[Stage Direction]
Bill No. 85, to incorporate Domestic Finance Corporation.-Mr. Beaubien (for Mr. Chevrier, Ottawa East).
Bill No. 86, to incorporate Atlantic Loan and Finance Corporation.-Mr. Martin.
Bill No. 87, to incorporate United Credit Association.-Mr. Jacobs (for Mr. Factor).


[Stage Direction]
On the orders of the day:
Mr. A. W. NEILL (Comox-Albemi):: Mr. Speaker, on March 24, about two months ago, the Secretary of State (Mr. Rinfret) was kind enough to say that in a short time he hoped to be able to report favourably on the passage of an order in council granting sick leave to government servants who, although not qualified as employees under the civil service commission, had been many years in the government service but who, upon losing a half day's time, are docked for it.


Hon. FERNAND RINFRET (Secretary of State):: The hon. member raised the point

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previously in the session. I regret to report that it may not be possible to do exactly what the hon. member has mentioned, but we are now considering whether or not we might substitute an alternative provision which would partly meet the views he has expressed.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
The house resumed from Thursday, June 4, consideration in committee of Bill No. 21, to amend the Canadian Natiomal-Canadian Pacific Act, 1933.-Mr. Howe.-Mr. Sanderson in the chair.
On section 3, paragraph 6-Tenure.
Mr. STEWART:: When the house adjourned last night I was discusing with the minister a certain provision of this bill, and calling attention to the fact that he had at different times in the course of the discussion stated that the object of the previous government in appointing trustees for a fixed term was to tie the hands of a succeeding government, and when I made that statement the minister replied, "So it was," as will be found at page 3422 of Hansard. Then I said:
I ask the minister to read the report of the Duff commission and to study the reason why that commission recommended the appointment of a board of trustees and recommended also that it be given permanence.
At the time I did not have before me the report of the Duff commission, and I now call the minister's attention to clause 204 of that report, which says in part:
One of the trustees should be named as chairman at the date of his appointment with tenure of office seven years.
The minister surely does not think that away back behind the report of this commission the government set out with or was able to impose upon that commission a desire to tie the hands of its successor. In answer to the request of the minister as to why the recommendation of the Duff commission as to the length of tenure of office was not followed, I said I was not sure. The appointment of the chairman was made for a term of five years instead of seven, again disclosing an absence of all desire on the part of the previous government to tie the hands of a succeeding government for any particular period of time. The report of the commission discloses certain conditions with which the minister is familiar, political interference in the management of the road and extravagance in its management, all of which is specifically set out in the report, and has been referred to at different times in this debate.
I really think, Mr. Chairman, that the minister ought to withdraw the statement that it was the intention of the government to tie the hands of its successor, when the fact is that an honest and sincere effort was made to carry out the recommendation of this very important, impartial and capable commission, and that was all that was behind the appointment of the board of trustees. I would ask the minister if he still persists in the statement that the object of the government was to tie the hands of its successors.


Mr. HOWE:: I am sorry to have to differ from my hon. friend. I do not think I can withdraw my statement. It seems to me that when the. term of office was being considered and a change was being made from the recommendation of the Duff report, it could have been for a term within the life of the parliament then sitting. I think that would have been wiser. That is all I have to say about it.


Mr. BENNETT:: It is quite obvious that the term was to preserve continuity, for one of the trustees was to leave office next fall, another next year, and in two years more the chairman would retire; but it was thought that seven years was too long, and so the term was made five years. In the debate which took place it was quite clear that the whole bill was framed on the Duff report, and for the minister to suggest improper motives is not only contravening the rules of the house but is not in accordance with the facts. The term of office was lessened for the very purpose of meeting unfair criticism that the hands of the next parliament were being tied by the then parliament. When a grant was being given to the federal commission of this city I argued that we should not go beyond the life of a particular parliament, but the Prime Minister took the other view.
Public interest is not always synonymous with pure partyism. It does not mean that, and if it is impossible for hon. gentlemen opposite to conceive of other people having an honest desire to carry into effect the report of the Duff commission, merely because they want now to remove the trustees who were promised a certain term of office, they have no right to attribute improper motives to those who sincerely endeavoured to give effect to the recommendations of the commission appointed, not at the instance of any one railway, but at the instance of both, because both railways thought it desirable in the public interest that such a report should be made.


[Stage Direction]
Paragraph agreed to.
On section 3, paragraph 7-Provincial companies reincorporated.
[Stage Direction]
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Mr. CAHAN:: May I ask if the minister
would be so kind as to give us a clear statement as to the differences between the powers of the board of directors as proposed under this bill and the powers of the trustees treated by the act of 1933? I have puzzled my brain over it but I cannot see very much difference between the powers of the directors as stated in these sections and the powers of the trustees as they were created by the act of 1933.


Clarence Decatur Howe: I thought my hon. friend saw a very decided difference, because he claimed that one made for an improvement all round and the other led to unlimited graft and corruption.


Charles Hazlitt Cahan: I still adhere to that opinion.


Clarence Decatur Howe: There is a difference, and I
will try to explain it. First there is no difference in this principle, that the management of the internal affairs of the Canadian National Railways is now vested in the hands of the trustees, and under this bill will be vested in the hands of the board of directors. But at the present time those powers are vested in one man, who must agree to every action that is taken respecting the internal affairs of the Canadian National Railways-one man in charge of a property far-flung from coast to coast, and of the magnitude of the Canadian National Railways. In addition, that one man is operating some eight departments of the railway directly. In other words, he is not only running all the affairs of the railway personally but he is acting as the manager of eight departments of the railway. He has two co-trustees, neither of whom can carry out anything that is suggested unless the chairman agrees, and always one must agree with the chairman to make a particular act effective. That is the present set-up.
Under the new set-up we have a chairman. He is one member of the board of directors, and he will have six other directors with him of the type described in the Duff commission's report, if it is possible to get them-and I am satisfied that it is-men of experience in financial matters and with a background in the industrial life of Canada which will permit them to make an important contribution to the affairs of the railway. We have in this case a full time chairman as was the case with the board of trustees. The chairman of the board of trustees was assisted by two part time directors; in this case, by six. When the seven sit around the table each will have an equal vote in deciding any matter of policy coming before the board. That is the main difference.
There is no difference so far as outside control goes. The present board of trustees have 
to go to the government with respect to certain matters in .which the government and railroad are so interlocked that it is impossible for one to act without the other. The new board will be in the same position, and the contact will be between a practical railway man as chairman and the Minister of Railways. The contact at present is between the chairman of the board of trustees, who is not a railroad man at all, and who must necessarily bring an adviser with him. Present discussions between the Minister of Railways and any practical railway man is conducted through a third party, who has no first hand knowledge of most matters under discussion but who must convey the views of the practical railway man to the government. Those are the main differences, and I think they are very important.


Charles Hazlitt Cahan: But what supervision will
the Minister of Railways have over the proceedings of the directors? I do not think, simply because the chairman of trustees had supervision over several departments of the railway, that that is altogether a crime, as the extravagance and emphasis of the language of the minister would seem to indicate. When the new Department of Transport is set up I assume the hon. gentleman will preside over it. He will then have the supervision and direction of several departments or branches. If the employees in that new department are to be appointed outside of the civil service, he will have a direct voice in the appointment of more persons than any previous minister has had in the history of Canada. If he considers himself qualified for the supervision of so many branches, I cannot understand why he should think the chairman of trustees is so absolutely disqualified. He has admitted himself that he has been unable to find any serious error of act or judgment which could be charged against the present board of trustees or the chairman of the board. The hon. gentleman has put himself out of court by admitting that he can find no real cause for criticism.
He has suggested that Mr. Fullerton is disqualified because he was not trained as a railway man. I call the attention of the hon. gentleman to the fact that he himself is not a railway man. The other great competing railroad is in charge of a gentleman of high qualifications and large experience, but he was not originally a railway man. I could take the minister to many of the leading corporations in the United States where the great executive heads are not trained in the mechanical operations which are carried on by the particular corporation

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over which they preside. A gentleman with whom I have been intimate since his youth is the executive head of the General Electric Company of the United States. He is merely a lawyer; he never was a railway man or a manufacturer. It is quite possible for a man who is not a railway man to act as chairman of the board of trustees and supervise and direct affairs in such a manner as to preserve and maintain the best interests of the public service over which he is placed. Are the members of this new board of directors to be railway men? Are they to be selected because of their railroading experience?
Except in one instance, the hon. gentleman has not been able to indicate any difference between the powers and responsibilities of these directors and the powers and responsibilities of the trustees. The chairman of the board of trustees had to have the concurrence of one of the other two trustees, and the other two could not carry out matters of policy except with the consent of the chairman. The so-called departments over which the chairman had supervision were not departments connected with the actual running and operation of the railway system. The more I think of this the more I am driven to the conclusion that the purport of the bill is to change by statute a board of trustees into a board of directors, the appointment to which will rest with the hon. gentleman and depend upon his recommendation and selection. I am driven to the conclusion that the whole purpose of the bill is to obtain for the minister political control over the management, maintenance and operation of every department of the railway.


Clarence Decatur Howe: Mr. Chairman, the hon. member referred to supervision by the chairman over certain departments. The fact is that the chairman is operating manager of seven or eight departments, in addition to running the whole show as chairman. I want to make that clear, because there is a slight difference. The hon. gentleman said that my department would be the largest in Canada, but I ask him to compare it with the Canadian National Railways. When this new department is formed there will be some 5,000 employees in it, but there are over 75,000 in the Canadian National Railways. I will be in charge of property valued at only one-twenty-fifth or one-thirtieth the value of the property of the Canadian National Railways. I admit I have a very difficult task; it is perhaps an open question whether too much work will not be connected with this department, but the
hon. member was comparing two totally dissimilar things. It might be true to say that the chairman, not being a qualified railway man, has a task somewhat beyond his capacity, and that I, not being a qualified railway man, have a task somewhat beyond mine, but it would not be for the same reason.
I think we had better straighten out the question as to what this government is trying to do. The impression has been created that we are passing this bill to dismiss three trustees.


Richard Bedford Bennett: That is what you said.


Clarence Decatur Howe: We are passing this legislation to get a better set-up for the Canadian National Railway. When I first took office I talked with the trustees individually and each told me that the present set-up is bad. I talked with my predecessor in office, and he said it was bad. I heard the views of other people who had had close experience with the situation, and they felt it was impossible. Just how far should the personality of the chairman be allowed to intrude into this matter? I think it has gone rather a long way. A few days ago in the committee on railways and shipping the hon. member for Leeds (Mr. Stewart) demanded that the chairman be given the privilege of making a statement. Objection was raised because this bill was not before the committee, but I took the view that I should like to see the chairman have his day in court if he so desired. I saw nothing behind it at all; I thought it was only fair that he should be given this opportunity. He came before the committee and made his statement. I thought it was a very fair statement, and I made some rather flattering remarks about it. But what happened? A beautiful document-I understand it has been published both in English and in French-is being flooded over the country, being a reprint of the chairman's statement.


Charles Hazlitt Cahan: What statement is that?


Clarence Decatur Howe: The statement made by Mr. Fullerton before the committee, which statement was out of order.


Richard Bedford Bennett: It was not out of order; it was very much in order.


Clarence Decatur Howe: I question to what extent a member of parliament was justified in pressing a thing like that if he knew how it was going to to used. After all, this bill is before parliament and I think it can be considered on the basis of statements made in parliament, rather than on the basis of statements made outside and broadcast throughout the
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country. That is all I care to say. We believe that in the interests of the railway a change should be made.
If there should be any hardship imposed upon the chairman by this change, I am quite prepared to see that he does not suffer financially. There is nothing personal in the relations existing between the chairman and myself. The chairman happens to be involved in this change, and I am sorry. I did my best to see that his personality would not be involved when the time for reorganization came, but the fact remains that I believe it is necessary in the interests of the railway to change this system of management. That is the view of the government. Why pound away on the individuality of a man who happens to be chairman of the board?


Charles Hazlitt Cahan: The hon. gentleman has disclosed one matter which I think is of the utmost importance and should receive the consideration of this committee. If the hon. gentleman received gossip from this man or that man, from some of the officials of his department, to the effect that the present administration was not competent and was not effective, why in the world has he not brought that evidence before a committee of this house where the house would be able to cross-examine witnesses and ascertain the import and accuracy of the statements made? I tell the hon. gentleman, I think it is a gross error of judgment on his part that he should attempt to dominate the will of parliament and to secure the passage-


Some hon. MEMBERS:: Oh, oh.


Charles Hazlitt Cahan: -yes, to dominate the will of parliament-I use the word parliament- as expressed in the statute of 1933, without giving the real source of his information, but by retailing a lot of gossip which has come to his ears.


Some hon. MEMBERS:: Oh, oh.


Charles Hazlitt Cahan: That is exactly what it is. He had not the courage-


Some hon. MEMBERS:: Order.


Charles Hazlitt Cahan: He had not the courage when he stood in that committee-


Some hon. MEMBERS:: Order.


Charles Hazlitt Cahan: -to call in question a single statement which had been made in the report of the trustees which was then under consideration. He has simply shrugged his shoulders and said, in effect, that he had to admit that there had been an economical and careful administration. He was not able to indicate a single default on the part of the

trustees. Treatment of this kind is, I think, unprecedented in the history of government in this country; and it is unprecedented in parliamentary affairs that a minister should rely on a bit of gossip, without producing any evidence in support of it, as the ground for asking parliament to repeal an act which received the consent of a majority of both houses of parliament so recently as 1933.


Mr. DUNNING:: It is rather difficult to ascertain the cause of so much heat on the part of my hon. friend. It appeared that my hon. friend accused the Minister of Railways of attempting to dominate parliament, and when we try to discover what parliament we find it was the last parliament. That is the whole point. The last parliament was supreme so long as it was in office-


Mr. MACKENZIE (Vancouver):: And still
tries to be.


Charles Avery Dunning: This parliament is now supreme. The Minister of Railways and the government of the day are responsible to this parliament and to the people of this country in precisely the same manner as their predecessors were to that parliament and to the people of Canada. We are exercising our judgment on this problem with the same motives, I hope, as those which actuated our predecessors in exercising their judgment upon it.


Richard Bedford Bennett: According to the Minister of Railways they are pretty bad.


Charles Avery Dunning: I am trying to credit my hon. friend with higher motives than the hon. member for St. Lawrence-St. George (Mr. Cahan) attributed to the Minister of Railways a little while ago.


Richard Bedford Bennett: The motives were attributed by the Minister of Railways.


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: This noise won't pass the bill.


Charles Avery Dunning: On no occasion in my hearing did the Minister of Railways refer to his views on this matter as being predicated on gossip.


Richard Bedford Bennett: But he did attribute
motives.


Charles Avery Dunning: I heard no attributing of motives.


Charles Hazlitt Cahan: He referred to reports that had been made to him orally. What is that
but gossip?


Charles Avery Dunning: He sought the advice of responsible men, and Hansard will show that he considered the views of his predecessor

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in office with respect to the matter. It is not possible for the head of a great business to determine in the manner of a court of trial the qualifications for executive positions of those conducting that business. Matters of judgment cannot be dealt with by question and answer in the manner in which a lawyer would conduct a trial. The head of a great organization must make up his mind, with respect to the executive capacity of those charged with responsibility, by a variety of methods; and I suggest that what the minister said this afternoon with regard to the confirmation of his own view was not petty gossip but the kind of thing which one would expect a man taking over such responsibilities to pay attention to. The whole point is that with the best of motives, and without attributing any to our predecessors, we believe that we have a mandate from the people of Canada to change the system which the previous administration put into effect.


Richard Bedford Bennett: Forty-six per cent of the votes.


Charles Avery Dunning: Well, as to the percentage of votes, my hon. friend is a constitutionalist; I have not heard of him as an advocate of proportional representation. Why talk about the percentage of the votes? He was quite satisfied with a majority of the members in the last parliament.


Richard Bedford Bennett: He is yet.


Charles Avery Dunning: Why not this one?


Richard Bedford Bennett: He is quite satisfied with it yet.


Charles Avery Dunning: I believe my hon. friend is; I am quite sure he would be. So are we.


Hugh Alexander Stewart: The Minister of Finance has just referred to the questioning of motives, and I do not think he could have been in the house when I read a statement which the Minister of Railways made last night in answer to one that I had made. I said:
The minister persists in stating or insinuating or suggesting that the object behind the fixing of the period of office of the trustees was a political one; that it was done for the purpose of tying the hands of a succeeding government.
The reply of the minister was:
So it was.
Now is not that a questioning of motives?


Richard Bedford Bennett: I should say so.


Hugh Alexander Stewart: This comes from the Minister of Railways and it comes after long consideration, and is repeated; this is the second or third time he has made that statement. I ask the Minister of Finance, who is
questioning motives? I referred to the record and showed that the recommendations of the Duff commission embodied the appointment of a board of trustees for a longer period of office than the one for which they were appointed. Surely therefore that destroys entirely the contention, oft repeated in this house by the Minister of Railways, that the motive of the former government was to tie the hands of a succeeding government. I asked the minister to withdraw it but he declined to do so. So he reaffirms it. The record is against him. Not only is the record against him on that, but it is against him on other matters he has stated to-day. He says that the chairman of the board of trustees took over the charge of operating departments of the road.


Clarence Decatur Howe: Operating the several departments.


Hugh Alexander Stewart: The minister said operating departments. I think Hansard will prove that. What does the chairman of the board of trustees say about this in his statement? He refers on page 218 of the proceedings of the railways and shipping committee-


An hon. MEMBER:: Which was out of order.


Hugh Alexander Stewart: It was perfectly in order. When in the world did it become out of order for the chairman of any organization in charge of the national railways to make a statement in explanation of his conduct or in justification of it? Whenever did it become out of order? It never has been, and, I hope, never will be. However, here is what the chairman said:
I now turn to the departments which came under my direct management. Section 10 of the 1933 act provides:-
"The trustees shall appoint, on terms to be fixed by them, and with the titular rank of president, a person other than one of themselves to execute and perform, under and in consultation with them, the powers, authorities and duties of chief operating officer of national railways, as such powers, authorities and duties shall be from time to time defined by by-law or resolution of the trustees and committed for execution and performance. The president shall report and be responsible to the trustees and to them alone."
That is in a statute passed by this parliament. The chairman continues:
It is my view that the person who fills this position has a task requiring not only high technical skill, but demanding his full time and attention. On January 31, 1934, the trustees appointed Mr. S. J. Hungerford as chief operating officer. In arranging the division of departments between the president and myself I took over those departments which were not connected with the actual operation of the railway. Those connected with the operation of the railway proper were assigned to the president, and I have never at any time interfered in their operation,
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although I recognize that the ultimate responsibility for the efficiency of those operations rests with the board. The working out of this arrangement has been harmonious and I have never heard of any complaint from any railway officer.


Clarence Decatur Howe: May I ask whether my hon.
friend agrees that these departments-the legal, the accounting, the publicity and so on-have no relation to the operating of the railway?


Hugh Alexander Stewart: He does not say that.


Clarence Decatur Howe: Read it again.


Hugh Alexander Stewart: He says that these assignments were made with the approval of the jperating officer, Mr. Hungerford-


Clarence Decatur Howe: Ridiculous.


Hugh Alexander Stewart: They were made after
consultation with and obtaining the approval of the chief operating officer.


Clarence Decatur Howe: My hon. friend agrees with
that statement entirely? That is his statement, is it?


Hugh Alexander Stewart: I will make my own
statement, and the minister can agree with it or not. To proceed a little further, there was no questioning of the chairman of the board as to his statement. If there was any doubt about the accuracy of it, the opportunity was there. I desired to ask him a few questions upon it, but it was ruled out of order. Now the minister says that this is a personal matter on the part of the opposition, arising from personal interest in the chairman of the board of trustees. I say that such is not the case. We are more concerned with the successful operation and the efficiency of the Canadian National Railways than we are in any person or any number of persons, but we do contend that the chairman of the board should have had an opportunity of answering any charges that were made against him, that the charges, if there were any, should have teen preferred under the statute, and he should have had an opportunity of answering them.
The minister refers to certain changes, and declares that the chairman of the board of trustees had too much power. Again I point out to him that all that is needed is an amendment of the existing act. It is not necessary to destroy the present set-up of the board of trustees, based on the recommendation of the Duff commission. The duties of the trustees might be enlarged, varied or otherwise changed by amendment of the existing statute. But that is not what the minister wants. That is not what his government wants. They simply want to wipe out this organization that was established as the result of an investigation instituted in an honest and sincere endeavour

to place the Canadian National Railways on a sound basis, to put its administration above political interference; and the minister, although he has on record the warning of this commission, the finding that such practice was disastrous to the Canadian National Railways, now openly avows that he is going to return to it. That is all there is in this legislation.


Clarence Decatur Howe: Just one word on that. There is something else this government wants. As long as this government is responsible for the Canadian National Railways and its operation it wants a management at the head that is lo3'al to this government. Now I can tell the hon. gentleman what he very well knows, that since this government took office the chairman of the railway has spent more time in Ottawa in the offices of members of the late government than he has in the offices of the present government.


Hugh Alexander Stewart: Mr. Chairman, the
Minister of Railways is making a charge. At last he has come out into the open and made a charge against the chairman of the board of trustees. I know the minister has a sense of British fair play, and the chairman ought to have an opportunity of answering that before this bill passes.


Richard Bedford Bennett: The statement made by the minister that the chairman has been frequenting the offices of the members of the late government is not true as far as I am concerned. I have had no discussion with him, except that I just met him casually on a Sunday, and I have had no talk with him other than on that one occasion. I have not seen him, nor has he called upon me. It may interest the Minister of Railways to know that I believe he has not called on any members of the late government, and that his sole purpose so far as we could see, judging from the attitude which was taken by him, was to obtain the good opinion of the present minister.
The minister has made a very serious charge. It would not occur to hon. gentleman behind him that it was at all serious-I should not expect it would; it would be very odd if it did. But the issue is a serious one. To hon. gentlemen behind the minister I simply say, do not for a single minute think you are assisting the passage of this measure by the attitude you are adopting this afternoon. We understand what our duties are, and we propose to discharge them. It may take the rest of the summer to get to the bottom of this matter, but we shall get to the bottom of it. The minister has charged the chairman with disloyalty to the government and with frequenting the offices of members of the late

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administration. Of the late administration there are present the former Secretary of State, my right hon. friend Sir George Perley, the former Minister of Public Works, and myself. The former Minister of National Revenue is absent, and the minister without portfolio, and the Minister of National Defence is here to-day. Those who are present can speak for themselves.


An hon. MEMBER:: Ex-ministers.


Richard Bedford Bennett: They can each speak for themselves so far as that is concerned. But a charge such as that should not be permitted, merely by the cheers of a tyrannous majority, to be regarded as correct. I challenge it.


An hon. MEMBER:: Another Mussolini.


Richard Bedford Bennett: The minister has said that the former Minister of Railways had reflected upon the statute and the set-up. I should like further evidence of that statement. The minister may have made observations respecting the chairman, but in common with those who sit with me I should like to know what Doctor Manion said with respect to this measure. If conversations are thus to be retailed, not in the committee where the chairman could be heard, but in the house, and therefore in his absence, and are to be treated as evidence upon which to frame policies, then I recommend that the Minister of Railways should take an elementary course in the conduct of parliamentary procedure.


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: That is what I recommend to him. Judge Fullerton is to be removed from his office. He has had an honourable career at the bar. He was a judge and was highly regarded; at least the Minister of Railways has said so. He was chairman of the Board of Railway Commissioners for Canada. For over two years he has held the high and responsible position of chairman of the board of trustees of the Canadian National Railways. But, though it was pointed out during the debate in the committee that that would be his only opportunity to be heard, it required great effort on the part of my colleague from Leeds to secure for Judge Fullerton the opportunity of presenting his statement. It may amaze this committee to know that the former Minister of Public Works had not held any conversation with Judge Fullerton of any kind, form or description with reference to the matter, and when in the committee it was suggested that he might consult him with respect to the [DOT] matter it will be recalled what the chairman said. It was because we on this side of the house believe that it is an elementary rule,
under this form of government, that when a man is being removed from office by statute he should have an opportunity to be heard, that we took the course we did. The section provides:
No trustee shall be removed from office, nor suffer any reduction in salary, during the term for which he is appointed, unless for assigned cause and on address of the Senate and House of Commons of Canada.


Ian Alistair Mackenzie: Was that done with regard to the federal appeal court?


Richard Bedford Bennett: Yes. Provision was made for them.


Ian Alistair Mackenzie: They
were not heard before the positions were abolished.	.


Richard Bedford Bennett: Those positions were abolished by law, but there was no such provision as this in the statute, namely "for assigned cause."


Ian Alistair Mackenzie: There
was a definite contract for a term of years.


Richard Bedford Bennett: The privy council may not have known, but it said not, distinctly and positively, in the Reilly case, and they based their judgment upon one fact only, that the office had been abolished, which parliament can always do. But there was no provision such as there is here, for assigned cause. That is not a matter of form; that is a matter that comes distinctly within the provisions of the statute having to do with the appointment of judges.
The position is this, Mr. Chairman, that with much difficulty Judge Fullerton was permitted to present a statement. Then when an effort was made to examine upon it the chairman called it out of order, and the government supporters immediately raised the question as to its being in order, as the record shows. That was the issue. Surely there is an elementary rule that when the house is investigating the annual accounts and the operation of the company and the chairman is delivering his last statement, he has a right to make a statement. The minister himself says he attended upon him soon after his appointment as minister for the purpose of securing his resignation, but we are leaving all that out for the moment.
This afternoon the minister has said that this government must have a board that is loyal to the government, and that the chairman was not loyal to the government for he spent more time in Ottawa in the offices of members of the former government than in the offices of members of the present administration. I can only speak for myself,
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but I say he has never been in my office, as far as I know; at least I have not seen him in my office, since I have been here. I saw him once in the hotel during the time he was in Ottawa, and that is all; that, I should say, was for a few moments only. That is the position. I believe he was present at a public dinner which I attended, and I shook hands with him on that occasion. That is the only time I have seen Judge Fullerton to speak to him since the last slection, at a public dinner or dinners, once Dr twice, and I saw him at the hotel. Those have been the only occasions. I desire to make that perfectly clear, and I am not sure that I saw him at more than one dinner. I did see him at the dinner of the Commercial Travellers' Association in Montreal, but I cannot recollect whether or not he was present at another dinner. My colleagues who are here can speak for themselves, and the bon. member for York South, who is not here, will be able to speak for himself at another time.
So far as the circulation of the statement made by Judge Fullerton is concerned, I had not the slightest idea that it was being circulated until the minister said so. I do not know what is meant by that, but presumably it is a public document and might be sent anywhere. The minister says it is being sent broadcast throughout the country. I do not know to whom or why or by whom, except that it is a report made by the chairman of the board who is being legislated out of office, as to the manner in which he has discharged his duties. That is all. I think the minister must realize that, after all, the fact that he is minister does not warrant his making attacks upon a public official when that official is not afforded an opportunity to defend himself. Then when he does attempt to present a defence he is told that he is out of order, and by every means within their power the supporters of the administration endeavour to prevent him from defending himself by making a statement. The minister makes a statement and there the matter ends; the chairman says, "This must be out of order, the bill not having been referred to this committee." That surely is not necessary to enable the operations of the system to be discussed. That is the whole purpose of setting up the committee, and certainly this was one of the most important matters to be considered, the conduct and operation of the road by the board during the period the chairman has been in office, which office, of course, he still holds.


Hugh Alexander Stewart: I think I should be the first to assure the Minister of Railways that since the defeat of the former government I have never spoken, written to or communicated with Judge Fullerton in any way, until I saw him in the special committee appointed to investigate the affairs of the Canadian National Railways. Not only that: I did not speak to him there on the matter of the investigation. Members of the committee will recall the surprise that Mr. Fullerton expressed when I suggested that he should make a statement. He said it had not been conveyed to him that he would be expected to do so, which was perfectly true. I say that I had not spoken to him before I saw him in the special committee. I do not think I have spoken to him since his appointment, certainly not since the defeat of the government. In that committee it was suggested that the method by which he should reply to the statements made by the minister in this house, which reflected on his administration, was through the press, if you please; that he should take advantage of the press to reply to the statements of the Minister of Railways which I called to his attention.


Clarence Decatur Howe: Would you read that statement, please?


Hugh Alexander Stewart: What statement?


Clarence Decatur Howe: The statement you say somebody made, as to replying through the press.


Hugh Alexander Stewart: I say the chairman made that statement, that he might reply through the press.


Sir EUGENE FISET:: I think you had better peruse the evidence and the proceedings. You will find nothing like that said by me.


Hugh Alexander Stewart: I think it is in the records, and if I had a little time I believe I could turn it up. However, I objected to that at the time. I asked since when it was right that the head of the Canadian National Railways should have to defend himself through the press.


Eugène Fiset: Mr. Chairman, I rise to a point of order. I think the hon. gentleman had better peruse the proceedings of the committee; I do not think he will find any word of mine that advised Judge Fullerton that his only recourse was through the public press. I never made such a statement.


Hugh Alexander Stewart: That is my recollection, and it is very clear. We will just have to take a little time to look through the records,

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and if I am wrong I will gladly withdraw any statements I have made. In any case that is my recollection. I do not know just who did say it, whether it was the chairman or somebody else, but as I have said, according to my recollection it was the chairman.
Well, that is the situation as far as I am concerned with the chairman of the board of trustees. As I have said, I am not interested in him personally at all; all I am interested in is the proper and efficient management of the affairs of the Canadian National Railways.


Sir GEORGE PERLEY:: I should like to say that I never had any conversation with Mr. Fullerton since the election last fall. I saw him one day in the Rideau club, but we did nothing but pass the time of day. I shook hands with him on that occasion.


Charles Hazlitt Cahan: I can say I have not had any conversation with Mr. Fullerton since his appointment in Ottawa. I cannot recollect having a single word of conversation with him since his appointment to office. I believe on one occasion about a year ago some complaint was made to me as Secretary of State in connection with a certain widow who thought she had a claim for damages. I enclosed her letter and sent it to Judge Fullerton as the head of the Canadian National Railways, acting in a purely formal manner. Outside of that I have had no communication with him, orally or in writing. On the same day-at least I believe it was the same day- to which the right hon. member for Argenteuil referred, I came out of the dining room of the club, and nodded my head to him as he passed by, but not a word was spoken between us. I am glad that the matter has been brought up because it indicates the sort of perversion of justice which is being committed in dealing with the chairman of the board of trustees, through pure gossip.


Some hon. MEMBERS:: Next, next.


Mr. STIRLING:: As one of those to whom the minister has referred it is incumbent upon me to say that I have had no communications at all with Judge Fullerton. It would be more to the point if the minister would be good enough to amplify and substantiate his statement.
Paragraph 7 agreed to.
On section 3, paragraph 8-On appointment of directors, direction and control vested in board of directors.


Richard Bedford Bennett: The minister will observe that in subparagraph 3 of paragraph 8 a substantial change is made. May I point out that subparagraph 2 of paragraph 7 creates a situation of some difficulty, and one to which
the law officers of the crown might give their attention. However, in view of the observations which have been made I shall not do more than direct the attention of the minister to it.


Charles Avery Dunning: It is a reenactment.


Richard Bedford Bennett: Part of it is, but there is some little change as between the two.


Charles Avery Dunning: It is not amended.


Richard Bedford Bennett: Section 7 is new, eliminating that part which deals with the removal of the trustees from office. Then, subparagraph 3 of section 8 is corollary to part of section 7. It reads:
3. At the same time, by the same force and without more, the directors and the chairman of the board of directors shall become and be respectively the directors and the chairman of the board of directors in the place and stead of and in succession to the directors or trustees and the chairman of the board of directors or of the trustees of every other company in Canada comprised in National railways and they may and shall, thereafter, subject to the provisions of this act, have and exercise with relation to such companies, respectively, the like powers-
And so on. I think some questions might arise there. Then we come to the proviso which states:
... such directors shall elect from among themselves the number of directors which they are entitled to elect to the board of directors of such company.
The difference between the old act and the new to which the minister did not refer is the method to be adopted for the purpose of electing or selecting a temporary chairman in the absence of the chairman, for cause or reason. The government is carrying out its view that the governor in council shall do it. The exchequer court was to do it, under certain circumstances. The minister did not refer to that point, but he will remember it. That provision is wiped out, and it has a material bearing on other sections which follow. If, however, the principle is to be maintained as the minister suggested it, there is no point in discussing the matter beyond pointing out these differences, and whether or not it is competent to effect the purpose mentioned in paragraph 8 by the method indicated. I am not going to express an opinion upon it, but I think there is some doubt.
Paragraph 8 agreed to.
On section 3, paragraph 9-Approval of governor in council instead of shareholders.


Richard Bedford Bennett: Paragraph 9 makes the
shareholders of the company the governor in council and the governor in council the shareholders of the company for all purposes that
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may require the consent of the shareholders. That is, where under any statute, including the railway act or the railway commission act, it is necessary for the consent of shareholders to be given, the governor in council acts as such shareholders. That of course is a wide extension of the powers which have heretofore been exercised in th-t regard. I suppose yesterday when dealing with this matter the minister intended to point out what successive ministers have pointed out, namely that here we have a system which, if it were a private one, would be in the hands of receivers. There can be no argument as to their having defaulted in payment of interest on their securit' s, and under those circumstances a receive.- would be appointed by the courts and the lines would be operated by the receivers. It is conceivable that a possible difficulty might arise. For instance, Canadian Northern British Columbia bonds are guaranteed by the province of British Columbia. If we did not pay interest on those bonds, the province of British Columbia could not do it. The same is true with respect to Alberta, Saskatchewan and Manitoba. The same is also true in connection with the Halifax and Southwestern no"way in Nova Scotia. These facts have a pertinent bearing upon the whole situation. I have expressed and do now express surprise that the minister is not dealing with that phase of it. It was that which influencd the commission in support of the judgment which I read when I spoke in the debate on second reading. If this were a private enterprise it would be operated by receivers, and they would issue receivers' certificates which they would sell for the purpose of obtaining fresh capital, in the meantime not paying any interest upon the securities, but rather accumulating against the day of reorganization. Under those circumstances the trustees were appointed, and those trustees to which the irinistc. referred yesterday. because of the financial position of the railways, occupied a very special position. To sub titute directors must have the effect to which attention has so often been directed in this chamber, and which I shall not deal with at this time.
Now we come to the finding of fresh capital. The old act provided that that principle should be maintained and that the government would find fresh capital. Why? Because the property being in the condition in which it is, fresh capital must be found or it will not be found at all. For it they obtained receivers' certificates in the form of securities of the railway itself. That is, I assume the securities of the railways are being accumulated from one secur-

ity payment, one promise to pay. The commission recommended that instead of issuing securities of the railways guaranteed by the government, thereafter the security should be issued by the government and the money loaned by the government to the railways. So that part of the debt that has been accumulated over the last five years, I think something like twenty per cent of the whole, is Canadian National debt. Under preceding administrations that was not so; the debt was the debt of the Canadian National, guaranteed by the country, and the securities were securities sold by the railway company. The change was for one purpose, to effect economy, and to bring home to the people the realities of the situation. It was believed by the Duff commission, and especially by those who had to do with the financial side of the railway, that if parliament had from year to year to find the money and make it a direct charge against the people themselves they would be more interested in the enterprise; the principle of the enterprise that was unable to meet its fixed charges would be maintained right through the whole administrative process, namely, trustees, capital provided by the government, not at the will of the trustees but at the will of the government, and if they did not think the case made out by the trustees was sufficient they would not, as investors would not in the case of a company in the hands of a receiver, advance the money for capital expenditures. But the deficit, and that is where the whole point comes in, would have to be paid by the people. Why? Because default in the payment of interest on a guaranteed security has the same effect upon the credit of this country as failure to pay interest on its direct obligations. That is what differentiates this whole enterprise from an ordinary enterprise that is failing to pay its fixed charges. If it were not for that, the situation would be very simple; but once we put our guarantee behind all these securities we must pay them or default, and if we default our credit is gone, alike with respect to direct and indirect obligations.
Now we have said that where the assent of the shareholders is required, and it will be recalled that for purposes of borrowing the consent of the shareholders is sometimes required to be expressed in a given way, that shall be done by the governor in council. I suppose that is the easiest and simplest way in which the matter can be done, but it involves the acceptance of a very strange principle by those who formerly so vigorously opposed such powers being conferred upon

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the governor in council. The real difficulty we have always had in this and other countries is to know who will represent the shareholders in a publicly owned enterprise. Yesterday the Minister of Finance was stating he had some plans in his mind as to how to select the directors. I have gone over the matter on several occasions in various ways, hoping to bring a sense of responsibility more directly home to the people, but we have not done it.
The government of the country cannot say that it represents the shareholders, because the shareholders are all the people in all the provinces, and of all shades of political opinion. It may well be that the heaviest shareholders, being those who pay the largest taxes, by reason of conditions, may not be interested in any political party at all. Under these circumstances the powers conferred are very great, but I suppose the answer the minister will give is that this is the simplest way in which to deal with it. It is always simple, I suppose; but I used to be told in this house in days gone by that to confer powers of this kind upon the executive was a departure from the well established rules of constitutional government. Be that as it may, what we are doing here is to say that wherever under the provisions of the railway act or any other statute approval by the shareholders has to be given under the law, and there are numerous cases once you take away the trustees, in all such oases "with respect to any company to which the next preceding section applies, such approval, sanction or confirmation may be given by the governor in council." That means all the subsidiaries. 139 in number, because it will be found in the letter that was signed by Mr. Liddy that the Canadian National comprises 139 companies, as stated in evidence; the Canadian Pacific conducts its own affiliated operations through approximately the same number of companies, and in the case of all these 139 subsidiaries the shareholders will find themselves in the position of votes being given by the governor in council exercising shareholders' rights, and they are not all of them companies of which we are the complete owners. But we are providing that all these affiliated companies shall be represented by the governor in council regardless of whether they have provincial or federal incorporation. I question the legality of it, to start with, and in the second place I think it is an unprecedented exercise of executive authority. It confers on the governor in council power to represent shareholders in provincial companies, whether the shareholders are in complete control of the
road or not. For instance, the Central Vermont Railway is a road in which the Canadian National has a very large interest. We were told at one time we would not incur any responsibility in the rehabilitation' of that system. What happened was that it issued its securities, which were put in the treasury of the Canadian National, and then this country guaranteed the bonds of the Canadian National Railway which were sold on the markets of the world and provided the money. So we have a vital interest in that system. The Canadian National, I understand, has a substantial holding in that road. The Central Vermont would probably not come within the operation of this section because it does not run into Canada, but there is a road that crosses the boundary and runs partly into Canada as a continuous line, namely, the Grand Trunk Western, which crosses via the St. Clair tunnel under the river, running on the rails of the tunnel company, the tunnel company being a separate company, with part of the tunnel in the United States and part of it in Canada. All these are matters of such importance that it is a very serious matter to declare that regardless of every other consideration the governor in council shall represent the shareholders of all these companies whenever approval has to be given, or in the language of the section:
Whenever under the provisions of the Railway Act or any other statute or law the approval, sanction or confirmation by shareholders is required with respect to any company to which the next preceding section applies,-
That is, any one of the affiliated companies. -such approval, sanction or confirmation may be given by the governor in council.
This bill declares that the present officers are relieved of their duties and the new directors shall be the directors of the enterprise, and it is provided in the preceding section that:
The National Act and all statutes, charters, letters patent and orders in council of Canada which relate to any of such companies in Canada shall, in so far as they may be inconsistent with the provisions of this section, be read in the light hereof and be construed so as to conform herewith.
Not only is this an extraordinary power, but I greatly fear it is a wholly illegal power applied to some at least of the companies in question.


Clarence Decatur Howe: The wording of this is exactly the same as the language of the Canadian National Railway Act of 1919.


Richard Bedford Bennett: But there is a difference in the preceding section.

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Clarence Decatur Howe: Under the trustees no approval of the shareholders was required. In other words, the trustees acted entirely independently of the shareholders, but now we are returning the power of the shareholders, to be exercised by the governor in council, on the theory that we are not operating the road as a bankrupt concern. Whether it is or not, we are operating it as a going concern, and we believe that where the approval of the shareholders is required it can best be expressed by the governor in council, who are the elected representatives of the shareholders. This does not apply to subsidiaries within the United States. As far as subsidiaries within Canada are concerned, it will be noticed that another section incorporates them as dominion companies.


Richard Bedford Bennett: That is what I had reference to. Read alone the preceding section might not be important, but when this section and later sections are read with it, they certainly confer wider powers than we have ever undertaken to confer in this country. Paragraph 9 reads:
Whenever under the provisions of the Railway Act or any other statute or law the approval, sanction or confirmation by shareholders is required with respect to any company to which the next preceding section applies, such approval, sanction or confirmation may be given by the governor in council.
What we have done is to take the provincial companies and make them into federal incorporations willy-nilly. Then we have said that the new directors shall become directors of those companies willy-nilly. Then we have said that if there are more than seven, a certain method is to be followed for the purpose of selecting them. Then we say that any statute, charter, lease or whatever it may be that is inconsistent with the provisions of the section, shall be read in the light thereof and be construed so as to conform therewith. That in itself is a tremendous exercise of power. In the main, that power was conferred by the act we are amending, but in that case the trustees represented the shareholders as well as the security holders. That was the whole basis of the report made by the commission, and it was for that very reason that they went so carefully into the financial set-up of the enterprise. The minute we earn enough money to pay the interest on the securities, it is quite clear that the statute would be amended, but as long as the conditions exist to which reference has been made, there will be a situation entirely different from the one the minister contemplates.
What he now says is that they are going to treat this company as a company which is meeting the obligations of its fixed charges from year to year. Treating it as such, the

governor in council becomes a shareholder, not only for the purposes of the company but for the purposes of the subsidiaries as well. That is an entirely different thing from what prevailed in the case of the trustees. They represented the shareholders. As the minister knows, in an ordinary legal proceeding receivers are officers of the court, and the trustees were officers of the high court of parliament. The shareholders have no longer anything to say when receivers are appointed, and will not have anything to say until the system is reorganized and they once more come into the authority of their position. What we are doing by this legislation is to say that the company no longer occupies that position, whereas we are to deal with legislation at this very session which indicates that we shall have to raise from $35,000,000 to $40,000,000 to pay the interest upon the securities. There is a contradiction between the two. The one is logical and consistent, the other is illogical and inconsistent; the one is contradictory and the other is selfexplanatory. That is the real truth about it. I direct attention to it, but I know there is no likelihood of its being changed.


Charles Hazlitt Cahan: I have sent for a copy of the act which contains as a schedule a list of the subsidiaries of the Canadian National Railways. My memory is that a number of the subsidiary companies mentioned in that schedule are provincial incorporations.


Clarence Decatur Howe: That is right.


Mr. FINN:: Mr. Chairman, I have listened to the remarks of the leader of the opposition (Mr. Bennett) and it seems to me that the statements that have been made during the second reading of this bill were made by hon. gentlemen opposite in an effort to show that the Canadian National Railways is not worth a cent to this country which is burdened down with debt. An effort has been made to show a conflict between the act of 1919, the act incorporating the various companies that go to make up the Canadian National system, the trustee act of 1933 and the present bill as introduced by the Minister of Railways and Canals (Mr. Howe). I desire to state as emphatically as I can that if there is connected with the Canadian National railway system any piece of road which is not paying-I refer particularly to the Canadian Northern- it was placed in the system by whom? Was it by the present Prime Minister (Mr. Mackenzie King)? Was it by his late lamented leader, Right Hon. Sir Wilfrid Laurier? No, it was by a fellow Nova Scotian, the Right Hon. Sir Robert Laird Borden. He took over the Canadian Northern to save

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the Bank of Commerce. He gave them $40,000,000 for the Canadian Northern and then appointed a commission to find out the amount of the equity of redemption of Mackenzie and Mann. This royal commission found they were entitled to receive $10,000,000. At the very inception of this system the country was saddled with a piece of railway which should have been put up for sale under the hammer. This was a private corporation and it should have been sold for what it was worth to any one who desired to buy it.
The leader of the opposition referred to the Halifax and Southwestern Railway. As the hon. member for St. Lawrence-St. George (Mr. Cahan) has just indicated, that railroad was built under a provincial charter. The province paid subsidies of $3,400 per mile. This railroad was taken into the Canadian National system. I cannot lay my hand upon it at the moment, but the previous government, I believe in 1932, stated that the Intercolonial Railway should consist of those roads in Nova Scotia which belonged to Mackenzie and Mann and that the Halifax and Southwestern should become part of the Intercolonial system, as it was known up to the time it was handed over under the legislation of Sir Robert Laird Borden. Under the legislation of 1919, which came into effect in 1922, the Grand Trunk in the United States and in Canada became part of the Canadian National Railway. The Intercolonial, which was owned by the government as trustees for the people and which was built as a term of confederation, as covered by section 145 of the British North America Act, was also brought into the system.
The leader of the opposition, the former Secretary of State (Mr. Cahan), who came from Nova Scotia and now lives in Montreal, and other hon. gentlemen opposite, have testified that they had no relationship with Mr. Fullerton or the other directors. One by one they have come and told us that: I met him in the rotunda of the hotel and I bowed to him, but that was all. I suppose if he stays long enough they will be able to turn things over in their minds and discover whether or not he winked at them. The leader of the opposition, and the gentlemen who support him in this house are doing everything they can to frustrate the policies of this government and of the people with respect to the operation of the Canadian National system, and when you begin to raise doubts in the minds of the people that the securities that are outstanding are securities that may not be worth the paper they are written on, notwithstanding that the railways to-day are owned by the people and
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have the people behind them, it is just another evidence of the campaign of propaganda that started somewhere in the city of Montreal and has been pursued every week, in leaflet and in pamphlet, in reference to the management and the condition of the system. And that has been carried on-I ask hon. gentlemen opposite to refute this-for no other purpose than to hand over the Canadian National system to Sir Edward Beatty and the Canadian Pacific Railway.
Let us have a clear understanding of this matter. I speak not only as a member of this house but as one who has had some experience in the public life of the country and of his own province, and I say this afternoon that my whole life as a public man has been devoted to the best interests of the people and of their future. As I said in the house last night, I may not live long-I do not expect to-but I think it is the first duty of every hon. gentleman, including the leader of the opposition, with the power and knowledge that he possesses, to support the will of the people and to assist rather than oppose the government in the tremendous task which they have to perform with respect to our national railways. H the government of Sir Wilfrid Laurier had taken over the system the responsibility would be upon this side of the house to-day; if the present Prime Minister had taken it over, the responsibility would be his. But when I look opposite I see sitting there to-day hon. gentlemen who were in this house when that legislation was passed in the days of Sir Robert Laird Borden and of the Right Hon. Arthur Meighen. I wonder whether my hon. friends ever stop to think that if the Canadian National system is in the condition in which it is said to be-and I do not know exactly what that condition is -the condition is due absolutely to the fact that the Conservative government of Sir Robert Borden took over the railways. And I speak of Sir Robert Borden with great respect, for he comes from my own province; indeed, I studied law in the same city with him and was often in his office in the days when I was beginning to take up the profession. It is not fair to place the responsibility upon the present Minister of Railways or upon the Prime Minister of the day.
The point I want to make quite clear is that legislation will have to be brought down-and this is a suggestion to the government made in the open-not at this session but after they have had an opportunity of looking into the matter and have obtained advice from their legal advisers, to deal satisfactorily with the Intercolonial railway, so that the Intercolonial shall remain as it was when it was completed under Sir Wilfrid Laurier, with the various
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branches that were built up as subsidiaries. To-day we find the Halifax and Southwestern, which belonged to the Canadian Northern and in which we put S3,400 a mile, as part of the Intercolonial railway, though it has no more right to be a part of the Intercolonial railway than I can claim to belong to the country from which Haile Selassie had to flee, seeking protection as a guest of the people of England. I say to the leader of the opposition that these are matters of great importance. The Grand Trunk Pacific was built under Sir Wilfrid Laurier, and so was the Transcontinental-for what purpose? It was for the purpose of bringing the maritime provinces closer to the great centres of Canada. It was built at a time when everyone believed that the twentieth century belonged to Canada. But a great war broke out, a war in which Canada took part, in which her noble sons fought and died that civilization might continue and that we might have the liberties that we have always enjoyed under the great British constitution. Following that came the great slump of 1929, from which Canada has not yet recovered. Immigration had to stop. But such were the knowledge and the vision of Sir Wilfrid Laurier and his cabinet in days gone by that if their intentions had been carried out, and if the war had not taken place, if the great depression of 1929 had not overtaken us, our Canadian west to-day would be filled and there would probably be a population of twenty or twenty-five million people in this country. Unfortunately however these vast areas in the west are not being tilled to the extent to which they might be, and ten million people have to carry the tremendous financial responsibility.
In these circumstances it seems to me hon. gentlemen opposite do not offer to the government even constructive criticism; their criticism is all destructive. They do not support the government in the task which it has to perform. I have no doubt that we all love our country; I do not believe that love of country is all on this side of the house; there is as much over there as there is here. But there seems to be some sinister motive on the outside, as evidenced in these pamphlets and in the propaganda that is being carried on and is seeping through the cracks and crevices of this chamber, to discourage the people of Canada with respect to the Canadian National Railways. The Prime Minister and his cabinet have undertaken to restore to the system a board of directors such as Sir Robert Borden provided for as the proper method of managing the railways. As the Right Hon. Arthur Meighen said in this house, there is no other system, no other management in connection with the Canadian National Railways than a

board of directors; for, as he pointed out, the interests of the country are diversified and what is suitable to one section does not suit another. Therefore, in order to keep the system as far as possible out of politics, Sir Robert Borden provided for a board possessing a knowledge of the varied interests with which they were concerned, a board made up of gentlemen who understood the conditions that existed in the different parts of the country from which they came. Was Sir Robert Laird Borden wrong? Was the Right Hon. Arthur Meighen wrong? And is the only man who is right on this great question to-day the present leader of the opposition? If that is so he is at opposite points to his predecessors in office and to the very honourable gentlemen who gave this system, not as it is to-day, but largely so, to the country, to be brought to fruition through the years. I have none but the friendliest feeling towards hon. gentlemen opposite, and I think that when in their quiet moments they sit down and reflect upon their position they will realize that what was perhaps the hardest fought campaign the Conservative party ever contested in this country was lost from the beginning, that the leader of the opposition knew he was fighting a losing battle, and though he put his best foot forward, defeat perched on his banner; but on that account they need not despair; they need despair only if hon. gentlemen continue in a carping way to belittle the purposes of the present government in trying to put this Canadian National Railway system on its feet, and to refuse the support that is due to the Prime Minister, or if not to the Prime Minister, to the government, or if not to the government and the hon. gentlemen who sit on this side of the house, to the people of this country.
My right hon. friend the leader of the opposition and those associated with him represent a large number of electors. To them I say, in concluding my observations at this time, that under the trustee act as introduced by my right hon. friend in 1933 it was evident that he cared not for the rights of anybody in this country except three classes enumerated in the statute who might possibly succeed in obtaining damages by virtue of their relationship to the Canadian National Railways. But in reference to every other statute, to every other right, to everything that was sacred because it was the property of the people, that legislation was seriously defective. Why, sir, there is contained in that statute a clause to the effect that the railways may, if they so desire, tear up the tracks, cease to operate the trains, and do away with roads that the people have paid for-all subject only to the railway

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commission of Canada. Is that commission the last word in this country? Is it the only body that can decide these things? Is it the body that should have the right to tell the people of Canada and this parliament and this government: You have nothing in the world to do with the railways? There was placed on the statute books of this country, when my right hon. friend the leader of the opposition was Prime Minister, the clause which enabled either privately owned or publicly owned companies to tear up their tracks and stop the use of their roads for public purposes if the railway commission of Canada permitted them so to do. Are the hands of this parliament tied with reference to the matter of who should be the manager of this road? This government is taking a leaf out of the book of Sir Robert Laird Borden and the Right Hon. Arthur Meighen, who said that for the Canadian National Railways the directorate system was the proper one, the system best suited to the needs of this great country, extending as it does from the Atlantic to the Pacific, including nine provinces with differing aspirations, but desiring only one object, the success of this vast confederation. These distinguished men having said that the directorate system was the best, and my right hon. friend the leader of the opposition having said, in the act of 1933, that it was not, he will have to go into the house of his friends and settle that question with them, not with hon. members who sit on this side of the house and who have a direct mandate from the people to place upon the statute books a measure returning to the system of directorates, and to give a fair trial to the new administration in its endeavour to make that railway what the people of Canada desire it to be, a railway that will conduce to the prosperity of all parts of the dominion, and make happy and contented those who will come after us, if not we ourselves. In my humble opinion these are the considerations that should actuate criticism on the part of the right hon. leader of the opposition and his supporters, and which require that it should be constructive.
Midway between his assumption of office as Prime Minister and his exit from the political stage in that capacity, he placed upon the statute books in 1933 the Canadian National-Canadian Pacific Act. That, to use his own words, was rather telling, rather significant, and I ask him now why it was, when he was going to do away with the president and the board of directors and substitute a board of trustees, he did not do that
by itself as a distinct piece of legislation rather than mix it up in a conglomeration of paragraphs that occupy many pages of the statute books, between the railway commission, the Canadian National, the Canadian Northern, the Grand Trunk Pacific, the Grand Trunk, and the Intercolonial Railway provisions. Those things are all intermixed in that statute of 1933, although it was the right and the privilege of the leader of the opposition to have remedied that state of things if in his judgment it was the proper thing to do. It should have been distinct and apart from other ramifications in reference to very many matters that have no direct relationship to the question of the board of trustees and its management of the Canadian National railway system.
Under the act of 1933, and dealing with the subparagraph of which the leader of the opposition has been speaking, I cannot for the life of me see why it was that they were so determined not only to nail their party interests to the cross, but the people of Canada also, who have to carry the financial burdens. I do not understand why they made it so hard for the present government, representatives of the people, with the largest majority ever given to any party since Can ada became a confederation. The Prime Minister of to-day, then leader of the opposition, said in the city of Toronto that he wanted a verdict from the people, he wanted a clear mandate, he wanted them to understand that if he came back to office this act of 1933 must go by the board and a new system of management and control of the Canadian National Railways must come into effect. I heard his voice over the radio in the city of Halifax, when he spoke to that vast audience in Massey Hall, Toronto. Surely if he was.fair enough, and, as he always has been, honourable enough, to make known to the people of this country what his policy was going to be, after it has been endorsed so unmistakably there should be no question about our putting through this measure. The people have endorsed that policy so strongly that there is not room on this side of the house for all hon. members who support the Prime Minister. Some of them have to sit on the other side and associate with the right hon. leader of the opposition; sometimes people think they belong to his party, but they do not.
Therefore, Mr. Chairman, I say the mandate of the people comes ahead of the statute of 1933 and it is the duty of parliament and the government to implement the pledges then given to the people of this country. That is what has been done, in bringing down this

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legislation and placing the control of the Canadian National Railways back in the hands of the people through a board of directors subject to the control of parliament, the representatives of the people. Surely no one can say that is not standing behind constitutional government and the very finest conceptions of democracy. President Wilson wanted to make the world safe for democracy. It seems to me that the harder the right hon. Prime Minister tried to make Canada safe for democracy the more hon. gentlemen opposite, led by my right hon. friend the leader of the opposition, try to remove the foundations of our democratic thought, our democratic principles, our constitutional ideas, which have been behind England's success through the years and which have built up the British empire which to-day is as free as the sun and which will remain free as long as the people live within the law and the proper authorities place that law upon the statute books in the various countries.
I make this statement, Mr. Chairman, only because I feel that the people of Canada should know that this propaganda has succeeded in getting into this very chamber. Last night my hon. friend from St. Lawrence-St. George said there was another chamber making up this parliament, namely the senate, and we had to deal with them. I should like nothing better than to go to the people of my own constituency-and I would do it tomorrow-if the senate dared to turn down this legislation as it has been introduced in this house and as it will be passed by this house, representing the will of the people. If that is done, some day in the near future they will find that the door will be locked and they will not be able to get in. I remember that the ex-Minister of Finance, who I regret is ill, locked the door on the legislative council in the province of Nova Scotia, and said, "You have no rights or privileges. Go home and attend to your business, but keep away from here." Did they talk about indemnities, those people who were appointed for life? No, sir, they did not.
But those are not democratic ways of doing things; they are autocratic; they seem to be the ways of some hon. gentlemen who sit opposite. They are not followed by the present Prime Minister, who is simple in his love for Canada, who carries nothing but the best thoughts for everyone. If I had any criticism of the right hon. gentleman at all it would be that he is too generous, too kind. He has too broad an outlook as to the future of this country, and his main desire is to see that the policies he believes best are carried out so that the people of Canada may have

at least a little time in which to go ahead and enjoy more of the prosperity that ceased when the bell rang in 1911 on reciprocity. Then we heard "no truck or trade with the Yankees," but a few years later we saw hon. gentlemen opposite, when in power, taking a different view and going off to Washington in an endeavour to negotiate a reciprocity pact. It is a good thing that ex-President Taft of the United States was not alive and in office at that time, or my right hon. friend the leader of the opposition might have been asked to withdraw the statement made by his party that they would have no truck or trade with the Yankees. He might have been told, "Take your bag home; carry it yourself. There is nothing to be put in it."
Ah, Mr. Chairman, these are the things for the public to remember. These are the things that sink deep into the hearts of men. The position taken by the Prime Minister is the sort of thing that makes for better government and for better relationship between the different parties in this house. That is not done by creating in the public mind a feeling of unrest with regard to this national railway system. We have, this system; we have to deal with it, and we are going to keep it, in spite of Sir Edward Beatty's public statement in Canada and in London that, notwithstanding the parliament of Canada and the will of the people, within three years the Canadian National would be associated with the Canadian Pacific, of which he is the president. Whoever gave him the right to make that statement? He must have had someone standing nearby who gave him the impression that there was some possibility of bringing about such a thing. He has a great railway system. In the early days his company received the very best soil in our Canadian west, and the people of this country contributed large sums of money for the construction of that road. To-day they, or those they have brought to this country, are in possession of that land, and the Canadian Pacific is receiving thousands and thousands of dollars from the grants of land and as a result of the financial support given that company by the parliament of Canada in the early days of confederation. I say to Sir Edward Beatty that if he will attend to the Canadian Pacific Railway, the Prime Minister, the government, this house and the people of Canada will attend to the Canadian National system. It belongs to the people, not to the Canadian Pacific Railway.
May I say, Mr. Chairman, that it is a very nice compliment to me that, when I am speaking in the interests of the people of this country, the hon. member for St.

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Lawrence-St. George should leave the chamber and the right hon. leader of the opposition should cross the floor to enter into a discussion wTh the Minister of Justice, because he cannot stand the gaff. It is a sort of lefthanded compliment to the senior or junior- I don't know which I am-member for Halifax. I want to say to him that he has been handed so many left-handed compliments by the people of Canada that it does not hurt him to hand him one more. I shall close my eyes as if in oblivion to his passing from that side to this, because I believe in my heart he likes this side better than that. If there is any enjoyment in what he has done I am pleased; I am made very happy. With that I shall stop before the gong rings.
Paragraph 9 agreed to.


Hugh Alexander Stewart: May I have permission to clear up a matter about which there was some difficulty this afternoon. I now have before me the proceedings of the standing committee on railways and shipping. At page 208 I find the following:
Hon. Mr. Howe: I might say, Mr. Stewart, that the trustees have already made two annual statements. No one is preventing them from making any statement at any time or in any place they like. Why insist that they make a statement before this particular committee to which this bill has not been referred? They can make a statement in the newspapers if they want to.
Hon. Mr. Stewart: I say that this is the proper place to investigate matters relating to the Canadian National Railways. The press is not the place. This committee should be the place in which to get the facts.
It was a statement by the minister, not by the chairman of the committee.
On section 3, paragraph 10-appointment of president.


Ian Alistair Mackenzie: There is an amendment before the committee.


The CHAIRMAN:: Yes, there is an amendment to subparagraph 2 of paragraph 10, section 3, as follows:
That subparagraph 2 of paragraph 10 of section 3 be amended by striking out all the words after the word "council" in the third line on page 6 of the bill down to and including the word "approve" in the sixth line of the same page.


Richard Bedford Bennett: Why is that done?


Clarence Decatur Howe: Paragraph 10 provides a salary for the president when he acts as chief executive officer. This was to take care of providing a salary for the chairman and president. A careful reading suggests that it might be interpreted that he was being paid
two salaries, one as chief executive officer and the other as president. We find that without these words he will be sure of his salary, and for these reasons they are superfluous.


Richard Bedford Bennett: Speaking to the amendment and to the section I suppose the minister will agree that to no inconsiderable extent success or failure will be determined by the president of the system. The hon. gentleman will recall that it was because of difficulties in connection with that situation that this country sought a president from outside Canada. He will also recall that the London and North Eastern Railway sought and obtained a chief executive officer in the United States, in the person of the late Sir Henry Thornton. In my judgment the whole question as to the present situation of the Canadian National Railways requires immediate attention. If the minister had known, perhaps he would not have used the terms he did as to the possibility of trustees being in conference with me with respect to administration.


Clarence Decatur Howe: I did not say that.


Richard Bedford Bennett: Because I have differed materially about some things. However, that is not the issue. There is in the Canadian National at Montreal in my judgment-and I say this with great hesitancy, and am giving my opinion-a clique-and I do not use the word in an offensive sense-that makes it impossible to accomplish certain things which must be accomplished, if the system is to succeed as it should. This section deals with that phase of the situation.
There is no use having an acquiescent president whose principal quality is his generous spirit and fairmindedness, unless you add to it a grim determination to carry through matters that may be entrusted to him for consideration.


Robert Emmett Finn: Louder.


Richard Bedford Bennett: Judging from the hon. member's recent observations regarding the views of the leader of the opposition I should think it would be quite indifferent to him as to whether he heard or not. I mention that simply in passing.


Robert Emmett Finn: I did not say that, but if my right hon. friend wants it that way, I will leave it.


Richard Bedford Bennett: I think the minister
should give consideration to this matter from the angles I suggest. I am now giving him the benefit of my not inconsiderable observations and experience in the matter. Of
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course I would hesitate in a committee of the house to name a man, but the qualities required in an executive officer capable of discharging the duties which fall upon him are those not possessed by every man one meets. If you trust the operation of the system to an experienced railroad executive he must have knowledge of many things beyond the mere intricacies of the machine he is administering. For instance, the president of one of the great American railways is a Yale graduate whose knowledge of railroading might be less than that of a dozen men under him. But he has the qualities, vision, firmness and the ability to conceive and carry out plans of far-reaching consequence Therefore he is highly prized by the shareholders and directors. Perhaps the minister will recall that when Mr. Harriman consolidated his great roads, he took a lawyer from Texas and made him head of his system. The quality which makes a successful operating official is not the quality which makes him a successful executive. It will be recalled that the Canadian Pacific Railway was favoured with a rare combination in the presence on the board of directors of the late Sir William Van Home and the late Lord Shaughnessy. The two working together, one complementing the other, made a tremendous success of the administration of that property.


Robert Emmett Finn: Were they college graduates?


Richard Bedford Bennett: I was not suggesting that they were graduates from anything other than the great school of experience and university of hard knocks. But since those days conditions have changed to a certain extent in connection with the administration of properties. I am not in any sense suggesting the desirability of or necessity for an appointee being a college graduate; that was not the point at all. My point was that in the realm of economics and theories we encounter conditions that are not of a practical kind, and if you entrust your fortunes ostensibly and openly to a skilled railway operator, and he commits his fortunes to the academic economist and theorist, you find yourself in a position not unlike that of the minister, himself, who found it desirable to eliminate from his speech certain sections that had been prepared for him by others who thought they knew more about the matter than he did. That is an apt illustration of what I desire to say. I have hesitated a great deal whether I should say as much as I have on this section. I have hesitated more as to whether I should not have said more because I realize perhaps to a greater degree than any other of this committee just what is involved in that section. I would like to see certain reforms effected, and I say to the minister frankly that they 
would have been effected along that very line whether he were in his present position or not. He will find that the same circumstances which developed, what some people call esprit de corps, in connection with the head office, but which those who know it more intimately would designate by another name, have led great railway corporations into taking most drastic action in England, the United States, and almost every country in the world, in dealing with their problems. That is the reason I have ventured to say what I have, believing the minister will recognize that I have done so only because of my deep conviction as to the necessity of there being concentrated effort, on the one hand, and firm and determined will, on the other, and a determination which will not be baulked by mere internal opposition or resistance. In giving effect to this section very great care will have to be exercised.
There is another section, Mr. Chairman, to which I might also refer without mentioning it by number, because it touches this only by way of argument. We talk of cooperation, and it will be remembered that we propose to continue cooperation between the two systems. No change has been made in that regard in this bill. We know now in the light of two years' experience the difficulties that have been encountered and the lack of really effective results.
It will be recalled that the report of the managers indicated a saving amounting to $1,000,000 in one year, which is a substantial sum of money, and a little less, I think, in another year. That is excellent, but we know, and the late government knew, the continued discussions, the continued negotiations, the continued meetings which were held, extending over weeks and months until finally the year came and went, and that was all. The minister must know by this time that for the last two years that has been going on, but there never was during all that time any suggestion that the arbitral tribunal should act. When I say suggestion, there may have been suggestions in discussion. I will put it in another way. There never was an appeal to the arbitral tribunal appointed under the act. Now the whole theory of the Duff report was that cooperation might bring a measure of success to both properties in which the country had a deep and abiding interest, owning the one and having a great stake in the other, not a financial stake in the same sense as it has in the Canadian National, but a national stake in the success of the other road. We know that these negotiations failed of result in the large sense that the Duff commission had in mind.

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I put to the minister this: Does he think we ever can get anywhere with negotiations being carried on by representatives of the roads if in the midst of the meeting someone says: I must refer that to Ottawa? And then the minister becomes an absent negotiator, for he is not sitting at the table; he is having someone there representing his views. That was not the intention. The whole purpose was to try to create in this country as much as possible an independent body that would deal with another independent body subject to the restrictions imposed upon them by the statute. Responsibility must be accepted, and decisiveness must be evidenced by action. That has been the difficulty, and the minister knows that as well as I.


Clarence Decatur Howe: I do not quite understand the reference to cooperative efforts being referred to Ottawa. They have not been while I have been Minister of Railways.


Richard Bedford Bennett: The officials of the railways have been meeting together since October. I am advised that they have not ceased to meet.


Clarence Decatur Howe: But the cooperative efforts have not been referred to Ottawa.


Richard Bedford Bennett: But the negotiations
never reached finality. That is my point, and the reason given in one case why finality is not reached is: Oh, well, I cannot go any further in that matter; I shall have to see what Ottawa thinks.


Eugène Fiset: That is not what Judge Fullerton says in his report. If I may be permitted, he said that the cooperating board of the Canadian National Railways and the Canadian Pacific Railway was composed of officials of the railways, and that they were more scared of competition than concerned with the public interest.


Richard Bedford Bennett: But they were representatives of the railways, and the difficulty is that as representatives of the national railways, on the one hand they were thinking, as the hon. gentleman has said, in terms of fear of their competitors overreaching them, which is always a dangerous way of approach in negotiations, and, on the other they were wondering what the government thinks or will think of this. If one can get out of his mind that it is necessary to wonder what the government thinks or does not think, then one can begin to deal effectively in matters of administration, and can get results. That is the reason I make the suggestion. We had some experience two years ago, and one of the reasons I deprecate changes being made in this way is
that I had hoped there might be an improvement which would warrant the expectations that were entertained by the members of the Duff commission, and it is too bad in that sense that you have the termination of an arrangement which gave some hopeful signs of success. That is as far as I shall go. While those efforts have not been ended but are being continued under this legislation, the effect of this legislation is to leave them in an entirely different position from what they were under the former act, and my only suggestion to the minister is to make it clear to whoever is appointed under this section that there must be a sense of decisiveness, of reality and of finality that will make possible the attainment of results, instead of merely the continuation of negotiations over months reaching into years on matters which might have been quickly disposed of.
I shall give an illustration, and as it is a reflection upon the late government it cannot be said to be political. The representatives of the two companies met together and dealt with two problems, one express, and the other telegraphs, and they made recommendations. They had not concluded their final determination of the issues raised when they thought it desirable that legislation should be enacted of a permissive nature, only permissive, not representing an accomplished fact, but that would be available in the event of conclusions being reached. What happened? The government had courage enough to put the measure on the order paper, but that is as far as it ever went, and if the hon. gentleman seeks the reason all he needs to do, in the words on the monument to Sir Christopher Wren, is to look about him. He will look behind and in front, but however determined he may be he will not be able to carry his views into effect. In the essence, government is compromise; it is the surrender of your views to the views entertained by your colleagues. For instance, however strong my views may have been, those views could not prevail. It is idle to say that it is possible for the arbitrary will of any one man to be decisive with respect to matters over which he has no jurisdiction and which he must discuss with his colleagues and arrive at a middle course. The result was that the notice which appeared on the order paper never went any further. If the hon. gentleman is desirous of knowing how those who now sit about him felt about the matter, he will have no difficulty in ascertaining that. It was at once the subject of correspondence and public attacks and propaganda in the press in connection with loss of employment, whereas we were assured that that would not follow.
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The matter was never completed, but I say to the minister that he will have to deal with it in the next few months. Therefore, it becomes of great importance that this section should be carried into effect in such a manner as will ensure the realization of the hopes of those who know, as I do, that in all these matters there is the personal equation which in the end determines to no inconsiderable extent the success or failure of your effort. You may have the highest minded industrialists in Canada sitting on your board, but in the end the success of this venture, as it is now provided for by this legislation, will depend upon the one or two or three entrusted with the power and authority to carry these views into effect. If the minister is to have in this venture the part that is contemplated by this legislation, I can only suggest to him the desirability of exercising the greatest care when the governor in council gives approval to some of the appointments that must be made.
I suggest to him, in all good will, that he will find that there has grown up in this corporation a situation not unlike that which has been known to exist in other great corporations. This is not unlike the so-called family compact, although it has nothing to do with family except as it is concerned with the law of self-preservation. I am suggesting to him what is known to every man who carefully observes and is willing to express an opinion. When the hon. member for Halifax (Mr. Finn) was discussing this matter-


Robert Emmett Finn: Hear, hear.


Richard Bedford Bennett: It is not necessary to say "hear, hear'"; that is quite apparent; it is "there, there," that I am thinking of. When the hon., member suggests that we are merely critical, I assure the minister, through you, Mr. Chairman, that we have been something more than merely critical. I am grimly opposed-"grimly" is the right word-to the methods that have been adopted to accomplish the ends which the minister admits are aimed at. However, if we leave that out, the rest of the matter becomes a question of experience and observation, and of suggestion in the light of that experience and observation. He would be a very poor man indeed who had occupied any position in the public life of this country during the last four or five years, who could not make some suggestions that would be of value to those who have succeeded him. The suggestions might not be, and probably would not be, well received, but, on the other hand, the duty rests upon us to make suggestions, whether they are well received or not.

In all sincerity, and in the light of my own observations and experience, I say to the minister that there is a situation existing which I had made up my mind, and which I am sure he with his technical and professional experience will make up his mind, should be cured. This can be cured only in a manner that will be as ruthless as it will be efficient. When I say "ruthless," I mean that there must be no consideration of sentiment or of past services or of pleasing personalities; these factors must not stand in the way of the public interest. When I say "as ruthless as it will be efficient," I mean just what I say. When that power is exercised the efficiency will be increased many fold. I am not unmindful of the fact that the observations which I make will be misconstrued. That is not a matter of great importance to me because they are not difficult of understanding by those who wish to understand.
I do say-it has never been more apparent than just recently-that a condition exists which some would call intrigue, and which others would call something else. Stripped of everything, it is a combination of interests that aims to accomplish certain purposes. Despite what may be said, the fact is that the investigation which took place some years ago in the United States in connection with the transportation systems, and the investigation that took place in connection with the insurance companies, would make one realize how easy it is, even in this country, for efficiency to be restricted and lessened, not by conspiracy, far from it, but by those friendly understandings which are based upon a mutual desire to assist and are bottomed sometimes upon generous instincts of the human mind, which, nevertheless, in the end, operate very seriously against the success of the enterprise.
I say what I have to say on this section because I am greatly concerned with the whole situation. My experience and my observations lead me to make the remarks I have made. Possibly some members of the committee may think I should be more exact, but I prefer not to mention names. I leave it to the minister himself and to those who will be associated with him to ascertain just what reforms are necessary for the purpose of effecting the success of the operation of the undertaking in question.


Clarence Decatur Howe: Mr. Chairman, the leader of the opposition (Mr. Bennett) has pointed out a situation of which we are all aware. I may say that I agree with a great many of the things he has said, as I usually do when he adopts his more constructive line. The new

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set-up will stand or fall on the appointment of the chairman or, if the office is divided, on the appointment of the chairman and the president. We have left ourselves some latitude, as my right hon. friend will see; we can combine or divide the office. I assure him that every effort will be made to get the sort of head who will do whatever is needed to bring about definite results in the higher circles of the railway. He is quite right when he says that recourse has not been had to the arbitration section, but we are reenacting it and I venture to suggest that within a few months we may call upon it.


Mr. TAYLOR (Nanaimo):: Mr. Chairman, I should like to direct attention to a misprint at the end of line 13 on page 6.


Frederick George Sanderson: What paragraph is the hon. member referring to?


James Samuel Taylor: Subparagraph
3 of paragraph 10, on page 6, line 12. The word "comprised" is misspelled.


Frederick George Sanderson: Shall the amendment
carry?


Robert Emmett Finn: I wish to say just one word
in reply to the leader of the opposition. We must all remember one thing. He says that there has been a lack of cooperation between the two systems, as provided for in the act, but I would call his attention to this fact. In my own province we are struggling to live. In the old days the Dominion and Atlantic Railway was owned in England and was operated by Mr. Campbell and later by Mr. Gifkins. One day it became the property of the Canadian Pacific Railway Company. First, they had it declared to be a road for the general advantage of Canada and then they purchased it, or at least they secured a majority of the common stock, which gave them control. They came down and rented at a high rate to the Dominion and Atlantic Railway cars that were as old-fashioned as the chariots in which Caesar rode in Rome. Canadian Pacific officials came down later on, when these cars were still there, took off the letters "D.A.R." and substituted "C.P.R.," and they ripped off the "D.A.R." buttons from the coats of the officials and put on "C.P.R." buttons. They also changed the stationery. That was the first evidence of good will to the people of Nova Scotia. I am not complaining particularly of that, but what happened? It was the beginning of a movement to destroy the esprit de corps of which the leader of the opposition has spoken this afternoon. To
make matters worse they removed the auditing branch from Nova Scotia to Montreal, throwing people out of work in our province.
No more, there is no more
To live for now.
My king is false,
My hope betrayed;
My father, O! the worth,
The gloriousness and the loveliness
Has passed away from earth.
Then they issued an order that all car repairs were to be made in Montreal, the engines to be taken out of Nova Scotia to that city for overhauling, so that by degrees they closed the machine shops in Nova Scotia, there being but a limited number of men there to-day. But did they stop there? No. There is a rumour, which I believe to be true, that the general manager of the line is to be retired on pension and that the operation of that railway is to be from Montreal and not in Nova Scotia. By degrees they have sucked the very lifeblood of that little line in my province in order to bolster up their assets, taking the property of the "D.A.R.", as it is called, and making it a part of the Canadian Pacific Railway so as to make a favourable annual statement. Not only that; I believe it is the intention to have merely a sort of superintendent and to have the "D.A.R." go through that lovely land of Evangeline from Halifax to Yarmouth. We are inviting tourists to our province though the hearts of our people are heavy, for these people have been thrown out of employment in order that the work they were doing should now be carried on in Montreal. In this respect the little province of Nova Scotia, the province next to New Brunswick in which my right hon. friend the leader of the opposition was born, is being discriminated against. Can we have any prosperity under these conditions, far removed as we are from the centre of things, with a high tariff wall against us in the United States, though it '.s true that wall has been somewhat lowered? With proper transportation facilities we might have gone into the New England market, but we have been cut off by a high tariff wall, and the general freight structure has operated against us, with the result that our industrial activities have been dwindling. It is fortunate that we have had some men- perhaps I may be pardoned if I say that I am one of them-who have been instrumental in saving one or two industries in the province, including the Acadia Sugar Refinery, which gives employment to some 400 people. In all, about 2,500 people would have been
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seriously affected if the rates had not been fixed so as to permit this industry to operate.
Sir Edward Beatty may be a graduate of McGill; he may be a man of high social standing; he may be the essence and indeed the quintessence of higher society in this country. But I want to say to my right hon. friend that if that ruthlessness to which he has referred is to be applied in the same way to the man who takes his cocktail in the club as to the man who wears overalls, then it is all right. Otherwise it is wrong, and the people of Canada will ever remember the statement the right hon. gentleman made in the house this afternoon in that regard. Sir Edward Beatty sent down the late Mr. Grant Hall, the vice-president, to a meeting of the Eastern Steamship company, putting Canadian money into an American concern. The steamers Prince Arthur, Prince George and Prince Edward, built by the Dominion and Atlantic Railway, had proved satisfactory on the route between Yarmouth and Boston, but what did Sir Edward Beatty do? He entered into an arrangement with this American concern, the Eastern Steamship company, with the result that on that trade route on which ships flying the British flag had operated, and on which Nova Scotians had been engaged, from captains down to sailors, the Eastern Steamship company took over the business at the instance of Sir Edward Beatty and the Canadian Pacific Railway Company.


Frederick George Sanderson: I do not like to interrupt the hon. gentleman, but he is out of order and I would ask him to confine his remarks to clause 3, paragraph 10.


Robert Emmett Finn: I bow to your ruling, Mr. Chairman, but I would point this out. The leader of the opposition dealt with the question of cooperation, urging that in order to secure the necessary esprit de corps and fairness, even ruthless methods should be resorted to. Surely if he could elaborate on that I have a right to point out that the very essence of that cooperation is lacking as between that part of our transportation system owned by the Canadian Pacific Railway and the part owned by the people. I am arguing that the rights and privileges of the people of Nova Scotia in this connection should not be handed over to the people to the south of us. I am sure that, upon reflection, the chairman will realize that I do not desire to transgress the rules. Although I will bow to his ruling, I do not believe I am without the rule; I believe I am within it. Perhaps I may be permitted to continue hewing close

to the line, in the direction I am going. I shall be through in five minutes, and there will be no more "Order," and, I hope, no more disorder.


Frederick George Sanderson: Has the hon. member finished?


Robert Emmett Finn: No. The Chairman evidently did not hear me; I am sorry. I do not want to repeat my remarks, but I should like to know whether the chairman heard what I said; if he did, whether or not there was a transgression of the rule on the part of the right hon. leader of the opposition, and if there was, and he was allowed to go ahead, why I am to suffer. I am prepared to do so, but I should like to know the reason why.


Frederick George Sanderson: I did not hear all the remarks of the hon. member for Halifax, but I did hear him say that he would finish in five minutes, and if so, I am quite in accord.


Robert Emmett Finn: Perhaps, Mr. Chairman, it will take me only five minutes; when I return to that little province by the sea it will be known that I have been permitted to go on if I shall confine my remarks to five minutes, and they will see the hard-heartedness of this chairman and his strict administration and interpretation of the rules as applied to one of the members for Halifax as against the right hon. leader of the opposition. My only object in desiring to be heard is that some benefits may come to the people of a province that I love, as I love also the rest of Canada, and want to see all the dominion develop equally, so that we shall not lag so far behind. It was in reference to that I was speaking of the Yarmouth Steamship Company, started by a Nova Scotian, L. E. Baker, who put everything he had into it, desiring its development and prosperity, and who died practically without anything. Then came the Dominion Atlantic Railway Steamship Company, then the Canadian Pacific Railway control and management; then followed the disappearance of the Dominion Atlantic Railway Steamship Company and the arrival of the Eastern Steampship company's boats, the Evangeline, the Yarmouth, the Acadia, and the Saint John, four boats, with a bonus of forty per cent by the American government, a sixty per cent loan on which they have not paid interest, and a subsidy of $500,000 for carrying the mails in the winter across the Bay of Fundy.
The word from Washington under the late President Hoover was that the coastal trade of the United States must be built up, and they built it up with the resources of 130 millions of people. Our relationships with the people of that country are splendid, but if

C.N.R.-Board of Directors
things are to be done in that way we in the province of Nova Scotia might as well know it, and the sooner the message of sudden death is pronounced the more quickly we shall realize our position. The statements I make cannot be controverted. To-day the Eastern Steamship company, at the solicitation of the Canadian Pacific Railway Company, who are owners of stock in the American company, are running between Boston and Yarmouth. What has been the result? Our captains, chief officers and second officers, born in Nova Scotia, took up residence in Boston, became American citizens, took their examinations, became masters and mates under the American flag, and returned on the bridge and on the deck of those ships to Yarmouth, leaving Yarmouth as Nova Scotians and coming back as aliens. Is this the evidence of the policy of cooperation of which the leader of the opposition speaks? I bring this to his attention. Are Sir Edward Beatty, the Canadian Pacific Railway and its management, the brains behind this? The right hon. gentleman differentiates between Lord Shaughnessy and Sir William Van Home, and Mr. Beatty because times are different. Times may change, but hearts and minds do not, and I state to my right hon. friend that, while I want to see this road a success, I desire also to see placed in charge men who have hearts as well as minds, and that the man who wears the overalls shall not be ruthlessly removed while those in the higher-up sections of their company are continued in office. How is it possible for us in Nova Scotia to have faith in Sir Edward Beatty and his management? I should like to ask the right hon. leader of the opposition the question: Is he in agreement with Sir Edward Beatty in the handing over of that trade route between Yarmouth and Boston to the Eastern Steamship company and the American flag and making Americans of Nova Scotians? Is he in favour of that or is he not? I await his answer.


Richard Bedford Bennett: The hon. member will
keep on waiting.


Robert Emmett Finn: Ah, yes. And that is the reason the people are going to keep him waiting where he is, even if he remains there. I am glad I have accomplished my purpose. My five minutes may not be up, but I have had an answer that will go out to the people. Mr. Chairman, I thank you for your indulgence.


Richard Bedford Bennett: The observation I made
as to ruthless action creating efficiency had reference to the head office of the railway, That is where, I said, it would have to be exercised-and not with the frills which the
hon. member has added. He is a past master at that sort of thing. I take this opportunity to state that I made it clear that I meant the head office, and I have nothing to retract in that regard.


Robert Emmett Finn: All I say, Mr. Chairman, is
that the answer speaks for itself.
Amendment (Mr. Mackenzie, Vancouver) agreed to.
Paragraph as amended agreed to.
On section 3, paragraph 11-Meetings.


Richard Bedford Bennett: As we deal with that I have only this to say. To provide that a mere four of seven directors can sign a minute, without any provision that it shall be incorporated in the minutes of the corporation, is unsound. The original section in the old act was not as full as it should have been; I saw that when, unfortunately, it was too late. There should be a provision that a minute which is unanimously agreed upon, as evidenced1 by the writing of all the members who are expressing their acquiescence, should be incorporated in the minute book of the corporation. That is a matter which experience has shown to be highly desirable. I think the section should be amended in that regard. The minister can speak to the leader of the senate with respect to the matter. To leave it as it is now is rather a dangerous procedure. There is nothing, as the minister sees, that contemplates a minute thus arrived at finding its place in the minute book of the corporation, and with his experience of companies he knows, perhaps, that the court of appeal in England decided many years ago that although a director might be in the room and two others just outside, and a quorum present, they were not present unless they were in the same room. This is in derogation of the common law provision; it provides that a minute signed by all shall have the same force and effect as though it were passed at a meeting, but there is nothing to provide that it shall be entered in the minute book as part of the proceedings of the corporation. Perhaps this paragraph might stand and the minister can speak to his leader in the senate who has the bill in charge there. I have no desire to hold up this paragraph, but certainly as it stands now it is not very satisfactory.


Clarence Decatur Howe: I will see that this is gone into.


[Stage Direction]
Paragraph agreed to.
C.N.R.-Board oj Directors
[Stage Direction]
On section 3, paragraph 12-Annual budget.
Richard Bedford Bennett: This has to do with the budget, and I have before me a notation as to a suggestion I should like to make. I assume that the minister is anxious to get this bill to the other house, but this paragraph .provides that the budget shall be submitted to the Minister of Transport, while the next paragraph provides that the annual report shall be submitted to parliament also through the Minister of Transport. The minister will perhaps recall that as the law now stands the budget has to be submitted to the Minister of Finance, and with all deference I suggest to the minister who is in charge of the bill that the Minister of Finance is the person to whom the budget should go, for he is responsible for finding the money. There was some discussion about this matter when the other bill was under consideration, and the general view was that the Minister of Finance as distinguished from the Minister of Railways should receive the budget for the purpose of submitting it to his colleagues in council. He must consider it first of all from the standpoint of his ability to raise the money required by the railway company. I do not know whether or not there is any reason behind this change, but I suggest that it would be better to retain the supremacy of the Minister of Finance over the budget as it reaches council. It is only a question of how it shall reach council, whether through the Minister of Finance or the Minister of Transport, but I submit that the Minister of Finance would be the proper person. That is what we have in the old act, and perhaps this change was made inadvertently. I do not think it serves any useful purpose.


Clarence Decatur Howe: The change was made quite deliberately, as a matter of fact. The difficulty is that in everything else the trustees write to the Minister of Railways, whereas in this case they write to the Minister of Finance. The Minister of Finance immediately has to write to the Minister of Railways, asking him to please check the budget and return it.


Richard Bedford Bennett: No.


Clarence Decatur Howe: That is what happens in practice. This year we went into the budget exhaustively in our office before we returned it to the Minister of Finance, and we thought the channel for all communications between the government and the railway should be the Minister of Transport, fully understanding that the Minister of Finance would have to pass the budget and deal with the matter before council.


Charles Hazlitt Cahan: If I might revert for a moment to paragraph 11, all that would have to be done would be to add the following words, "and entered in the minute book of the board." It would then read:
The board of directors or a majority thereof may without meeting decide or act by way of a written minute or concurrence signed by the directors or a majority of them and entered in the minute book of the board.
I think it would be far better to make an amendment such as that.


Richard Bedford Bennett: I was against this being done by a majority of the members of the board, because three of them might not know what was going on.


Clarence Decatur Howe: I shall be glad to look into the matter. It is practically six o'clock now, and I am afraid we shall hardly finish this bill by that time, so after dinner I shall bring in an amendment to that paragraph.


Richard Bedford Bennett: May I point out what I have just said to my colleague. I think it highly undesirable that a minute of that kind, signed by a majority and never communicated bo the minority, should have the force of a binding minute, because the other three members might never have heard of it. In practice my view has been that a minute signed by all the directors should have the force of a minute passed by the majority and entered in the minute book. If the minute is signed by all of them-one might be in Saskatoon, another in Halifax and a third somewhere else; sometimes you telegraph the substance of the minute to them and they telegraph their consent before it is signed-it should have the force of a minute, but as the paragraph reads, it is provided that a majority may sign that minute and give it the power and authority of a minute passed at a meeting held by the directors where the pros and cons could be considered. As the paragraph now reads, only four need sign and the other three might know nothing about the minute. They might have great opposition to it, such opposition as might prevent its being passed if the meeting were held. That is the point I was endeavouring to make.


Clarence Decatur Howe: I shall consider that.
At six o'clock the Speaker resumed the chair and the house took recess.

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After Recess
The house resumed at eight o'clock. CANADIAN WHEAT BOARD ACT



PROPOSED APPLICATION OF PROVISIONS TO OATS, BARLEY, RYE AND FLAX PRODUCED IN WESTERN PROVINCES

[Stage Direction]
On the order:
Resuming the adjourned debate on the motion of Mr. Perley (Qu'Appelle):-That, in the opinion of this house, the provisions of the Canadian Wheat Board Act, 1935, should forthwith be made applicable to oats, barley, rye and flax produced in the provinces of Manitoba, Saskatchewan, Alberta, and British Columbia.
Ernest Edward Perley: Mr. Speaker, with the consent of the house I should like to have order No. 44 on the order paper withdrawn or struck out.


Mr. SPEAKER:: By consent of the house order No. 44 in the name of Mr. Perley (Qu'Appelle) will be withdrawn.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
The house resumed consideration in committee of Bill No. 21, to amend the Canadian National-Canadian Pacific Act, 1933-Mr. Howe-Mr. Sanderson in the chair.
Paragraph 12 agreed to.
Paragraph 13 agreed to.
On section 3, paragraph 11.-Meetings.
Grote Stirling: Did the minister give consideration to the point raised by the leader of the opposition?


Clarence Decatur Howe: Yes; I had hoped the leader of the opposition and the hon. member for St. Lawrence-St. George would be in their seats. I believe we have found the solution to the objection raised to paragraph 11. I propose to ask my colleague to move this amendment:
That clause 3 be amended by adding after "them" in line 42, page 6, the following:
"A note of such written minute or concurrence shall, at the first meeting thereafter of the board of directors, be entered in the minute book of the board, provided that a majority decision or action by way of a written minute or concurrence shall not be valid unless or until all directors have had notice of the subject matter thereof."


Charles Avery Dunning: I so move.


Grote Stirling: Mr. Chairman, I wonder whether the minister would be good enough to allow paragraph 11 to stand for a few minutes.


Clarence Decatur Howe: I shall be very glad to. Possibly that would be the best solution of the matter.
Paragraph 11 stands.
Paragraphs 14 and 15 agreed to.
Section 3 stands.
On section 4-Duty of C.N.R. and C.P.R. to meet by their proper officers and endeavour to arrange for cooperation.


Mr. HEAPS:: On this clause I should like to move an addition. Yesterday I indicated that I would move an amendment to clause 4 in connection with the pay of employees dismissed from the service as a result of cooperation between the two railways. At that time the suggestion was made that this was the proper point at which to move the amendment. I made the statement yesterday that in 1933 the main purpose behind the measure was to provide a certain amount of cooperation between the two railways, and I stated that this bill is a further step in the same direction. When the minister spoke upon introducing the amendments to the 1933 legislation he claimed that one of the reasons for the changes set out in the present bill was that there were not sufficient cooperative measures instituted between the Canadian National Railways and the Canadian Pacific Railway. When I made that statement yesterday the minister said that I had misquoted him, and as a result of his observations I withdrew my statement. These are the words I used:
The act of 1933 was an act to provide for looperation between the two railways, and if I remember aright-and I hope the minister will tell me if I am wrong-when he introduced the present bill he said that one of the reasons for the changes proposed was that there had not been sufficient cooperation between the two railways.
Mr. Howe: The hon. member asked me to correct him if he were wrong, and I shall be glad to do so. I said nothing of the kind.
Mr. Heaps: Then I apologize to the minister.
Then I did apologize. May I proceed to quote what the Minister of Railways said. Upon introducing the bill on April 27, he is reported at page 2178 of Hansard as follows:
To date they have failed to achieve any substantial cooperative economies, to secure which was the principal object of their appointment and the outstanding feature of the 1933 legislation. Not only have they failed to
C.N.R.-Board of Directors

secure any substantial results to date, but on their own published statements, the prospect of future results from cooperative measures, plans and arrangements is not bright.
Then, as reported on the following page, he made this statement:
Two annual reports from the Canadian National trustees, but one continuous recitation of apologies for lack of success in applying the cooperative provisions of the 1933 act under which they were appointed.
I take it that in itself is sufficient indication of the purposes underlying the introduction of the present measure. While I withdrew any statement I made with regard to the minister, after he denied having made such observations, I somehow feel that my withdrawal of the statement I made in committee yesterday was not entirely warranted.
I made the claim yesterday that employees of the railways find themselves in a different position from that enjoyed by men working for private companies, when such companies voluntarily arrange to amalgamate and thereby save expenses by way of reduction in either labour or overhead. In the present instance we have a government owned utility. We have another utility which is under government regulation. Now we bring in legislation compelling the two railway companies to do certain things. One thing we compel them to do is to cooperate their services and thereby bring about certain economies in costs of operation. It has been stated often that the large amount of economies to be effected as a result of cooperation of the services will be at the expense of those who are employed on the railways. In other words, the working men will be the main sufferers as a result of the legislation. May I quote what Mr. Justice Fullerton said to the committee on Tuesday:
Perhaps the greatest difficulty in the way of expediting further extensive economies concerns labour. To reduce expenses on any large scale men must be displaced, and if serious hardship and unrest are to be avoided, some form of dismissal pay or compensation should be considered. It is my personal view that a great deal more progress might be made in cooperative measures for economy, as well as in other economy measures, if some plan for employee dismissal compensation were worked out, and adopted. I believe it to be a fact that the officials of the railroad, contemplating changes designed to secure economy but which involve putting men out of work with little hope of reemployment,-
I want that to be borne in mind by the members of this committee, that there is little hope of reemployment.
-are influenced by humanitarian feelings, and naturally the men resist all such measures to the limit. It does not seem unreasonable to urge that part of the advantage to the

employers should be shared with labour, rather than that the whole burden should be borne by labour. The Canadian National-Canadian Pacific Act requires that both the burden and the advantage should be shared by the two companies. It seems to have been overlooked that the joint advantage can be secured only by transferring the burden to labour. A more equitable arrangement with labour appear to be required and should be provided. If this were done, one great preliminary step towards the accomplishment of any radical changes which might displace labour would be made.
A little further down, on the same page, Mr. Justice Fullerton said:
Nevertheless, I am convinced that the greatest obstacle to cooperative measures is consideration for the men who would be displaced by their adoption. An agreement has been reached between the railway executives and organized labour in the United States providing for the payment of a measure of compensation to employees thrown out of work by consolidation of railway facilities, and I understand that the British railways also made some provision for employes displaced as a result of the amalgamation of British railways into four systems.
I have reached the conclusion that the government, the railways, and the representatives of railway labour-
May I point out to the minister that Mr. Justice Fullerton, chairman of the board of trustees, places a responsibility here upon the government as well as upon the railway companies.
-should discuss this matter together with a view to the adoption of some arrangement for the two Canadian railroads as will afford reasonable protection against hardship on the part of these employees who, after long years of service, may be displaced by the adoption of cooperative methods.
May I point out the anomalous position in which the railways of this country and their employees might find themselves? Both the Canadian National Railways and the Canadian Pacific Railway have large interests in the United States. The Canadian National Railways own quite a valuable piece of railway, I understand, between Detroit and Chicago, and they have also large interests in the Central Vermont railway, which was referred to this afternoon by the leader of the opposition (Mr. Bennett). The Canadian Pacific Railway have also interests in railway lines in the United States. Yet, Mr. Chairman, the employees in the United States of these two railways, if cooperative measures are adopted there, will become the beneficiaries of certain agreements arrived at with the railway companies while the employees in this country of these two roads will not be eligible for the same benefits. I think that is most unfair. I noticed the other day when the right hon. the Prime Minister (Mr. JUNE 5, 1936
CJVJ2.-Board oj Directors
Mackenzie King) introduced a measure for the amalgamation of various departments, he stated that there would be no dismissals of employees in the various services of the government; in other words, the employees were to be protected. I am simply asking this committee to give in this legislation the same consideration to the employees of both the government owned road and the privately owned road. I think that is not an unfair request to make. In the United States the railway companies and their employees have arrived at a basis of understanding by which dismissal pay is going to be given to the men who will be displaced as a result of the amalgamation of services. Why cannot we do the same thing in this country? If the government are not willing to introduce legislation along that line, at least let them take the same stand that has been taken in the United States.
I do not have to go into the whole question why men are entitled to compensation upon being dismissed after long years of service on behalf of the railways because that question has been gone into in years gone by, and even during this session it has been spoken to by many members on both sides of the house. Therefore, Mr. Chairman, I am going to move that the following be added to section 4 on page 8 of Bill No. 21 now before us:
An employee of the railway companies affected by this act who as a result of cooper- . ation of services between the railways loses his or her employment shall be entitled to compensation, and the amount of such compensation shall be determined by a board of three to be appointed, one by the employees, one by the railways, and a third who shall be chairman of the board to be selected by the two representatives already appointed.
In the event of failure to select a third member of the board, such appointment shall be made by the Minister of Labour.
The funds for such compensation awards and expenses in connection therewith shall be derived from a levy on the gross receipts of the two railways, and the award of the board shall in all cases be final.
I know that I may be met with some difficulties from the Chair. I anticipate that, for I remember that when I moved an almost identical motion in 1933, different only in phraseology, the point was raised that the amendment was out of order, and the Chair ruled my motion out of order on grounds that I could not understand. I was extremely honoured, however, 'to have on my side at that time members of the Liberal party who were then in the house, supporting my contention that the motion was perfectly in order. I hope they will be just as anxious to support 12739-220
this present motion of mine as they were in 1933. I know they do not sit on the same side of the house now, and a great deal depends upon which side of the Speaker one sits as to the viewpoint one will take on particular questions. But the point I want to emphasize in arguing that this amendment is perfectly in order is the fact that its final clause provides that:
The funds for such compensation awards and expenses in connection therewith shall be derived from a levy on the gross receipts of the two railways, and the award of the board shall in all cases be final.
In other words, it is a fund which is to be created by the two railways themselves, and is not money which is voted by parliament out of taxation raised in the dominion. Under those circumstances I think the amendment is perfectly in order. But, assuming for the sake of argument that a private member is not allowed to move such an amendment, and I have a very strong suspicion, Mr. Chairman, which way your riding is going to be-


Some hon. MEMBERS:: Order.


Abraham Albert Heaps: That is perfectly in order.
I have an intelligent anticipation of the chairman's ruling.


Ian Alistair Mackenzie: You know you are wrong.


Abraham Albert Heaps: I say that if a private member cannot move such an amendment the government should be prepared to adopt it in principle and bring down an amendment accordingly, because the fundamental principle underlying this amendment cannot be ignored or swept to one side on the ground that through some technicality it is out of order. When this parliament by the legislation it is enacting is making itself responsible, either directly or indirectly, for the displacement of large numbers of men at present employed, I think the least we can do is to make provision for these men for whose position we shall be in some degree responsible, and therefore, Mr. Chairman, I now move the amendment which I have put into your hands.


Frederick George Sanderson: I am in the judgment
of the committee, but I think in order to keep the record clear we should deal first with the amendment to paragraph 11. It has been moved by Mr. Dunning:
That clause 3 be amended by adding after "them" in line 42, page 6, the following:
"A note of such written minute or concurrence shall, at the first meeting thereafter of the board of directors, be entered in the minute book of the board, provided that a majority decision or action by way of a written minute or concurrence shall not be valid unless or until all directors have had notice of the subject matter thereof."



CJ^.R.-Board of Directors


Richard Bedford Bennett: In a general way that
meets with the views which I suggested to the committee just before we rose at six o'clock, although I would have used a little different language. But that is not a matter of importance as I think the idea is adequately expressed. The point is this-and I think the minister will at once realize the effect of it

that a unanimous minute signed by all without discussion or meeting shall be regarded as the equivalent of a majority decision after discussion at a meeting of the board. I think that is a salutary and sound! rule in view of the decisions that there is no valid meeting of the board called to consider a subject matter unless the members are present in the room. That is, you cannot have one member in one room, another in another room and then say that they were both present and that a decision was arrived at after discussion. Unanimity would seem to be desirable, but that was not the purpose the minister had in mind in drafting the amendment. He contemplates the possibility of a majority decision and it seems to me that he has safeguarded the matter by saying that notice of the subject matter shall be given to all directors. If one or two directors telegraphed and said that they were opposed to a certain matter, it is not probable that the other directors would sign a minute unless there was a formal meeting with discussion.
Amendment (Mr. Dunning) agreed to.
Paragraph 11 as amended agreed to.
Section 3 as amended agreed to.
On section 4-Duty of C.N.R. and CP.R. to meet by their proper officers and endeavour to arrange for cooperation.


Frederick George Sanderson: On this section, the
following amendment is moved by Mr. Heaps:
Any employee of the railway companies affected by this act who as a result of cooperation of services between the railways loses his or her employment shall be entitled to compensation, and the amount of such compensation shall be determined by a board of three to be appointed; one by the employees, one by the railways, and a third who shall be chairman of the board to be selected by tile two representatives already appointed.
In the event of failure to select a third member of the board, such appointment shall be made by the Minister of Labour.
The funds for such compensation awards and expenses in connection therewith shall be derived from a levy on the gross receipts of the two railways and the award of the board shall in all eases be final.


Ian Alistair Mackenzie: I should like to point out that practically the same amendment was moved by the hon. member
[The Chairman.]
on April 7, 1933. At that time a point of order was raised by the then Minister of Railways, Mr. Manion. I spoke on the point of order as follows:
Speaking to the point of order, as this bill removes entirely from parliament the control of the expenditures of the Canadian National Railways, I do not think the point of order is well taken, because the levy proposed is upon an industry which by the terms of this legislation is no longer within the purview of the minister or of parliament. If it were otherwise, the point of order raised by the minister would be well taken.
I submit that under the legislation now before the committee, all the revenues of the Canadian National Railways will be under the control of the minister and of parliament, and therefore the point of order raised on April 7, 1933, by the former Minister of Railways and Canals would be quite valid with reference to this amendment. The hon. member moved a further amendment on May 9 of that year, and another amendment was moved on May 9 by the hon. member for Winnipeg North Centre (Mr. Woods-worth). The latter amendment was ruled out of order by the Speaker. The hon. member's amendment read:
That the said bill be not now read the third time, but that it be referred back to the committee of the whole with instructions that the following clause be inserted:
"That the Canadian Pacific Railway and the Canadian National Railway Company shall provide compensation to those whose services will be dispensed with as a result of the operation of any of the provisions of this act."
This amendment was ruled out of order, which ruling was sustained on division. On three separate occasions during the debate of 1933 the same point of order was raised and was sustained each time by the house. While I do not believe that the fears of my hon. friend have any justification, he knows as well as I do that it is not within the purview of a private member to move such an amendment.


Mr. WOODSWORTH:: Mr. Chairman, on the point of order. I think the Minister of National Defence (Mr. Mackenzie) is stretching the point considerably when he ventures to say that under this proposed set-up all the expenditures of the Canadian National Railways will be under the control of this parliament. As a matter of fact, I do not think anyone could argue that seriously. It is quite true that under this legislation there will be a little more immediate responsibility to parliament, but the railway will still have a large measure of discretion in regard to its expenditures. The proposed amendment is that such compensation awards and expenses

C.N.R.-Board of Directors
in connection therewith shall be derived from a levy on the gross receipts of the two railways, and the award of the board shall in all cases be final. That cannot, by any stretch of the imagination, be called taxation. In the strict sense of the word, the gross receipts of the railways are not government moneys. There is not any added expenditure proposed, and it is not in any sense taxation. Hence, I do not think the minister can say that the situation is radically different from what it was when we proposed this amend-mfent in 1933. As a matter of fact, I think that whatever change there is comes largely because of the changed position of the minister, who now is sitting to the right of the Speaker instead of to the left.


Ian Alistair Mackenzie: I was quoting my own former statement in justification of my present stand.


Abraham Albert Heaps: If I may speak on the point of order, the whole question is as to whether this involves taxation or expenditures from the supply granted to His Majesty. This amendment asks that the revenues of the two railways, derived from the various services which they render to the public of this country, shall be utilized to provide a fund out of which compensation shall be paid to the employees of the roads. I do not think it can be argued that the question of taxation enters into the matter. The point might be stretched to the extent of saying that the government might have to pay the deficit of the Canadian National Railways, and there might be something in the argument if it were said that the government was to be directly responsible for such compensation awards. But we are not asking the government to be responsible; we are asking that the railways themselves be responsible by a levy on their gross receipts to provide a fund from which the men affected may receive compensation. For that reason I believe the amendment is perfectly in order.


Charles Avery Dunning: Before you give your
ruling, Mr. Chairman, may I call attention to the fact that in vote 426 of the special supplementary estimates now before the house provision is made for the deficit of the Canadian National Railways in the amount of 839,900,000, representing the amount by which the gross revenues of the railway system fall short of its operating expenses and-


Abraham Albert Heaps: Not operating.


Charles Avery Dunning: -fixed charges.


Abraham Albert Heaps: Did my hon. friend say
operating expenses?


Charles Avery Dunning: I said operating expenses and fixed charges. Any levy on the gross revenues of the railway must, therefore, operate directly to increase the amount which must be voted by this parliament. I do not think I need amplify that.


Frederick George Sanderson: I quote paragraph 562
of Beauchesne's Parliamentary Rules and Forms:
It shall not be lawful for the House of Commons to adopt or pass any vote, resolution, address or bill for the appropriation of any part of the public revenue, or of any tax or impost, to any purpose that has not been first recommended to that house by message of the governor general in the session in which such vote, resolution, address or bill is proposed.
This amendment has for its purpose the appropriation of public funds and therefore I rule it out of order.


Abraham Albert Heaps: It goes to show that my
intelligent anticipation was quite correct.


Alan Webster Neill: Is there any reason why the
minister should not accept the amendment on its merits? Is there any reason why he should, not adopt it himself?


Clarence Decatur Howe: I heard Sir Edward Beatty
express the opinion that this was a proper thing to do; Judge Fullerton has stated that it is right; I think most of us believe that it is. But this is the wrong way to do it. I happened to be in Washington during the Easter recess and I went to the hearing on the bill that was then before the United States congress. It was quite obvious to me from the discussion which I heard on that bill that it suited neither the employers nor the employees; it was not a workable bill. What happened was this: Employers and employees got together through the regular channels-and they are well established there as between the railway system and the men-and worked out a practicable scheme.


Abraham Albert Heaps: Independently of the government?


Clarence Decatur Howe: Yes, by mutual arrangement. This amendment proposes that any employee affected by this bill may ask for a board. He appoints a man; the railway appoints a man, and the two men appoint a third. If that method were adopted, how many boards would! there be in the course of a year? There might be hundreds. The fact is that people who do not understand railway practice and the relations between railways and railway labour will sit down hurriedly and draft legislation with respect to a complicated matter. In Canada we have the most advanced laws with respect to railway labour of any country on

C.N.R.-Board oj Directors
the north American continent, this being the only country which has a complete pension system for employees. That was not the result of legislation but was worked out by mutual arrangement between the railways and their employees. The United States government a year ago adopted a compulsory pension scheme for railway employees, but it has not been made operative. On most of the railways in the United States we find that there is no pension scheme or, if there is, it is only on a small scale, not on the scale that we have in Canada. This question will be worked out in the not too far distant future by the railways and their employees, but it is significant that as Minister of Railways I have received no formal application from either the railways or their employees to take an active part in ..this matter.


Abraham Albert Heaps: I thank the minister for the pretty compliment he paid me. I may tell him that I belonged to the railway trade union in this country more than a quarter of a century ago, but that is by the way. The minister entirely misunderstands the drafting of a very simple motion because this motion, if he will only read it, is not open to the interpretation he has put upon it. No one but the minister would put that interpretation on it. It is quite obvious-


Some hon. MEMBERS:: Order.


Abraham Albert Heaps: It is obvious, I say, that what is intended is not a separate board for every employee who wants a board.


Some hon. MEMBERS:: Order.


Frederick George Sanderson: I do not wish to interrupt the hon. member, but I have already given my ruling on the question and the amendment is therefore disposed of.


Abraham Albert Heaps: But why did you not stop the minister when he spoke? Will you have one law for the right and another for the left? I do not intend to continue along that line, but if you call one member to order you should give equal treatment to all.


Frederick George Sanderson: The hon. member is entirely wrong. The minister was replying to a question put to him by an hon. member.


Abraham Albert Heaps: But he answered the question by quoting from an amendment that had been ruled out of order.


Some hon. MEMBERS:: Order.


Frederick George Sanderson: We are now on clause
4.


Abraham Albert Heaps: It is the easiest thing in the world for hon. members to shout "order." Anyone can do that; it does not require brains to do that. As a rule I do not stray very far from the proper procedure. I try to conduct myself with decorum.and in keeping with the rules of the house and I do not attempt to shout anyone down. I have enough confidence in the Chair to adhere 'to the proper .procedure. I thought, however, that when the Minister of Railways had referred, not altogether in any complimentary way, to the resolution I had proposed, the least I could do was to say a word in reply. The minister has expressed sympathy with the men who may be affected by the provisions of this clause. A good deal of sympathy has been expressed in various quarters in that connection, and the minister cited what has been done in the United States. I think it is a fact, however, that what happened in the United States was due to legislation which was pending. I hold that had no legislation been pending in the United States there would have been no agreement with respect to paying anything to the men who were dismissed as a result of the amalgamation of services there. I do not think the minister would care to deny that statement. It was because legislation was pending, because the president of the United States had himself taken an interest in the matter and was convinced that something should be done for the railway men so affected, that the employers took action and reached an agreement with the men. The minister is not less sympathetic than officials in the United States, and there is a great deal of sympathy all round for the men in this country. But I submit that unless this parliament takes concrete action, all the sympathy in the world will be of little avail so far as the men themselves are concerned. All I plead for this evening is that consideration be given these men, who have a right to expect protection from this committee. They have a right to expect protection from this committee and they are not receiving it. All the minister says is that we should not interfere between the railway companies and the men. We are not interfering, in the sense that is implied, between the railway companies and the men. But may I point out that every piece of legislation we put on the statute books of this country is interference with somebody, in some way, shape or form. I know what this legislation involves. Through it we are threatening the livelihood of many thousands of railway employees in the dominion, and we are making no provision for the men so affected. The

C.N.R.-Board of Directors
government tell us that by this legislation they are going to solve in some degree our unemployment problem. I venture to say that by this legislation they are going to aggravate the existing unemployment problem without making provision for those affected, and all I suggest to the government, the minister and those associated with him is that they take some definite action so that the men who may be thus affected will be properly and adequately protected.


Charles Avery Dunning: Mr. Chairman, I speak to the point out of some experience as a former Minister of Railways, not for the purpose of creating dissension, but out of some knowledge of the complicated structure of agreements which exist between recognized representatives of railway men in this country and the two great railway corporations. There is no better organized class of men in Canada than our railway employees, and I think I can say that no trades union organizations are better led than those representing our transportation employees. By this action of my hon. friends, which admittedly is not at the request of the men's organizations, nor at the request of the two great employers of railway labour in this country, the idea is that, in spite of the relations existing to which I have referred, this parliament should come along with some arbitrary method whereby an adjustment between the railways and their employees shall take place. From experience I can say that in the past the railway unions always asked me as Minister of Railways to leave them free to negotiate with the management of the railroad with respect to any matter affecting the welfare of the employees. That is the basic principle upon which the organizations have operated for many years, and in the main, I believe, successfully. There is no doubt at all that this problem must be faced. There is no opposition to the idea, which my hon. friend seeks to convey, from the employers, as was I believe the case in the United States. In this country, instead of having a great number of railway companies we have just the two great railway corporations and a few smaller ones which in practice always follow along in connection with agreements between employer and employee. The heads of both these two great systems recognize in principle that this problem must be met and must be negotiated to a satisfactory conclusion. That being the case, I submit, with all deference to my hon. friend, who I know speaks in a political capacity for labour, that on this occasion he is not speaking for the organized bodies directly interested in the matter. If he is, I am very much surprised, because it represents a completely new departure by the organized workers in the railway service for them to take an action at this time without having first approached their employers through the medium of their own organizations, under the terms of their own agreements, and endeavoured to work out a solution.


James Shaver Woodsworth: Mr. Chairman, will the present Minister of Railways state that the standard railway organizations have not approached him with requests for legislation along this line?


Clarence Decatur Howe: I can say that it was mentioned at a general discussion, I believe some month or six weeks ago. The matter was brought forward and I was shown what was being done in the United States. At that time the legislation of which I spoke was pending. I was very much interested in the subject, and I took occasion when I was passing through Washington to spend two days there, hear part of the debate in committee, and also had a talk with the federal coordinator of transportation of the United States. I also had conversations with three or four railway presidents who were in Washington at that time. I went into the matter very fully, and I came to the conclusion that we should be very foolish to rush into legislation until we knew more about the matter. Nothing more occurred.


James Shaver Woodsworth: But there have been, from the standpoint of the railway organizations, suggested drafts of amendments to this very bill?


Clarence Decatur Howe: I have not seen them.


James Shaver Woodsworth: The former Minister of Railways would give us to understand that the unions have not made requests of this kind. This is not my information. I have had in my own possession some of the drafts which have been prepared. It is quite true we are following independent lines with-


Clarence Decatur Howe: I may say that I have never seen those drafts. If the hon. member has them, his knowledge is confined to himself. I have never seen them.


James Shaver Woodsworth: I have seen them, and we have had numerous requests from employees. Be that as it may-


Clarence Decatur Howe: May I ask the hon. gentleman what organizations have requested him to press this matter? What is the name of one organization? There are official organizations that are the links between Ottawa and the men. I would like to know the names.
C.N.R.-Board oj Directors


James Shaver Woodsworth: I shall be prepared to bring certain information to the minister.


Clarence Decatur Howe: I say that there are certain official links between the government, the men and the railway. If any of them have prepared drafts, what are they? I should like to know.


James Shaver Woodsworth: I have not any under my hand to-day. I did not know I should be required to produce those, but I believe that there have been prepared-


An hon. MEMBER:: You "believe" so.


James Shaver Woodsworth: -by certain of the standard railway organizations amendments along the line suggested. We were not following those amendments. My colleague used almost the exact wording of the amendment we made three years ago. But I have had scores of telegrams and letters with regard to this bill from different locals all over the country.


Clarence Decatur Howe: Mr. Chairman, will the hon.
member for Winnipeg North Centre (Mr. Woodsworth) tell the committee the name of one official railway organization that has taken this matter up with him? I should like to know, because I am surprised that it has not been taken up with me. I should like to know the name of one of these organizations.
Mr. W'OODSWORTH:	With regard to
compensation?


Charles Avery Dunning: The name?


James Shaver Woodsworth: I have no documents with me. One organization that has made protests against "cooperation" is the Canadian Brotherhood of Railway Employees. They have not asked for compensation, though. They have taken the line that this is a weakening of the position against amalgamation that has been held in the past, but while they are heartily in favour of compensation if coordination is to go on, they oppose coordination.


Clarence Decatur Howe: I think I can take it that
the hon. gentleman is speaking for himself and not for the railway organizations of Canada at this time.


Abraham Albert Heaps: I can give the minister the
names of the Winnipeg locals of the running trades. They sent me a resolution.


James Shaver Woodsworth: Nearly all of us, as labour representatives here, have constant communications from the locals of the various railway organizations. I am not prepared at this moment to say which they are, but I do say that I have been in frequent
| Mr. Howe.]
communication with some of them. In my own city we have hundreds of railway people who are vitally affected by this kind of legislation. This is one of the big questions which were to the fore at the time of the general election, and let me say to my Liberal friends that, just as the general impression was that we were to have a thoroughgoing national central bank owned and controlled by the government, just as strongly there was the impression spread among all railway organizations across the country that we would have no more "cooperation" of this kind, no amalgamation.


An hon. MEMBER:: There was not.


James Shaver Woodsworth: No amalgamation,
and that was interpreted to mean, no further extension of cooperation.


An hon. MEMBER:: No.


James Shaver Woodsworth: Yes, it was.


An hon. MEMBER:: No unification.


James Shaver Woodsworth: And if this bill is
held over, I shall be very glad to produce, from the replies made to inquiries sent out by railway organizations, sufficient evidence of this, I believe, to satisfy fully the Minister of Railways. I, as a candidate, was requested to give some definite information as to my stand with regard to this so-called cooperation. The railway organizations asked me that, not only in my own city of Winnipeg but wherever I campaigned as leader of the Cooperative Commonwealth Federation, and those who ran as Liberals were asked that question as well. The men who are in this house gave their replies, and if the minister wishes and the opportunity occurs later on I can collect many of those replies. I have not resorted to this kind of politics in this house in the fifteen years I have been here, but if the minister insists that we produce certain documents showing the position of labour in this matter and the replies of men who were elected on the ground that we would have no more of cooperation, then I shall be willing to produce some of those replies for his benefit. But I do not want to go into that any further; I shall content myself with the general statement. There is no doubt that right across this country tens of thousands of labour men were induced to vote Liberal because they believed the Liberals were absolutely opposed to amalgamation in any form.


Some hon. MEMBERS:: Hear, hear.


James Shaver Woodsworth: Yes, in any form,
and this kind of cooperation is looking in that direction.

C.N.R.-Board of Directors


Clarence Decatur Howe: On a point of order, Mr. Chairman, this statement has been made three, four or five times. It has been said that this bill provides for cooperation and consolidation. It does nothing of the kind. It does not change any existing legislation one iota in regard to cooperation, so why keep repeating that statement? It has been said seven or eight times from that comer.


James Shaver Woodsworth: In the side note
of the very clause we are discussing, I read this:
Duty of C.N.R. and C.P.R. to meet by their proper officers and endeavour to arrange for cooperation.
That is the interpretation of the clause.


Richard Bedford Bennett: That is a reproduction
of the old section, with the substitution of "directors" for "trustees."


James Shaver Woodsworth: Quite so. That is the purpose. I take the minister's own statement when he introduced this bill; I read it the other night and I shall read it again:
Mr. Speaker, in bringing down this measure I feel I am sponsoring a most important and necessary piece of legislation. It is common knowledge that the three directors to whom the direction of the railways was entrusted as a result of the 1933 act have made no real progress toward the improvement of our railway situation. To date they have failed to achieve any substantial cooperative economies, to secure which was the principal object of their appointment and the outstanding feature of the 1933 legislation.
The minister introduces this legislation in order that we might have more thoroughgoing cooperation and might be able to arrange a set-up under which economies along these lines may be effected. I simply cannot understand the minister when he says-


Clarence Decatur Howe: I did not say that; that is
what the hon. gentleman is saying. I said that the trustee set-up could not reach the objectives mentioned in the Duff report, and therefore the set-up should be changed. I said nothing about extending cooperative arrangements in any manner; my hon. friend is reading that into what I said. Let him find one place where I say cooperation is going to be carried on at all.


James Shaver Woodsworth: I think I have already read it. I shall continue:
Not only have they failed to secure any substantial results to date, but on their own published statements, the prospect of future results from cooperative measures, plans and arrangements is not bright.
So we are to have a new set-up in order *that these cooperative economies may be effected. Surely that is the inference.


Clarence Decatur Howe: I did not say that. I wish the hon. member would try to keep within reason on this matter. He objects to being called to order, but he never sticks to a point, as far as I have been able to hear, and I have listened to him carefully since I have been in this house.


James Shaver Woodsworth: There is no point of order in that, of course, but I think hon. gentlemen will hardly say that I do not stick to my point. My understanding of the minister's words is as I have given it. If the minister undertakes to give another meaning to those words I hope he will tell us very clearly their real meaning and the real purpose of bringing in this bill.
Now I should like to refer to another statement made by the minister. He says that this matter could be best arranged by some agreement which he thinks might be made quite independently of legislation. Let me point out that in this country the Canadian National is a national system. A few minutes ago, thotigh in one sense we represent the shareholders of the system, we were not permitted to pass regulations with regard to these railways because they came directly under the government. The government have thought it desirable to introduce pension schemes in connection with the civil service. If the argument advanced by the minister has any validity at all, the railway employees are coming very close to the point where they will be directly under government control, and in that case surely there cannot be any very great objection to this government instituting something analogous to provisions it makes for its own employees.
Now I come to the suggestion made by the hon. member for Comox-Alberni (Mr. Neill), I think it was, that even though the Chair has ruled that we cannot introduce a motion providing for compensation, it would be quite proper for the government to give serious consideration to bringing in an arrangement by which compensation might be given railway employees for loss of work caused by legislation of this kind. Last night when we were on section 2 I was prevented from reading the arrangements that are now in effect in the United States. Perhaps I might now be given an opportunity to read two or three paragraphs summarizing those arrangements. I quote from Labour of May 26:
No employee's wages will be reduced if, as the result of a consolidation, he is placed on a job paying a lower rate.
Displaced employees will be paid coordination allowances ranging from sixty per cent of their wages for five years for men in the

C.N.R.-Board of Directors
fifteen year service fist down to a "grub stake" of two months' full wages for men with less than twelve months' service. These men will hold reemployment, free transportation, hospitalization and other rights.
At the option of the employee, a cash lump sum settlement may be paid to him and he gives up all rights to reemployment, etc. Under this plan men with five to fifteen years' service can get immediate cash equal to one year's full pay.
In the three to five year service group the cash allowance is nine months' pay. Two to three year men can get six months' pay in cash. Those in the one to two year class get six months' wages if they take the dismissal allowance instead of coordination benefits. If the men with less than one year's service want immediate cash they can get it on the basis of five days' pay for each month they have worked.
Moving expenses and property losses of transferred employees will be paid.
Railroads which are parties to the agreement agree not to coordinate with any carrier which has not signed the agreement until the latter provides the same protection guaranteed by the signatory roads.
I have read an outline of the agreement recently brought into existence in the United States. It seems to me that some similar provision and some method acceptable to the government ought to be introduced to safeguard the rights of our Canadian railway workers. Let me point out that if workers on the Canadian National Railways went on strike there would be an immediate outcry across Canada that those men were operating a government railway. I would be one of the first to protest against that interpretation of their position, but there is no doubt that there would be a great outcry to the effect that those men are in a position of responsibility. The statement would be made that they are operating a government railway and ought not to go on strike. Any really effective movement of that kind which might be made in an attempt to force the hands of the employers would immediately bring down the condemnation of the government; I have no doubt of that.
We are attempting to adopt a method by which the rights of the men may be safeguarded peaceably and without any dislocation. I should like to say, however, that when we introduced a similar amendment three years ago, the Minister of Railways and Canals in the late administration suggested that it would be a good thing to do this a little later on, when any employees were adversely affected. These last three years have demonstrated that many employees have been adversely affected. I said upon that occasion that I thought the time to introduce measures of this kind was at the time legislation was being set up, and I still think so. We now take this opportunity to place this

proposal before the government, in the hope that it may be included in the bill.
In closing, may I say that while I cannot argue against economies of any kind, from what I have read I am firmly convinced that the economies contemplated are nothing like as great as they are made out to be. Mr. Beatty himself has been unable to point to just where the great economies may be secured. In my view the pleas for economy have not been sustained by the facts. If we are going to put the whole transportation system under the government, I, with a socialist viewpoint, would say that might be a proper procedure, although I should hate to have the whole system placed under the present government. But under a socialist regime we might very well have coordination of all transportation and communication facilities. I say, however, that under present circumstances we in the labour movement are opposed to chiselling in, in such a way that under the name of "cooperation" we get a very large measure of amalgamation. Any economies are being made at the expense of the employee for the sake of the bondholders; that is the trouble.
What have we in the way of cooperation today? Yesterday in the Quebec legislature a bill was passed by which the Canadian Pacific Railway will go into a territory which all along has been supposed to be that of the Canadian National Railways. Is that cooperation? Now we have a bill introduced in this house the effect of which will be to send a branch line of the Canadian National Railways into that territory. That is not cooperation. If the Canadian Pacific Railway wanted to take action along the lines of the legislation secured in the provincial legislature they ought first to have gone to the board of railway commissioners and inquired about the situation. They should have come to this parliament and submitted their bill. We cannot have cooperation which simply means that employees are ground down and dismissed to effect economies, when at the same time, if they take the notion, the railways may spend tens of millions of dollars to carry through undertakings completely out of harmony with the spirit of cooperation. These are matters which must be considered.
Hence I would urge upon the minister that the new board should not be instructed in any way to foster cooperation of the kind we have had in the past. If the new board is to be more directly amenable to the government, the government which to a great extent won its majority in railway districts on the understanding that the Liberal party was opposed to amalgamation, that govern-

C.N.It.-Board of Directors
ment I would hope would instruct the new board of directors and the new management to halt the progress of "cooperation," in so far as it is more or less a disguised step towards amalgamation.


Clarence Decatur Howe: A while ago I said that only one representation had been made to me about this matter, and that it had been oral. I now find written confirmation of the oral representations made at our interview. It is signed by the secretary-treasurer of the Trades and Labour Congress of Canada, and the secretary of the dominion joint legislation committee.


Abraham Albert Heaps: What date?


Clarence Decatur Howe: It is dated April 27, and a draft amendment is submitted with the letter. I shall not read it because it is long, but I can say that it has no relation to the amendment proposed at this session, either in subject matter, form or anything else. I replied to the communication that we had taken on all the work we could complete at this session of parliament, and in our conference I think we agreed that a tremendous amount of study would have to be given the matter before a proper amendment could be drafted. I think I can say it is mutually agreed that they were satisfied with my expression, which I repeat here, that the government looks with a good deal of favour upon an agreement of that kind, and that if the situation seems to require it a year from now, we shall go into the matter more seriously with the thought of presenting an amendment to the house.


Abraham Albert Heaps: I did not get the full explanation of what was contained in the memorandum of April 27. Do I understand that in the memorandum submitted to the minister there is a request for compensation for employees dismissed as a result of cooperation in regard to services?


Clarence Decatur Howe: I cannot say that. This is a confirmation of the discussion we had. The copy I have is not signed, as a matter of fact, but I believe I may say that there is complete understanding between the parties that signed and myself that negotiations should probably be conducted first with the management, and in the event of no satisfactory result being obtained, we shall look into the matter again next year.


Abraham Albert Heaps: The minister suggests that representatives of railway employees should first approach the management, and if they get no satisfaction from the management they will then come to the government. I
assume there must be some understanding of the purposes for which they would go to the management. I assume their only reason for approaching the management would be arising out of the legislation which we have before us to-night. I have no idea of what is contained in the memorandum in the minister's possession, and he has not read it, although I believe the rules of the house provide for the reading of it. However I shall not ask him to put it on Hansard, if there is an understanding that it should not go there. I believe some kind of negotiation is to be undertaken with the management of the railways, and if the representatives of the men do not receive what they want they may come to the government one year hence. The only point is that none of us has any idea of what they are going to the management for, unless it would be in connection with matters arising out of the legislation now before the committee.


James Samuel Taylor: Am I right in understanding that the minister is sympathetically inclined towards the idea that the men and the railway companies should get together, and that if they agree he would be favourable to dismissal compensation?


Clarence Decatur Howe: That is the situation, yes.


James Samuel Taylor: Thank you, very much. Then, in view of the reasons annexed to the setting aside of the amendment, will the government take steps to prevent the railway companies from levying funds for the purpose of making dismissal compensation?


Clarence Decatur Howe: On what section is the hon. member speaking?


James Samuel Taylor: I am asking this question: In view of the reasons annexed by the chairman for the turning down of the amendment offered by the hon. member for Winnipeg North, will the government take into consideration the fact that these levies by the railway companies for the purpose of satisfying the claims of dismissed men will affect government funds, and will they step in to prevent these levies being made?


Clarence Decatur Howe: I cannot understand the hon. members question. All this talk in parliament about agreements between the railways and the men I think will be resented equally by the men and the railways, and quite properly. I claim that in Canada we have the finest channels in the world between the men and their employers so far as railway labour is concerned. They work together with a minimum of friction, and I have every reason to believe that if parliament will allow this
C.N.R.-Board oj Directors

matter to take its natural course there will be no serious complaints. It seems to me that for hon. members to rise in their places on their own responsibility and ask questions of the government about matters relating to involved arrangements between railways and railway employees, is going a little too far.


James Samuel Taylor: If the government is not permitting the amendment on the ground that it interferes with government funds, I would point out that any arrangement made between the government and its employees would also affect government funds. I want the assurance of the minister that he will not interfere if the railway companies make these arrangements and pay out of their funds dismissal pay in compensation to those who lose their positions through cooperation.


Charles Avery Dunning: If there is no legislation interfering at all, it is quite obvious that agreements between the employees and the employer can be undertaken within the ambit of the authority of both as it at present exists. That is the best answer one can make. Certainly the government will not interfere or prevent the management of the railway from reaching an agreement with its employees. I do not think any government of Canada ever has done so, and certainly this one will not.
Mr. TAY'LOR (Nanaimo): Thank you very much, but you realize the implications attaching to the decision of the chairman.


Charles Avery Dunning: I do not realize any implications at all.


Mr. CAMERON (Cape Breton):: It strikes me that there is involved in the question of compensa tion something which has so far been a hindrance to the carrying out of the principle of cooperation. That seems to be evident from the statement of the chairman of the board of trustees and also from the statement of the Minister of Transport (Mr. Howe) as it is published in the proceedings of the committee.
I think perhaps the best friends of the railway organizations would be well advised if they accepted the word of the government and the suggestion of the minister of transport that in the matter of cooperation provision would be made for compensation. I believe it would lot be wise to have that provision made in this bill. Nevertheless, in view of the fact that the chairman of the board of trustees made it perfectly clear that one hindrance to further cooperation was the fact that the burden of it would of necessity have been transferred to labour, the whole situation becomes important when we consider any further

cooperation between the two great systems. I do not believe that the directors will succeed in further cooperation unless the board feels itself able to meet the question of compensation with a reasonably free hand. The president of the Canadian Pacific Railway has on more than one occasion, according to reports in the press, made it clear that he did not want cooperation if it meant employees of the railway losing their positions. That statement has been made by advocates of cooperation in this house during this session of parliament, and it is tacitly made by the present minister in his reply before the railway committee to the chairman of the board of trustees. It seems to me that there should be a fairly definite understanding in order that the men in the employ of both companies may feel assured that the process of cooperation, however far it may go, will not have the effect of placing their positions or their earnings in jeopardy.
Of course, as I understand this whole problem, there is a far greater scope for the management of both roads, particularly the management of the public road, in broadening out its sphere of activities, enlarging the scope of action of the board of directors, reaching out for new business and bringing in a return which will, in the words of the minister, ultimately wipe out the huge deficit we have to face each year. If we succeed in doing that, that is the real purpose of the legislation before this committee, not ascribing motives such as have been mentioned during the discussion this afternoon, yesterday and on other occasions when this matter has been before us. I hope to see this legislation bear fruit such as the minister of transport has suggested it is likely to do, and I believe it will if all parties in this chamber forget the ascribing of unworthy motives to one another, unite, with the common purpose of trying to salvage what may be salvaged from this splendid asset and give this dominion an up to date system of transportation which will meet the needs of the various portions of this dominion, and meet particularly the needs of industry, which I am satisfied it is not doing at the present time.


[Stage Direction]
Section agreed to.
Section 5 agreed to.
On the preamble.
Richard Bedford Bennett: I observe the "Minister
of Transport" is used in two cases on page 7 of the bill, although there is no minister of transport yet. That is no reason why the bill should be held up, but the situation is unusual.

Supply-Agriculture


Clarence Decatur Howe: The bill providing for a
minister of transport has been introduced, and I find that we cannot use here the same clause that was used in the harbour boards bill.


Richard Bedford Bennett: No, the minister has to
be named.


[Stage Direction]
Preamble agreed to.
Bill reported.
Clarence Decatur Howe: With the consent of the house, I should like to move the third reading now as we are anxious to get this bill to the other chamber.


[Stage Direction]
Motion agreed to, and bill read the third time and passed.
[Stage Direction]
The house in committee of supply, Mr. Sanderson in the chair.

[Stage Direction]
Fruit, including grant of $4,750 to Canadian Horticultural Council, $460,200.
Mr. PELLETIER:: Will the minister explain the decrease in this vote?


Hon. J. G. GARDINER (Minister of Agriculture):: Perhaps that question could
best be answered by giving the different items in the vote and showing where there are increases and decreases. In travelling expenses of head office staff, $8,000 was expended in
1935-	36; the estimate for 1936-37 is $9,000, or an increase of $1,000. Outside administration, salaries and expenses: 1935-36, $222,790.48;
1936-	37, $225,407, an increase of $2,616.52. Rental of offices and railway spur: $1,393 in
1935-	36 and $1,535 for 1936-37, an increase of $142. Shipping point and export inspection, salaries and expenses: 1935-36, $187.322.50;
1936-	37, $174,090, a decrease of $13,232.50.
Operation of onion warehouses:	1935-36,
SI,500; 1936-37, $200, a decrease of $1,300. car precooling: $1,500 in 1935-36; $1,000 for 1936-37, a decrease of $500. There is an item covering exhibitions which has been taken over by the publicity and extension branch. The amount expended in 1935-36 was $3,500, so there is a decrease of that amount in this branch, but there is not a decrease in the total expenditures. Extending markets, test shipments: 1935-36, $2,000; 1936-37, $2,000, no increase or decrease. The amounts are the same for equipment and repairs of onion warehouses, $800 for each year. The amount for technical instruments, transportation and warehouses is the same for each year, $500. Publications and bulletins: $3,500 for each year. Crop and market reports, telegrams, et cetera: $12,000 for each
year. Office supplies, stationery, forms, equipment, et cetera: 1935-36, $15,800; 1936-37, $16,800, an increase of $1,000. Apple maggot survey, eastern provinces:	1935-36, $8,000;
1936-37, $6,000, a decrease of $2,000. The amount for legal services is the same for each year, $1,500. Repairs to departmental cars: $1,000 for each year. Grant to horticultural council: 1935-36, $4,500; estimated for this year, $4,750, an increase of $250.


Mr. MacNICOL:: What is the increase for?


James Garfield Gardiner: The original grant of $5,000 was reduced by ten per cent, and the reduction this year is only five per cent. Unforeseen expenses: 1935-36, $254.50; 1936-37, $118, a decrease of $136.50. When the decreases and increases are totalled up, it will be found that the total decrease is $15,660.48.


René-Antoine Pelletier: The minister mentioned an amount of something like $3,500 for advertising. Is this the total amount expended to advertise Canada's fruit crops?


James Garfield Gardiner: That item is for publications and bulletins. It is not advertising; it is largely information furnished to people who are growing fruit.


René-Antoine Pelletier: Is there any amount under any other heading for advertising the fruit production of Canada?


James Garfield Gardiner: There is nothing provided at the moment for that purpose.


Mr. BARBER:: The minister mentioned an amount of $225,407 for outside salaries. Would that be for inspectors?


James Garfield Gardiner: That is mostly for inspection services throughout the country.


Harry James Barber: Would that include experimental farms?


James Garfield Gardiner: No; it has nothing to do with the experimental farms. This is inspection work throughout the country in connection with fruit growing, fruit grading and the general administration of the fruit act.


Mr. ROWE (Dufferin):: What is the difference in the grants this year and last year to the seed fairs?


James Garfield Gardiner: That would come under the next item.


Percy John Rowe: I understood that the item had been passed. Was the grant last year the same?


James Garfield Gardiner: There is a slight decrease I gave all the particulars. It is $15,660.48 less on the total vote.


[Stage Direction]
Item agreed to.
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[Stage Direction]
Seed, feed and fertilizer control, including grants to seed fairs, et cetera, also grant of $18,900 to Canadian Seed Growers' Association, $407,200.
James Garfield Gardiner: On February 28 we
covered this entire vote and all explanations were given. Eleven o'clock came before the item could carry. The information will be found in Hansard of that day.


René-Antoine Pelletier: Does this include the funds required for freight charges on seed grain shipped to farmers from seed cleaning establishments ?


James Garfield Gardiner: Yes.


[Stage Direction]
Item agreed to.
Entomology, including investigations and inspections relating to destructive insects and pests, $400,100.
James Garfield Gardiner: This item was called earlier in the session, but the leader of the opposition asked to have it stand because some members were not present.


Ernest Edward Perley: What work is carried on at Indian Head with regard to cutworms and grasshoppers?


James Garfield Gardiner: The entomological work is not done at experimental farms. There are two different branches, the experimental farm branch and this particular branch. A certain amount of research work is done in connection with insects and other pests at different experimental farms throughout the country. One of the pests in the west is the cutworm and another is the wheat stem sawfly. Most of the work done at the entomological laboratory at Indian Head is in connection with pests of that kind, and information is given the farmers from time to time as to how to deal with them.


Grote Stirling: Can the minister give us information with regard to cooperation with the provinces? The act with regard to insects and pests is under the administration of the dominion government, but in connection with certain work-for instance in the fire blight experiments, though I am not quite sure whether that comes under this item-operations are carried on by both the province and the dominion, in British Columbia and possibly in other provinces.


James Garfield Gardiner: There is cooperation between the provinces and the dominion. It will be understood, of course, that when an insect of any kind attacks, say spruce trees or any other forest trees, it does not stop its operations at provincial boundaries but extends from one province into another. This is true of grasshoppers and other insect pests. It is necessary, therefore, to have the greater

part of the work done by the dominion. The provinces cooperate to the fullest extent whenever any pest is being attacked. We have the fullest cooperation from New Brunswick, Nova Scotia and Quebec in fighting certain pests in the east; we have cooperation in British Columbia, and we have cooperation in the prairie provinces in connection with insects that attack the grain crops.


Grote Stirling: Was this cooperation a matter particularly under discussion at the dominion-provincial conference?


James Garfield Gardiner: Yes; it was discussed in a general way though there was no detailed discussion. The question of overlapping was discussed and it was decided that there had been the fullest cooperation in this regard.


Mr. DOUGLAS:: Does the department contemplate any action in connection with the wireworm, in the way of cooperation with the provincial departments?


James Garfield Gardiner: An experiment is being carried on at Swift Current for the purpose of providing the best information available with regard to attacking the wireworm.


Richard Bedford Bennett: I wonder whether the minister would see to it that someone from the experimental farm inspects the small trees and vegetation roundabout these premises. I was looking at them the other day. They are being attacked, not by the fire blight but by something worse. The trouble will spread and valuable trees will be destroyed. I meant to telephone the Department of Agriculture but I did not know whom to get in touch with. Someone should be responsible because it is a very bad condition. It is at the back of this building, and the rapidity with which the destruction is going on is suoh that I should like to see it attended to at once. I bring it to the minister's attention in the hope that someone will look after it.


James Garfield Gardiner: I am pleased that the leader of the opposition has called attention to it. Whenever the attention of the department is drawn to matters of this sort it has always 'been the practice to have an investigation made.


Richard Bedford Bennett: Who makes it?


James Garfield Gardiner: It is made by this particular branch of the department.


Percy John Rowe: Have there been any successful experiments in connection with the distribution by airplane of powder for the destruction of insects in western Canada this year?

Supply-Agriculture


James Garfield Gardiner: Some preliminary work has been done particularly for forest insects, but it -has been found expensive to do it in that way; there are less expensive ways for field crop insects.


[Stage Direction]
Item agreed to.
Salaries, $798,997.75; contingencies, $77,200.
James Garfield Gardiner: There are three main reasons for the difference shown. The 1935-36 item for salaries is $711,334.25.


Richard Bedford Bennett: Will the minister give particulars of how this item is made up?


James Garfield Gardiner: In a moment. First, I will give the main reasons for the difference and then I shall give the items, if necessary, from the itemized account. For 1936-37, the estimate is $798,997.75. There is an increase there of $87,663.50. If members of the committee will look at the next item, contingencies, it will be noted that the 1935-36 item is SI 14,200; the 1936-37 item is $77200; that is a decrease of $37,000. That decrease will be accounted for largely in the increase of $87,663 in the item for salaries. It is a transfer of salaries from contingencies into the civil government list.


Percy John Rowe: There is still an increase of over $50,000.


James Garfield Gardiner: I shall come to that in a moment. It is largely due to temporaries made permanent.


Mr. SENN:: Was that $114,200 for contingencies all taken up last year?


James Garfield Gardiner: Yes; it was all taken up last year. In addition to that there is the five per cent as compared with the former ten per cent deduction in salaries; there is five per cent added there. The balance is due to transfers of salaries from the branch votes to civil government.


Mark Cecil Senn: Do I understand the minister to say that the-re have been no additions during the year to the staff of the Department of Agriculture; that none of this extra amount that is being voted is to be for new help?


Grote Stirling: There are twelve new stenographers.


James Garfield Gardiner: There have been three new positions provided, but two of those are modified old ones. This does not mean the putting on of three individuals, but it is the creation of three new positions, two of them being modified old positions that were in existence before.


Mark Cecil Senn: Will the minister say what those are?


James Garfield Gardiner: The three of them are: the general executive assistant; that position has not been filled; it was created some time last year but it has not yet been filled; then there is the chief, fruit and vegetable field service, and the dominion agricultural chemist. The latter two were just modifications of previous positions.


Grote Stirling: And are they filled?


James Garfield Gardiner: Yes; the latter two are filled.


Percy John Rowe: Markets and transportation: two additions there, assistant chiefs.


James Garfield Gardiner: Do I understand the hon. member to ask if those positions were in markets and transportation before?


Percy John Rowe: No; are there not now two chief assistants in the markets and transportation branch?


James Garfield Gardiner: In the fruit branch?


Percy John Rowe: Yes.


James Garfield Gardiner: The matter of appointments is under consideration.


Grote Stirling: They are provided for but not filled. At the bottom of page 70 of the estimates two of them are mentioned.


Percy John Rowe: Field services, the same? The salaries are provided for.


James Garfield Gardiner: They will be found all through the list. These were all in the branch votes. They were taken out of the branch votes and put into civil government this year. That is the only change there. If hon. members go over the items on pages 70, 71 and 72 of the estimates, they will find that this is shown there as an increase in civil government. That is the reason there are more of these employees.


Percy John Rowe: An increase of fifty-four new employees?


James Garfield Gardiner: Yes, but they are not
new employees. They are simply taken out of the branch votes we have already passed and put under civil government.


Percy John Rowe: All except three.


James Garfield Gardiner: All except three.


Grote Stirling: For instance, as regards
the four senior fruit and vegetable inspectors, they are not new creations? They are people whose salaries previously have been paid out of the particular vote?


James Garfield Gardiner: Yes; that is my information.
Supply-Agriculture


Percy John Rowe: Where does the increase of the $50,000 come from?


James Garfield Gardiner: That increase is as shown. Part of it is due to the five per cent difference in salary deduction, and part of it is due to transfers from the branch votes into this vote for civil government. The $50,000 increase in the civil government vote is made up in that way, but it does not increase the total vote of the department by that amount.


Grote Stirling: Does it amount to this? At the top of page 71 of the estimates is one assistant chief, field services. I do not know if that is for fruit. Is it?


James Garfield Gardiner: Yes.


Grote Stirling: His salary added to those of the four senior fruit and vegetable inspectors, makes $11,800, and that, I take it, if I understand the minister aright, is a set-up against the $15,600 deduction in the fruit vote.


James Garfield Gardiner: In part it will be. There are other reasons, as I mentioned.


Mark Cecil Senn: I note also that there is a
chief canning inspector whose office is being done away with at the present time. Perhaps I am going a little far afield in asking this question, though it has to do with the canning of fruits and vegetables. I understand that there is to be some change in the regulations respecting containers; that regulations are being prepared at the present time to standardize containers of fruits and vegetables after they are canned. Is such in contemplation? Are these regulations nearing completion? And what are they?


James Garfield Gardiner: I understand that in
1933'the government established the practice whereby when a position was vacated it was allowed to lapse along with the vacation of the position. That move was made, I think, to cut down staffs in certain departments. It has been found necessary from time to time to reestablish some of these positions. This position went out of existence in that way, and will probably have to be reestablished to take care of the very matter that the hon. member has spoken of.


Mark Cecil Senn: Yes, but I should like the
minister to give us the information for which I asked, regarding a change in the regulations for the standardization of containers for canned goods.


James Garfield Gardiner: Really there has not
been any change up to date other than this, that I think it will be found that in the bill before the house there is a provision for a change in containers for cheese, packages for

cheese, and in connection with fruits. The matter of containers is under consideration as a result of the report made last year by the price spreads committee. The idea that at the moment is seemingly most acceptable to the department is that we might be well advised to depart from insistence upon certain weights in connection with canned fruits, accept the idea of volume and take pints, quarts, gallons and so on rather than deal with weights in the set-up of the packages. But the matter has not yet been fully decided, and no change has been definitely decided upon in connection with it.


Mark Cecil Senn: May I ask the minister if
the department has received any representations from the canning industry as a whole, or from any of the larger concerns which are interested in canning, to the effect that they would rather have the net weight as the standard than the size of the container in quarts or pints or multiples of quarts or pints? I understand that they feel quite strongly on this matter, and that they are of the opinion that it is more in the interests of the canning industry, of the fruit farmer and of the vegetable farmer, that containers shall have the net weight marked distinctly on the package, so that the housewife may know what she is going to get. I should like to know if any representations have been made and any conferences held with respect to the matter.


James Garfield Gardiner: Meetings and conferences have been held in that connection. I understand that one of the companies has expressed strong views with regard to the matter, believing that the net weight method is fairer than any other of providing containers. I believe that the other companies have open minds on the matter, some of them being favourable to containers in accordance with the view I expressed a moment ago, based upon pints and quarts and multiples of pints and quarts rather than upon weight.


Mark Cecil Senn: I understand that one of the objections raised by one of the larger companies mentioned by the minister is that a certain quantity of goods is canned for export, and it has to conform to the regulations of the country to which it is to be exported. It is very difficult, of course, for these companies to estimate just how much they are going to be able to export, and if they overstep the mark and can a larger quantity than they are able to sell, in sizes that are required by the regulations of these foreign countries, a regulation which sets the size of the container in pints, quarts or multiples thereof would

Supply-Agriculture
make it impossible for the company to dispose in the domestic market of any goods which it was not able to export. I should like to ask the minister if all the companies have been consulted and if any conferences have been held.


James Garfield Gardiner: Conferences have been held and, of course, all the companies will be consulted before anything final is done. The matter is under consideration at the moment, and the point raised by the hon. gentleman has been considered in a partial way but not finally determined. Nothing will be done that will interfere in any way with trade into any other country. We shall attempt to arrive at a conclusion that will make that kind of trade possible.


Grote Stirling: I think that is one instance where the Canadian Horticultural Council has demonstrated its usefulness.


Richard Bedford Bennett: I think in the main import countries require net weight to be shown. Within the British empire the standard is universal, but on the continent the metric system prevails, and there is some difficulty about weights. That is my information. I think the Department of Trade and Commerce should be consulted about this matter with a great deal of care, in relation to the reports from their trade commissioners. My information is that in the British empire we have a net weight standard, because we all have sixteen ounces to the pound. But once you get on the continent of Europe you have the metric system; the weight is indicated in grams and the volume in litres, which is an entirely different proposition. I should not think it would be a change for the better to provide quarts, pints and gallons as the standard to show the net amount the housewife is purchasing. I say that only because of some investigations I made in that connection in one of the large stores in London that dealt very largely with Canadian products. A standard which is known to be standard throughout the empire is one from which I think we should not depart unless we have the very best reasons for doing so.


Harry James Barber: I should like to draw the minister's attention to the fact that apparently about twelve extra stenographers have been taken on. Would the minister say that they were all taken from the temporary staff which he had last year?


James Garfield Gardiner: I am informed that there is very little variation, if any, in the stenographic staff. Changes are made back and forth between the different branches; there
may be a cutting down in one and an increase in another, but as far as the total staff is concerned I am informed that it is practically the same as last year.


Harry James Barber: On page 72 of the estimates I see an increase from sixty to seventy-two stenographers under one item and from nineteen to twenty under another.


James Garfield Gardiner: They are all covered by the explanation I gave a few moments ago. These are largely changes from the temporary staff to the permanent staff and from branch votes to the civil government vote. They are not increases in the number of individuals in the service.


Percy John Rowe: That is with the exception of the three new positions, which have not been filled yet as I understand the situation.


James Garfield Gardiner: No; they were on the staff and they have been transferred from one vote to another.


Percy John Rowe: All but three?


James Garfield Gardiner: There are just the three new positions.


Mr. TUSTIN:: I understood the minister to say that consideration was being given a question of changing containers for fruit. I should like to ask if the same consideration is being given containers for canned vegetables.


James Garfield Gardiner: Yes. All the questions raised in connection with the price spreads investigation are being given consideration at the present time. There is only one on which we have reached a final decision, and that is still to be dealt with by the house in the legislation having to do with butter and cheese.


Mark Cecil Senn: Would the minister explain
just what are the duties to be performed, by the general executive assistant?


James Garfield Gardiner: That position was
created before I took over the department, and whoever was appointed was supposed to give general assistance to the executive in administering the affairs of the department, f have not found use for such an appointment up to date and I do not know that I shall, but we are making the vote now until the matter is finally determined.


Richard Bedford Bennett: Do not mention that; it might turn out to be another assistant chief electoral officer.
Supply-Agriculture


Ernest Edward Perley: On page 71 of the estimates provision is made for a chief seed grader. What are his duties and does he work in the west or in the east?


James Garfield Gardiner: He is in the executive office, the central office at Ottawa, but I am not in a position to give his duties in detail except that he will have charge over those who are grading seeds.


René-Antoine Pelletier: Before this item passes I should like to bring a certain condition to the attention of the minister, and I think it might come under the miscellaneous item. It has been the practice of the Department of Agriculture, in order to encourage and promote the distribution of pure seed, to pay the freight on all shipments of registered or certified seed made before March 2 of this year, under certain conditions which are set out. There have been brought to my attention certain cases in which it was impossible for the department to have the seed cleaned and ready for shipment before that date. When this matter was taken up with one of the seed stations the reply was that it was impossible to get the seed out under the free freight rate because it would not be ready for shipment by that date. In this particular instance the money for the seed grain had been sent to this station and was there for some time before the date fixed. The point is that the seed could not be shipped under free freight after that date, because it was not possible for the government to have it ready at that time, and also because the money was not voted for the following year to take care of this situation. I was wondering whether the minister would not consider what I have said when he is drawing up future estimates. That is to say, those who cannot take advantage of the free freight simply because of the inability of the department to have the seed ready in time are subjected to extra expense. I believe it is unfair to ask the farmer to bear that extra cost. It would be good policy for the government to set aside a very small sum-it would not need to be large-to take care of these cases, and I believe it would be easy for the department to find out how many such cases there have been in the last few years and to base their estimates upon the facts as they have gathered them. I speak to the point because some farmers obtain the benefit of the free freight rate, while others, through no fault of their own, but because the government cannot get the seed out in time, are forced to pay freight. Between the free freight date and the time new moneys are voted to provide

for the item in the next year, I suggest that some provision should be made to take care of the farmers who do not receive the free freight rate.


James Garfield Gardiner: The letter sent out may be open to a wrong interpretation. It is generally known that the end of the financial years is on March 31. These votes cover the year from April 1 until March 31 of the following year. Most farmers who are laying in seed for the spring have obtained it before the end of March. That is the common practice throughout Canada and the practice of those who are providing themselves with the amount of seed indicated in the vote. There have been cases where people have not had their applications in sufficiently early. If the applications were not in about the middle of February it is possible that delivery of the seed could not be made in sufficient time to get it out before the vote lapses. But in actual practice most of those accounts have been paid. All those cases are subject to review, and when the new votes come in on April 1, the moneys are used to take care of cases which have been carried over from the previous year. However, in order to protect themselves against conditions which might arise, officials of the department necessarily send out orders from year to year to get applications sufficiently early to make it possible for delivery early in the month of March. I believe the letter could be interpreted as more or less a warning to a man to get his order in earlier next year.


René-Antoine Pelletier: The seed growers' association and organization take the responsibility for sending out advice of this kind to the farmers, and perhaps when they are notifying farmers of seed price lists they could send a notice to the effect that it would be much better for them if they had their orders in before a certain date. If February 1 is a date satisfactory to all concerned I believe it would be a good idea to include that information in the pamphlets sent out.


James Garfield Gardiner: We shall consider the suggestion.


Thomas Clement (Tommy) Douglas: When the minister replied to the hon. member for Dufferin-Simcoe (Mr. Rowe) stating the reason for the increase in salaries, he said that it was due partly to transfers from the temporary to the permanent list, and partly to statutory increases. It would seem that $37,000 would refer to transfers, and we would assume that $50,000 was required to cover statutory increases.


James Garfield Gardiner: Some of the $50,000 is paid in connection with the transfer of

Supply-Agriculture-Marketing Act
individuals from one vote to another, as well as from contingencies, in addition to the amount which would be necessary to pay the statutory increases.


Mark Cecil Senn: I do not wish to transgress the rules of the house, but I think the minister will recall that when one of the first votes was passed I asked that one vote be left so that anything concerning the estimates might be discussed. May I ask the minister if the government has made a final decision against aonusing cheese this year?


James Garfield Gardiner: That would come under the next item.


[Stage Direction]
Item agreed to.
Natural Products Marketing Act, 1934, $106,000.
James Garfield Gardiner: Last year there was a vote of $1,545,500, and this year the vote is $106,600. The difference in the two items is due to the cheese bonus and the amount expended last year in connection with the export marketing of butter. As was announced, the- government has decided not to pay the cheese bonus this year.


Mr. BLACKMORE:: In connection with the marketing of our natural products there are some observations I should like to make to the minister. I realize that perhaps one of the most serious problems which will face us within the next years is that of marketing our natural products, and particularly our agricultural products. I have no use for finding fault without offering some kind of solution. Where the difficulty is obvious to everyone, and no solution is offered, discussion seems idle, but I believe what I have to say might help at least to some degree to solve the problem we must face. It is recognized that agriculture must continue as Canada's basic industry, and it is also recognized that that industry is suffering. There are many causes for anxiety; for example, a large crop of wheat, an overproduction of meat products, or of butter, or of potatoes, may cause us great concern, and sooner or later we must find a solution for our difficulty. We are attempting to solve the problem. This item for the bonusing of chee j is a good example of that. We are pegging prices for wheat and we shall peg other prices, I fancy. We have a marketing act now before the courts, and I am quite sure that we shall put through another marketing act if the present one is not upheld by the courts. We have a Prairie Farm Rehabilitation Act, which is a most excellent one, and for which I desire to commend
everyone who had any part in bringing it in. It will be followed by others of its kind, I assume.
There are two problems, however, to which I think we have not thus far given sufficient attention in Canada, and the time is now ripe to give attention to them. One is the maintenance of soil fertility. The Prairie Farm Rehabilitation Act attempted something along that line, glancing at the soil drifting difficulties which have arisen in different parts of Canada. We have another serious question which we must face before long, and that is the problem of the economic use of irrigated land. I do not wish to take up too much of the time of the committee, but I wish all members of the committee could be out for a little while in the constituency I represent. There are four distinct irrigation projects there, and they are, to use the fine description which the bon. member for Kootenay East (Mr. Stevens) applied to the Canadian National Railways, a magnificent asset. I feel that one is perfectly justified in applying that term to them, and it is an asset whose value I believe can be greatly increased to the great advantage of this country. But before that can be done we must look to the economic use of these projects or we shall have a magnificent asset turning, because we misuse it, to our disadvantage.
Having said this much, I wish now to direct the attention of the minister to the condition of the beet sugar industry in Canada. I would ask all members of this committee to give their earnest consideration to the condition of the beet sugar industry because there are at present many misunderstandings and misconceptions about it, and it is very easy to make a grave mistake in connection with it. The minister might possibly have overlooked some facts in connection with this industry which, I think, should be brought to his attention, and by the way may I say without his feeling that I am endeavouring to flatter him that I have a very high opinion of the Minister of Agriculture (Mr. Gardiner). I feel that he is the right man in the right place, but with the multiplicity of his duties it would be an easy matter for him not to have given a matter of this kind particular attention. There are also, I believe, many members of this committee who, because they do not come from territory similar to that in my constituency do not realize what irrigation project districts are like, just as I myself, when I had occasion to go through part of Quebec a little while ago, found that I could never have imagined what the actual conditions were like in that province without going there. I am quite sure that some

3466	COMMONS
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members of this committee cannot imagine what conditions are like in the irrigated regions without going there and seeing for themselves, and I should like to help them see something of the nature of these projects.
The problem of the beet sugar industry is a difficult one, much more difficult than most people in this country .realize. We are at the present time placing a levy on the beet sugar industry.	We are bonusing wheat,
bonusing cheese, and aiding in various ways a good many other industries in Canada, but on the beet sugar industry we are placing a handicap, and this will show how serious that handicap is: The government tax, the one cent levy on each pound of sugar produced, was so grievous that it amounted in 1935 to 54-7 per cent of the gross returns to the farmer. I do not believe anyone could have imagined that the government got 54-7 per cent of what the farmer got for every ton of beets delivered to the factory. That is an unjust situation, I am sure. Again, the government, through this levy, received 66 per cent more than the labourers received who did the work on the beets.


James Garfield Gardiner: That would cover all
the municipal, provincial and federal taxes?


John Horne Blackmore: No; that is just the dominion tax. I wish, Mr. Chairman, with your permission to put on Hansard some figures which are right up to date and have come from the Raymond sugar factory, which is a very accurate one, to illustrate the handicap under which the beet sugar industry carries on. The government is receiving so much money from the beet sugar industry that it receives on an average, clear, 13-6 times as much money as the farmer receives on an average, clear, per ton of beets. This is an almost inconceivable, an almost unbelievable situation; yet it is borne out by the figures I shall presently put on Hansard.	_
There is another point, and that is that Canada is, so far as I have been able to learn, the only country in which there is not definite assistance given to the sugar beet industry. Canada, on the contrary, actually places a oandicap on that industry.


Grote Stirling: May I ask a question? Mr. BLACKMORE: If it does not require me to digress too much.


Grote Stirling: I wonder whether the
hon. member would amplify his statement that the dominion government receives thirteen times as much as the sugar beet farmer.


John Horne Blackmore: 
Grote Stirling: What is the government tax?
Mr. BLACIvMORE: One cent per pound excise tax. The gross average amount received per grower was SI,018.86, and the gross average cost of production per grower was 8978.07 The net average profit per grower was 840.79


Harry James Barber: Do the growers pay this one cent tax? The consumers claim that they pay it.
Mr. BLACIvMORE: I am glad that point has been brought up.


Harry James Barber: The consumers claim that they would be able to get sugar one cent per pound cheaper if it were not for this tax.


John Horne Blackmore: When the farmer delivers his beets to the sugar company they tell him that they would be able to pay more if they did not have to pay this tax.


Harry James Barber: They charge the tax.


John Horne Blackmore: In any case the farmer has to pay the tax. We shall go on. The average amount of the government tax per grower is 8558.48. For every dollar paid out in labour during the beet crop, the government receives $1.66. I have not the time, nor would it be fair to take up the time to go into these figures, but I think it worth while to put them on Hansard so that hon. members who are interested can study them. One or two hon. members would seem to be inclined to scoff just a little, but I think it would be well if the} would consider these figures very carefully before they say much. Otherwise, they might not feel very proud of what they do say.
I should like to draw to the attention of the committee the national need of a beet sugar industry at the present time. Unemployment is our most serious difficulty, but it has been estimated in the United States that for every factory of 1,200 tons' capacity, 10.000 people would be employed. That is a surprising estimate and I should like to read something to bear it out. Let me quote from a pamphlet entitled, Why Canada Needs Sugar Beets, by the joint sugar beet development committee. Lethbridge, Alberta. I read from page 16:
It has been estimated in the United States that one factory of from 1,000 to 1,200 daily capacity will, directly and indirectly, give a living to 10,000 people-men, women, and children.
12739-221 i
There is another statement which appears on page 19 of the same pamphlet:
Mr. Charles H. Houston, president of the Canada and Dominion Sugar Company, when appearing as a witness before the select standing committee of the Canadian House of Commons inquiring into the beet sugar industry. made the following significant statement: "I will say this, that the beet sugar industry employs a tremendous amount of labour. There is no other industry that I know that takes care of as much labour as the beet industry."
I should like to quote from an article by S. P. Grounds which appeared in the October, 1931, number of Empire Production, published in London, England, as follows:
It is undoubtedly in the direction of increasing home supplies of sugar that the industry in Canada will continue to develop. The prairie provinces themselves have been computed to import sugar worth $10,000,000 every year. This might well be supplied by six or seven more factories like that at Raymond, cultivating 60.000 to 75,000 acres, giving employment to 5,000 farmers, 8,000 hand labourers and 2,000 factory workers, and utilizing each year 125.000 tons of coal,
1.500.000	sugar bags. 30,000 tons of limerock,
3.000	tons of coke, 200 tons of soda ash, and large supplies of other materials.
I direct the attention of hon. members of the committee to the number of acres which could be taken out of wheat production. This article indicates the possibilities in the beet sugar industry, but I am afraid that so far these have been neglected in Canada.


John Ritchie MacNicol: Might I ask a question of the hon. gentleman?


John Horne Blackmore: 
Mr. McKENZIE (Lambton):: I speak very seldom in committee, and I crave your indulgence, Mr. Chairman, for probably five or ten minutes. I have the honour to represent what is probably the largest district devoted to the beet growing industry in Ontario, and I feel I would be remiss in my duty if I did not for a moment or two speak on this subject. Since I came to Ottawa I have probably heard more talk about the tariff on sugar, .-and the protection given beets destroying the potato industry in the maritime provinces, than anything else. I wondered whether that was the case. I found that Canada has a :trade agreement with Great Britain, and with .the British West Indies, which is a British [DOT]possession, as regards a duty on sugar.


Richard Bedford Bennett: They are separate. The treaty with the West Indies was long prior to the 1932 agreement.


Robert McKenzie: At the present time there is a stated duty which, I believe, cannot be changed before 1937, and even then not without twelve months' notice. About that time, in 1931 or 1932-


Richard Bedford Bennett: No; it was prior to that. The agreement was made not under the late government, but under the government that preceded it.


Robert McKenzie: About 1932 I believe that very cheap sugar was being dumped into Canada. At that time a dump duty was put on refined sugar coming into this country. It was imposed at the request not of the beet-growing industry, but, probably, of the sugar refineries; possibly the competition was unfair; I do not know.


Richard Bedford Bennett: It was Cuban sugar that came in.


Ian Alistair Mackenzie: Cuba is not in quite the same position to-day. Because of a special trade agreement with the United *States, that island is selling two-thirds of her products to the United States at what is, for sugar, a very fair price. The other one-third she is dumping, mostly into Great Britain, at
I Mr. Blackmore.]
a very cheap rate. Great Britain has imposed or is about to impose a dump duty upon all sugar that is selling below SI .75 per hundredweight. The sugar beet industry and the consumption of beet sugar have increased marvellously during the last few years. Fifty years ago not more than ten per cent of the world's sugar was beet sugar. To-day almost forty per cent of the world's consumption of sugar is of beet sugar. Great Britain and the United States, which have been large importers of sugar, are to-day growing from twenty to twenty-five per cent of their own sugar as beet sugar.
In 1903 or about that time the beet sugar industry was started in Canada. It made fairly rapid progress until about 1920, when the great sugar debacle of that year ruined a great many of the organizations that were insecurely grounded. Now, in 1936, we have again some thriving sugar beet factories. In the riding I represent, at Wallaceburg they are refining beet sugar at the rate of a hundred tons of raw pulp an hour, or twenty-four hundred tons a day.


Richard Bedford Bennett: For how many months?


Robert McKenzie: For probably three months.


Richard Bedford Bennett: The important thing is the number of months.


Robert McKenzie: In spite of that dump duty Canada imports approximately eighty-four per cent of the sugar she consumes. The average consumption of sugar in this country is quite heavy. I think it is ninety pounds per capita or more.


Mr. MARTIN:: Eighty pounds.


Robert McKenzie: It varies from one year to another. The amount of excise that is collected on sugar has already been mentioned by my hon. friend. I got it from the bureau of statistics, and I assume it is correct. The excise collected on sugar for the year 1934-35 was $11,037,278. Import duties collected on the sugar we imported for the fiscal year were: not above Dutch standard, $3,433,000; sugar above Dutch standard, $1,373,000, or a total duty, collected on sugar we imported, of approximately $4,807,000, which, added to excise of $11,037,278, makes a total levy of $15,844,322 on sugar consumed in Canada. In spite of that heavy tax on sugar, this product is selling more cheaply to-day than at any time in our history. I was passing through London a week or two ago when sugar was retailing at $4.80 a hundred pounds. Take off your excise, which surely

Supply-Agriculture-Marketing Act
has nothing to do with the cost, and you have sugar selling to-day on the market at S3.80 per hundred pounds.


Richard Bedford Bennett: The duty was reduced last year to one cent a pound.


Robert McKenzie: That is what I say; take off the one cent per pound and your sugar costs the consumer to-day, without that tax, $3.80 a hundred pounds.


An hon. MEMBER:: Retail.


Robert McKenzie: Retail, yes. It retails at $4.80, and taking off the excise it is really retailing at $3.80, the cheapest price at which sugar has been sold in the history of Canada.


Paul Joseph James Martin: Those figures are computed on the two cent basis, rather than, as the right hon. gentleman points out, one cent.


Robert McKenzie: No, they are not. I took the one cent rate. There is nothing new about the sugar industry. Hon. members who sat here in 1932 and 1933 can remember that, on February 24, 1932, after an exhaustive and careful investigation of the situation, the select committee on agriculture and colonization submitted this report:
Your committee, therefore, recommends that in view of the existing tariff on sugar and in consideration of the substantial payments being made to agriculture and labour by the beet sugar factories at present in operation, the cane sugar refineries should undertake to provide for a gradual increase of factory facilities for the refining of beet sugar in Canada, and that with the additional advantages in freight rates to points in the middle west, heretofore described, factory facilities should now be steadily increased in western areas where beets are grown, and thereby make it possible to produce from beets a more substantial percentage of the sugar consumption of Canada.
There is something further I should like to say that should be rather interesting, for I cannot help thinking that these countries which produce beet sugar cannot all be wrong. I believe beet sugar has a future in Canada. M. Golodetz, an authority on sugar, writing in the weekly Sugar Market Review of recent date, says that existing rates of duty on raw and refined sugar offer very inadequate protection to the sugar beet industry, particularly when we bear in mind that the cane production has been and is very substantially subsidized. Nearly all of what is known as the world's production is protected. He points out that over ninety per cent of the sugar for the world's sugar market is produced and marketed under various forms of state protection. Moreover, cane is produced under labour conditions that do not bear comparison with those of
Canadian labour. Sufficient it is to say that as a Canadian people we cannot entertain the lowering of the present level of labour but should rather strive to raise the present standard.
The other day in this house we spent a good deal of time in discussing the possibilities and the future of the soya bean industry in Canada. The farmers of this country have a great deal of money invested in beet sugar equipment. They have imported trained men from other countries who have become naturalized Canadians, and I think it would be a mistake to have the beet sugar industry forced out of business. I feel sure that if that result were brought about the companies which are subsidized would raise the price of sugar once they got rid of that competition, so in the long run we would have to pay more for our sugar. I do not want our friends from the maritime provinces to think we are trying to steal their markets. I believe there is a place for both beets and potatoes in this dominion, and I think we would do well to devote a great deal of study to this question, because Canada with its great resources will support a very much larger beet sugar industry than we have at the present. Certainly I have no hesitation in urging that the one cent tax in so far as beet sugar is concerned should be removed.


Alan Webster Neill: I should like to ask the minister a question, but first I should like to compliment the hon. member for Lethbridge (Mr. Blackmore) on the interesting address he gave us. It was one of the most instructive and practical speeches I have heard from his group. I can understand the hon. gentleman far better when he talks about beets and acres and cents than when he talks about just prices and dividends. I hope he will enlarge his activities along the line he took to-night; I am sure we would all profit by it.
This vote shows, according to the minister, a large reduction due to our ceasing to bonus cheese. Could the minister indicate why that has been done? Was it not satisfactory or have conditions so changed as to render it no longer necessary?


James Garfield Gardiner: 
Richard Bedford Bennett: That would seem to be temporary.


James Garfield Gardiner: It may be temporary, but these figures can hardly be explained in that way. There is another reason; the price is very much better at the present time than it was a year ago. Not only is it better in the United States market; it is better in the British market as well. Then there are understandings in connection with trade treaties with different countries that may be interfered with by the payment of bonuses. We in Canada as a people took exception to certain activities in countries such as Australia in connection with state encouragement of the production of butter. Probably we might expect other countries to take the same exception to similar action on our part if we have trade arrangements with them.


Richard Bedford Bennett: No exception was taken by any country, was it?


James Garfield Gardiner: Not directly, but there was an indication that some exception might

be taken. Questions were asked with regard to the matter.


Alan Webster Neill: Would not the United States automatically increase the duty by the amount of the bonus?


James Garfield Gardiner: They have not said so, but there have been inquiries as to what were our intentions. Those came after we had made our decision, as a matter of fact; the decision was not the result of any threats or anything like that, but such inquiries have been made. All matters having been taken into consideration, we are of opinion that we can benefit both the butter industry and the cheese industry in Canada to a greater extent by providing markets and assisting in the maintenance and further development of those markets rather than by encouraging a greater production without any special market being provided for it. We think probably more can be done in the - way I have mentioned, and I believe our experience in regard to the United States trade treaty indicates our view to be sound. Our greater exportations of cheese to the United States and Great Britain have had something to do with the better price that we are getting for cheese at the present time, and as compared with last year that price per pound is greater than the amount of the bonus that was being paid.


Mark Cecil Senn: I should like to have something to say in regard to this matter-


Frederick George Sanderson: Eleven o'clock.
Progress reported.



ADJOURNMENT-BUSINESS OF THE HOUSE

Richard Bedford Bennett: What business will be taken up on Monday?


Ian Alistair Mackenzie: We are prepared to proceed with any of the bills on the order paper.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Monday, June 8, 1936