C. P. R. Guarantee

If the U. S. Government had guaranteed a $100,000,000 bank loan to American Telephone & Telegraph Co. which remained a secret for months & months and if President Roosevelt had appeared before the Senate Banking & Currency Committee to be cross-examined on such a transaction by rich, radical Senator Couzens, the ensuing commotion in Washington would have been deafening. Yet 500 miles to the north on Parliament Hill, Ottawa, last week, approximately the same set of facts was revealed without any Dominion-shaking uproar. Edward Wentworth Beatty, blunt, ready-tongued head of Canadian Pacific Ry., had testified before the House of Commons Banking & Currency Committee that in order to obtain $60,000,000 in bank loans, he had been forced to ask the Prime Minister for a Government guarantee of principal & interest. Bond issues and old bank loans were coming due and the New York and London capital markets were closed to orthodox financing. Canada has no RFC because Canada has only two railroads (privately-owned Canadian Pacific and government-owned Canadian National*) and only eleven commercial banks. But solemn Rt. Hon. Richard Bedford Bennett has broad powers under The Emergency Relief Act. C. P. R.'s request was granted after it had pledged with the Government $100,000,000 face value of senior securities on which inter- est was being earned even last year. To let C. P. R. go to the wall for lack of a guarantee would have been unthinkable. C. P. R. is not only a $1.000.000.000 railroad but also a Dominion tradition which peopled the prairies. It operates hotels, steamships, telegraph lines.

No good Canadian objected to saving the C. P. R., but the Opposition saw a fine chance to make political hay. Prime Minister Bennett wrote an informal letter to the Bank of Montreal last spring promising a Government guarantee for the C. P. R. loan. On the basis of this letter the bank loan was negotiated. Not until six months later did the Prime Minister find time to draft the necessary Order-in-Council. In this delay the Opposition thought it smelled a rat. Furthermore, the The committee room was jammed and overflowing when Prime Minister Bennett took the witness stand last week. In its nearby chamber the Commons could scarcely scrape a quorum. Quickly the Prime Minister assured the committee that he owned no C. P. R. securities, that there was nothing sinister in his actions. Authority for the guarantee was contained in emergency legislation. The delay in issuing a formal order was only an oversight. Most of Canada quietly took him at his word. Nevertheless, revelation of the Government's new interest in C. P. R. seemed to bring one step nearer that inevitable day when Canadian Pacific and Canadian National will be merged into a single transport system spanning two oceans and a continent.

*Ownership of Canadian National is represented by a single share of stock registered in the name of George V and deposited in Ottawa. His Majesty's investment is a notoriously poor one. Last year C. N. R. operated at a $52,000,000 deficit.

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