerned that no strong case shall be made against us, notwithstanding what 
some people suggest, that we do not care what the English press or the English financiers say. We ought to care what they say. At present we are not borrowing money in England, but the time is not far distant when we shall be mighty glad 'o do so, and when we shall find it necessary to go to England for the purpose. So that it behooves us to maintain our reputation and our credit. I am not offering these observations in any critical spirit, but I think I have stated the case as it will be presented to the English shareholders. It will be confined to that one consideration. The English shareholders will not go into all the old questions and discussions regarding the Grand Trunk Pacific or any other matter of that kind. They will say:' All these matters were settled by the Act of 1920, and we were allowed nine months; but as the obligation was a tremendous one, and, as the Government obviously anticipated, nine months was not a sufficient time, and the company asked for an extension of three months, which was refused, the Government taking the position that they would grant this extension on condition that the whole property should be surrendered. I am afraid that this is not a strong position for the Government to take in the eye of the English shareholders. I repeat, I do not say this in any spirit of antagonism, because I fully realize the difficult situation in which the Government find themselves; but I do ask them seriously to ponder this particular thought.
Mr. NESBITT:: I should not like to prejudice the English shareholder or any other shareholder in connection with any property in which they may have invested money in Canada, because I should dislike to have my own investments prejudiced by the Government. I disagree, however, with the suggestion that we are refusing to carry out the arbitration. We simply say that if an extension of time for the arbitration is to be granted we must have possession of the road. Why? Because the road is being managed now partially by Government representatives and partially by representatives of the Grand Trunk, and it strikes me that the situation is a good deal like the manager of a business who knows that at the end of three months or six months his management will cease. He naturally does not look after the interests of the business as he would if he knew that at the end of six months his salary would be increased instead of his services being dispensed with. So that it is absolutely vital that the Government

24G1
should take over the road. I entirely agree with my hon. friend from Marquette (Mr. Crerar), that it is useless having these other roads as national roads, without the old Grand Trunk as a feeder, because the original intention was that these roads were to be operated by the old Grand Trunk. The intention as regards the building of these other roads might have been all right, but in my judgment the time was inopportune. That, however, does not affect the present situation, and I say that to complete the national roads we must have the old Grand Trunk lines as feeders; otherwise we shall have a national road with one end in the air, so to speak. Now, we are not demanding that the Grand Trunk shall sacrifice anything in the world. Surely in nine months they should have all the papers and documents, all the facts and everything that is possible or that can imaginably be necessary, to complete their arbitration. Because, in the first place, they themselves are in possession of the facts. As the Prime Minister has pointed out, the Government are the ones who are at a disadvantage in the collection of facts in connection with the arbitration, and that statement seems very reasonable to me. The Grand Trunk themselves had all the facts in their possession, and there was nothing in connection with the whole case that they could easily get hold off. Surely, therefore, they do not want more time than nine months. We do not ask them to sacrifice anything in the arbitration; we only ask them to hand over the road to Government management in the meantime, and we shall continue the arbitration. As to letting the roads go into liquidation and appointing receivers, we should have applications for receivers from every one of the subsidiaries of the Grand Trunk-


An hon. MEMBER:: No.


Edward Walter Nesbitt: That would be the case, and what a fine mess we would be in before we got through. There would be no benefit to the lines we already own, and I repeat that we must have the Grand Trunk as it is now, to complete the Transcontinental and the Grand Trunk Pacific. The old Grand Trunk touches nearly every hamlet in Ontario, and it would be a very valuable acquisition to any one who could properly manage a railway. I have always been an opponent of Government ownership of railways and of everything else, but I did support the taking over of the old Grand Trunk, because it would complete our system of national railways. The Govern-
156i
ment, I think, have been perfectly reasonable and generous in their treatment of the shareholders of the Grand Trunk, and it is nothing but absolute good reason and common sense to ask them, if the arbitration is to be continued, to hand over the road to Government management in the meantime.


Mr. EULER:: I would ask the Prime
Minister a question, which possibly he has already answered. So far as I am personally concerned, the information would assist me, to some extent at least, in arriving at a decision. That question is, whether the fact that the period of arbitration has exceeded nine months does in effect vitiate or render voidable the agreement that was made when it was first decided to acquire the Grand Trunk? If there is any likelihood that the agreement is rendered void or voidable, then we might have to decide whether we shall continue with the arbitration under the conditions of this Bill, or whether the road shall be allowed to go into liquidation and into the hands of a receiver, as has been suggested by one or two members-a procedure of which I, personally, do not approve, for the reasons that have been given by the hon. member for Marquette (Mr. Crerar) and the hon. member for North Oxford (Mr. Nesbitt). I agree with them that in order to make the national system a success it is absolutely necessary that we shall have the Grand Trunk Railway system as well, but the matter might be debatable on the ground as to what action should be taken now- whether the road shall be allowed to go to the wall, if you like, and the Government later acquire it if it can, at whatever price it may be able to get it at, or whether we shall go on with the arbitration as provided for in the Bill.
The hon. member for Shelburne and Queen's (Mr. Fielding) has raised another point, that it might be well to extend the period of arbitration for three months. Personally, I am not in sympathy with that suggestion. It seems to me that the investors in England, the holders of the bonds, the holders of the underlying securities, are already absolutely protected because the Government has already agreed to take over those liabilities. As to the arbitration of the common stock it does not seem to me that prejudices any one very seriously. My own opinion at the time it was agreed to arbitrate was that the Government made an error in this way-that we should have arbitrated all the securities

of the Grand Trunk, and not merely the stocks which are now under arbitration, and it was for that reason, and for that reason only, that I voted against the Bill at that time. I was in favour of the acquisition of the Grand Trunk, hut I did feel that under the conditions, seeing that the whole proposition was not to be arbitrated, the people of Canada were likely to be called upon to pay too much for the railway, and I am still of that opinion. As to the shareholders-outside of the ordinary holders of the underlying securities-I cannot see that they have any very good ground for objecting, in view of the fact that the Government is actually under the necessity of supplying funds. It seems to me it is only fair that the Government of Canada, who are going to supply large sums of money for the carrying on of the railway, might very well demand that the system come under their control. That is my position. I would like to know from the minister whether, in his opinion or in the opinion of the Department of Justice, the agreement itself could possibly be voided by reason of the delay in the completion of the arbitration beyond the nine months originally fixed. If there is no possible escape from it, then I can see no reason why we should not go on with the Bill.


Arthur Meighen: I gave an answer to
the question, but I do not think the hon. member was present at the time. There are many legal questions that may be put

many that I would not like to take the responsibility of answering in any way. But even were I to assume that responsibility, there are very many as to which one cannot answer "yes" or "no." The hon. member asks: Does the agreement stand or has it fallen-has either party to it any obligations now? Well, in respect to the arbitration, which was the main purpose of the agreement, it has fallen. I give that as my opinion. There can be no further arbitration, without the intervention of Parliament, and there can be no further arbitration resting on the foundation of the agreement alone.


William Daum Euler: May I ask the Prime
Minister this further question: should the Government decline to continue with this Bill what would be the outcome?


Arthur Meighen: There can be no further arbitration.


William Daum Euler: The whole agreement
would be void.


Arthur Meighen: Now, I am coming to
that. The arbitration was the main purpose of the agreement. In such a contingency as the hon. member suggests the agreement is at an end, there can be no more arbitration. Now is there any section of the agreement, or any portion of it, that still is valid-that is to say is there any obligation on either, party, aside altogether from the arbitration, based.upon the agreement? Well, the Grand Trunk claims there is, as seen by the letter which I read. It claims that the Government guarantee of the debenture and guaranteed stock-practically all the mortgage securities-is valid, anyway, whether the arbitration falls or whether it does not.


William Daum Euler: Will my right hon. friend pardon me? Do the Government not practically admit that, by their action in having paid certain obligations since, the period of arbitration has expired?


Arthur Meighen: No, the Government
does not admit it, but takes this position. It has always been ready, and is ready today, to take the road at the price of those securities-always ready-consequently, the question does not arise; at any rate we do not admit it has arisen in such form that we need dispute it, and we feel that it is better for the credit of Canada that we should pay those obligations because, at least, it might be argued that we are liable anyway. Nor do we shun the liability; we are quite prepared to take the road at that price. To shun it would mean the sacrifice of some hundreds of millions of money- perhaps I should not say "hundreds of millions," but a hundred of millions of money -that has been invested in the road and has rendered service to the people of Canada. We have not suggested getting the road at any lesser price than that. The hon. member says we should originally have put in arbitration these underlying securities as well as the preference and common stocks of the company. But under the circumstances, the Government felt it was its duty to acquire the whole property. Suppose that property, instead of being a railway system, had been a farm and there was a mortgage against that farm of, say, $10,000, and we said to the owners, "We will take that property and assume the mortgage and we will arbitrate with you on the equity of redemption. We will arbitrate with you as to what we will pay over and above that mortgage." We have done just the same here.


William Daum Euler: But you would not take a farm that was not worth as much as the mortgage?


Arthur Meighen: We do not suggest
taking the property at less than the value of these underlying securities; we did not think there was any need of doing so at all -we would not have been any further ahead. What we promptly said is this: "We will assume these underlying securities but we will arbitrate as to the value of the equity of redemption represented by the three preference stocks and the common stocks"-on which there had been placed a value of some hundreds of millions of dollars. Surely that was a pretty reasonable position?	[DOT]


William Daum Euler: The mere fact that such a sum of money had been placed in them does not imply that the value is still there.


Arthur Meighen: Yes, I know that it does not imply it, but we all know the Grand Trunk railway, and we all know the advantages to this country to have that system which is so vital to our own commercial existence, and we did not think it would add very much to the reputation of this country if we said to the owners of these securities-men who started together seventy or eighty years ago and had put their money into this railway system in Canada-if we said to them "No, we won't even assume the underlying securities, we won't even admit your property is worth that, but we will put them in jeopardy under arbitration as well." We did not think it would be wise to do that, and in order to bring about an amicable arrangement along the desired lines we said, "We will assume these securities and arbitrate about the rest." We are taking that position consistently still.


Mr. CAMPBELL:: Do we understand
then that if this arbitration falls down completely the whole deal is off, or if it is not off that the Government will get the property at the price of the underlying securities?


Arthur Meighen: If the arbitration falls down, then, as I see the circumstances before me, if nothing else takes place the whole property marches right into liquidation with all the consequences attendant upon that. I do not say that nothing should be done to protect the property and hold it intact and not let it go into liquidation, but I do say that before this Parliament undertakes to do that we should seek to
carry out the intent of the original agreement, we should exercise every means in our power to put it out of the power of the holders of these securities to say we treated them unfairly. But I believe that something could be done which is well within the authority of Parliament to do, to see still that the dissipation and all the consequences of liquidation, as it would take place under the present law, did not ensue.


William Stevens Fielding: Would the right hon. gentleman-


Arthur Meighen: I should have answered the hon. member for Shelburne and Queen's, but the other questions intervened. The hon. member apprehends that there may be some cause of complaint on the part of owners of Grand Trunk stocks, in that although they had made an agreement providing for a nine months' arbitration, and in that the agreement contemplated the possibility of an extension, yet they have been denied an extension of three months, that being all that was applied for. Now,
I do not think they have any cause of complaint at all. I fully agree with the hon. member for Shelburne and Queen's that it is of the utmost importance to this country to be sure that we are quite scrupulous in our dealings with the Grand Trunk shareholders. I also thoroughly understand this, that we are very likely to see the matter from our point of view instead of theirs. I realized that very fully when I came in contact" with Grand Trunk directors in England, in 1918. They look on this whole situation from an entirely different standpoint-they are away off somewhere on what does not seem to me tenable ground at all. But knowing we are at a different standpoint from theirs, it is doubly important that we be even more than usually scrupulous in regard to our treatment of those shareholders.	[DOT]
Now, the way the Government argued the matter is this. It is true the Grand Trunk company only intimated a need for a three months' extension. It is also true that the whole arbitration might have been over in the three months. But several other factors of the problem came up. First of all, and very important, the Grand Trunk directorate found themselves unable to carry out their primary responsibility to finance the system, and they were under the necessity of continually calling upon the Government to furnish moneys to hold their system together. Secondly, they said to us: " Yes, we are only asking for three

months, but we intend to appeal this case. We tell you right away that we are going to take it to the Supreme Court, and if that does not satisfy us we are going to take it to the Privy Council." What does all that mean? It means three months with them in possession of the road, and in a position to fix salaries and everything else as directors of the system can do; and when the three months are up, suppose the arbitration is not over? Then they will want another extension. But suppose it is over, and the award is made? They have their appeal entered, and before it is finally determined it might be two years longer. In the meantime they are in possession of the system of railways for which the country has paid in large measure, and which is equitably ours, and they are in a position to dictate everything-and it is a great deal-connected with the operation of a great railyaw system. We thought the time to speak was now. The system should be in our hands to-day. If the three months expired and the award were given, it would not be in our hands, for we then would have to wait for the determination of the appeal that followed the award.


William Stevens Fielding: Might I pursue that thought for a moment more? I have carefully refrained from expressing any opposition to the meaure or any adverse criticism. I have tried to put myself for reasons that I have stated, in the position of the British shareholder-not in respect to the unreasonable complaint which very often English shareholders will make regarding colonial investments or investments in overseas countries, but in the position of the reasonable shareholder; I am trying to see how he will look at this thing and how he will present it to his fellow shareholders and to the English financial public. Now, my right hon. friend says that the Grand Trunk are going to appeal. Well, that is not a ground for complaint. The agreement gives them the right to appeal.


Arthur Meighen: Correct.


William Stevens Fielding: Why should we complain if they exercise all the rights that the agreement contains, and say to them: We are going to take your property from you because you have the right to appeal. Their answer is: "Sir, that is what we contracted to have. You have no right to complain. All we ask is fulfilment of the agreement. We ask it in this case not' only touching the appeal, but we say your own agreement contemplated that you

should give us an extension of time. You evidently contemplated you were not going to complete this arbitration in nine months, and you make provision for extension by Order in Council." I am putting myself in the position of the English shareholder. He will be able to say, with force, I am afraid: "All we asked was what the agreement contemplated by the extension. We asked for three months' extension. There is the agreement which contemplated that we might have an extension. But your Government says: No, we will only give you that three months' extension if you give us possession of the property at once." My hon. friend for North Oxford (Mr. Nesbitt) argues that it is of vital importance to have the property. Is it vitally different whether you get the property in nine months or in twelve months? An argument of that nature would have applied very well to taking the property in the beginning. If, instead of making arrangements, the Government had provided by their agreement to take possession of the Grand Trunk at once, it would have been the more logical position. They could have said: We have arranged the finances, and you will get your money; meanwhile we get possession. It would have been a stronger argument then than to-day, when you contemplate leaving the system in their hands until the arbitration is completed. Again I repeat, I am not saying this in any adverse spirit;
I am trying to look at the position as would the English shareholder-if he is reasonable; he is not always reasonable; many of the English financial newspapers are unreasonable; and when a shareholder of a Canadian company takes his grievance to them they magnify it to the disadvantage of Canada. So long as we have a good case I am content, but I am afraid the English shareholders can make a stronger case on this particular matter than I would like them to have.


Mr. BRISTOL:: May I ask my hon.
friend if the Grand Trunk are asking the Government of Canada to advance millions of dollars, something that was not contemplated when the agreement was entered into?


William Stevens Fielding: I think it would have been better if the Government had based their action on the fact that they would refuse to finance the company. I think the demand for immediate possession without extension of time for the arbitration is rather a weakness; but if they had said:

"We will give you an extension of time, but we will not give you any more money,"
I think they would have taken a very much stronger position than they did take.


Mr. MO  WAT@: It must be remembered in dealing with this case that we are dealing on behalf of Canada with very adroit and powerful negotiators, and unless the course the Government intimate they are going to take is wrong, it seems to me that, generally speaking, we should back them up. So far I feel, and I think the people of Canada feel, that Canada's case has been ably conducted by the ministers in charge, and I think that very fact should make us go slow in limiting them in the course which they now tell us they think is proper.
It must be remembered that this agreement with the Grand Trunk following the legislation was one of compromise-it must necessarily have been so. This very clause providing for arbitration and allowing the Grand Trunk to remain in possession of their property pending the arbitration was, as we were told last year, put in only on the very strong pleading of the Grand Trunk itself, because its directors said: "We cannot conduct this arbitration to our advantage or with the success we are entitled to if we have the property taken out of our hands." As a matter of fact, the Government could have taken the property at that time and let the arbitration go on without it, but in giving away here and taking as much as you can there -the usual course of negotiations between astute negotiators-the Government gave way on this particular point.
Now, I do not agree that there is anything here of a harsh nature as is referred to by my hon. friend from Shelburne and Queen's, I do not think there is even a suspicion of it, and I do not share his feeling that the shareholders in England have any cause for criticism or dissatisfaction. Nine months is a long time to prepare for an arbitration. It has been said here, and there is no contradiction of it, that for a year, or perhaps more than that, the Grand Trunk was getting ready for this very thing. In addition to that, we have the fact that some months ago the Government intimated to the Grand Trunk that time was passing and that the arbitration would have to fee terminated on the 9th of April. But up to the time this notice was given-I think it was in January-practically nothing had been done; everything had been left at loose
ends. I do not know whether it was by design or through carelessness. I do think that the English investors and shareholders, who are by no means fools, will find out where the fault was, and when they come to the end of their investigation they will not criticize the Government of Canada. The company have themselves to blame if they are in default. As the Prime Minister said, they must have been dilatory or they could have been well on with their work and have had it concluded by this time. It was never necessary that they should have the property in their hands pending the arbitration. The stock, which represents the property, belongs to Canada; the system itself was left with the Grand Trunk as the result of a compromise which they demanded. I think, therefore, that there is nothing harsh in the Government's action. I am not disposed to be influenced by propaganda in England. The cleverest propaganda carried on in business is that which is carried on in England. They have their important newspapers, the editors of which are clever, successful business men, and the moment some difficulty is seen there is a flood of comments, well printed and well edited articles, appearing in these papers, to influence public opinion. If we are sure we are right, we should not bother ourselves about what is said by the English newspapers in regard to this matter. This afternoon I see a despatch quoting the view of no less a person than the financial editor of the Times, who is right at the pinnacle of newspaper ability in the Old Country. The despatch says:
The financial editor of the Times understands that the Grand Trunk Railway Board have decided to give favorable consideration to the proposals contained in the new bill before the Canadian Parliament for the acquisition of the. railway, provided certain conditions in connection with the arbitration proceedings are fulfilled. Presumably, says the Times, the transfer of the control of the railway to thfe Canadian Government, which has shown a considerable capacity to assimilate railways in difficulties, would mean that the Canadian Government would find the money to pay the interest arrears, and take steps to assure the resumption of the arbitration proceedings without delay.
There you have the whole thing; the moment they are met with firmness and ability, there is indignation, but as the financial editor of the Times says, there is evidently a feeling now of willingness to come to terms. But the English shareholders will be in no way prejudiced by this Bill, because the arbitration can resume at once. It came to an end, not at the

instance of the Government but at the instance of the arbitrators themselves. Sir Walter Cassels ruled that the arbitration was bound by the terms of the statute, and in that ruling his colleagues on the board concurred. So we should put this legislation through, enabling us to resume negotiations with the company, and we can do so without tlie slightest feeling that any injustice is being done.
The member for Pontiac (Mr. Cahill) asked why we should not let this system go into the hands of a receiver. Now, to the timid and over-cautions people of the country, to whom, I suppose, my hon. friend and some of his colleagues on the other side wish to appeal as part of the political end of these negotiations, that is a very good argument. These people say: Why should we assume ownership of this system? Let it go into the hands of a receiver. But what is a receiver? A receiver is a person appointed by a court to take over a property pending the satisfaction of the debt by the sale of the property. Sometimes shareholders themselves appoint one person or a committee of shareholders to take over the property, as they are entitled to do under their bonds, and that is sometimes called receivership. But we must take care not to use the word "receiver" loosely; it involves court action. Now, what is the position of a creditor in dealing with the Grand Trunk system? It must be remembered that the Grand Trunk system differs very widely from the Grand Trunk congeries of companies. The rights of the shareholders against any one of the - companies making up the Grand Trunk system exist under their bond. I have not before me the terms of the bond mortage which is the security for investment in the case of these different companies, but I should be very much surprised if it con-'tained any provision for a receiver. Why? Because only the court can appoint a receiver. The only way that the shareholders can satisfy themselves under the bond mortgage is by taking over the property, provided there is a clause to that effect. What happens, in this case? They appoint a committee of the shareholders to take over the property and manage it, but there is no such thing as a receiver. If instead of taking over the property they went to the proper tribunal and asked that the bond obligation should be merged into a judgment obligation, then they could ask the court to appoint a receiver temporarily, to hold the property until the judgment was satisfied by execution and sale. But it 
is not the system that falls into the hands of a receiver ; it is each particular company making up the system. You would have the court dealing with the companies, putting each company into the hands of a receiver for the time being and gradually proceeding to sell the property. Then we would have the companies dissolved and broken up, and we would have a rival company which desired one particular part of the system to be sold under the judgment of the court against one of the companies, making a bid, acquiring the line and destroying the system as a whole. Canada would suffer if such a course were pursued; the Government must guard against having the Grand Trunk system brought to an end piecemeal in that way. When my hon. friend speaks about putting in a receiver, as is sometimes done in the United States, he must bear in mind the difference between the laws of the United States and the laws of Canada and the difference between the wording of the different bonds. While it is true that receivers have been appointed in the United States for bankrupt railways, almost always it has been the result not of antagonism, but of agreement between the directors, the company itself and the shareholders. So it would be unfair to assume that we could put these companies in the hands of a receiver. Receivership is a temporary thing, to protect the property until judgment can be settled by sale. By no means could the Grand Trunk system be operated under a receiver for more than a very temporary period. It would be suicidal for us to submit to temporary management through receivership.


Frank S. Cahill: The hon. member speaks of the bonds. Can he tell me of any terminable bonds issued by the Grand Trunk?


Mr. MOWAT:: I have not them before me. If I had been prepared for this, I would have looked the matter up and would give the hon. gentleman the best answer I could. I am speaking of the ordinary bonds.


Frank S. Cahill: There are no ordinary
bonds.


Herbert Macdonald Mowat: I presume they have all a fairly similar character. I am talking now of what is to be done in case of default by the Grand Trunk system, which default means the Grand Trunk defaulting by its different companies. It would be a dangerous thing to sell each of those different companies at one time, because you would

only have a temporary receivership which my hon. friend seems to covet or desire or believe in. The ultimate and inevitable result of proceeding's under a bond mortgage is the sale of the property, unless the bondholders take the property over themselves, and that is very seldom done, because the result of management by bondholders of commercial institutions has been disastrous on this continent, perhaps ever since such management has been attempted. No committee of bondholders has ever been able, so far as I can remember, successfully to run a railway. Therefore, we must bear in mind that the result of action by bondholders of the different companies will mean sale of the different companies separately. There would be offers for some of the companies which would be useful to other and rival railways, and the other companies composing the system would remain inactive for want of buyers to conduct them. We cannot go into this whole question without remembering that the Grand Trunk is a system and not a company and that, being a system, it must be protected as a system. Therefore, it seems to me that this proposed legislation, which is not unjust to the Grand Trunk, but which will have the effect of bringing them to the very point of negotiation which is indicated in the Times article printed in to-day's papers, is the wise course to take at the present time.


Charles Murphy: Having heard from the fount of wisdom, whence the hon. member for Annapolis (Mr. Davidson) drew the inspiration for the speech which he delivered at Toronto a few days ago, and which was adverted to this afternoon by some hon. members on this side-a speech, I understand, calculated to secure a Tory re-nomination for the hon. member for Parkdale (Mr. Mowat)-may I be permitted to return to a practical feature of the issue that we are discussing? One of the points dealt with by the Prime Minister (Mr. Meighen) might be made more clear to the committee if he would have the goodness to address himself to it again for a moment. The period of the arbitration and the time for making the award expired on April 9. The right hon. gentleman has read to the committee this afternoon correspondence not included in the file originally brought down, showing that on April 6 the right hon. gentleman and his Government had in their hands what was practically the ultimatum of the Grand Trunk Railway Company with
reference to the arbitration. May I inquire why, immediately upon the receipt of that correspondence, action was not taken to extend the time for the arbitration?


Arthur Meighen: Because the Government does not necessarily yield when an ultimatum is presented. The letter of April 6 offered no new material to change the position which the Government had taken. In fact, the Government does not by any means agree in every respect with the position taken in that letter.


Charles Murphy: What I desire to know is-was it on account of a desire to secure control that action was not taken prior to April 9?


Arthur Meighen: It was because the Government had decided that a condition of extension must be possession of the system.


Mr. MIDDLEBRO:: I understand that, under the agreement of 1909, it was provided that as soon as the management committee took charge of the road, the voting power in respect of the debenture stock- I think also the guaranteed stock-should cease. What was the voting power in respect of the debenture stock and the guaranteed stock, which amounted to many millions of dollars, and what is the proportion of votes of those stocks as compared with the whole voting power of the company?


Arthur Meighen: The relative voting strength, which I
have just received, is as follows:
For every f 100
Guaranteed stock	
four	votesFirst preference stock	
four	votesSecond preference stock	
four	votesThird preference stock	
four	votes
Debenture stock 5 per cent Grand
Trunk	 four	votes
Debenture stock, 4 per cent Grand
Trunk	 four votes
Debenture stock, 4 per cent Northern	 two	votes
The total number of votes of the Grand Trunk is:
Preference stock	 1,024,720
Ordinary stock	 479,108
Debenture stock	 1,161,952
That means this that the preference and guarantee together amount to 1,024,720 votes and the debenture stock to 1,161,952 votes, so that the debenture stock votes are more than the total votes for the preference and guaranteed stock. Added to that there are the common stock votes, 479,108.


Frank S. Cahill: 
Arthur Meighen: I have done so, and
the total is 1,024,720 votes.


Frank S. Cahill: It should be included
with the debenture stock, not with the preference.


Arthur Meighen: The hon. member is right. In this table it is with the preference stock. The guaranteed stock anyway is represented by 500,000 votes; the debenture stock by 1,161,952 votes; so that the two together would be represented by 1,661,952 votes, as against preference stock represented by 524,720 votes, ordinary stock represented by 479,108 votes, or a total of about 1,000,000 votes. The guaranteed and the debenture stock have the majority.


William Sora Middlebro: As a matter of fact we are, if not in law, in equity the owners and really entitled to representation on these two stocks, the debenture stock and the guaranteed stock. As a matter of equity, we control the majority of the voting power in the Grand Trunk Pacific, and had not the Act provided that when the committee took over the management the voting power ceased, the voting power would have gone to the Dominion Government, and the Dominion Government would have controlled the majority of the voting power. I do not know if we control that now, because the

agreement provides that there shall not be voting power in respect of this stock, when guaranted by the Government but as a matter of equity we are more interested in the management of the affairs of the company than the other shareholders, and if we had the voting power in respect of the stock we have guaranteed or taken over we would really control the Grand Trunk railway. So, as far as that is concerned, the Grand Trunk should have very little to say, morally at any rate, if we take the position we do here to-day.


Frank S. Cahill: Does my hon. friend take the ground that if we get the majority control we should force the minority shareholders into an arbitration into which they do not care to go?


William Sora Middlebro: No, I merely say that we are in equity more interested in the company than they are.


Arthur Meighen: This agreement, if
acquiesced in by the shareholders, will be acquiesced in by those who remain, the preference and common.
At Six o'clock the committee took recess.
After Recess
Consideration of Bill No. 80 respecting the Grand Trunk Arbitration resumed in Committee.


Georges Henri Boivin: When the Committee rose at six o'clock we had under consideration clause 1 of this Bill. Shall clause 1 carry.


John Howard Sinclair: Before this clause passes I would like to get a little information from the Prime Minister. With reference to sub-section (b) of clause 1, is the Grand Trunk Company still a corporate entity, and has it the power to hold meetings and appoint directors?


Arthur Meighen: Yes, it has.


John Howard Sinclair: It has all the functions of a joint stock company?


Arthur Meighen: It has all the functions given to it under its charter, subject only to the provisions of the agreement and the Act ratifying the agreement.


John Howard Sinclair: I notice that the Government undertake to appoint directors under the authority of Parliament, and its truck me that, as the Grand Trunk Company is still a corpora-

tion with power to manage its own affairs and appoint directors, it might appoint a board and it would be a very intricate legal question as to which board of directors would have the necessary legal rights. The government undertakes to appoint a board and to say that this board shall not pay any attention to the shareholders and shall not take any instructions from them. The shareholders cannot dismiss the board the Government is going to appoint under this Bill, but cannot the Grand Trunk appoint a board of directors and have the legal right to do so?


Arthur Meighen: There can be only one board of directors of the Grand Trunk Railway Company under its charter. Now there is a present board. By the contemplated agreement if it is made, the company will be compelled to have its present directors retire one by one, the remaining directors appointing a nominee of the Government. It is not strictly correct to say that the Government is to appoint anyone as a director. It does not. But the remaining directors are to appoint a nominee of the Government as a director in place of a man who resigns. That done, another man resigns and the directors appoint a nominee of the Government to the vacancy created. That done, another resigns and the directors appoint a nominee of the Government to the vacancy until the directorate is composed solely of nominees of the Government appointed by the board of directors.


John Howard Sinclair: Suppose they do net resign?


Arthur Meighen: If they do not resign they cannot get the arbitration on. That is made a condition; that is the method of getting possession.


John Howard Sinclair: The terms of the agreement are stated in these sub-sections. May I ask if these terms have been submitted to the Grand Trunk representatives and if they are acceptable to them?


Arthur Meighen: No, they have not. Just prior to April 9, there were some discussions as to the carrying out of the Government's conditions that are now reduced to legal phraseology and embodied in the Bill. I could not say that they are just precisely as embodied therein, but, in general, the method of getting possession is. Nothing came of these discussions; the Grand Trunk was quite independent, and the consequence was that nothing was done.
Mr. Phippen and Mr. Kelley went over to England but there has been no further communication since. We ask Parliament to authorize the submission of these terms to the Grand Trunk and it is for that company to say whether it will accept them or not.


John Howard Sinclair: They must either take them wholesale or refuse to take them at all? No negotiations can be carried on to make them acceptable to. the Grand Trunk staff?


Arthur Meighen: No, I explained that in the statement I made on Tuesday last. We do not feel that it is any longer proper to approach them for negotiations. We think the time has come to say what we are ready to do and what we are not ready to do, feeling certain that all we lay before them is only fair and right.


Fred Langdon Davis: With regard to subsection
(e) of the Bill, in the present state of feeling of the shareholders it is quite possible that they might not appoint a committee. If they do not appoint that committee can there not be provision made, by the Government or some one else, for deductions to pay their share of the costs of the arbitration?


Arthur Meighen: I think what the hon. member has in mind is that in case the Grand Trunk does not accept this Bill at all there will be no committee under subclause (e), and in that event there should be some provision made for deducting the costs already incurred, and there will be costs incurred, of course. No, I think the old Bill will take care of that, or rather the old agreement. The Government would be justified, as I understand the agreement, in deducting from the guaranteed shareholders' dividends any costs that remain unpaid or that are already charged against the Grand Trunk.


Fred Langdon Davis: So far that is good. I
have in my mind another possibility, that perhaps under section 2, when we come to it, it would be possible that the company and the Government would come to an agreement and yet the shareholders stand aloof, in which case, again there should be some provision for the costs subsequently to be incurred because it is possible that the Government might accept their arrangement under clause 2 and go on. The other point as to costs is a small detail afer all.


Arthur Meighen: The company itself makes the arrangement with the Govern-

ment-that is if the company accepts these terms they enter into an agreement. That agreement would, I presume, be ratified by the shareholders. If the directors agreed to them, a meeting of shareholders would be called to ratify the agreement; time is given for that. Well, if the shareholders ratified the agreement it does not stand to reason that they would refuse to appoint a committee to look after their own interests. I do not think there is any chance of that. If they ratify this agreement they are going to appoint a committee to see that their interests are looked after in the arbitration.


Fred Langdon Davis: In their present temper
that is just what they might not do.


Arthur Meighen: Then they would have to take the consequences; I do not think we would suffer at all.


Daniel Duncan McKenzie: I would like to understand the situation in connection with this agreement which we have already made and which was duly executed. Is it not a fact that the necessary steps to complete the sale and transfer of the road to the Government hinge upon compliance with the terms of that agreement? Is it not necessary that to complete the agreement and its purpose both parties must comply with all the terms of the agreement? Now if one of the parties to the agreement refuses to comply with its terms, does not that give the other side the option of hacking out altogether if they want to? In view of the default of the Grand Trunk to comply with the terms under which the Government agreed to take over the road, does not that leave it open to.the Government to back out if they want to, or take the other steps which the Government seems to be taking now? I am not expressing an opinion, because I have not read that agreement, but as a rule if one party to an agreement defaults it leaves quite a number of options to the other party. For instance, he might sue for specific performance of the agreement, or he could back out and sue in damages. Those are the common law rights of parties to an agreement. _ I was trying to understand the real situation of the Government under the agreement when the Grand Trunk defaulted, as I understand it has, in this connection.


Arthur Meighen: I will try to put my views before the hon. member, and I am sure he will not have much difficulty in following me, because he has already a pretty good grasp of the subject. For
[Mr* Meighen.]
some time I have been more or less living with this subject in its legal as well as every other aspect. Yes, if there are two parties to an executory agreement, and one defaults, at common law there is the right in the other to elect to abandon the agreement. But is that the case here? There are two parties to this agreement. It cannot be said that either has defaulted in such a way as to enable the other to elect to declare the agreement at an end. What is the default? There is no default on the part of the Government, that is certain. Now, as to the company; how could we establish that strictly they have defaulted, using that word in its legal sense? They have not finished their case. They did not bind themselves to finish their case. All the agreement said was:	You will have
nine months to complete the arbitration, or such further time as the Governor in Council may approve. They did not bind themselves and say: We will absolutely finish our case in nine months, and if we fail to do it, it is default vitiating the agreement. The hon. member will see at once that there is no such default as would vitiate the agreement. But the purpose of the agreement, namely, a final award, not having been reached in nine months, the agrement in that case lapses because there is no power in the arbitration board to make a finding. In that respect it is clear to the hon. member that there can be no final award. The Grand Trunk maintain: Even though that is the result, you have to pay the dividends on the debenture and guaranteed stock, because that was a condition precedent to our giving up our voting power, and so forth. It is contended on the other side, that the whole agreement is one

that if they cannot carry out one part, none can be carried out.
I would not like to express an opinion which of those two views is right, nor do I think it important. Because, as was frankly stated two years ago, there is no disposition whatever on the part of the Government to seek to escape their responsibility provided we get the system. We are quite ready as well, if there is any value in the rest of the stock, to pay the fair value that may be found by the arbitrators. That question does not arise. I really do not like to give legal opinions in this way, but I do so now for just what they are worth. I do not think anything has occurred which could be described as default of such a character as would enable the Government to elect to consider the whole thing at an end.


Daniel Duncan McKenzie: All I have to say to my right hon. friend is that it is a most novel situation.


Arthur Meighen: Most situations are.


Daniel Duncan McKenzie: Well, this is a most extraordinary situation. I am not saying that by way of criticism. In a very long and extensive practice I never came across a case where default of this kind has arisen.


Arthur Meighen: Is it default?


Daniel Duncan McKenzie: If it is not default, what is it? It is non-compliance with the terms of the contract. Whose fault it is I do not know, and I am not expressing any opinion. But the terms were that within a certain limit of time conditions precedent to the taking over of the road were to be complied with. I understand there was a proviso in the agreement for extension of the time for the arbitration. The most extraordinary thing is that the company did not apply for any extension. Did the arbitrators have power to extend the time?


Arthur Meighen: Not without the approval of the Government.


Daniel Duncan McKenzie: Was application made for an extension of the time?


Arthur Meighen: I do not think any formal application was made. The hon. member will see in one of Sir Alfred Smithers' cablegrams, dated about March 23, that the Grand Trunk directors wanted an extension of three months. But the power remained in the Government to agree or disagree, and if the Government did not agree there could not be any extension, and the arbitration closed. I think it is manifest that inasmuch as the Government had to give its approval to an extension, in giving that approval the Government had to decide whether or not it was in the public interest to give it; and if there should be conditions attached, what, having regard to all the circumstances that had developed in the meantime, those conditions should be.


Frank S. Cahill: I would remind the minister in charge that when this matter came before the committee originally in 1919 it was pointed out to the present Prime Minister that the agreement was being made between the majority shareholders -who were being guaranteed their interest in any event-and the Government of Canada. The majority shareholders, or the
guaranteed shareholders, then undertook to arbitrate the value of the minority shareholders' stock. Now I think that is where the difficulty arises with regard to the arbitration. I do not think there is any question about the majority shareholders opposing or delaying this arbitration in any way. Apparently the whole difficulty arises with the minority shareholders, who are the people affected by this arrangement. The majority shareholders are now in a better position than they were before, and better than they can be if the agreement is not carried out. So apparently a deal was made between the Government and Smithers to guarantee certain stocks, provided that the Grand Trunk people would agree to arbitrate the balance. The minority ' shareholders have apparently never been quite satisfied with this arrangement, and the position now appears to be that the Government are not quite prepared to say whether these minority shareholders are the only people with whom they will have to deal. The majority shareholders, or the debenture holders, will of course be ifi the majority as the member for North Grey mentioned this evening.


William Sora Middlebro: By the agreement they are not shareholders at all now.


Frank S. Cahill: Just exactly. That gets us to the point where two people who are not interested in this undertaking for their own selfish ends are undertaking to arbitrate some other persons' stock. That is the point I put to the hon. member for Grey this afternoon. The Government and the majority shareholders, who are in no way interested in this undertaking, are attempting to arbitrate the value of certain stock of the minority stockholders, and the latter are the people who are objecting. Now we propose to pass legislation that will further curtail their rights in this matter, if they have any. I do not claim that they have any value in their stock; I do not believe they have-the minister's argument this afternoon -would rather lead me to believe that. But that is the stock we are undertaking to arbitrate; that is the stock we are legislating on now. There is no question about the majority shareholders, the people who have their stocks guaranteed.


William Sora Middlebro: My hon. friend continually refers to the majority shareholders. He should remember that there are no majority shareholders now; their Votes

have been wiped out. The only shareholders now are shareholders other than those who formerly had voting powers on the guaranteed and debenture stocks.


Frank S. Cahill: I would ask the Prime Minister if that is his understanding of it.


Arthur Meighen: That is true. I must say, though, that I do not think it affects the point my hon. friend is trying to make, because they had votes when the original agreement was made. My hon. friend's point is that having votes then, they virtually entered into a bargain, as he says, with the Government to arbitrate the value of the shares of the minority. In a way, that is correct. It turns out that the guananteed and debenture stockholders had the majority at the time of the making of the first agreement. But they have not now any voting power; they were compelled under the agreement to give up all control. So that when this agreement goes before them they will have nothing to say about it; it will be only for those holding the preference and common stock. The hon. member is quite wrong if he believes that Sir Alfred Smitners made an arrangement thoroughly satisfactory to him and not at all to the holders of the preference and common stock. I did not come in contact with the holders of the preference and common stock, but if there is any worse state of dissatisfaction than that on the part of Sir Alfred Smithers, I would be sorry for the fact. He is by no means elated at the arrangement made or at the position of things to-day. The Government could not make an arrangement with any except the majority; there was no other way to do it. We could not say: We will deal only with the minority; we had to deal with the whole of them.


Frank S. Cahill: That is not the point. You took certain stocks that were not guaranteed or debenture stocks, selected enough of them to make a majority to support your contention, took them out of one class, put them Jnto another, and gave them preference rights over the minority stock holders.


Arthur Meighen: No, we did not give them any preference rights at all. They had those rights before.


Frank S. Cahill: They had no guarantee before except the guarantee of the common stock and the preferred stock.


Arthur Meighen: But they had a prior claim on the earnings of the company. They

were in a position of first mortgagees. It was just a case of the mortgages having
votes in the running of the concern, as well as the owners of the equity of redemption. The Government was faced with the necessity of dealing with all the shareholders. It all became a question of whether we were to meet the request that we assume what you might describe as the mortgage on the property. That we did. I know it is open to the criticism that the majority, being, as they were, secured, would perhaps vote from their own point of view rather than from the point of view of the. company. But that was inherent in the whole situation; you could not avoid that. I think it is a fact-I do not want to say this with finality, al-thought I can verify it-that the majority of the preference and common stockholders, did vote for the transaction. They wanted to carry it through, and it is only natural that they would. They knew we had a lot to fear from liquidation and they knew they would get nothing, so it is only natural they would vote for it. They were not done any injustice, that is certain. They are not being done any injustice now-that is if I know what injustice is.


Frank S. Cahill: Who will vote the debenture stock at the proposed meeting to ratify?


Arthur Meighen: Nobody. It has no ratifying power at all.


Frank S. Cahill: It must have voting power.
M^. MEIGHEN: No there is no voting power except in the preference and common. It will go entirely before the holders of those stocks.


Frank S. Cahill: So this agreement now
being presented to the shareholders will go only before the first preference, second preference, third preference and the ordinary stockholders.


Arthur Meighen: That is right.


Frank S. Cahill: Those are the stocks
that are to be arbitrated?


Arthur Meighen: Yes.


Frank S. Cahill: The holders of these
stocks will finally decide, then, whether or not they will accept this agreement?


Arthur Meighen: That is right.


Frank S. Cahill: If they refuse to accept
it, what position will the Government find themselves in? Are the Government bound then on the other stocks?


Arthur Meighen: Well, they claim so.
We have not admitted it. We take the stand, and have always taken it, that, bound or not bound-we do not seek to evade our obligations-it will be for us to see that we get the property at that price or on such terms as may appeal to Parliament as right. It will be for us to consider, if they do not accept this, what the next step should be. I do not fear at all that it will not be in our power in some way to see that the end we have sought from the beginning is achieved or that we shall not be able to protect ourselves. Our anxiety is to do so in such a way that Canadians of this generation and future generations will not have to look back to the transaction and say that we were unfair to anybody.


Frank S. Cahill: Unless it would be to
the Canadian people.


Arthur Meighen: To either.


Frank S. Cahill: The member for Parkdale (Mr. Mowat) this afternoon was giving us a great deal of what he thought to be enlightenment on the subject of bondholders. But there are no such things in this transaction as bondholders. The securities in this case are all debenture stocks-first, second, third, fourth, fifth, sixth and seventh preference stocks. There are no bondholders. The Government make the claim that there is about $250,000,000 worth of equity in these debentures which are the property of the Grand Trunk shareholders. My hon. friend's argument with regard to the receivership falls to the ground, because the Government maintain that there is $250,000,000 worth of equity there before the subsidiary companies are touched. You have that to come and go on, as it were. If a receiver were appointed, these debenture holders would have to find a way of financing the road for the present and getting themselves out of their difficulties. The Prime Minister told us to-day that they were earning sufficient to pay their operating charges, so' that after all the only think they are short of, apparently, is the interest on these debentures, and they are not going to throw away these debentures because they do not receive the interest on them. It is merely a matter for the debenture holders to decide whether they want to wait or not. But instead of that the Government step in and say:	All
right, we will pay you interest on this, we will undertake this whole transaction. What for? Because, they say, we require this system as a feeder for the National
Railways. Now, "feeder" is not the proper word to use. It will cost more money to maintain the Canadian National Railway system with the Grand Trunk than without it, so that it is something to be fed rather than a feeder. According to what evidence we can get, it will cost us this year in the neighbourhood of $25,000,000 to $50,000,000 to maintain the road. There was an item last year of $25,000,000; I do not know whether the loan was made or not. But we also made loans to the Canadian National, and the Minister of Finance tells us that they are not such as he considers as live assets,

in other words, that it is lost money. We have $70,000,000 deficit on our National railways, and thirty, forty or fifty million dollars more on the Grand Trunk. Why the haste in getting into this further deficit on the railways? We have deficits enough now. If we leave the Grand Trunk alone to work out their own salvation, we shall be saving this country an expenditure of $25,000,000 to $50,000,000 a year for the next ten years, so that we might just as well let the Grand Trunk work this out themselves. My hon. friend says that we must get the system to round out the National system. The same result can be achieved by co-operation. The Grand Trunk will give the Canadian National system an interchange of traffic arrangement which will lead to absolutely the same advantage that the Government have if they take the road over, with this difference that the Grand Trunk people will finance themselves instead of the country financing them and paying out from twentv-five to fifty millions a year.
As regards the question of receivership, my hon. friends are getting scared before they come to the difficulty. No difficulty would arise. The present debenture holders would take care of the matter themselves. Hon. gentlemen opposite tell us in one breath that the debenture holders are unable to do that. They tell us in the next that they are able to do it. There is absolutely no sense in that argument. Let the bondholders try it out. If the Grand Trunk goes into the hands of a receiver and the receiver finally comes to the point where he is to sell the road, the Government can gain possession of the road, with this difference that they will save several hundred millions of dollars to the Canadian people. After all, our business is to look after the interests of the Canadian people and not after the interests of shareholders or debenture holders of some (railroad. That is their business. The Government

should bear in mind that our duty is to look after the interests of the Canadian people instead of trying to furnish money to some persons, because we think we need something which the majority of the people of this country are absolutely satisfied we do not need.


Mr. MANION:: I should like to know if my hon. friend is proposing that the Canadian people should cancel a debt which the Grand Trunk owe us in regard to the Grand Trunk Pacific. He said that there would not be a receivership unless the debenture holders took action. The only way to avoid a receivership is for the Canadian people to cancel the debt which the Grand Trunk owe us on the Grand Trunk Pacific.


Frank S. Cahill: Would it not be very much better for the Canadian people to forego the interest on their investment in the Grand Trunk Pacific amounting to some eight or ten million dollars than to undertake an expenditure of forty or fifty million dollars a year? The question is one of saving what you can. We are getting into the hole further all the time. My hon. friend surely would not contend that it is good business, in order to save the first ten million dollars, to take over the Grand Trunk at a cost of forty or fifty million dollars a year. It is not necessary to take any action at all. If the only difficulty that confronts us is the matter of the interest on our investments in the Grand Trunk Pacific, why not let the Grand Trunk go ahead with their enterprise, because every time we get into a new railway enterprise, we are only adding that much more by way of deficit and taxation to the burdens of the Canadian people?


Robert James Manion: Unless we have the
Grand Trunk in the East, the Grand Trunk Pacific in the West would not be of very much use. As was stated by the hon. member for North Oxford (Mr. Nesbitt), we would have the Grand Trunk Pacific with one end in the air, with no eastern connections for it, because the Grand Trunk Pacific was built as a western connection for the Grand Trunk.


Frank S. Cahill: I pointed out just a few moments ago that the Grand Trunk were in the same position. They have no western outlet. What are they going to do? They naturally will make a traffic arrangement with the people who have a western outlet. They have an eastern line; we have a western line; they will make a traffic arrangement that will suit both parties and 
that will be much more satisfactory than this business of taking over the Grand Trunk and running it at a cost to the Canadian people of forty or fifty million dollars a year.


Robert James Manion: The Grand Trunk
would like exactly what my hon. friend proposes, namely, that the (Government cancel the interest which they owe in regard to the Grand Trunk Pacific. That is not what the Government of Canada is apparently willing to do, and personally, I think the Government is upholding the rights of the Canadian people much more by insisting on having that debt paid.


Frank S. Cahill: On having the debt paid with their own money! That is the most nonsensical argument in the world. The Government are not getting any money from outside; they are putting more money into this enterprise.


Robert James Manion: They are getting the
Grand Trunk.


Frank S. Cahill: They are paying not only the debt, but three times the debt in order to pay it. The Government are not getting any money from any outside source; they are taking over another defunct proposition and paying a huge price for it. What for? My hon. friend from Fort William and Rainy River (Mr. Manion) says, "to save expenditures already made," and he is going to spend hundreds of millions of dollars to protect something that is already lost. Would it not be better for the Canadian people to take their first loss and be done with it, than to pile on millions more and to have deficits piling up year after year? The Government apparently are getting in worse on the Canadian National, and they will continue to get in worse with the Grand Trunk attached to it. To take over the Grand Trunk is only adding to the difficulties.


[Stage Direction]
Section agreed to.
On section 2-agreement to revive and continue arbitration proceedings to be made on or before May 16, 1921.
William Lyon Mackenzie King: Was the committee of management of five . ever appointed?


Arthur Meighen: Yes.


William Lyon Mackenzie King: What has
become of it?


Arthur Meighen: It is still there.


William Lyon Mackenzie King: What will become of it if this passes?


Arthur Meighen: By subclause (b) of clause 1, one of the things that must be provided for if there an extension is:
That the directors of the company appointed upon the nomination of the Government as aforesaid, in addition to their other powers, shall have and may exercise all the powers and functions of the committee of management as provided by the said agreement.
That is to say, the committee of management ceases, and the new board has all the powers the committee of management had, as well as the regular powers of the company.


Charles Murphy: This afternoon my right hon. friend (Mr. Meighen). answered an inquiry regarding the right of appeal. I understand, under this clause, that my right hon. friend has no apprehension as to the continuance of the right of appeal because of his taking over control and management of the road. As I understand the matter, the right of appeal still inures under the new agreement.


Arthur Meighen: That is undoubtedly
the intention. We do not intend to take away any right which the Grand Trunk would have under the old agreement.


Rodolphe Lemieux: Before the arbitration.


Arthur Meighen: Yes. I know that is not the intention of the draughtsmen. I know that Mr. Newcombe and Mr. Tilley have no intention of taking away the right of appeal. I will draw their attention to my hon. friend's apprehension.


Charles Murphy: I simply wanted to be satisfied that, in my right hon. friend's mind, there is no doubt as to the right of appeal being continued. I do not raise any doubt as to the drafting of the clause.


Arthur Meighen: I know there is no
intention that the right of appeal shall be taken away. The intention is that the right shall remain.


William Stevens Fielding: Was the date, May 16, arrived at for any particular reason?


Arthur Meighen: One is that we knew that the Bill would be introduced last Tuesday, and we thought we would get on a little more rapidly, but perhaps we have got on as rapidly as is well. The company's by-laws require two weeks' notice in the Canada Gazette before they can call a meeting of the shareholders. It would take some days to arrange for the meeting, and
then it should be held a little while before that date. I thought that when they knew the terms that the Government were willing to give, there was nothing to hinder them from calling a meeting of shareholders, and they could give sufficient notice of the purpose of it to enable them to decide at the meeting, and by the time they met, the agreement could be all ready. We thought May 16 would give them sufficient time to do that. I hope it will yet.


William Stevens Fielding: They cannot lawfully
proceed to give notice until this Bill becomes law, can they?/


Arthur Meighen: Yes, I think so.


William Stevens Fielding: A notice given in
anticipation of this would not be in compliance with the Act.


Arthur Meighen: I think they could give notice in this way. A special meeting of the shareholders could be called for the purpose of authorizing the directors to enter into an agreement for the continuation of the arbitration. As long as the subject matter of the meeting were given in the notice, I think that would be sufficient.


Charles Murphy: They can, but will they? And if they do not, will the time be sufficient?


Arthur Meighen: If they do not, it will not be sufficient.


Charles Murphy: Would it not be better, then, to extend the time? I am only suggesting that to save time.


Arthur Meighen: It is just possible we
might have to come and ask Parliament for a short extension, but we do not want to do that if we can help it.


Edward Walter Nesbitt: It is only a few days
since the Bill was introduced, and I think it would be nothing but reasonable to give them at least a month, and make it the 25th instead of the 16th. It would be better to do that now, than to have to come and ask Parliament for an extension.


William Stevens Fielding: These large bodies .
move slowly, and especially a body the greater part of which is over in England and the officials here. I can easily imagine there may be many difficulties in calling a meeting so promptly. That is all I care to bring to the attention of the right hon. gentleman.


Arthur Meighen: Large bodies move
slowly, and I hope I will be forgiven if 1 say, especially this large body.


William Stevens Fielding: That makes my point the stronger.


Charles Murphy: That is why we want
to extend the time.


Arthur Meighen: I considered the question yesterday and to-day as to whether or not before this goes through committee we should add a few days to it, but I rather came to the conclusion that if we found that was absolutely necessary it might be done in the Senate. I think we will know to-morrow definitely whether or not it will be absolutely necessary. I am getting details as to just the amount of time that will be required. My own opinion is that it would be better to have it go through the way it is.


Daniel Duncan McKenzie: If you want to make
a show of fairness in all these things, and I am sure we want to make even more than a show of fairness, it would look better not to crowd them for time in connection with this meeting.


Thomas Alexander Crerar: I think the question of
extending this period for a week or ten days, or even two weeks, is not of great moment, if it will avoid unfavourable criticism on the part of the shareholders. We are taking pretty strong action, although, as I expressed myself this afternoon, I do not know there is very much else for the Government to do, but I think it would be well to be as fair in this matter as it is possible for us to be.


Arthur Meighen: That is quite right,
but I want to lay this point clearly before the committee. If this time is extended, say even a week, that brings us to May 23. Now we may not know until pretty nearly say even a week, that brings us to the that time whether they are going to agree or not. We may not know for some time.
I have not the least doubt myself that if they do not agree there will .
9 p.m. be further legislation necessary to be considered by Parliament, and very important legislation, and the hon. member will see how far in the session that would be. We do not want to find ourselves in the position of having to come to Parliament right at the end of the session with' very important legislation, if we can avoid it. We would like to have as much time for consideration as possible. At the same time, the necessity of being reasonable, and" of not forcing the day too hard, is great, and I suggest this: if we pass this to-day, it is quite probable that the Senate will be able to deal with it on Monday or Tuesday, and

I am in hopes that before that time we will have details as to whether a few days more will be necessary or not. I could intimate to the leader of the Senate whether they were or not, and have the extension made there if it was vital that a few days more should be added, and then the Bill could come back here. I would not like to add a single day unless it were absolutely necessary.


[Stage Direction]
Section agreed to.
On section 3-powers and duties of arbitrators to continue if Governor in Council extend time:
William Lyon Mackenzie King: I would ask my right hon. friend if he would not reconsider the matter of submitting this agreement to Parliament when it is drafted. He may recall that at the time the arrangement was first entered into, it was suggested on this side of the House that the agreement should be submitted to Parliament. My right hon. friend refused that, but he came back the next year and submitted the agreement for ratification. He might save a repeated action of the kind if he took the step of submitting the agreement to Parliament.


Arthur Meighen: The hon. member does not state why it was that we came back last year with the agreement.


William Lyon Mackenzie King: There were errors.


Arthur Meighen: But not any errors of ours. The Grand Trunk in sending out the notice omitted sending notice to certain debenture holders, I think it was; at all events, to some shareholders. The company had the notice put in the Canada Gazette all right, but in the letters, which many lawyers thought it was not necessary for it to send at all, certain classes of shareholders were omitted through an error, and therefore there arose a doubt as to the validity of the ratification on the company's part. The only body which could make it good in any event was this House. It was not an error of the Government in any way; it was the company's error. The Grand Trunk also in giving us a schedule of their subsidiary properties omitted two subsidiary companies. That also made it necessary to have the agreement submitted to Parliament. The errors were entirely the company's. There was no error on our part. As to submitting this agreement to Parliament, how could we say to the Grand Trunk: Here are our terms; take

them or leave them; if you leave them all right, but if you take them we want them to come back here and we want to think them over again? I cannot see how you could logically take that position at all. To go to the Grand Trunk and say definitely: Here are the terms upon which we will resuscitate this arbitration; now it is for you to elect; if the company elects "yes," how can we say then, we want to have this considered over again? It would be rather humiliating.


Daniel Duncan McKenzie: That is not the point. The power to make an agreement stipulated in an Act of Parliament, and the agreement itself, are two different things. They are never exactly the same. The draftsman who draws up the agreement uses his own language, and the wording is never the same as in the Act. All we ask is that when you put it into shape we would like to look at your agreement.


Arthur Meighen: We will grant the hon. gentleman that right.


Daniel Duncan McKenzie: As a Parliament, I mean. I am not so dull as my right hon. friend may suppose.


William Stevens Fielding: Is it contemplated that the term of the extension should be at the discretion of the Government? The Bill does not say the arbitration may be extended for a given time. It is practically an unlimited power of extension, if I read it aright.


Arthur Meighen: We wish to have control of it, so the Grand Trunk cannot get it extended indefinitely while we have our railway engineers and all the rest of our witnesses under pay. We do not want to be in that position, but we do not like to fix here a definite period and say: We will only give you that long anyway. We do not want the shareholders to be able to say: The Government not only took over our road and went into possession, but after it was in possession, would only allow us so long to finish the arbitration.


William Stevens Fielding: They were only allowed a limited time before?


Arthur Meighen: Yes, I know, but the Grand Trunk were in possession; and there was power of extension on the part of the Government then. We shall now have the same power, and I cannot think of any state of affairs that would warrant us in refusing extension, except the clearest pos-
157i
sible evidence that the company was delaying for the sake of delay.


Charles Murphy: Instead of leaving the date to be fixed, would it not be advisable, in the interests both of the public and of Parliament, to provide that the arbitration shall be concluded and the award made, not later than a certain date?


Arthur Meighen: That is really what is provided now; the arbitration is subject to extension. [DOT]


Charles Murphy: Why not fix it so that there will be no extension beyond a given time?


Arthur Meighen: That would not leave it in our hands; you would have to fix a definite time, and that would be wholly unreasonable. The question of extension had better be left in the hands of the Government.


Charles Murphy: As to length of time?


Arthur Meighen: I think so.


John Howard Sinclair: What is the significance of the word "further" in the first clause? The clause provides that terms may be made upon which the Governor in Council "may approve of a further time," etc. What does that word "further" signify?


Arthur Meighen: In the first clause the recital refers to the time which they had previously; then the Governor in Council "may approve of a further time." Clause 3 refers to the aproval by the Governor in Council "of a further time," which is the time provided in clause 1.


Frank S. Cahill: Will the new agreement provide that all the shares shall be turned over before the money which may be payable under the award is paid?


Arthur Meighen: Yes, and that is inherent in the old agreement. In the old agreement the shareholders could not get anything on account of the award until they turned in the stock, because it was only on the turning in of the stock that the new guaranteed stock issued in pursuance of the award. The award was made payable in new guaranteed stock, and that was to be given only when the old stock was turned in.	,


Frank S. Cahill: Will the agreement provide that no award shall be made unless the shareholders turn in the stock?


Arthur Meighen: Yes. The terms of the old agreement are revived in that respect,

and when the award is made they can get nothing unless they turn in the old stock. We should be just that much better off if they did not turn in the old stock, because we should not have to pay dividends.


Frank S. Cahill: The stock arrangement is different now from what it was previously. The ordinary stock now will have practically 50 per cent of voting power, and in my judgment that stock will not be entitled to any dividend under this arbitration. Now, if the common stockholders say they will not give up their stock, what position will the Government be in?


Arthur Meighen: This will be the position: The Government's directors will be running the road in full control, able to do everything that directors can do, as the hon. member will see if he will read paragraphs (b) and (d). So that the common stockholders could not have any say whatever in the running of the system; they could not get any dividends because dividends would be no longer payable, and the stockholders would simply stay out enjoying the dignity of being old shareholders of the Grand Trunk. I cannot see what other advantage they would have. Furthermore, the Government takes power under the legislation to declare that stock, if the shareholders do not turn it in, the property of the Government, and to issue in its stead guaranteed stock, if there is any coming to them under the award. Of course, if they are entitled to none, ngne will be issued. But even if that power were not exercised, I do not see that there is any element in the situation that would be embarrassing to the Government. If the shareholders want to remain outside in possession of their certificates, I do not think it will hurt the management of the road.


Frank S. Cahill: The Prime Minister will not argue that we can take possession of stock outside of this country. We might legislate in that way in regard to stocks held in Canada, but this stock is held outside of Canada. It follows that if you paid dividends on all the debenture stock and the preferred stock, and there were a surplus, the common stockholders would be entitled to it. I do not see how the Government can take possession of stock outside of Canada by legislation in this country, if the shareholders refuse to give it up. As a matter of fact, as I see the situation, the common stockholders would be the owners of the road, and I do not see how you can take possession of their stock.


Arthur Meighen: The Government is advised that this stock is Canadian property. Even though its owners may live in England, even though the paper that represents it may lie in England, the stock is stock of a Canadian company chartered by this country. That being the case, the Government is advised that that stock may be expropriated and declared the property of the Government of Canada by this Parliament. Now, even if there may be doubt about that, even if there are others who might think differently from the legal standpoint, the only contingency one can imagine, in which there would be any embarrassment to the Government, would be this, that the common stockholders might stand by and not hand in their stock, because they get nothing under the award, and theii claim later on to be shareholders of the company. They cannot vote; that is clear, because the Bill provides that the company shall agree that our directors shall go in and stay in, not subject at all to the vote of the stockholders. Under the old agreement, which is revived, they agreed, as well, that they would hand in their stock, and they cannot get a dividend from the concern until they do. So that all that I can see they could ever hope to gain would be the pleasure of having the certificates in their vaults.


Frank S. Cahill: Where is the head office
of the company?


Arthur Meighen: The head office is now
in London, under the charter of the company.


Frank S. Cahill: Is there any legislation
changing its location?


Arthur Meighen: No, but this legislation provides that they may meet in Canada.


Frank S. Cahill: Well, the , head office
being in London, if the shareholders refuse to give up their stock they can hold their meetings there, which is the legal place. The Government would have no voting power there, and the shareholders might continue, and some day, if the road became valuable, you would have a lawsuit on your hands. Before the agreement is concluded you had better provide against such a contingency; make arrangements to get the stock before anything further is done, or there will be difficulty.


Arthur Meighen: The Government is
doing precisely that now. The Government is going to these common share-

holders and to the preference shareholders and saying, "Are you ready to do this? Are you ready to agree to do this?" And they agree to do it. What more can you do? You cannot follow them up and physically take it from them.
Mr. CAHILL; No, because they are outside the country.


Arthur Meighen: You could not do it if they were here.


Frank S. Cahill: Yes, you could by legislation.


Arthur Meighen: That they happen to be outside the country does not affect the question. For example, if to-day we want a certain piece of property and the owner is in England our Expropriation Act applies just the same: we go and take it. It is Canadian property and subject to the jurisdiction of the proper legislative tribunal of this country, so we go and take it. The fact that the owner resides in London or Jericho does not matter in the least. As we are advised, it is the same in respect to the stock of a Canadian company. This is a Canadian company and the fact that its head office is in London or Paris does not make it any the less so, and its property is subject to the jurisdiction of the Canadian Parliament.


Rodolphe Lemieux: And the property is in Canada?


Arthur Meighen: Yes, most of the property.


Charles Murphy: Some property, not all of it.


Daniel Duncan McKenzie: These legal points always interest me. I do not agree with the Prime Minister that a stock certificate can be confiscated by Parliament when it is held and owned by a man outside of Canada. I may be wrong, but that is my view of the law. That is property in itself. There is property in that stock certificate which he holds; it is transferable and negotiable, and the owner can sell it, in whatever method is provided, by endorsing it and passing it over. It is like a dollar note. If we in Canada issue a dollar bill it is, in a way, Canadian property. These Government bills are Canadian property and they are redeemable by the Government, but they are negotiable and they are currency. Suppose that dollar bill gets into the hands of a man who is here from Paris and he goes home with it in his pocket. Of course the origin of that property is in Canada and it has, the guarantee of this country, but the dollar passes from hand to hand in Europe. Does my right hon. friend mean that we can deprive the man who holds that dollar bill of its validity and of its intrinsic value by some legislation in this House? I do not think so. I do not want the Prime Minister to answer me at all. I am simply making my view clear that my opinion is-and it is given for what it is worth-that there is intrinsic value in the stock certificate. It is property in the possession of the owner. It is negotiable- and we cannot constitutionally interfere with it in this country when the property owner, the man who owns it, is not within our jurisdiction.


Mr. KEEFER:: Is stock negotiable like a dollar bill?


Daniel Duncan McKenzie: Debentures are; they are transferable.


Francis Henry Keefer: Transferable but not negotiable.


Daniel Duncan McKenzie: I think it is a very nice distinction to make. I do not see much difference between "transferability and negotiability". There may be to the mind of the hon. gentleman but not to a blunt Scotchman like myself.
Bill reported.
On motion of Mr. Meighen that the Bill be read a third time.


William Lyon Mackenzie King: I think it is only proper to point out that practically all the legislation pertaining to the Grand Trunk railway has been railroaded through Parliament. The very first Bill for the acquisition of this road was introduced at the eleventh hour and rushed through in great haste. When the Bill to confirm the agreement was brought into the House we were told it must be confirmed within two or three days. Now we get the present Bill brought in on two or three days' notice and the Prime Minister wishes to rush it through to-night. I think opportunity should be given to the people of the country as well as to the members of the House to understand this legislation. We ought also to have the benefit of the opinions of the press and of the public to guide Parliament as well as the views of hon. members.


Arthur Meighen: I understand we have the right to ask for the third reading of the Bill and I would like very much to have

it to take place. I will give reasons for my desire. I must say that if the Bill has been railroaded through, even though it is a railroad Bill, I do not know just what the process of railroading has been; I do not hold either end of the steel. We have tried to have the measure considered at as early a date as possible-that is true,-but for the most obvious reasons and in order to avoid, if possible, having to bring in legislation at the end of the session. For myself, I have not very much objection to that method but there is always complaint to bringing in anything at the end of the session except when it is a case of adjourning. I do not know how you could get to the end of the session without doing some work. It is in order to avoid having to bring in legislation at the end of the session, to which hon. gentlemen opposite object, that I desired to get this Bill considered as speedily by the House as was fair and reasonable. If we wait until Monday Public Bills and Orders may not be called-it is private members' day.


Rodolphe Lemieux: The list is very short though. I think my right hon. friend will be able to proceed with the third reading then.


Daniel Duncan McKenzie: I would like to remind the Prime Minister that there was an amendment proposed by the hon. member for North Perth (Mr. Morphy), which he promised to consider.


Arthur Meighen: Yes, and I did.


Daniel Duncan McKenzie: Then you are not entitled to read your Bill if there was an amendment made to it.


Arthur Meighen: I do not think that because an amendment is considered we cannot read a Bill.


Charles Murphy: Not a third time.


Arthur Meighen: I had the amendment carefully considered by the Deputy Minister of Justice and his opinion was that the amendment was not necessary because the word " nominated, " used in subclause (b) of clause 1 is right-for the reason that the Government only nominates directors; it does not appoint them. The word " appoint " could not be used because the Government only nominates tho directors and they are appointed by the other directors-that is the reason. As to paragraph (c) the language employed there " Board of Directors " is right-it should be the board. The horn member for

Neepawa suggested that the word " duly " be omitted from clause (a). It is not necessary but the deputy minister thinks it is rather better in that it merely provides that the appointing shall be done as it should be done by the appointing body.


William Stevens Fielding: I certainly think the Government in rushing this Bill through in
the manner which is proposed is not creating a favourable impression either here or in England. It is a very important measure and reasonable notice of it should be given. My hon. friend is open to some criticism in the matter; he brought down essential correspondence that was not printed. In a matter of such great importance correspondence should be laid on the Table in printed form. As a matter of fact an important section of that correspondence was not submitted at all, and it was not until the discussion this afternoon that we succeeded in getting the letter. These are evidences of rushing this legislation through, and whether my hon. friend means it or not, it is creating a bad impression on the part of the country and interested parties abroad. I do not think it is a wise policy to (rush through legislation of such importance in such a very short time.


Arthur Meighen: The only letter that was not brought down was received after we had tabled the correspondence. I read it to-day. It will be seen that it could not affect the merits of this legislation.


William Stevens Fielding: That is a matter of opinion; others might differ.


Arthur Meighen: I think the Government has been pretty frank with Parliament in this matter. The custom would be to bring down the correspondence when the Bill was introduced, but we brought the correspondence down two weeks ahead of the usual time. However, as for the third reading, this is an important Bill, and I know that hon. gentlemen opposite feel the responsibility of carrying this matter along until perhaps we 'may be under the necessity of holding Parliament longer and the responsibility is shared generally. But under the circumstances I will agree that the third reading be not dealt with now. But I would bespeak this consideration that on Monday there be no objection-even though we do not reach it-to the third reading being taken up.


Georges Henri Boivin: Third reading, next sitting of the House.



ROYAL CANADIAN MOUNTED POLICE ACT AMENDMENT

[Stage Direction]
On the motion of Hon. J. A. Calder (President of the Privy Council) Bill No. 82, to amend the Royal Canadian Mounted Police Act, was read the second time, and the House went into committee thereon, Mr. Boivin in the Chair.
On section 1-fines and forfeitures earned by members of the force to be paid to the Minister; how money to be used; regulations:
William Lyon Mackenzie King: Will the minister explain what is meant by this amendment?


Mr. CALDER:: As I explained on the first reading, there is a feeling that this practice, which has been followed for some years, should be put an end to because it is considered that the results are not at all conducive to building up the proper morale and spirit of the force itself. There are some four federal statutes under which in cases where mounted policemen are the informers, and the parties are found guilty and fined, the informers are entitled to a portion of the fines. There has been a good deal of feeling in the force with reference to that. The chief officers think that the practice is a very bad one, and that while those provisions should remain in the law, nevertheless the moneys paid in that way should be set apart as a special fund to be used for the benefit of the members of the force and their families. After making inquiries I have been unable to ascertain the amounts that have been paid to individual members of the force under the four federal statutes, namely the Inland Revenue Act, the Opium and Narcotic Drug Act, the Indian Act and the Customs Act, because when convictions are obtained against offenders the magistrate simply orders that a portion of the fine be paid over to the informant. From all that I have been able to gather in the discussions I have had with officers of the force, I find that they are of opinion that this practice should cease.
As regards the matter of pensions, from inquiry I made this afternoon I find that a man must be in the force for ten years before he is entitled to a pension. Occasionally a man retires from the force because of ill health or something of that kind before he has completed the ten years' service, and it is felt that if a benefit fund of this character were established, those moneys might very well be used to assist
members of the force so retiring. That, of course, would only he in deserving cases.


Charles Murphy: I find some difficulty in reconciling a couple of statements made by the hon. gentleman. In explanation of the reasons for introducing this amendment , my hon. friend said that the practice had given rise to considerable dissatisfaction among members of the force.


James Alexander Calder: Not among the men.


Charles Murphy: Then among whom?


James Alexander Calder: It is felt that this practice does not conduce to building up the proper spirit and morale of the force itself. If a mounted policeman, or in fact any policeman, has evidence he should lay his information without looking forward to receiving any portion of the penalty. I dare say the men who happen to receive portions of these fines will not complain, but, on the other hand, it is held that there will be a better feeling throughout the entire force if this practice is done away with.


Charles Murphy: Can the hon. gentleman say what amounts were distributed among members of the force by reason of their sharing in these fines?


James Alexander Calder: No. Probably if I had
more time I might be able to ascertain what amount has been received altogether, but I think it would require a good deal of searching to ascertain the amounts paid to individual members of the force.


Charles Murphy: Has the practice been
so extensive that it would take considerable staff and time to ascertain the amounts that have been distributed?


James Alexander Calder: I imagine we would have to get in touch with every magistrate in the country.


Charles Murphy: Taking members of the
force who were here in Ottawa, would it not be possible to ascertain from them what fines they have shared in?


James Alexander Calder: I imagine that could be
done fairly quickly.


Charles Murphy: Could the hon. gentleman do that before the Bill goes through?


James Alexander Calder: Yes.


Charles Murphy: The hon. gentleman has stated that application would have to be made to magistrates all over the country to ascertain what fines were imposed and what portions of those fines were distributed among members of the force. Is the hon. gentleman aware that there may have been

a distribution of moneys outside of that directed by magistrates?


James Alexander Calder: I am not.


Charles Murphy: I might refer him to a
case here in Ottawa where a member of the force undertook to impose, and did in fact impose, a fine and collected it from the offender. Having done that it is-well, it is a safe assumption that no return of it was made either to a magistrate or to the superior officer of the force.


James Alexander Calder: I doubt very much if the practice has prevailed at all. Unless a member of the mounted police force was a magistrate sitting on a case, he would have no right to impose a fine and put the proceeds in his own pocket. If the hon. gentleman has information with regard to any such case, I should like to have the particulars from him in order that I may follow them up and see just what the facts are.


Charles Murphy: I have information to that effect, and I shall be very glad to give it to the hon. gentleman. I will remind him of the matter a little later in case there is any dilatoriness in letting the House know the result of my supplying him with the information. I do not know whether the gentleman who acted as the arresting officer, the magistrate, and the recipient of the fine-he was a pooh bah on that occasion-is still a member of the force. If he is not, I am ready to admit that the hon. gentleman might not be able to pursue the inquiry very far. But it does seem to me that he ought to be able to give the committee more reasons than he has given for the introduction of this amendment. Surely there must be something before the department showing the necessity for such an amendment, and some, specific instances must have arisen. I think the committee is entitled to that information.


James Alexander Calder: It seems to me that it does not make any difference whether ten mounted policemen received a fraction of the penalties, or twenty, or thirty, or fifty, or one hundred. There is a principle involved. The question is whether under the law the mounted policemen in the discharge of their duties should be entitled to a moiety of these fines. Personally I think they should not. This practice has been in force for a number of years, and most officers of the mounted police have also come to the conclusion that it should cease.


Mr. MACLEAN (Halifax) :: Will it be any better if we adopt the proposed amendment providing that the penalty shall go to some club or association?


James Alexander Calder: Oh, yes, there is a great difference, because the individual interest is-eliminated. For instance, under the Opium and Narcotic Drug (Act, if a mounted policeman knows that if he follows up a certain case he will get a portion of the fine, he will probably be more interested in it than he otherwise would be. But if that portion goes into a fund for the benefit of members of the force and their families, he will look at the matter differently. What the chief officers of the mounted police desire to do is to create a feeling in the force that every man should do his full duty regardless of any fraction of a fine that should come to him. .


Alexander Kenneth Maclean: Is it not the practice to give to those securing convictions for violation of the customs regulations a portion of the fine imposed? I doubt whether it is very objectionable to give to officers of the law a portion of penalties in these cases. I am not quite sure that the judgment of the officers of the mounted police is based on human experience when they recommend the adoption of this amendment in preference to the present practice.


William Stevens Fielding: Do these sums paid to the mounted police not constitute practically an increase in pay, and when you deprive them of it, are you not, in effect, reducing their pay? I must say I like the principle laid down by the minister, but if these sums have been fairly widely distributed, one who has hitherto been in the habit of receiving them may feel that his pay is being reduced. You are cutting off a perquisite; it is like saying to a waiter: You shall get no tips, but there will be no increase in your salary.


James Alexander Calder: Well, there is something in that.


Mr. PEDLOW:: I am glad this matter has been brought up. I would like, if it were possible, to broaden the discussion on this Bill; I presume, though, it is not in order to discuss the matter generally. The practice which this Bill deals with is somewhat general in all branches of the Inland Revenue Department. I know personally of many cases where inspectors or officers of the Inland Revenue Department have stooped to very questionable methods in order to secure evidence to bring about a

conviction and thus obtain a share of the fine. My view is that officers intrusted with that work should be sufficiently well paid not to require any inducements of this kind. When these inducements are held out to them, they are apt to be overofficious; the effect is a degrading and a demoralizing influence upon the public service. I am sure that the Minister of Inland Revenue and the deputy minister of the department could furnish many instances wherein officers have exceeded what is required of them by the department and by the law in order to secure convictions and to get a portion of the fine. The whole principle has a demoralizing effect on the branch of the public service concerned and the practice should be entirely eliminated. If our police officers are not paid sufficiently without getting inducements or considerations of this kind, or without getting a bonus, commission or rake-off, then their salaries should be increased. No matter whether the portion of the fine is paid to an individual person or to an organization as provided in this . Bill, the principle is wrong, and should be done away with.


William Daum Euler: I take it that the object of assigning a portion of the fine to officers making arrests is to ensure greater diligence on the part of those officers. If that is now to be abolished the object disappears altogether. I quite agree with what the hon. member for South Renfrew (Mr. Pedlow) says; but I would go just a bit further than that, and I would say that no moiety of those fines should go anywhere except into the public treasury of the country or of the municipality,-into the funds of the Government, let us say. If the whole object was, in the first place, to ensure diligence, as I have said, why should this be continued by paying the money into an association? The thing is illogical; it ought to be abolished.


James Alexander Calder: I am not so certain but
that the idea of creating a benefit fund is a very good one. As a matter of fact, I know, from information that has come to me from time to time, that many of the old members of the force get into very serious financial difficulties. They have the Veterans' Association, and I am not so certain but that it would be advisable, if this Bill is passed, that provision he made under it for the payment of some grants to that Veterans' Association. Many members of the House are familiar with the work of that association and the burdens
that they have to carry in connection with some of their older members, who are not as well off as they should be and who have pretty trying times occasionally. Therefore, I think the creation of that fund is a good thing and can be made most useful as regards men who retire from the force. I think I am safe in stating that to the committee from my personal knowledge of the situation in regard to those matters.


William Daum Euler: I am quite in agreement
with what the minister has said as to the propriety and advisability of forming a fund of that kind, but I see no logical connection between that and creating it as a proportion of the fines.


Francis Henry Keefer: Is the minister able to
say anything regarding those Royal North West Mounted Policemen who went overseas? We know they wanted to be the first to go; but they could not go for a while until they got the necessary permission, and they had to take less pay over there and were not on the same rate of pay at that time as the members of our Canadian Expeditionary Force. I happened to come down on the train and saw a tourist car full of them. They were discussing that point. They were anxious to come back to Canada when the war was over, if they were alive. But under the peculiar regulations then of the North West Mounted Police Force, they could not draw anything whatever by virtue of their having to go over, and they had to take less by serving in the British army. They hoped that some provision might be made by which the difference in their pay would go on, so that when they came back, they would have some little stake. Is the minister able to say that proportion of those men who served overseas have returned? They were the very best type of men, and it would be a good thing for Canada to get them back. A fund of this nature would be a benefit also. While I am on my feet, I might say, as regards the objection of my hon. friend (Mr. Euler) to any portion of the fines going to that fund, that there are many statutes, in which there are what are called Quitam penalties, and under the statute which is sometimes provincial, sometimes Dominion, half of the penalty goes to the man who lays the information. Many an officer, many a civilian, knows of these penalties and starts proceedings in order to get half of the penalty. We cannot deal with that question here except in the way in which this Bill proposes to deal with it, that is to say, that that half

which ordinarily goes to the North West Mounted Police as the informants does not go to them-if it is an Irishism to say that-and to see that at the same time they get a benefit out of it. That is the way in which I understand it.


William Daum Euler: If the proposed change in the law is going to change the direction in which the moiety of fine is to go, why is it not just as possible to wipe it out altogether? We are making the law; we can make it to suit ourselves.


Francis Henry Keefer: Sometimes a province
makes the law.


James Alexander Calder: I am not able to give my hon. friend (Mr. Keefer) the information at the present time. As I did not know that this matter was coming up, I have not the information at hand. I will make inquiry and when we are on the mounted police Estimates, I will give the hon. member information for which he asks.


Mr. WHITE:: This measure is a good one and should be supported. I think it is better for the moiety of the fine to go into a fund than to an individual, not because I think there is any danger, as I heard whispered around me, that members of the police force would be too eager to obtain a conviction for the sake of what was in it. I do not believe there is any danger of that. As the hon member for Port Arthur and Kenora (Mr. Keefer) has stated, there are certain laws with statutory fees which must be collected. The opportunity may come to one member of the force very often, to another very seldom. A man who executes a warrant or has charge of a case, on account of holding a position on a detachment or where there is a good deal of work to do, may have a better time than another man who may work harder, and may get all the opportunity of obtaining this money. Therefore, he may get a great Meal more than his share, while the other man gets less. An old practice in connection with this fund was that furnishings, reading rooms, places of amusement and so on came out of the " fine " fund or " recreation " fund, but at that time it was chiefly derived from fines imposed on members themselves for misdemeanors. In the case the minister mentioned, the fund might be of great assistance to veterans or others who were in need of help, and this would be a good way of disposing of the fund. I know there are old pensioners of the police force who are not receiving anything like pensions our soldiers who served in the late

war are getting. Some of them receive as little as twenty cents a day, which was the pension settled upon them at the time, and they are to-day objects of charity. If a fund could be carried in any way, it would be of great assistance to them, and they are in need of it. The best way to distribute this money is to put it into a fund as outlined by the minister, so that it could be distributed equally Or used for the benefit of somebody who was really in need of it.


Daniel Duncan McKenzie: The original Act is Chapter 91 of the Revised Statutes. The amendment is marked 21 A. I do not see any connection between this amendment and section 21 of chapter 91, which provides for the salaries of the different officials. The Commissioner of Police gets $3,000 and it goes on with a list of salaries and other allowances. These deal immediately with penalties. I never had occasion to read the Act, and I do not know what the provisions of the old Act are in respect to the disposition of fines of this kind, but if the old legislation is to disappear, would it not be better to strike out the old provision and substitute the new one for it, than to have that old provision continued in the law, when notwithstanding that, something else will govern? If a person picks up the revised statute and finds a certain provision in it he is apt to follow that; the magistrate and others think that is the law; they may never come across this amendment, which says that notwithstanding anything else contained in the law its provisions must govern. I think it Would be better to have the law in one statute, if possible.
I had always understood that the fines or penalties were dealt with by the court, and that the magistrate who imposed the fine would order what was to become of the money. That is the rule, but this seems to leave it to the disposition of the minister at some later stage. I am looking for information; I do not know who is to settle the division of the money unless the court does. This seems to leave it open to some other authority who is not defined by this amendment. If the minister has a reasonable explanation of this, I have nothing more to say.	|


James Alexander Calder: I thoroughly agree with what the hon. gentleman has stated, but to follow his suggestion would mean an amendment to at least four statutes. The Mounted Police Act does not deal with this question, but there are at least four statutes, the Inland Revenue Act, the

Opium and Narcotic Drug Act, the Indian Act, and the Customs Act, which contain provisions to the effect that any informant whether a mounted policeman or not, who gives information that leads to a conviction shall be entitled to a moiety of the fine imposed; so, to follow my hon. friend's suggestion, would mean amending these four Acts. Instead of that, this amendment simply states that notwithstanding the provisions of any Act inconsistent herewith any portion of a fine or forfeiture that is payable to a member of the force shall be paid to the minister. Let us take a concrete example. A mounted policeman lays information against some person who has infringed a provision of the Indian Act. The guilty party is convicted and fined $100. The mounted policeman who laid the information is entitled, we will say, to one-half the fine. He would receive $50. Now under the old law he would pocket that himself, but under this law he must immediately forward that $50 to the minister. If the hon. gentleman will look at the statute before him, he will see that it does not deal with this question at all.


Mr. HALBERT:: Suppose no part of the fine was paid to the mounted policeman at all; would it not be his duty to look after the enforcement of the Act in that case?


James Alexander Calder: Oh, yes.


Robert Henry Halbert: Then why pay him a portion of the fine?


James Alexander Calder: That is what we are trying to remove.


Robert Henry Halbert: But under this amendment, though he vyill not get it himself personally, it will go into a fund for the benefit of the mounted policemen. Why should not that whole fine go into the treasury to help pay the expenses of the Mounted Police Force.


Alexander Kenneth Maclean: There are some statutes in this country, which have been long in existence, in which provision is made that a portion of the penalties secured against violators of the law shall go to the informant. This relates to but a few statutes such as the minister has mentioned, the Customs Act, the Inland Revenue Act, and the Opium and Narcotic Drug Act.


James Alexander Calder: And the Indian Act.


Alexander Kenneth Maclean: I have had no experience with the Indian Act, but I do say that it is impossible to secure proper enforcement of legislation of that character without providing that a portion of the penalty shall go to the informant. I am sure that has been our experience in this country. It would be utterly 10 p.m. impossible to get proper enforcement of the customs regulations, for instance, in Canada merely by giving a certain definite salary, even though it might be regarded as a very good one. It is all very well for hon. gentlemen to say that a public officer should carry out his duties for the salary he receives, but there are some statutes being constantly violated and it is very difficult to secure a conviction under them because the offences are of such a nature that it requires a great deal of time, and frequently no inconsiderable expense, for the law officer to obtain the evidence necessary to secure a conviction. Therefore, it is in this country, and I fancy in a great many other countries, that a portion of the penalty is payable to the informant or prosecutor.
I should say without having any special knowledge of the work of the mounted police, that their work relates largely to 'statutory offences of that character. I think the principle is sound that the informant or officer prosecuting should receive a portion of the penalty. The minister by this amendment proposes that that proportion of the penalty usually payable to the informant or officer shall now go into a fund. I think we must either accept the amendment or go back to the law as it was. Personally, I think the law as it now stands would be preferable to the amendment, but I do not know sufficient of the practices in the West particularly, where the mounted police operate, and therefore I decline to venture a judgment, but I say that we must either accept the amendment or the law as it now stands.


James Alexander Calder: I think my hon. friend from Victoria (Alta.) has put his finger on the real weakness. Under the law as it stands, a man who happened to be fortunately situated would have opportunities that other men did not have. Let me give an illustration. So far as the Opium and Narcotic Drug Act is concerned, I think we can all realize that the main infractions of that law take place in our large centres. If I recollect rightly, we collected last year in fines something like $18,000. I do not know what portion of these fines went to the members of the force who were responsible for bringing about the convictions, but a very large'number of these convictions were dependent on action taken by

them. Now, if there were a few of these men in Montreal, Toronto, Winnipeg and Vancouver, they would reap a very large harvest out of that portion of their work.


Alexander Kenneth Maclean: That is
their good fortune.


James Alexander Calder: But that is the objection to the present arrangement. Take [DOT] the Customs law. Out of hundreds of men engaged in the administration of that law, there are a few located along the border who look after customs work. These few have an opportunity to make money in this way that other members of the force have not at all, and it is because of that very inequality of opportunity, for one thing, that this suggestion has come. The member for Victoria (Mr. White), who is thoroughly conversant with the situation in so far as members of the force are concerned, their location, and their opportunities in this connection, will bear me out in that regard.


Mr. FORTIER:: Where a case is brought against a defendant and it falls to the ground, it seems to me that the complainant, unless he has acted on the strongest possible evidence, should be made to pay the costs. If you put a premium on the business of supplying information, I think you leave the door open to injustice to innocent parties. The complainant is certainly interested in securing convictions, and when he happens to bring an action against an entirely innocent person, if the judge is satisfied that there is no evidence, the complainant should be mulcted in costs.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
On motion of Hon. J. A. Calder (Minister of Immigration and Colonization) , the House went into committee to consider the following proposed resolution, Mr. Boivin in the Chair:
Resolved, That it is expedient to amend the Act to provide for the Retirement of certain members of the Public Service, chapter sixty-seven of the statutes of 1920, and to provide:_
3.	That subsection two of section three of the said Act, relating to the rate of retiring allowances to officers be repealed, and that it be enacted in lieu thereof that every officer retired under the provisions of the said Act who is not less than forty-five and under sixty years of ago who has served continuously in the public service for not less than twenty years, and every officer retired under the provisions of the
[Mr. Calder. J
sa'd Act who is sixty years of age or over and who has served continuously in the public service for not less than ten years, in addition to the payments authorized by subsection one of the said section, shall receive an annual retiring allowance payable to him during his life, equal to one-sixtieth of his average salary for the last three years during which he was in the public service for each year of his service, but not exceeding in' all thirty-sixtieths of such average salary;
2.	That subsection five of the said section three, relating to the computation of average salary, be amended by striking out the words "average annual" in the first line thereof:
3.	That the two preceding resolutions shalf be deemed to have come into operation on the first day of July, 1920;
4.	That section four of the said Act, relating to payment of expenses, be repealed, and that it be enacted in lieu thereof that any moneys payable under the provisions of the said Act to any officer retired under its provisions shall be paid out of any unappropriated moneys in the Consolidated Revenue Fund.
5.	That the time of operation of the Act be extended to the first day of July, 1922.
Georges Henri Boivin: I note that this
resolution is completed by Resolution No. 32 on page 8 of the Order Paper respecting certain members of the public service, which is as follows:
Resolved, That the Resolutions of March 18 relating to amendments proposed to be made to the Act to provide for the Retirement of certain Members of the Public Service, chapter sixty-seven of the statutes of 1920, be amended by adding thereto the following Resolutions:-
1.	That paragraph (b) of section one of the said Act be repealed and in lieu thereof it be enacted that "officer" shall mean any officer, clerk or employee who is employed in the public service and who received a stated annual salary, and any officer, clerk or employee in the said service who is continuously employed but for only a portion of each year and who receives a daily or monthly rate of wage, but shall not include any person appointed for a temporary purpose or on part time.
2.	That subsection two of section three of the said Act be amended by adding thereto the following proviso:-"Provided that if the average salary of any officer retired under the Act for the last three years during which he was in the public service is less than the average salary oi such officer for the full term of his service, such latter average shall be taken as the basis upon which to compute any allowance to which such officer may be entitled under the said Act."- The Minister of Immigration and Colonization.


William Lyon Mackenzie King: Perhaps the
minister will make a general statement upon the significance of these resolutions.


James Alexander Calder: We might take up each
in turn. The first amendment proposed is the repeal of subsection 2, of section 3 of the Act as it stands. The proposed new subsection contains three changes, and I think I can probably best explain the matter by reading the law as it stands now. The first portion of this subsection reads:

Every officer retired under the provisions of this Act, who is not less than 45, nor more than 59 years of age.
It is proposed to change that to read:
Who is not less than 45, and under 60 years of age.
The reason for that is that under the law as it stands, if a man is not less than 45 nor more than 59, he is entitled under certain conditions to a certain retiring allowance. If he is over 60 years of age, under certain conditions he is entitled to another retiring allowance. You will note that no provision is made for a man who happens to be over 59 and under 60. It so happens there are a certain number retired who come in that class and they are simply left in the air.


William Lyon Mackenzie King: They are over fifty-nine and less than sixty.


James Alexander Calder: As the Act reads it says: "If he is not less than forty-five and more than fifty-nine." Well, if he is fifty-nine then in six months he is between the two, and they could not deal with the case at all. That apparently was not the intention and the amendment is merely to make the correction and give effect to what was the evident intention of the law. So that the section, if amended in that respect, will now read:
Every officer retired under the provisions of this Act who is not less than forty-five and under sixty years of age shall receiveand so forth.


John Howard Sinclair: On that point will the minister tell us to how many officers this will apply, or give us the approximate number?


James Alexander Calder: I doubt if there are very many. I have here a statement of all the officers who have been retired to the end of last month which I can give the committee a little later if they desire.


John Howard Sinclair: Are there many of them?


James Alexander Calder: No, I think 187 all told. Now the second change in the section is this: I had better read the section as it stands at present:
Every officer retired under the provisions of this Act who is not less than forty-five
I will put in the change.
-and under sixty years of age who has served continuously in the public service for not less than twenty years, and every officer retired under the provisions of this Act who is sixty years of age or,over and who has served continuously in the public service for not less than ten years, shall receive an annual retiring allowance payable to him during his life equal to ten-sixtieths of the average annual salary received by him during the last three years of his service, and in addition one-sixtieth for each additional year of service.
There was a very unfortunate wording of the law there as well, because it leaves a certain class of officials in this position: If a man was between the age of forty-five and sixty and served twenty years and another man was over sixty and served only	ten	years,	they	would each inthe first	instance	get	ten-sixtieths andthen	one-sixtieth	for	each additionalyear of service. Well, that was not the intention. The intention was that if a man was between the age of forty-five and sixty and had served twenty years, and another man was over sixty years of age and	had	served	at	least ten years,
each of them should receive one-sixtieth of his average salary for each year of his service. That was the intention and it was clearly explained to the House when the Bill was under discussion last year and was accepted by it. But the way the section is worded does not carry out the intent that was explained at that time and which the House accepted.


Francis Henry Keefer: Reference is made to so many years in the public service. What is meant by "public service"?


James Alexander Calder: Service in the Government.


Francis Henry Keefer: In this Government?


James Alexander Calder: Yes.


Francis Henry Keefer: My reason for asking the question is that I know of a case where we took into the service of the Dominion Government a provincial official who had served many years provineially, and had been in the public service all his life. Although he had been serving the public all his life I suppose the provincial government made no provision for a pension for him covering the time he was in the provincial service. He is now pensioned off under the Dominion Statute but although he was receiving probably $2,500 salary from the Dominion he is now only in receipt of $1,000 a year or some other small amount. Some of our most efficient men in the Federal service to-day are men who have been transferred from the provincial service; some of them have become even deputy ministers. I need not mention any names, the gentlemen in question will easily be recalled by the House. They

have been brought from the province of Ontario into the public service of Canada and one of the reasons for making the transfer was doubtless the experience and efficiency which these gentlemen had acquired under the Provincial Government. If we are tied down, in awarding a pension to these gentlemen, to simply the service they have given the Federal Government they will, although they have been engaged in the public service all their lives, on retiring receive a less pension than if they had been federal officers during the whole of that time. In my opinion some thought should be given to this principle. I have in mind a case-I do not deem it advisable to mention names-of a very prominent medical health officer whose name is a household word in the province of Ontario, and who, in his early days, did much for the strengthening and the building up of the provincial health regulations. He was brought down here some years ago but has been retired on account of age and the pension which he receives is a mere pittance. In order to meet such cases as these I would ask whether the meaning of the term "public service" could not be broadened. While we do not want to pension former provincial officers unnecessarily, still when we take them into our service, especially in view of the fact that there is no provincial pension, we ought to recognize the long years they have spent in the public service. That course is followed by banks. When a new bank absorbs another bank it takes over the staff of the other institution and places them on its pension list crediting them with their term of service with the bank which has been absorbed. We might, perhaps, follow out that principle when we come to pension former provincial officers.


James Alexander Calder: Such a policy will open up a fairly large door and I do not know where it might end.


Francis Henry Keefer: I know cases of very
great hardship.


James Alexander Calder: At the same time I doubt very much if the responsibility for making provision for a civil servant who has been in the federal service but a short time, but happens to have been in the provincial service for a fairly long period, should fall upon the federal treasury. Coming back to the immediate subject under review there is a third change in that section as it stands in the Bill and it is this: Under the present law the allowance to which an officer who is retired is entitled is computed

upon the basis of the average salary received by him during the past three years. Well as it so happens we find that some of the civil servants who are eligible for pension have been on leave of absence either on part pay or no pay, and as a result of that, if their allowance is to be based on the salary which they actually received during the last three years, a very great injustice is done them. It is now proposed to change this law so as to make it conform to our superannuation law in this respect-that the computation shall be based upon the average salary authorized for the party who is being retired; the salary that he would actually be entitled to receive rather than the salary that he actually does receive. I think myself that the suggestion is a proper one. There are not very many cases of that kind but there have been a few, and the Civil Service Commission and the Auditor General have suggested that this change should be made.


Isaac Ellis Pedlow: I would like the minister to give us an illustration of how the changes he proposes are going to work out compared with the situation as it now stands. For instance what will be the difference between the two ages he has referred to. Suppose a man aged forty-five had been in the service for twenty years. How much would he receive under this new arrangement, how much would he receive under the statute as it now stands? Then take the case of a man of sixty and over, who has been in the service for, say, ten years or even for the same period of twenty years; how much would he receive under this new arrangement as a retiring allowance and how much would he have received under the present statute?


James Alexander Calder: The purpose of this first amendment is merely to clear up errors in drafting to carry out the intent of the law as it passed the House last session. There is no difference in the amounts that will be received, except in one instance. Under the law as it stands, if a man is between the ages of forty-five and sixty, and has been in the service twenty years, he would get ten-sixtieths of his average salary for the last three years. On the other hand, if a man is over sixty years and has only been ten years in the service he would begin with ten-sixtieths of his average for the last three years. Then each of them would get one-sixtieth of his average salary for each additional year of service. As I explained, it was never intended when the Bill was under discussion last year that the law should operate that way. It was merely

an error in the drafting. It was intended that in the case of the man under sixty years of age who has served for twenty years, and of the other man over that age who has served ten years, each of them shall receive one-sixtieth of his average salary for the last three years for each year of service. The section is amended merely for the purpose of carrying out what was intended in the legislation passed last session.


Mr. COPP:: It is simply interpreting
last year's legislation.


Isaac Ellis Pedlow: The results would be
the same as intended last year?


James Alexander Calder: Yes.


William Stevens Fielding: My recollection is that last year the hon. gentleman presented this as a temporary measure, and I suppose he is still adhering to that view? He is not treating this as a permanent system equivalent to our old Superannuation Act?


James Alexander Calder: No.


William Stevens Fielding: Of course, the general'
question remains.


James Alexander Calder: Yes.


William Stevens Fielding: We had that Superannuation Act down to the year 1897 or 1898-


Alexander Kenneth Maclean: 1897.


William Stevens Fielding: Then the Government
of that day adopted the policy under which old officials were continued under the superannuation law, but all officials appointed after that time were looked after by a retirement fund, or in other words a compulsory savings fund for the benefit of those officials. As I have already said, I think that policy was a mistake, but in the execution of that policy a large number of officials appointed since 1897, and not on the superannuation list at all, will of course be included in this Bill if they fall within its provisions?


James Alexander Calder: If they retire.


William Stevens Fielding: There is still in the
mind of the Government an intention to create a general superannuation Act of a permanent character, or is this regarded as a permanent Act?


James Alexander Calder: No.


William Stevens Fielding: This is to meet a temporary condition?	,


James Alexander Calder: That is all.


William Stevens Fielding: One other question.
I am speaking now in regard to a case that came under my notice. It appears to be held that to enable an official to qualify under this Bill his service must be continuous?


James Alexander Calder: That is the condition.
The amending resolution deals with that.


William Stevens Fielding: That is to say, a man who had been some years in the service, for a short time was absent, and then returned to the service. Taking both his terms he is quite an old official. However, when this was brought to the notice of the department it was held that he could not be brought under the Act. Do I understand that under the amendment he would be entitled to have his two terms considered as one continuous term?


James Alexander Calder: I doubt very much if
the amendment meets that case. In so far* as the general question is concerned, it is merely proposed to continue for one year more the Bill that was passed last session, in the hope that a regular superannuation Bill will be brought down that will deal with the entire service for years to come and will be a permanent measure. Personally, I would like very much if a Bill of that nature could have been brought down this session; I am very much in favour of it. I think if cases of the kind which my hon. friend has just mentioned are deserving, we will be able to make an amendment to cover them as well.


William Stevens Fielding: To this Bill?


James Alexander Calder: Yes.


William Stevens Fielding: What is the position
of an official who does not avail himself of this Bill within the year, or within the second year as it is now to be? He will be deprived of any privilege unless we have a general superannuation bill?


James Alexander Calder: Or unless Parliament
extends this for still another year.


William Stevens Fielding: The official whom I had in mind occupies a prominent position, and he put his case to me in this way: I can avail myself of this Bill, but I do not want to retire, for I am blessed with health and strength, yet I do not want to be deprived of the benefits of this Bill later. I told him that in my opinion cases of that kind would be numerous and that probably further legislation would be passed to deal with them. He said: I am strong and healthy, but if I do not resign now I will be out in the cold next year.


Alexander Kenneth Maclean: He could
not resign now and take his pension unless he was unable to properly discharge his duties.


James Alexander Calder: These are all compulsory retirements.


William Stevens Fielding: After a man reaches a certain age he can very easily make a claim to retire.


Alexander Kenneth Maclean: But the retirements are compulsory.


John Howard Sinclair: I hope when my hon. friend brings down his superannuation Bill he will be as careful as possible of the public interest. According to the Auditor General's report, during the last fiscal year we paid out something over $26,000,000 for pensions. I do not know what 'proportion of that amount is for military pensions, and I would like to have some information on the point. I trust the minister will take care of the public interest.


James Alexander Calder: It will not be done this year.


John Howard Sinclair: There
is really no good reason why men in the public service should be treated any differently from men who are struggling along in private service. If we are going to provide old age pensions for people in the service, it would be logical for us to also provide similarly for people outside. Many of the men who are paying pensions to these civil servants are themselves poor. That, of course, is a very large question and one which under the present circumstances we may not be able to deal with. My object in speaking about it at all is to ask the minister to be cautious about this matter and not to increase our burdens in that direction any greater than they are at present. Would the minister tell us how many pensioners we have now in the pay of the Government?


James Alexander Calder: Do you mean under this law?


John Howard Sinclair: Well,
altogether, exclusive of military pensions.


James Alexander Calder: I am not in a position to give that information offhand by any means. I understand that under the Superannuation Act passed many years ago the moneys paid in by the civil servants themselves take care of whatever moneys are paid out to them. I am not in a position to give information as to the number of
[Mr. Fielding.!
pensioners there are as the result of our military operations and in connection with the police force. I have not the details here.


John Howard Sinclair: I am
concerned more with the civil than with the military end of it.


James Alexander Calder: Under the Act passed last session there have been retired, to date, some 187 officials, of an average age of 71.64 years. The average length of service of the 187 was 23.65 years. Both the departments concerned and the Civil Service Commission, so far as I know, have been handling very carefully the administration of this law. I do not know of one instance in which there has been what you might call abuse.


Arthur Bliss Copp: What was the total amount involved in the retirement of the 187?


James Alexander Calder: The average salary of
the 187 retired was $1,634.96, of the 187 retired, 128 receive annual allowance, the average allowance received being $620.23. I have not the total amount involved, but it can be easily figured out. I have not the figures of the number who were retired simply on gratuity, and the amount of the gratuity, but they can be ascertained.


Rodolphe Lemieux: While I am under the impression that the Act passed last session has been well administered, it has come to my knowledge that in a few cases the retirement of officials under this law has been carried out rather hastily. I have in mind a gentleman who was in the Customs Department in Montreal. He was appointed a short time ago, having been associated previously with a reputable firm of manufacturers in that city. Suddenly last winter he was informed that after a certain day his services would no longer be required. His superior officers appeared to be surprised at the decision arrived at in Ottawa. The man had reached the age of 69 or 70, but was perfectly strong and healthy and quite willing to continue his work. He remonstrated to his superior officers, but without avail. He had been receiving a salary of $1,500 or $1,600. When a man is able to perform his duties properly, is in good health and is willing to work, he should not, I submit, be dismissed -or pensioned; but if you are given a small gratuity and informed that your services are no longer required, I call that dismissal, pure and simple. I can give the particulars to my hon. friend if he requires

them. There is another point which I should like to bring up. When the amendments to the Civil Service Act and the proposal for the Civil Service reclassification were under consideration, I directed the attention of the junior member for Halifax (Mr. Maclean) who was in charge of the legislation, to the fact that a few old gentlemen who had been superannuated many years ago jvere suffering from the high cost of living, and I made a plea in their favour. I contended that if civil servants were entitled to higher pay and even to a bonus, old men who had served for a long time and were now superannuated were entitled to a proportionate allowance on account of the high cost of living. I rememeber that the junior member for Halifax promised me that he would consider those cases. There are very few of these gentlemen, but they are numerous enough to have formed themselves into an association, and they are writing letters to members and interviewing them and pleading their case as earnestly as possible. I would like to know from the minister if that matter has been considered by the Government? I see that the Minister of Trade and Commerce, with other members of the Government, lately received a delegation from the Civil Service. The Government had publicly announced that the Civil Service bonus would be cut by twenty-five per cent, but since hearing the delegation they have receded from that position and are now considering the advisability of maintaining the whole bonus. I have nothing to say in the matter, but it might be an occasion for the Government to consider wdiether or not old faithful servants who have been superannuated and are suffering just as much as civil servants from the high cost of living, should receive bonus or be considered when any adjustments are being made in that connection.


James Alexander Calder: I should be very glad
if the hon. member would let me have the particulars with regard to the case he mentions.


Rodolphe Lemieux: I will give the name at once. He is Mr. Barsalou of the well known family of Barsalou of Montreal. His family were connected with Benning & Barsalou, an old auctioneering firm of that city. He was himself a manufacturer, and was indeed greatly shocked when he heard that he was to be retired upon receipt of a lump sum gratuity, when he was perfectly well able to perform his duties. Mr. Chairman, we have in this 158
House men who are over seventy. I claim that the men over seventy in this House are perhaps doing better service than the young men. Who would think, looking around us this evening, of suggesting for one moment that men in this House who have reached the age of seventy are not able to perform their duties as representatives of the people? In the Civil Service, I grant that there are men under seventy, who are disabled, who are not in a position to perform their duties; but when a man is seventy and is strong and healthy and willing to work, why should he be stranded in such a way?


James Alexander Calder: Dealing with this question, I should like to point out that, under the Bill of last session, we took care of just such cases as the hon. gentleman refers to. It will be remembered that this section was inserted in the Bill after it came before the House.
When it is decided to retire any person under the provisions of this Act notice in writing thereof giving the reasons for such retirement shall he sent to such person, and he shall have the right to appeal to the Civil Service Commission, and the Commission, _after giving such person an opportunity to be heard, shall make a full report upon the matter to the Governor in Council, and the decision of the Governor in Council thereon shall be final.
Under the law the Civil Service Commission, in the case of persons over sixty-five years of age, had to obtain from each of the departments a list of all persons who, on account of advancing age or ill-health or other causes similar to that, should be retired, and if I am not mistaken, out of a total list of about 1,700, reports came from the various departments to the effect that about 600 should be retired. Notice was at once sent to those people, and somewhere in the neighbourhood of two or three hundred appeals came in, and each of those appeals is being heard and carefully considered by the commission. While it is possible that injustice may be done, that mistakes may be made, still at the same time men are not retired from the Civil Service merely by sending them a letter and telling them that we are through with them. If the case is a deserving one, if the man thinks he has good ground for appeal, that there is still work for him to do and he is giving valuable service, he has under the law full right to place his case before the commission, and I doubt very much if the commission, if the man has a good case, would recommend to the Governor in Council that he should be retired.



REVISED EDITION. COMMONS

Alexander Kenneth Maclean: I have
never been able to give my assent to this Bill; I have always thought it was wrong in principle, fundamentally wrong, for the [DOT] reason that it proposes to afford a pension system to certain members of the Civil Service who happen to live between 1920 and 1923. Along with the statute is the public declaration that after one year the Act expires. It is manifestly unjust and fundamentally wrong to attempt to provide pensions for members of the Civil Service who, within a given period, happen to reach a certain age or, perhaps, are not quite efficient. The most that can be said for this measure is that it is the beginning of a permanent Superannuation Act' such as we should have in this country. I should think that the minister will agree with me that this particular legislation must continue upon our statute books until it is replaced by a permanent Civil Service Superannuation Act. It would be manifestly unjust, absolutely indefensible, to decline to pension certain of those engaged in the public service in say 1925, were they disqualified for the reasons set forth in the statute under discussion, and to pension those who happen to live between 1920 and 1922.
I quite agree with the remarks of the hon. member for Shelburne and Queen's (Mr. Fielding). There should be a permanent Superannuation Act in this country, and it was a great misfortune that the former Act was ever repealed. We are the largest employer in Canada and all employers in Canada of any substantial proportions, such as banks, railways and a great number of our larger industrial concerns, have superannuation systems. The only reason why I should give my support to this Bill at all is that it holds out some hope that this will develop into a Superannuation Act, because it never can be discontinued.


Rodolphe Lemieux: The minister states
that, in the legislation passed last session, an appeal is provided for those who are pensioned, and so long as members of the Outside Service come under the Civil Service Commission, that is somewhat of a guarantee, I must say, that they will receive justice, although, when a man is notified officially that his services will be no longer required, there is a prejudice at once created in the mind of the commission that, by his superior officers in the department, he is no more of service to the public. I have, however, certainly the

fullest confidence in the fairness of the Civil Service Commission on that appeal.
I am informed on pretty good authority that the Government intend at the present session to introduce a Bill relieving the Civil Service Commission of what we call the Outside Service. Supposing a member of the Outside Service is thus relieved of his work and pensioned by virtue of this legislation, which is only amending past legislation, there will no longer be an appeal for that member of the Outside Service because the Outside Service will not come under the Civil Service Commission.


James Alexander Calder: Even if what the hon. member says might happen, did happen, I doubt very much-


Rodolphe Lemieux: Will my hon. friend deny that it is going to happen?


James Alexander Calder: I am neither denying or affirming at the present time. That is a question of policy. I have under my hand a list of all retirements down to the end of March of this year, and the name which the hon. gentleman has given to the cou-mittee, so far as I can see, is not included in this list. It is quite possible that he has received notice of retirement. He has a right of appeal and he probably has lodged an appeal. That appeal may be before the commission at the present time.


Henri Sévérin Béland: What proportion of those who have been notified have been retired? I have looked over the papers, but I forget. I think it is about twenty per cent.


Mr. LALOR:: I agree with the remarks-


Henri Sévérin Béland: I should like to have an answer to my question.


Georges Henri Boivin: Mr. Lalor has the floor. He has been attempting to get the floor for the last half hour.


Francis Ramsey Lalor: I want to agree with the remarks of the hon. member for Maison-neuve (Mr. Lemieux). I know that in my section of the country custom house officers, for instance, are being retired pretty generally, whether they want to be retired or not. I know of cases of men who are fully competent to discharge their duties and fully able to carry on who are being retired under this Act; if they do not retire by the first of June they will lose their superannuation. These men have to be replaced, and I think it is a great hardship that a man who is fully able to discharge his duties should be retired in this way. Furthermore, it is only adding to the ex-

penses of the country to retire men who are fully competent and to replace them with others.
But the Act has not only been applied to the Customs Department. It operates also in the Public Works Department. In my section of the country, I understand that the Superintendent of the Welland canal, who is fully able to discharge his duties, and is a splendid officer, respected and esteemed by everybody-he was appointed by the late government, I think- is to be retired. He is a man of about sixty-five and, I repeat, a splendid officer. Another man will have to be appointed in his place. That is another case of great hardship, and it is only adding further expense to the country. I understand that even carpenters and labouring men who have been working on the canal for years, and who are still able-bodied men are to be retired under this Act and their places filled by other men. It is simply adding to the expenses of the country without giving us any more efficient service than we have now. I think we are going altogether too far in this respect. Whether it is the commission or the Government who is responsible I do not know, but I think it is a mistake, and I think the Government or the commission should very seriously consider before they retire men under this Act who are perfectly competent to perform their duties. The Act is being applied altogether too widely.


Alexander Kenneth Maclean: I am inclined to concur in the observations of my hon. friend who has just spoken, because it came under my notice last year in my own province that a large number of persons received notice that they were to be pensioned from the service under this Act. I know that in very many cases there was absolutely no justification for it whatever, because these men were neither old nor inefficient. I only mention this to express the hope to the minister that he will take special care to see that the Act is not abused. This Act was orignally brought forward for the purpose of securing the discharge from the public service of certain old and inefficient people in the service here at Ottawa. It was never intended that the Act should have the wide application which some persons in the service attempted to give to it last year. I do hope, therefore, that the minister will take care to see that the Act is not abused, and that it is not applied to cases to which it was never intended to be applied. I want to call the
158&
minister's attention also to this: The last clause of the Act provides that "No person shall be retired under the provisions of this Act after the 1st day of July, 1921." Is it proposed to amend that?


James Alexander Calder: The existing law will be extended for one year.


Alexander Kenneth Maclean: Until 1922?


James Alexander Calder: Yes.


Alexander Kenneth Maclean: I cannot help but remark that that is very, very objectionable. It should have a more stable tenure than that, because notwithstanding Acts of Parliament and members of Parliament, people will persist in growing old and inefficient in the public service. If such cases exist to-day, the reasons for legislation of this kind will exist just as strongly every year in the future. The very fact that the period is so limited
11 p.m. brings about the condition which my hon. friend from Shelburne and Queen's thought did exist, namely, that people can apply for superannuation under this Act, and that is one way in which the Act can be abused. Some person nearing the age limit, and whose career in the public service is likely soon to end, can easily have a recommendation from his superior officer that he is growing too old for the public service and should be retired.


James Alexander Calder: I doubt whether the
allowances are large enough to hold out that inducement.


Alexander Kenneth Maclean: There is the further fact that in 1917, 1918, 1919 and 1920 persons were forced out of the public service without receiving one cent of pension. In 1920 and 1921 a few people went out with $300 or $400 or $500 or $600 for the rest of their lives.


James Alexander Calder: Old civil servants.


Alexander Kenneth Maclean: Yes, but
there were a lot of old civil servants let out between 1897 and 1920 who did not receive any pension. The point I want to make is, that those who go out under this Act are receiving a privilege which hundreds, and perhaps thousands, would like to have shared in during all the years between 1897 and 1920. Therefore, I say this Act was only intended to be applied in a limited sense. Some departments made a mistake in putting this Act into operation last year. They sent out hundreds of letters that never should have gone out. There should not be 187 people

to be retired under this Act in all Canada. I have personal knowledge, as my hon. friend knows, of the steps leading up to this legislation which went through last year, and I know it was only intended to take care of aggravated cases, cases where undeniably men were absolutely unfitted for further service either by age or by indisputable inefficiency. It would be unfair, unjust to the great numbers who have gone out in previous years, and unfair to those who are to go out after 1922, to apply this Act unless we have a permanent superannuation Act to look after the future. While the Act does remain on the statute book, I say that it should be strictly interpreted and the pension given only to those who are an incumbrance to the Civil Service.


Francis Ramsey Lalor: Personally, I have not the slightest objection to men applying for superannuation under this Act, but I think it is too sweeping altogether to say that they must be retired at the age of 65 whether they want to be or not. That works a great hardship.


Alexander Kenneth Maclean: The Act
does not say they must be retired at 65.


Francis Ramsey Lalor: That is the inference that the men in the service are drawing from a reading of the Act.


James Alexander Calder: Just a word in reply to the hon. member for Halifax. I must say that I take direct issue with the view he takes on the main question. In my judgment this Act was never intended to apply only to the Inside Service at Ottawa. More than that, I think it would be very unfair and unreasonable if such were the case.


Alexander Kenneth Maclean: I did not say that. I said that the original purpose of the Act was to retire from the public service those who had grown inefficient, particularly those in the departments at Ottawa.


James Alexander Calder: Well, if the hon. gentleman takes that view, I doubt very much if he will find upon examination that there have been any abuses. I shall be only too glad to hand over to him the lists that give the names, the positions held, the length of service, and payments made either in the way of gratuity or of allowance, and I do not think he will discover any abuses along the lines he has suggested. It seems to me that if the Act is to stand at all it must be applicable not only to departments at Ottawa but to the [Mr. A. K. Maclean. I
entire service. Let me give an illustration. I will not mention names, but we had in one of the departments a gentleman who had been in the service thirty or thirty-five years in British Columbia, drawing a salary for years without doing one single tap of work. For years he did absolutely nothing and drew in the neighbourhood of $1,800 a year. This was an outside man attached to one of the departments. I could give the case of another man in Manitoba who drew some $1,800 a year, year after year, for several years and never did one single stroke of work.


Alexander Kenneth Maclean: There is a way of dealing with cases like that; abolish the office and let the man go out.


James Alexander Calder: You will find, all through the service, both inside and outside, men who have grown old in the employ of the Government. Take the first example I gave

as I said, I will mention no names. This man had been long years in the service and had reached the age of 79, 80, or 81. He was probably living on the salary he drew, with nothing else to depend upon. Now, it is very easy to say, retire him. As a matter of fact, that man had been carried along year after year simply because of his circumstances.


John Howard Sinclair: When he is pensioned, do you intend to replace him with another civil servant?


James Alexander Calder: No, he will not be replaced, nor will the second man of whom I have spoken. And there are many similar cases in which the person retired will not be replaced. As my hon. friend from Halifax (Mr. Maclean), well understands-and this is something for which no government is reponsible-when men get into the service the tendency always has been for them to remain in it. They grow old in the service, and once they pass the age of 60, 65, 69 or 70, no Government in the world is going to turn them out unless they have something to live upon. No government has done this in the past, and no government will do it in the future.


John Howard Sinclair: They did.


James Alexander Calder: They do not, and the object of the Bill of last year was to provide at least something upon which these people could live. Many of them were not required, yet every one hesitated to retire them. That aplied, not only to the inside service, but to every branch of the outside service as well, and so long as the Act

stands it should be made applicable to all parts of the service.


John Howard Sinclair: The hon. member forgets that there was a Government that turned out about 25,000 men at one time for political reasons;-no, I think 12,000.


James Alexander Calder: I was referring to people over the ages of 65, 68, 70 and upwards.


John Howard Sinclair: But I am referring to men who were not over age at all; I am talking about people who attended to their duties and who had committed no fault except what was reported by that particular Government as a political offence.


James Alexander Calder: I suppose all parties and Governments have done that in the past.


John Howard Sinclair: A great many were turned out and twice the number appointed instead.


James Alexander Calder: Very bad.


John Howard Sinclair: Now, the minister has not replied to the charge made by the member for Maisonneuve (Mr. Lemieux), and the member for Halifax. If it is true that this Government is retiring men who should not be retired, and replacing them with other men, thus putting a double burden on the country in the way of pensions to men improperly retired and salaries to new men, this is a very grave abuse that should not be tolerated. The minister ought to give the facts of the matter. If he has 182 officers whom he wishes now to retire it is important that the committee should know who they are, what their names are, where they live, the work they are doing, and the reasons for their retirement. I must confess I have lost confidence in the administration of the Civil Service to a large extent under the present Government, and I want to know before I assent to any new legislation, or sanction any new vote of money for these services, what the Government are doing in that respect. If it is true that they are retiring men who are well able to do their work, as in the case mentioned by the member for Maisonneuve, it is of course unpardonable at the present time, when money is so precious and when the debt of the country is increasing so rapidly. I do not think my hon. friend has given sufficient attention to that phase of the question. The hon. member for Halifax is well posted in these matters, every one accepts his word, which is his bond and when he makes a statement that he is aware of numerous cases of that description that have arisen during the
past year, I think it calls for something more than the minister has given in 'reply.


Alexander Kenneth Maclean: May I correct my hon. friend?
Mr. CALDER. Hear, hear.


Alexander Kenneth Maclean: What I
did say was that it had come to my attention during the year that a large number of persons had been notified that they were to be retired, as the statute requires, and who to my certain knowledge might very well continue. I did not say whether they were in the end discharged or not. The minister has absolutely failed to catch the purport of my remarks, or else I neglected to make myself clear to him. The Act is on the statute book, and I am glad that it is there, to be applied in some cases at least. The point I wish to impress on the committee is that that legislation was intended to take care only of those in the Civil Service who obviously were unfitted physically, mentally, and otherwise for further service.


James Alexander Calder: And also, if there was no further employment for them; there were the two reasons stated in the statute.


Alexander Kenneth Maclean: Yes. Now, possibly those who were old should be entitled to superannuation, but not if they were young people. The weakness of the Act is that it gives preferential treatment to those who just happened to be retired from office in 1920 and 1921, and I do hope that before very long we shall have a superannuation Act. So that the fewer that are retired at this time under this Bill, the less trouble there will be when that Act is introduced. If we introduced a general superannuation Act to-morrow these people who were retired in 1921 would be coming forward asking for the same superannuation as they would have received had they waited until the enactment of the permanent Act.


James Alexander Calder: The member for Beauce (Mr. Beland), asked a question some time ago as to the proportion of those over 65 years of age who had been retired. There were 1,599 reported by all the departments as being in the service and over 65 years of age, and of that number the departments recommended 650 for retirement.


Henri Sévérin Béland: Does that necessarily
mean that they were retired?


James Alexander Calder: No. Of this number 72 were* contributors to the superannuation fund. Of the 650 recommended for retirement 211 appealed; I am giving the figures to December 31. I have a statement of those retired since then, but it has not been worked out fully. Of the 211 appeals, there were 92 actual retirements at the end of December or 92 actual retirements out of some 650 recommended for retirement.


Henri Sévérin Béland: What conclusion does the minister draw from that?


James Alexander Calder: Just one moment. Since then, that is during the months of January, February and March of this year, there have been some 95 retired in addition making a total of 187 retirements since the Act came into force. Now, as I stated, there were in the entire service 1,600 in round numbers over the age of sixty-five. Of these 650 have been recommended for retirement and down to date only 187 have been retired. Yet the senior member for Halifax (Mr. Maclean) speaks of the wide abuse of the administration of the law. He spoke of young men being retired. I had already pointed out to the committee that the average age of the 187 retired is no less than 71.64.


Alexander Kenneth Maclean: The average age?


James Alexander Calder: Yes the average age is 71.64. Well I think hon. gentlemen will realize at once that if there were a large number among the 187 who were young men you would not have that average.


Alexander Kenneth Maclean: I was not talking about young men. I never used the expression all the evening until a moment ago.


Henri Sévérin Béland: How does it come that 1,600 men have been recommended for retirement?


James Alexander Calder: I did not say that. I said there were 1,600 in the entire service over sixty-five years of age, and of these 650 were recommended for retirement.


Alexander Kenneth Maclean: Who by?


James Alexander Calder: By the department.


Alexander Kenneth Maclean: I would say to the minister that if 1,600 were recommended by some one in the department-


James Alexander Calder: I repeat that I did not say that. I said there were 1,599-in round figures 1,600-in the service-over sixty-
[Mr. BSland.)
five years of age and of this number 650 had been recommended for retirement.


Alexander Kenneth Maclean: Who recommended the retirement of this 650.


James Alexander Calder: If I remember rightly the Civil Service Commission under the law in regard to men over sixty-five years of age make their own inquiry.
The Act says:
The Civil Service Commission shall, immediately after the passing of this Act, and after consultation with the deputy heads prepare and submit to the Governor in Council a report on all officers of sixty-five years of age and over, and all such officers who are not reported to render good and efficient service-
And so on. That is, the Civil Service Commission on their own motion, must, in the first instance ascertain, after consultation with the deputy heads, the men over sixty-five years in their department who in their judgment should be retired.


Alexander Kenneth Maclean: That is an unfortunate provision and ought to be taken out.


Mr. DUFF:: Is it not a fact that these 1,599 officials were notified their services would be no longer required?


James Alexander Calder: No.


William Duff: I have three or four cases in my county of men who were connected with different departments and occupied positions entitling them to draw the munificent salary of $100 or $150 who were last year notified that their services would no longer be required. Now these men are just as capable of doing the little work that is necessary as they formerly were.


James Alexander Calder: They were simply notified by the department.


William Duff: Why are they notified by the department before some inquiry is made?


James Alexander Calder: They do not come under this law.


William Duff: Which law do they come under?


James Alexander Calder: The departmental law, which ever department it may be.


Alexander Kenneth Maclean: I think the member for Lunenburg is quite correct. I have had similar instances come before me in my own constituency. I do not remember how it occurred but it was a matter of administration. I am not criticising the minister for it but I think he

should take advantage of these facts because it would assist him in seeing that the Act is not abused-that is the matter that I am particularly interested in. Now I know of cases in my own province-and I called the attention of the minister to the matter by letter last year-where certain outport customs officers particularly, enjoying a salary of perhaps one or two hundred dollars a year


James Alexander Calder: They never went through.


Alexander Kenneth Maclean: There is no use of my hon. friend saying " no " to me when I know it was done. I do not say it was intended, I do not know who is to blame, I simply say such a thing occurred.


James Alexander Calder: If the hon. gentleman
will allow me just a moment. There is nothing in the law to prevent the Minister of Customs from retiring an out-port officer in his department if he so desires.


Alexander Kenneth Maclean: There is
nothing in the law which enables the Minister of Customs to retire any one from the Customs Department and give him a pension. There are only two statutes under which persons can be superannuated or pensioned. One is the regular Superannuation Act which applies to those who entered the service before 1897, and the other is the Act we are now discussing. Now I want to point out to my hon. friend once more than it is a fact that many persons throughout Canada-perhaps they were among the 650-were notified that by reason of their age they were to be retired notwithstanding the fact that they were quite capable of doing the work. I submit further that if a person was in the customs service living in a country district, working perhaps only thirty days out of the year and receiving only $100 or $200 salary, he is not entitled to a pension- it was not the purpose of the Act.


James Alexander Calder: Could you give me the name of one of these men.


Alexander Kenneth Maclean: I cannot give my hon. friend any name now but I
wrote the minister about it during last year.


James Alexander Calder: If I am not mistaken,
while letters of that character may have originally gone out and while certain of the departments may have thought that that class of officials came under this Retirement Act, I doubt if in one single case of the kind any person has been retired under this law on a pension.


Alexander Kenneth Maclean: That may be, and if the minister had been attending to what I am saying he would long ago have learned that I did not say any of) these people were actually receiving a pension. I say that during last year these letters went out to a great number of people -no doubt there were several hundreds in Canada-advising them that they were to be retired under the Act. I say it was not good administration of the Act to have these letters go out in the manner they did. I never said these persons were receiving a pension under the Act, never insinuated that at all. What I was trying to impress upon the minister was the fact that some persons in some department, or the Civil Service Commission possibly, intended originally to widen the application of the Act, and gave a wrong impression to the public and to many in the service. That is what I am trying to correct and I again express the hope that the minister will see to it so that too many people in the service will not get the impression that they are entitled to a pension under this Act. The Act was originally intended, as I have already said, to deal with exceptional cases where persons-by reason of age, inefficiency or one cause or another-were not suited to continue their work in the public service and should be retired.


Mr. STEELE:: While I have no
knowledge whatever of the cases referred to by the member for Halifax I think he will agree with me that if such a mistake did occur the civil servants in question should be very well satisfied now that they have not been retired. In the administration of this Act as well as the administration of all Acts' relating to the Civil Service, there will be a great deal of dissatisfaction created among civil servants. That is the effect of every Act passed which changes their status in any way. I am sure a person who gives any thought or study to the condition of the Civil Service has found this fact established: that there are in the Civil Service-and I speak now of the Inside Service; it probably applies also to the Outside Service-many employees who are not physically able to give the country full service for the salaries which they are receiving. I might say that when the committee appointed two years ago to investigate the Civil Service were holding their sittings evidence was given which proved absolutely that many men and some women were physically unfit. Now, the

Government must face the position that these people have to be dealt with in one of two ways. The first "way is to continue them in the service at their full salaries. The second way is to afford them some means of retirement as provided under this Act. I think if we look at the matter from the business point of view, leaving sentiment aside altogether, we must come to the conclusion that the only course to take is to retire these people under this Act. The member for Halifax made the statement that 187 people have been retired. I am surprised that double that number have not been dealt with. I am satisfied that the Act has been administered very leniently in that respect and that there must be still in the service many people incapable of rendering full service for the salaries which they are receiving, and whom it would be to the advantage of the country to retire under this Act.
Now, there is another class of employees not taken care of under this Act, and I think they should be. I refer to employees under forty-five years of age. I am quite sure that in the Inside Service at least there are a number of men and women under that age who are physically unfit to carry on their duties but who are drawing their salaries as if they were giving full time. I think provision should be made for those people.
With rgard to the remarks made by the hon. member for Port Arthur, I do think that when a person has been engaged in provincial government service for a number of years, and owing to the experience which he has acquired in that service he is sought by the Dominion Government, it is not going too far to recognize the years which he has given in the provincial service as public service under this Bill. I would like to see that matter taken up for consideration. No man, I take it, would be invited to leave the provincial service and enter the Dominion service unless he were thoroughly capable, and where men are recognized in that way, I think they should also be recognized when it comes to retirement.
I am glad that the Government proposes to extend this Act. I am sure it is to the advantage of the country, financially and otherwise, and of the Civil Service, because in many cases we find these old people who are incapable of attending to duties which they have been performing for many years, and they may be heads of branches or occupying other prominent positions, and their very presence in the service prevents

the promotion of younger and capable men. In that way their continuance in the service is a decided disadvantage to the country.


Isaac Ellis Pedlow: The minister has made
the statement that no government ever had discharged or ever would discharge an aged official without considering his ability to provide for his old age. I would call the attention of the minister to a case in point that occurred in 1920. In the month of March an employee, who had been in the service for over sixty-five years, was dismissed on a month's notice with one month's pay. I called his attention to that case when this Bill was under consideration last year, but without result. I appealed to have the Bill dated back to the end of the fiscal year so it would cover this particular case, but the minister took the ground, possibly with good reason, ' that if he acceded to my request somebody else would come along and ask that the Bill be dated still further back. But the fact remains that here is a case to which the minister's attention was called a year ago where this Government had dismissed an employee, who had given good service in several capacities for a period of sixty-five years, without any regard to his ability to provide for himself.


James Alexander Calder: What position did he
hold?


Isaac Ellis Pedlow: He was employed on the Ottawa river in several capacities-as contractor building slides and making improvements of one kind and another. I think the member for North Renfrew is fully conversant with this man's treatment at the hands of the Government. I presented his case a year ago with all the force I was capable of, and tried to appeal to the heart of the minister then in charge of the Bill, but I must confess that my best endeavours were without success.
Now, members have asked the reason why these 187 employees have been retired since this Bill came into operation. I will tell them one reason, and if they will read section 8 of the Act they will find it for themselves. That section reads:
No person shall be retired under the provisions of this Act after the first day of July 1921.
One can imagine a man over sixty-five years of age, with finances perhaps not in a good state and possibly in precarious health, backed up against a proposition of that kind. I know many men who applied for consideration under the Act, but who

if the time had been extended would have continued in the service another year, to the advantage of the country. But they were forced by the provisions of the Act to make application forthwith. I know one man who has been in the service for twenty years and never was sufficiently paid; that man was forced to take advantage of the provision of the Act. Now, I agree with the views expressed by the member for Halifax (Mr. Maclean), and the member for Haldimand (Mr. Lalor) in regard to the operation of this Act. I say, as they have said, that this Act is forcing employees out of the service who are able and willing to continue. This action on the part of the Government has a tendency to increase the cost of the public service. I would ask the minister whether those who have made appplication under the provisions of this Act will be allowed to reconsider the matter and take advantage of the opportunity to remain in the service another year? It is unfair that they should have been forced to make this application; we should deal with them fairly and squarely. If we are going to extend the time for those who have not already applied, we should also give consideration to those who have already been forced to arrive at a decision. The minister has stated that there are in the service 1,599 employees over sixty-five years of age, and that the number recommended for retirement is 650. Of these 72 were contributors to the Pension Fund; 211 appeals have been registered against this arbitrary measure, and 187 have been retired. That makes a total of 1,120, so that there are still 479 men over sixty-five years of age not accounted for. Can the minister tell us anything about these men? Also, will provision be made for men who have been forced to make application for retirement under the circumstances to which I have referred? Will they be permitted to reconsider their applications and remain in the service for another year? That suggestion seems to me to be entirelv reasonable, and I hope the minister will take the same view.


James Alexander Calder: These men had the right to appeal; they made their appeal; the appeals have been decided, the retirements made and the rate of allowance fixed. I doubt very much, therefore, the advisability of opening the question up again. Personally I would not be in favour of it.


Isaac Ellis Pedlow: They had the right to appeal, but they had nothing to gain by
appealing; there was the provision of the Act staring them in the face. As it is proposed now to amend the Act, if appeal was allowed to these men I venture to say that in some cases they would take advantage of it and elect to remain in the service at least another year.


James Alexander Calder: My hon. friend is overlooking one important consideration. Under the law men are retired on account of advancing age, ill-health, lack of efficiency or lack of employment. If they appeal, the Civil Service Commission would consider the question whether these men were capable of carrying on. I can quite understand that the hon. member for Renfrew may have his own opinion as to the capability of a certain man, particularly if he is one of his constituents and as such makes certain representations to him. On the other hand, the commission must sit as a tribunal to try these facts on appeal. They listen to all that is to be said, and they come to a conclusion as to whether or not these men should be retired.


Isaac Ellis Pedlow: I have a case in mind, and I view it just the same as I would view any case which occurred anywhere from Halifax to Vancouver. It is that of a man who had served for twenty years and had given excellent service, one of the most capable and efficient employees of the Customs Department.


James Alexander Calder: Would the hon. gentleman give his name?


Isaac Ellis Pedlow: Well, I do not care to give the name, because I question whether he would wish to make an appeal now. But under the clause of the Act that I have quoted, if that man had failed to make application for retirement before the first of July, 1921, he would have been debarred for all time. A man of sixty-eight would weigh this situation very carefully from every point of view and he would say: Well, I will accept the retiring allowance, whereas if he had been given the option of remaining in the service another year he would certainly have done so and have given good service.


James Alexander Calder: If that man made application for retirement while he was still efficient and able to carry on, well, he broke the law, that is all. This law is not intended to retire men of that class. One other point. The Civil Service Commission and the officers of the department must first decide whether those over sixty-five

years of age are able to carry on efficiently. That is a fact that must first be determined by the Civil Service Commission plus the departmental officials.


Alexander Kenneth Maclean: But this
man likely got a notice that he was to be retired.


James Alexander Calder: Well, in that case the Civil Service Commission plus officials of the departmet had decided that on account of advanced age, ill-health, lack of efficiency, and so on, the man should be retired.


Alexander Kenneth Maclean: The notice that went out to the office holder was a clear intimation to him that it had been decided to retire him on account of this, that or the other cause. O'f course he had the right of appeal, and I suppose in many cases during the year, upon evidence being submitted to the commission, the appeal was allowed and the man was not removed. We can all quite understand how persons of a certain age in the public service receiving such a notice, especially those who are not conversant with the manner in which public affairs are administered, would not like to resist the notice and would allow it to go. That is the case which my hon. friend (Mr. Pedlow) has in mind. It is a great pity that the notices went out in the form in which they did. It is quite possible that mistakes might occur.


Mr. WIGMORE:: As regards the Department of Customs and Inland Revenue, no man received a notice of his retirement unless his case was first referred to the inspector or collector of customs of the district, who was asked to report whether the man was efficient and able to carry on properly or not. After the report of the inspector or collector of customs was sent to the department, the department turned that report over to the Civil Service Commission, and then the man was notified that he would be retired on a certain date, the reasons for his retirement being given. Then the man was notified by the Civil Service Commission that he had a right to appeal from that decision. It seems to me that the man was given every opportunity of presenting his case before the commission, or of sending in a written report if he was not able to appear in person.


Isaac Ellis Pedlow: There seems to be a misapprehension as regards the point I have made in connection with this particular transaction. The Minister of Customs and Inland Revenue (Mr. Wigmore) has stated
[Mr. Calder. 1
that in a case of this kind an inspector would report. I want to tell the minister and this committee, without mental reservation or fear of any kind, that the inspector who reported that this man was inefficient would need,to have some report sent in regarding himself.


Rupert Wilson Wigmore: All these cases are
reported in that way.


Isaac Ellis Pedlow: If the inspector reported this man as inefficient, I say that there is not a more capable and efficient man in the customs service of this country, bar none.


James Alexander Calder: Will the hon. gentleman
let me have his name?


Isaac Ellis Pedlow: I will, but not on the
floor of the House.


James Alexander Calder: Confidentially, so that
I may trace up his case.


Isaac Ellis Pedlow: The reason why this
man did not appeal is quite clear. The man is sixty-eight or sixty-nine years of age, and he was up against the possibility that, if he delayed until after July 1 of this year, he would be debarred from the provisions of this legislation. You can easily understand the reasonableness of the man's decision, that he would take no chances after July, 1921; that he was going to take advantage of the Act. If the Act had said that the final date would be July 1922 or 1923, he would have appealed, and the department would have had the services of this man for several years to come, whereas, now they are pensioning that man and putting another in his place at $1,500 or $1,800 a year, so that the country is saddled with this additional expense. It is foolish, insane, to discharge a man of this kind.


William Duff: The minister (Mr. Wigmore) says that before any of these officials receive notice of retirement, the inspector or customs officer for the district has to send in a report. I do not wish to blame the Minister of Customs and Inland Revenue; but I know of a case in my constituency where a man in an outport district who, perhaps, did not have to do an hour's work in a day, although he did that work efficiently and well, was notified by somebody that his- services were Po longter required. Although, as the Minister of Immigration and Colonization (Mr. Calder), who is in charge of this Bill, says, he could have appealed, the fact remains that ninety out of a hundred men realize that it is useless to appeal to the Civil Service Commis-

sion at Ottawa. This man was receiving the Mr. MACLEAN (Halifax) : What does magnificent sum of $100 a year for the the minister call a part-time man? position of customs officer for the outport Mr_ cALDER: Men who are outport when he received that notice. I doubt if he officers drawing a hundred dollars a year knew where the Civil Service Commission and employed in some other business, as was, and he felt, once he received that notice nearly all these men are, are not public from the Customs Department, that it servants coming under this legislation, meant that his services were ging to be
dispensed with, and he realized it was use- Mr. MACLEAN (Halifax) : Nevertheless for him to appeal to the Civil Service less the fact remains that that class of Commission.	men did receive notices under this Act.


Alexander Kenneth Maclean: Do any Mr. CALDER: That may be but the Act
outport men get superannuation?	is not operative in regard to them.


William Duff: I do not know whether they do or not.


James Alexander Calder: Not under this legislation.


William Duff: I do not care what legislation it was under, but these men were given notice, although they were quite capable of doing their work in their district. The Department of Customs and other departments notified these men that their services were no longer required. Men of this class who have served the public for, perhaps, 20, or 30, or 40 years, should not have received this notice. In my opinion, it is useless to argue that they had a right of appeal to the Civil Service Commission. The Civil Service Commisson is at Ottawa, and they do not know the first thing about the matter.


James Alexander Calder: They .would have no right of appeal. That class of men does not come under this Retirement Act at all. Those are only part-time men.


Alexander Kenneth Maclean: Such men were under the Act last year. The minister is amending it now to exclude them. That is the matter which I brought to the minister's attention last year asking him to amend the Act to exclude those men.


James Alexander Calder: The class that comes under this legislation is defined under the term "officer."
"Officer" means any officer, clerk or employee who Is employed in the public service, and who receives a stated annual salary, but shall not include any person employed for a temporary purpose or on part time.
These officers are merely part-time employees. They get only a hundred or two hundred dollars a year, and it has never been considered that they come under this legislation.


William Duff: That is an annual salary.


James Alexander Calder: No person who is a parttime employee shall come under this Act.


Rupert Wilson Wigmore: These men are not receiving a retiring allowance.


Alexander Kenneth Maclean: I should
hope not.


Rupert Wilson Wigmore: A number of these men ' who have been performing duties as outport officers, and receiving fifty dollars a hundred dollars or two hundred dollars a year, have received notices and have been retired, and their positions have never been filled.


William Duff: Why?


Rupert Wilson Wigmore: Because they have not been doing anything even for the small amount they are receiving.


William Duff: The minister does not know his department as well as he might. The man to whom I have referred is absolutely necessary, and consequently he should not have been retired, and the fact that he has been retired necessitates the appointment of another officer. Consequently, it is useless for the minister to say that he was retired because he was not necessary. It was necessary to have an officer at this outport. I know why he was retired. He was retired because he was not on the right side of politics. He was retired because he was a Grit. That is the whole story.


Rupert Wilson Wigmore: I do not know anything about this particular case, but there are a number of cases such as I have spoken of. In this particular case, the man may not have been retired at all.


William Duff: He has been retired.


Rupert Wilson Wigmore: Has another man been appointed?


William Duff: It takes the Civil Service Commission ten years to make an appointment.


Henri Sévérin Béland: It appears that in the application of this law there have been some hardships. The minister has stated that over 1,500 men over 65 years of age

were in the service; that out of that number, 000 had received notice that they might or would be retired from the service for lack of efficiency as one of the reasons; that out of those 600, about 400 went down without any protest or appeal; that 200 appealed from the decision reached by the department and Civil Service Commission, and that 92 were retired out of this 200.


James Alexander Calder: Before December 31.


Henri Sévérin Béland: Yes.


James Alexander Calder: And 95 since. The total number to be retired is 187 up, to the end of last month.


Henri Sévérin Béland: Let us take only the 600 the minister has referred to.
' Mr. CALDER: Out of this 600, 187 have been retired.


Henri Sévérin Béland: How does the minister explain that 600 notices were sent out, implying, of course, that there were that number in the service who were considered inefficient?


James Alexander Calder: Not necessarily inefficient. They may be retired for other reasons. A man may be retired simply because there is no work for him to do; I gave two illustrations of that. He may be retired on account of his physical condition, or because he is considered inefficient on account of old age or ill health.


Henri Sévérin Béland: Does it not strike the minister that if only 187 have been retired out of the 600 to whom notices were sent, it was a hunting expedition on the part of the different departments? The departments sent out 600 notices, and some of the big game were wounded, and some killed. We can all see through that. I am sure the minister would admit that it was a hunting expedition, if he would be frank. The idea was, let us send out these 600 notices, and there will be many who will not appeal. Why? Because they will have to travel, some of them, a long distance to Ottawa and incur a big expense, perhaps hire a solicitor, and a lot of correspondence will be entailed. For these reasons many refused to appeal, although they felt in their conscience that they were still performing their duties to the satisfaction of any impartial man. I shall not press the point further, but it does seem to me that this was a hunting expedition in order that the department might retire a number of civil servants who had given very good service, and who were still in a condition to perform their duties in a satisfactory

manner. I would urge the minister, if this Bill passes, and I suppose it will, to impress upon his colleagues and the deputy heads of the departments to refrain from sending out these notices unless there is very good ground for sending them out. It is a hardship in every case where the man is still in good health and able to perform his duties.


William Duff: Has the minister a copy of the notice that was sent out to these 1,599 officials?


James Alexander Calder: I never sent the notices at all. The notices would go from the Commission, under the law. I have not a copy of the notice here. The notice did not go to the 1,599 officials in the service over sixty-five years of age, but only to those who were to be retired.


Alexander Kenneth Maclean: While I am sorry to detain the committee, it might not he objectionable if I were to call the minister's attention to section 2 of the Act, and to subsection 2 of that section. Perhaps the discrepancy which I shall point out has been responsible for these notices which have been sent out, and for the confusion which has arisen. Subsection 2 provides that the Civil Service Commission shall prepare and submit to the Governor in Council a list "of all officers who are not reported to be rendering good and efficient service for the remnuneration that is being paid them." I suppose quite a proportion of the Civil Service might possibly come within that definition. It would all depend upon the person who was rendering judgment on the capacity and efficiency of the individual. While those words are in the Act, I think I may safely say that it was never intended that this Act should be used to secure the dismissal of persons on the sole ground of inefficiency. The Act was for a bigger purpose than that.
Then subsection 2 of section 2 provides that the commission shall submit to the Governor in Council "the names of all officers who, being under sixty-five years of age, by reason of advancing age, failing health, physical disability, lack of experience, and so on." It is this subsection which really discloses the reason which the Government had in mind at the time as affording grounds for the removal of persons from the service; that is, the grounds of inefficiency were to fall specifically within that category. Section 2, which I read, is very general in its application, and I fear that it was misleading just on that

account, and has been responsible for the notices being sent out. I think the minister will agree with me that it was not the intention of this Act that people should be retired merely because they were inefficient, but there had to be a combination of circumstances, namely, age, physical incapacity, utter and obvious inefficiency, or clearly no duties to perform.


James Alexander Calder: I thoroughby agree.


John Howard Sinclair: I would suggest to the minister that before he takes the next step with this Bill, he lay on the Table for the information of hon. members the list that he has, and also a copy of the notice that was sent out.


[Stage Direction]
Amendment agreed to.
Resolution as amended reported and concurred in.
Mr. CALDER thereupon moved for leave to introduce Bill No. 107, to amend an Act to provide for the retirement of certain members of the public service.
Motion agreed to, and Bill read the first time.
On the motion of Right Hon. Mr. Doherty the House adjourned at 12.05 a.m. Saturday.
Monday, April 25, 1921.