rapidly with construction work on such Hydro-Electric Railway Lines as to do otherwise may impose serious burdens for the future. In that event the sale or issue of the $25,000,000 to $26,000,000 of bonds mentioned may be effected gradually and as conditions warrant. In any event, however, the total amount now in contemplation to be provided on the credit of the Province (subject to the guarantee of the municipalities) is upwards of $55,000,000 or an amount in excess of one-half of the present debt of the Province. With such expenditures made upwards of $105,000,000 will stand invested in Hydro-Electric enterprises and the Central Ontario System, and of this amount approximately $65,000,000 will be represented by undertakings, the exact costs of construction and operation of which are still matters for the future to determine.
"At the present time Canadian securities cannot be sold in the United States except at excessive rates, unless principal and interest be made payable there, which of course, means that exchange would have to be paid on interest and principal payments as they fall due; the sale of new securities in England is out of the question. Accordingly, the probability is that a large proportion of the moneys now necessary for the purpose of the Commission may have to be borrowed in Canada. There can be no objection to this course if the Province is prepared to pay the rates of interest demanded. Money markets are not unlimited under present conditions, however, but they are more restricted than they have been in years. It is, therefore, necessary, so far as the Province is concerned, that it does not put too great a strain upon them if its high present grade ofcredit is to remain unimpaired and it is to continue able to borrow money without payment of too high a rate of interest.
"Under the above conditions and if the Province is to be left in the position where it can support the Commission in a proper manner and still provide for its other requirements at reasonable interest costs, it is essential, in my opinion, that there shall be the most complete confidence between the Government and the Commission to the end that new projects shall not be entered upon — or substantial additions — beyond those of immediate necessity, — be made to existing undertakings, without a complete and frank understanding in respect to each of them. Before new projects be entered upon, also, the Government should, in fairness to the Province, the Commission and the Municipalities, fully satisfy itself that they are based upon such business principles as will ensure that its guarantees are not likely to be called upon; at the same time moneys necessary for the purpose should be financed before construction of such work be commenced or their purchase undertaken.
"Moneys raised by the Province for the purpose of any Department of the Government or for the Commission cannot, under the Audit Act, be paid over without a vote of the Legislature, and when so voted they are strictly limited in amount. Under the Acts regulating its powers the Commission has authority to issue bonds and the Treasurer of the Province is empowered, subject to the approval of the Lieutenant Governor in Council, to guarantee the same, but no limitations are imposed in the Acts with respect to the aggregate amount of bonds which the Commission may issue or the Treasurer of the Province guarantee, with the approval of the Lieutenant Governor in Council. As the liability of the Province is the same to all intents and purposes whether is raises moneys direct or guarantees bonds of any undertaking, in that it must see that payment of all borrowings or guaranteed bonds be made, it is a matter worthy to be considered as to "whether the Legislature should have direct control over all the finances of the Province or the Treasurer of Ontario remain vested with authority to guarantee bonds with the approval of the Lieutenant Governor in Council."
He also refers to the question of higher rates of interest.
It was not until June 11th, 1920, that Sir Adam Beck replied to this letter, wherein he stated that the delay was due to the decision of the Commission to have a special report prepared on the Hydro-Electric Railways, and stated that Mr. W. S. Murray, a consulting engineer of New York, had been employed for the purpose. He intimated to the Premier that much of the information desired by him in his letter would! be found in Mr. Murray's report. In his letter he also referred to the Toronto, Pert Credit, St. Catharines Railway, as to
