Mr. Smith  in  his  Report  took  definite  ground  in  approval  of
past  Government  aid  to  railways  in  money,  credit  and  legislation,
but  supplemented  this  with  regret  that  there  had  not  been  some
official  supervision  of  policy  and  expenditure;  eulogized  the  C.P.R.,
alleged  that  the  Grand  Trunk,  standing  alone  with  better  operating
conditions,  could  become  profitable,  and  declared  that  with  a  return
to  normal  conditions  "and  provided  with  the  capital  necessary  for
equipment  and  for  additional  local  facilities,  this  road  could  work
its  way  out  in  a  reasonable  time."  He  urged  this  strong  argument
against  the  policy  proposed  by  the  Majority  report:  "The  three
great  Canadian  companies  amongst  them  either  own,  lease,  or
control  no  less  than  7,000  miles  of  railway  situated  in  the  United
States. And  some  at  least  of  these  lines  are  necessary  economic
complements  of  the  Canadian  systems. It  is  clearly  impossible
that  the  Dominion  Government  should  be  subjected,  not  only  to
the  regulating  authority  of  the  Interstate  Commerce  Commission
and  the  several  State  Railway  Commissions  of  the  United  States,
but  also  to  the  police  regulations  of  all  the  States  which  these  lines
enter. Technically,  no  doubt,  the  difficulty  could  be  got  over  by
vesting  the  legal  ownership  in  Government  officials  under  their
own   names   as  trustees  for  the   Government. But  the    practical


Transportation  and  War;  Railway  Nationalization    399

fact  would  remain. It  would  in  eflPect  be  the  Canadian  Govern-
ment which  would  be  ordered  by  the  United  States  Interstate  and
State  Commissions  to  alter  its  rates,  and  Canadian  Government
officials  who  would  be  required  by  United  States  law  courts  to  ex-
plain their  actions  and  justify  their  conduct."  He  did  not  believe
in  nationalization  and  could  not  accept  the  general  conclusions  of
his  colleagues :

My  friends  seek  to  avoid  Government  ownership  and  operation — in  fact  condemn
it  as  inadvisable,  but  propose  a  plan  which  contains  so  many  elements  of  danger  in
the  direction  which  is  sought  to  be  avoided  that  I  am  unable  to  join  them. Their
plan  would  add  about  a  billion  dollars  to  the  direct  Debt  of  Canada. The  interest
on  this  is  about  forty  millions,  adding  very  largely  to  Government  expenses. Judging
from  the  experience  Canada  has  had  with  its  Government  railways,  it  is  fair  to  assume
that  this  would  remain  a  permanent  burden. 