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tawa and was voiced by a Cabinet Minister of the Bennett Government was no idle threat was later abundant-- ly proven. Under its former contract with the MacLaren--Quebec Company the Hydro was obligated to take an additional 27,000 h.p. on July 1, 1935, Imad made any decision on disallow-- ance of the Ontario Act to declare the contracts invalid. "On the same day the Canadian Press sent out a report of meetings being held in Toronto by the Ontario Municipal Electric Association, and certain financial organizations inter-- ested in power bonds. I mention this as indicating the company kept by an Association purporting to represent the power--users of Ontario, and whose utterances are apparently inspired by Mr. T. J. Hannigan, and Mr. Alfred from the financial interests at Ot-- "But the threat of power shortage in the Eastern District was not the' only attack upon the Province of On-- tario in connection with the power| companies. I hold in my hand a, newspaper despatch from the City of| Ottawa, dated April 4, 1935. It reads| as follows: . and was delivered complcts and in place by the Westinghouse Company | on Oct. 15, 1935. A few days after-- ward the Commission cut off its entire | supply from the Gatineau Company, and 60,000 horsopower surged through . the great machine at Chats Falls and | took up the burden of the Eastern | district withou,. so much as the flicker l of a light. In the meantime the Com-- | mission had been active in many direc-- | tions readjusting its complicated elec-- | trical system to the receiving of it.s' supply from its Niagara plants in sub-- | stitution for the powoer which formeorly arrived via the Gatineau line,. For seven years the Hydro System had been adjusting itself on the basis of power from the East, and an almost unbelievable number of minor changes and arrangoments were required for the adjusting of the systom to suppliecs from the West. To outward appear-- ances the Commission was enjoying & period of stalemate and delay, in striking contrast to the almost feverish activity within. The truth is that Hydro was working Mr. Hcpburn into & hitting position, and was preparing to protect itself and those d:p:'ndlngs upon its services from the threatoned | sabotage to these favored customers. _| to pull its switches on paniles. By Oct. 22 taking power from Power Company, the bec Power Company, harnois Company. "The system was now in a position to protect itself, and, accordingly, on Oct. 21 the Commission commenced famcus speech in the City of Toronto, threatening to plunge the Eastern dis-- trict into darkness and to still the wheels of its industry, that the Hydro Commission was at the very moment rushing to completion an addition to its equipment which would make that groat district independent of Quebec power. I trust that the coun-- try will now perseive one reason for the long delay in the much--heralded conferences between the Ontario Gov-- ernment and the power companies and of the numerous and highly publicized prospective confereonces botween the Prime Minister of Quebsce and the Prime Minister of Ontario, which somehow did not take place. "True to schedule, the foundations were laid by the Commission's con-- struction Gspartment, and the groat machine was assembled at Chats Falls, "'Ottawa today saw no problem in Premier Hepburn's query, 'What are they going to invoke to make us pay, under the power contracts en-- tered into by the Ontario Commis-- slion, with the Quebec power com-- €redit, and Ontario will become a new Chicago.' it was declared. *"*Even Mr. Hepburn won't be able to collect his salary, nor will any Ontario public servant, if a serious effort is not made to save him from his own folly, a Cabines Minister said, after confessing he did not know whether or not Mr. Bonnett banks will simply shut off the power com--| we had ceased| Oitawa Valloy| MacLaren--Que-- | and the Beau--' "As intimated in the report, negoti-- ations did continue, and a further meeting was held between the Gov-- ernment and the companies, but the companies were unable to agree among themselves, The Gatineau Company argued, and with some force, that its being the original con-- tract that it should enjoy a preferred position. To this the other companies would not consent, and moreover the companies' management appeared to be quite unable to reach an under-- standing with the holders of their bonds, and it became quite obvious that the companies were unable to alter the agreements because of the terms of their bond mortguges. I have in hand the trust deed of the Mataren--Quebec Power Company, under authority of which that com-- pany issued bonds in the amount of $18,000,000 on the security of a pledge of its assets. The Commission advisos that it is ; holders. _ Obviously, therefore, th in a position to carry on its opera-- | | only way in which the companies coul tions, and give all essential services | jbc relieved from their binding obliga to the power and light usors of the | tions with respect to the agreemen! Province, without dependence on | | as dcfined in their own trust deed power supplicd under the agreements $ | was the cancellation of the agreemen! mentioned in the said Act. : | by the proclamation of the Hyd: "This resolution was published, and,' |Pewer Commission Act, 1935. Th as already stated, by Oct. 22 the Com-- was accordingly done, and at the clos mission had opsnsd the switches on of the conference the Government is Beauharnois, MacLaren and the Ottawa Isued the following statement: Valley Company, and had reduced its ; The Ontario Government this take from Gatin--au to 201,000 horse-- ' afternoon met representatives of the power, Accordingly the power com-- | Quebec power companies, and after panies approached the Government | prolonged negotiations failed to for a conference. A mseeting was held ® | reach any agreement. The proceed-- in Toronto on Oct. 23, 1935, with all _| ings finaily closed in the Premier's four companies represented, and with office, when, in the presence of all the full Cabinet present. The repre-- | members oi the Cabinet and Mr. sentatives of the companies were || Symington, as spokesman for the heard, and at the conclusion of the l Beaubarnois, MacLaren and Ottawa mecting the Prime Minister handed Valley Company, and of Mr. Grau-- out a statement. | stcin of the Gatineau Company, the "As intimated in the report, negoti-- Prime Minister announced that, in ations did continue, and a further view of vhe companies' inability to meeting was held between the GOV~ | submit any offer which was possible ernment and the companies, but the | of accoptance, the Government companies were unable to agree | t ith rer among themselves, The Gatingau ' Xgl:;?tgxgg g?;}a%glgfi Ijl.!;?!m Cipeny , Mpued. ho Wih _ SONCLAI Commission the question of the force, that its being the original con-- f future purchase of power, on the tract that it should enjoy a preferred; disti that more position. To this the other companies | nct understanding No L0 e 7 d than is would not consent, and moreover the power will be purchase comnmanies' management anneared to actually required. "As I stated before, the Conmmission had demonstrated its ability to rely upon the resources of its own System, and on Oct. 19, 1935, the Commission forwarded to the Government, a resolution which reads as follows: Dcoar Mr. Prime Minister: '"The people of Ontario flocked to the support of a courageous Govern-- ment and the answer of the Commis-- sion was a further refusal of addi-- tional deliveries, falling due as fol-- lows: MacLaren--Quebec Power Co., 33,000 h.p.. July 1, 1936. Reauharnois Power Corp., 354,000 h.p., Oct. 1. 1936. MaclLaren--Quebec Power Co., 25,000 h.p.. Nov. 1, 1936. and on June 10, 1935, the press car-- ried the news that the Hydro manage-- ment would refuse to accept the de-- livery. This was the first overt act which conveyed to the financial in-- terests the unwelcome news that the Government of Ontario was in deadly earnest in connection with the power contracts, and actually intended to carry out its resolve to protect the power--users of the Province. Now, it happened by a mere coincidence that about the same time, the Ontario Government offered for sale an issue of Provincial bonds of $15,000,000. It is not my intention to recount at this time the details of the incidents that followed. Sufficient to say that St. James St., combined with Bay St. in an attempt to discipline the Govern-- ment of Ontario for its power policy and to cocrce the administration of the Hydro Commission into submis-- slon to the power barons, by a con-- spiracy to cut off its financial supply. The situation is best described in a statement which Mr. Hepburn issued at the time. Beauhbharnois Power Corp., 67,000 h.p., Oct. 1, 1935. "As everyone knows, the Govern-- ment won, and the credit of the Province stands higher today than ail any time in all history. At a meeting of the Commission held on Friday, Oct. 18, 1935, at which all members of the Commis-- slion were prosont. it was unanimous-- ly decided by the undersigned to forward to you the following recom-- mendaticn: The Hydro--Electric Power Com-- mission of Ontario recommends that the Powor Commission Act, 1935, be forthwith proclaimesd. Marchkh |the conseut of the bondholders, and 'u seems that no machinery was sot up in the trust deeds for enabling a committse to act in such a matter on behalf of the individual holders. It wou'ld appear that unanimous consent of the bondholders was required to an alteration of the agreements which would fundamentally affect either quantity or price, 'The inability of the compani¢es' managements to deal on their own authority was admitted in the second conference between the Government and the power com-- | panies, which took place on Dec. 7, | 1935, and the companies admitted that | they had no authority from the bond-- holders. Obviously, therefore, the | only way in which the companies could | be relieved from their binding obliga-- itions with respect to the agreements | as defined in their own trust deed:s | was the cancellation of the agreements | by the proclamation of the Hydro | Peower Commission Act, 1935. This was accordingly done, and at the close of the conference the Government is-- | sued the following statement: No power is now being received from Beauharnois, MaclLaren Of CS:s Falis, and a limited amount of approximately 85,000 horsepower is being taken from Gatineau on the primary demand, and about 113,000 for steam generation purposes. !~__ It is further hereby declared and agreed that any and all of the said -- agreements reforred to in sub--clause (II) of sub--clause (a) of Section (1) of this Article 4 may from time to time be modified, added to, can-- celled or replaced by the company _ _with the approval of the trustse, provided that the trustee be of the opinion that such modification, amendment, addition, cancellation or replacement will not be preju-- dicial to the interests of the bond-- holders, upon such terms and con-- ditions as the trustes may impose. "I have aiso in hand a trust deed of the Gatince Power Company securing an issue of $37,500,000 of bonds, on a pledge of the company's assets. On Page 98 of this document there appears the following paragraph: The company will not consent or be a party to any cther changes in any of the said contract, except such as in the cpinion of the Board of Directors of the company, expressed in a resolution authorizing or anp-- proving the change, and adopted by a majority of the Board of Directors at a meeting duly held, are im-- portant to the proper administration of the contract or to the relations between the company and the other party to the contract, or are other-- wise in the best interests of the company and the bondholders, and involve no fundamontal reduction from the basis spcecified in the con-- tract in respect to the quantity of power covered thereby or the price of power thereunder. "It is quite obvicus on a reading of these paragraphs that the companies wore not in a position to deal without Continuation of negotiations as to purchase of the Hydro require-- ments must ncecessarily await the conclusion of the Ottawa confer-- ence. In the meantime, conditions as they now exist will continue. The Ontario Government this afternoon met representatives of the Quebec power companies, and after prolonged negotiations failed to