RESOLUTION. (Hansard, 10 June 1870)

§ MR. MONK
, on rising to calling attention to the Correspondence laid before Parliament relative to the Canada Railway Loan Act, 1867, said, he had no intention of expressing distrust of the Government of Canada, still less of imputing to that Government any want of good faith or integrity. Neither did he believe that this loan had been prematurely negotiated under the pressure of financial difficulty, or in a manner other than beneficial to Canada and not disadvantageous to this country. Entertaining these views, he should carefully avoid making use of any expressions that could give pain or annoyance to his Canadian fellow-subjects, and if in the course of his observations he should be under the necessity of alluding to and commenting upon the acts of members of the Canadian Government, he should endeavour to do so with the greatest moderation, bearing in mind that they were responsible not to that House, but to the Canadian Parliament. It might be in the recollection of the House that attention was called last year by the hon. Member for the Fife burghs (Mr. Aytoun) to the mode in which a portion of the money which had been raised under the Canadian 1845 Loan guarantee had been temporarily invested by Sir John Rose, the then Finance Minister of Canada; but as the object of that Motion, which had eventually been withdrawn, had been misunderstood by the Canadians, he should refrain from making a Motion similar to that of the hon. Member, which was to the effect that no further guarantee should be given by the Commissioners of Her Majesty's Treasury, except in such form and manner as should insure the direct application of the money so guaranteed to the construction of the Intercolonial Railway. That Motion, as he had already stated, had been withdrawn, after a short discussion, at the request of the right hon. Gentleman the First Minister of the Crown, and upon his giving an assurance that the subject was receiving the serious consideration of Her Majesty's Government, and that the opinion of the Law Officers of the Crown was being sought upon the matter. He also refrained from bringing forward such a Motion, because he believed from the correspondence before the House that the Canadian Ministry were really anxious to comply, not only with the letter, but with the spirit of the Canadian Railway Loan Act; and, secondly, because he had the fullest confidence that the right hon. Gentleman the Prime Minister and his Colleagues at the Treasury would not guarantee the remaining moiety of this loan, without taking full security that the money should be directly appropriated to the railway for the construction of which the guarantee had been given. But, although utterly opposed to the principle of colonial loans, which he regarded as a most unconstitutional method of increasing the burdens of this highly-taxed country, he should not have felt it his duty to bring the matter before the House, if a satisfactory explanation had been given, or if he did not fully concur with the Law Officers of the Crown, that the spirit and intention of the Imperial Act had not been complied with, and that the investment of money under the Minute of the Privy Council of Canada of the 27th of August, 1868, was in violation of the provisions of that Act. In 1867 an Act was passed authorizing the Treasury to guarantee the payment of interest upon the sum of £3,000,000 sterling for the purpose of constructing an intercolonial railway be- 1846 tween Quebec and Halifax upon certain conditions, one of which was that an Act should be passed by the Canadian Parliament for the construction of a railway along a route to be determined by a Secretary of State, and for its use by Her Majesty's troops. The Canadian Act was also to provide for the raising, appropriation and expenditure for the purpose of the construction of the railway of the £3,000,000, and for raising such further sum on the sole credit of Canada, as might be required to complete the railway. In December, 1867, the Canadian Parliament passed an Act providing for the raising of an additional £1,000,000 to complete the railway, and the Bay of Chaleurs route was selected and approved of by the then Colonial Secretary the Duke of Buckingham. On the 13th of February, 1868, the Secretary to the Treasury (Mr. Hunt) wrote to the Colonial Secretary, approving generally of the Act of the Canadian Legislature, 31 Vict. c. 13, for the construction of the Intercolonial Railway. But when he (Mr. Monk) came to look closely into the provisions of that Act, he confessed that he felt some degree of surprise that the Lords Commissioners of Her Majesty's Treasury should, without a little more consideration, have expressed their satisfaction with the terms of that Act. The important clauses of that Act, which referred to the appropriation of the money, were the 27th and the 35th; the 27th clause merely repeated the words of the Imperial Act, whereas he ventured to think it should have contained Mine provision regulating the investment of the money during the interval between the time when it was borrowed and the period when it would be required for the purposes of the construction of the railway. He had, however, the greatest satisfaction in stating that the Canadian Government had acted in the most open, candid, and straightforward manner in the matter. In January, 1868, Viscount Monck, the Governor General of Canada, transmitted to the Colonial Secretary copies of the Canadian Act, and expressed the desire of the Canadian Parliament to know whether the terms of that Act fulfilled the requirements of the Imperial Act, and forwarded a letter from Sir John Macdonald, the then Attorney General of Canada, who evidently contemplated the possibility, nay, even the probability, of 1847 further legislation on the subject being required. Sir John Macdonald said— The Canadian Legislature will re-assemble on the 12th March, and it is exceedingly desirable that it should be informed that the Act in question has been approved of, or that some further legislation is necessary. The late Government were by no means taken by surprise upon the question, and, in fact, when the then Under Secretary of State for the Colonies (Mr. Adderley) brought forward the question of the guarantee, he received full and sufficient warning that the appropriation of the loan would be carefully looked to, and of the necessity that existed for security being taken that the money raised under it should be appropriated exclusively for the purpose of the construction of the Intercolonial Railway. What said the Chancellor of the Exchequer (Mr. Lowe) on that occasion? The right hon. Gentleman said that he hoped the House would seriously consider the step they were about to take, and that, if they determined to enter upon that step, they would put into the Bill some very stringent securities to provide that the money spent under our guarantee should be applied to the purposes for which it was voted, and that it should not stick to anyone's fingers in its progress to that charming railway that was to be constructed. Those were truly prophetic words, as he should presently show. And on the same occasion his right hon. Friend the present Prime Minister said that the general system of colonial guarantees had come into just discredit within the walls of Parliament. He (Mr. Monk) would ask the right hon. Gentleman whether there was any mode of bringing colonial and other guarantees into greater discredit than by a disinclination on the part either of those who give, or of those who receive, a guarantee, to be guided by the spirit and letter of the Act, providing for the appropriation of the money so guaranteed? He did not think that proper care had been taken for the expenditure of the money in the mode directed by the Imperial Act. He found no sufficient provisions in the Canadian Act for the proper custody and expenditure of the loan. He sincerely hoped he was wrong in his conclusion; but he feared he was right in the view he took of the conduct of the Commissioners of the Treasury in 1868. It was their duty to 1848 have taken care that the money should be expended in the mode intended by the Legislature. They had absolute control over the matter, and if they had thought the Canadian Act insufficient to afford the security needed they could have asked for further legislation. The Government did not do so, and what had been the result? The Finance Minister, Sir John Rose, as soon as he found himself in possession of funds, set to work most vigorously, and, he must add, most successfully to reduce the Canadian Debt, and from his own figures it appeared that more than one-half of the loan was so applied. Out of $10,280,000, the proceeds of the loan, three-fourths of which were guaranteed by this country, $5,536,538 were applied in reducing the Debt of the Dominion, and of the remainder $1,500,000 were temporarily invested with the Bank of Montreal. These were the moneys which were to be kept exclusively for the railway works, out of which—and out of which alone—the contracts were to be paid for the works executed on the railway. Sir John Rose now said that the Debt of the Dominion was really paid out of the Treasury balances, because, except during a short period in the quarter ending September, 1868, there was sufficient money in the Treasury for the purpose, without trenching upon the guaranteed loan. But this was not the meaning of the Minute of the Privy Council of Canada of the 27th of August, 1868, which stated that the Debt should be paid out of the money received on account of the Intercolonial Railway Loan; and Sir John Rose in his Budget speech in May, 1869, observed there would be available for recouping the Intercolonial Railway Loan certain special credits, savings-banks deposits, receipts from insurance companies, and Great Western debts in bonds specially set apart, amounting in all to $5,754,901. He thought he might safely assume that the Lords Commissioners of the Treasury in 1868 would scarcely contend that it was the intention of Parliament that the money raised under its authority should be used in paying off even temporarily the Debt of the Dominion, with the contingency of its being recouped out of savings-banks deposits and Great Western Railway bond debts. Such at least was not his opinion, and such certainly 1849 was not the opinion of the present Law Officers of the Crown as set forth in the Papers before the House, in which they informed Lord Granville— That we regret to be unable to advise that the investment of the money under the Minute of the Privy Council of Canada is in conformity with the Imperial Act of 30 and 31 Vict. c. 16. We think that it was not the intention of the Imperial Legislature that the money should be invested at all: it was to be appropriated or set aside. … We think that the spirit and intention of the Canada Railway Loan Act, 1807, has not been complied with. Shortly before the Easter Recess he (Mr. Monk) called attention to a telegram received from Ottawa to the effect that the Finance Minister of Canada had stated that the Canadian Government intended to disregard the opinion of the Law Officers of England as to the appropriation of the Intercolonial Railway Loan. The Under Secretary for the Colonies at that time said that he had received no intimation of such an announcement. But, on looking over the Papers, which had lately been laid upon the Table, he (Mr. Monk) found that Sir Francis Hincks, the present Minister of Finance, admitted that some such expression had been used by him, and he attempted to justify it by saying that it was not possible to act in accordance with the opinion of the Law Officers. It would, no doubt, be felt that such a statement made by a responsible Minister of the Dominion in his place in Parliament was one of grave importance as affecting the relations between Canada and this country. But he should leave it to his hon. and learned Friends to defend their own opinion, which Sir Francis Hincks had so gravely called in question. If that opinion were of any value, he was sure that no hon. Member would maintain that the temporary investment of the money raised by loan under the guarantee was such an appropriation as was contemplated by the Imperial Act of 1867. He did not throw blame upon the Canadian Government. On the contrary, he believed that the Minister of Finance had kept within the letter of the law, though he could not agree with him that the loan had not been used in redeeming the Dominion Debt. Such an assertion, he thought, was not in accordance with the Memorandum submitted by Sir John Rose to the Privy Council in August, 1868. It savoured of something like an after-thought. He 1850 did, however, agree with him in considering that, owing to the action of the Lords Commissioners of the Treasury in 1868, the expenditure and appropriation of the loan rested with the Government of Canada under the Colonial Act, 31 Vict. c. 13. He could not, at the same time, acquit the Commissioners of the Treasury of blame in the matter. In February, 1868, they signified their approval of an Act which did not fulfil the requirements of the Imperial Act of 1867, and they must, therefore, be held primarily responsible for the temporary misappropriation of the money which had unfortunately taken place. The hon. Member concluded by moving his Resolution.

§ MR. WHATMAN
, in seconding the Resolution, said, he fully agreed in the opinion expressed by the Law Officers of the Crown, and he thought that if the House inquired into the past history of Canadian railways an additional reason would be found for caution with regard to this loan. The Grand Trunk line of Canada had proved most injurious to those who had embarked their money in it; and, at the time when this guarantee was given by the Imperial Legislature it was understood that none of those who had either managed or mismanaged the Grand Trunk line would have any part in the management of the Intercolonial line. It appeared, however, from the Papers that that understanding had been departed from.

§ MR. MONSELL
said, he must remind the House that the question raised by the hon. Gentleman who last addressed it with regard to the Canadian railways had nothing whatever to do with the Motion. He was happy to find that the hon. Gentleman the Member for Gloucester (Mr. Monk) disclaimed any intention of throwing any sort of imputation upon the honesty or straightforward conduct of the Government of Canada 1851 on the subject. The hon. Gentleman discharged a very useful function in looking with a jealous eye to the giving of Imperial guarantees to our Colonies, and calling the attention of the House to the subject. Nobody could feel more strongly than he (Mr. Monsell) did that the principle enunciated by the late Government with reference to them should not be departed from, except for very especial reasons; but he thought the hon. Gentleman had been led by his zeal somewhat too far in the present instance, and had, in consequence, taken a somewhat unfair view of the conduct of the Canadian Government.

§ MR. MONK
explained, that he had brought no charge against the Canadian Government. He held them to be wholly blameless. All they had to look to was the Canadian Act for the appropriation and expenditure of the loan.

§ MR. MONSELL
said, that was what he understood the hon. Gentleman to say—that he thought the Canadian Government had acted wrongly in certain instances in the appropriation of the money. But the Papers to which the hon. Member had referred showed distinctly that the Canadian Government had provided that there should be a fund applicable in its entirety and at any moment to the object for which the loan was destined—that was to say, the funds raised under the Imperial guarantee were strictly appropriated for the construction of the Intercolonial Railway; and further on there was a Minute by Sir Francis Hincks, stating that at that time there were $5,733,763 of the Imperial guaranteed loan unexpended. He understood there were now only about $5,000,000, and of that amount there was in the Bank of Montreal, to be drawn as required, a sum of $4,799,784, and on Indian Bonds in London $681,333, making in all $5,481,117 appropriated strictly for the purpose in question. Further, there was on deposit at call in the Chartered and other banks a sum of $1,814,769; but the two first sums were more than sufficient to cover the unexpended capital guaranteed. His hon. Friend would, therefore, see that up to the present time the Canadian Government had faithfully discharged their obligations to this country. They had proceeded with the railway as rapidly as they could, and they would, probably, have the whole line finished 1852 in 1872, having had to overcome great difficulties in the accomplishment of the task. With the conduct of the Canadian Government under those circumstances he saw no reason to find fault. He came, then, to the only serious question raised by the hon. Member's Motion—namely, whether the Canadian Act satisfied the requirements of the Imperial Act. His opinion was that it did. He had taken the advice of the Law Officers of the Crown—and, besides, had availed himself of the best advice he could obtain at the Colonial Office—and their opinions were, there was no divergence whatever between the two Acts. He did not think it was necessary to go through all the various clauses of the Colonial Act to establish the justice of that view. The Canadian Act in every particular went part passû with the Imperial Act, and fulfilled every one of its requirements, in most cases adopting its very wording. The hon. Gentleman had failed to point out a single particular in which the Canadian Act did not meet the requirements of the Imperial Act. All the Act required was that the custody and appropriation of the money should be carried out; but it was the opinion of the late and the present Governments that the mode in which it was to be done should be left to the Canadian Government. Whether it was a wise or an unwise course to adopt it was not for them then to discuss; but it was clear that that was what had been done. He submitted that it was impossible for the House to adopt the Motion, and, under the circumstances, he hoped his hon. Friend would not divide the House upon it. He seriously regretted that any question should have been mooted at the present moment which appeared to raise any controversy with Canada. Bearing in mind her recent gallant conduct, it would, he thought, be scarcely wise or judicious—in fact, it would be ungenerous, to raise any such question. He maintained that the terms of the Motion had not been substantiated, and that the Canadian Act faithfully carried out the words and intentions of the Imperial Legislature.

§ VISCOUNT MILTON
said, he found at page 23 of the Canada Railway Loan Papers a paragraph which stated that the learned Gentlemen to whom the question was submitted were of opinion that it was not the intention of the Im- 1853 perial Legislature that the money should be invested at all; but that it was to be appropriated, or set aside, and that, in their view of the matter, the only sort of investment within the provision of the Imperial Act would be one the value of which did not fluctuate, and which was convertible at any moment without loss; and, further, that they did not think the Guarantee Act of 1867 had been complied with. To that opinion was appended the names of the present Attorney and Solicitor General. He thought that opinion was hardly consistent with what had fallen from the right hon. Gentleman the Under Secretary for the Colonies.

THE ATTORNEY GENERAL
said, that the opinion of the Law Officers, which had been quoted by the noble Lord (Viscount Milton) had no bearing at all on the question under discussion, but referred to a suppositions case. The present Motion was to the effect that the provisions of the Act of the Canadian Legislature, 31 Vict., c. 13, did not satisfactorily fulfil the requirements of the Canada Railway Loan Act, 1867. If the opinion of the Law Officers was referred to, it ought to be borne in mind that the case on which it was given stated that the Act 31 Vict., c. 13 was passed in due form. That statute was in operation, and it might be assumed that it fulfilled the requirements of the Imperial Act. The opinion of the Law Officers was not given on that point for the simple reason that it was not asked. He must say that, as a rule, it was not very convenient to publish the opinions of the Law Officers, who are, in fact, private and confidential Advisers of the Government. They gave their advice on dry questions of law and not of policy; and the Government having received their opinion decided whether they would act upon it either to the full or to a modified extent. He had always understood it to be the rule that these opinions should not be published; but, however this might be, the opinion just referred to had no bearing on the question before the House.