/ 
 
 SPEECH 
 
 DELJVERED BY 
 
 Mr. JOHN S. HALL 
 
 (KX-TREASURER) 
 
 BEFORE THE 
 
 LEGISLATIVE ASSEMBLY 
 
 OF THE 
 
 FROVTNCE OF QUEBEC. 
 
 ON 4th AND 5th DECEMBER 1894 
 
 / 
 
 ON THE LOAN OF 27,682,647 FRANCS 
 
 (3% BONDS AT 77 KOK 60 YEARS.) 
 
 J 
 
'' ; J 
 
DECEMBER ^894. 
 
 QUEBEC LEGISLATURE. 
 
 The following contains the speech delivered before the Legislature 
 on the 4th and 6th December 1894, by the Hon. John S. Hall, ex-Treasurer 
 of the Province, on the motion of Mr. Cooke, Member for Drummond 
 against the Loan of 27,632,647.00 francs. 
 
 It was in connection with this loan that Mr. Hall resigned Trea- 
 surership. His letter of resignation, the Hon. Mr. Taillon's answer, Mr. 
 Hall's reply and Hon. Mr. Taillon's answer were all laid before the 
 House by Hon. Mr. Taillon without any comment, leaving the public 
 and the members of the House to read them and form their own con- 
 clusion. The discussion on Mr. Cook's motion brought up the question 
 of the loan upon its merits. 
 
 On the 15th July 1891, the Hon. Joseph Shehyn effected a loan ol 
 20,000,000 francs for two years through the Credit Lyonnais and La 
 Banque de Paris et des Pays Bas of Paris, issuing 500 francs Bonds to 
 these institutions for 480 fr. 25 centimes per Bond, tlie Province paying 
 in addition the .stumps and printing of the Bonds and the exp Mises. The 
 Bonds bore four per (unit, interest. 
 
 In July 1893 when this loan fell due there was a panic in the 
 money market and a financial scare pervaded investors, and the loan was 
 renewed by the Hon. Mr. Hall. The Province issued two year, four per 
 cent. Bonds of 500 francs each, through the same Institutions to the amount 
 of 21,277,000 francs the Province receiving 490 francs for each Bond. In 
 addition the Province paid the cost of printing the bonds and stamps. 
 
— 2 — 
 
 The G-ove»*nment of Quebec, exercising" its option, has entered into 
 negotiations, which have been subsequently embodied in a contract to pay 
 off, on the Ist January 1895, this loan of 21,277,000 francs, by issuing 60 year 
 3 per cent Bonds at 77, to the same Institutions or issuing a total of 27,632,467 
 francs of Bonds, the proceeds of which at 77 would realize just enough tc 
 pay off the 21,277,000 francs. 
 
 To Mr. Cook's motion an amendment was offered by Mr. Desjardins 
 
 of Kamouraska and then a sub-amendment by Mr. Tellier, of Joliette. 
 All these read as follows ; — 
 
 Mr. Cooke moved : — 
 
 "That this House, having taken communication of the papers and 
 " correspondence brought down between the Grovernment Le Credit 
 " Lyonnais and La Banque de Paris et des Pays-Bas respecting the con- 
 " tractiug of a loan of 27,632,000 francs through the issue of debeu- 
 " tures to be dated the day of December next, bearing 
 
 " three per cent, interest, at a price of seventy-seven nett, such loan 
 " redeemable in sixty years or at any tinje after ten years from the 
 "date of the debentures on giving six months notice, to redeem the 
 "loan of 21,227,000 francs contracted with the above institutions on 
 " the 15th July, 1893, is of opinion ; 
 
 1 "That the Grovernment has not acted in the best interest of the 
 "Province or made the best arrangement possible : 
 
 2. "That the maturing indebtedness of the Province could have 
 "been liquidated without resorting to a permanent loan : 
 
 3. " That it was not to the advantage and interest of the Province 
 " to make an issue of three per cent securities at a price involving so 
 " heavy a discount as 77 ; 
 
 4. " That even if a permanent loan should have been resorted to 
 " it should have been offered by way of competition or tender so as 
 " to obtain the best possible price and advantage for the Province." 
 
 Mr. Desjardins moved in amendment ; 
 
 That all the words after "opinion" in the motion be struck out 
 
 and replaced by the following : — 
 
 "That it is better to wait until the contra^tt for the loan is signed 
 " before pronouncing on this transaction." 
 
 Mr. Tellier moved in sub-amendment ; 
 That all the woris after and including the words " it is better to 
 wait " in the amendment be struck out and replaced by the follow- 
 ing :— 
 
 "That the Government could not do otherwise than have re- 
 ' course to a loan to redeem that of 21,277,000 francs contracted with 
 
 "the said institutions on the loth July 1893, which loan was but 
 "a continuation of that of 1894." ■■''■ • n. ... .^ • 
 
— 8 — 
 
 "That, as to the question whethtM* tho Govormntmt should have 
 " called for tenders, as to the kind of bonds, the priee obtained for the 
 " three per cent bonds and jrenerally as to the manner of (^onductina: 
 " the nef^otiation as well as the conditions of the loan, this House is 
 "of opinion that the Gov.'rnment has acted in the interest of the 
 "Province and has made as advantageous an arrangement as cir- 
 " cumstances permitted." 
 
 Mr. Cooke commenced the discussion in favor of the motion and 
 Hon. Mr. Casgrain, Attorney General followed against. Then the Hon. Mr. 
 Taillon spoke followed by the Hon. Mr. Hall. 
 
 Mr. Hall spoke as follows ; — 
 
 On rising to make some rer»iarks in support of the motion, I am 
 free to confess that I find myself in an unpleasant position of having to 
 d'^viate from colleagues and persons with whom I have worked for a 
 length of time. The financial position of th,; Province, however, is one 
 of such importance, and I, as treasurer, being looked to by the public to 
 direct those affairs, it became necessary for me in a question of this kind 
 to decline to accept any responsibility in connection with the transaction, 
 which I thought not according to a policy and plan capable of working- 
 out our financial affairs It led to ray resignation, and the correspondence 
 in connection with this resignation has already been laid before the 
 House, and the Members and the public hav^e had an opportunity to read 
 it over, therefore I pass over any discussion of it. 
 
 No matter what may have passed, it is quitt evident that as regards 
 the public and the party, I must be considered as having been Treasurer 
 and so primarily liable and certainly officially responsible for the Loan, 
 and the financial policy of the Grov .nment, and this I cannot assume. 
 
 I will therefore come to the merits of the Loan and the question 
 as laid down in the terras of the resolution. I raight however be per- 
 mitted to say a few words in general about the financial position of the 
 Province before coming to the question specifically dealt with by the 
 Motion. 
 
 I do this to show (i) the position in which I found our finances (ii) 
 the policy to be adopted and adopted until my leaving office to put 
 matters right (iii) to shew what has been the result (iv) to shew after 
 nearly three years of administration what ought to have been expected of 
 us. 
 
— 4 — 
 
 I hav(! also had the opportunity of hearing the speeches of thi- 
 Attorney General and the Premier and will endeavour to take up the 
 matters in the same order. 
 
 Coming to office in December 1891, neither my colleagues nor my- 
 self imagined the financial situation was so critical. 
 
 Even if I say so myself, it is true the raembi'rs of the Administrat- 
 ion set to work to meet the situation and fu'fll the mandate given to us 
 by the electors of the 8th March 1892. 
 
 I dont think it can be denied for one moment that the great issue 
 presented to the electors at that time was that of our financial position, 
 and the promise by us to put it right. 
 
 The Province was awakened to the fact that an enormous expen- 
 diture had been going on for years, that our debt was being increased to 
 an extent to cause alarm and that public confidence in our credit had 
 been shaken. 
 
 However onerous the obligation was or wa.s likely to be, we had 
 assumed it, and the public rightly expected that the existing state of 
 affairs must cease. 
 
 There w^as no doubt that large deficits existed each year, which 
 we undertook to put an end to, and there existed a large debt, funded and 
 floating, and a series of liabilities which we had!to define, limit, and reduce 
 to the utmost extent. 
 
 We mi>t the House on the 20th April 1892, and to it we had to 
 submit statements that, in the total rijceipts and expenditure, leaving 
 out the amounts received from temporary loans and th • amount paid for 
 railway subsidies, wi> were going behind, roughly, $1,500,000.00 a year 
 and would be in the same position for the year ending 30th Jun ; 1892. 
 
 These deficits, as the Public- Accounts will shew, were as follows, 
 and I give also the deficit for 1892-93, the first year of our Administrat- 
 ion, to shew the result, and I will speak of it later on : — 
 
 1889-90. Deficit. I,380,5tj9.18 
 
 1890-91. Deficit. 1,444,236.09 
 
 ' 1891-92. '■ ' Deficit. / ^ 1,742,651,02 ....-..;' 
 
 1892-93. Deficit. , 24,828,00 > 
 
— — 
 
 • Our Fniidt'd Dfbt on that dat.*, in.ludin!,^ thi* loan ot 20,00(),UO() 
 frail. -s madt' on 15th July 18t»l. ainouut-d to 1125, 175,320.01, less 
 $9,994,000.00 appropriat.Ml lor iSiukiug Fuudy. Our (loati ug debt and 
 liabilities irr.-speotire of claims and oth ;r inatt.M-.s not necessary for 
 present disi^ussion as they would be (and as they turned out to be) on 
 30th June 1892, were as follows:— ' 
 
 Floating debt, 30th June, 1892. 
 • r • Temporary Loans 1,550,000.00 
 
 Trust iJepositK. • 268,905.00 
 
 Railway Guarantee Deposits. 1,742,038.43 
 
 Railway subsidies &;c, under terms 
 of the various Statutes. 5,621,789.40 
 
 9,177,732.83 
 Our credit at the same time was in a critical condition. 
 In London, the market was practically closed to us. The state of 
 our finances and the legislation about the forced conversion of our debt 
 had created such a feeling against the Province that any financial opera- 
 tion was out of consideration. 
 
 In Paris the feeling was as strong, though Mr. Shehyn had been 
 able in July 1891 to make a two year loan at a cost, including expenses, 
 of over six per cent interest per annum. 
 
 Our local institutions had so little confidence, that in what tempo- 
 rary loans were outstanding in July 1891, when thj loan in Paris was 
 effected to partly pay them off, they had been charging .six per cent, 
 interest. 
 
 The administration set itself to work to bring about an equilibrium 
 of this $1,500,000.00. The expenditure had to be cut down and the 
 r-vMiu.^ properly collected. In addition to this, we had to impose ta.x- 
 ation. no matter how unpopular it might be, and thi' r.^sult was that for 
 our first full year ending 30th June 1893, our deficit was only $24,828.00 
 or, practically speaking, an equilibrium 
 
 The people ot the Province, with the exception of some in the City 
 of Montreal, on account of our aff"airs, submitted to extra taxation, relying 
 on our promises and having confidence in the mandate entrusted to us. 
 They also relied on our utterances that the taxation if not a large part of 
 it was temporary and imposed to carry us over until our position was 
 defined. . , 
 
 I ..i-- .-i. ^^ ^y J, -j: -.•-?.;r,:i,^j>;,M ', 
 
— 6 — 
 
 Now, Sir, ill Juiu> 1892, fhi'^ Proviiire was in a critical «'onditioa. 
 We had to provide for #1,500,000.00 of liabilities that wen* in sij^ht for 
 tho 30th June, and about half of this, |750,000.00 was wanted for interest 
 on our bonds in England for that date. In addition, provision had to be 
 made for our Railway subsidies during the year 1892-93 and for the 
 future. If we eould not get help, default was staring us in the face. 
 
 However, our local banks, alter I explained the situation to them, 
 .md having confidence in the Administration, advanced the money 
 and, I may say, continued to do so until March 1894, when we floated the 
 the loan of $3,000,000.00 and paid them off. 
 
 In the meantime, and during this interval, I had financed and 
 borrowed from the local institutions, about three million dollars, and I 
 wish to say here, on behalf of the Province, that we are much indebted 
 ior the loyal and considerate manner in which these Banks came to our 
 assistance, and I feel grateful for the conside* ration and courtesy extended 
 to me personally. 
 
 But, Mr. Speaker, business is business, and these institutions natu- 
 rally asked how these loans from them were to be paid off", and I replied 
 by no doubt a permanent loan and they asked that they should have 
 something in the nature of a call upon our Bonds. This of course I could 
 not consent to, but I did undertaKe that when a question of issuing Bonds 
 came up, I would give them a preference but no advantage. I mention 
 this as a matter of history, and to explain my position later on. 
 
 In December 1892, I had occasion to visit England on professional 
 business, but took the opportunity, while there, to speak of the Province. 
 
 The Attorney General was with me on many occasions and he no 
 doubt will corroborate me that there was more than a feeling of distrust 
 against the Province. 
 
 In May I went to Europ » again and still found the constant 
 recurring deficits of the Province were <alled to my attention. It was 
 useless to discuss with any of these people that in analyzing the Public 
 Accounts the deficit would appear to be owing to the extraordinary or 
 special expenditure. It was pointed out that from the statements 
 published at the end of the Public Accounts, these deficits had been 
 recurring yearly for many years, and there was nothing extraordinary 
 about them. It was further pointed out, without any answer being 
 )H)S8ible, that such expenditure had to be met and if not out of yearly 
 

 — 7 — 
 
 revoniv, it had to be oonstantly added to. and iiirreased, our debt, aud 
 the inter. 'st for this had, anyway, to be providedfor. 
 
 Our Funded Debt in proportion to our population as one of the 
 Provinces of the Dominion was considered very Iar<,'e and our floating: 
 debt and liabilities to be too heavy for any suc-essi'ul and creditable 
 financial scheme. 
 
 On my return from Europe in 1893, I laid the whole matter of our 
 affairs before my colleagues, and especially the Premier, and we readily 
 came to the conclusion that the dehcits must disappear, that we should 
 do everything in our power to reduce our Public Debt, to consider its 
 «;onversion and consolidation, to define and restrict our Floating Debt 
 Railway Subsidies and liabilities aud, if possible, avoid going onto the 
 markets for new money. 
 
 We had at this time as will be seen later on to consider the 
 probable payment by the C.P.R. of the amount due by that Co'y. 
 
 As to borrowing or reducing and converting our Public Debt it 
 was determined we should legislate to deal with and utilize the assets 
 of the Province. We introduced legislatiou at last session permitting 
 this, and followed i. up by getting legislation at Ottawa, permitting 
 the principal of the Grant, known as the Railway Grant, amounting to 
 ^2,394,000 to be paid to the Province should the Province so desire it. 
 
 We also adopted legislation finally determining the liabilities res- 
 pecting our railway subsidies, and as a consequence of all this. 
 
 The floating debt on the 30th June 1894, would appear as follows : 
 
 Temporary Loans $ 500,000.00 
 
 Trust Funds and Deposits 267,002.00 
 
 Railway Guarantee Deposits 1,251,515.^9 
 
 Railway Subsidies (say) 1,950,000.00 
 
 $3,960,518.12 
 
 This is a remarkable difference to the state of affairs on the 30th 
 June 1892, though of course out of the Floating Debt of 1892, $2,920,000.00 
 had been borrowed in March 1894 to pay off railway subsidies and tem- 
 porary loans, and added to our funded debt making the latter on that 
 date $29,380,81434. . . 
 
 But the public will see that a large amount of railway liabilities 
 have been disposed of and a large amount of the so-called special or 
 
— 8 — 
 
 extraordinary t'xpt'iiditun'. whit h whs supposrd to be paid for out of the 
 loan of $10,000,000.00 had been disposed of in another wny, and our 
 position well difined. . . , 
 
 For all this, the Administration, and I dont hesitate to give it to 
 thenj. is entitled to credit. However as matter.s wt'nt on in the fall of 
 1893 and the early part of 1894, it wmII not be surprisin;!' to any one 
 dealing with finanees that I should feel considerably alarmed at the 
 possible deficit that might result on 80th June 1894, and it will not be 
 even more surprising if, when I found I could not got thisdeKcit reduced, 
 that I should feel called upon no longer to accept the responsibility of 
 Treasurer. 
 
 I have had to defend the Province from all manner of assertions 
 made against it about its financial position, but I did so cheerfully and 
 willingly, and I had succeeded, I think, with the ossistance of my col- 
 leagueci, in getting ourselves restored on the London market. This how- 
 ever, I will speak of a little later on, but give these few remarks to shew 
 how the affairs of the Province had undergone a change. 
 
 Coming now to the matter under discussion. 
 
 Tne first two questions are that : 
 
 THF TRANSACTION IS NOT ONE OF ADVANTAGE TO THE 
 
 PROVINCE AND THAT THE MATURING LIABILITIES OF 
 
 THE PROVINCE MIGHT BE MET WITHOUT A 
 
 PERMANENT LOAN. 
 
 This immediately brings up the question of the utilization of our 
 assets and the general policy of the administration. 
 
 On this point the main question is : 
 
 C(m the Province utilize the monei/ coming' from the Canadian Pacific 
 Railway l^, .',000,000.00 and the $600,000.00 alread/) paid in which sums 'ire the 
 proceeds of the sale oj the Q. M. O. dc O. Rij., and can we utilize /he $2,394,000.00 
 now payable by the Dominion on demand and ^renerally called The Railway Grant 
 in Jailor of the Province ; or are these two sums appropriated in favtrr of the Bond- 
 holders under the Loans f)/'1874, 187t) and 1878? 
 
 I have no doubt I will ho able to shew that the whole policy of 
 our party since 1886, when I was first a member, and the policy of 
 the present administration, has been to avoid further borrowing and 
 that these monies might be utilized. 
 
— 9 — 
 
 We have had in their speeches the views of the Attorney Greneral 
 and the Premier. They are both of opinion that these monies are pledged 
 by the statutes lo the bondholders of 1874, 1876 and 1878, but they both 
 go on to say that in cases of possibL* dishonor or some great emer- 
 gency they might be used for other purjlioses. 
 
 It seems to me Mr. Speaker that these amounts are pledged or 
 they are not pledged. If they are pledged they must never be used 
 except for the purpose of the pledge. 
 
 To admit that they are pledged but might be used in cases of 
 emergency merely leaves it to a question of expediency to b«^ decided 
 by the ministry of the day, a very unfortunate position for the Province 
 and critical for the bondholders as regards any rights they have. 
 
 I trust the House will bear with me even if I am a little lengthy 
 in the examination of the statutes and loans and prospectuses. 
 
 In 1882, the Q. M. O. & O. Railway was sold in two sections, the 
 western to The Canadian Pacific Railw^ay Company for |3,600, 000.00 and 
 the eastern to the North Shore Railway Company for #4,000,000.00 ; a 
 total of $7,600,000.00 of which $600,000.00 has been paid on account, 
 $100,000.00 for the western section and $500,000.00 for the eastern. (45 
 Vict.-caps. 19 and 20). 
 
 The Companies could pay off the balances due, on giving six months 
 notice, or the Government could exact the balance due (i) on the western 
 section any time after twenty years, on giving six months notice, and (ii) 
 on the eastern section any time after five years, on giving one year's no- 
 tice. 
 
 Interest on balances remaining unpaid was to be five per cent, 
 payable semi-annually. 
 
 In 1883, under an order in Council of 12th December 1883, an 
 agreement was passed between the then Treasurer that the North Shore 
 Railway Company would not give any notice to pay off the balance, 
 $3,500,000.00, before the first day of March 1894. A similar agreement 
 '■^as prepared for the western section and executed by the Canadian Pa- 
 cific Railway Company, but, for some reason, not signed by the Treasurer. 
 
 Both agreements were "subject to the approval and confirmation 
 " of the Legislature of the Province of Quebec at its next session " but 
 nothing seems to have been done in this respect. 
 
 i 
 
— 10 — 
 
 Subspquently the C. P. R. bought out the North Shore and all 
 «lame under the former company. 
 
 It must be evident to anyone, especially anyone dealing" with the 
 Finances, that the possible payment into the Treasury of this amount 
 Was a matter of serious consideration, especially as it was a 5 per cent, 
 investment. 
 
 In 1892, shortly after taking office, and on one or two occasions 
 during the year, the question of the payment was a matter of informal 
 discussions between myself and the C.P.R. people. 
 
 Before I went to Europe in April, 1893, to provide for the Loan of 
 20,000,000 francs, I met the Directors and asked them to let me know, if 
 they could, their intention, as my policy depended, to a certain extent, 
 on this. After friendly interviews, and 1 asked them to state it in writ- 
 ing, which they did, they wrote me officially that no notice would b;^ 
 given to pay the money off before 1st March, 1894. 
 
 However, on the 19th June, 1894, the C. P. R. sent the following 
 official hotice stating they would pay over the |7,000,000.00 on 19th 
 November 1894. 
 
 " Canadian Pacific Railway Company, 
 " Montreal, June 19, 1894. 
 
 " The Honorable John S. Hall, 
 
 " Provincial ^Treasurer, 
 
 " Of the Province of Quebec : 
 
 '' Sir. — I have the honor to say that I have been directed to notify 
 " you in pursuance of clause five of the agreement confirmed by the Act of 
 " the Legislature of the Province of Quebec, 45 Vic, cap. 19, that the 
 "Canadian Pacific Railway Company will pay to the Government of the 
 " province of Quebec, at the end of six months from this date, the sum of 
 " three million five hundred thousand dollars, being the unpaid purchase 
 " money of the western section of the Quebec, Montreal, Ottawa and Occi- 
 " dental Railway under that agreement ; and also to notify you in pur- 
 " suance of clause 14 of the agreement confirmed by the Act of the Legis- 
 
— 11 — 
 
 " lature of the Province of Quebec 45 Vic, cap. 20, that on the same dav 
 " the Canadian Pacific Railway Company will pay to the Government of 
 " the province of Quebec the sura of three million five hundr^*d thousand 
 " dollars, being the amount of the unpaid purchase money of the eastern 
 " section of the said railway under that agreement ; and I hereby notify 
 " you accordingly. 
 
 " Will you please acknowledge receipt, 
 
 . . "I have the honor to be, sir, 
 
 " Your obedient servant, 
 
 " (Signed) C. Drinkwateh, 
 
 " Secretary." 
 
 Receipt of this was duly acknowledged. 
 
 In 1884 (47 Vict., cap. 8, Canada), The Dominion granted in favor 
 of the Province, the sum of $2,394,000.00 as a subsidy on account of the 
 Province having constructed the Q. M. O. & 0. Railway, but only con- 
 sented to pay to the Province the interest at 5 per cent, on this sum, and 
 not the principal. 
 
 In 1894, at the last Parliament (57-58 Vict. cap. 5, Canada), at the 
 instance of the province, the Dominion agreed to pay the principal of the 
 grant " at the request of the Grovernment of the Province of Quebec." 
 
 To return to 1882, and this opens an important question as to what 
 had to be done with the money already paid in, viz, $600,000 and what 
 should be done with the balance $7,000,000. 
 
 I may here, take up the Loans in connection with which the 
 purchase price of the Railway has been dealt with by the Quebec 
 Statutes as the Attorney Q-eneral and the Premier have referred to them 
 at length. 
 
 In 1874 (87 Vict., cap 2), a loan of $3,893,333.34 ; in 1876 (39 Vict. 
 cap. 4), one of S4,185,333.33, and in 1878 (41 Vict., cap. 1), one of $3,- 
 000,000 had been authorised, or a total of $11,078,666.67, all bearing 5 per 
 cent. By each of these Statutes it was provided that a sinking fund of 
 I per cent per annum should be established for the redemption of the 
 Loans. But no enactment was made about the nature of the inv^estment 
 or any naming of trustees, &c. 
 
— 12 — 
 
 In 1882, by means of the sinking funds and purchasing of bonds, 
 there was outstanding $10,685,440.00. 
 
 I will now give the exact wording of the Statutes respecting these 
 loans and the Sinking Funds and also what may have been stated in any 
 prospectuses in connection with the loans. 
 
 37 Vict., chapter 2, .section 23 for the loan of 1874 reads as fol- 
 lows : — 
 
 '■ All provincial bonds or debentures issued under the authority of 
 " this Act, shall be made payable in thirty years from the date thereot 
 " and shall bear interest at the rate of live per cent per annum, and in 
 " the case of the issue thereof, it shall be the duty of the Treasurer of the 
 " Province, to cause to be invested yearly, one per cent, on the amount 
 " of such bonds or debentures, as a sinking fund, for the redemption of 
 " the principal thereof at maturity." 
 
 When the prospectus for the loan was issued, there Was a clause 
 in it as follows : — 
 
 " A cumulative sinking fund of one per cent will be annually 
 " invested in these bonds at or below par; but the Government reserve to 
 " themselves the right to invest this sinking fund in other securities in 
 " case the bonds of this issue cannot be purchased at par." 
 
 For the Loan of 1876 the Statute 39 Victoria chapter 4, second 
 paragraph of section 2, reads as follows : — 
 
 " Such bonds shall be payable in thirty years, in currency or ster- 
 " ling, and shall bear interest not exceeding five per centum per annum. 
 " A sinking fund of one per centum per annum shall be established for 
 " their redemption." ' 
 
 In the prospectus of this loan, there is a clause and a clause in the 
 memorandum of the Treasurer accompanying it respecting the Sinking 
 Fund. The clause in the prospectus reads as follows : — 
 
 " The Act provides that for the redemption of these debentures at 
 " maturity, a Sinking Fund of one per centum per annum shall be 
 " established." 
 
 The clause in the memorandum of the Treasurer, reads as fol- 
 lows : — 
 
 " The ultimate payment of this loan, and the preceding one, is 
 " provided for by a cumulative sinking fund of one per cent, per an- ; 
 " num." 
 
— 13 — 
 
 For the loan of 1878, the Statute 41 Victoria, chapter 1, section 5, 
 reads as follows : — 
 
 " Any issue of bonds or debentures of this Province, issued under 
 " the authority of this Act, shall take, hold, and have the same privileges 
 " and advantages, and the same rank and priority on the revenues or 
 " rental of the said Quebec, Montreal, Ot^'i.wa and Occidental Railway, as 
 " the bonds or debentures of the said Railway Commissioners would have 
 " taken and held under the authority of the said. Act, 39 Vict. cap. 2 : 
 " and the net revenue or rental of the said road shall be used and applied, 
 " conformably to the terms of the said act, in the payment and discharge 
 " of the interest and sinking fund, occurring or arising from said sub- 
 " stituted bonds or debentures." 
 
 Section 7 of the same Act reads as follows : — 
 
 '' Such bonds shall be payable in thirty years, in currency or ster- 
 " ling, and shall bear interest at a rate not exceeding five per centum per 
 " annum. A sinking fund of one per centum per annum shall be estab- 
 " lished for their redemption." 
 
 I may say here that the amount of the loan under this Act was 
 $3,000,000.00. 
 
 The prospectus of this loan, among other things, contained the fol- 
 lowing two clauses : 
 
 " A cumulative sinking fund of one per cent will be annually 
 " invested in these bonds at or below par ; but the G-overnmeut reserves 
 " to itself the right to invest this sinking fund, in other securities in case 
 " bonds of this issue cannot be purchased at par." 
 
 " These bonds represent a charge upon the revenues of the Prov- 
 " ince, and, in addition, have a first lien upon the net revenues and rental 
 " of the Quebec, Montreal, Ottawa and Occidental Railway, which are to 
 " be applied to the payment of the sinking fund of this loan." 
 
 I will also go on discussing the prospectuses of the other Loans of 
 the Province as they are said by the Attorney G-eneral and Premier to 
 have a bearing on the question. 
 
 The prospectus of the Loan of 1880, authorised by 43-44 Vict., cap. 
 45, contains no statement about the Public Debt nor any particulars about 
 the Finances of the Province. 
 
 I have not been able to find any memorandum in connection with 
 this loan issued by the Treasurer. 
 
X — 14 — 
 
 By 45 Vict., cap. 18, and 48 Vict., cap. 11, loans of $3,500,000.00 
 were authorised. Of this ^£500,000.00 was issued in London and the 
 bftlani^e in Canada. 
 
 For that part issued in Canada I find no prospectus. 
 
 For that part issued in London in 1883, there is a prospectus and 
 an acccompanying memorandum of the Treasurer. 
 
 The prospectus makes no mention of the financial position of the 
 Province, but refers to the memorandum of the Treasurer. 
 
 This memorandum after declaring what the proceeds of the loan is 
 18 to be devoted to, states ; 
 
 " The funded debt of the Province, exclusive 
 
 " of the present loan amounts to, $14,854,226,27 
 
 (Consisting of the unredeemed bonds of the 
 
 Loans of 1814, 18*76, 1878 and 1880.) 
 
 " Against which has been invested as Sin- 
 
 " king Fund. 7,600,000.00 
 
 " Leaving a balan^-e ..f $7,254,226.27 
 
 " for the redemption of which provision has been made for an annual 
 " Sinking Fund of one per cent 
 
 " This debt has been created by the Expenditure on the Govern- 
 " ment Railway (since sold and the pri:.e invested as above for the 
 " redemption of so much of the public debt), by the payment of subsidies 
 " to railways in course of construction, and by the cost of other public 
 " works and buildings, all tending to develop the natural resources of 
 " the country and to increase its population." 
 
 For the loan of 1888 there is no mention made at all of the financial 
 position of the Province, nor was there, as far as I can find out, any me- 
 njorandum of the Treasurer. 
 
 As to the public accounts of the Province commencing with those 
 for the year ending 30th June, 1882, in the " Statement of Public Debt," 
 there is a note that " The Sinking Funds invested for the redemption of 
 " the Loans of 1874, 1876 and 1878 consist of the price of the Quebec 
 " Montreal, Ottawa and Occidental Railway appropriated thereto by the 
 " Act 45 Vict. cap. 21 " and in the Public accounts for the year 30th June 
 1888, for the first time there is added on to the note " and of the grant by 
 " the Dominion Government in consideration of the construction of the 
 " Q. M. O. & O. Ry. appropriated by the Act 49-50 Vict., cap. 2." : .; 
 
— 15 — 
 
 I have referred rather fully to the prosp^n-tuses and the notice in 
 the public accounts as they have, as I said, been referred to by the At- 
 torney General and the Premier, and at the moment I wish to call 
 attention to the fact that all these, with the exception of that for the loan 
 of 1888 and the note about the Federal GTrant in the Public Accounts, 
 were in existence and known when the question of dealing? with these 
 monies from the C.P.R. and the Dominion has been discussed by our 
 party and between myself and the Premier and my colleagues. 
 
 I will now come to the statutes passed in 1882, and 1886, respecting 
 the price of the Q. M. O. & O. Railway, and the Dominion Grant. 
 
 In 1882, as I have stated, the Railway was sold, and I have carefully 
 read the debates that took place at the time, as reported in " Desjardins, 
 Debates of the Legislature 1882." Nothing was said about any rights of 
 Bondholders directly or indirectly. At just about the close of the de- 
 bate, Treasurer Wurtele said, he proposed to introduce a Bill that the 
 price would be used in the redemption of an equivalent amount of the 
 Public Debt. 
 
 By 45 Vict. cap. 21 Assented to on 27th May 1882, it was provided 
 as follows : — 
 
 " 1. The priceof the sale of the two sections of the Quebec, Montreal, 
 " Ottawa and Occidental Railway shall he appropriated to the payment 
 " of the consolidated debt of the Province. 
 
 " 2. This price shall be paid into the funds created for the re- 
 " demption of the loans effected under the provisions of the Acts 37 Vict. 
 " cap. 2. 39 Vict. cap. 4, and 41 Vict. cap. 1." 
 
 Sections 3, 4 and 5 divide or distribute the amount to the sinkinjj 
 funds of the three loans, as far as they will go, taking the loan of 1878 
 first, presumably because the net revenue and rentals of the road were 
 affected for this. 
 
 Section 6 reads as follows : — 
 
 "The Provincial Treasurer, shall from time to time, in conformity 
 " with the instructions that may be given him by the Lieutenant Gover- 
 " nor in Council, invest all sums that shall be paid on account of the 
 " price of sale ; and such investments shall belong to that sinking fund 
 " of which the monies they represent form part." 
 
 Section 7 confirms section 6 as to the interest in the hands of the 
 purchasers, and section 8 reads as follows : — 
 
— 16 — 
 
 "The Provincial Treasurer is prohibited from employing, even 
 " temporarily, the money arising from the price of the sale of the Quebec, 
 *' Montreal, Ottawa and Occidental Railway, and the interest to be derived 
 " therefrom, for any other purpose than that above enacted." 
 
 In June, 1880, by 49-50 Vict. cap. 2, this Legislature passed a 
 Statute similar to the one in 1882, and appropriated the $2,394,000.00 
 granted by the federal to the sinking fund for the loan of 1874. The 
 clauses of this Statute are precisely the same as those of the Statute of 
 1882, and it will not be necessary to quote thtm over agaiu. 
 
 The question of the true intent and meaning of these Statutes has 
 been the subject of discussion between the Premier and myself on many 
 occasions. 
 
 There are four principles laid down in the Statute as to the price 
 of the sale of the road. 
 
 1. It is to be used in the redemption of the Public Debt. 
 
 2. The amount is to be used to guarantee the sinking funds of 
 the loans 1874, 1876 and 1878. 
 
 3. The Treasurer, under authority of an Order in Council, must 
 invest the proceeds, for these sinking funds and for the interest on the 
 Loans. 
 
 4. The price must not be used for any other purpose. 
 
 The Premier has contended that this Statute of 1882, passed long 
 after the Loans of 1874, 1876 and 1878 had been contracted, could not 
 operate as any contract with the bondholders, and further that it was and 
 is purely a domestic statute, or order, and direction, from the Legislature 
 for the time being, as to the disposal of, and investment of the funds, and 
 might be changed from time to time by the Legislature. 
 
 In his letter answering my resignation, he suggests the question 
 of the honor of the Province being involved if the Funds are used, and 
 takes the same ground in his speech and in his correspondence ; 
 but he goes on to admit, in effect, that if the Province could only 
 borrow on humiliating terms or not advantageously, then, to save the 
 credit of the Province, he would use the Funds in paying our debts. 
 This then would leave, in my opinion, the funds in a dangerous position 
 It would really leave it in the hands of the Grovernment of the day to 
 decide and be no security at all. In other words, a Government might 
 have acted so badly and recklessly that they could not borrow any more, 
 
— 17 — 
 
 yet if those funds wore within their roach, they might contra ^t debts and 
 pay them out of these funds. 
 
 The question, however, is not new and the party has pronounced 
 upo). it. 
 
 In 1887, when Hon. Mr. Shehyn was submitting his project for a 
 Loan of 13,500,000.00, to pay off alleged floating debt, railway subsidies 
 and other liabilities, the then opposition, led by the present Premier, and 
 of which I was member, combatted the loan, and several on our side of the 
 House spoke. We contended that the Loan was not necessary, cer- 
 tainly for such an amount, and that there were assets or resources that 
 might be used before borrowing; and in this connection it was con- 
 tended that instead of borrowing, Mr. Shehyn should use the $600,000.00 
 already received on account of the price of the Railway, and which was 
 deposited as to great part of it in banks, and the balance invested in 
 Quebec Court House and other Bonds, $469,000.00 bearing 5 per cent 
 and the balance 4 per cent, interest. 
 
 At page 1105 of Desjardin's Debates of the Legistature for 1887, I 
 find that Mr, Desjardins, then member for Montmorency, after quoting a 
 portion of Mr. Shehyn's speech referring to this sum of money, and 
 in which Mr. Shehyn suggested that it would be more advan- 
 tageous to employ these moneys for the purchase of bonds, said, 
 ''There is there a sum of $600,000 that we can easily use for the payment 
 " of the obligations of the Province." ' It only requires to amend the 
 " law to authorize this use. The probability is that before long, perhaps, 
 " w^e will not be able to obtain more than 3 per cent, or 3J per cent, in- 
 '• terest on the deposit of this sum. The best financial policy would be. 
 " then, to utilise it for the payment of railway subsidies better than to 
 " borrow anew. The purchase of our 5 per cent obligations is not 
 "practical because we could not do so excepting by paying 12 or 13 per 
 " cent, premium." 
 
 He concluded his speech by presenting a motion, seconded by Mr. 
 Taillon, that the House should not authorise the making of the Loan, and 
 one of the considerants for the resolution was as follows : — 
 
 "Whereas the sum of $600,000 received on ac^-ount of the price of 
 "the sale of the Quebec, Montreal, Ottawa and Occidental Railway, 
 " $205,000.00 of which is on deposit in various banks at a rate of interest 
 " of four per cent." 
 
— 18 — 
 
 "And whereas it is unctTttiin that the Governmont can continue 
 " to receive 5 per cent, upon the .sum of $113,500.00 deposited in oth-r 
 "banks, it would be in the public interest to amend 45 Victoria, chap. 1. 
 " in such a manner as to authorise the use of the $000,000.00 received on 
 " account of the price of the North Shore Railway for the payment of 
 "the railway subsidies which will become due." 
 
 Supporting Mr. Desjardins, the following voted for his motion : — 
 
 Baldwin 
 
 Beauchamp 
 
 Blanchet 
 
 Caron 
 
 Casgrain 
 
 Charlebois 
 
 Hall 
 
 Mclntos 
 
 Johnson 
 
 Nantel 
 
 Lapointe 
 
 Owens 
 
 LeBlanc 
 
 Picard 
 
 Lynch 
 
 Poupore 
 
 Martin 
 
 Spencer 
 
 Cormier 
 
 Desjardins 
 
 Dorais 
 
 Duplessis 
 
 F. St. Maurice 
 
 Flynu 
 
 Taillon 
 
 At page 1143 is to be found the commencement of the discussion 
 on the third reading of the same Bill for the Loan of $3,500,000.00. 
 
 At page 1144, of the same Debates, Mr. Taillon, says: — 
 "The Hon. member for Montmorency has expressed the views of 
 " the Conservative party on the question of this Loan, Nevertheless, I 
 " wish to declare before the House the opinions that I have expressed in 
 " the course of private conversation." 
 
 After stating that there was no necessity for a loan, and further 
 calling the attention of the House to the fact that the Loan would bind 
 the Province for thirty or forty years, he urged delay in order that the 
 Government might more fully study the situation and have an oppor- 
 tunity to consider the available assets. 
 
 And at page 1150, of these Debates he says : — 
 
 " I am then of opinion that we should await next session. We dont 
 "know just at present what we have to pay, and dont know if the 
 "Government will collect that which is due to it.- Our adversaries are 
 " crying out very much because the Province lost so much money in the 
 " failure of the Exchange Bank. We have at the moment some of this 
 " $600,000.00 deposited in Banks, and these deposits run the same amount 
 " oF danger as that which we had in the Exchange Bank. Why then 
 "does not the Treasurer take this money instead of going elsewhere and 
 " borrowing? These $600,000.00 are destined to the payment of the Con- 
 " solidated Debt. "What difference is there between paying the conso- 
 
— 19 — 
 
 " lidatod debt or the floating debt? I do not see why the Goverument 
 "should not nse this money. 
 
 "The Federal Government pays us a certain amount of interest on 
 "the capital of two millions. This will be a good opportunity for us to 
 " learn whether the Federal Government will consent to pay us this 
 " amount." 
 
 Hon. Mr. Mercikr — "Is the Federal Government disposed to pa\ it?" 
 
 Hon. Mr. Taillon — " We have always pretended that the Federal Go- 
 " verument would be ready to pay us this amount because it could 
 *' borrow an equal amount at a less rate of interest than they pay us, and 
 " this would be an economy for the Federal." 
 
 Hon. Mr. Mercier — "Why did you not demand this when you were in 
 " power ? " 
 
 Hon. Mr. Taillon — "At that time we were not speaking about borrow- 
 *' ing, and if we had been in pow^er this year we would have made this 
 "demand upon the Federal Government, if we had thought it was neces- 
 " sary to borrow. We are now studying the question of the necessity of 
 " a loan and above all its urgency, and it is in considering this double 
 " question that I say to the Government ; there are such and such means', 
 •' take them and we will avoid increasing the debt of the Province." 
 
 When the third reading of the Bill came up, Hon. Mr. Taillon, at 
 l)age 1179 of the same Debates of 1887, spoke as follows : — 
 
 " The Hon. Member for Gaspe has made a very interesting dis- 
 " cussion of the legal side of our floating d»^bt. It is clear that the 
 " Government can, between now and the next session, avail itself of 
 " temporary loans to meet the expenses that may come up. We say to 
 " the Government: you have $600,000 which is lying in banks ; it is the 
 " proceeds of the sale of the Railway, take it, and as it will be necessary 
 
 ■ for you to have a law authorizing this use, we are ready to grant this 
 • to you. You have also the amount which has been granted by the 
 
 ■' Federal Government. I understand that legislation will also be ne- 
 " i-essary to put this sum at your disposition. We promise you our sup- 
 
 ■ port to obtain a law at Ottawa to this effect, and, in so far as it depends 
 
 ■ upon this Legislature, we are ready to vote it to you now, immediately, 
 "on condition that you abandon your project for a loan. 
 
 " As regards the $600,000, coming from the sale of the Railway, th ' 
 "law adopted in 1882 had according to the intent of the I^egislatur , 
 
— '20 — 
 
 "probably tho object of pn'VtMitini^ this sum biMiij^ tiikiMi to pay current 
 " oxpeuscs. II' wc were disiussiii«r extiiifi^uishin^ a debt, that wo could 
 *' pay otherwise, I would say dont touch this money but here the question 
 •' is to pay a floatinj^ debt of which a portion would be transformed into 
 ■* consolidated debt at a dale more or less distant. 
 
 " In the IJudget Speech, the Honorable Treasurer said that it would 
 " bo better to apply this money in purchasiuiJi: our debenturi's, rather than 
 " to allow it exposed in banks. We say in order to complete the idea of 
 " the Treasurer, pass a law to apply this sum to the payment of the lloat- 
 '' ins debt. From the Treasurer's reasoniui^ he could, thti day after the 
 " loan had been etFected, take the sum of !^600,000 to buy in these same 
 " debentures." 
 
 Then on the third readinjj of the Hill, after these remarks of Mr. 
 Taillon, the following voted against the Bill : 
 
 Baldwin 
 
 Beauchamp 
 
 Blanchet 
 
 Caron 
 
 Casgrain 
 
 Charlebois 
 
 Cormier 
 
 Desjardins 
 
 Dorais 
 
 Duplessis 
 
 F S Maurice 
 
 Flynn 
 
 Johnson 
 
 Lapointe 
 
 LoBlauc 
 
 Lynch 
 
 Martin 
 
 Mcintosh 
 
 Owons 
 Poupore 
 liobertsoi 
 Spencer 
 Taillon 
 Villeueuve 
 
 I may say also that when I was in Europe in 1893, I found I would 
 have difficulty in renewing the loan of $4,000,000 falling due on loth 
 July 1893, excepting at very high rate of interest. I kept my colleagues 
 daily informed about affairs. On 9th June I cabled to Mr. Taillon to see 
 about what assistance could be had from Ottawa, in connection with some 
 of our Assetts there. He cabled me in effect that I could rely on $2,300 
 000 odd from Ottawa for 1st July. I then arrang^-^d for balance of the 
 4,000,000 in London. On further examining the cable from Hon Taillon I 
 saw it was proposed to use the Federal G-rant of $2,394,000.00, that we are 
 now discussing, in paying off the Paris people. I raised objections that 
 it might injure us on account of the Legislation respecting the Bond- 
 holders, and also that I would not and could not act, against the direct 
 order of the Legislature, because of clause 8 prohibiting the Treasurer 
 from using it, and cabled them out to the Premier. He answered me 
 back. It was in cypher but, translated, it is as foPows: — 
 
— 21 — 
 — CABLKGRAM. — 
 
 From Montroal, to London, 17th Junti 181)8. 
 
 Hon. Mr. Taillon to Hon. Mr. Hall. 
 
 " W*^ think legislation (•on<;ernin^' that snb.sidy confer no rij^ht 
 "to third party, it is arranji^fini'nt which Province has made lor 
 " itself and which Legislature can chanj^o when n^u-esisary, do you 
 " not think so, do not think Federal will do any thing elne, bank 
 " very reticent, circumstance justifv use subsidy now Li-gislature 
 " will ratify." 
 
 I may say at first I did not concur with Mr. Taillon, but subse- 
 (juently consented, that we might in ray negotiations of 1893, use it if w<' 
 could, but only on condition that another sum of !$2,r)4i),2 13.01 in thi; hands 
 of the Dominion under the Act of 1884, known as the Better Terms Act, 
 be transferred by Order in Council to the linking Funds oi' the Loans of 
 1874, 1870 and 1878 that the 12,394,000 would hi taken from. After this 
 however on the 2(3th June, Mr. Taillon <;abled me I could not get the as- 
 sistance from the Federal, and therefore my negotiations fell through, as 
 I had then no timu' to try elsewhere as, under th? contrnct, I should b^ 
 ready for the Paris people on 1st July. This was th j r^'ason of my failura 
 in London. 
 
 Coming down, to a very recent date in July last, in now looking at 
 the correspondence that the Honorable Premier has had with the Credit 
 Lyonnais and Banque de Paris, and looking at the letter of 23rd July, 
 1894, it is quite evident that he intended to utilize this money if he saw 
 lit, and in so writing to the Credit Lyonnais and Banque de Paris, he 
 idearly indicated that the money was available, and made no pretention 
 to them that these monies were in any way effected for the payment of 
 any sum, or for the Sinking Funds of any loan. 
 
 Let rae give a quotation from the Premier's letter ot 23rd July 1894. 
 After asking them to make an otfer, he says : 
 
 " However, as all this correspondence causes considerable delay, and 
 " as we must on our side consider how to employ the seven millions that 
 " the Canadian Pacific owe us and which they will pay us on the 19th 
 " Dec. next, according to the notice which they have Just given us, as well 
 " as the $2,394,000 that the Federal Government owe us, the payment of 
 *' which has just been authorised by an Act of Parliament of Canada, I 
 " would ask you to let me know your decision, as soon as you possibly can 
 " do it without inconvenience, after receipt of this letter. For we have de- 
 
— 22 — 
 
 " cided, if we cannot come to an agreement with you, to take advantage 
 " of the clause 1 of our contract (it is understood that in corresponding with 
 " the Banque de Paris et de Pays Bas and with the Credit Lyonnais I 
 " correspond with you) of July last, which permits the Government of 
 •' the Province to call in these Bonds at par with interest, at any time 
 " after the 15th July, 1894, on giving three months notice to the Banque 
 " de Paris and Credit Lyonnais. We wish to give you this notice as 
 " from the 15th August next. This will obviate the necessity of execul- 
 " ing clauses three and four of the contract because I am in a position to 
 " assure you that before the 15th January, 1895, we will give you the 
 " indisputable justification of our ability to pay our $42,554 of obligations 
 " on the 15th July the date of their maturity." 
 
 I think I have quoted enough to show the position that some were 
 willing to go in respect to the use of these funds, and what was thi 
 opinion as regards the Statutes of 1882 and 1886. 
 
 I listened with interest to the speech of the Attorney General, and 
 what he says is this : 
 
 The money from the C.P.E. is a pledge for the payment of these 
 bonds of 1874, 1876 and 1878, and to use it for any other purpose would 
 be dishonor. 
 
 Then he goes on to say, however, that if the Province had to 
 borrow on humiliating terms, or were (and I use his own words) " taken 
 by the throat " the money could be used for other purposes 
 
 In addition, he justifies his votes above quoted, and admits the 
 $600,000 should have been then used, because (i) he did not think the 
 Province should borrow, and (ii) he had no confidence but that the then 
 Administration would use the mon»^y any way. 
 
 I cannot agree with him, and I am of opinion that if that money 
 is pledged, it cannot be used for any other purposes nnd cannot be left 
 open to the ministry of the day to consider what may be an emer- 
 gency. The Prtmier now practically takes the same view. I have given 
 quotations enough to shew under what circumstances he would use the 
 money. They would really have the question in the discretion of the 
 ministry of the day. 
 
 The Attorney General ask the Members of the House who are 
 lawyers, to give their opinion. Mine is as follows : 
 

 — 23 — 
 
 1st. Under the Loans of 1874, 1876 and 1878, the Province pro- 
 mised the bondholders to set aside and invest one per cent, per annum as 
 a sinking fund. 
 
 2nd. For the loan of 1878, amounting to $3,000,000.00 in addition 
 to the general lien of the Province, the rental and revenue of the Q. M. O. 
 & O. Railway was charged to the payment of the interest and sinking 
 fund of this loan. 
 
 3rd In the pros))ectuse8 of the loans of 1874 and 1878, the Pro- 
 vince specially declared that it would invest the Sinking Funds for these 
 loans in Bonds of its own of this issue at or below par : but, in any 
 event, reserved its right to invest in other Bonds or securities. 
 
 4th. The Acts of 1882 and 1886, in so far as it might affect the 
 Bondholders, guarantee that these Sinking Funds will be provided 
 for, 
 
 5th. The moment the Province keeps faith and agreement in this 
 respjct, as to the Sinking Funds and assures them even by oth^r means, 
 there is no question of dishonor. 
 
 On careful reflection and giving the matter full study, alter many 
 consultations with the Premier, I was not disposed to repeal tha Statutes 
 of 1882 and 1886. I did not feel disposed to go to the extent of holding 
 these Statutes were purely domestic, I did not want to have it open to the 
 slightest criticism or charge, that the Province was doing anything 
 affecting any rights of bondholders, if any they had. 
 
 In addition and perhaps, I should not say it, I did not want to have 
 #7,000,000.00 or $2,394,000.00 within call, or paid into the Treasury with- 
 out some safeguards. I feared if this were done we might find onr money 
 in a few years all gone. I thought the best way to deal with the question 
 was by further legislation. 
 
 On my return in August 1893, I, as above stated, discussed the 
 whole financial position several times with the Premier with the object 
 of reducing our public debt, of arriving at the conversion of our 5 per 
 cent, bonds, and of dealing with the C.P R. money, and also that from the 
 Dominion. I still objected to repeal the Statutes of 1882 and 1886, but I 
 prepared, after full discussion, the Act passed last session, called the 
 " Public Debt Act" and I am quite willing that this should receive the 
 closest criticism. 
 
t: i 
 
 — 24 — 
 
 In examinini^ the Aot, all I wish is that anyone should say. How 
 he would deal with the C.P.R. and Dominion money. How he would 
 protect any rights of the bondholders and how the money, when paid in, 
 should be utilized or invested. 
 
 The investment returns the Province 5 per cent. From the 
 C.P.R. we receive $350,000 per annum, and from the Dominion $129,100. 
 The principal of the Dominion sum is only payable on the demand oi' the 
 Province and so remains without much difficulty. But if the C.P.R. pay 
 in $7,000,000. how is it to be invested ? We would at once lose $350,000 
 per annum. How can we invest the $7,000,000 so as to give the Pro- 
 vince compensation ? I dont suppose anyone would pretend it should be 
 deposited in Banks. How also would we invest it so as to be satisfactory 
 to any rights of the bondholders, and carry out our obligations about 
 investing the Sinking Funds. 
 
 Coming now to the public Debt Act, 57 Vict., cap. 2, it will be 
 seen in section 1, pro^nsion is made for the appointment of trustees, 
 which was wanting in the prior statutes to carry out the formation and 
 completion of the sinking Funds for the loans of 1874, 1876 and 1878, and 
 recites the Funds, viz., the price of the sale of the Railway money, and 
 the Dominion money that may be dealt with. 
 
 The total of these monies amount to the sum of $9,994,000.00 and 
 the amount of the Loans of 1874, 1876 and 1878 form the sum of $10,685,- 
 440.00. The sinking fund of 1 per cent, per annum on this latter 
 amounts to $106,854.40. 
 
 Section two of the "Public Debt Act " of last session reads as 
 follows : 
 
 " Should the said sums so to be received, (meaning the money 
 " from the C.P.R. or the Dominion or either of them) and the amount already 
 " received on account of the sale of the said railway, or on account of the 
 " said grant, be more than sufficient to provide for the Sinking Funds, 
 " up to the time of such payment to the said trustees or agents, the 
 " Lieutenant Governor in Council may, on such conditions as he may 
 " deem best, appropriate or authorise the use of the balance of such 
 " monies for the redemption, or conversion of the Public Debt generally, 
 " provided satisfactory dispositions are made by the Lieutenant G-overnor 
 " in Council, for the payment into the Sinking Funds, or to the said 
 " trustees or agents, in each year thereafter, of a sufficient amount to 
 " meet the requirements of the said funds." 
 
25 — 
 
 This section then requires that the amount liecessary tn complete 
 the sinking funds on a given date, when the moneys from the C.P.ll. and' 
 the Dominion are received, shall be made up and paid over to Trustees, and' 
 the balance used to redeem or convert the Public Debt, provided, lor the 
 future, satisfactory arrangements are made with the Trustees that the ; 
 annual amount required for the Sinking Funds shall be annually paid 
 over to them ; all taking place with the concurrence of the bondholders. 
 
 Taking the G.P.R money, if paid, there would require to be paid 
 to the Trustees for the Sinking Funds to complete them up to date 
 13,000,000.00 and enough would be left free, to pay off' the Paris loan, or to 
 be invested, if the Province satisfied the Trustees that $106,854.00 would be 
 paid in to them thereafter annually. There are of course many ways by 
 which this could be easily assured. . 
 
 This being done, the bondholders could have no cause of com- 
 plaint. The agreement with them tinder the Statutes of 1874, 1876 and 
 1878 would have been complied with, and Trustees satisfied as to 
 the future, and in addition to that, of these Funds, the balance not imme- 
 diately required would have no chance of being dissipated, but, on th»i 
 contrary, would be well invested by redeeming the Public Debt, in 
 this case, the Paris Loan, and by so much, adding to the security of the 
 bondholders. ■ ' 
 
 * • 
 
 The Premier now States that under this section the vhole $10,- 
 000,000.00 would be required, but this is not correct. If it were so then 
 this Public Debt Act and this section 2, would be a sham. There would 
 have been no necessity to have passed the act. 
 
 The Premier contends the Act was passed to get rid of two objec- 
 tions in the acts of 1882 and 1886, the first, to permit the money to l)e 
 iisi'd if necessary, instead of applying it to the Sinking Funds, and the 
 stMond, to get over the prohibition against iht; TriNisui'iM* using thes;i 
 Funds contained in these acts. 
 
 I cannot admit or consent to any su<h interi)retation and must say 
 on my part there never »vas any such object. The object was still to 
 keep the funds tied up by legislation and only to use them under the 
 Itt-rms of that legislation Otherwise that legislation is dangerous. 
 
 Finally, on this qm-stion I may say my views and opinion arc 
 h'mbodied in this Publii- Debt Act of 1894. It is an act in the interest of 
 tile Bondholders and protects any rights they have. The act in dealing 
 
— 26 — 
 
 with these monies dep;Mids upon no eraeri»;enoy or discretion of the 
 Government. The Legistature stil states, and declares how the monies 
 should be dealt with 
 
 I need not g-ive the other sections of the Act, but ray plan under 
 that Ai't was to carry out one scheme for the conversion of the Debt, and 
 its reduction, and among other ways by paying off the Paris Loan. 
 
 The Provinije has at the present time 5 p;ir cent, outstanding 
 debentures amounting to $14,185,268.33. If these could be converted 
 into se(;urities, bearing not more than 4 per cent., it will be easily seen 
 the annual interest saving would be great, and on a 4 per cent, basis the 
 reduction in favor of the Province would in round figures be |142,000.00 
 less the cost ot conversion, annually. 
 
 My proposition, without giving any more detail than necessary^ 
 was to confer with our bondholders ; inform them we had $10,000,000.00 
 in hand, ($7,600,000.00 proceeds of the Railw^ay, and $2,394,000.00 from the 
 Ft-deral), offer then a new security, say for twenty or thirty years at a 
 reduced rate of interest, on surrender of their bonds, calculate the value 
 of their 5 per cent; security and the new security and pay any differeu ;e 
 in cash. 
 
 By this means I have no doubt the $15,000,000 of 5 per cent, debt 
 could be converted and a large portion, if not all, of the C.P.R money 
 and the Dominion money left with us. The C.P.R. $7,000,000 we could 
 use in paying off (i) the Paris loan of $4,000,000 odd, and the balance of 
 $3,000,000 in paying our present and outstanding railway subsidies and 
 lioating debt, and the Dominion money, or any part not used, we could 
 leavv! where it is as a 5 per cent investment. 
 
 In this way the Province would make but one financial operation, 
 we would not only not borrow anew, but w^ould reduce our Public Debt, 
 by $7,000,000, but now in what way will we get an opportunity again to 
 reduce $4,000,000 odd ot our Public Debt, if the Paris loan is re-contracted 
 for a period of sixty years ? 
 
 I have given the whole question full consideration and have con- 
 ferred with several financial people and I am quite satisfied the scheme 
 was feasible and possible. In any way it was a project that should have 
 been tried if we intend to convert the debt. 
 
 If not, what can be done to utilize the payment of these monies, 
 and to invest them, and how, otherwise, can a favorable conversion of the 
 debt take place ? • " * . ' 
 
 
— 27 — 
 
 Further as to investing- the money, thi» prospectuses of the Loans of 
 1874 and 1S78 state the Sinkinj^ Funds will be invested in our own Bonds 
 of these issut s at or below par ; and the Government reserved its rights or 
 invest in other securities. Could there be any objection in investini^ in our 
 other Bonds ? Can the Province offer or suggest a better investment than 
 its own Bonds, or ofi'er any better security ? It is nothing unusual for Pro- 
 vinces or Corporations to invest Sinking Funds in thyir own Bonds Illus- 
 trations an; numerous, but take the city of Montreal. It has to inv«'st 
 yearly a Sinking Fund for the School Commissioners Bonds and it has to- 
 day invested over a million dollars in its own Bonds. Why could not the 
 C.P.R. money have been invested in these very Bonds held by the Paris 
 l)eople that we are going to pay off? It is a four per cent, investment 
 for over 4,000,000.00 and at once puts this amoun' beyond being touched 
 
 It is now said, and of course since my resignation, that the C.P.K. 
 have withdrawn the notice to pay. This of course has only been done 
 with the consent of the Grovern:?ieii.t. 
 
 The resolution of the C.P.R. dated the 26 Septembrc. 1894, stales 
 among other matters : 
 
 " Whereas it has been mutually agreed between the Government and 
 " the Canadian Pacific Railway Company, that the said notice shall be 
 " withdrawn and cancelled, and the parties shall thus be restored to the 
 " positions which they would respectively have occupied had the said 
 '" notice not been served." 
 
 And the order in Council dated the 28th September, 1894, accepts 
 this notice sent under this resolution and states : " the Government of the 
 "Province of Quebec consents to the withdrawal by the said Canadian 
 *' Pacific Railway of the above mentioned notice." 
 
 It is open also for the C.P.R. to renew the notici- at any time and 
 ])ay the money, and the position of the Province will be worse, or arrange 
 to keep the money until 1904 when the first Loan matures, at a lower 
 rate of interest. _ 
 
 At once the Province suffers a loss in revenue and loses tht' oppor- 
 tunity to reduce its public debt by paying off the Paris people. 
 
 In reading over the Order-in-Council appointing Mr. Barbeau as 
 agent, the Government of cour. e still see the difficulty about the C.P.H. 
 money coming in, and Mr. Barbeau is to enquire and sei' what is to b- 
 done. Th»' Order-in-Council reads as follows : 
 
— 28 — 
 
 .1 : "Copy ot the report of thi? Honorable Executive Council, dated 
 "October 30, 1894, approved by the Lieut.-aoveruor, October 30, 1894, 
 "(No. 6ft2). . V . .:■- . :-- ; • ; - ' v •: a 
 
 .;;:>.. "(jji jjjy appointment of a mandatory of the Government to nego- 
 " tiato the loan authorized by Order in Council, No. 537 of 1894, etc. 
 
 "The Honorable Provincial Treasurer of the Province in a report 
 "dated October 30th instant (1894) exposes; 
 
 " That it is necessary to send to Europe, a mandatory of the Govern- 
 " me)it of the Province of Quebec, to complete the negotiation of the loan, 
 " authorized by the Order-in-Council, No. 537, of the 13th of October ins- 
 " tant, or in case this loan is not effected, to advise as to other means of 
 "meeting the loan negotiated in Paris in 1891, and continued in 1893. 
 
 "That moreover, seeing that the Canadian Pacific Railway has the 
 " right of paying to the Government, by giving notice of six months, the 
 "sum of seven million dollars still due on the price of sale of the Quebec, 
 " Montreal, Ottawa and Occidental Railway, it is expedient to study the 
 " whole financial situation of the Province, not only here, but also in Paris 
 "and London, where all its loans have been negotiated since 1874, so a« 
 " to be able to judge of the most advantageous arrangements to be made 
 " with this company and the best means of employing the said sum. 
 
 "That, owing to the approaching session, the Honorable Treasurer 
 " cannot undertake this journey. 
 
 "That the members of the Executive Council knowing the hi^'-h 
 ' position which Mr. Edraond Barbeau, of Montreal, occupies in financial 
 "circles, and having the fullest confidence in his ability and honesty, 
 " have authorized the Hon. Treasurer to request him to accept this impor- 
 " tant mission, that after much hesitation, Mr. Barbeau has acceded to thtj 
 "solicitations which were made to him by the Honorable Provincial 
 "Treasurer, and has consented to render to the Province theservice which 
 " was asked of him, declaring that he would take no remuneration. 
 
 "The Honorable Treasurer proposes that Mr. Edmond Barbeau be 
 ■ requested to go to Europe : — 
 
 1. "To complete the negotiation of the loan authorized by Order-in- 
 " Council dated O.tober 13 inst. (1894), and sign the contract to that effect. 
 " after it has been finally approved of by the Executive Council ; 
 
 2. "Or, in case the loan is not made, to negotiate in Paris or Lon- 
 "don, according to the instructions which will be addressed to him by 
 
— 29 — 
 
 "tho Goverumont, other arrang-oments to meet the loan contracted in 
 " Paris in 1891 and continued in 1893. 
 
 3. " To study in Paris as well as in London, the whole financial 
 "situation of the Province, so as to be able to judge what arrangement 
 " would be most advantageous to make with the Canadian Pacific Rail- 
 " way regarding the sura of seven million dollars, or the best means of 
 " employing this sum, and that, for these purposes, Mr. Barbeau be cons- 
 " tituted the mandatory of the G-overnment of this province. Mr. Barbeau 
 "will report upon the execution of his mandate as often as necessary. 
 
 "The Honorable Provincial Treasurer proposes moreover, that the 
 "Government advance Mr. Barbeau a sum necessary to cover his travell- 
 '• ing expenses and his fees as director on the boards of the various com- 
 " panics with which he is connected, and which he may lose by his 
 " absence, and that that sum bj taken from the amount voted for the 
 "administration of the public debt. 
 
 "(Certified.) . 
 
 ' -. ^ ■' "(Signed) • Gustave Grenier, 
 
 "Clerk of the Executive Council." 
 
 This clearly proves my position, that until a schema for dealing 
 with the C.P.R. money is decided on, the Province should not make a 
 permanent loan. 
 
 I may say that, to provide agains.t any difii(nilty, and even any 
 question about using the C.P.H. money, except concurrently with a con- 
 version scheme, Mr. Machin, the Assistant Treasurer, when in Europe in 
 March, April and May, had been discussing the question of raising 
 money by a temporary loan, say for a year, in London. I followed the 
 matter up in July and August, in the local market as well, and am 
 certain the Province could have borrowed in a temporary way, enough 
 to pay off the Paris people at a a rate of interest not exceeding 4 per 
 cent. This is corroborated by some loans that have been made recently 
 by a large corporation in this Province who have borrowed in Loudon 
 large amounts for 3J nett for 6 months, with privilege of renewing for 
 another six months without further charge. 
 
 To further shew the policy not to borrow, I may again recall that 
 the Premier went to Ottawa last session for the Legislation to enable us 
 to get the principal of the $2,394,000.00. This legislation could have no 
 
 
— so- 
 other object than to carry out ray scheme of conversion and reduction 
 aud no new loan. The Premier followed this up also by correspondence 
 with the Dominion, copies of which have been laid befon; the House. I 
 fear I would get tedious to do any more than refer to it and let the mem- 
 bers read it themselves. 
 
 Concluding my remarks on this head, I think, I can safely say, I 
 have shown ; from the declarations and principles of the party, from the 
 utterances and writings of the Premier, even as late as those to the 
 Banque de Paris et des Pays Bas, from the general policy of the Gloveru- 
 ment, from the Legislation of our Public Debt Act last session and, from 
 the Legislation at Ottawa, it was not any part of our policy to borrow 
 and the Loan was unnecessary. 
 
 The next question is : — 
 
 OBJECTIONS TO A 3 PER CENT. BOND AT 77 FOR 60 YEARS. 
 
 The great initial objection to selling a 60 year, 3 per cent. Bond at 
 77, is the enormous unwarranted increase of capital or Public Debt that is 
 at once created without the Province getting the money. The maturing 
 Paris loan amounts to |4.106,461.00 and in order to pay this off we have 
 to issue at a price of 77 for 3 per cent, bonds, bonds to the amount of 
 #5,333,066.0.0, or an increase of $1,226,605.00 in our Public Debt in this 
 single transaction. 
 
 T consider it bad financing to sell Bonds at such a heavy discount, 
 and damaging to our credit. In the event of being required to borrow I 
 am of opinion th" Province should not have sold, except four percent, 
 and these at not less than par. My reasons for this I will give later on. 
 To redeem the Paris loan of |4,106,461.00, the transaction under dis- 
 cussion appears as follows : — 
 
 New 3 per cent. Bonds amounting to $5,333,066.00 
 Annual interest at 3 per cent. 159,992.00 
 
 Now to make comparison, if the Province issued a loan at 4 per 
 cent, at par, or at 99J or at 99, and one at 3 at 77 the total amount of 
 Bonds to be issued in order to realize enough to pay the debt would be 
 as follows : — 
 
— 31 — 
 
 3 per cent. Bouds at 77 $5,333,066.00 
 
 4 per cent. Bonds at par 4,106,461.00 
 4 p«r cent. Bonds at 99^ 4,127,096.00 
 4 per cent. Bonds at 99 4,147,940.00 
 
 The increase in debt in the transaction of 3 per cent, at 77 is as 
 I'ollows : — 
 
 Over transaction 4 per cent, at par, increase #1,226,605 
 
 99i " 1,205,970 
 
 " 99 '• . 1,185.126 
 
 The total volume of interest each year, on each transaction would 
 be as follows : — . . 
 
 3 per cent, at 77 #159,992.00 
 
 4 per cent, at par 164,258.00 
 4 per cent, at 99^ 165,084.00 
 4 per cent, at 99 165,917.00 
 
 The annual saving in interest on the transaction of 77 for three per 
 cent, would be : 
 
 Over the 4 per cent, at par saving of #4,266.00 
 
 99J " 5,092.00 
 
 99 " 5,925.00 
 
 It will be seen by any of these calculations that on a 3 per ciMit. 
 basis the Public Debt is enormously increased and the Province does not 
 aret the money. 
 
 Comparing the 3 per cent, loan at 77 : 
 
 1. With a 4 per cent at par, the annual interest saving is #4266.00, 
 and this if regularly and punctually invested yearly and compounded 
 for sixty years at 3 per cent interest, would only yield #695,585.00 and at 
 4 per cent interest #1,105,265.00 while the increase in capital is #1,226,605. 
 
 2 With a 4 per cent loan at 99| the annual interest saving is 
 #5092.00 and this compounded yearly regularly at 3 per cent, would yield 
 #830,268.00, and at 4 per cent interest, #1,211,848.00 while the increase in 
 capital is #1,205,970.00, or 
 
 3. With the most favored case of a loan of 4 per cent, at 99, the 
 yearly saving would be #5,925.00 and this compounded for 60 years at 3 
 per cent, would only yield #966,091.00, and the increase of capital is 
 #1,185,126.00 ; the #5,925.00 compounded at 4 per cent for 60 years would 
 bring #1,410,094.00. 
 
— 82 — 
 
 In the first place, the Province will never set aside the ^5,925.00 or 
 other sum aimuully, secondly it never can obtain 4 per cent, compounded 
 semi-annually, for GO years. Even if this rate of interest is likely to prevail 
 It requires the investment and re-investment to be made to the hour, each 
 six months and why should we go to all this trouble?; thirdly, it was 
 never contemplated in Mr. Taillon's correspondence that there should be 
 any question about a Sinking- Fund, but all offers were without this 
 being calculated. The whole question on this point is purely mythical. 
 
 In the meantime therefore we will have increased our Public Debt 
 by |l,226,G0r.0O against all our policy, and against the warning of the 
 financial public and have no fund to meet it at maturity. 
 
 It is said there is a clause in the draft contract to pay off this new ' 
 loan any time after 10 years. This only means that our money would 
 cost us so much nio .e. On the present basis of 77, for 3 per cent, at 60 
 years, if we paid off in less lime after 10 yearp, our money would cost us 
 for following periods the amounts as below :— 
 
 . . At end of 10 years about 6| per cent interest. 
 
 20 " 4| " " . 
 
 30 " 4| " " ' 
 
 40 " 4i 
 
 50 " 4i 
 
 It is also dangerous, as it might give a government who had not 
 the interests of the country at heart, an opportunity to turn over the loan 
 again at the cost of further commissions. 
 
 In one of the newspapers, Le Moniteur du Commerce, I saw a good 
 illustration. A man gives a Bond for $100 and agrees to pay 4 per cent 
 interest and he receives $99. This sum he uses to develop his property, 
 and at the end of the term gets another $1 and adds it tothe $99 and 
 pays back the $100. In the other case, his interest amount is a trifle less, 
 but he gives a Bond lor $100 and only gets $77 to go and develop his pro- 
 perty. Ar^the end of the term he finds that the lender has had the $23 • 
 to add to th«? $77 to pay hack. It is true if he had calculated every half 
 year the difference in the interest and invested it and re-invested it to the 
 exact date every half year, he would have had. nearly enough to make up 
 the $23. , ' , , . ! ■ . : ■ ,; ■ j. •. : .Iv... '^i'. 
 
 i- 
 
 . It is urged that borrowing at 3 per cent and at such discount helps 
 thepr.edlt of the Province, but even this only in the case of future bor 
 
 
— 88 — 
 
 rowings. For Quebuo, the public and the taxpayers expect the borrowing' 
 to cease. 
 
 Money is worth so much and no more, and, in proportion, as a <^ 
 per cent security increases in value, a 4 per cent goes in the same ratio. 
 
 The experience of the past with the province and with others ought 
 to prove useful and an object lesson. 
 
 The province issued a loan in 1880 with bonds at 4^ and received 
 #3,772, •717.23 for a loan of $4,277,853.34 : a slight examination will sec 
 that we pay over 5. 20 of interest for our money. 
 
 In 1882 two further loans were issued, by the Province one in 
 Quebec or New York, and the other in London, but both w^ere at 5 per cent. 
 The Province had to comeback from the 4^. These loans were at par and 
 the money costs the Province at least 5 per cent. In all three cases the 
 expenses and commisions arc not included. 
 
 Take the City of Montreal. 
 
 In 1887 the City got authority to issue three per cent stock. They 
 issued some stock in London at 80 or 82, and tried the plan of this system 
 helping their credit, as they were likely to borrow more. But the stock 
 never got up above 84 I think, and the debt of the City was enormously 
 increased. It failed and the City returned to the Legislature, and got au- 
 thority to change the rate of interest from 3 per cent, to 4 per cent. Since 
 then the City has borrowed, and successfully, but on 4 per cent Bonds. 
 The City of Toronto had authority to issue Bonds at 3|, yet when they 
 were about to contract a loan quite recently, the best offer that City could 
 get from a financial point of view, was for bonds to bear 4 per (;ent interest. 
 
 The final question set up in the motion is; 
 
 IN VIEW OF A PERMANENT LOAN HAVING BEEN RE80RTE1> 
 TO, IT SHOULD HAVE BEEN OFFERED JiY WAY OF 
 COMPETITION OR TENDER SO AS TO OBTAIN 
 THE BEST POSSIBLE PRICE AND AD- 
 VANTAGE FOR THE PRO- 
 VINCE OF QUEBEC. 
 
 This question is so elementary, that a person should hardly be 
 considered fit to conduct the finances of a public corporation, much less 
 
— 34 — 
 
 51 large Provmcf like the Proviiici! of Quebec uuless he resorted to every 
 ineiins, au<l there is no nieuus better than l)y eoin|)etitiou, to get the best 
 possible price lor bonds, or to secure the lowest rate of interest possible 
 ou any amount that might be borrowed. 
 
 At the outset let me here say I cannot, and do not admit, with the 
 Premier and the Attorney General that the cTedit of the Province was 
 too low to invite competition. 
 
 I think that after three years ot administration the Government 
 ought to be able to say they have sufficiently raised our credit to invite 
 competition. 
 
 Now, without being too tedious, there are, generally speaking, 
 three ways of making a loan. 
 
 It must be borne in mind also that the investing public connot be 
 reacht'd, excepting through the stock markets, and the banks and banking 
 institutions. 
 
 The first method of issuing a loan is to do as the Dominion of 
 Canada has no doubt done, namely, to fix a minimum price upon its bonds 
 and offer them to the public by public advertisement through the aid of 
 some banking institution. When the credit of the country, and thi^ 
 character of its banking institution are well known, a loan in that way 
 is well received, and the party gets the full possible price that the public* 
 are willing to give, and has but to pay ordinary commission to its bankiT 
 and the costs of printing the issue. 
 
 The second method is for a country to ask by tender or competition 
 for offers, to buy its bonds en bloc. The bankers buying of (.ourse pay 
 over the money, and assume all risk and r(!sponsibility bout the bonds 
 being subscribed for, and taken by the investing public. This method 
 sometimes suffers a little modification in the borrower sharing in the 
 benefits of the subscription, should the bonds be taken at a higher rate 
 than the one fixed by arrangement. 
 
 Another method, and one that is sometimes adopted if the 
 credit of the the country is not all right, is to put a definite fixed price 
 upon its bonds and ask, not necessarily by public advertisement, but 
 different institutions to make offers for the bond. 
 
 Now in remembering what I have just said about the position of 
 the Province of Quebec, it will be seen that it was of the greatest advan- 
 tage to get back onto the markets again and to be able to effect a loan. 
 
— 85 — 
 
 The problem how to do it was tiiken up by inc in February 18Jt4, when it 
 was determined that our temporary loans should be converted into a 
 permanent issue. The publicity of it was one of tht; first (juestions dis- 
 cussed by my colleagues. After a good deal of reili-ction, we came to the 
 conclusion that while the banking institutions and other circles had 
 conlidence in the Province of Quebec, that, perhaps among the general 
 public, the Province was not strong enough to expect a hearty response 
 in subscribing for some of our bonds should we adopt the Hrst method I 
 have just mentioned. 
 
 Then came the next question of selling our bonds en bloc by way 
 of comp(;tition. The City of Hamilton and another large corporation, 
 had tried this method by public tenders in London, and had not sur- 
 ceeded. In discussing it for the Province of Quebec, we thought (his 
 might be dangerous. Either the price otfi'red for the bonds would be 
 vt'ry low, and impossible to accept and our credit suffer, or we might have 
 no offer at all. 
 
 Then came the discussion of the third method which was the one 
 we adopted in February 1894. 
 
 In January and F'ebruary, the 4 per cent Bonds of the Province of 
 Quebec of the Loan issued in 1888 were quoted on the London market at 
 from 96 to 98, and there were som«' sales of a little over 97. 
 
 Taking into consideration the cost of issuing a loan, which is about 
 at a moderate figure 3 per cent, and taking the amounts between these 
 two quotations, 97 would be a very fair price to put any bonds to be 
 lloated on the Loudon market, and 94 would be a good prii-e for the Pro- 
 vince to receive, free and clear of all commissions and charges. 
 
 It was therefore decided that 94 should be asked for, for the 
 bonds. It was known on the Loudon market, and also on the Paris 
 market that the Province wen- about to make a loan. Four or five insti- 
 tutions were separately asked to give us a pri»*e for our bonds and (hey 
 were all refused as too low. Then the parties who got the bonds bid 94, 
 ami we sold them at that rate. The contract will be laid befon? the 
 House and all its details seen, but this price is nA and clear of all com- 
 missions, excepting the cost of printing and stamps on the bonds, and 
 free from any interest except from the actual dates of payment of the 
 money overto us. In many previous loans the money was only paid by 
 instalments after the date of the Bonds, In the March 1894 loan we only 
 paid interest from the date of the actual receipt of the money. 
 
— 86 — 
 
 I consider that the price obtained was a good one for the Province 
 of Quebec and it re-established us on the market, that we had been shut 
 out from. It gave an activity and value to our Bonds. It also had this 
 advantage, that we had the co-operation and assistance of our local insti- 
 tutions. I may say that the total amount of issue for the loan was je600- 
 000, and in the syndicate who bought the bonds, our local banks and 
 local institutions, and I may add, among these were some of the banks in 
 Ontario, took one-third of the loan, and if more could have been allotted 
 to them, more would have been taken. 
 
 Now, as watching the progress of our credit, and looking forward 
 to what the Province might have done, I would like to give the House a 
 few figures as to the growth of our credit as taken from the quotations of 
 our Bonds on the Loudon market. 
 
 Loan of 1888 
 
 4's 
 
 Loan of 1894 
 
 Date. 
 1894 
 
 Quotations. 
 
 Sales. 
 
 Quotations, 
 
 Sales. 
 
 Jan. 18 
 
 96 to 98 
 
 97f 
 
 
 
 Jan. 25 
 
 96 to 98 
 
 
 
 
 Feb. 1 
 
 96 to 98 
 
 
 
 
 Apr. 12 
 
 98 to 100 
 
 98| 
 
 
 
 Apr. 19 
 
 98 to 100 
 
 100 
 
 
 
 Apr. 26 
 
 99 to 101 
 
 lOOi 
 
 
 
 June 14 
 
 101 to 103 
 
 
 98 to 100 
 
 ■ 
 
 June 21 
 
 102 to 104 
 
 
 99 to 101 
 
 
 June 28 
 
 102 to 104 
 
 
 99 to 101 
 
 100 
 
 July 19 
 
 100 to 102 
 
 102 
 
 100 to 102 
 
 lOU i f 
 
 Aug. 2 
 
 100 to 102 
 
 
 100 to 102 
 
 lOlf 
 
 Aug. 1 
 
 100 to 102 
 
 lOlJ 
 
 100 to 102 
 
 
 Aug. 9 
 
 100 to 102 
 
 
 100 to 102 
 
 lOlJ 
 
 Aug. 23 
 
 102 to 104 
 
 
 101 to 103 
 
 
 Sep. 6 
 
 102 to 104 
 
 
 101 to 103 
 
 102i 
 
 Sep. 13 
 
 102 to 104 
 
 
 101 to 103 
 
 102H 
 
 Oct. 11 
 
 102 to 104 
 
 103 
 
 I 
 
 102 to 104 
 
 102 
 
 On June 14th when the issue of March 1894 was put upon the 
 market, the bonds of 1888 were quoted at 101, to 103, and the new issue at 
 
— 37 — 
 
 98 to 100. Evory week saw a little improvement in these bonds, and on 
 August, 9th, as it will be seen, the 1888 bonds were quoted at 100 to 102, 
 and the new issue of March 1894 at 100 to 102, with actual sales at lOlJ, 
 and then again on September Gth the quotations for the loan of 1888 were 
 102 to 104 and those of March 1894 were 101 to 103 with actual sales at 
 102|. 
 
 It will thus be seen that in a period of seven months there was an 
 improvement of six points in the increase of value of our bonds and we 
 were strengthening ourselves in the market, so much, that, to my mind, if 
 a loan were necessary, thare would be no question it could be 
 offered to a good deal more competition than had been done in March 1894. 
 
 However, as far as I am concerned, although during the month of 
 August last I had been asked by some parties and two or three institutions 
 whether we were going to issue any bonds, I told them No. This of 
 coi^rse was in accordance with my policy and what I understood to be 
 the policy of the G-ovcrnraent, not to borrow. One or two people did tell 
 me that we ought to get par for our 4 per cent bonds. The Premier speaks 
 of having sounded somebody and finding out that we could only get 97 for 
 our 4 per cent bonds less 1 per cent commission. This I know nothing of 
 because after I handed him the draft of letter on 20th July, I considered all 
 correspondence ended, and not only the Paris but all other markets were 
 closed. 
 
 It was, and is my opinion today, that we could have got par for 
 our 4 per cent bonds if we were making a loan, and on or about the 6th 
 September last I received a cabLi from London asking me if we would take 
 99i net for our bonds, but of course at this time the negotiations were 
 about finally closed with the Credit Lyonnais, and after communicating 
 the cable to my colleagues, I sent an evasive reply, I may say also that 
 it was quite impossible for the party who made this offer to have been in 
 any manner aware that the Paris institutions were in communication 
 with the Province or that they had made us any off'er. 
 
 Everything has been favorable to us. From my opening remarks 
 it will be seen that the Receipts and Payments of the Province had been 
 got well in hand; our floating debt and Railway subsidies had been 
 amply reduced and, what was more important, our exact position on 30th 
 June 1894 defined. 
 
 Following this, great confidence had been placed in the Adminis- 
 tration and I think from the terms of placing the Loan of March 1894, the 
 
— 38 — 
 
 concurrence of our Local institutions and the healthy rise in value and 
 activity in our Bonds, nothing was to be feared. Over and above all this 
 even, we had a j^ood money market and demand for good securities. 
 
 Take the City of Montreal. It sold on 30th July 1894, in Montreal 
 after competition, its 4 per cent Bonds en bloc to the Bank of Montreal for 
 101,1 
 
 I hear the Premier state the City has a better credit than the Pro- 
 vince, Well Sir I think this is humiliating for the Province and we 
 should not admit it, but do everything we could to force our credit and 
 not sell Bonds at these low rrtes 
 
 Take lastly, the Dominion to shew any way the state of the mar- 
 ket. It has just recently sold its 3 per cent Bonds through the Bank of 
 Montreal for a little ov^er 97. I must say a difference of 20 points over 
 our sale at *7*7 is too much. 
 
 I come now to another point that has been touched on by the Att'y 
 (xenl. and the Premier as a reason for negotiating as has been done viz : 
 that the Province was under some sort of obligation to these institutions, 
 on account of their action in March 1894, and on account of Article III 
 
 OF THE CONTRACT OF .TCLY, 1893, WITH THE LE CREDIT LyONNALS ET 
 
 La Banque de Paris et des Pays Bas. 
 
 This article reads as follows and I giv^e article IV. 
 
 ARTICLE III. 
 
 "The Government of the Province of Quebec undertakes, before 
 " the 31st Dec, 1894, to issue a loan to be created under the Act 54 Vic, 
 '■ chap. 2. The Funds derived from that issue shall be specially devoted 
 " to the repayment of the bonds of 1893, and cannot be otherwise em- 
 " ployed 
 
 " In the event of the aforesaid issue not being effected on the 
 " 31st December, 1894, the Government shall, before the 15th of Jan- 
 *• uary, 1895, deliver, one half to Le Credit Lyonyiais and one half to 
 " La Banque de Paris et des Pays Bas, bonds of a consolidated loan, 
 " whose terms shall not exceed forty years, in sufficient quantity that these 
 " bonds, calculated at ten per cent, below the current rates at London 
 "and Paris,of similar funds of the Province of Quebec, shall represent 
 " the amount of the nominal value of the forty-two thousand five hundred 
 " and fifty-four (42,554) bonds, due on the 15th July, 1895. 
 
— 39 — 
 
 " Le Credit Lyonnais and La Banque de Paris el des Pai/s Bas shall 
 " agree with the Province of Quebec as to the price of sale of these bonds. 
 " In default of agreement, the said bonds shall be realized on the 1st of 
 " March, at the latest, by public sale on the markets of London and 
 " Paris. 
 
 " If the proceeds of such sale amount to a sura greater than that 
 '• required to redeem the bonds maturing on the 15th of July, 1895, such 
 " excess shall be paid over to the Province of Quebec. If, on the contrary, 
 " the amount is insufficient, the different shall be paid by the Province of 
 " Quebec. . 
 
 " The foregoing stipulations in no wise affect the rights which the 
 " holders of bonds, maturing on the 15th of July, 1895, may exercise at 
 " such maturity. 
 
 ARTICLE IV. 
 
 " Le Credit Lyonnais and La Banque de Paris et den Pays Bas shall not 
 " proceed to realize the bonds above mentioned if the Province of Quebec 
 " gives them the proof, accepted by them, that by collec;ting all the 
 '• amoants due to it, or by any other means, it possesses the necessary 
 " moneys for redeeming the bonds of the 15th July, 1895, at maturity. 
 " Le Credit Lyonnai'i and La Banque de Paris et des Pays Bas shall alone 
 " weigh such proof and shall be the sole judges thereof." 
 
 These two articles have a little history which the Grovornment 
 were aware of and whi(^h I may as well now give. 
 
 There is no doubt our credit was bad in 1893. 
 
 In the negotiations at that time with the Credit Lyonnais, and Lu 
 Banque de Paris, et des Pays Bas they wisht.'d a clause inserted, and were 
 insisting on it, that the Province should transfer to them a sufficient 
 amount of our revenue or taxes to secure the payment of the Loan. This 
 I refused under any circumstances to allow. 
 
 They withdrew this, but offered a clause, by which if the Province 
 did not shew means by 1st July, 1894, to pay off the Loan, that we should 
 deposit with them a sufficient amount of Bonds for them to sell at the 
 price and time they saw fit to pay off the loan. Such a clause I also 
 objected to and finally consented to the first paragraph of clausj III, 
 undertaking to make a loan ourselves before 31st December, 1894. 
 
— 40 — 
 
 Then the contract was to be rewritten. I saw some of the Directors 
 individually and another meeting was held, and the other paragraphs of 
 Art. Ill were added. We separated to meet again for a further draft, and 
 in the meantime I again saw some of the Directors individually, and 
 article IV was added ; these institutions insisting if it was inserted, that 
 the last sentence permitting them to be the sole judges of the statements 
 of our ability to pay should be added. Under these circumstances these 
 <lauses were inserted. 
 
 I may say, however, though the clauses are onerous there was 
 nothing that obliged us lo negotiate with them solely, to the exclusion of 
 all others and to pass over competition. The Premier alludes to these 
 Institutions threatening trouble in March, 1894, when I negotiated the 
 loan of =£600,000. They did, at that time, as the correspondence brought 
 before the House shew^s, contend, not that they had a right to issue or 
 make any loans for the Province or to have any preference in this respect, 
 but that they were entitled to the first proceeds of all loans made by the 
 Province until the amount of the loan contracted with them in 1893 was 
 paid off. 
 
 A perusal of the article III will shew this ground was utterly un- 
 tenable and «o the Government at the time considered it, and, after con- 
 saltation with my colleagues, I wrote the letter appearing in the corres- 
 pondence brought down which reads as follows : 
 
 Montreal, 5th March, 1894. 
 A. Mazerat, Esq., 
 
 Director General Credit Lyonnais, 
 
 Paris, France. 
 Sir, 
 
 Your letter of the 16th February was received, and submitted 
 by me, to my colleagues of the Executive Council of the Province of 
 Quebec. After a conference it was decided that I should reply in the 
 following sense : — 
 
 The Province do not admit the pretentions of the Credit Lyonnais 
 or La Banque de Paris et des Pays Bas. This has already been expressed 
 to you in the cable referred to in the letter of 16th February. In no 
 «ense in the contract entered into on the 3rd July last, is it in any- 
 way stated or can it be inferred, that the proceeds of the first loan made 
 by the Province should go towards the repayment of the Loan mentioned 
 in that contract. It was not even thought of by myself, and I dont see 
 
— 41 — 
 
 how it could have been thought of by your institution, in as muoh as I 
 and you were aware that the Province had other oblif^ations to meet. 
 In other respects, the contract provides that the Province has an option 
 to pay off the loan after the 1st July 1894. 
 
 Then as regards Article III, you seem to quote only the first para- 
 graph of that article, but if the whole of it is considered, you will see 
 that it might be possible no loan would be issued or made to take up 
 these bonds, but that they might be provided for in some other way. 
 
 As to the other parts of your letter, the Province will look after its 
 own interest and act on its own responsibility. 
 
 Yours truly, 
 
 JOHN S. HALL, 
 
 Provincial Treasurer. 
 
 If anything else were necessary on this point, I migh call atten ion 
 again, to the concluding part of the Premier's letter to them on 23rd 
 July last which I have already quoted, and which after referring to the 
 C.P.R. and Dominion money, and telling them he is going to give them 
 notice on 15th August to pay them off, reads as follows : 
 
 " This will obviate the necessity of executing clauses 3 and 4 of 
 " the contract because I am in a position to assure you that before the 
 " 15th January, 1895, we will give you the indisputable justification of 
 " our ability to pay our 42,554 of obligations on the 15th July, the date 
 " of their maturity." 
 
 This clearly shews there was no necessity or obligation to treat 
 exclusively with these two institutions, but further it declared to them 
 that the Province was in a position to pay them off. 
 
 CONCLUSION. 
 
 I trust I have not been too tedious, or too lengthy, but the impor- 
 tance of the matter is my only excuse. 
 
 I do not disguise the fact that it was with great regret I felt called 
 upon to resign. I did not fail to consider the close personal and confi- 
 dential relations, that had been formed between myself and my comrades 
 in work, commencing in 1886. I did not fail to consider our mutual 
 loyalty in the work of the party in opposition, the battles waged and suc- 
 cesful entry to power; and while we have been in power I did not fail 
 to appreciate the consideration and devotion of my friends on this side of 
 
— 42 — 
 
 the House. Had it been au act counected with some other department I 
 would have yielded. Had it been an isolated act performed by the 
 Premier in my illness, in some well defined part of our policy and plan I 
 would also have yielded. But as it was in my own Department, and 
 responsible as I must be for it, and as it was contrary to my own thought 
 out policy and plan, and as I conceived it, the plan of the Government, 
 and knowing the financial history of the Province as I did, and consider- 
 ing the transaction against the interest of the Province, and injurious to 
 the solution of our financial position I felt it my duty to resign, and leave 
 the future to decide on the merits of my action. 
 
 After speeches from Messrs. Fitzpatrick, Carbray, Stephens, Chi- 
 coyne, Hon. Shehyn, Savaria, Turgeon, Hon. Marchand, King, and Cooke 
 <Jo8ing, the vote was taken as follows : — 
 
 FOE THE SUB-AMENDMENT. 
 
 Allard 
 
 Chicoyne 
 
 McCleary Petit 
 
 Baker 
 
 Descarries 
 
 Magnan 
 
 Poirier 
 
 Beaubien 
 
 Desjardins 
 
 Marion 
 
 Eioux 
 
 Beauchamp 
 
 Doyon 
 
 Martineau Savaria 
 
 Bedard 
 
 Duplessis 
 
 Nantel 
 
 Ste-Marie 
 
 (Jarbray 
 
 Girard (Joseph) 
 
 Normanc 
 
 L Taillon 
 
 Cartier 
 
 Grenier 
 
 Panneton Tellier 
 
 Chateauvert 
 
 Lacouture 
 
 Parizeau 
 
 Tetreau 
 
 Cholette 
 
 McDonald 
 
 Pelletier 
 
 Villeneuve 
 
 
 AGAINST. 
 
 
 Bernatchez 
 
 Girard (Alfred) 
 
 King 
 
 Piuault 
 
 Bourbon uais 
 
 Girouard 
 
 Laliberte 
 
 Stephens 
 
 Bisson 
 
 Gladu 
 
 Lussier 
 
 Tessier (Auguste) 
 
 €aron 
 
 Gosselin 
 
 Marchand Tessier (Jules) 
 
 Cooke 
 
 Hall 
 
 Morin 
 
 Turgeon 
 
 Gillies 
 
 Kennedy 
 
 Parent 
 
 
 
 Absent with pairs. 
 
 
 
 For 
 
 
 Against 
 
 
 Simpson 
 
 
 England 
 
 ' 
 
 Greig 
 
 
 Spencer 
 
 • 
 
 Morris 
 
 
 Dechene 
 
 
 Flynn 
 
 
 Shehyn 
 
 « 
 
 Hackett 
 
 
 Fitzpatrick