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STEPHENSON & CO., CHATHAM, ONT. 1882, I u3 \ > TABLE OF CONTENTS Introduction.. paob. Commission , *" ^ RlPOET 26 Preliminary remarks of Commissioners IZZI ^^ Engineering 29 Surveys ' ^^ do and Location ^^ do and Construction ^' do Analysis of. ®® Detailed Statement of BxDloratinn- o«^ o '" ^® Contracts ^^^^^-P^orations and Surveys, 1871 to 1879 loo Table of Expenditure ^^® Contracts No, 1 to No. 70 in Dumeri^i'oXZr.'.! ^"^^ Nixon Thomas * ^^^ Eort Prances Lock Expenditure .''" ^^^ Cooper, Pairraan&Co "^^^ Contract Letting ^^4 Final Conclusions.... • ^'^^ ■Appendix , ^^^ " 497 ERRATA. (I (1 VOLUME I. Page 193, question 2,9Jl, in answer, instead of " can " read " cannot." ^^^' " '-^'929, " « "harbour "read "hardware." •713, " 10,964, " « u uiere was any material " read " there was not any material." 918, question 13,493, in answer, instead of Gorman " read " Pairman." 918, " 13,493, " .« "Fairman" read -Gorman." VOLUME IL Page 1,290, question 18,501, in answer, instead of " a person you may rely on " read " of a per.son you relied on." 1,334, question 18,936, in question, instead of" $li),000 " read "8216 000." I ^'J^^^' " '^'960, " - "8116,000" read "$216,000." 1,393, " 19,520, in answer, " " ties" read " the." VOLUME in. Page 33, on 8th line, before " receiving " read " of" *' 48, on 16th line, strike out " and yet." " 81, on 22nd line, omit " with " before " plan " and read " on the." 160, in price column opposite contracts 9 and 10, instead of " 53.33 " vead " 53.53. 186, on 23rd line, take out " the " before " Guest & Co," 418, on 13th line, instead of "piles " read "Piles." 423, on 9th line, instead of " l*76i.' " read " 1879." •I INTRODUCTION. The first official step towards the Caiiadian Pacific Railway was talten in 1870. On the 14th August, 18H0, the Colonial Secretary addressed a despatch to the Governor of British Columbia on the subject of the incor- poration of that colony with the Dominion of Canada. Rupert's Land and the North- West Territory being about to be incorporated in the Dominion, the main obstacle in the way of the Imperial Government entertaining the ques- tion had been removed. A legislature drawn from an extended area could hardly fail to deal with questions comprehensively and impartially. The interest of every province of British ^forth America would be advanced by enabling the wealth, credit and intelligence of the whole to be brought to bear on every part. Especially was this true in tho case of internal transit. The difficulties in the way of union, presented by distance, were in this respect an advantage, that they would render easy communication indis- pensable. A copy of this despatch was forwarded on the KJth August, 1869, to His Excellency the Governor-General. Alter some further corres- pondence a delegation from British Columbia came to Ottawa and conferred with the Privy Council The result, an Order-in-Council passed on the 1st July, 1870, submitted certain conditions as a base of jiolitical union, amongst them being the following : — Clause 11. "The GovprntuHiit ol" the Dominion undertake to secure the commonceoient, simultaneously, within two years from the «1ate of the Union, of the construction of a railway from the Paciiic towanis the Rocky Montains, and from such point as may be selected east of the Rocky Mountains towards the Pacific, to connect the sea-board of British Columbia with the railway system of Canada ; and further, to secure the completion of such railway withia ten years from the date of the UnioD. And the Government of British Columbia agree to convey to the Dominion Govern- ment, in trust, to be appropriated in such manner as the Dominion Government may deem it advieable in furtherance of the construction of the said railway, a similar eztenfe of public lands along the line of railway throughout its entire length in British Columbia, not to exceed, however, twenty miles on each side of said line, &i may be appropriated for the same purpose by the Dominion Government from the public lands in the North- West Territories and the Province of Manitoba. Provided that the quantity of land which may be held under preemption right or by Crown grant within the limits of the tract of land in British Columbia to be so conveyed to the Dominion Government, shall be made good to the Dominion from contiguous public lands ; and provided further, that until the^ commencement, within two years, as aforeaaidi from the date of the Union of the conttruo- 1 I' 1:iud the Fubject to your consideration. Coi)ie8 of the correspon- dence shall be laid leforo you, and I feel assured that, should any proposal, calculated to eflfpct the establishment of s'jch communicat'on, on terms advantageous to the Piovince, be «ubmitted to you, it will receive encouragement at your hands." In 1868, Mr Alfred Waddington, a distinguished engineer, and a man deeply interested in British Columbia, brought his views on the subject of the building a Canadian Pacific Railway before the British public. On the 9th of March, 1868, he read a paper before the Royal G-eographical Society, in which Le ably stated the whole case, and with a knowledge of the country so accurate and authoritative as might well excite admiration and surprise. In this paper, and in a pamphlet published shortly afterwards, like a practical man he with facts disposes of the difficulties in the way of € INTEOBUCTION. T the enterprise. The port to which he directed his line was Bute Inlet» his main points being Ottawa, Fort Garry, Yellow Head Pass and Bute Inlet. The passage in which he tabulated the various passes indicated an assured knowledge and well grounded confidence. Until his death Mr. Waddington was full of the idea of building the railway ; and on the 24th of March, 18*71, he and Mr. William Kersteman presented a petition to the Canadian Parliament, praying for an Act of incor- poration under the name of the "Canadian Pacific Railway Company." He had a bill introduced and printed. On the nth of March, 18*70, was read the petition of Charles P. Treadwell and others, praying for an Act of incorporation under the name of the ** Canadian Pacific Railway and Navigation Company," with power to construct a railway from Ottawa through the Red River Territory and Rupert's Land to the Pacific Ocean, at Bute Inlet ; also for the interposition of the House in their behalf, to assist them in obtaining a grant of wild lands in aid of their undertaking. It may be worth here recording that Mr. Allan McDonell and many other projectors fixed on Fucas Straits, or what we now know as Burrard Inlet, as the objective point on the Pacific. ' In January, 1871, the Legislative Council of British Columbia, which had been considering the action taken in the preceding year in Ottawa, adopted an Address to Her Majesty, representing that British Columbia was prepared to enter into the Union with the Dominion of Canada, on terms which were substantially the same as those agreed on between the British Columbia Delegation and the Dominion Privy Council in the pre- vious year. The Address was, on the 23rd January, sent by the Lieutenant Governor of British Columbia to the Governor General of Canada. On the 17th of March, 1871, agreeably to a recommendation of His Excel- lency the Governor General of Canada, a series of resolutions respecting the admission of British Columbia into the Union with Canada were refer- red to a Committee of the Whole House, and on the 80th of the same month the House of Commons of Canada in committee concurred in the terms and conditions of Union set forth in the above-mentioned Address, and resolved that an Address should be presented to Her Majesty under the l4Gth clause of the British North American Act, 1867, to unite British Columbia with the Dominion of Canada on the said terms and conditions. On the Slst the resolutions were reported, read a second time and agreed to, and a Select I INTKODUGTION. Committee was appointed to draw up an Address to Her Majesty, embodying said resolutions, which was passed at the next sitting. On the 16th of May, 1871, the terms of Union between the Dominion of Canada and British Columbia were confirmed by Her Majesty in Council, and union directed to take etiect on the 20th of July, 1871. On the 24th March, 1871, was read a petition from Alfred Waddington and Wm. Kersteman praying lor an act of incorporation under the name of the " Canada Pacific Railway Company." On the 11th of April, 1871, Sir Geo. E. Cartier moved, seconded by Mr. (now Sir Leonard) Ti.ley, that the House resolve itself into a Com- mittee to consider the following resolution : — "That the railway referred to ia the Address to Her Maj^ety concerning the Union of British Columbia with Canada, adopted by this irouse on Saturday the Ist of April inst., should be constructed and worked by private enterjirise and not by the Dominion Govera- roent, and that the public aid to be given to secure th»t undertaking should cors'st of such liberal grants of land, and such subsidy in mon»^y or other aid, not increasing the present rata of taxation, as the Parliament of Canada shall hereafter determine." The House having resolved itself into Committee and the resolution having been reported, was read a second time and agreed to. On the 13th of March, 1871, on a memorandum of the Minister of Public Works recommending the organization of a survey in view of the contemplated extension of the railway system of British North America from the Atlantic to the Pacific, an Order in Council was passed autho- rizing the Minister to organize for survey parties along the route of the proposed Railway Extension (1) between the Valley of the Ottawa and Nipigon ; (2) between Nipigon and Fort Garry ; (3) between Fort Garry and the Rocky Mountains ; (4) between the Rocky Mountains and the Pacific Ocean. For the fiscal year ending 30th June, 1871, the sum of |250,000 was appropriated for the Canadian Pacific Railway, of which the sum of $30,148.32 vras expended. On the 26th of April, 1872, Sir George E. Cartier obtained leave to bring in a bill respecting the Canadian Pacific Railway. The bill was read a first time and ordered for second reading on the following Tuesday. On the 29th of April, 1872, a petition of the Hon. D. L. Macpherson and others was presented praying for an Act ol incorporation under the name of the " Interoceanic Railway Company of Canada," and on the same day a 6 INTRODUCTION. petition of Sir Hugh Allan and others "was presented praying for an Act of incorporation under the name of the " Canada Pacific Railway Company. " ■Bills on the above petitions were introduced on the 30th April and passed through the different stages, and in due course became law. On the 7th of May, 1872, the House resolved itself into Committee to con- sider certain resolutions respecting the Canadian Pacific Railway. The resolutions were recommitted on the 21st and ordered to be reported. There were eight resolutions, the first afl&rming the expediency of providing for the construction of the said railway ; the second relating to the extent between «ome point near Lake Nipissing and some point on the Pacific Ocean, and the sixth fixing the gauge at four feet eight inches and a-half. The thii-d, fourth, fifth, seventh and eighth resolutions were as follows : — *'3* Thbt the wl o'e line of such railway be constructed and worked by one Company, to be approved of and at railway is completed in proportion to the length, difficulty of construction and cost of such portion; the company allowing the cost of the surveys of the line in 1871-72, as { art of such subsidy ; and that the Governor in Council be authorized to raise by loan such sum as may be required to pr singly or together to contruct tuoh railway, tbey may unite as one Company, and buch Agreement may be ma«le with the united Company, or, that if there be no such Company with whom the Government deems it advisable to make such agreement, and there be i)er80ns able and willing to form such Com- pany, the Governor may by charter incorporate them, and make such agreement with the Company so incorporated. " 8. That the Governiuent may further agree with the Company with whom such agree- ment as aforesaid shall have been made, to construe' and work a branch line of railway from flome point on the mam line in Manitoba to some point on the boundary line between that province and the United States, to connect with the system of railways iu the said States, and another branch line from some point on the main line to some point on Lake Superior, in British Te ritory ; and that such branch lines shall be deemed part of the said Canadian Pacific Railway, and a land grant in aid thereof may be made by the Government to such «xtent as may be agreed upon between the Government and the Company, not however to «xoeed 20,000 acres per mile of the branch line in Manitoba, nor 2^,000 acres per mile in the branch line to Lake Superior." A Bill embodying these resolutions became law on the 1st June, 1872, under the title of " An Act respecting the Canadian Pacific Railway, 35 Vic, cap. 71." For the fiscal year ending 30th June, 1872, $260,000 more was appro- priated, which made, together with the balance ol' the previous year, $469,851.68, the expenditure exceeding the appropriation by $19,576.48, having been in effect $489,428.16. On the 31st of Jan , 1873, His Excellency the Governor General in Council approved of a report of a Committee of the Honourable the Privy Council, recommending that, as the Interoceanic Railway ('ompany, and the Canada Pacific Railway Company would not unite, a company should be incorporated under the 15th sec. of the Canadian Pacific Railway Act (35 Vic, cap. 71) by charter, for the construction and working of the Pacific Railway, and further recommending that negotiations for that purpose should be opened v/ith certain gentlemen who were ready to enter into an agreement for the above purpose. On the 5th Feb , 1873, the charter was signed by the Governor General by the provisions of which a company, at the head of which was Sir Hugh Allan, bound themselves to build the railway within ten years from the 20th July, 1871, in consideration of which they were to receive a land grant of 60,000,000 acres, and a subsidy of $30,300,000, payable from time to time in instalments. The Governor General, on the 13th of March, 1873, communicated to the House of Commons, by Message, that he had granted a charter 10 INTRODUCTION. to a body of Canadian (capitalists for the construction of the Canadian Pacific Railvw^ay : said message was also accompanied by papers and corres- l>ondence relating to the subject, and a communication from the Government showing the futile efforts which had been made to bring about an amalga- mation between the Interoceanic Eailway Company of Canada and the Canada Pacific Railway Company. On the 31st of Marc h, 1873, Sir John A. Macdonald laid before the House correspondence on the subject of Kersteman's scheme for the con- struction of the Canadian Pacific Railway. ' In consequence of a motion made on the 2nd of April, 18*73, by the Hon. Lucius Seth Huntington, concerning the Canadian Pacific Railway, and which alleged amongst other things that he believed that an under- standing had been entered into between the Government and gentlemen named by him, concerning the contract for the construction of the said railway, which was negatived ; The Right Hon. Sir John Macdonald, on the 8th of April, moved for a Committee to investigate and report on the several matters contained in Mr. Huntington's motion. The motion was carried. A bill enabling the Committee to receive evidence under oath having been disallowed. His Excellency the Governor General wrote to Sir John Macdonald suggecting a Royal Commission in order to get over the diffi- culty. On the 18th of August Parliament met and was prorogued. On the 14th of August a Royal Commission was issued to the Hon. Charles Dewey Day, the Hon. Antoine Polette, and James Robert Gowan, Esq., to enquire into the matters and statements made by the Hon. Lucius Seth Huntinsrton. The Commission met at Ottawa on the 18th of August, 1873, and closed its sittings on the 1st of October. The terms of the Commission did not require the Commissioners to express their opinion. In their report they describe the course of the enquiry, and point to the evidence contained in thirty-six depositions. On the 23rd of October, 1873, Parliament met. The Speech from the Throne contained these words : " The Canft'li'in Pacific Compauy, to whom a Royal Chapter was granted, ba^e, I regret to My, been unable to make the financial agreements necessary for the construction of that INTRODUCTION. It osed not they great undertaking. They have, therefore, executed a surrpn ler of their charter, which has be<>n accepted by me. You will, I trunt, feel yourselves called upon to take steps to secure the early commenceinent and vigorous prosecution of that railway, end thus to carry out Id good faith the arrangement made with the Province of British Columbia. A measure for this purpose will be submitted for your consideration." On the Tth of November, the Ministry having resigned during the debate on the Address, Parliament was prorogued. The amount spent on the Pacific Railway for 18*72-73 was $501,818.44, as per Public Accounts, the sum appropriated being |600,000. Parliament met on the 26th of March, 1874. In the Speech from the Throne the Members of the Senate and House of Commons were told : " The enactment of J 872, respecting the Canadian Pacific Railway, having ftiiled to secure the prosecution of that great enterpri3<>, you will be called upon to ronsider what plan will best and most speedily provide the means of tninscontinental comnuinication with British Columbia. A report of the Chief Engineer will l)e laid before you, showing what progress was made during the past year in the surveys connected with the proposed line." On the 28th of April, Mr. (now Sir TJichard) Cartwright, seconded by the Hon. Mr. Dorion, moved the House into Committee to consider resolu- tions affirming the expediency of authorizing the raising, by way of loan, for the purpose of the construction of the Canadian Pacific Railway and the improvement and enlargement of the canals, a sum of money not exce(»ding .£8,000,000 sterling. The resolutions w^cre agreed to on the 5th of May, and a bill was introduced founded on the same, which became law. (37 Vic, cap. 2 ) During the session of 1874 an Act was passed intituled "An Act to provide for the construction of the Canadian Pacific Railway " (37 Vic, c. 14) which provided that the railway might })e built as a Government work or by a subsidized company, ihe line was by this Act divided into four sections and two branches: the branches from the eastern terminus to Georgian Bay, and from Fort Garry to Pembina ; the four sections : (1) From Lake Nipissing to Lake Superior ; (2) from Lake Superior to Red River ; (3) from Red River to some point betweeiL Fort Edmonton and the foot of the Rocky Mountains ; (4) from the western terminus of the third section to the Pacific. As soon as practicable, after the location of the line should be determined on, a line of electric telegraph was to be constructed in advance of the railway and branches, along their whole extent respectively. Should the work be built by a company or companies,. 13 INTRODUCTION. $10,000 per mile in monthly instalments, as the work progressed, was to have ])een paid, and land was to have been given, not exceeding 20,000 acres, for each mile in alternate sections of twenty square miles along the line of the railway or at convenient distance from it. Section 11 provided that no contract for any portion of the main line should be l)indin<^ until it should have been laid before the House for a month, or should have been approved by a resolution of the House. Section 12 provided for building the line as a Government work. In this case the construction was to have been let out by contracts offered to public competition. Sections 13 and 16 provided for the building of the branches either as a public or by private enterprise Section 1 4 provided for the granting of a ])onus or bonuses to existing lines, not exceeding |12,000 per mile so as to secure the construction of the bran<'h lines extending from the eastern terminus of the Canadian Pacific Railway to connect with existing or proposed lines of railway. The expenditure on the railway for ISlS-li was $310,224 88, the amount authorized being |538,181 50. British Columbia, feeling that she had some ground of grievance because of the non-fulfilment of the conditions of Union, Mr. Edgar was in February, 1874, sent to British Columbia. His mission being unsuccessful he was recalled. Mr. "Walkem proceeded to London as a delegate from British Columbia. The result of much negotiation was that Lord Car- narvon suggested that both Governments should accept him as arbitrator. In an Order in Council passed on the 23rd July, 1874, in which the Committee of Council "advise that Lord Carnarvon be informed they would gladly submit the question to him, whether the exertions of the Oovernment, the diligence shown and the ofiers made have, or have not, been fair and just and in accordance with the spirit of the agreement," negotiations were prolonged, and in a despatch to the Earl of Dufferin, dated the I7th November, 1874, Lord Carnarvon announced the conclusions at which he had arrived, namely : " 1. That the railway from Esquimalt to Nanaimo Bhall becommenoed as soon as posinble .Mid completed with all praotioable despatch. *' 2. That the surveys on the mainland sb&U be pushed on with the utmost, vigour. On this point, after considering ihe representations of your Ministers, I fear that I have no alter- native but to rely, as I do most fully and readily, upon their assurances that no legitimate INTRODUCTION. i;j I possible knr. On 10 alter- zitimate ■I ! J effort or expense will be spared, first to determine the best route for the lino, and secondly, to proceed with the details of the engineerins work. It would be dista'teful to me. if indeed, it were not impossible to prescribe strictly any minimum of time or expenditure with regard to work of so uncertain a nature; but hHppily, it is equally impossible for me to doubt that your Qovernment will loyally do its best in every way to accelerate the completion of a duty left freely to its sense of honour and Justice. " 3. That the waggon road nnd telegraph line shall be immediately constructed. There seems here to be some di£r«)rence of opinion as to the &p 'cial value to the Province of the undertaking to complete these two works ; but after considering what has been said, 1 am of opinion that they should both be proceeded with at once, as is indeed suggested by your Ministers. "4. Thftt $2,000,000 a year, and not $1,500,000, shall be the minimum expenditure on railway works within the Province from the date tit which the surveys are sufficiently com* pleted to enable that amount to be expended on construction. In naming tbe amount I understand that, it being alike the interest and wish of the Dominion Qovernment to urge on with all speed the completion of the works now to b« undertaken the annual expenditure will be as much in excess of the minimum of $2,000,000 as in any year may be found prac* ticaMe. •'.5. Lastly, that on or before the Slst of December, 1890, the railway .shall be completed and open for traffic from the Pacific seaboard to a point at the western end of Lake Superior at which it will fall into connection with existing lines of railway through a portion of the United States, and also with the navigation on Canadian waters. To proceed at present with the remainder of the lailway extending, by the country northward of Lake Superior, to the existing Canadian lines, ought not, in my opinion, to be required, and the time for under^ taking that work must be determined by the developrnent of settlement and the changing circumstances of the country. The day is, bowever, I hope not very d'stwnl wiieii a con- tinuous line of railway through Canadian territory will be practicable, and I therefore lojfc upon this portion of the scheme as postponed rather than abandoned," '.' Subsequently, (20th Sept., 18*75) an Order in Council was passed respecting terms with British Columbia, which led to further negotiations On the 3rd March, 1876, Mr. Mackenzie laid before the House articles of agreement entered into between Asa Belknop Foster and Her Majesty Queen Victoria, represented by the Minister of Public Works of Canada, for the construction and working of the Georgian Bay Branch of the Canadiau Pacific Railway, bearing date the 27th Feb., 1875. On the 13th March, 1875, upon the question that this House doth concur with the Committee (of Supply) in the following resolution : — "That a sum not exceeding $6,250,000 be granted to tier Majesty to defray expenpes of Pacific Railway, viz. :— Telegraph line and construction of roadway $1,000,000 j tteel rails and fastenings, $2,000,000; Pembina Branch, $500,000; Port Sbebandowan, $5U0,000; Georgian Bay Branch, $500,000; Esquimalt to Nanaimo, $500,000; Mainland to Colurabii, $250,000; Locks at Fort Francis, $150,000; Fainy Lake and Shebnndowan, $540,000; Manitoba oni 14 INTKODUCTION. SaskatchewHii, $50,000; Stenmerii, Rivfr Saskatchewan, and improvementB in rapids, $60,000 ; Lake of the Woods to Red River, $500,000. for the year ending 30th June, 1876." Mr. (now Sir Charles) Tupper moved in amendment, seconded by Mr. Pope, that the following words be added : — "ThRt iu view of the engngementa entered into during the past Session between the Government of Canada and the Imperial Government and British Columbia, to build a railway without delay from Nanaimo to Esquimau, on Vancouver Island ; to expend not less than $2,000,00: por annum, in British Columbia, on the Canadian Pacific Railway, and to complete the constt'ucllon of the line fiom the Pacific Ocean t-y the shores of Lake Superior in 15 years; this ilouBo is oi'o]>inion that n? (inio should be lost in beginning the eastern portion of the CanB(U-\n Pncitic Railway, and constructing it flfl rnpidly as i» consistent, with a due regard to ecorouiy, from a point fixed by Parliament at a point near to and south of Lake >'ij>is«ing, westward to Lake Nepigon, and thence to Red River, commencing at Lake Nepigon, and working cafatward and westward, and that Government should employ the available funds of the Dominion in the first place in the completion of that great national work. A continuous railway on Canadian leiritory by the shortest route from the Atlantic to the Pacific Ocean." Which amendment passed in the negative; and the question being again proposed, Mr. Masson moved an amendment which was withdrawn, w^hen the resolution wa.s agreed to. 4 On the 4th of November, 1874, an Order-in-Coancil was passed advising that- a subsidy of $12,000 per mile be granted to the Canada Central Rail- way Company under the terras of the Act 37 Vic, cap. 14, providing for the construction of the Canadian Pacific Railway, said grant to aid in construct- ing their line from Douglas west to the eastern end of the branch railway proposed to be built from G-eorgian Bay. On the 13th of March, 1875, Mr. Mackenzie moved the ratification of the said Order ; Mr. Masson moving an amendment to the effect that no con- tract should be entered into with any company for the construction of the Georgian Bay Branch of the Canadian Pacific Railway, nor any subsidy granted until a thorough and complete instrumental survey should have been made of the route proposed. The amendment was defeated, and the main question was resolved in the affirmative. On the 31st March, 1875, Mr. (now Sir Charles) Tupper moved an address to His Excellency, praying for copies of specifications and contracts for any portion of the Canadian Pacific Railway telegraph, with corres- pondence. Mr. Bowell moved an amendment to add the words : " and this House regrets that contracts have been made by the Government for the construe- INTROnUCTIOX. 15 tion of th*' line of telegraph fVoiii Lako Superior to Cash Crock, before the location ol" the Canadian Pacific Railway has been deti^rmined on." To this amendment, on the 2ud April, Mr. Kirkpatrick moved in amendment to add the words: ''contrary to the Statute authorizing the construction of the said telegraph line, and therefore this House do«»8 not approve ot the said contracts." Both amendments i)assed in the negative. Then the main question having been put, th^' address was ordered to be presented. On the 3rd of April, 1875, Mi Mackenzie laid before the House the contracts 13 and 14, in connection with the Canadian Pacitic Railway, lor the grading and bridging from Red River to Lake of the Woods, con- taining bills of works, general specifications and conditions of contract ; and for the grading and bridging from Fort William to Shebandowan. On the 3rd of April, 1875, Hon. Mr. Mackenzie moved that the House ratify the contract proposed to be entered into with Messrs. Siftoii iSc Ward, for that portion of the Pai^ific Railway extending from Fort William to Shebandowan, a distance of about forty- five miles, at a cost of |!406,194. Mr. (now Sir Charles) Tupper, seconded by Sir John Macdonald, moved that the consideration of the approval of the said contract be postponed to this day three months, which was pa.ssed in the negative after a division. The House then divided on the main question, when it i)assed in the affirmative. > On the same day the Government were authorized to enter into a con- tract, during the recess, for the construction of that portion of the Pacific Railway from Rat Portage to Cross Lake, thirty-seven miles. The expenditure on the railway for 1874-75 was $1,5 40,241.67, the amount authorized being !|;2,6 50,000. On the 20th of September, 1875, an Order-in-Council was passed, in which it was stated that the Committee of Council had had under consideration the difficulties arising out of the agreement made in 1871 for the construction of the Canadian Pacific Railway, the conditions of which were quite imprac- ticable of fulfilment ; that it had been agreed that after location, $2,000,000 should be expended yearly upon construction in British Columbia, and that a railway from Esquimalt to Nanaimo should be built ; that every step in the negotiations leading to this result was subject to the condition that the existing rates of taxes should not be increased ; that there were obvious ii; INTIJODUCTION'. reasons, under ordinary circumstances, against the Canadian Government building a line from Nanaimo to Esquimalt, which really formed no part of the line of the Canadian Pacific Railway, and was purely a local work ; that the bill for building this railway was thrown out in the Senate ; that it was reasonable British Columbia should herself construct this work, and that $750,009 would be a liberal compensation for not going on with the work. On the Gth of December, 1875, the Privy Council of British Columbia de<'lared that they dissented from the views of the Order-in-Council described above, and refused the offer made. Early in 1870, the members of the Legislative Assembly of the Province of Lritish Columbia, in session assembled, petitioned Her Majesty, reciting the petition of the British Columbia Government of 1874, the Carnarvon settlement, the assent as they alleged thereto of the Dominion Government, and stating that the Dominion Government had "almost wholly" disregarded the terms of the said settlement, the promised commencement of the railway not having taken place either on the island or on the main- land, nor had the agreement in the settlement for the immediate construc- tion of the Provincial section of the Trans-( itinental Telegraph Line been carried out. The Minute of the Privy Council of Canada of the 20th September, 1875, is then referred to, and it is pointed out that the Dominion Government in the said Minute affirmed that the section of the railway on Vancouver Island is not part of the Pasific Railway, but was offered to British Columbia in comi>ensation for local losses caused by delays in the construction of the Pacific Railway, whereas no such offer was ever made or even suggested to the Province of British Columbia ; " that the Domin- ion Government state in their Minute of the 20th September last, that it cannot be too clearly understood that they will not abide by or observe the agreements in the settlement for an annual railway expenditure of $2,000,- 000 in the Province, and for the completion of the railway from the Pacific to Lake Superior by the year 1890, if the performance of such agreements should interfere with the conditions of a resolution passed by the House of Commons in 1871, after our terms of Union had been assented to by that body. The terms of this resolution were in effect that the railway should be constructed and worked by private enterprise and not by the Dominion. Government ; and that subsidies in land and moneys to an extent that would not increase the rate of Dominion taxation, should be given in aid of the work by the Government ;" but in 1874 the terms of said resolution INTIIODUCTIO.V. Government lied no part local work ; enato ; that s work, and on with the h Cohimbia r-in-Council iibly of the tioned Her enton874, 10 Dominion lost wholly" enceiaent of I the main- ite construc- h Line been )f the 20th le Dominion he railway las offered to el ays in the s ever made the Domin- last, that it observe the B of $2,000,- the Pacific asjcreements le House of to by that vay should e Dominion extent that jiven in aid i resolution were abandoned, r;)te of tnxation was incifa^rtl, iuid iln* toiistruction of* Tailwiiy undertaken by Ciovernincnt ; the oiler of sTWi.OOO n ^ cii-^li honus for forego! ncf the lixed term for romplctioii <>[ ili ' Dvilway aiil Ihi* a-iree- month for a yearly exix'nditnre, and the refu-al ol the ollcv luiviiiu;' )> 'cn si-t, out, the oris'inal terms of Union ar»^ recited, aiul th- prayc;- asks dial the Dominion Government bo moved to iinmiHliatrly «;\ny t>ut llic ici-ius ol the ('arvarnon settlement. On the 13th of March, 1S7G, an C)nler-iii-('.»iin Govcriim sit and F. ilarnard, Esq., in relation to the construction of th • sai'l Jin ^ of L"lt»i>'rapli. On the 7th of April, 1876, Mr. Young- report-d from \]\v Committee of Supply, s'.iveral resolutions which read as follows ; — "1. /ieso/y«f, Tlifit a sum not e.xceeding two !ui!li)ii pii;:'it li'iiilr-^l an I {l:-^ tliousand dollars be granted to Hor Majesty, lo defray exiionses of J',.ci!iv! Jlailwuy for tiio yeir ending SOlh June. 1S77. "2. liexolved, Th&i B. suui nut exceeding liv«< humlivd tlion-iitjd uollin l.o granted lo Her Majesty, to defray expenses of Pacific Kail.vuy Survey aul Eti^itieerin.;, for t'lo year eudinjf 30th June, 1877. The first resolution being* read a second time, Mr. Ross (Middlesex) moved, seconded by Mr. Sinclair, and the question being put, that the words "and while granting- tliis sum, this llouso desires to record its view that the arrangements for tlie co)istruction of' the Canadian Pacific Railway, should be such as llu^ r;\souvces of th" country will permit without increasing the existing rate-; of tax.it ion,"' be a.dded to the end thereof ; ttie House divided : and tlif' nam vs In'ing called for, the numbers were, yeas 149 ; nays 10. On the 8th of April, 1876, the second resolution being read a second time Mr. Plumb moved, seconded by Mr. Kirkpatrick, and the question being" put, that the words "that while concurring in this vote, this House desires IS IXTRODUCTIOX. to record its opinion that tlit? couiilry is pledged to the construction of the Pacilic IJuilwiiy in its aiviv Mui'iit with British Columbia, and that it is in accordance with that agr.'enicnt, and with tlie ])ubli(' interest, that the surveys tsliould bo c-uer^elically proceeded witli, in order that the construc- tion oi' the road ,sliould be prcsecuted us rapidly as the resources of the country m ill piTUiit without adding to the burdens of taxation," be added at the end of the i^aid resolution ; the House divided : and the numbers were, yeas 36 ; nays 80. So it passed in the nejjative. Tlitt said resolution was then agreed to. On the 11th of April, on motion of Hon. Alex. Mackcjizie, seconded by Mr. Blake, " Jieso/ved, Tbat tbo Governiu^nt he authorized to enter into contracts during the recess ■with partia.-* son»- ag in the lowest available tenders for the works of construction of the following )[oniori8 o!' th« Ctttusdian Pac.ilic Railway, viz. : — From Fort William westward towar'^8 Lie (l-^s Mdle ]jxce, lui.l ll>e croiKing of Steel River; from Rat Fortage to Cross Lake." Expenditure ISTS-H, ^ii3,oi(;,o67.0G ; authorized, $6,250,000. On the 23th Fe])ruary, 1877, in consequence of motions by Mr. McCarthy and ^Ir. Kirkpctriclc, an address was ordered to be presented to His Excellency the Governor G-eneral asking for i^apcrs relative to the construction of tli'^ Georgian Bay Branch and specially for a statement of the service or services lor which the sum of $101),000.50 had been paid to A. B Foster on aceount ol that contract ; also for evidence that the Canada Central liailway Company had provided sufficient means with the Government bonus to set ure the completion of the line on or before .Tany., 1877 ; also for statemc^nls ;is 1o payments and the value of rails delivered at any point of the said line, ^Vc. On the 2Gth March, 1877, Mr. ^Mackenzie laid on the table copies of contracts entered into for construction of the Canadian Pacific Railway. On the 10th ol April, 1S77, on the motion that Mr. Speaker leave the chair, Mr. Kirkpatrick moved an amendment condemning as nnconstitu- tiomd and a violation of the Act ol" 1874 the building of Fort Frances Lock, as a work of the Dominion, by time work. The motion passed in the negative. On the 21st of Ai ril, on the motion that the Speaker leave the chair, Mr. Tupper moved that that House could not approve ot the course taken by the Government with respect to the Canadian Paoific Railway, which, passed in the negative on the 24th. INTKOnUCTIOX. ID tion of the hat it is in st, that the e coiistruc- LTces of the " be added nbers were, econded by >ing the recess 'uction of tb© iam westward ,o Cross Lake." >ns by Mr. ^resented to tive to the tatement of een paid to e that the IS with the efore Jany., s delivered copies of Railway. r leave the iiiieonstitu- ;ices Lock, sod ill the 3 the chair, ■)urse taken ray, which. The expenditure on the raihvoy durinij;- 1870-77 was $1,001,149.97, !5(3,310,000 being authorized. On the 5th of March, 1878, Mr. Mackenzie presented a return to an address for a copy of any reports in possession of ihe Grovernment made in 1877 by Admiral do Horsey respecting the port or ports most suitable for a terminus of the Canadian Pacific Railway in British Columbia, with cor- respondence. On the 4th of April, 1878, a bill to amend " ihe Canadian Pacific Rail- Wiiy Act of 1874*' was read a second time. This l)il] was amended in the tSenate, and the Comuions not agreeing with the amendments of the Senate it dropped. On the l&th April, 1878, an Order in Council was passed which, having recited the (reoraiiiu Bay Branch contract with Mr. 'Foster in 1874, and its cancellation in 1876 ; the Order in Council of the 4th of November, 1874. granting a su])sidy to the Canada Central R lilway, the advised pause in the work in consequence of the lapse of the Oeorgian Bay Branch con- tract; certain reports .• a letter from the Canada Central Company, dated the 10th Feb., JST7, proposing to build the westward extension from Pembrok'? to the south-east corner of Lake Nipi.ssing, for a total bonus of ^1,440,000; a letter from Mr. Fleming saying his information ivould go to show that a line with mort.' favorable gradients might 1)e obtained on the route irow proposed to In* adopted by the Canada Central, and that it would serve the interests of llie country fully as well, as the line to which it w.is a pro]>osed alternative; a resolution of the House of As.sembl^ of the r)ovini e of Qui'bec, in favour ol a junction at Pem])roke ; having recited these, the Order in Council recomnuMided that the proposal of the Canada Central should be accepted, the Company within three months from the ratiiication of the Order in Coujiril, to satisfy the Minister of Public "Works that they had entered into a 6wA/// AVA' contract for the building of ihe Raihvay. This Order in Council having been laid before the House, on the 24th of April, on the 7th of May, on the motion of Mr. Mackenzie, was ratilied. The expenditure on the Pacilic Railway during 1877-8, was $2,228,- 373. 13, the sum authorized being $:2,C79,900. On the 13th March, 1879, Mr. (now Sir Charles) Tupper laid before the House — INTRODUCTION. I ! " Articles of Agreement entered into between Jrenoy, Cbarlebois aod Flood, and Her Majesty Queen Victoiia. represented by the Minister of Public Works of Canada, to do the excavation, ttack-Ia} ing, etc., of the C-ieorgian Bay Branch of the Canadian Pacific Railway, from Station O, South lliver, to French liiver, oO miles (37th contract). ' Also, articles of agreement entered into between Kavanagh, Murphy A: Upper, and iter Majesty Queen Victoria, represented by the Minister of Public Works of Canada, to do excavation, grading, track-laying, etc,, of part of the Pembina Brbncb, between St. Bonifaoe and Emerson, Canadian Pacific Hallway (33rd contract). " Also, agreement by Joseph "Whitehead (13th Sept., 1S78,) to make embankments on Sifton, Ward & Co.'s contract, No. J 4, Canadian Pacific Railway, at a less cost to Government than per contract of Sifton, Ward & Co., No. 4572, accepted by the Minister cf Public Works, 8th October, 1878, and further agreement by Joseph Whitehead. Also, articles of agreement entered into between Gouin, Murphy A- Upper, and Her Majesty Queen Victoria, rei^resenteu by the Minister of Public Works of Canada, to build a ten stall engine bouse on the station ground at Selkirk, Manitoba, for the Pembina Branch of the Canadian Pacific Railway (40th contract). And also, agreement entered into between George Stephen and Her Majesly Q'leen Victoria, represented by the Minister of I'ublic Works of Canada, refpecting running powers over the Pembina Branch, Canadian Pacific Railway. On the 21st March. 1879, Mr. Tupper presented : — "Articles of agreement entered into between Fras?r, Mixnning & Co. and Ker Majesty Queen Victoria, represented by the Minister of Public Works of Canada, to do the excava- tion, grading, bridging ballasting, traak-Uying, iV. 3., from Eagle River to Keewatin, G7 miles, on the line of the Canadian Pacitic Railway (B) contract Xo. 42. " Also, articles oi agreement entered into between Thomas Marks, Jobn Ginty, P. Purcell and H. Ryan and Her Mpjesty Queen Victoria, represented by the Minister of Public Works of Canada, to do the excavation, grading, bridging', ballusting, tr-ick-laying, \-c., i'rom English River to Eagle River, 118 miles, on the line of the Canadian Pacific Railway (A). " And, also, schedules offenders, for contracts, Canadian Pacitic Railway, vi/.. :— Schedule A, from English River to Eagle iJiver, MS miles : schon'ule B, from Kig'o River to Keewatin, 67 miles, and schedule C, from English IMver to Keewatm, ISo miles.' On the 30th of April, 1870, Mr. Tupper, Lvid belbre the House :— "Agreement between Joseph Upper, Benjamin W, Folger, James Swift and Matthew H. Folger, under the name and firm of • Jo^^ph Upper & Co,' and Her Majesty the Queen, represented by the Minister of Public \\'ork8 of Canada, to equip and work the Pembina branch of the Canadian Pacific ix'ailway, in lieu of Government, under agreement of 3rd August, 1S7S, of George Stephen and St. Paul A Pacilic li'aihray Company." On the 8th of May, 1879, several resolutions were reported from Com- mittee of Supply ior Pacific Railway purposes, the total vote being* $5,910,000 On the lOth of May, 1879, Mr. Tupper proposed the tions ; — following resolu- INTRODUCTION. 21 lood, and Her idn, to do the icific Railway, fe Upper, and [y'anada, to do 1 St. Boniface ankments on Government ['ublic Works, 3cr, and Her ida, to build a lina Branch of ajfsly Q'leon nning powers Ker Majesty o the excava- itin, 07 milee, ty, P. Purcell ubiic Works rom English -Schedule to Iveewatin, e : — nd Mdtthew the Queen, ;ho Pembina meut of 3rd loiu Com- atc being' liX re«olu- « I . Resolved, That engagements have been entered into with British Columbia as a -condition of Union with Canada, that a line of railway to connect the Atlantic with the Pacilic shall be constructed with all practical speed. " 2. Resolved, Tbat the Pacific Railway would form a great Imperial highway across the continent of America, entirely on British soil, and would provide a new and important route from England to Australia, to India and to all the dependencies oi Qreat Britain in the Pacific ; as also to Chini^ and Japan. " 3. Resolved, That reports from the Mother Country set forth an unprecedented state of enforced idleness of the working classes, and the possibility of a scheme of relief on a largo scale being found indispensable to alleviate destitution. " 4. Resolved, That the construction of the Pacific Railway would afford immediate employment to numbers of workmen, and would open up vast tracts ot fertile land for occupation, and thus would form a ready outlet for the over-populated districts of Great Britain and other European rountries. " 5. Resohed, That it is obvious that it would be of general advantage to find an outlet for the redundant population of the Mother Country within the Empire, and thus build up flourishing cobnies on British soil, instead of directing a stream of immigration from p]ngland to foreign countries. " G. Resolved, Tbat in view of the importance of keeping good faith with British Columbia, and complettLg the consolidation of the Confederation of the Province) in British North America, and for the purpose of extending relief to the unemployed working classes of Great Britain, and afibrding them permanent homes on British soil; and in viev of the national character of the undertaking, the Ciovernm nt of Canada is authorized swi directed to use its best etibrts to secuie the co-operation of the Imperial Government in this great undertaking, and obtain further aid by guarantee or otherwise in the construction of this great national work. "7. Resolved, That it is further expedient to provide (1.) That one bun Ired million acres of land and all the mineral they contain, be appropriated for the purposes of construct- ing the Canadian Pacific Railway. (2.) That the land be vested in CotumissO-ifrs to be specially appointed, and that the Imperial Government be rei)resented on the Commission' <3.) That all the ungranted land within twenty miles of the line of the Canadian Pacific Railway belonging to the Dominion be vested in such Commission ; snd that when the lands alcijg the line of the Canadian Pacific Railway are not of fair average quality for settlement, a corresponding quantity of lands of fair quality shall be appropriated in other parts of the country, to the extent in all of 100,000,000 acres. (4.) That said Commissioners be authorized to sell, from time to time, any portions of such land at a price to be fixed by the Governor-in Council on their recommendation at the rate of not less than $2 per acre ; and that they rnsy be required to invest the proceeds of such sales in Canadian Government securities, to be held exclusively for the purpose of defraying the cost of the construction of the Canadian Pacific Railway, " 8. Resolved, Tbat the withdrawal for sale and settlement of lands for twenty miles on each side of the located line of the Pacific Railway, has, in part, had the efiect of throwing settlements south and west of Lake Manitoba. " 9. Resolved, That in the existing state of things, it is desirable to combine the promo- tion of colonization with railway construction on the Canadian Pacific Railway west of R«d Birer. ■n 22 INTRO DLXTION. "10. Itesoheil, Tbut lie (ioverntnent La authorized and diiecled to locate a portion of the Canadian PaciKc Ivailwny from the Hed iiiver westerly, running to the south of Lake Manitoba, with a branch to Wiiinineg ; and if they deem it advisable to enter into a contract for expending a sum not oxceediog $1,000,000 in conslructiQg the said railway without pro- viouBly subnoilliDg the contracts to Parliament. " 11. llesohed. That it is expedient to make further explorations in the Peace and Pine Biver districtB, and other soctions uP the country not y(>t examined, in order to ascertain the feasibility of a line through tie largest extent of fertile territory, before beginning the work of construction in British Columbia. •• 52. Resolved. That ia the oiiinion of the Uouse the eelection of the Biirrard Inlet ter minus was premature. "13. Resolved. That it is neceFsary to keep good faith with British Columbia, and com- mence the construction of the railway in that province as early as is practicable. " 14. Resolved, That the (Jovernment be authorized and directed to make such further ezplorationa as they may deem necessary for the said purpose, and so scon as they linally selected and located the line, to enter into contracts for constructing a portion of the same, not exceeding 125 miles, without the further sanction of Parliament, so that the woak of con- struction may, at latest, be commenced during the piesent aeii on, and thereafter be vigour- oualy prosecuted." On the 15th of May, 1879, assent was ohon to an Act to amend " the Canadian Pacific liailway Act, 1874," embodying the main features of these resolutions. On the same day assent was given to another amending Act, which would enable the Governor-in-Council to make certain arranuements as to the Peml)ina Branch. The expenditure for 1878-79 was i|-?,240,285.47, the amount authorized being 12,949,700. On the 16th Feby., 1880, Sir Charles Tupper laid before the House:— "Ai tides of agreement entered into hc-twcen John lijan and Uer Majesty Queeu' Vicloiia, represented by the Ministtr of Kailways and Canals, to do the excavation, grading,, bridginj;, track-laying, ballasting, station building, Ac, on the Colonization Railway, narth- wosterly I'loni "Winnipeg, Manitoba, about 100 miles, Canadian Pacific Riilway. "Also, articles of agreement entered into between Andrew Onderdonk and Her Majesty Queen Victoria, re])rpsented by the Minister of Railways and Canals, to do the excavation,, grading, bridging, tracklnying, ballasting, <.Vc , from Emory's Bar to Boston Bar, British Columbia, about 29 miles (Section A) Canadian Pacitio Railway. " Also, article! of agreement entered into between Andrew Onderdonk and Her Mpjeaty Queen Victoria, represented by the Minister of Railways and Canals, to do the excavation^ grading, bridging, track-laying, ballasting, if c, between Lytton and Junction Flat, about lix miles above Spence's Bridge on River Thompson, British Columbia, about 2S^ miles in length potion P) Canadian Facifio Railway. INTIJODUCTIOX. 23 a portion of ith of Lake 9 a contract vilboub pro- ce and Pine Bcertain the ag the work ird Inlet ter i, and com- iuch further they finally 9f the same, If oak of con • r be vigour- end " the ?s of those ot, wliich L'lits as to uthorized ouse: — esty Queen' on, grading^ way, north- lor Majesty excavation,, tar, British [er Mpjesty xcavatioa^ ;, about aix 8 in length * " Aho, articlt^a of Hcrerini-ut entered into betweon Kyan, Grolwin it Oi. and Her ?Mpjo3ty Queen Victoiin, represented by the Minister of K'ulwaya and Canal', to do the ^•xcavatioii, grading, bridging, track-laying, ballasting, dc , between Bostm liiir and I.ytton, Jritiih Columbia, about 29 miles (Section B) Canadian Pacifio Hnilw.»y. •' A!ao, articles of p^jreenient entered into betweon Andrew Onderdonk snl Her Majesty MQueen Victoria, represented by tlio Minister of Railways and Caofils, to do t*ie excavation, Mgradintr, bridging, track-laying, ballasting, itc, between Junction l-lat snrl Savcna's Ferry IBritish Columbia, about 40^ miles in length (Section D) Canadian I'aoilic liailwHy. "Also, articles of agteement entered into between Miller Bros, it Mitchell and Her llajesty Queen Victoria, represented by the Minister of Railways anil Ctmils, to i*upi)ly 700 tons of railway spikes, delivered 400 tons at Fort William and ;J Grbrtino. Whereas, it appears from a Heport of our Minister of Railways and Canals of Canada^ bearing date on or about the 20th day of May, in the year of Our Lord one thou.'and eight hundred and eighty, among other things that an expenditure has been incurred from the month of April in tho year of Our I^rd one thouBand eight hundred and sfventy-one, down to the thirty-firat day of Deceoiber in tbe yew of Our Lord one thousand eight hundred and seventy-nine, and charged to the account of thx) Cai^adian Pacific Railway, r mounting to the sum of fourton millions two hundred and eighty-seven thousand eight hundred and twenty, four dcUnrs. That two changes in the Government of Canada have takpn plaoe during that period ; that important questions have arisen and become the buhject of di^cus'^ion, both in •nd out of the rarliament of Canada, touching the propriety of and reHpoiisibi.'ity for, large expenditures connected with this work. That nlleg-itious have been made 'i<; to divers irregu- larities and extravagancies, neglects and other derelictions of duty on the j,jirt, of the officers and others em]>loyed in the said work, and that sundry irregularities anc] iii}2)roprietieB have taken place in tbe obtaining of contracts for portions of said work and in the performance of the same ; And whereas, We deem it expedient in the interest of and as connected with the good government of Canada, tj cause enquiry to be made into and concerninj;; all tho faots con. iiected with such work, and the conduct and prosicution thereof from its inception to the present time ; Now know ye, that we, by and with the &dvice of Our Privy Courcil for Canada, do by these presents nominate, constitute and appoint Gerrge M. Clark, Esquiie, Jiniior .ludge of the united counties of Northumberland and Durl'am, Samuel Keefer, Efq'-ir<-,<^ ivil Engineer, and Edward Miall, Esquire, junior, Assistant Commissioner, Inland Rever ue Dcpaitment Gommissiouers to make enquiry into and concerning all the facts connected with and the conduct and prosecution of the Canadian Pacific Utiil'vpy from its ince|itiri!! to the present time. An>l we do hereby authorize and reipiire them to report fully, from time to lime, all matters thMt they may th-nk it right and prDper for them to report under their Coni;uit>sion, and espec aliy their conclusions as to the mo'^o in which such work has bt'f n carried on, both from an engineer'ng and financial point of view, and the proper discharge of th-^ir duties by •11 oiHcials find others in relation to the eaid railway ; and also as to thf> manner in wliich all contracts have been obtained and executed on the said work, and a^ to the pviyra^'nts made lor and in respect of said work. And We do hereby, under the authority of an Act of the Parliament of (' m-^da, passed in the thirty-first year of Our Reign, chaptered thirty-eight, and intituled : " An Act reppeoting Inquiries concerning Public Matters," confer upon the said Commissirne's the power of summoning before them and party or witcessr^p, and of requiring them to give evidence on INTBODUCTION. 2r sued : — and Ireland, > concern, — lERTINO. of Canada, ii<^and eight i from the ir-one, down ]ndred and iting to the md twenty, luring that on, both in ' for, large ^ers irrpgu- he officers ieties have ^rmance of oath, orally or in writing (or on Bolenan affirmation, if they be parties entitled to affirm in civil matters), and to produce euch documents and things as such Commissioners deem requisite to the full investigation of the matte t into which they are appointed to examine And We do order and direct that the said Commiesionera rei)ort to Our Secretary of State for Canada from time to time, or in one report, as they may think fit, the result of their enquiry. In testimony whereof We have cauaed these Our letters to be made Patent, and the Great Seal of Canada to be hereunto affixed :— Witneas Our Right Trusty and AVell- beloved Councillor, Sir John Docolas Sutherland Campiiell (commonly called The Marquis of Lome), Knight of Our Moat Ancient and Most Noble Order of the Thistle, Knight Grand Cross of Our Most Distinguished Order of Saint Michael and Saint George, Governor-General of Canada and Vice- Admiral of the same. At Our Government House, in Our City of Ottawa, this Sixteenth day of June, in the Year of Our Lord One thousand eight hundred and eighty, and in the forty, third year of Our Beign. By Command, (Signed) J. C. AIKINS, Secretary of State. Z. A. LASH, " Deputy Minister of Justice, Canada. \i the good fiXfts con. liuu io the af!a, do by r .1 udge of Engineer, 'paitnaent I and the i«^ present 1 time, ail nuission, I on, both duties by which all nts made passed in "ppeoting power of lence on II' ' I n REPORT Ok' THE CANADIAN PACIFIC RAILWAY ROYAL CO:\IMISSION. To the Honourable The Score tar 7/ of Slate : — We, the undersipned, having- been appointed by a Royal Commission, dated the 16th of .Tune, 1880, to make enquiry into and concerning all facts connected with, and the conduct and prosecution of, the Canadian Pacific Railway from its inception to that lime, — and to report all matters that \vo might think it right and propor for us to report under our commission, have the honour to report as follows : — Shortly after the issue of our commission we met at the city of Ottawa, and, preparatory to calling witnesses, took steps to inform ourselves, as well as the material at our command would permit, on the different branches of the subject referred to us. Our first sitting for the reception of evidence under oath was on the 12th of the following August, — after due notice of the appointment for that purpose had been given in newspapers. The public was then admitted to the place of hearing aiid accommoda- tion found lor the press reporters. Procet'dings were commenced by the Secretary reading the commission, after which the Chairman made th>t following remarks : — " The language of the commission just read, and the fact that it was accompanied by no instructions from the Crown, make it apparent that our enquiry is not to be limited to particular transactions. It is evidently intended that we should obtain from reliable data, a general knowledge of the various steps in the piogi-ess of the Canadian Pacifier Railway, as well as a more thorough insight into all those matters pertaining to it which may seem to us to require explanation. V ■ :80 PJtKLnilNAUY. Having considered the liistory of this undertaking as it appears upon the puhlish«'d records, wo proceed now to call witnesses whose evidence will he uiven under oath. Some gentlemen in the interest of newspapers have applied to us at dillerent times to ascertain delinitely whether our sittings would he held with open doors. As no decision was arrived at, and as some of thes(» gentlemen are present, it is proper to say that we, the Commissioners, are unanimous in the desire to admit the public to all our hearings, and yet, while there is • ich suj port by cross-examii. ■ tion. Persons having money demands against the Government on matters connected with this railway have sometimes been permitted to show the circumstances on which such claims are based — not that we might pass on -^ '^m s to facilitate jiven matter, upon which my business ■!, such action principles of rinister or of ; of all other iiir only as clitui Pacific :)r{)of of each in it, would ol'Mich per- ■ with which )ut to record of tlie isteps fa Groverii- ■ on the ro- re into the PEELLMINARY. 33 ;he validity of the demand, for the respective claimants were generally informed that we did not propose to adjudg-e between them and the Gov- irnment, but we allowed the witnesses, on these claims, to tell their itories with some latitude for the reason that in recounting all the facts hey could not fail to afford us some information upon the manner in hich the G-overnment officials had b een managing the railway affairs. We have held the opinion that when private rights were not infringed t was better to err, if at all, on the side receiving more testimony than ight be necessary, rather than too little. We concluded that we were not desired to report upon matters which ,re patent on the journals of Parliament, such as messages, statutes, votes tnd resolutions, and we have made but few allusions to such subjects. In order, however, that some account of them may be near at hand as help to our report, we have requested the Secretary of the Commission to reparea summary of those proceedings, which appears as an introduction. sments coii- thcir own lot outirely ^ submitted nquiry, wt' ►ss-i'xamii." i on matters ) show the ight pass on 34 ENGINEERING. Surveys. ; iK-i i ; ' 1 ! I'll ' On the 20th July, 1871, British Columbia became a part of the Dominion of Canada. By the terms of Union the Government of the Dominion undertook amongst other things to ^'ecure the commencement, simultaneously, within two years from the date of the Union, of the construction of a railway from the Pacific towards the Rocky Mountains, and from such point as might be selected east of the Rocky Mountains towards the Pacific, to connect the sea-board of British Columbia with the railway system of Canada ; and further, to secure the completion of Buch railway within ten years from the date of the Union. In April, 1871, Mr. Sandford Fleming was appoin-,e«:'. i y Order in Council, Chief Engineer of the Canadian Pacific Railway , No instructions but verbal ones accompanied the communication of ^his order, and he testified that he understood the instructions to involve, with a view of carrying )ut the terms with British Columbia — directions, " first, to find if a railway was practicable between the seat of Government and the Pacific CDast, and, second, where the best route could be had." Within these limits his liberty of action appears to have been unrestricted ; not even the termini were fixed. Mr. Fleming describes the first three years as having been taken up exclusively with surveys, and inasmuch as the succeeding three years v¥eT«^ marked by their own distinctive characteristics, it has been thought jp ii: able to deal with the subject of engineering in triennial periods. From the beginning ample means were placed at the disposal of thi Chief Engineer to meet all such expenditure as would be incurrerl in carrying out his wide instructions. The first duty of the Engineering Department would naturally be to ascertain such facts concerning the country as were then unJ'nown, and as were necessary to be ascertained, before deciding on the fv.. ;);lity and location of a Railway ; and in order to understand what had to be ^ oae, it is material to see what had been ascertained in that direction, and what assistance could be received from auth.ntio information already at command. SUnVEYS. as part of the iment of the mraencement, nion, of the jT Mountains, y Mountains >lnmbia with ompletion of iy Order in lunication of 5 to involve, I — directions, Government lid be had." inrestrioted ; sen taken up se years n'-erc" ought cip-ii 8. posal of th( incurrerl in laturally be unknown, e ftv*. ;);Iity to bu ^ . >e, action, and already at The country through which the line must pass was for the most part, not altogether, unsurveyed, but it was not entirely unknown. On the mtrary, rau<;h information of a reliable character respecting it was at lat early period available. Several generations had passed away since the [udson Bay Company's posts had been established at the more important Joints throughout this vast territory and, in carrying on the business of leir fur trade, constant communication had been kept up between their jveral posts by their officers and servants, along familiar land trails, and Ines of water travel. The nature of the country, therefore, became well [nown to them, and although it was not tlie policy of the Company to make le outer world aware of the true character of the vast area over which leir operations extended, their officers were generally ready to give infor- lation and to grant assistance to scientific travellers and explorers specially to such as bore Her Majesty's Commission. Much, too, had been accomplished through the i)rovident foresight of le British and Canadian Governments towards gaining a fair knowledge |f its physicial features The Admiralty surveys of the great lakes irnished the outlines of the coasts of the Georgian Bay, Lake Huron and Like Superior, and showed the positions of the bays and mouths of rivers HViiilable for harbours along their shores. The Admiralty charts of the *aciiio coast likewise gave the position 'and other particulars relating to le islands, straits, inlets and harbours of British Columbia, and, usconcern- ig the vast extent of country lying between Lake Superior and the Pacific, largt amount of valuable information had been obtained by the explora- loiis of Captain Palliser and his assistants, under the authority of the tritish Government in the years 1857 to 1860, as given in his report laid ^efore Parliament and published in 1863. On the iace of the carefully [ompiled map which accompanies that report were represented the wood- md, the mountain and the prairie regions, and their respective boundaries as well as the mountain passes, the lakes and courses of rivers id trails, and the various lines traversed by the officers of his command, )gether with notes on the soil, climate and the products of the iountry. ?he geological formations were also indicated, and the elevation of the ^njat plains and terraces, as well as that of many of the passes through the tocky Mountains. Respecting these passes, however. Captain Pallisev's laminations were confined by his instructions to the area bounded on the [orth by Mount Brown near the Boat Encampment at the l>end of the Columbia River, and on the south bv the international boiindarv line. The 3i "*•»■ 36 ENGINEERING. discovery of Yellow Head Pass, which was some sixty miles north of the Boat Encampment, was therefore impossible to him unless he exceeded his instructions. However, when Dr. Hector, the G-eologist of the expedition, penetrated the main chain of the Rocky Mountains as far as Henry House, a post of the Hudson's Bay Company, located near that pass, the discovery was all but made, and, in fact, though not examined, the pass itself is marked upon Captain Palliser's map as the " Leather Pass." The labours also of Mr. Alfred Waddington in connection with his project for a Pacific Railway, are acknowledged by Mr. Marcus Smith as having been of great service in the prosecution of the British Columbia surveys. In his "Overlan'"^ Route through British North America," published in 1868, he remarks on the various Rocky Mountain Passes, and gives a Uihl^, here reproduced, of the different passes which had been explored o) I. »sh Territory; leaving out the Athabaska Pass by Peace River, in lat. u . 28', as being too far north for the purposes he had in view : Namea of the Pasaea. Ridge or Divide. Ldt. 1. Vellow Head Pass, from the Athabaska to the Upper Praser. 2. Howse Pass, from Deer Kiver by Blaeberry River to the U|i[>er Columbia 3. Kicking Horse Pas?, by Bow River and Kicking Horse River, to the Dpper Columbia, Sullivan _. 4. Vermillion Pasa, from the South Saskatchewan by Fort Bow (4,100 feel) to the Kootanie, Hector C. Kunanuski Pasa, from Fort Bow by Ramsay River to the Kootanie (with a short tunnel 4,0u0 feet), Palliser <). Crow's Nest Pnas, by Crow River to the Kootanie 7. British Kootanie Pass, by Ritilivay River to the Kootanie, Blakiston 8. Redstone Creek or Boundary Pass, from Waterton River to the Kootanie, (partly on American ground) BlaKiston Deg. 52-54 51-57 61-16 51-06 50 45 49 38 4»-27 49 06 Long. Deg. 118-33 11T07 116«32 116-15 115 31 114-48 114-5T 114-14 Alt. Feet. 3,760 6,347 5,420 4,947 5;985 5,960 6,030 Mr. "Waddington then proceeds to discuss the relative merits of the different passes, concluding that " there could be no hesitation in regarding the Yellow Head Pass through the Rocky Mountains, with its easy gradients and low elevation, as the only feasible one for a railroad." During the year, 1857 and 1858 other exploring expeditions were despatched by Canada to the Red River, the Assineboine and the Saskatche- wan ; reports of which were published by authority of Parliament, and SURVEYS. 9f north of the e exceeded his he expedition, Henry House, the discovery pass itself is tion with his •cus Smith as ish Columbia •th America," in Passes, and lich had been Pass by Peace had in view : Divide. K- Alt. ?• Feet. 8'33 3,760 7 07 6,347 6-32 5,420 615 4,947 5 31 4-48 4-5T 5,985 6,960 4-14 6,030 merits of the in regarding rith its easy road." iitions were le Saskatche- liament, and lalso in 1860 by Mr. Hind, who took part in these explorations. His work is flibcrally illustrated by sketches, views, maps and sections. The published reports of Mr. Dawson and the surveys of the Dawson [route between Lake Superior and Red River, were also available. Of the [character of the remaining portion of the country — that lying between Ottawa and Lake Superior— some information had been obtained by the surveys for the Ottawa Canal, of which the first was conducted by Mr. "Walter Shanly and reported upon by him in 1858, and the second by Mr. T. C. Clark and reported on in 1860. More recent land surveys had been made by the Province of Ontario along the Georgian Bay and the north M shore of Lake Huron as far as Sault Ste. Marie. The geological survey eon- 1 ducted by Sir Wm. Logan, with the maps accompanying his reports, I embracing the whole country from the Atlantic seaboard to the Red River, ^also supplied much valuable information. Besides these official explorations and surveys, other information of a 1 general character relating to the climate and the conditions of the North- West Territories could be gathered from the published accounts of travellers through that region, such as Lord Milton and Dr. Cheadle in 1864, and several others who had made extended explorations. The search for gold in the Gold and Cariboo ranges of British Columbia, unveiling as it did many of the physical features of the country, Mr. Trutch's map of 1871 giving the coast lino, mountain ranges, roads, lakes and rivers of that colony, or thejsurveys upon which it was based, — all these sources of information were available before the commence- ment of the survey. On the 5th May, 1871, Mr. Jas. H. Rowan, then an officer of the Govern- ment in the Public Works Department, was appointed, with the acquiescence of Mr. Fleming, as his chief assistant. Mr. Rowan states in evidence '.hat from that date until about the 10th .Tune, he v;as engaged in collecting all the information that it was possible to obtain with reference to the country between Ottawa and the Rocky Mountains; that he made a digest of all the information so obtained and sketched an outline of the manner in which he thought it would be desirable to carry on the surveys This report, having been considered by the Chief Engineer and certain alterations made, he says, the work was organized, and about the 10th June he (Mr. Rowan) set out with some thirteen parties of surveyors who were to be started from various points "'^^I 38 ENGINEI<:UING. !l between the Ottawa Valley and Red River, it being expected that each party would make a survey of about seventy-five miles per season. About the same time Messrs John Trutch, R. McLennan and Walter Moberly were appointed to examine the country lying between the Rocky Mountains and the Pacific,— each of these gentlemen being in charge of two parties, while Mr. Frank Moberly was instructed to examine the prairie region between Fort Garry and the Rocky Mountains — one-half of his i)arty having the Yellow Head Pass, the other half the Howse Pass as its objective point. Some twenty-one parties in all ..ere organized for this work. The aggregate number of men employed during the first season was stated by the Chief Engineer in an official report to have been nearly 800, so that the parties must have averaged not much less than forty men. The information from the reports of his subordinates, addec to that at his command from the then existing literature on the subject, enabled the Chief Engineer, after less than a year's operations, not only to report officially the practicability of the entire route, but also to indicate its general course. His first special report as Engineer of the Canadian Pacific Railway is dated 10th April, 1872. Before that was written the Yellow Head Pass of the Rocky Mountains was considered to be most eligible, and the facts reported led to an Order in Council dated 2nd April, 1872, by which it w^as adopted by the Grovernment as the gate to British Columbia from the east. The rernlt of the first year's surv^eys are summed up in the official report above referred to as follows : — " No serious engineering difficulty has been met with in passing from the valley of the Ottawa to the country north of Lake Superior. It is im- possible, however, to speak so favourably of the country covered by the divisions G and H, embracing over 100 miles easterly from the River Nipigon. This section is excessively rough and mountainous, and the survey made through it did not result in finding a practicable line for the railw^ay. West from Mipigon River to Fort Garry — although two divisions of the survey are incomplete — enough is now known of the country to warrant the belief that it will admit of a practicable line with favourable grades for the greater part of the distance." In respect of the line from Sau]t Ste. Marie towards Lake Nipissinghe states that " a good line can be had with very favourable grades ; " and with regard to the British Columbia section the following words are made € SURVEYS. 98 ;cted that each eason. lan and Walter een the Rocky ig' in charge of nine the prairie lalf of his party as its objective his work. The L was stated by BOO, so that the ddeo. to that at ct, enabled the only to report cate its general ific Railway is 7 Head Pass of and the facts which it was rom the east. in the official passing from or. It is im- ered by the )in the River ous, and the e line for the wo divisions e country to h favourable Nipissing he rades ; " and :ds are made use of, viz.: — "There \^ill be no difficulty in building a railway with very / favourable grades fiom T6te Jaune Cache to Kamloops. From Kamloops a survey has been made to Burraid's Inlet, except about seventy milas on the extreme western end of the line, and on the latter section, no serious diffi- culties are believed to exist. The survey shows that a practicable line with 3f favourable grades may be had, although the cost, particularly along the canons of the Lower Fraser River, will be consider? bly above an average." The map accompanying this report of 18t2, shows his projected line as follows : — " From Ottawa to the Red River, the line runs to the north of Lake Nipissing, thence to the south of Lake Nipigon, and after touching the north shore of Lake Superior, crosses the Red River between Fort Garry and Lake Winnipeg, after which it passes to the south side of Lake Manitoba, then over the great fertile plain to the Rocky Mountains, I through the Yellow Head Pass, and down the north Thompson and the I Fraser Rivers to Burrard Inlet on the Pacific Coast." There is also given a |< connected profile of the whole line from Ottawa to the Pacific Coast, which M is placed in contrast with the railway line from New York to San Francisco, I by the Union and Central Pacific Railway, as follows : — i Distance in Elevation ia 1^ miles. feet. New York to San Francisco 3,363 8,242 Montreal to Burrard Inlet 2,730 3,760 Difference 633 4,482 No location surveys were attempted at this early date, but it is a noticeable fact that, though some of the instrumental surveying parties — which were considered by the Chief Engineer to be indispensable— failed of aeir object, flying exploratory parties succeeded in obtaining the lacking data, so that a line was laid down upon the map accompanying this report, corresponding very closely with that which, after some years of persistent j effort to find a better, has been finally adopted for location. This is especially the case in respect of British Columbia, while as respects the prairie region, the location subsequently made north of Lake Manitoba, upon which the telegraph line was actually constructed, has been since abandoned in favour of the line on the south side of that lake, in the [neighbourhood of that originally projected as the result of the first year's [Burveys. 40 EXGIXEKRING. It has biifore been stated that about the 10th of June, 18*71, some tliirteen parties left Ottawa, under the general direction of Mr. Rowan, to conduct the surveys from the Ottawa Valley to Fort Grarry. A more detailed account of the operations of these parties, as well as those in subsequent years, is to be found at the end of that portion of our report bearing upon Engineering. A synopsis in tabulated form showing how all the parties were dis- tributed as to districts, is also there given. These parties had for their object to ascertain the practicability of a line from the Ottawa to the Red River, touching at some point suitable for a harbour on the north shore of Lake Superior. Many of the officers engaged upon these surveys, as well as those operating west of the Rocky Mountains, have given their evidence before us, and such of it as portrays any specific features calling for special remark is hereinafter dealt with. Some of these parties continued in camp throughout the winter. Many difficulties were met with and great hardships endured, partly on account of the burning of the forest, by which several lives wer e unfortunately lost, and partly on account of insufficient commissariat arrangements. The work of supplying several hundred men at various points along a line of some hundreds of miles of unfamiliar country, is admittedly one requiring more than ordinary organizing ability. In undertaking a work so extensive as that which was imposed upon the Chief Engineer, the selec- tion of suitable men for the work should have been a matter of very serious deliberation. "Whether it was so or not, the arrangements made for ihe distribution of supplies to the parties operating east of Fort Grarry appear to have been lamentably defective, resulting, in some instances, in great individual hard- ships, and, in many cases, in serious delays in the prosecution of the work, and consequently loss to the publico revenue. Mr. Carre states that soon after their first arrival at Thunder Bay, Mr- Rowan started two parties under Mr. John Fleming and himself (Carre) for Lac des Isles, from which point one party was to work easterly, and the other westerly. They were provided with what Mr. Rowan considered to be sufficient supplies for a month. During t^eir journey, en route to the starting point of their intended operations, they began to question the adequacy of supplies, and came to the conclusion that when they arrived SURVEYS. 41 .1 , 18Y1, some Ir. Rowan, to js, as well as portion of our ;ies were dis- bility of aline suitable for a icers engaged iy Mountains, -^s any specific winter. Many ;ly on account rtunately lost, nts. points along imittedly one dng a work so er, the selec- )f very serious distribution to have been ividual hard- of the work, ader Bay, Mr* imself (Carre) easterly, and an considered n route to the question the they arrived there they " would have to turn back with all hands and get provisions." Flemino-'s party, therefore, returned to Thunder Bay, and the other one appropriating the supplies intended for both, proceeded to Lac des Isles. Notwithstanding this precaution, their provisions ran out one week after they reached that point. Fresh supplies were forwarded ; but on the 15th October, although full information had been sent to Thunder Bay as to their requirements, they again failed ; and the party had to abandon the field and return to headquarters. His men refused to go back, and he was compelled to hire a new party. Mr. Carre estimated the direct loss in wages, paid to the men while not at work, at about |3,840. There is little doubt, however, that including the provisioning of the party, the cost of this misadventure could not have been less than |8,000. Mr. Kirkpatrick, who was, in 1871, a transit-man, attached to party Q-, also gave evidence as to repeated delays from similar causes. At one time he had to employ a party of forty to forty-five men in making snowshoes and toboggans, in view of the approach of winter; these necessary articles not having been provided by those whose duty it was to do so. On another occasion, constant and repeated delays in provisioning the party i}iduced the Engineer to make a writt(ni complaint — in reply to which the Commissariat Officer wrote back stating, "that if Grod spared his life, and " the mosquitoes were not too bad, he would supply them better in " future." These cases are cited as typical of others which will be found recorded in the evidence, and we are forced to the conclusion that there was a great want of business capacity in the management of this branch of the undertaking, which is the more to be deplored, inasmuch as every day lost to each party's effective energy, involved a pecuniary loss of from $100 to $12Q. The only operations in the prairie region during 1871 were those under Mr. Frank Moberly before mentioned. Some description of the physical features of the Mountain Region is, perhaps, necessary to a proper understanding of the operations carried on therein, and a just appreciation of the importance of the results achieved. The coast line of British Columbia extends from the 123rd degree of west longitude on the international boundary (latitude 49°) to the 130th B 42 ENGINEr<;iUNG. 1 V '■u degree, west longitude, on the 55th parallel, which approximately marks the most southerly part of Alaska in contiguity with British territory. Its general trend is from south-east to north-west. Parallel with its coast line the Cascades form an almost impenetrable belt of mountains, extending from the confines of Alacka on the north to the southernmost boundary of the province. At intervals of from fifty to one hundred miles (and sometimes less) along the whole extent of the coast line, deep arms of the sea run inland in mountain gorges, some of them for a distance of sixty or seventy miles. On the eastern frontier of the province, the Rocky Mountains lie in about the same general direction from 120*^ west longitude, at the northern extremity, to 114° where they intersect the United States boundary. The " Rockies " are flanked on the west by several other ranges of com- paratively short length, the most important of whic!i, viz., the Cariboo, the Gold or Columbia and the Selkirk ranges, extend in the order named from north-west to south-east, almost parallel with the general course of the Rocky Mountains. The Selkirk, the most easterly of these smaller ranges, is almost entirely embraced by the River Columbia, which takes its rise on the western slopes of the Rocky Mountains near latitude 50°, and, after running northwesterly for nearly two hundred miles to a point known as " the Boat Encampment," abruptly turns to the south and pours its waters, through the United States territory, into the Pacific. From the western bend of the Columbia River - on its southward course as above described rise, more or less abruptly, the next of the said smaller range of mountains known as the Gold or Columbia range, extending from the southern boundary of the province up tc Yellow Head Pass. This famous pass is situated directly north of the Boat Encampment» at the bend of the Columbia, and distant from it some sixty miles, be it more or less. In this neighbourhood the Thompson and Fr?iser Rivers take their rise. The Thompson River runs for about 100 miles due south, and is then turned in a south-westerly direction by the foothills of the Columbia range, which widens out as it trends southward, until its mountains become merged into the Cascades, upon the United States boundary. #J SURVEYS. 43 Tho Fraser River, like the Columbia, runs ibr some 200 miles in u Ijiorth-westerly direction until, in the vicinity of Fort George, it too turns abruptly south, and after traversing some live degress of latitude and receiving into its bosom the waters of the Thompson, it enters the Straits of Georgia at about the same longitude as that of Fort George. "VVithin the northern bend of this magnificent river, the Cariboo Mountains form an almost unbroken range. West of these subsidiary ranges and between them and the Cascades ■on the Pacific Coast, is an elevated plateau, more or less mountainous, but level as compared with the country which we have been describing. The first efforts of the engineering staff in this portion of the country were naturally directed to the discovery of a pass in the Rocky Mountains, through which the construction of a railway would be practicable, and from which a route through the inferior mountain chains might be had to the central plateau above referred to. The Yellow Head and Howse Passes were selected as the two w^hich were most likely to prove available, and six parties were organized in the summer of 1871 with a view to tost their relative claims to adoption. The general position of the first has already been described. The lower end of Moose Lake, which marks the westerly limits of the pass, is almost exactly in 53'' north latitude and 119'' west longitude. The Howse Pass is some 120 miles further south. This depression in the Rocky Mountain chain occurs near the sources of the North Saskatche- wan. A direct south-westerly line from Howse Pass to Burrard Inlet would, immediately upon leaving tlie Kocky Mountains, at this point, cross the Columbia River on its north-westerly course, and striking across the Selkirk Range for some fifty miles, would again encounter it on its southerly route towards the Pacific. This imaginary line w^ould be the base of a triangle w^hose two sic'cs would be formed by the course of the river, and whose apex would be the point previously referred to as the Boat Encampment, distant from Howse Pass some eighty miles. After crossing the Columbia the second time, which it would do at^a place called Big Eddy, the line would run through a depression in the Columbia range vid Eagle Pass to Shuswap Lake. From that point a broken and rocky country extends to the valley of the Lower Fraser. H, however, instead of continuing in the same south-westerly line from Shuswap Lake — the western side of the lake beina- {rained— the course should be diverted •o o^ ^ 44 ENGINEEIUNG. in a direction somewhat more westerly, a valley would be struck through which the waters of the lake find their way to Kamlooj^s where the North Thompson joins the main stream. From this point the Thompson and the Lower Fraser flow in a zigzag but generally south-westerly course, until their waters are emptied into the Straits of G-eorgia at Burrard Inlet. It has been stated that six ^jarties were organized in 1871 to operate in this region. Two of these parties were placed under the direction of Mr. John Trutch, with instructions to survey from the mouth of the Fraser to Lytton» and thence vid Kamloops and the Thompson River to Shuswap Lake ; this distance being the westernmost section of the route from Howse Pass to Burrard Inlet, just described. Two more were placed under Mr. Walter Moberly ; the one to take up ihe line of Mr. Trutch's operations, and to extend it easterly by exploring the country from Shuswap Lake through the Eagle Pass, as far as Big Eddy, a point on the Columbia Kiver, on the west side of Selkirk range. For the time being, no eifort was to be made to pierce the Selkirk range ; but the other party under Mr. Moberly 's "ontrol was instructed to strike across the country from Hope (on the L ■ Fraser), in an easterly direction, to Wild Horse Creek, a little to the 6out,a of the head waters of the Columbia liiver, and thence to follow the course of that river upon its eastern bank to a point about the latitude of Howse Pass. From this point they were to survey easterly through Howse Pass ; and ai'ter reaching the summit, to descend the eastern slopes of the Rocky Mountains, to connect with Mr. Frank Moberly 's party on the Kootanie Plains. Had the Hovfse Pass proved to be a more favourable one than its rival, the Yellow Head, persistent efforts would, doubtless, have been made to find some available route through the Selkirk range, to connect the two lines, which Mr. Moberly's parties w^ere, at this period, surveying. An extension of the line projected by the party, whose proposed opera- tions we have just been considering, westerly through the Selkirk Mountains to Big Eddy would have completed a chain of surveys from the head waters of the Saskatchewan to Kamloops, and thence vid the Thompson and Lower Fraser to Burrard Inlet, by a route as direct as the most sanguine might hope to obtain, through so mountainous a region as that which this province presents. SURVEYS. 45 ruck through ;ro the North ipsoii and the course, until I Inlet. Jl to operate of Mr. John ser to Lytton* ip Lake ; this >wse Pass to le to take up by exploring s far as Big ; of Selkirk the Selkirk nstrueted to I an easterly d waters of "er upon its lowse Pass ; )f the Rocky he Kootanie an its rival, en made to :3onnect the reying. losed opera- he Selkirk rveys from ;ice vid the rect as the region as t Apart, however, from the prohahility of fuidinga fuvoural)le line llivough the Selkirk range, it was known that from Big Kddy the Columl)i.i Biver imi'T-ht be followed, around the bend, ind the Boat EncampmtMit to the [vicinity of the Howse Pass ; and the line so obtained, though prol)ably one [hundred miles longer than if carried througli the Selkirk, would still com- pare favourably, in point of distance, with ♦hat vid Yellow Head Pass and the North Thompson River. The remaining two parties did not brandi off easterly from Kamloops, as did those of Mr, Moberly, but proceeded from that point, under charge of Mr. R. McLennan, in a northerly direction —the one to make its way through the Caril)oo range with a view to find some avt liable line from the neighbourhood of the Upper Fraser River to that of T6te Jaune Cache en route to Yellow Head Pass ; the other to follow the valley of the North Thompson to the Yellow Head Pass, and there to examine its capabilities. Mr. Waltei Moberly and Mr. R. McLennan, who directed the operations of four out of the six parties engaged upon the British Colum]>ia surveys during 1871, have boUi given evidence before us. In our judgment the method adopted at the q^tset for the examination of the country was one which involved larger parties and a greater expen- diture than the circumstance? justified, and inasmuch as the evidence of these gentlemen describes the operations of their several i>arties as circum- stantially as could be desired, we think it is well to report more fully than we should otherwise do as to the size, equipment and progress of these parties, with the view of illustrating some features of a system which we consider objectionable. In order to measure the necessity for such large parties and for pre- l>arations so extensive as their organization and supply called forth, it is necessary to keep in mind their respective objects and destinations. The two parties under Mr. Moberly were organized to ascertain the practicability, through a comparatively unknown country, of two links of a prospective route for a railway, between Kamloops and the plains east of the Rocky Mountains. Party T was to examine one portion of the route, viz. : From Shuswap Lake to Big Eddy, west of the Selkirk range. The other, party S, to take up the same line — but beginning on the opposite side of the Selkirk range —and to proceed through the Howse Pass to the eastern side of the Rocky Mountains. 4ii ENGIXRERIXr;. Party S had from eighty to ninety animals (i.e., horses and mules) and about twenty-four ?aen besides packers — the hitter would number about ten for this sized party— so that the party in ail, including a commissariat officer, would not have numbered less than thirty-five. Of these, beyond the staff, some were axemen wno were paid $40, and some packmen whose wages ranged from $50 to $90 per month, all provisioned at the G-overnment expense. The party w^as organized at Victoria ; was conveyed by steamer to Hope, and, accompanied by some eighty or ninety horses and mules, had to make their way several hundred miles to the point at which the survey was to begin. Leaving Hope the first week in August, they did not reach Wild Horse Creek (near the source of the C<)lumbia River) 'ill some time in September. From that point to Howse Pass it became necessary to make a trail to get in their supplies ; and they did not reach the point at which it was designed their sur^/eying operations should commence until the 2nd of October. Mi. Moberly did not accompany his party to Wild Horse Creek, having had to take the route i^d Colville, a point south of the United States boundary line, in order to purchase further supplies, and make arrange- ments for their transport. Notwithstanding this long detour, however, he reached Howse Pass in advance of his party. Unaccompanied by them, and attended only by three or four Indians, he w^ent through th^j pass and descended the easterly slopes of the Rocky Mountains. On his return to the western side of the Mountains he found his prrty had reached the scene of intended operations. A depot was built ; and his party having opened a trail by the Blae- berry River to the summit of the pass, a distance of some thirty-sev^en miles. Ihey w^ere forced at the beginning of November to suspend operations and go into winter quarters. Mr. Moberly, with one of his party and six Indians, returned to Vic- toria, taking with him, for transmission to Ottawa, the data which had been obtained. They accomplished the journey, aiiOn snowshoes, in fifty-four days ; and it was during this journey that he ascertained, by simple observation, the impracticability of the route from the Columbia River depot westerly through the Selkirk Range. 'm. SUiiVEYS. m mules) aud r about ten iriat officer, d the staff, lose wages overnment steamer to lies, had to survey was iVild Horse September, rail to get ss designed itober. ek, having ted States e arraiige- ;^se Pass in y by three erly slopes . his prrty the Blae- v^en miles, tions and id to Vic- had been fifty-four J simple ia River Mr. Moberly stated, in evidence, that the amount expended bv him ,m the 20th July, 1871, to the end of the year, reached $57,000, which Lvered the requirements of his party through the winter. Party T consisted of about twenty-two men ; they had neither packers or animals. This party w;is instructed to run a line through Eagle Pass Having iroceeded from Yale to Kamloops, by the usual method of travel, they were nveyed thence to the neighborhood of the pass by batteaux. From this point they started their exploration eastward. They sur- Ifeyed some forty-four miles, as far as Big Eddy, on the Columbia River, ^here thev wintered. ^ Supplies for party T had been purchased by Mr. Moberly ; and had locompanied the party as far as Eagle Pass, where they had been cached. 'he scarcity of Indians to pack them had made their transportation to that int — beyond navigation — very expensive. Mr. Moberly stales the trans- rt to have cost, on a rough calculation, 80 cents per pound from Kam- ioops to the depot, half-way through Eagle Pass ; while the transport irom olville to Big Eddy, the eastern terminus of the survey, cost only Irom five to six cents per pound. I The parties under the charge of Mr. R. McLennan, each numbered fuout forty, of whom all but five were labourers. 1 "■% The party (Q) were directly under his control ; left Kamloops early in tugust, under instructions to proceed, in as direct a route as possible, to ellow Head Pass, and to survey thence westerly to T6te Jaune Cache, at which point it was expected the other party (R) which was to operate in the Cariboo district (if successful in piercing that range from the valley o^ the Frazer) would meet them. I Party (Q) was accompanied ^y some forty animals. ). They reached Cranberry Lake, which Mr. McLennan states to be about poo miles north of Kamloops, and distant some fifty miles from Yellow Head jftbout the 5th of October. , . At this point, winter threatening to close in, he thought it prudent to |*educe his party so as to have no more than could subsist well till spring pon the supplies they had with them. All the packers and nearly all the nimals were therefore despatched to Kamloops. This done, a parly of welve or fourteen were left at Cranberry Lake to survey that pari of the ENGINEERING. route, and continue examinations during the winter, while Mr. McLennan aci-ompaniod by Mr. Selwyn (Director of the GeologicarSurvey), and four men, went on to Yellow Head. This small exploring party, six in all, accompanied by about the same number of animals, left Cranberry Lake about the 18th of October, and penetrated the pass to within about ten miles of the summit level, when on the 26th of that month a severe snow storm warned them to retrace their steps. Mr. McLennan reached Cranberry Lake, on the return journey, about the 1st of November, and leaving his party there, he made his way back via Kamloops to Victoria and thence returned to Ottawa to communi- cate the results of his explorations. "We have already stated that the im- practicability of the Selkirk Range was discovered by Mr. Moberly, unac- companied by his party, while on his return journey to Victoria. By Mr. McLennan's evidence, it will be seen that the crucial question as to the capabilities of Yellow Head Pass, was determined likewise by a bare exploration. And yet the information obtained was so convincing that without waiting further surveys the Yellow Head Pass was adopted and the Howse Pass abandoned. Many engineers have been examined by us upon the expediency of commencing the examination of an unsurveyed country with the view to building a railway over it, by simple explorations rather than by instru- mental surveys. All of them, not excepting Mr. Fleming himself, agree in the view that under ordinary circumstances, the instrumental examina- tion ought to be deferred until after the preliminary track surveys had shown, in what localities the closer and more expensive surveys should take place. All excepting Mr. Fleming and Mr. Rowan state that in the case of the Canadian Pacific Railway the ordinary rule ought to have been followed. Mr. Fleming and Mr. Rowan testified that the case of this rail- way was an exceptional one, and that under the circumstances it was ex- pedient to depart from the ordinary rule, and to begin by the more exact and more expensive system. Mr. Fleming said that if time had not been limited he would have taken a course entirely different from that which was adopted. He would have had explorations made — a reconnaissance of the whole country before employing expensive parties to make instrumental surveys ; that that system would undoubtedly have been the best to adopt, because it " would have saved a lot of money " ; that the explorations would have given a general SURVEYS. 49 [r. McLennan ey), and four •out the same October, and t level, when 3m to retrace turn journey, ; lade his way to communi- that the im- oberly, unac- )ria. By Mr. on as to the £> by a bare vincing that adopted and xpediency of I the view to n by instru- imself, agree al oxamina- surveys had eys should that in the o have been of this rail- s it was ex- more exact of the country, and would have shown where it was justifiable to incur 'ttte expense of an instrumental survey, and that this would have been a •ireat advantage. He also said that if the time had been much longer than 7^0 years he would, north and west of Lake Superior, have taken a different )urse, namely, to examine simply by micrometer and barometer for the [urpose of getting a general, though not strictly accurate knowledge of le country, because this would have enabled him to project the more ex- pensive instrumental surveys on routes which were most promising. ■ Again, Mr. Fleming said that if time was not an element — for instance, ten years had been available instead of two, he would have sent explor- ing parties iip the River Ottawa to make a micrometrical and barometric 'Observatioii, and the same up other rivers, and in that way endeavoured ip narrow the limits within which to make the kind of surveys which were made. In this case the system adopted from the beginning for the examina- lion of the country was generally an instrumental survey, i.e., a continuous ^hain of instrumental measurements upon a line over which levels were taken ; " the engineer endeavoring to follow a tract of country through rhich a railway route had subsequently to be laid out". This is apparent from the evidence of Mr. Fleming and Mr. Rowan, as rell as from the fact that the instructions issued by the Chief Engineer his staff, and dated 24th lay, 18*71, contained no directions for in- lependent exploring parties; they proA ided for examinations of that ^Jiaracter only when made in connection with the instrumental force. The evidence leads us to believe that, in devising the system for the irst examination of the country, simple explorations were so completely [ignored, that the cost of them as compared with instrumental examinations vas not seriously considered or discussed. Mr. Fleming and Mr. Rowan were both examined concerning the cost [of track surveys. Mr. Fleming did not remember that calculations upon that subject had ever been made by him. Mr. Rowan had not any settled [opinion as to the size of parties necessary to carry out a simple exploration, in the country which had been under his charge. He seemed to think, 'moreover, that they would have been useless as independent expeditions. Under these circumstances, it became our duty to investigate carefully .the reasons why the course which is, in the profession of engineers, undev- '■ ' 50 enginfh:rin(;. stood to be one followed under ordinary circumstances, was, in this particu- lar case, departed from, and a system which is admitted by the Chief Engineer to be more expensive adopted in its stead. Mr. Fleming said that because of the limited time within which this -Tailway was then expected to be commence 1, it was expedient to treat the •case exceptionally ; and under the circumstances he considered it advisable to begin by making instrumental examinations, generally. We endeavoured to ascertain Mr. Fleming's reasons for saying that the shortness of the timt! within which the road was expected by him to be commenced, made it necessary to depart from what he understood to be the best method when time was not limited. He said, " it was necessary to ascertain whether a line Irom end to end of the country was practicable or not, before a blow was struck", meaning, as we understood him, that a continuous line should be accurately described from instrumental data before a decision could be arrived at on the vital question — could a railway be built. We have taken occasion while examining those engaged upon these surveys, especially such as have been deemed to be men of professional acquirements, to request from them an expression of opinion on this point. Mr. Marcus Smith says : " I think I should have preferred to have thoroughly examined the country, and almost decided upon the line or lines before I made the instrumental surveys ; " and, referring to Mr Moberly's survey of the Howse Pass, he expresses his belief that the comparative advantages of the different passes might have been ascertained by parties of ten, instead of the much larger parties which were actually- engaged upon the Howse Pass explorations. Referring to that expedition he says: "I think it was premature going into such expensive surveys as| be did." In a letter addressed by Mr. Marcus Smith to the Chief Engineer in I 18*72, which was produced in evidence, the following passage occurs: "It is impossible now forme to reduce the expenses very materially as all the parties are in the Keld at a great distance, and a mistake was made at first in placing largt^ surveying parties in the field. They ought to have been simply exploring parties, each consisting of two thoroughly competent engineers, each having a mountain barometer, compass and tape line, and j a few guides and horses, altogether not more than one-fourth of the size of j the present parties, as these could have made surveys, if done with SURVEYS. 51 in this particu- Chief Enginwr lin which this 3nt to treat the red it advisable saying that the by him to b*' fstood to be tlie as necessary to vas practicable >od him, that a iital data before a railway bo ^ed upon these of professional on this point. "erred to have on the line or rring to Mr lelief that the en ascertained were actually hat expedition ive surveys a.^ f Engineer inj je occurs: "It ally as all the ^ made at first to have been ily competent tape line, and I of the size ofj f done with i |ad«Tment, sufficiently close to determine the general route of the railway, i(;h would have left only one line, with minor deviations, to be surveyed r located." ■ Similar opinions were expressed by Mr. Moberly, who stated that, in )rganiz:ing the party as he did, he simply carried out instructions received from the Chief Engineer. * Mr. McLennan states : " I have always maintained it would have been %etter to have explored for two or three desired or desirable points before •faking instrumental surveys at all. A few men with Indians can get •ithrough a country well, for the Indians, as a rule, are very good packers, l^ut when you get a large party for an instrumental survey, that you have to ^t out for surveying, you increase the weight of the whole expedition, #hat is, without knowing you can get a line through at all, you simply fet routes without a certainty they will even be utilized." Mr. Fleming in describing thc^ effect of the two systems, said that the Moss, if any, by that which was adopted, was a financial loss, and that the 'only gain by the other would be that it " would be more likely to meet Jwith ultimate success." He testified, moreover, that it happened in various localities, that the instrumental examinations wore sometimes of no avail, because obstacles ere met which might have been discovered by simple exploration ; that ;|these localities were principally north of Lake Superior, and in British olumbia ; that, however, some of the obstacles met with, were not such as would have been discovered by simple explorations ; and that in some portions of the country, even if time had not been limited, it would have been advisable to begin the examination by instrumental surveys. "We understand from Mr. Fleming's evidence that this exceptional country was at the eastern end of the proposed line. " more especially from Nipissing to the Ottawa,'" and somewhat further west for a considerable portion of the distance to Lake Nipigon. It is proved beyond doubt, as before pointed out, that on the first yciu "s (examination of British Columbia, the crucial question of " a gate "' through the Rocky Mountains, involving as it did the choice between two rival passes, was made and settled on from the reports of a flying exploration, showing that an instrumental travc rse line was not indisp^ an exploratioL as follow^s : — made a series o lompson Vallei illiam, near th thence easterl from that poim m and G-amsby )m Waddingtoi " Thus it will be seen the whole length of the two alternative lines '^om Yellow Head to Bute and Lurrard Inlets, respectively, were covered (|^y the operations of that year. During the winter of 1871-72, Mr. Moberly's two parties were en- iamped, the one at Big Eddy west, and the other at the Columbia River )ep6t east, of the Selkirk Range. While in Victoria, Mr. Moberly having transmitted to Ottawa all the l^ata obtained from the surveys of his parties prior to their going into winter quarters, represented to the Chief Engineer that to complete the work com- litted to him during the ensuing season, he required the services of a third )arty ; and permission to orgaiiize it was granted. This party was itended to be utilized chiefly in trail-making. As he was on the eve of his return to Howse Pass, he received instruc- ions from Ottawa to abandon his surveys in that district, and to take his party it^ Athabaska Pass to Yellow Head, to complete the surveys from Tete fauna Cache to Edmonton. Mr. Moberly pointed out the di lliculties of the proposed course and mdorsed by the Lieutenant-Governor, Mr. Trutch, who was himself an able mginoer, asked permission to take his party through Howse Pass, and lence to Edmonton, from which point he could survey w^esterly to Henry [ouse, while party T, following the course of the North Thompson, could 5ach, vi(i Cranberry and the AlbredaXakes, the westernmost portion of the ine to be surveyed, namely, T6te Jaune Cache, and could operate thence easterly to Henry House. In reply, Mr. Fleming telegraphed that the time from Boat Encampment to Henry House would be only ten to twelve days, md that east of Jasper House the country was flat, wet and swampy, and le doubted the propriety of going by Edmonton. This led to Mr. iMoberly's party proceeding v/rf Athabaska Pass. Mr. Moberly states that he then ordered the trail party which had been {•organized for the Ilowse Pass survey to proceed up the North Thompson, :and to make a trail by which further snppL'es whi )h he had contracted lor [jnight be transported to Tete Jaune Cache for the use of party T. Party S did not reach Henry House until the 24t}i of October, IS'^C, having been compelled to make a trail all the w^y from the ColuToibia Depot. :.ii' 66 ENGINEERING. Mr. Moberly aff:'*ms that had he taken the route suggested by himself via Edmonton, he would have reached the scene of his intended operations three or four months earlier, and would have been able to complete the whole line of survey he was directed to make before the setting in of the winter. Meantime party T, under Mr. Mohun, having reached Blue River, a point about two-thirds of the way from Kamloops to T6te Jaune Cache, and not having, as expected, fallen in with the supplies which had been some- what delayed en mute, became disorganized, and instead of going back to assist the trail party, its members spent some six weeks hunting for game, In consequence of this delay *and the tardiness of their operations they failed to reach Henry House as instructed ; they arrived at Moose Lake on the 8th of September, having surveyed a line of twenty-nine miles from Tete Jaune Cache, at the rate of about a mile a day. They were, therefore, dismissed, and Mr. Moberly with party S, and the trail party under Mr. McCord, having worked eastward as far as Lac a Brule some forty-nine miles distant from Henry House, went into winter quarters. Mr. Moberly estimates the loss entailed by the delays attending the transport of his party and supplies from Howe 3 Pass to Henry House to have been not beon less than $60,000, and a sum nearly equal to that to have been thrown away by the misconduct of party T. There is, there^re, strong reason to believe from the evidence that a large outlay of money, possibly over one hundred thousand dollars, was wasted in connection with the surveys of parties S and T during the years 1871 and 1872. ' That Mr. Moberly and the Lieut.-Grovernor, Mr. Trutch, had good reasons for the objection to the route proposed by the Chief Engineer, is evident from the fact that some %ree months or more of the most valuable season of the year (notwithst.inding that they had a pack trail of some 200 animals at their disposal), w ere occupied in making a trail and transporting supplies from Columbia River to Henry House, from which point their work easterly was to begin. ited by himself ded operations ) complete the ttiiig in of the Blue River, a une Cache, and ladbeen some- P going back to :s hunting for leir operations ived at Moose )f twenty-nine a day. They and the trail far as Lac a mt into winter attending the snry House to ual to that to vidence that a d dollars, was .ring the years ch, had good 3f Engineer, is i of the most I [ a pack trail! ing a trail and 1 J, from which 1 SURVEYS. 5r I In the matter of furnishing supplies for his parties, a wide discretion as left with Mr. Moberly, and we have to report that this was not exer- ised with due consideration of tho consequences. The evidence shows that furnishing party S, he procured a large quantity of goods which, in the timation of the Chief Engineer, as well as in ours, was unnecessary and ught not to have been purchased ; and in providing for party T, it is only 00 apparent that supplies were procured and, at a hi^avy expense for trans- rtation, taken to Eagle Pass, on the chance of their being afterwards quired at that spot. The withdrawal of this party from that district required that they should remove these supplies back to Kamloops at a cost of 80 cents per )ound, or that they should abandon them. Inasmuch as flour could bo mrchased at Kamloops for 4^ cents per pound, Mr. Moberly decided on Ihe latter course. He values the provisions so abandoned ut about 17,000. . Mr. Moberly had, before his employment in the Canadian Pacific Rail- |way, been engaged pro fessionally[in examining different portions of Brilish iColumbia. He discovered the Eagle Pass, which he thought to be a leasi- )le one for a railway between Shuswap Lak<; and Big Eddy, on the route hereinbefore described, and having apparently a favourable opinion of that a prospective location, he advised the instrumental survey of this link of )f the line, and it was accordingly undertaken — as we think, unnecessarily jcause, as before mentioned, it could only be available in case the Yellow- lead Pass was never adopted, and the problem whether it was to be adoi)ted, ^could have been settled, and was in fact settled without any data derived f from instrumental examinations. I There are two points concerning these supplies abandoned vA Kngle j- Pass Pass, on which we think Mr. Moberly's action unreasonable, consider- ing the circumstances in which he was placed at the time. Assuming that a location of the line through this pass was to be ex- pected to follow in 1872 the preliminary survey of I8Y1, and that therefore a provident foresight required that some provision for the supplies of the persons to be engaged in that work should be made during the first season, we think that if the final cost of them was to be taken into account, there was no good ground for supposing that the best course was to take them 68 ENGINE KHING. with party T and to cache them as was dono half way on the route to Bigf Eddy. It must bo remembered that these supplies were understood to b«| wanted, if at all, only on the return trip of party T from Big Eddy tof Shuswap Lake. It seems self-evident that if supplies could be laid dowuj at tb's initial point at a cost far less than at Eagle Pass, then it shouldl have been so arranged, the more especially as in transporting them west ward, the party would be travelling over a road which they had traversodl the year before — and would not be forced, as they were during the first sea- son, to pack them over a route entirely new to them. Now, Mr. Moberly has! testified, that the $7,000 worth of supplies cost 80 cents per pound to trans- poi L them to Eagle Pass, and that he did not take them farther east, becausel at Big Eddy they could be laid down by navigation from Colville at a cost] for transportation of about G cents. We think the decision to take theinl from the west, as was dono, to Eagle Pass, showed an entire disregard] of pecuniary results But we have to point out that Mr. Moherly's action in providing themj at all, was not based upon any instructions, on the contrary, it was solelyl on his opinion that Howso Pass would be eventually chosen in preference tol the Yellowhcad Pass ; a result which was, to say the least, too uncertain to justify the outlay undertaken by him on the possibility r,^ it. The evidence that this was the only ground for procuring those su^jt-I'c^ to be deposited] at Eagle Pass, is unequivocal. Mr. Moberly testified that he left them there in 1871, expecting that in 1872 he would there complete the location survey, because he thought it probable that it would be the pass that would be adopted in preference to| Yellowhead. ! , ' In our judgment this was not sufficient ground for Mr, Moberly'sj action concerning' these supplies, ^ Without questioning Mr. Moberly's professional judgment, which wel believe is entitled to respect, we cannot refrain from pointing out that he I exhil^ited a tendency to insubordination, which, if general, would have! rendered futile the best endeavours of the chief administrative officer of the| Department, he had been elected to serve. Mr. Fleming met Mr. Moberly, at or near Yellowhead Pass, in the summer of 1872, and after asking and receiving information as to these transactions which we have been describing, as well as others during the SURVRYS. M Mr. Moberly's }reoeding season, dMormined to dispenst* with his services, and subse- Iqnently by l«>tter notiflsd him to that effect. Mr. Moberly, however, placed bin ovs'ii judgment above that of hi» luperior olKcer, and decided to continue the surveys upon which he had (entered until they veere complete. In reference to this matter he sayn* [in his sworn deposition (p. 1^28) : " On receiving the letter above alhuled Ito, the instructions conveyed in it were too childish to be followed, and f [then decided that I would carry on any further work to the best of my Ijudgment lor the interests ot the Government ; that I should obey orders when I could see they were sensible, but not otherwise, and as soon as I |could do so get out of the railway service as quietly as possible." There seems also to have been a deplorable lack of disi-ipliue on the [part of party T, conducted by Mr. Mohun. It is manifest that a serious waste of money occurred in connection |with the surveys in Britieiii Columbia during the seasons of 1871 and 1872. The cost of the sarveys over the whole line up to the 80th June, 1873 was $1,081,395.36, and may approximately be considered as covering the expenditure incurred in respt^ct of the first two seasons' operations. By the analysis of surveys accompanying this report it will be seen, that some forty-four parties were during that period engaged, being an annual average of twenty-two, of which three were merely explorations, the remainder instrumental surveys. The Chief Engineer in his report of 1872 states, as has been before remarked, that nearly 800 men had been employed on the work The evidence which has been taken leads us to believe that the usual number of men attached to fully equipped surveying parties, ranged from thirty to forty-five ; while that of those engaged upon explorations would reach eight or ten. Assuming then that the nineteen instrumental parties engaged during each of the years 1871 and 1872, con^sted of thirty" eight men (the mean between these two extremes), and that the three exploratory parties each consisted of ten, some 750 men would thus be accounted for. Dividing this number into the average annual expenditure of 1540,697 we have |720 as the cost per man per season. «0 j;ngini':ering. Applying the same method of calculation to the aggregate expenditure upon surveys to 30th June, 18S0, the cost per man for each season averages about 700, or from $3 to $3.50 per day per man, during some six to seven months of the y^ear. A detailed analysis of the expenditure made through Mr. Wallace. < overing the outlay on account of parties operating east of Fort (rarry, confirms this esiirr.ate. The whole sum expended through him amounts to $")35, 154.36. "^tie number of men employed is found, by a careful examination of the pay-rolls, to have been equivalent to one mau for 152,273 days. Dividing the former amount by the latter, we have almost exactly $3.51 as the cost per man per day. This sum covers wages, sujM 'lies, travelling and other expenses, including those of management. Exi\'i)ting in some specific cases w^hich have come before us in evidence, thi' expenditure for supplies, though high, does not appear to have been extravagant or wasteful. Still it must be remarked that the accounts have been very insufficiently vouched. During 1873 the operations in the mountain regions were confined to exploratory surveys by Mr. E. W. Jarvis, Mr. C H. Gamsby, and Mr. Walter Moberly, and an exploration by Mr, Marcus Smith. In the prairie district an exi)loration was made by Mr. Selwyn, and a survey by Mr. H. B. Smith, while in the woodland or eastern district some nine or ten parties were still engaged in trying to improve upon the lines which had been already run. ■ . On the 26th January, 18V4, Mr. Fleming made his second special report, and stated in effect that several routes through British Columbia had been found on which the obstructions met with, although formidable, were noj insuperable. That a favourable and comparative easy route had been found from the Ottawa to the northerly side of Lake Superior : that it would be possible to locate the line direct from the northerly side of Lake Superior to the prairie region, without unusually expenrsive works of construction, and yet jv^ith remarkably light gradients in the direction of heavy traffic ; that there would be no difficulty in finding a comparatively easy route across the prairie region, and, therefore, that the " practicability of establishing railway communication across the continent, wholly within the limits of the Dominion, is no longer a matter of doubt." Mr. Marcus Smith, after nine years' connection with these surveys, and after hf^.ving, ai Acting Chief Engineer in Mr. Fleming's absence, made himself familiar with au the surveys from one end of the line to the other, SURVEYS. 61 e expenditure ibon averages six to seven aade through ating east of through him s found, by a t to one raau e have almost overs wages, management. in evidence, to have been Eiccounts hav*" re confined to nd Mr. Walter )rii,irie district H. B. Smith, parties were been already special report, ibia had been ihle, were no^ id been found it would be lake Superior construction, an of heavy iratively easy icticability oi holly within I surveys, and )sence, made to the other, %tates in evidence that " the second year, in the middle of 1873, within less Ihan two years we had sufficient information to bi'gin to construct a ^railway across the country. It is possible, if a company had been making fthe surveys, they would have begun after one year's surveys." " It appears to have been considered that sufficient information had been 4oained at this date to warrant construction being proceeded with in ^accordance with the terms of Union with British Columbia, and a charter I was granted ibr the building of the road throughout. This, however, f lapsed before any works were commenced under it. [• In 1874 the Canadian Pacific Railway Act was passed, and the construction of the railway, as a public work, was placed under the general superintendence of the Department of Public Works. The second triennial period, of which that year marked the commence- ment, was one of great activity, sixteen explorations and sixty-four instru- imental surveys (of which latter some twenty-eight were either nJscd or [location surveys) took place during the three years referred to, ai);».jrli )iied [as to districts as follows : — Districts. Explorations. luslrumentai Survevs. Ki'oudlaud Region *rairie Region (oiintHin Region., 4 4 8 If 24 U 29 # The aggregate cost of these operations was a little in excess of two jjuillions of dollars. The thirty-six exploratory ^surveys averaged a little more than thirty- ^foar thousand dollars each, as against twenty-seven thousand during the [three years preceding. . Of the four explorations made in the Woodland region, on(} only was west of Nipigon, namely, that from Nipigon to Dog Lake in lS7pear to be anything in connection with those surveys requiring special lemark beyond the temporary diversion of the energies of the Engineering Department, during 1874 and ISTS, in the direction of examining the interio: water stretches. Since the close of our sittings for taking oral testimony, Mr. Flemin; has transmitted to us a copy of a memorandum addressed by himself tc the Hon. Alex. Mackenzie, dated the 29th of September, 18*74, bearing upot] this matter, and has requested that it should be treated as part of hii evidence, and inasmuch as it does not appear upon any of the public records we introduce it at this point. SURVEYS. 03 Trial Location! ■ iemorandum in reference to the construction of the Canadian Pacific Railway and Settlement of the North-West Territory. , Office of thk Enoimebr iN-CiiiEr, Canadian Pacikio Raii.wav, Ottawa, 29th September, 1874. the Honourable Ai.kx. Mackenzie, Minister of Public Works, etc, etc., etc. Sir, In accordance with your withes, I have given some consideration to the question of instructing the Pacific Railway, and the best mode of proceeding under the Statute passed \»i session. 1 now submit the general views I have formed on the subject. You are already aware that I have always considered and advocated the conetruction of [line of telegraph, in advance of the railway, as a necessary and most important preliminary ark. The construction of the telegraph from the Pacific coast as far easterly na Lake Superior, tnow placed under contract, and may be considered secured, For reasons whicli will here- sr lie presented, I think that there should be no delay in inaugurating the construction of telegraph from Lake Superior along the route of the Railway, to the south side of Lake Ipissin?, at some point where it would connect with the telegraph system of Ontario and lebec. I have tbe highest possible opinion of the producing capabilities of much of the country ctending for a thousand miles, west from the Like of the Woods. I be'iove this vast ^rritory is destined to support a very large population, and 1 think that a judicious expendi- re on the part of the Government, in opening up lines of communication, together with a j^ell devised scheme of emigration, will very soon have the elleot of settling the country. Under favourable circumstances, I believe that in a few years the population will be anted by millionB, and that the day is uot for distant when the census will show a greater iber of Canadian subjects to west of the Lake of the Woods, than it now shows to the east it. Ontario and Quebec will then he classed with the Eastern Provinces of the Dominion. If such a population existed on the central plains at the present time, who, for one loraent, would doubt the gigantic proportions of the trailic between the millions oobt and tho killions west of Lake Superior — a traific which would not only find a channel thr,)iigh the iiagnificent system of lakes and rivers during the season of navig;ition to the Lower St. iwrence, hut would absolutely demand for its service throughout the whole year, the shortest Msible ali-rail route that can be made. The traflic indicated would, without any doubt whatever, fully occupy every lino of )mmunication now thought of. Freight would naturally seek the water channels during tho son of navigation, while pas-jengers and tbe light kinds of trailio would, as a general rule, at all seasons of the year by rail. Looking to the future, therefore, it is of the utmost iportance that the railway should be projected and cousti acted on the bhortest possible Dute that can be fouud. It is a mistake that miny of the people have fallen into, to suppose that tho shortest )ute would run south of Lake Superior. The best information yet obtained goes to show bat a line south of Lake Superior would be from 59 to 94 miles longer than a line north of it, luching at Thunder Bay, and from 123 to 1.53 miles longer than a lino touching at Nipigon ■Pffip 64 ENGINPTERING. Entirely apar^, tborefure, from tho cjuostion of passing through a foreign country, it ig . quite clear thut all ii the Paciti;i liailway which will lirst demand a double track, will be that portion between Kat Portage ao'| Red River. I feel convinced that the D.vwson route, iiiproved and employed to the fullest capacitjl will bo utt'^rly inidequatc for the freight traffic that will be created, and hence tho importaco I attach to the con.' truction of that i)ortion of the Paciiio Railway between Red River ancj Lake Superior, of such a character as will specially adapt it for the heavy traffic which wi. soon scok thi'^ ciiauuol.— Tu/c Paciiio K\ilway report 1873, page 33. oata SUliVEYS AND LOCATION. 65 gn country, it is a line south of establish a more The Pembina Branch will of course be useful for a short time, in giving access to Manitoba, I the other and more direct lines are established through Cinadian territory. The Cinadian Pacific Railway from Minitoba eastward cannot stop short at Like iSuperior ; terminating, it woul J only be employe 1 during the summer months. The Pembina ich woul 1 continue (o be the only inlet and outlet during the winter season, but when the try becomes populous the people on the plains will never bo satisfied to make a journey ■jgh the Unite 1 States of 1,'')S9 miles to Toronto, when it might be reached by travelling I 173 milps J nfJr would they submit to be thrown 1,925 miles away from Montreal when the pletioti of the 1 nk east of Lske Superior would shorten the distance 637 miles. With regard to the country west of Rei River, the question of the day is really its lemenl. The lakes and rivers can undoubtedly be used in promoting this work, to a great t, but owing to the climatic fact that the water channels cannot be employed at all for a idorable portion of the year, something more than the navigation of the lakes and rivers quire'l to render the settlement of the country upee ly and successful. We mu9t look to t)ie edtitbli^hment of railway.o, not simply a trunk line, but a complete ay system, as the only satisfactory means of maintaining communication between tho ■al sections of this vist territory. A trunk line is probably the first ra'Iway t'lat should be undertaken. Branches to it will in due time, and they will ramify in every direct'on whera proti able traffic ij fjund ille. Everything LO fbr points i") the Yellowhea 1 Pass as t'le proper git^way through the ;y Mount iins t> the Pacific coast. Whatever explorations now being made and yet to be e miy 1 ring to light, I assume fjr the present that the trunk Hue will pws through the ik, at once be ren Yfllawheaii Pasp, and I have laid down on tho acoimpsiiying map its probable approximate during the seasoui pfl|j|tion from lie! liiver westeily. Fiou the trunk hue I have indicated where some leadmg br inches in ly bo judiciously ilished. It will be eeon that o;ie branch isprnjectadi'rDU thfl main line at tho Red River ing, nearly due west by the valley of the A.'sineloiiie. Tiiis branch would t'Crve the country in that direction, and )pears to be the pinion, should be listant future and through line, bi :ourse. The very L we would desire. ;on, that undoubt. acing the Eastern ig an unnecessary all future time. \ mtinuous all rail , I simply recoiu ,art of the general Bution. There are ig the steam coa. ["hunder Bay is th« anitoba, popularlj by steam througl ake of the Wood; )o canalled shouk |^j iu for transferriu, oint on the Paciii; snce to Red Rive 3 Dawjon route h , Lake Superior an part »f the Pacin n Rat Portage aa he fullest oapaciijj ice tho importacci een Red River antj trafHo which « 66 ENGINEERING. Iv virould undoubtedly be ndvantagenus, in many wiys, to conBtruct the Pacific Railway throUf^n the instrumentality of a large company, instead of directly by tfae Public Work» Department. I feel BiUisiied, bowever, after giving t'le matter careful consideration, that it would be best, during the next two years or so, to carry on initiatory and desirable works directly by the Department of Public Works. This would give tims to obtain full information respecting every portion of the country, to losate the railway route, to erect the telegraph, and to do all the works embraced in the telegraph contracts, such as clearing, making roads, &.c. It would enable the Government, as well as parties who may propose entering into contracts, t^form a more intelligent idea of the undertaking proposed to be carried out, than can poisibly be formed at the present time. Before the expirattor. of a period of say two years, the (jovernment could publicly invite and receive proposals from capitalists, wto might be prepared to form one or mora strong financial companies, to carry out the undertaking, and such proposals as may be made, could embrace the assumption, by the contracting company or companies, of such portions of the whole scheme ai the Government may ececute in the meantime, and as may b» stipulated. In the meantime, I would recommend that the Government, through the Department of Public Works, proceed during the D(xt two years, with as much energy as possible, in carry- ing out certain preliminary and necessary works as follows : — I'irsily — Telegraph Line, including clearing, two chains wide along the route of the Railway^ throught forest and pack-trail or roads. 1. British Columbia to Edmonton 1300,000 2. Elmontonlo Fort Pelly 117,250 3. Fort Pelly to Fort Garry 56,250 4. FortGarryto Lake Superior 189,120 5. Lake Superior to Lake Nii)i88ing 250,000 $912,620 Total, say $1,000,000 Secondhj — Land and water cominunlcat'on from Lake Superior to Red River (Dawson route) Approximate Expenditure. 1. Railway from River Kaministiquia to Lake Shebandowan ?1,000,000 2. Railway from Rat Portage to Red River 2000,000 3. Portages and equipment between Lake Shebandowan and Rat Portage 250,000 Total expenditure on th*^ Dawson route, of which $2,000,0J0 would be common to the trunk line of the Pacific R»»l»»y 3,250,000 SURVEYS AND LOCATION. 67 Thirdly.— J. &xi'\ and water communication, Ilcd Rivor to the North Saskatchewan. 1. Failway from Red River to I^ke Manitoba $1,500,000 2 Portage, railways, improvement of navigation of Saskatchewan, Bteamboats, etc 2"0,000 , , TotHl expenditure in connection with the Saskatchewin naviga- tion, of which $1,500,000 would be on account of the main lineof the Tacific Railway $1,750,000 Fourthly — IVmbina Branch $1,000,000 Fifthly. — On account of construct'on of Pacitio Railway in British Columbia and bntween Rat Portage and Nipigon $3,000,000 liECAriTULATION. 1. Pacific Railway Telegraph Lino $1,000,000 2. Railway and water communication from Thunder Bay to Red River 3,250,000 ,, 3. Railway and water communicati m from Red River to Edmon- ton 1,750,000 4. Pembina Branch Railway 1,000,000 5. Pacific Railway in Britiah Columbia, etc 3,000,000 Totel $10,000,000 The expenditure above sugsrested would initiate construction gem rally tbrougloul the whole line, and it would {)robably le quite as much as could judiciously be made within the periol referred to. It would secure a telograph line along the ro'jte of the railway from Ottawa to British Columbia, it would clear the forest land to a width of t'.vo chains, it would establish a road passable for horses along the entire route, and thus give access to the country fir contractor.^, explorers and te: tiers, who woul 1 follow and render the establishment of regular postal com- munication possible and easy at a very early day. The expenditure proposed would also develop and 8 3 far i.?rfect the Dawson route, as a line of steam communication, as would make it r<>ally serviceable for all kinds of trailic until the completion of the railway between Lake Superior and R^'d River. On the completion of the railway a c-l:i8sification of thetraffij would naturally follow. The Dawson Route would continue to be of value as a means of trinsporting way freight, whi'e pissengor and othdr • ralfic would find their way by rail. The expen'liture proposed would also connect Red River by rail, with Lake Manitoba, place railways on the portages lying between Lakes Manitoba, Winnipegojis and the Saskatch- ewan Rivei, improve the rapids of the Saskatchewan, place steambojtta on the whole uu.d iU. C8 ENGINEERING. aDd thus practically extend tbo means of steam communioation from tide water at Qmbeo, by both brancties of the Saskatchewan, to the foothills of the Kooky Mountiins. It will be Eeon, too, that the expenditure contemplated will be strictly conGned to thos') prrliona of the great lines of communication eescntial to the opening up of the couptry, and which would in the highest degree assist in the ecouomical construction of thbt which, at the end of two years, would remain ti be don^. In the estimUe presented, I Lave pl<»ced $3,000,000 for espen liture in Biiiiuh Columbia and on the line bet veen Rat rorta;{e and Nipicon. I havt) not attem])te 1 to separate the sum, us the amo mt which m' of one lai'ge company, it would in the m?anlime be in tbo pub'io intoretts to initiate coii^truct!oa in s>me such manner as heroin imlicfited. I j ftvo arable to Canada than can poss'lly be expacted at tho present timf . Slioild you cntt'itain favoural ly the sugi'stioaa herein contained, I would farther r commend that public notice be at onro given tlat the grading of the railwajs from Thunder ri;»y to Sheban lowan, from Red River to Rat Portsgo, and from Red River to Lake Mamtobn, will be ready for contract before next motting of Parliament, and that tenders wiil be invited to soon a^ the surveys now in course of completion le rcidy, and the plan?, profiles and specidca ions prcpired ; the object being to affird intending contractors an cppoit'inity* befo-e winter com^s on, o'' personally examining intJ th^ chaiaUer of t'lo excava'.ioas which will rcq'jire to be made on the several sections ro''erred lo. 1 am, itc, tko., SANDFUKD FLEMlNa. miiu or foj toTl locat^ to wlj and tl to ascl westel with practi^ along tl A contract was entered into with the Hon. A. B. Foster in 1874 to sur- vey and build a line of railway, known as the Georgian Bay Branch, tor- SURVEYS AND LOCATION. 69 minating at the mouth of French Kivcr on tho Gi'oii^iau l^ay. Some three or four hundred miles of hike navigation became avaihibhi from that point to Thunder Bay. Thonco the line of the Canadian Pacilic Kailway was located to Lake Shebandovvan, and surveys were entered upon to ascertain to what extent the lakes and rivers of the Dawson route, might be utilized and the portages overcome. Further surveys were undertaken with a view to ascertain if the navigation of the Lake of the Woods could be extended westerly, and examinations were made of certain portages in connection with lakes Cedar, Winnipegosis and Manitoba, in order to ascertain the practicability of uniting their waters by short canal;*. In pursuance of this general object the construction of Fort Frances Lock was entered upon early in 1875. The Hon. Mr. Mackenzie, w^hile giving evidence before us, stated '* that the policy of the Government looked to the possibility of the road east of Thunder Bay not being constructed lor many years, and to use the water as a means of communication between the Ontario system of railways and Fort "William, and possibly to utilize the small lakes in the interior of the country also for a term." Inasmuch as these surveys were entered upon in pursuance of a certain policy of the then existing Administration, we consider it unneces- Bary to do more than refer to the matter in the most cursory way. The Canadian Pacific Railway Act of 1874, to which allusion has already been made, provided among other things that a line of electric telegraph should be constructed in advance of the said railway and branches along their whole extent respectively, as soon as practicable after the loca- tion of the line had been determined on. In the autumn of the same year, contracts for the construction of a continuous telegraph line from Thunder Bay on Lake Superior to the then existing telegraph system of British Co- lumbia, were entered into. The location of the whole line at an early date therefore became necessary. The first definite location of any portion of the line, was that of the Pembina branch, over a section of the country, w^hieh left little room for engineering ability. Owing to the distressed circumstances of many of the inhabitants of Manitoba, the (Tovernment decided, in the summer of 1874, to place under construction the portion of the line between "Winnipeg .'!,■ 70 ENGINEIiRINO. and the iutomational boundary, and instructions were issued to Mr. Rowan, the district engineer in that Province, to locate the line without delay, following as much as possible some of the road allowances between the two points named. This was done, and on the 8th of August tenders were invited, which resulted in a contract, dated on the 30th of that month, for the construction of the road bed. In April, 1875, the line from Fort William lo the Shebandowan and from Selkirk to Cross Lake were placed under contract, and on the *7th June, 1870, the construction of the line from Thunder Bay to Shebandowan, having been diverted in a more northerly direction from Sunshine Creek westward, the grading and bridging fiom that point to English liiver was contracted for. The manner of l«;tting these contracts and all other matters relating thereto, not directly of an engineering nature, are dealt with later on. In nearly every case, from 1875 to 1878, the contractors came upon tho ground prepared to commence operations before their work was fully laid out. In the case ot contracts 13 and 14, it is alleged that losses wero sustained by the contractors on this account, and claims were in fact pre- ferred against the Government for compensation, one of which was paid, and the others are pending. This brings us to the consideration of a matter which has given rise to much controversy —that is the insufUciency and inac- curacy of information ollered to tenderers in connection with the construe- tion of the road-bed. During the progress of the evidence it has transpired that in the case of the first four contracts for road-bed construction between Thunder Bay and Ked Eiver, tenders were invited and contracts let before a sufficient examination had been made of the projected line to enable the Engineering Department to state, in most cases, even approximately, what work would require to be performed. The bills of works offered to tenderers were invariably calculated from nothing more reliable than profile plans. In every case tho contract was let before the quantities had been made up from cross sections. 'Mi Fleming testified that an estimate so made would be a " mere guess." li might, therefore, have been expected, and it did happased should turn out to be approximately correct, and the various tenders consistent as to prices, the relative position of tlie tenders, when subsequently based on executed quantities, might not undergo much change, but sliould the prices affixed to the tenders be incongruous and the relative proportions of earth excavation' rock, masonry, &c., be materially altered during the process of construction, then those tenders which seemed to be the lowest might turn out to be considerably higher than others. To exemplify this a statement w KNGIMKERIXG. has btioi) propart'd hliowing', firstly, tho rulativo positions hold ])y the ti'iulon-rs for scuitiou ITi, and undor which the contract was mado, and, H'jcondly, tiio relative rank they would have occupied had the figures con- tain«'ro!rres.s estimates been oJIered to tenderers, instead of the irnai;iniiry <|uantities upon which their oilers, as a matter of fact, were based. Stathmknt slutwini; the result of lettini^ contracts upon the plan of a schedule of prices, where the rjuantities oll'ered in the bills of works are inaccurate, ami prices affixed by tenderers relatively incongruous. Names of TenJcrers for •'Section 15." Martia k Cbarltoa... SuUoa & Thompson.. J. A. Green Talbot & Jones 0. Hinkson Hill, Lipe A Co D. S. Booth 0. 0. Gregory Mullen & Whclan O'Brien & Ryder , J. Whitehead A. Farewell Wright k Scachrel . Kavanagh & Co H. A. Cleveland Hunter & Murray... Oampbell & Kelly... McParlane & McRao. Brown & Ryan Jleed k Dixon At date i.f oi'PiiiM(» ten- der B9 pt-r ongifiiil Hill of Works. As they would ha?p ranked bad Bill ot Works corresponded with iHSt Progress Eiitimatea. Rank. Amount. Rank. Amount. $ 1 f 1 l,n40,09O 6 2,58G,95» 2 1,S91.S85 5 a,S»8,t79 3 l,67e,06S 3 2,467,33(1 1 4 l,6M3,0Ma 9 2,643,213 6 1,699,665 1 2,3S6,34a 6 1,727,876 10 2, 706, 78a 7 1,734,820 7 2,597,883 8 1,745,9?5 19 3,39.',90IJ 9 1,749,895 12 2,731,047 10 1, 780,310 II 2,729,205 a 1,7J.9,7»0 8 2,635,797 12 1,81.5,485 2 2,433,033 13 1,832,175 4 3,514,340 14 1.895,404 14 2,751,9C9 15 1,899,680 13 ?,731.814 1 16 l,9t36,7:C 15 2,779,113 17 2,052,770 17 3,098,611 18 2,093,970 16 2,039,144 19 2,U.9,125 2,950,0.0 18 3, 266,771 3,523,7J4 20 20 1. SUIiVEYS AND LOCATION. TS III preparing this statement the tender of Macdonald Sc Kane has been omitted for the followini*' reason : — Mr. ^faodonald stated in evidence that he declined to enter into the (Contract when awar(h'd, becanse he had based his ealcuhitions upon section 14 being eomph'tcd williin a certain iixed time, by which condition the Depart" raent wouUl not agree to bo ])onnd. His ealcuhitions were tht^refore bused upon contingent conditions, which those of ot her t>Miderei'.s were not, resulting ill lower prici's throughout, which prices he refused to stand by unless the uncertainty which surrounded his competitors wero in his case converted into a certainty by the Uovernment guarantee. For this reason his tender is not fairly comparable wilh the others, and has been excluded. It will be seen by reference to the above statement that the Iivi» tenders which were assumed to be the lowest were as follows:— 1. Martin & Charlton $1,540,090 2. Sutton & Thompson 1,591,825 3. J. A. Green I,f)70,0o5 4. Talbot& Jones 1,083,085 5. 1). Hinkson .- 1,095,0(55 Had the quantities contained in the bill of works furnished to intend- ing tenderers been according to the work actually required to be done, tho tenders would have rated as follows : — 1. 1). Hinkson $2,380,3-42 2. A. Farewell 2,433.022 3. J.A.Green 2,40*7,338 4. Wright & Scachrel 2,5l4,2tO 6. Sutton & Thompson 2,582,479 Thus, by a change in quantities (the prices being the same in both eases) the lowest tender, that of Martin 8c Charlton, finds no place among the first five. The second lowest, that of Sutton & Thompson, on which the contract was actually based, recedes from the second place to the fifth. The last of the five, that of I). Hinkson, becomes the first, and two ten- derers ranking twelfth and thirteenth under the original bill of works, become respectively second and iourth. It will be further remarked that, while by virtue of the first calculation^ Sutton & Thompson, the second lowest and successful tenderers were 11 n ENGINEERING. below D. Iliiiksoii by $103,840, by virtue of tho socond and upon the actual work done, thoir tender is higher than his by no loss than $196,137. Their relative po&ition, ther(;for o, has been altered by the change of quantities by some $300,000. Had it been possible, therefore, to offer accurate quantities to tui-derers, Mr. Hinkson sluiild have obtained the contract at a price which would have saved the Government nearly $200,000, or about 8 per cent, upon the entire outlay. Th(j foregoing facts sulllciently illu.strate the principle involved. Uecognizmg this f";iture as one calling for careful consideration on the part of the Government, e.iquivies have been directed during the examina- tion of both contractors and of engineers, to the existing system o\' oflerinL'- public works for tenders ; but n-'ither contractors nor engineers appear to think tiial there is any alternative method betwecMi that of l>asing tenders upon a b'llk sum and that of leasing Lhcin upon a schedule of prices, as at present carried out. AVhile (\ich system has its advoj-ate*-: uuiongst engineers, both ai>pear lo ua unsalisfactory and unreliable. It has occurred to us that a modiru ation of the existing practice miglit be worthy of consideration. The danger attaching to the present system would seem to ari.se mainly wiJere the prices upon which a tender is biised are relatively incongruous. It will be easily under.stood that if a contract is based upon an unreasonably high price for one class of work, rock for instance, and a correspondingly low price for another class, earth for instance, then a change in the course oi construction, which would increase the quantities in rock, would augment the profits ; but if the increase should be in earth it would diminish them ; while, if both should happen, Tnat is the rock, be diminished, and the earth increased, then the contract which had promised large proliis might involve an actual loss; and so, from time to time, the chance of loss or gain on the bargain would iluctuate with such changes as might be made on the difTereni classes of w^ork. A contract for the same w^orks, based on a ditlerent tender where the oiler lor rock was unrea':,onably low, and the earth proportionately high, would, by such change, be alfected in the opposite direction ; the increa.. J of rock causing a loss— of earth, a gain. It is plain, therefore, that tenders showing the same total for the whole estimated quantities would not be equally advantageous to the Govern' ment under all circumstance- ; and, in fact, if the prices were not cousistont throughout, the relative rank of tenders would change according as tht; in th proli quan SURVFA'S AND LOCATIOX. 75 Icni Itont. particular classes of work might hi; increased or lessened, on which tlieir respective prices were too high or too low. No sut'h :' inge in results, however, could happen if the prices given in the tender afforded on each class of work about the same percentage of prolit or loss as the case might l)e : the increase or the decrease of the fiuantity would proportionately increase his prolit or loss and no more. In such cases the result of a contract to the contractor and to the Govermnent, v/ould depend on a careful consideration at th(^ beginning of !.he real value of each kind of work. That being ascertained, the tenderer whoi-'! capital and ability gave him facilities over others, could well make the lowest oiler. If, after having obtained by a thorough survey, fairly accurate quantities, the Department — having due regard to the conditions as to locality, facility of approach for moving macliinery and supplies, and other considcriitions affecting cost — were to fix a standard price for cadi class of work oflered under the sch(!dule, and invite tiMiderers to slater at what unilbini per- centage above or below that standard they would be willing to undertake the work, then the.se didiculties arLsimr from inconuvuous tenders would disappear, and with Ihem the great temptation offered to the Government Engineer to permit, or even suggest modifications, by which low priced work would l)e diminished and more remunerative work increased. Lest from the foregoing remark it might \n'. inferred that, in our opinion, the public interests had suffered from the recreancy of the rtupervisii'.g t'^gineers to their trust in th.; manner indicated, it is only lair to say that iho vvhole tenor of the evidence has been generally in a noticeably contrary direction. Ap^rt from the error of judgment in supposing that contracts may bo let with impunity upon bills ot works in which no more than fictitious quantities are named, the engineering of this period is mnrked by an unfor- tunate omission for which we find no excuse. The Government was committed to the final location of considerable portions, in all 225 miles, of the line betwi'en Lake Hup»>rior aiul Red Kiver, without any adequate effort having been made to learn the natuni or the extent of the different kinds of material which would be met with in the actual construction ot the work. These sections were from time to time submitted to public competition and placed undtu- contract, in ignorance of ENGINEERING. data upon which a reasonable amount of information is indispensable whev»> the element of cost is of any consequence. The a])senco of this information led to the executed quantities being largelj' in excess of those which were x)r(\sented to the tenderers by the bills of works on whidi the prices were to Ik* fixed iind the total cost of con- struction estimated. In addition to the disappointnu'iit occasioned in these instances by the increase in cost over that which was assumed at the time to be approxi- mately correct, we are of opinion lliat themorey expended on the works, reached a higher iigure tlinn would have been lu^cessary had the Government and the tenderers b(MMi informed, as fully as the circumstances permitted, coucerninj^' facts which could have been readily ascertained, and which it was the duty of the filng-ineering Department to ascertain, before advising upon the quantities or the value of different classes of the work. ]'etwecn Thunder liay and Ked River, the country at each end of the located line i.s comparatively Hat, while towards the middle of it the surface is very irregular, owing to the frequent and sudden changes from stretches or knolls of rocky formation to the waters of lakes or inlets. The distcas ■ covennl by section 14, next cast of lied Eiver, w^as piincipally flat, 'ih.^ easterly two miles of it and the adjoining section 15 was ol the roughest char- Aiirer. Next I^ake Superior section 1-1 was rather level ; the section 25, next west of tha* was as i\ rule "flat, but dotted with rocky islands like small hills.' It i*lhe cost of fhesw four sections, in all about 225 miles, which wo 4||isid.''' to liave be(»n materially aflected by the ignorance to which wo have alluded. Over the very rough portion of the country, notably on section 15 and the adjoining portion of 14, the embankments made through the waters have called for a very large quantity of material beyond that suppos<'d to \h} suflicient when it was iirst decided to cross them by a solid road-l>'d. The truih is that the depth of waters, and that was about all that was known to the engineers, gave but a faint idea of the quantities which had to be aeposited, before a suitable embankment could bo raised upon a suflici'Vit fouiulalion. The bottoju of these waters was composed of soft, deep and movable mud. The vvtMght ol the embankment, as it was built up, caused a sinking much beyond that wliich would have occurred had the bottom been of the character which it waa assumed to be, and in its progress dov\nward.s to a SUnVEVS AND LOCATIOX. TT lirmer foundation, the earth dumped into the road-lieddispUiced the original bottom so that it was pressed outwards and upwards above the former water level, for hundreds of feet on each side of the work, yielding its place below to material provided by the contractor at Government expense. How far the expense of providing material for thi.? purpose could have been prevented is not known. It was never ascertiiinod, ]);'cause no olhnr location was looked for in order to avoid thi.s expense. Whether the soft movable mud which has been described is to be found in sonn; localities of a greater depth than i!i others, or wiiether it invariably bears a relation to the depth of water over it, or to the area over which it is found, an^ data which would be necessary to have, before deciding to what extent, if any, a diflerent location would have saved the cost ^occasioned by it on the line iidopted. The absence of knowJedge concerning the natural formation under the 'ine of country selected for the location, led to another serious disapjjoint- ment in this — that long swamps were crossed, which subsided under the weight of the road-bed to such an extent, as to render it necessary to make the embankments deeper than Vvould have been necessary, had the natural foundation b.H'u of th(^ character which ilw, lilngineering l)ei)ar(ment assumed it to be. This is particularly the caso. on section If ^^■here tho Julius Mu.-kcg is cros'scd. Spjakiugof this locility, Mr. Murdoch tiistilied that lie wa.s, from differ- I'lit examinations in that part of the country, aware, in 1812, of the character of the mandi"s and tee bottoms of them; that he had passed over tho vicinity of the line, and had noticed where " poh^s were stuck down to any l.Migth." He said that ab;mt that tiun' in a coiiversation with Mr. Fleming and Mr. Ilowau, h > alluded to " the swamps that surrounded tho Dutskirt of the whole of that rocky country," mentioning that th'^y " were very deep and very long in some in^itances," and communicating what he <3onsidered to bo the dilheulties of those places. Upon this occasion Mr. Howan differed from him, and, according to Mr. ?.[urdoch's recollection, stated that thi^re " was good sandy bottom." In another locality, that of section 16, the work of construction was designed and the quantities stated in the bill of works given to the ten- derers as if the excavations on the line, or closo by, would provide but a small proportion of the earth required to make a solid embankment, and -l' . Ili: 78 ENGINEERING. instead of that it was arranyvMl that trtvstU> work should, in tho first placo, be orv^ctcd to carry the traok. Mr. Itiittan, wlio was tho contractor's fers, as was mentioned in evidence by another engineer, to such cases a.^ sonn^times occur where, from the shape of the original surface, or som;' other cause, it is not possible to ascertain the cubic contents of the material which was taken away, and then the next best thing is to sf'c what is in the embankment made from it, and aft«'r making due allowances so to estimi'te the work done. Clause 17 ol th' specification seems to make it plain, that by the contract this material icas to 1)3 treated, for the purposes of payment, as ordinary earth. The following is the language of clause 17 : — '17. Excivation will be classed und'»r three heaila, r/c. ; Solid Ji'icl:, Loose A'oc^•, and Karlh, nn i will be paid for according to the I'ollowini; delinillonB: '' Ist. All stones Bnd VouMers measuring more tban 40 cubic feet, and .iH solid quarry rook, .shall l>e termed SulU] Ruck Exravalion. " Jnd. All »toneR and bouldf^m measuring nn)ri' than 14 cubic feet, an I less llian 40 cubic fjet, and all laaM"^ roi;k, woether in siLu or oihsrwiie, thit may be remove I with facility by hand, pick or bar, without ilie neceisity of blasting, shall be termed L^ose RocJc Excavation. '• ;Jrd. All other excavation of whatever kind, with the exception of olF tike ditches referred to in cJausa 13, shall be termed Earth Excavation^ At all events the disjussiou about the meaning of (he spacifications might well have been avoided, and it is at best an endeavour to save by some argument, on the legal ellect of a document, an outlay which could SURVEYS AND LOCATION. 81 an*i ibic by ion. and ought to have been saved without discussion, by learning, before local ing and contracting for the construction ol' the road-bed, the nature of the material which was likely to be met with in the prosecution of the work. The serious omission to which we have here called attention would not have occurred had the Chief Engineer and his subordinates acted on the elementary principles of railway engineering. Professor Rankine in his work on Civil Engineering describes the steps to be followed in Railway Engineering, placing first the reconnoissauce or exploring of the country. Of this his lauguage is : — " The reconnoissance or exploring of the country by the engineers with a view to ascer- tainln 7 # Photographic Sciences Corporation \ %\^ 4v Li>^ :\ \ 'ib^ Ci^ 4^ 23 WEST ^JlAir' STREET WEBSTER, M.r. 14580 (716) 871-'^^03 % \ :<> SB ENGINE KRIXG. the character of the navigation and the unsuitability of the more northerly harbours which, if not known, ought to have been ascertained, as the Chief Engineer himself explicitly admits in his special report ot 1877, "before any " harbour should be selected as the water terminus of the line," and consequently before any expense in elaborate surveys in that direction was incurred, we think that the surveys of some of the eleven routes to the sea described by Mr. Fleming in his report of 1877, might have been well omitted. ' At page 73, Mr. Fleming uses this language : " In considering the question of route in connection with that of the water terminus, the enquiry may be narrowed down, by rejecting all the j)rojected lines and harbours except the most promising and important." The tenor of Mr. Fleming's report is that the information derived from the Admiralty enabled the Engineering Department to see more clearly than before, the expediency or inexpediency of carrying the railway to any particular one of the several harbours to which surveys on land had been made, and that some, at all events, of these harbours were altogether ineligible. "We think it is to be regretted that the enquiry w^as not, in Mr. Fleming's words, " narrowed down " before large expenses were incurred on those surveys which for nautical reasons were futile. Without assuming to particularize the individual routes which w^ould have been known to be unnecessary had the information from the Admiralty been obtained before they were undertaken, we feel obliged to say that it was under the circumstances a duty to learn, in the early stages of the surveys, all that could be communicated from such an authentic source, and that no expense should have been incurred in running lines to those points which from their nature were impossible as termini. In the table at the end of our report on engineering we have shown separately the various explorations and surveys directed to Burrard Inlet, as distinguished from those to more northerly points on the Pacific coast, as well as the probable cost of them. Those to Burrard Inlet are stated at $797,2o6 ; to other harbours, |968,- 090. These figures are not given as exactly correct, but are based upon an average assumed to be applicable to the several kinds of examinations, as explained in a note to that table. We have, in dealing with the first triennial period, mentioned that our judgment was against the system adoj^ted at the beginning, of examining SURVEYS AND LOCATION. the country generally by instrumental surveys rathor than by simple ex- plorations, but we have to say that the mistake of using instrumental sur- veys too freely was not confined to the first year or period of the surveys. "We think the evidence shows that bare explorations have given informa- tion to the Engineering Department which was of great value, and, indeed, more reliable than it was on different orcasions considered to be by the Chief Engineer. In 1874, a line was explored by Mr. Horetzky from Gar- dner Inlet across the Cascade range to Lake Fran9ois, heights being taken by barometer only. This examination, according to Mr. Marcus Smith (page 175, in the Chief Engineer's report of 1877), " gave no promise of a practicable line." In 1875, however, an instrumental survey was undertaken of the same route. We have seen the original profile of the line followed on this occa- sion. , . , ' , • - ''.!'■ ' A regular instrumental survey was made from G-ardner Inlet up the Valley of the Kimano River to Lake Fran9ois, on the east side of the Cas- cades, a distance of twenty-two miles. , . r u ' ; .; . From Gardner Inlet the line for the first nine miles runs up the valley of the Kimano, which is about half-a-mile in width, and is hemmed in between high precipitous mountains on either side, and rises by easy grades to the base of the mountain, 166 feet above the sea. In the next ten miles the line abruptly ascends the face of the moun- tain defile at the rate of about 400 feet to a mil ;, to a pond on the summit, 4,019 feet above the sea. It then descends in a'jout three miles to the level of Lake Fran9ois, which is 2,776 feet above the jea, at the rate of 413 feet per mile. A regular profile is given of thi? instrumental survey, with all the levels marked upon it in the mos*^ formal manner, as if dealing with a practicable line, and s. projected lunnel twelve miles in length through the mountain range, ascending from the valley of the Kimano to Lake Francois at the rate of 233 feet in a mile. The general features of the country through which this instrumental survey was made are so pronounced, and so well described in Mr. Horetzky's report of November, 1874, which appeared in that of the Chief Engineer for 1877, that we think it ought to have been evident, before the expedition was started, that no result could be reached beyond showing that l Hi ! n. 88 ENGINEERING. I- >i! f. a railway on that line was not feasible, and that the consequence would be, as it was, no better than a waste of time and money. Similarly in 1874, Mr. Horetzky, whose explorations were clearly con- ducted with much care and correctness, examined a route through the Cascade ranje from a lake on its eastern slope, to which he gave the name of Tochquonyala, thence westerly through a pass into the valley of the Kitlope River, and towards its mouth at the G-ardner Inlet. In his report of this expedition he gives the respective elevations of the pass and of a portion o! the valley near it, showing such a sudden fall (about 300 feet per mile for six miles) as to make a railway on that route impracticable ; his language is : "I think the inference may be safely drawn that in this quarter no practicable route is to be looked for." An instrumental examin- ation of this route was, nevertheless, ordered, and though the service was a hazardous one, Mr. Gamsby volunteered and was directed to undertake it. Early in 1876, he proceeded with a party to Gardner Channel. Some account of this expedition is found at page 1T6 of Mr. Fleming's report of 1877, and a more detailed account by Mr. Gamsby himself, commences at page 177. The conclusions given by Mr. Qnmsby are based on the supposition that some of his party reached the lake described as existing on the eastern slope of the Cascade range, and to which Mr. Horetzky had given the name of Tochquonyala, and he assumes to contradict the substance of Mr. Horetzky's report as to the height of the said li^ke, and the pass between it *nd the River Kitlope. The evidence shows as a matter of fact ; and, although the latitude and the altitude of Mr. Horetzky's points, as well as a sketch of his route, had been given to Mr. Gamsby's party, that the latter gentleman failed to reach the objective points of his expedition. He assumed others at much lower elevations respectively, to be those he was instructed to find. The result of the expedition was unequivocal failure, without any advantage to compensate, in our opinion, for the expense unnecessarily incurred in projecting it. ^' The last triennal period, 1877-78-79, was devoted mainly to location in the west and construction in the east. The subject of surveys in the first triennial period — of location in the second — are such as elicit, in the consideration of them, various and often conflicting views. Involving aa as ter He Kvas the aa SURVEYS AND CONSTRUCTION. S^ these subjects do, questions of route, theories as to the modes of survey, the adequacy or the inadequacy of the means at the disposal of the Doi^artment, they open up a wide field of controversy. The subject is a large one ; but all' these matters having been finally decided, and definite action thereupon begun, the consideration of the propriety of official action thereafter is restricted within narrower limits. There remains, therefore, but little to be said in respect of the transactions of 1877-Y8-*79. There were in all, during this period, fourteen explorations and twenty-five instrumental surveys. The parties were distributed as follows : — B. 1^ .• . Instrumnntal Explorations. Siirfeys. Mountain Region 8 11 Prairie Region 5 3- Woodland, west of Nipigon 4 Woodland, east of Nipigon 1 T Total 14 25 In the mountain region the instrumental surveys, eleven in iiumbor, were, with one exception, confined to the Burrard Inlet route. Seven trial locations, covering the entire 493 miles, being made in 187t ; three revised locations covering that portion of the line between Yale and Kamlcops, in 1878, and a trial location along the Skeena in 1879. Of the eight explora- tions during the same period, two were made in 1877, and six in 1870. They were as follows, during 1877 : — 1. Exploration from Fort Simpson via Skeena River to Fort George, by Mr. Cambie. 2. Exploration from Fort George through Pine River Pass, by Mr. Hunter. During 1879:— 3 Exploration by Mr. Cambie. 4 " by Mr. McLeod. 6 •< by Mr. Horetzky. 6 ** by Mr. Dawson. *" •7 " by Rev. D. M. Gordon. ,' 8. " by Mr. Hunter. The object of these examinations, with the exception of Mr. Hunter's explorations in Vancouver Island, was to obtain definite data to determine 90 ENGINEERING. whether a northern route could be found, by Peace or Pine River, to Port Simpson. The result was to confirm the general route projected during the first and second year's surveys vid the valleys of the North Thompson and Fraser Hi vers to Burrard Inlet, for a portion of which, tenders for con- struction were invited during the fall of the same year (1879).- In the prairie region, surveys by Mr. Lucas were made in 18Y7, between Selkirk and the South Branch of the Saskatchewan, for an alterna- tive line ; and an exploration by Mr. Marcus Smith to Lac la Biche and other points to the north of the Main Saskatchewan. No operations were undertaken in this region during 1878. Four explorations by ilessrs. Eberts, Dr. Smith, D. C. O'Keefe and Professor Macoun were undertaken during 1 879, with a view to obtaining a more extended know^ledge of the characteristics of the various districts lying between Fort Grarry and the Rocky Mountains. An exploratory survey was also made by Mr. Marcus Smith from Fort EUice to the w^estern boundary of Manitoba, and a second one by Mr. Murdoch, both in connection with the second 100 miles west of Winnipeg In the woodland region the following explorations and surveys took place during 1877-78-79 :— West of Nipigon. East of Nipigon. Exploratory fcsurvey. Revised Location. Exploration. Exploratory Surveys. Revised Surveys. Trial Location. '1 1877 3 3 1878 1 1 1879 1 1 2 1 1 3 1 6 1 1 Of the parties engaged west of Nipigon, three were engaged during 1878, in revising the location of the 186 miles between English River and Keewatin, known as sections 41 and 42, both of which sections were placed under contract during March, 1879. An exploratory survey was also made between Thunder Bay and Nipigon. wester In Railwt In sixty-tl River t A Th was $7i Sill fngagec Bay anc cost of cannot 1 Thi " No ser] valley o; The (which T requiring been no having h section o miles, Wi sion of t entered i Both excess in and the r contract the fact t Were not reported i SUEVIOYS AND CONSTRUCTION. 91 East of Nipig'oii the following operations took place, viz : — In 1877, three instrumental surveys were made from French River, two westerly and one easterly. t , In 1878, one revised survey in connection with the Canada Central Railway. In 1870, Mr. Austin ran a line from Callander, north-westerly some sixty-three miles, with which an exploration by Mr. Brunei, via Spanish River to Sturgeon River, made the same year, connected. A survey of French River was also made by Mr. Bender. The expenditure for the third triennial period, on account of surveys, was $754,793. Since the inception of the surveys some thirty-four parties in all were engaged {i.e. several each year) in examining the country between Thunder Bay and the Ottawa ; of these but six are described as explorations. If the cost of these parties was up to the average, this portion of the survey cannot have cost less than $850,000. . This is the territory respecting which Mr. Fleming reports in 187- that, " No serious enginering difficulties have been met with in passing Irom the valley of the Ottawa to the country north of Lakt; Superior." The general direction of a practicable route having been ascertained (which we think might have been done by well directed explorations requiring an outlay of from $8,000 to $10,000 each), there would seem to have been no necessity for this further lavish expenditure, until construction having been decided upon, a definite location was required. In 1877, the section of railway between Cross Lake and Kat Portage, some thirty-seven miles, was placed under contract, and later on in the same year the exten- sion of the Pembina Branch northward, from Winnipeg to Selkirk, was entered upon. Both these contracts exceeded the estimated cost very largely. The excess in the latter case arose in part from other than engineering causes, and the matter is more fully dealt with under the head of the individual contract (5a). The greatly increased cost of the former, arose mainly from the fact that the quantities contained in the bill of works offered to tenderers were not even approximately ascertained. This feature has already been reported upon. Inasmuch, however, as a portion of the increased cost was ■^- I; ^■■iiv 92 ENGINE KRING. duo to a change in the method of construction, a few words on this point may be advisable. Tenders were invited for the construction of this section at three several times. The bill of works and specifications in each case contemplated a different mode of construction. The first provided for the cuttings approxi- mately balancing the fills, resulting in a solid rock and earth road-bed throughout the entire length of the section. The estimated cost, however, was so great that this proposition was abandoned after the tenders were re- ceived, and a second advertisement was issued inviting tenders for the work upon the plan of a higher grade, the material fvoiii the cuttings to be used infilling the intervening gaps as far as they would do so, but not provid- ing for further means of crossing theopen spaces. Tenders wereduly received, but none of them were accepted. A third advertisement was inserted in the fall of the year 1876, inviting construction upon the general plan just describt'd, but providing, in addition, for the filling up of the land gaps with ti- 'stle-work, and the water stretches, which were numerous, with rock-cui tings, up to three feet above high-water level, and with trestle-work thereafter. Soon after construction was entered upon, it was found that whenever the material from any cutting was in excess of the quantity required to fill the next void up to the specified height, the trestle-work would require forthwith to be erected in order to utilize the superabundant material in the next void, for which such material would be available, unless the con- tractor took the time and trouble necessary to move it over the natural unduLition of the country ; and in many cases several land voids would intervene, all of which would require to be trestled before the next water stretch could be reached. In respect of this, Mr. Whitehead stated that the proposed method of construction would have required twenty years for completion, that, in fact, it was impracticable. His views were placed before Mr. Rowan, the District Engineer, while he Avas being examined belore us, and ho said in relation thereto : " I think there is some truth in that." When the work was offered for construction, it was thought by the Government Engineers, that very little earth could be found along the line. Mr Ihittan, however, the contractor's engineer, as before mentioned, stated, in evidence upon this matter, that he saw, upon his first inspection of the line, that he could borrow all the material necessary for making the embank- ment. SURVEYS AND CONSTRUCTION". 98 Mr. Whitehead, therefore, offered to substitute earth-work for trestle- work without making any charge for extra haul. His ofFor was recom- mended by the District Engineer, and, being approved by Mr. Fleming, the Honourable the Minister of Public Works submitted a memorandum authorizing the change to His Excellency in Council for consideration. Mr. Fleming was on the eve of taking his departure for Europe, and before leaving he saw Mr. Rowan, who was then at Ottawa, and informed him that his recommendation was approved by the Department, and that a memorandum had been submitted to Council to authorize action there- under. Council, however, neither adopted nor rejected the proposition at that period, and Mr. Rowan, not having received any further communica- tion, thereupon returned to Winnipeg under the impression that he was, or would be, authorized to permit the contractor to proceed with construction in the manner proposed. This change is estimated by the Supervising and District Engineer to have increased the cost of the section to the extent of from $200,000 to $260,000. The further increase of some $750,000 is con- sidered by Mr. Carre to have been due to oth«r causes. His evidence on this point may be summed up in a few words, and the general tenor of the evidence of others confirms his testimony — viz., that the grades having been altered after the original quantities were esti- mated, the entire calculations based upon the first profile plan were inap- plicable. The nature of the country, however, was such that no reliance could be placed on any calculations made from a centre line only. Respecting this matter Mr. Fleming admits that, without cross- sectioning, the quantities arrived at would be " a mere guess." The evidence of all who have been examined shows beyond doubt that the quantities were not calculated from the cross-sections until after the con- tract was let ; that the quantities contained in the bill of works sub- mitted to tenderers were based upon a centre line only, and that therefore they were a mere guess. The next sections offered for construction were those known as 41 and 42, comprising the 185 miles between the east end of contract 15, and the west end of contract 25. Tenders were invited by advertisement in August, 1878, the time up to which they would be received being 1st January, 1879. Mr. Fleming, on being consulted by the Minister of Railways and Canals, informed him that sufficiently accurate information would not by that date be available to il", ■h4 III. m KNCUNRKRINTJ. enable parties to make intelligent tenders. 'I'he letting was for this reason twice postponed. As a consequence of tho greater care exercised in this respect, the evidence leads to the belief that on these sections, for the first time in the history of road-bed construction on the Canadian Pacific Rail- way, the actual quantities and cost will, on completion, be considerably less than at first estimated. The probable reduction has, upon section 42, been stated at some $1,500,000, of which about $650,000 was expected to result from changes in location, and minor deviations effected without deteriora- tion of the railway, and $850,000 from modified design, by which the road- bed would be less permanent in character than was originally intended. This latter item of saving, however, is likely to be reduced, inasmuch as solid earth embankment and rock-borrow foundations have been author- ized in several places, where, at the time Mr. Schreiber's evidence was given, timber structures were proposed. Several other contracts for road-bed construction were let during this period, viz. : Contract No. 48, August 19, 1879. " 60, December 23, 1879. " 61, February 10, 1880. " 62, December 23, 1879. " 63, December 15, 1879. " 66, May 3, 1880. These contracts were entered upon only a few months — with one excep- tion less than six months before the date of our Commission. So that very few facts, and those of but little importance, have been presented before us in respect of construction. The bulk of the evidence taken as to these contracts has ^':en in reference to the manner of letting, etc., and will be found under the head of the individual contracts. One thing forces itself upon one's attention, however, in respect of the British Columbia contracts, namely, that though Mr. Marcus Smith had repori,ed the route along the canyons of the Lower Fraser as requiring such heavy work as to be almost impracticable, it has really, after careful location, been let at a price no higher than that portion of the line in the woodland | region between Cross Lake and Rat Portage. It has been our duty to animadvert unfavourably in several instances,! upon the engineering branch of the Department of Public "Works havingi i< <( (( Ow of mone impossil after the that the were deJS had wini could be think th£ ing force have kno' unconditi Anot parties ; tl fitness of Mr. F quences o He testifi< diflSculty, smaller cc often had SURVEYS AND CONSTIM'CTIOX. S>5> k»aJson 1 this L> first llail- [y lesH , been result eriora* ) Toad- ied. Lsmuch luthor- ;e was iig this excep- ^at very jfore US these Ind will of the ith had I ig such I )cation, iodland I stances, Ihavingl charge of the surveying operations. It is with pleasure that we .state that, during constri. Hion, the engineers have shown ability zeal, and the strictest integrity in the supervision of the work. The evidence shows that they fought inch by inch, and day by day, against what they thought to be attempted encroachments on the part of the contractors' engineers. We have felt that thoir determination to maintain the rights entrusted to their keeping, has in some cases led them to a strained construction of the specifi cations adverse to the con- tractors. Appeals were more than once made to the Chief Engineer or other superior officer by the contractor, which resulted in an interpretation more favourable to the contractor than the resident enginciT was willing, without such authority, to allow. Before closing our review of the engineering, it is our duty to call attention to serious difficulties which were always in the way of complete success in this branch of the undertaking. Owing to the extent of each year's operations depending on the amount of money to be voted for that purpose at each session of Parliament, it was impossible to settle definitely upon the whole work to be undertaken until after the votes had i>assed, and to this may be partially attributed the fact, that the spring was frequently well advanced before many of thi> parties were definitely organized and took the field, the exception being those who had wintered out, and whose work, having been fixed the previous year, could be commenced without waiting for new arrangements at Ottawa. "We think that the amount of work accomplished each season by the engineer- ing force w^as not so great as it would have been, could the Chief Engineer have known, that whatever was expedient to be done might be arranged for unconditionally, and as early as was necessary to secure success. Another difficulty was the composition of the staff of the several parties; this was frequently effected with but slight considcralion as to the fitness of the persons. Mr. Fleming's evidence is unequivocal upon the fact, and the conse- quences of places under him having been filled by political patronage. He testified decidedly that a private company, being free from this difficulty, could accomplish the work more efficiently and at a smaller cost than the Government. He said that in this case "men often had to be employed who were not too efficient ; " meaning, as .'I m ENGINEKIMNir. we undcrHtood hira, that they were not as efficient as they ought to have been ; and he said they were selected not solely on their merits ; that different nationalities and creeds had to be consulted under every administration, more especially on the engineering stafl ; that these, though th(i appointments were nominally by himself, as superior officer, were, in fact, invariably made by the Minister ; and on being asked whether or not ho had assumed to suspend or remove persons for inefficiency, he said he felt that persons employed through political influence, had to be kept at work unless for something notoriously wrong. He reached the conclusion, and retained it from year to year throughout, that because of persons being employed for political reasons, the work could have been done much more cheaply by a private company. He said he knew that patron- age had to be respected, but he could not say that at any time he had brought this feature of the transaction to the attention of any Minister'; and that until asked by us on the subject, no Minister or member of Parlia- ment had put the question to him plainly. He remembered on one occasion representing to the Minister, that a proposed appointment was not likely to be a good one in the public interest. He gave us no name, but he said the person was appointed and turned out to be inefficient. In many other instances, when he did not remonstrate, persons frequently got positions which they where not well fitted to fill. And he said it was not easy to get .inefficient men weeded out when once appointed. He added that he had no doubt that the public interest had suffered o) account of the patronage being in the hands of a political party. Considering the tenor of this evidence, and the fact that instrumental surveys were frequently undertaken, where, in our view of the evidence, they might have been better omitted, I we find it difficult to repress the suspicion, that various staffs having been filled from the influence thus described by Mr. Fleming, work was sometimes invented for their occupation, as an alternative less embarrassing | than ending their employment. Another serious drawback existed which was not due to the system I but to individual circumstances. During the whole time that Mr. Fleming was the Chief Engineer of this railway, he was never enabled to give his undivided attention to it. For the first five of his nine years' service he was filling also the position of Chief Engineer to the Intercolonial Railway. That state of affairs ceased in 18tG, and he testified that if he had not had both railways to superintend, he would undoubtedly have been able to visit the works on the Pacific Railway which the evidence shows he had SURVEYS AND CONSTBUCTION. •» not done.' After he was free from the Intercolonial Railway his health was so weakened that it led him to apply for leave of ubseiice, and he was granted a year. He was recalled, however, before he got the benefit of this full term, and then returned the following summer to make it up. During three years after his release from the Intercolonial, he was absent on Ieav« about nineteen months in Europe, and on another occasion he was in Eng- land on duty in connection principally with Ihe purchase of steel rails. Thus it will be seen that throughout the period in which he held the posi. tion of Chief Engineer, he was not able to give much more than half his time to the active management of the engineering branch of the Canadian Pacific Railway. In our judgment this ofiicer was overtaxed. In view of this fact, and the impossibility of excluding political influ- ence from the appointment of those who wore to be iiorainally under his command, and the palpable truth that the different steps in a large Govern- ment work are not always devised with the sole o' B <»00'*'01--'* N »- ** oT -- cT >«<" -T ..^ of -<■ o" i-cterti^ojioiMooio lO W CO -W t- t- M M r-l 1,391,619 80 2,020,274 95 754,793 02 00 i 1 O » .* O «D '♦ M- t~ 00 •HpniJl IJB JO 8.V3.\.Tng 1^0^ M«-.mMC-i-« -H *- t- s § s o ■suoijBOO'^I pasiAoy [ •i:::*^:*:!*' | : <^ 'o •B^aA.ing uoijBDcq | :::'^'^'^:::|® | •* • •SuonBOOq JBUX 1 : • j""**"^ :=^ 1?; 1 : 2 ^ •SiCsAjng pasiAoa | ! • I*^ • • •'^ • ■* 1 : CO ^ # -nj^sni 'eXaAJng .OoiBJoidxa • a; A CO 0> ■<«< CO 2 •8noiiii.ioidx5t 1 «^«!mwowm:-j|oj | 1 "t •BaorjBJOjdxa | • ^ ;•:::: I'' 1 " i : 1 1 "-iNevj-itirswt-ao'oi 000000000000000000 i d ^ cJ. w^ oi. t- *- t- ^ ^ ^ t- t~ t- 00 00 00 >H rl i-< •a i f6 SURVEYS AND ( ONST RUCTION. 9» * It has been elicited by the evidence uf various engineers who hare been examined, that th« different kinds of parties compared relatively as to numbers, as follows. — Explorations 10 men. Exploratory Surveys and Revised Surveys 40 do Trial Locations 30 do Location Surveys and Revised Locations 20 do In maiking the calculation as to the proportionate cost properly cbar^^eable against each district, the following data hare been adopted :— Exploration, = I. Exploratory and Revised Surrevs, (1 x 4)«4. Trial Locttions, (I X 3) = 3. ' Location Surreys and Revised Locations, (1 X i)-= i- The cost of each exploration, on this basis, is as foUorrs :— During 1871-V2-73 $6,788 38 do lt74-75-76 8,624 86 do 167T-78-79 8,116 05 Hence the cost of the remaining surveys are approximately ascertained bv multiplying thoM amounts by 4, 3 or 2 respectively, according to the character of the Hurvey ; and on that basis the results given upon tho accompanying table are arrived at. . ■■11 H 'f^^MP 100 ENGINEERING. 00 00 to 1^ o '^ I I I 0) at O -J 00*0 S? 00 H O •o§5 d ,i3 •>-• "^ '^ "H p*^ a o o a, :a o S o a O O •I o o <> O u .s « (^ ■a .y O -J >.0 O 08 00 o a (u o u . a ^ a o IS o ♦; 31 ii .M -5 — 9 gr a 9« o o o .a •- a «M 03 DQ o o o « £ tea • •-< 9 CQ . O a P : o bo : Ob, •s. :-^P o * a a o OM o E o o 09 «a 15 4> c o I" a « S o I O 8 M m s « s o "3 •♦3 3 a> S 0] § « S §m to Waoa a 3 o ti o _ .S (^* o^ SI, fe.t OS o OB B-BJ^ n 9 S 1^ o2 a o « es «a 4> .a •4J o M cS 1^ cq J3 _ » 9 TOO 2 ^ S 3 Q 3 a3 a o a Boo oooga 3 "O "O 'TJ "W ^ o o -a -a ooooooso 13 o •O o H H « I V a a o o 'O a ■" - « S O O-O ^glla sow « » .a -(n«)nnoj( •pu«ipooji =^ o o a Si o « « ^« ?i .2 9 a o a> O. .~ ot C c o . 01 CD > 18 a 2 >■ oS fc. *^ ' C V -;-> I CD <-> Jh I «««) O ; 'T.E-'fe;-: o £3 o e 'ai«;anoi| SURVEYS AND CONSTEUCTION. 101 2 S 2 A■ O on 2 d cua <• So* I O ^ m <& c^ o o a J •i O I s s o ss ►T « bo fc O bog""* a V to f J" 3 >« <• >>^ Ot- ►J •-• a 9 .2 a o ts o o •e o a S a o >5 d u S 55 .S ?i o a •-9 o o CO m OS t^oS oj'a 4) £ ° * : OS :§ •a a" "^ am u cS*© o : a •^ © as u ^ «> 05 ?* " i! 3 tm^ — © m •a o o >■ a o bo ■a ©"S, o "^ : 4> 13 : bo : a : o : J *t« © fc ©Tj -t' a O *> L..a ** r: .E: S a o bo © 01 <*. * C3 U : >^ • • u , a :93 o d QQ 0000©0000o o o o o o o © ^O ^3 ^3 ^3 T3 ^3 ^3 -n]«tnnoi| -puvipoo^ 99 I* a a M a "3 u OS a S " o _* .£« © > t> Eh ■♦>• OS a OS .a u ot 1 03 >■ bo a o d !> s. o -3 "So d OS H 03 .a 9 o OS OS s 1 a a OS o . a< in i g ^fc o 03 O o a 3 o cc o o OS o * ^•3 •=§ 5" d S. 3.3 o a a. 2 »►,&: 03-0 • on : a* : a • « •S» ^ bo OS O o J3 Jh- os _.= p*^ a_bp5 3bo ^ >>t:' Cubfc.2^3 ff* _ OS •*^ .^ -fj -A^ jr > C -1 rioSzj.S-.SSo:*- ©-' A-?: "2 1^2 3 = S : a >-> • O 4) 0,' bct; 08 :«*^ 9 6- © -2 i3 a a 0( — 2 "K « u <" •- ii- 4) 3 03 a 00 a -» « d © o o OS o -og : >. : i) : > • u> : 3 a ooo©ooooo t3 ^3 T3 ^) 'O ^B T3 ^3 ^3 o a T 00 &: wda -«i« ■nnr^unoK •ajjpMj "pn^ipooji w 102 ENGINEERING. 00 r S ^ § I I I o a •s '3 9 (2 V « U Em .2 .0 at O V, S' O « 'S, a ■S be o o 2 a •^ CO IS a ^5 Z2 . « a u s « o " can - *^ . „ 9^ 4 -, (S> kl I» V S 3 O 3 «8 "S-O 5e a g «» <« S 08 t J 4» .a a.® 00 gg pta : « i| ►a •Si • O i7"^r boa a^ftS g a o J-'Ot> t» ■<&. S ^ J (2 9= a •S^ 3:3 t 1:2 (> 3 o u a * s « f a ^- 09 i£ O aSasfc. is : a : 09 : « :,^ 09 to O O m •O ^ s u 09 B "3 a u « CbCO •EOO* « kl ^ 3S.£:S " — '« u ■ o o 02 >• 3 M a o •o •glES 5 3 O a o a o . o V bo O.-Hfc,c9*.SOJ309fl9'S 03 J Wfc a, 63 o-OiE-i oa J en 1 5" S » bog 5ZH o 'C 3 SOT « I 0_0 O ©"S i O o Oi,5 H a o •a <3 a : bo • a .••c . • M (1) a5 s5 .2a "a ♦- « a 4* o o o o S o_o I i-2 I o o o o o o I f : V 0»' — bi u 4) «> ?• B Kfe .eo3Kj.tfa ►^ws*^ ^ 09 3 • t> s a » o c .§J3 «^ a o o o o a aj3 teaQtE|.-SCL, >^M>qa oa'-^OTM a<)«M I .a -aiv^nnofi •ttUIWJ •pu»ipoo^ SUKVEYS AND CONSTRUCTION. 103 9 o o a 09 09 >> e or * s 08 "^ ^ a s| g.S, aj S S 02 .e 00 CiC a H •o B o( V B e B S 0) d o c m a s . cA .s SQ a > « I S. tx) u^Soj^cs I ® 9 *j = «, •" aw t: o * oj "O cS O*^ OS .2 03- in 3 a . o '1 «> 3 o '»' li u u ^5 B lis o w el a W g « "a o8^ B&H 3 &%<^ t!* 02 ■Bs oj * O bI^ 2 OS " h;q5 o .1 a 4> B O .2 .J a oi ^« uffi OS . s§«S o 2ob 2 Of>,a OS B DO B > OS •3 o « a ot « a tie is as . fc B " > > V (5:35 — "^^i Si 8j B oa.2* B a) Bh^ 3 > 3 S a 09 bo Ph FQ fQ Sb.S a aj 2 a o 09 g.- • »3 aj o S s > m « a a C o a S "3 ^ CQ et >, «^ > « 0> a ^^ ^ 09 (S fd-;ta-;aQaQaa u 'u a *< S lit "* Lj •*-• ^ ♦* WtC^ HO 2 'U]B}ar.oj| ■9U]«J(I •puvipooji > 01 P. o V bO O ► S o 33* •a a _a " ^'B t£ C9 ^ fcjj CO *<* O^ •a 8 "* O O O a O O O-O' "-"UTS 3^3 73'- 0* •3.3 .S «► •2 a $73=: a ^.2 i§§J a OS di^dao i-i^dasa 'uisfDnoji 104 ENGINEERING. 1 > 1 • i > ao DO s m a a p. m <9 ^ n O « O O a o « "S o o o X a; M H IS Q M »4 •< H A 03 O O c3 > S " 43 h a .2 o ■ S : o s 93/B.ZoSoSVu.l^ol S.S d o 'S O b bi b •O ••-• '-^ '-^ o o ^J^-S-S^tS *-^ 0} 5 'w^ OJ ?^ 0* 4> : u : a : V a o •5 a « 01 i> I* •S.S ■•3 £ \>^ ■ at • |3 2 S _ijt-i o a a o « • > a a S.2 .2 "^ 2 25^5 S^ I— I oj 'i "-^ p< t>,2 o« M O C M d o u o o "2 •c H 8> ii a -Eb d 09 o d d 5 o •J • 0/5 o • W SZ5 "^ d IE a «] :l d d b d d^s-S^^w- oj ^ d; w J •-; 2 ;. ■ & bi o « o .5 la •aurejj ■pnvipoo^ O d s I 3 GQ o .d oa ' _. « ■B.t d «< Is -8 08 1 en d "3 bi o I. a OQ « « a > - o.S'S s. on ^.2 o "^ •a a •a c •a .^-si d o •■3 <( o e •J •c •J g d o e s WQH-^d&:6a®d 'oj«)anoj{ •pw'd •Uroipoojji^ SURVEYS AND CONSTRUCTION. 105' • t •pnwjpoo^ ■I p. o o 1 t4 OB "So a 3 s o I o 1 o o a •: ^3| o 'unnnno]! -pnvipoo^ a i <9 a • M iT a « « U >' • -4 ^ V Oh «CU as e) '1 / « «> * -• « -3^ a> H-a s v> « !f{ o-a Oi 5ii eS 9 O >- 03 At at H «>-■ o o •s •-3 tio a o 9 o u o H 0) J) fcSJ -2 o 01 CO 9 O Q o a .M 9 fli a> ^a 002 o3 ^ O O tCCL, ■5 9 5.S PS § 09 trt g< pL, OS fcS ■7^ '0-« hn-2 9 a> o Sot 2 V 9* 03 . .^ ♦J » •■' i! P 4) o S"* 9 9Ja'2 o — < ••J 9 ••- 9 03 u ■•-» oi ot o o : 9 t- : 03 4' ■ te '' .2 £2 9. ^^ o ^-^n v o3 9 902^ o! O-*- 9 OS O b 03 •O 9 3 O S • «5 u q3 C3 ^^ u SOS CO « J3 CO kl ■Jli 9 O o bo y. OS 9 ^ 9 =s J3 03 tH &4 ^S« m a o a. u O 1-9 o o o o o o o ^3 nj3 ^^ T3 T3 ^3 T3 9. J M o o o tS 'O T3 9 'O O a> a wo cJcd -• 5; m Q 9 a o u OS 00 a a 03 9 9 2t3_; _ 9 OS - 9 0) ° o . j; . h s • •►J . • ■ai«;nnof[ •9UIB.IJ; •puwipoojii li i iiiiUUilJi ,. .) lOG CONTRACTS. 1: ■r 1 CONTRACTS. We now proceed to consider matters more particularly pertaining to contracts. Some seventy-two in all were entered upon before the date of our Commission, which may be grouped as follows, viz. : — Telegraph Construction. Nos. 1, 2, 8, 4. Road-bed Construction : Woodland region — Between Ottawa and Nipigon. Nofl. 12, 16, St. Between Nipigon and Fort Garry. Nos, 5, 6a, 13, 14, 16, 25, 33, 41, 42. Prairie region. Nos. 48, 66. Mountain region. Nos. 60, 61, 62, 68. Steel Rails. Nos. 6, 7, 8, 9, 10, 11, 44, 45, 46, 63, 64, 66. Bolts, Nuts and Spikes. 29, 80, 31, 32, 36, 47, 60, 61. Transportation of Rails. Nos. 17, 18, 20, 21, 22, 27, 28, 34, 39, 62, 69, 70. Minor Construction — Ties, Engine-houses, Station buildings, &o. Nob. 19, 23, 24, 26, 32a, 86, 38, 40, 49, 56, 67, 68, 59, 64. Equipment, SfC. Nos. 66, 67, 63. Operating — Pembina Branch. No. 43. CONTRACTS. 107 The elpenditure upon constrnction for each fiscal year, from Ibt July, 1871, to 30th Jane, 1880, is given below; and (for convenience of referencey the figures already given in respect of engineering are here reproduced in a parallel column. Year. 1871 1871-1872 1872-1873 1873-1874 1874-1875 1875-1876 1876-1877 1877-1878 1878-1879 30th June, 1880 Total Surveys, Explorations and Engineering. $ cts. 30,148 32 489,428 16 561,818 44 310,224 88 474,529 19 791,121 19 754,624 57 322,696 42 281,123 92 150,973 68 4,166,687 77 Construction, including Fort Francis Locks. cts. 1,071,712 48 2,555,445 87 936,526 40 1,905,677 71 1,959,161 55 3,893,549 04 12,322,072 05 Grand Total. cts. 16,488,759 82 TELEGRAPH LINES. The first contracts made in connection with the Canadian Pacific Railway related to the construction of telegraph lines. The Statute entitled " An Act to provide for the construction of the Canadian Pacific Railway" was assented to on the 26th of May, 1874, (37 Vict., Chap 14), and contained the following sections concerning works which embrace the construction of the telegraph line : — " Seotiou 5. A line of eleotrio telegraph shall be construoted in advance of the Bald rail- way and branches along their whole extent respectively, as soon as practicable after the location of the line shall have been determined upon." *' Section 7. The said Canadian Pacific Railway and the branches or sect'o ib hereinbefore mentioned and the stations, bridges and other works connected therewith, and all engine*, freight and passenger cars and rolling-stock, shall be constructed under the general superin- tendence of the Department of Public Workb," 108 CONTRACTS. ■ ri' .i Under the date of 18th June, 1874, the Government issued the follow- ing advertisement : — "A. "Canadian Paoifio Rftil way Telegraph Line. " Propoiala are invited for the erection of a line of Telegraph along the general route of the Canadian Pacific Railway, as may be defined by the Government. " The proposals to embrace the following points, viz. : " The furnishing of all materials, labour, instruments and everything necessary to put the line in operation. " The maintenance of the line for a period of five years after its completion. "In the wooded sections, the land to be cleared to a width of 132 feet, or euch greater width as may be necessary to prevent injury to the Telegraph from fires or falling trees. " Distinct proposals to be made for each of the following sections : such proposals in each oase to state tbe time when the party tendering will undertake to have the Telegraph ready for use : — "(1.) Fort Garry to a point opposite Fort Pelly, about 250 miles. " (2.) Fort Garry to a bend of the North Saskatchewan, about 500 miles. '- (3.; Fort Garry to a point in the longitude of Edmonton, about 800 miles. " ( 4 ) Lac la Haohe, or other convenient point on the existing telegraph system in Britidli Columbia, to Fort Edmonton, about 550 miles. " (5.) Fort Garry to Nipigon, Lake Superior, about 420 miles. *' (6 ) Ottiwa to Nipigon, Lake Superior, about 760 miles. '' Tbe above distances are approximate. They are given for the general guidance of par* ties desiring information. *' Any increase or diminution in tbe ascertained mileage after construction will be paid for or deducted aa tbe case may be, f t a rate corrpsponding with the sum total of the tender. " Parties tendering must satisfy tbe Government as to their ability to carry out tbe work and maintain it for the specifi 'd time. " Proposals addressed to the Minister of Public Works will be received up to the 22nd day of July next. " By Order, " cSigned) F. BRAUN, " Secretary, " Department of Public Works, "18th June, 1874." Under the same date a memorandum was prepared as follows :— " MElfOBANDUM. " Information to Parties Propoaing to Tender. " It is deemed best to make no bindingstipulntions aa to the form of proposal, so that par- ties tendering may be at liberty to'state their own t^rms and conditione, leaving the Govern- ment to accept the offer which in the interest of tbe public may be found most advan- tageous. CONTRACTS. loa work 22Dd " At the same time it ii considered advisable to furnish some diita for the guidance of parties tendering in order that proposals may be made on the same ba^is and ba uniform in essential points. "The following is, therefore, with this object In view, submitted :— "Ist. It is intended that the Telegraph shall be built along the lini to be adopted by the Government for the railway across the continent. " 2nd. The general character of the country to be traversed by the railway is described in the reports relating to exploratory surveys recently published. ** 3rd. The several routes now under consideration and survey are also referred to in the above reports. " 4th. When the route is adopted by the Government on any particular section, the line to be followed by the Telegraph will be defined on the ground by Government officers. " 5th. Through forest the timber must be cut down and completely burned (cleared) to a width of two chains (132 feet) to prevent injury to the Telegraph from falling trees or fire ; at the option of the contractor valuable timber my be cut in lengths, hewn, piled and reserved at his risk. " 6th. Along the cleared ground a pack trail or road to be made for the purpose of carry- ing material for constructing the Telegraph, and for effecting repairs. "7th. Through forest the poles should be of moderately large dimensions and of the best available timber to be had in each locality. "8th. In prairie sections, when suitable timber for permanent poles cannot 1><4 ohtainod until the railway be constructed, and the means of conveying them from a distance thus provided, the poles may be of an average light description, and of such timber as can most conveniently be procured. " 9th. In forest sections the poles may be erected 132 feet apart, and the wire to be used may be that known as No. 11. *' 10th. In prairie sections, the poles may be erected 176 feet apart, and the wire to be used may be that known as No. 9. " 11th. Each tender will specify the kind of insulator, as well as all other apparatus and materials proposed to be used. " 12th. Parties tendering may stipulate for maintaining and operating the line for five years, or a longer period. " 13th. On account of the difficulties in the way of transporting building material, it is not expected that the Telegraph will, in the first place, be so permanently constructed as could be desired. The main object, however, is to provide a pioneer line throughout the whole extent of the country, to assist in the building of the railway and settlement of the country. On the completion of the railway through any section, the Telegraph may then be xeoonstructed under new arrangements. " 14th. In the advertisements the sections are placed in the order in which parties tendering may propose to finish the erection of the Telegraph, and they are at liberty to m*ke a distinct proposal for each separate section, or lor the whole line. " 15tb. The whole of the section between Lake Nipissing and Fort Garry Is wooded, with the exception of about 30 miles of prairie east of the Red River. ** 16th. Between Fort Garry and Fort Felly the country is partly wooded and partly prairie ; the exact proportions are not yet known. 110 CONTRACTS. " 17tb. Between Fort Pel y and Elmonton the oon'itry is prairie. *'18th. Between Fort Edmonton and the telctgraiili ayatem in BriliBb Columbia, the omintry is generally wooded, although aome mixed prairie and woodland is met weat of Fort Edmonton, as well as unwooded bunch grass land in portions of the central plateau of British Columbia. " 19tb. In the valley of the Uiver Thompson there is a growth of flne timber from 6 to lO feet in diameter. It will not be necessary to clear in that locality to the full width of 132 feet, it will be sufficient to clear and burn up the underbrush and lower bronches of the trcM so as to render the telegraph secure from damage. " 20th. The advertisement desrribes the 6th section an extending from Nipigon to Ottawa, but the object being to connect the Pacific Telegraph L'ne with the seat of Govern- ment, it will be sufficient to make a connection with the telegraph system of Ontario at tlie most convenient point. It is reported that a telegraph line will be completed to the south- east angle of Lake Nipisaing before the close of this seaaop. The distance from I*ke 2Iipis ■ing to Nipigon is aV)Out 420 miles. "2lBt. It should be understood that section No. 1 is embraced in section No. 2, and both are covered by section No. 3. '' - Jnd. Tenders should giva a distinct rate per mile for the line through wooded and prsii !« land respectively for the sections where both exist. •• Department of Pcni/c Wouk.s, « 18th June, 1874." At the time of receiving tenders the location of the railway a >ng which the telegraph line was to be erected, had not been determined on. On the 22nd day of July, the day named for the final reception of the tenders, a large number had been received. In the Department of Public Works the opening of tenders was occasionally postponed beyond the last hour named for receiving them, in order to allow for the arrival of mails which might be carrying some, and which might be delayed without the fault of the sender. In this instance they were not opened till the sixteenth day after that named in the adver- tisement. On the Tth August, 1874, Mr. Trudeau, the Deputy Minister, Mr. Braun, the Secretary, and Mr. Fleming, the Engineer-in-Chief, met for the purpose of ascertaining the contents, and a record of the combined judgment of these gentlemen upon the substance and meaning of each offer was then made ; this original document was produced before qs ^exhibit I). (See page 2, Blue Book Return to Commons, 1st. April, 18*76 ) It contains] one column for the names of the tenderers, one for each section and one for the whole ^line, and particulars are given concerning each section or the whole line in the column pertaining thereto. By GMass a; between intent an attached together order for per mile sidered th the profiti tion and ii be equal t Theai whole of t British Co] f into four p O N: Fc Ec A sepai I lor the who In add Idivided in t Itbat betwet |By another t'ONTIlACTi?. Ill Subsequently on the 12tb August, Mr. Fleming submitted a report in which he points out the general bearing ot the tenders as a whole. (See Blue Book Return to Commons, 1st April, 1876, page 21.) In it hu says : " It !■ olear from the abov* that if the work oan be completed for the lowett tenders it would be best to let the ooDtracts by Beotiom." The Government proceeded accordingly to deal with the works of the telegraph line by sections. /^ » Contract No. 1. Telegraph Construction. By this contract, dated l7th October, 1874, John W. .Siftou, David GHass and Michael Fleming undertook to construct the telegraph line between Fort Garry and a point opposite Fort Pelly, " agreeably to the true intent and meaning of the specification or sidvertisemeni and memorandum " attached to the said contract and otherwise as described in the said contract, together with station hous»'i, and to " maintain the line in good running order for a period of five years from the date of completion," receiving' $492 per mile through woodland, and #189 per mile through prairie land, con- sidered then to h equal to a total of $107,850 for the construction and also the profits of the line, together with $16 per mile per annum for the opera- tion and mamtenance of the line, — which last item was then estimated to ho equal to $20,000. . , The advertisement "shows that for the purpose of receiving tenders the whole of the telegraph line, between the then existing telegraph system in British Columbia on the west, and Ottawa on the east, had been divided into four parts, and numbered as sections, in the following manner : — Ottawa to Nipigon, Lake Superior, (No. 6.) Nipigon, Lake Superior to Fort Garry, (No. ;'».) Fort Garry to Edmonton, (No. 3.) .^ Edmonton to the British Columbia systrm, (No. 4.) A separate tender was invited for each of these sections, as well as one I for the whole line. In addition to the above divisions of the line, Section 3 was sub- [divided in two ways ; by one way into two parts, of which the easterly, Ithat between Fort Garry and Fort Pelly, was designated Section 1. |By another way into two parts, of which the easterly, that between Fort ]>4 ; 8 ) J t n 112 CONTEACTS. Oarry and the bend of the North Saskatchewan River, was designated Section 2. And by the same advertisement tenders were invited for each of these easterly parts of Section 3 ; but none were asked for either of the westerly parts of the said sub-divisions. The «ffect of this scheme was that if any tender for Section 1 or 2 should be accepted, the westerly part of Section 8 would be left without any oflfer concerning it ; and it is for such a part that the contract noxt after this, was made with Richard Fuller, the easterly part alone being! provided for in the contract now under consideration. Contracting! separately for different portions of Section 3 was not the course first! decided on. The lowest tender for the whole of it was accepted, and it! was only after the Government found such tender to be unavailable, that| letting the work by sub-division was entertained. In our report on Contract 2, we discuss the method finally adopted for ? 114 COXTRACTS. i:i trees and brush from centre bo as to make a trail, and keep fires from the posts, with trees twenty feet from centre and leaning out from the wire not cut down : then seventy-five dollan per mile to be deducted from the wood lauds. " 10. The assumed length of the whole roid, from Lac la Uache, or to connect with the telegraph system of Britis'i Columbia to Lake Nipissing, or to connect with tbe telegraph system of the Province of Ontario, is 2,190 miles, of which 1,485 is assumed to be wood, and seven hundred and five (705) miles prairie. '' 11. The average cost per mile for wood lani would be $629, for everything including telegraph clearings, pack trail, station houses, insulators, instrumentf, tools, etc., all of the best description ; but the actual cost of each m'le will vary according to the location of the forest. "12. The average cost per mil ■« for prairie laud will be $2 >9, including everything sa per advertisement and information for parties pr7po8ing to temler, but the actual cost per mile will depend much upcn tbe location; for instance, tbe vorkfrom Fort Garry can be done much more cheaply than the section) further in the interior. " 13. In our estimate we place the wood land from Fort Garry to Winnipeg River, find from Fort Grxry t3 Fort Felly, at $492 per mile, also the prairie land within » distance of 250 miles of Fort Garry, at $189 per mile. ''14. We are prepared to proceed at once with the work, and il the contract is awarded to us will lose no time in carrying it forward under the direction and to the satisfaction of the Government. "15. We will be glad to give full information on every subject in our power if requested so to do. "Dated at Ottawa, this 22nd day of July, 1874. (Signed) ' (4 JOHN W. SirrON, [Seal.] DAVID GLASS, [Real.] " MICHAEL FLEMING, [Seal.]" There is no allusion in this tender to a price for Section 1 as such. The document purports to give some information, and offers to give still more upon matters not necessary to mention, in order to convey a substantive oifer. The tenderers say that in their estimate they place the wood land from Fort G-arry to Winnipeg River, and from Fort Garry to Fort Pelly, at a certain sum per mile. There was no section correspcnding to the distance between Fort Garry and "Winnipeg River, and it does not seem to us reason- able to say that these remarks amounted to a tender for the distances, or either of them, to which they thus allude. Neither does the proposal to complete Sections 1 and 5, respectively, within stated times, support the view that they were tendering for less than the whole line. Mr. Sifton, in his evidence, stated that this reference to the time of completing Section 1 was made only on the understanding that his firm should get the whole line. CONTllACT No. 1. n& On the 6th October, 1874, the Secretary of the Department telegraphed to Messrs. Sifton, Glass & Co., asking if they were prepared to contract for Section 1. Two days afterwards they sent a message to him enquiring: "Does Section 1 extend from Fort Garry to Edmonton." The transaction of the Department with Messrs. Sifton, Glass & Co., so far as it concerns Section 1, may b3 divided into two branches : (I.) Treat- ing them as tenderers for that section. (2) The terms finally granted to- them. As to the first branch, we think it clear upon the evidence that the Department founded this contract upon the theory that in the public com- petition of July, 1874, Messrs, Sifton, Glass & Co. had made a distinct offer for the construction and maintenance of Section 1. It is not necessary, therefore, to consider how far it w^ould have been advisable to enter upon negotiations disconnected with that competition. "We agree with the combined judgment of the Deputy Minister, the Secretary and the Chief Engineer on this subject, as recorded at the first consideration of the tenders on the 7th day of August, viz. that the tender of this firm related to the construction and maintenance of nothing lesn than the whole line. We think there was no more ground for the Chief Engineer interpret- ing it afterwards as a tender from Fort Garry to Fort Pelly, than for calling it a tender from Fort Garry to Winnipeg River. The same language is used concerning each of these distances, and as there was. no section front Fort Garry to Winnipeg River, it follows that the said language ought not to be construed as applying to any of the advertised sections for which separate offers might ])e made. Assuming, however, that it was competent for the Department in this case, without breach of faith to other competitors, and for other grounds not disclosed by the evidence, desirable to treat the tender in question as a distinct offer for Section 1, we have not found in that document, or in any other evidence, the reason for'granting to Messrs. Sifton, Glass & Co., terms so advantageous as those covered by this contract. In order to consider this branch of the transaction, it will be necessary to recall Mr. Fleming's report of 10th August, 1874, in which he gave the prices asked by the six lowest tenderers, and ranked them as follows : — 1. R. Fuller. 2. II. r. Dwight. 116 C0NTRA.CT3. i< >!■ 3. Waddle & Smilh. 4. Sifton. Glass & Co. 5. Mackenzie. Grier & Co, t). Mitchell. McDonald & Gough. Fuller's offer could not bo utilized for reasons explained in our report on Contract 2 ; the one finally made with him for the residue of Section 3, after deducting this Section 1 . On the 16th September, 1874, the Secretary of the Department enquired ivhether Mr. Dwight was prepared to carry out his offer for Section 1. On the next day Mr. Dwight answered in the negative. This, according to the ranking by Mr. Fleming before mentioned, and contained in the report of the 10th August, left Waddle & Smith's tender the only obstacle to treating witli Sifton, Glass & Co. The offer of Waddle & Smith was, as stated in Mr. Fleming's repoit before mentioned, $106,2-50 for construction, and $3,000 per annum for the five years, with profits for maintainance, they finding offices at an average distance of twenty-five miles apart. It appears to have been decided that this ought not to be accepted, though a better offer for the Government than the final one by the successful firm. A report of Mr. Fleming, dated 18th October, 1874, i)Urports to give a reason for this decision. This report, however, was made several days after the letter of Mr. Braun to Messrs. Sifton, Glass & Co., enquiring on 6th October, if they were prepared to contract, and after their answer in the affirmative. Mr. Fleming's reason is as follows : " It has already been determined not to award two sections to TNlessr?. Waddle & Smith." This remark has reference to the following circumstances : — Waddle & Smith had made the lowest eligible tender for Section 4, as well as for Sec- tion 5. In a report of Mr. Fleming, of 12th August, 1874, hereinbefore alluded to, and in which he recommended, amongst other things, the letting of specified sections on specified tenders, he made the following remarks, concerning Section 4, which extended from the telegraph system of British Columbia to Edmonton : — " Tho Dezt lowest is the tender of Waddle il' Smith, of Kingston ; but as these gentlemen are the lowest for Section 5, which, if awarded to them, would require all their em rgirs to complete it, and as Section 5 extends from Fort Garry to Lake Superior, while Section 4 is for a grf at extent beyond the Kocky Mountaiar, I do cot think it would be advisable to place both sections in tlie hands of the gentlemen last referred to." the a great see deteri to Me adjoin termii] Garry award( eviden< for Sec they hs for Sec Waddk oa cont] 5. We influenc this case posed or Co., and with the security Section ; We* awarding adjoining sideratior it seems advised a River, ar Columbia practicall] Tend( one contra it would 1 report of 1 CONTRACT No. 1- 117 This language conveys to us the idea, that Mr. Fleming's objection to the award of the two sections to Waddle & Smith, was based upon the great intervening distance between Sections 4 and 6, and wo do not see that the adoption of this last mentioned report of Mr. Fleming determined that two sections should not in any case bo awarded to Messrs. Waddle & Smith, particularly if they were, as in this case, adjoining sections, with Fort Garry, the best base of supplies as a common terminus. It decided no more than that two named sections, one from Fort Grarry eastward and the other from Edmonton westward, ought not to bp awarded at the same time to Waddle & Smith. Mr. Trudeau in his evidence suggests another reason for passing over Waddle & Smith's tender for Section 1, viz.: that they omitted to furnish the lequired security when they had the opportunity of doing so in order to take another contract, that for Section 5. We deal with the question whether on that occasion Waddle & Smith failed in doing what was required of them in our report on contract No. 4, which was given to Oliver, Davidson & Co., for Section 5. We think, however, that their action or omission in that case, did not influence the decision to pass them by in favour of Sifton, Glass & Co., in this case, for the evidence shows that the Secretary of the Department pro- posed on the 6th of October, 1874, to contract with Messrs. Sifton, Glass & Co., and that on a later day, the 21st of that month, he was corresponding with the Minister of Justice, concerning the nature and amount of the security to be furnished by Messrs. Waddle & Smith- in relation to Section 5. Idle & )r Sec- Ibeforo [etting larkf, sritish Itlemen [rgirs to 4 is for Lo place We cannot learn from any of the witnesses that the expediency of awarding this contract to Messrs. Waddle & Smith, together with the adjoining section from Red River to Thunder Bay, was taken up for con- sideration. None of the officials state that this feature was discussed, and it seems to have been taken for granted that because Mr. Fleming had advised against giving them two sections, one from Lake Superior to Red River, and the other from Kdmonton to the telegraph system of British Columbia, therefore they ought not to have two sections, though having practically a common terminus at Winnipeg. Tenders had been invited for the construction of the whole line under one contract, and that course was not adopted, apparently on the ground that it would be built at less expense with separate agreements. Mr. Fleming's report of 12th August, concerning the comparative cost of building the line K ' ' 118 CONTRACTS. "1:1 fi'i : I' S on one tender or on several, reads : "It is clear from the above that if the work -can be completed for the lowest tenders, it would be best to let the contract by sections." There is no evidence of a Departmental decision, that under no circumstances should adjoining works be carried on by a single manage- ment ; but in this case it seems to have been assumed that there had previously been such a decision. Whether at the time of discarding Messrs. Waddle & Smith's tender, the expectation that the whole distance from Fort Pelly to Thunder Bay, Sections 1 and 5, would, under two contracts, be built with more speed and -eflficiency than under one, and so compensate for the higher cost which was finally promised, may be open to argument. There were no reports on that question, and, as before mentioned, apparently no discussion. We arc not able to offer any decided opinion oil it. In reaching the terms finally conceded to Messrs. Sifton, Glass & Co, none more favourable were passed by — except those offered by Messrs. Waddle & Smith. The latter firm being disposed of as just mentioned, the Department, on 6th October, 1874, communicated th-ough its Secretary to Messrs. Sifton, Glass & Co., asking if they were ready to -contract for Section 1. The day before that Mr. Fleming had reported specially on the state of affairs in relation to this section, as follows : — " Ottawa, 5th October, 1S74. ^« F. Bbau.v, Esq , " Secretary Fublic Works. '* Sib,— Keferritig to my letter of September 16tb, reBpecting the tender for the Pacific Rail- -way Telegraph, and the guV sequent award of Section No. i to the parties represented by II. F. DwigL t, it appears that these i arties (who have recently been here) now decline to execute tho I contiact on the ground that they did not embrace tbe clearing required in the wooded portion ta their calculations, and they would le requiied to be paid extra for clearing at the rate of | $320 per mile. "On refeifnce to the comparative statement prepared when the tenders weie opened, embraced in my letter to you, dated August 10th, I find that the assumed length of woodland, | adopted at the time for calculation, was 200 miles in this Section (No. 1.) " Assuming that these parties were permitted to amend their tender by adding the clearing I f.i ;'320 per mi!e, or say $64,(XX), added to their original sum, $56,250, would make a total sumj , :. 124 CONTIIACTS. receiving the i^rofits of the line, docs not seem to have occupied the atten- tion of the Department. There is no record or other evidoncn of any official opinion on the subject. The evidence shows that on Hth Octo})t'r, 1874, the day on which Mr Glass interprets his lirm's tender, their whole demand was, by the Depart - )nent, directed to be embodied in the contract. A memorandum concerning this contract is produced in the writing of Mr. Fissiault, the law clerk of the Department, dated 14th October, 18*74, mentioning that an Order in Council would bo required, because the lower tender of AVaddle & Smith had been passed over. The contract was madr without such authority. In giving evidence, Mr. Mackenzie and Mr. Trudeau stated that as they understood the rules of practice on this subject, an Ord in Council was not required. The following is the language of p" ol section 21 of the " Act respecting the Public Works of Canada," i .ssed in 1867 : "In all cases where it seems to the Minister not to be expedient to let such work to the lowest bidder, it shall be his duty to report the same, and obtain the authority of the Governor, previous to passing by such lowest tender." AVe conclude that in this contract, and in addition to any advantage in being ranked as competitors for Section 1, the contractors got that to which they were not entitled under the tender made by them in competition with others, inasmuch as they obtained : — (I.) A higher price for maintenance than a fair construction of their tender would give. (2) The profits of operating the line. The evidence does not disclose the reason ior conceding these advan- tages, although the gentlemen then acting respectively as Minister, Deputy Ministoi' and Chief Engineer, as well as others, have been examined touch- ing the subject. Several witnesses have been questioned upon the manner in which this contract has been executed. The tenor of their evidence is to show that a mistake was made in placing too much reliance upon the fact that the con- tractors had to maintain the line for five years, after its completion ; this has not proved a sufficient inducement to make them erect a good line in the first instance. CONTRACT No. 1. 1S5 ing of 1874, lower » mad»> ■udeau Or<3 P" oi eised in lient to J sann', »y such )n Ich thii le con- line in Mr. Rowan was the District Engineer at Winnipeg during the construc- tion of the telegraph line and had considered this question. His opinion was that a Government Inspector ought to have been appointed to see that the work was efliciently done in the first place ; ho had rocom mended that loursc, but it was not adopted. In his view, the operating and maintaining the line would have been better in the hands of the Government, than of the contractors, berause it would have been so managed us to be of more use than it had been to the Government and to the public generally. lie testified that the poles had not been properly set in the first place, that it had not beeu properly maintained, and that communication had been fre- ^Al^.. ^~*-^\ CONTliACT No. 1. 127 •« The break thus left at the crossing of the river was supplied by a line constructed under a contract between Mr. Rowan, on the part of the Gov- ernment, and Mr. Sifton, of Sifton, Glass & Co. Mr. Rowan reported to the Department on the transaction, and it was carried out at a price of $600— half for construction and half for maintenance. Up to 30th Junp, 1880, the amount paid on the main contract was as follows : nOth June, 18'76 $18,250 1876 50,200 " 1877 31,350 " 1878 2,000 Construction $101,800 Maintenance 17,285 Total $110,085 '"I kmniiig Id. Wo :lnpsetl )ng the The CONTRACr No. 2. Telegraph Line. By this coiiiract, dated 30th October, 1874, Richard Fuller undertook |to construct the telegraph line, on that portion of Section 3 between Fort Pelly and a certain point in the longitude of Edmonton, about 650 miles in length, agreeably to the true intent and meaning of the specification or nemorandum annexed to the contract, and as more fully described in the ^aid contract, and also to maintain the line in good running order for a beriod of five years from the date of complecion, receiving for the construc- (ion $117,250, equal to $213.13 per mile, and for the maintenance $13,000 per annum. As explained in our report on Contract No. 1, no separate competition m invited fcr the distan. e covered by this Contract No. 2. At the oi)cnir.g of the tend. Ist September, 187G. 3 years. .500 miles yer year. 3 years. 4 years. On the 15th August, 18t4, the Dei^uty Minister of the Department telegraphed to Mr. Fuller that his tender was accepted, subject to conditions then mentioned concerning security. On the 18th of the same month the following telogrophic message reached the Department : — "Taccppt conditions mentioned in your telegram yesterday. Before proceeding to Ottawa, please to inform me if I>m to rim line to Fort Pelly by way of Fort Ell ice, that I may secure poles and have them planted forthwith. "II. FULLEIi. " The mention of Fort EUice in this telegram is the first allusion to a difficulty which was afterwards made more apparent, and finally prevented the Government from taking advantage of this, the lowest tender for| Section 3. Meither the advertisement for tenders lor this work, nor the memoran- dum of information which followed it, indicited the location which was afterwards adopted or gave data from which one could learn approximately the proportion of woodland or prairie to be crossed on Section 8. Th memorandum of information contained the following : — (Seo. 4.) " When the route is adopted by the Government on any particular aectton, tb line to be followed by the telegraph will be defined on the ground by the Government oiBcen.' (Sec. 10 ) " Between Fort Gairy and Fort Pelly the country is partly woodo I and pirtlv prairie, the exact proportions are not yet known." (Seo. 17.) 'Betv. ^en Fort Pelly and Edmonton the country is prairie." ; .i.( " Sij;,- ^'overnmen a'tered ten " I hav r lion 3 body i for .etion. ber, 1875 iber, 187G. per year. partmeni >nclitions Lonth the seeding to I that I may ] Ision to a 1 ire vented I Inder for lemoraii-l lich was Iximatelyl 8. Th| eotlcii H . officers. The map published with Mr. Fleming's report of 1872, show jd the then projected location of the railway to be south of Lake Manitoba, and through a country almost entirely prairi<;. Mr. Fuller, apparently, relying on what he considered to bo authentic information, assumed that the loca- tion would be on the southerly route near the Riding Mountains, and made his tender at the gross sum of $150,000, equal to $105 per mile, without any distinction in price between woodland and prairie. It does not appear from the evidence that Mr. FuUit was informed, in answer to his telegram, whether the line of Section 3 would be by way of Fort Ellice. At all events, after some further correspondenc; between him and the Department concerning securities, he proceeded to Ottawa on busi- ness connected with this matter, and while there objected to entering into a contract on the terms of his tender, demanding an additional price of $20 l>er acre for the clearing, which would be rtiquired through the woodland, v.pcji the northerly route by way of the Narrows of Lake Manitoba. i iC substance of the amended otler, and the bt-aring of it upon the pobjtion of the Government in regard to Section o, will be found in the following letter of Mr. Fuller and the report of the saino date by Mr. Fleiiing : — '' Ottawa, IGtb September, 1S74. " Siu, — Uefening to my letter of the 1 Ub in.-,t int, and joir intimation to me that the Government, in justice tJ other contractors and tho public interest, cannot agree to my a'ltired terms with reapeot to S etion No. 1 on account of the clearing, " I have no objection to carry out the work on the balance of No. 3 for the aum left by <1<> luotiog the aciount of Section No. 1 from the amiunt of Sojtion No. 3. *• I have the honour to be, Sir, " Your obedient servant, «U. FUrXER. "Sanufokd i lbilv',?. Esq., «• Chief Engine r, r c. Olfcawt." '• C.lN.\l)IAK Pacifio Kailwav, " OKFrCK OP THR ExUIKKERIxClIIEr, " Ottawa, 16th September, 1874. " S:r,-> With the view of amnging tome of the terms of contract wiih Mr. K. Fuller, to vTlion Wds R rded the construction of that portion of the Pacific Telegraph line, between I'ortB Gan-^ t <•. Ed by part e, and 82,250 L ofl'er f these took a & Co. of t>'' ost of by any its as a . for sec- ihrougli Depart- fact prc- id oiler iqueuliV report of ^-antagos closing the arrangements, to have been adopted as a basis for Iho action of the Department. The evidence of Mr. John AV. Sifton, alluded to in our report on Con- tract No. ], estimates his net receipts from the wording of the line at $1,300 for the five years. Therefore, though not able to form an opinion upon the profits which in October, 1874, might have been reasonably expected, wj have data upon which w^ can give the actual elfect of th.» course adopted in this instance. . . ... "We conclude that the two contracts entered into by the Government for the construction and maintenance of the whole distance of section 3, the said contracts being Nos. 1 and 2, have resulted in the contractors receiving a lower compensation than w>)uld have been received by Mr, Fuller ha his amended offer for the whole been accepted, arn^ that in obtaining this Contract No. 2 the contractor got no undue advantage. In this contract the time named for completion of the work was 1st July, 1876. It was completed so far as to be ready for operation on the 15th of that month. In the specifications furnished to tenderers the dis- tance over which this contract extended was described as prairie. After the contract was made it was found that, the line passed through some wood land, and Mr. Fuller claimed for clearing through this the compensa- tion of $30 per acre as an extra. His claim was not allowed in full but a compromise was effected, by which he accepted $25 per acre for this clearing, and he w^as paid altogether for that item $10,200. He also made a claim for delays and losses occasioned by his freighting parties being stopped by Indians. The correspendence on this subject between him and the Depart- ment is set out in a return to the House of Commons dated 8th March, 1880, (not printed). These freighting parties had been prevented finishing work [for Mr. Fuller, as provid . for in the contract with him, and they sued him iu a court in Manitoba, recovering judgment againtshim for their damages. His claim against the Government was for reimbursement. It was not allowed in full, but he received about half the amount that he had expended, and his claim was finally arranged by a payment of $1,367. When he first took his supplies upon the ground ready to proceed with the construction lof the line, it was not located, and he deposited his supplies at a place Iwhich turned out to be at some distance from the line as finally adopted. IThis necessitated a second transportation, and ho claimed to be reimbursed Ifor this. His demand was satisfied by payment of a portion. '( \ 184 CONTRACTS. » I • After the construction of the line, abont twenty miles of it was burned down by prairie fires on two occasions. This resulted in inten uptions and the Government deducted from the contractor's allowance for maintenance I960 on this account. This was the most serious omission in the main- tenance of the line according to the contract, and on each occasion the line was put into working order as quickly as possible after the fire. The con- tractor has been allowed to operate the line and take the receipts as his I compensation. Xo tarifF having been arranged between him and the Q-overnment, he established one to suit himself, at $1 for ten words or | under, and seven cents a word over ten without reference to distance. At one time he made a proposal to operate the line on specified terms, and the following Order in Council was passed : — " Copy of a report of a Committee of the honourable the Privy Council, approved by IIji Excel 'enoy the Governor-Oeneral in Council on the 18th March, 1875. "On a lefort dated 17th March, 1875, from the lion, the Minister of Public Worlif, I Btaticg that the only portion of the Canadian Paciilc Telegraph line for which arrangemenltl have rot Veen made for opeating is that part lying between Fort Pelly and Edmontrn, fori which Mr. II. Fuller U contractor, ilnd recommending that he be authorized to make ii lanjien^ontB with Mr. Fuller to operate the same on the same terms as the other contractors.| '\ie Committee f^ubmit tl e abcve reccmmendation for Your Exoellenoy'a apprcval. Certified. W. A. HIMSWORTII, C. P. C. This did not lead to an agreement, and Mr. Fuller has worked the lind without any recompense, except that which he has derived from busi] iiess over it. Working it upon these terms has been a loss to him. A report from 2vlr. Fleming, dated 13th January, 1879, states that hJ had communicated upon the subject with Lieutenant-Governor Laird, wtJ would be well informed on it, and he had found that the line betweei Livingstone and Battleford had been in pretty regular working condition| that the number of days on which communication had been broken wa twelve for the previous year ; that between Battleford and the westen end, Edmonton, the line had been down for fifty days in the same perio Deduction from the price of maintenance was made on this proportioij upon the said report of Mr, Fleming. In this same report Mr. Flemiii stated that Mr. Lucas had inspected the line from end to end, and ha found certain defects which it would cost about |6,000 to remedy. Thj sum was for the time kept out of moneys going to Mr. Fuller. We find that the contract has been fulfilled as well as could be ci pectcd under the circumstances, and that for such default as there has beel Bamar< memorj graph a as 8ecti( Columb in the si and to o whole U for the niaintenj he furthi and pay ( valley of British C Inth on the Ttl as well as alone, the CONTBACT No. 2. 135 »urned US and enance 1 main- he line he con- s as his I ind the vords or | !e. 1 terms, red by II si )lio Workt, aDpementi| ftontrn, fori ) make ii :ontractors| rcval. :. r. c. 1 the lin«| cm busii that li| lird, viU betweeJ londitionl jkeii wa wester le perio ^oportioij riemii] I aud haj ly. Tl Id be el has beel the Government has kept back from Mr. Fuller out of moneys payable to him, such amounts as were, from time to time, considered to be sufficient to protect the public interest. Up to the 30th June, 1880, the following sums have been paid on this contract : — 80th June, 1876 $76,950 do 1877 21,400 do 1878 3,250 J do 1880 14,000 Construction $15,600 Maintenance 21,677 $137,27; Contract No. S Telegraph Line. By this contract, dated the 10th of November, 1871, Lrancis Jones Barnard undertook to construct and finish, according to the specification or memorandum marked " A " attached to the said contract, the line of tele- graph along that certain section of the general route of the railway known as section 4, between the existing telegraph office, at Cache Creek in British Columbia, and Fort Edmonton, about 550 miles, and as more fully described in the said contract, and also to maintain the line in good runnmg order* and to operate the same for five years from the date of its completion, the whole to be finished ready for use on the 2nd October, 1876, receiving for the said works $495 per mile for construction, and for the maintenance and operation without profits $46.50 per mile per annum ; and he further undertook to keep an accurate account of the receipts or messages and pay over the same to Her Majesty. Cache Creek is a point in the valley of the Fraser River, and on the then existing telegraph system in British Columbia. In the schedule of all the tenders concerning telegraph lines opened on the 7th of August, 1874, by Mr. Trudeau, Mr Braun and Mr. Fleming, as well as in the subsequent report of the 10th of August by Mr. Fleming alone, the six lowest tenders concerning section 4, the one covered by thia • It' T^^^^ 136 CONTRACTS. li H .1 5. 6. contract, are said to rank in the following order, the lowest being given tht first place :— 1. W. R. Macdonaid. ' * 2. Waddle & Smith. ^ . , ; ^ ,. l> v ^ 3. F. J. Barnard. j • i ,A«cV' 4. G.W.Wright. . , Mackenzie, Grior & Co. Mitchell McDonald & Co. Mr. Fleming's first report, recommending any action upon the tenders lor the telegraph line, is dated the J2th of August, 187 1. In that ho deals with the expediency of letting the lino in separate contracts for separate sections rather than by one contract for the whole, and he also recommends the acceptance of certain tenders for respective sections. Amongst others, ho recommends the acceptance of F. J. Barnard's tender for the section covered by the present contract. In that report he gives his reasons for advising the Minister to pass by the tender of AV. 11. Macdonaid, the lowest , as well as of Waddle & Smith, the second lowest. In his view the offer ol W. R. Macdonaid was so low, and the time within which he would under- take to complete the work so short, that he had grave doubts as to the tender being bjnd fide. He pointed out that the tender of Waddle & Smith did not seem to be a proper one to accept ])ecause those gentlemen were tho lowest in their offer for section 5, which, if awarded to them, would require all their energies to complete, and as section 5 extends from Fort Garry to Lake Superic , while section 4 is for a great extent beyond the Rocky Mountains, deemed it not advisable to place both sections in the hands of Waddlo & Smith. He reported that Mr. Barnard was well and favour- ably known in British Columbia, and believed to be possessed of suflicient energy and resources to carry out anything he would undertake, and there- fore he had no hesitation in recommending that section 4 be placed in his hands. This recommendation was adopted by the Minister, and directions given to the Engineer in Chief to communicate with the respective parties accordingly. The contract was formally awarded to Mr. Barnard in Sep- tember, after Avhich it was prepared and sent to British Columbia for signature, and was executed on the 10th of November, 1874, The Order-iu- Council' prescribed by the Statute relating to public works as a condition precedent to passing over the lowest tenders, was omitted in this case. The contractor proceeded with his work towards Kamloops on the line indicated as the adopted route for tho railway. About five month? | Thi the Dep quence ( in view sary to s regard tt ment, for against t of the 30 at the dai Departme Corr€ concernin led to no i in Council to be take] done after As to lettii of Mr. Fie hands, und August, wi there was i within the states that Kamloops I distance is j year followi not upon th COM TRACT No. 3. 13T ere tlio •equire arry to Rocky hands favour- Ifiicient there- in his lections [parties in Sep- ►ia for ■der-iu- edition 6. Ion the I onth? I after the date of the contract the work under it was stopped by the follow- ing telegraphic message : — •'Ottawa, 9th April, IST). " risconiiniie building of telogrRph line BritiHli < 'oliim^i* iin mlloa, tioax (^lesncl on oM telog aph tiai). an \ clearing twenty feet wi le. "F. RRAIJX, ■ ■ % '' S'crfilarii. "To l-'. .1. Barvaiiu, " Victoria, B.C." This discontimianco led to a corrospondeuco between Mr. Uarnard and the Department on the subject of damages, which he suffered in conse- quence of the unexpected stoppage of his works, as well as the steps taken in view of future operations under his contract. We do not deem it neces- sary to Slit out this correspondence or the contention of the contractor in regard to the position in which he was placed by this action of the Depart- ment, for the reason that it has since been made the subject of a claim against the Government, and has been referred, under an Order in Council, of the 30th of May, 1S79, to one of the ofiicial arbitrators. The claim wus, at the date of our commission, still unsettled and under consideration in the Department of Justice. Correspondence took place between the contractor and the Department concerning the continuation of work under his contract which, however, led to no understanding, and finally on the 22nd of April-, 1879, an Order in Council directed the work undertaken by Mr. Barnard under his contract to be taken out of his hands, under its second clause. This was accordingly done after proper notification to him by the Secretary of the Department. As to letting this contract, we are of the opinion that the recommendation of Mr. Fleming to the effect that the work should be placed in Mr. Barnard's hands, under the circumstances detailed by him in his report of, Iv 12th of August, was a proper one in the public interest, and that at that time there was no more economical method of accomplishing the proposed work within the reach of the Department. Mr. Fleming, in his evidence before us, states that Mr. Barnard had done some work between Cache Creek and Kamloops before he was stopped by the order from the Department. This distance is about fifty miles, and he also states that theline which was in tho year following directed to be built by Mr. Barnard under his contract, was not upon tho line originally contemplated, at the time tho contract was 138 C0:< TRACTS. ¥^ entered into ; that it was between T6to Jaune Cache and Fort George, on another ronto altogether ; that the starting point of that line was a long way - bout 200 miles distant from the nearest work which he had done whi^n he was stopped, and that this direction was not within the original terms of the contract. "We therefore arrive at the conclusion that up to tho 9th of April, 1875, Mr. Barnard was following the terms of his contract, and that the direction given to him in the year following, was not according I to t'le original understanding of the parties to the contract. "We have avoided enquiry into tho particulars or tho validity of his claim against the I Government. Up to the date of our commission tho following sums had been paid] on account of this contract : — 30th June, 1875 $8,000 00 ♦♦ 187G 10,284 91 « 1877 8,900 00 " • 1S78 7,015 09 " 1879 7,700 00 Total $41,900 00 Contract No. 4. Telegraph Line. By this contract, dated 9th February, 1875, Adam Oliver, Joseph Davidson and }.*eter Johnson Brown, undertook to construct a Telegraph] line between Prince Arthur's Landing and Eed River (about 420 miles), according to the specifications or advertisement and memorandum attachei to the contract, and as more fully described in the said contract, and alf to maintain the line in good running order for a period of five years froDi its completion, receiving therefor per mile, $590 for woodland, and $43i for prairie. Mr. Thomas Wells, aJ,Barrister of Ingersoll, wms a silent partner inthi firm, known as Oliver, Davidson & Co. The schedule of the tenders made as hereinbefore mentioned on 7t August, 1874, by Mr. Trudt^au, the Deputy Minister, Mr Braun, the Seen tary, and Mr. Fleming, the Chief Engineer, as well as the report upon the CONTKACT No. 4. 13J rge, on a long d done original ) to the Dntract, cording I have instthe sen paid JosephI ilegraphj miiesjJ lattached md alH ITS fror |nd $43^ ^r in thi| on 1tl| le Secre Ion then ma( jj Mr. Fleming on the 10th of that month, stated correctly that the six lowest were as follows : — •!S^ Tender. CoDStructioii. Maiatenanco per Annutn. Time for completion. Waddle k Smith, Kingston gatton Ai Tbirtkell, Liadaajr Siition, Thomnsoa k Co., Brantford Sifion, Glass « Fleming, Ottawa ... Mackenzie, Grier h Co., Toronto R. Fuller, Winnipeg f 189,120 214,950 343. 1ft:? i:5J,oso !$'288,870 and profits 31.1,000 i $5,040 and proiils Included in con- struction. [Dcluiied in ron- striirtiuii. 70,000 22,500 500 miles p<'r rear. or nioif*. 3 years. I Julj, 18ie. let Sept, 187'J. 14 months. Messrs. Waddle & Smith having been offered the contract, a corres- pondence took place between them and the Government concerning the .securities to bo given before the contract was entered into. This correspondence shows that they offered as such security a mortgage on real estate, which was executed by no Mrs. Sellick as a surety, but which before being accepted as sufficient was withdrawn by her ; after the withdrawal, the Deputy Minister of Jastics, mi a letter dated 6th November, 1874, asked to be informed by the Minister of Public Works whether or not further time was to be given to the tenderers to complete their securities. Mr. Braun in a letter dated 4th November, 1874, to the Minister of Justice requested that all proceedings had with Messrs. Waddle & Smith should be cancelled, and stated that " the Minister would proceed to the consideration of tenders put in by other parties. " We have not been able to discover any correspondence or notice con- nected with security by this firm beyond what is printed in the Blue-I3ook return to the Senate, dated 14th March, 1878, and which does not show that either before or after Messrs. Waddle & Smith took steps towards furnishing securities, there was any notification to them of a definite period within which it will be necessary to complete their security. Mr. Waddle, ouq of the firm, was a witness before us, and then stated that he never had the impression that time was a material element in the arrangement, but, on the contrary, that from what had been said by the departmental officials on the subject, he was led to understand that there 'If Mil f ; 1 1 ! 1 < t i m mmKMimvBimmiBBmm 110 CONTRACTS. was no desire on the part of the Governmo!>.t to have the contract executed until after the end of that year. His ev idence also proves, that he had no- gotiated and arranged at the beginning Oi December for finding other security to fulfil the requirements of the Government demand. That he went t(^ Ottawa about 7th December to conclude arrangements connected with th(^ contract which he then expected to get, and he ihero learned for the first time, that the Government v'as no longer willing to deal with him. H" further said that lie had on that occasion conversed with Mr. Mackenzie, the Minister of Public Works, and had set up the contention that he had not been notified to give security within a stated time, and w^as then proni ised by Mr. Mackenzie ihat if the parties then negotiating \viththe Depart- men*; fjr the contract failed to give the requisite security, he (\Vaddl«\i should have the next opportunity of getting it. As a fact this was about seventeen days after the Departirent had oiTered the contract to Sutton & Thirtkell, higher tenderers, and negotia- tions were then pending for on extension of the time within which they might furnish securi'y. In corroboration of Mr. AVaddle's assertion concerning the willingnes.s of the Govornnient to defer making the contract, there is a letter from tht* Engineer-in-Chief to the present contractors, Oliver, Davidson & Co., dated 29ih December, 1874, before that firm had oflered any st^curity, informing them that the matter could be closed at any time covivenient to them to go to Ottawa. Mr. Mackenzie, when before us as a witn<.ss, wns informed ot Mr. TV addle's assertion that a higher tender was taken up v.ithout his firm hav- ingbeen informed that their opportunity would end at any specified day. He did not remember that there had been any such contention, and did not believe that there was any foundation for it, mentioning Mr. Trudeau'.H carefulness in such matters, apparently as a reason for his belief. Mr. Trudeau was recalled after this evidence from Mr. Mackenzie, and testified that he could find no correspondence b?yond that which was pub- lished, and had no reason to believe that there was any. This fails t > shou any notification to AV addle Sc Smith, or to any one on their behalf, to the eflfect that they would lose their position unless security should be pro- vided by them in a specified time. The evidence leads us to say that in this case after the tender ot V»''addle & Smith, which was understood to be the lowest, was accepted by CONTRACT No. 4. Ul [ Mr 1 hav- i\ not lean's 10, and pub- ro the the Department, it was passed over in favour of Sutton & Thirtkell upon the ground that Messrs. "Waddle & Smith had failed to furnish the requisite security, the fact being that the last named firm had never been notified of any day, before which they were required to complete their security. On the 20th of November, 1871, t\m Secretary of tl\e Department tele- i^raphed to Messrs. Sutton & Thirtkell, at Lindsay, from which jilace their tender was dated, asking whether th?y were still prepared to execute the works for the price named in their ti-ndor and to furnish the necessary secnrity. This firm was composed of K.T. Sutton, of Brautford, and "NV. .1. Thirtkell, ol Lindsay, uj)on the understanding between them that the latter should have no r'^id interest, but should allow his name to be used solely for Sutton's purposes. Thirtkell had left Lindsay before the 20th November, 18V4, and was then living in the United States. On the 24th November, 1874, the Secretary received a telegram, "Yes," from ]{. T. Sutton. After this, several communications, some by telegraph and some by letter, passed betwei-n the Department on the one part and Sutton or his solicitor on the, other part, by which ihe time for putting in the necessary security was extended until the 19th December, 1874. All but one of these communica- tions are priated at i>ages 6 and 7 of the Blue-Book return to the Senate, dated 14th March, 1878, and will show the steps in this negotiation up to IGth December, 1874, when an extension of three days was asked on behalf of Messrs. Sutton & Thirtkell. That one, a material link in the :tory, is produced from the records of the Department It is as follows: — " Hif Telcrjruph li. T. ScTTON, Tirantf pi. "Miui.-ler grftntig three (><•>»' * I ' •■! i .1 if This correspondence, and the evidence of the other parties, makes it plain to us that Mr Brown's recollection is at fault, and we are con- f;oqi"n?ntly led not to rely on his version of this matter where it differs from (heirs. ;Mr. Brown is not within his own knowledge cognizant of the occur- rences at Ottawa, and on this subject we can get no light from his evidenco. Mr. 13urpe saw, in Mr. Fleming's office, some of the gentlemen who have been named as visiting Ottawa on this matter, but, not being present in tht! room, he did not hear what passed between them and Mr. Fleming. Mr. Fleming, as a witness, has told us that his memory is not good Messrs. Oliver & Davidson both conversed about this matter with him on the 191 h December, and the letter hereinafter mentioned and dated on the 21th of that month came from their firm, but there are no written records of any of the steps in th-3 proceedings, which led up to the decision which forms the substance of Mr. Fleming's answer to them on the 29th, also hereinafter set out, and he fails to give any clue concerning them ; he has no recollection on the matter beyond the fact that some of them were in his office more than once, but he cannot say, " whether it was Oliver & Davidson or a gentleman named Brown." On being reminded by us of the i)art he had taken in this corrcs- pondance— by which Oliver Davidson & Co., had been allowed to get Sutton & Thompson's position, Mr. Fleming said he wished us to understand that from first to last he had nothing to do with making contracts, unless he was specially asked to interfere — that in this case he had probably gouo to the Minister, or Deputy Minister, or Mr. Buckingham, to enquire if the thing could be done so that he could answer the letter, but we understood him to state this probability as a surmise. Mr. Trudeau, as a witness, informed us that dealing with Olivor, Davidson & Co., under the circumstances in which they assumed to have the rights of Sutton and Thompson, that is on the assertion in their letter] of 24th December, was not according to the usual practice of the Depart- ment—that he cannot give any reason for this being made an exceptionJ und that though he was aware of the irregularity of the case, he did not| enquire into it, because the transaction was managed by the Minister. Mr. Mackenzie being questioned as a witness concerning the letting oi this contract, says he does not remember the particulars of the case ; that ha Both [lit Toronto When (o believe ititervenin< [of Sutton «S [Oliver & D Davids I lively that ' thought tl Sutton go in witl lie thinks it Isome of thoi should be se hey went b thinks there Krovernmenf In addil 'Sutton when the lower tei lliigher tende |to Thompson I'ssignment o This trar N^iit, and V peaching Otta 10 CONTRACT Xo. 4. 145 does not think ho himself ever arranpjed in re^ijard to contracts, and that he can give no explanation farther than what is contained in the records of the Department. After this we notified Mr. Trudeau of the substiince of Mr. Mackenzie's evidence, and asked him to investigate the matter carefully so as to give us, if possible, some account of what took place at the Department at the time this matter wsls being arranged with Mr. Oliver or Mr. Davidson, or any .ither person on behWf of that firm. On being recalled as a witness, he yaidthat he had nothing to add to his former evidence, that he did not think he took any part in the matter. Both Sutton and Davidson testify that the price talkedof bet ween them lit Toronto was lower than that which they obtained under the contract. "When Sutton and Oliver and Davidson reached Ottawa, there is reason (0 believe that Sutton himself was ignorant of the fact that there was no intervening tender between that of Sutton & Thirtkell and the higher one of Sutton & Thompson ; ho said he thought he first learnt that (act from Oliver & Davidson. Davidson testifies that when they left Ottawa they did not know posi- tively that they would get this contract (at tlie higher price), but he "thought the thing was looking that way." ■'' ' " - Sutton says his first arrangement was that Oliver tS: Davidson were to • go in with him" on the Sutton and Thirtkell tender (the lower one), and he thinks it was verbally arranged while they wore at Ottawa, between some of them and the Government, that the Sutton & Thirtkell tender bhould be set aside, and the one from Sutton & Thompson taken, because hey went back after the arrangement to " get things into shape." and ho thinks there was no doubt that the arrangement was accepted by the Uovernment. In addition to the fourth share of the profits which were promised to Sutton when he first arranged with Oliver & Davidson on the basis of the lower tender, they did in fact, before the contract was obtained on the higher tender, pay him a further sum of $800, which he said " had to go to Thompson," and that amount, or part of it, w^as paid to Thompson for an assignment of his interest in the higher tender. This transaction w^ith Thompson was no part of the original arrange- ment, and was an unserviceable expenditure unless these parties after caching Ottawa learnt that it was advisable to get into Thompson's position, lu » .!E I'--, i* 116 CONTRACTS. [. i'i I ^ 1 I After the date of the visit to Ottawa by Sutton, Oliver & Davidson, the first step recorded in the Department concerning the substitution of the higher tender is the following letter : " I.vGi-.RsoLi., 24th Decpmber, 1874. " My Dkar Sik, — We now arranged to carry out the tender of Sutton, Thompson & Co, of Brantford, for oection 5, Canadian Pacilic Telegrai>h. What time would be convenient to have the matter closed with the Department ? Could it stand over until after the Ontario elections ? Please advise and oblige yours. '• (Signed) OLIVER, DAVID.SON & CO., "By A. Oliver. "ToS. Fl.EMIXd, ••Chief Engineer, C. r. U." This was answered as follows : — "Canada Pacific Railway, " OFricB OK THB Enginkes i.v-Chikf, "Ottawa, 2%ik December, 1874. " Obntlbmek,— I have your letter of the 24th inet , with respect to the construction of the telegraph between Lalc) Superior and Manitoba. " This matter can be closed at any time convenient to you tc come here. , " Yours truly, "(Signed) SAN DFORD FLEMING. '•Olivkr, Davidson & Co., Ingerso'.l." The phraseology of the letter of the 24th December, the word ** now' occurring in the original, conveys to our minds the impression that it was intended to inform Mr. Fleming of the accomplishment of what had before then been spoken of between them as an uncertainty — and that what was alluded to was the assignment irom Thompson, a matter which became desirable only after their interview on the 19th of December. After this Mr. Oliver went to Ottawa without any of his partners and secured the contract, which was executed in its present shape on or about the 9th of February, 1875. Sutton at some time gave a letter to Mr. Oliver to bo handed to the Government to the eflfect that he refused to carry out the Sutton & Thirt- kell tender, i. e., the lower one. The date of this is not given.. No trace of its date or contents is to be got from the Department. Sutton said he thought there was no document assigning the interest of Sutton & Thompson to Oliver, Davidson & Co. It was left principally to Oliver to arrange with the Government to get the contract. This much is evident— that on the 19th December the time expired which had bsen granted to Sutton & Thirtkell for furnishing security. The parties ing it o no such Su ofiered tracted comprise time, an Davidso apparenj The (1.) (2.) t (3.) behalf, Oliver, D; they had (4.) J tenderers) (5.) J standing < Owin four witni bareness < memory o cnmstanti "Wetl Mr. Olivei Sutton, vi tract on th within the higher pri( Thompson I'orego thei lOJ CONTRACT No. 4. 147 tpired \. The parties representing that firm were in Ottawa with the intention of carry- ing it out. They omitted to do so, and yet the omission was followed by no such departmental action as was regular and usual in such cases. Sutton & Thirtkell were not officially discarded, nor was the contract offered to the tender next higher than theirs. The reason for this to be ex- tracted from the evidence is that the higher price would go to a firm which comprised a person, who had not been a party to the bargaining up to that time, and whose rights must be disposed of or acquired before Oliver, Davidson & Co. could be sure of the higher sum. The transaction was apparently kept open that this might be accomplished if possible. The official records show : — (1.) No decision to discard the Sutton & Thirtkell tender ; (2.) No reason for such a step ; (3.) No communication to Sutton & Thompson, or any one on their behalf, that the Grovernment proposed to adopt their tender until after Oliver, Davidson & Co , on 24th December, communicated the fact that they had acquired the position of the higher tenderers ; (4.) No assignment of the interest of Sutton & Thompson (the higher tenderers) to Oliver, Davidson & Co ; (5.) No decision that Oliver, Davidson & Co. were entitled to take the ptanding of Sutton & Thompson. Owing f.o the lack of direct evidence found in the statements of the four witnesses who were pecuniarily interested in this contract, and to the bareness of the records of the Department, coupled with the defective memory of its officials, we have to draw our conclusions partially from cir- cnmstactial evidence. "We think there is reason to believe that on the 19th December, 1874, Mr. Oliver and Mr. Davidson, under an-angemPiit to that effect with Mr. Sutton, visited the Department of Public AV< ks, intending to take this con- tract on the tender of Satton & Thirkell, and to provide the requisite security within the prescribed time ; that while at the Department, they learned that a higher price might be obtained if they could procure the standing of Sutton & Thompson ; that, beinguncertain as to the accomplishment of this, they did not forego their position in regard to the lower tender ; but they afterwards secured 1 us CONTRACTS. r ' I! \ ii 'I? m Jt :'. an assignment from Thompson which, with Sutton's acquiescence, then j^ave them the desired status ; that no reason for this substitution is recorded or can be ascertained. The evidt^nco leads us to conclude that in obtaining this contract the j'ontractors got undue advantages, (1.) Lower eligible tenderers (Waddle & Smith) were passed over with- out boing allowed any specified time for furnishing the requisite security. (2.) The contractors got a higher price than that at which they were willing to take the contract. (3 ) That the Department had the opportunity of entering into the contract with these same contractors for the same work at a cost $28,000 less than the amount agreed to be paid to Messrs. Oliver, Davidson & Co. The evidence does not disclose the reason for paying the higher imce. Towards the completion of the construction under this contract, an arrangement was made by which the contractors were to operate the line. On the 8d May, 18T6, Mr. Fleming made the following report : — " Ottawa, May 3rd, ]S7(). •'F. IUai-.v, E-q., Secrjtary Public Works Department. <'SiF.- Oliver, Lavidson & C)., contractors, for telegraph construction between Lv.vo iSupeiior and R«'d River, have made an offer to operate the line as it advances from both ends, furnisbingotBceswhPie no buMingn exiet, batteries, instruments and operators, fjr ten dollars (§10) per mile per annum ; all messages on Government business to be free, they receiving in addition to tha $10 per mile, what profits th^y may earn from outsiders, charging them the same rates as the Montreal and Dominion Telegraph Compaaies. " This 1 ropofa', if concurred ir, wo.ild ' e a great convenience ia connection with the sur veys and construction of the railway and as the charge per mile does not aeem unreasonable, I would rer<»mmefid that the offer be accepted. Yours truly, (Signed) S.\NDirOKD F'^EMING." This was followed by an Order-in-Council to the following effect :— t' Copy of a Report of a Committee oj the Honourable the Privy Council, approved by His Excellency the Governor General in Council on the 19[ontreal and Dominion Telegraph Companies. •'That said t^rmj appear to be reasonable, and that the free use of the telegraph line by Government would be oT great advantage in connecfon with survoyj and conitrucfoa of Pacific Railway, "The Minister, therefore, recommends Bcceptance of said olfer, the contract to bo ter minable on giving six months' not'ce t^ the contractor nt any time and the payment for any part of a year to be at above rate. " The Cjmmitlee submit the above reco ;:iiiendatio:i for Your Exf eilency's f pproval. W. A. in MS WO UT 11, C./'.C." ■ By letter of 10th June, 1876, the ofTer of Messers. Oliver, Davidson & Co , was accepted ; but the portion of the line between Selkirk and Rat Portage was not handed over to them, because it was being worked by Mr. Rowan, the District Engineer, and his subordinates on behalf of the Govern- ment. The western end of the line covered by this contract was well constructed as far as Whitemouth ; beyond that the country is difhcult and there the line was not so well constructed In many places the tops ot the trees were cut off, and the wires stretched over them. This had the oiTect of killing the trees, and the roots decaying, caused the supports and the wires to fall together to the ground. Mr. Brown, one of the contractors, testified that in the construction the poles were placed in the middle of the road-bed, particularly on section B; that he asked permission to move them at the expense of the Government, which was not granted, but the contractors for the railway were allowed to do so, and this was doTie, but rot well done, causing trouble. On section 41 he said that the excavation had taken place about the foot of the poles, and that the amount of earth loft being insuffi- cient to support them, they were blown down by the wind. The principal portion of the poles on this section was of better wood than on section No. 1. Mr. Rowan, tho District Engineer at "Winnipeg, said that the main- tenance of this line had been very poor, especially that portion of it oast of I Rat Portage, and that this fact had materially interfered with the busi.iess connected with the railway, serious delays having occurred which resulted ill loss to the work. Ho had means of communicating directly from his office over this line, and the mf nner in which it had been maintained was, therefore, continually within his knowledge. Tho ordinary habit was that messages would be repeated at Rat Portage, but this was not invariably , > > * ' t 1»!) CONTRACTS. ! i t * i w the case. Ho testified that the lino was out of order, and not sufficiently maintained for about one-sixth of the year. The following report was made by Mr. Gisborne, of the Telegraph and Signal Service : — "TELEGRAPH SIGNAL SERVICE. " Ca.vapian r.\oiKio Railwav, , "Okkicb ov tub En'uinbbr i» Ciijek, " Ottawa, December 29tb, 187'J. *' Sir— After a careful perusal of the contract and oorrejpoDience rolatiog to Messrs. Oliver, Davidson & Co.'s contract for the construction an 1 maintenance of the Telegraph line between Port William ^n-l Selkirk, anl aUo of their aft«>r a^jreement to operate the a'anae, I have the honour to report : — *' i»t. That the insulators, &c., (as per B'>mple placed before me for iQ8|)03tion) were cer- tainly not of the best quality commonly used, as required by contract. 2nd. That the line (as represented to me) has been very badly constructed, and was an^I is very iaefllciently main- tained — for example, th') wiris are reporlo I to have been down, "19 days during September, 1878. ly " " October, " 14 " ' Kovembfr, •' 10 •' " December, " "Since which dates no returns (so I am iufi rmed) have been made to (he Department ts ordered by Mr. .S»ndford Fleming. I am also informed by Engineers who have. lately trar <'rsed the line, that it is in a moat deplorable state of repair?. " It is my opinion, therefore, that the application of Messrs. Oliver, Davioson & Co , theirl successors and assigns, for a return of the $10,0 deposit account contract, or of the 10 per cent, drawback, or any portion thereof, or for any jiayment account operating the line is in- admifsible at present, and that no further payment shculd be made until the line has becij inspected and ita operation approved by your Superintendent. " I have tbe honour to \m. Sir, " Your mo3t obedient servant, «« F. N. GISBORNE, •' SuperintcnJent of Telegraph and Signal Service. *' The Honourable " The Minister of Railways and Cana's." We are not able to say whether these contractors have fulfilled thoij contract according to the legal construction of it. "We find that they havj not constructed a good line. By their contract they bound themselves t| maintain the line in good running order for a period of five years from it| completion. Up to the date of our Commission they had not don-^, so. Th following sums were paid on this contract up to the 30th June, 1880 took to d the rate < contract. to the G persons v plague, ai make an < on which I)ossible o the 8th of the grauin and a poii: Jate were io be unde advertisem two sectior and 5, aboi and 9, abou to form a r< of bridges. cubic yard J CONTRACT N.\ 4. 16t lutly was H'J. Messrs. ilegraph ate the 30th June, 1875 $ 2,140 1876 49,410 1877 39,460 1878 88,600 1879 33,500 1880 2,200 Construction .... $215,300 Maintenanoo 3,808 Total $210,lfi8 ,veio cer- e line (aa tly main larlmenlasl ely traf Co, their I Ibe 10 pet ine is m has befnj Hied theij jhey havj from it| so. Th 1880 CoNTR.vrr No. 5. Railway ConAlrucliuu. By this contract, dated 30th August, 1874, .loseph WhittOiead under- took to do the necessary excavation and grading on the Pembina Branch at the rate of 22 cents per cubic yard, in the mannijr specified in the said contract. The work was started hurriedly in consequence of reports made to the Government by people of influence in Manitoba, that numbers of persons were in very distressed circumstances, owing to the grasshopper plague, and Mr. Rowan, the District Engineer at Winnipeg, was ordered to make an examination and to locate a line between Emerson an I Winnipeg, on which work could be commenced immediately, following as much as IMjssiblo one of the road allowances between the two points named. On the 8th of August, 1874, the Government advertised, asking for tenders for the grading of the Pembina Branch, between the international boundary and a point opposite the town of Winnipeg. Specifications of the same date were furnished for the use of tenderers. These showed that the work to be undertaken would not be over so great a distance as suggested by tho advertisement, and that the work to be actually done was divided into two sections : No 1, the southern section, passing through townships 2, 3, 4 and 6, about 24 miles ; No 2, the central section, through townships 6, 7, 8 and 9, about 24 miles. The work was the excavation and grading necessary to form a road bed, leaving openings at streams for the subsequent insertion of bridges. The tenders included only one item, which was a price per cubic yard for this work. They were opened on the 26th of August, tho ..III 152 CONTilACTS. I (lay ul'tor that imniod for their receipt. Tweuty-ono toiitlers had btu j, H 'lit in, raii'^inijf in their prices from 21 cents ti) A9 (^oiils por yard. Tlu^ tlir«. lowest wero those ol' : ('. Peach at 21 eenls. .losi^ph AVhilehejul at -2 cenf.s. A. II. Clark at 22 cents. On tlie wamo day, Mr. Peach was requested to sco the Minister on tlu subject of his tender. On tli'5 27th, the day Ibllowiii'.^, Mr. Peacli wrot^ intiniatint^ a fear that lie c>uj«l not o-ive tlu^ security refpiired, and askiii-j a delay until he could hear liom tn^land. On tin; day followint^ that, th'! Socretiry of the Department inlormed him that the delay could not ]>■• granted. On the 71 h of September, 1874, an Order-in-Counil authorized the acceptance of Mr. Whitehead's lender, and the contract was entered into on that basis. At the time that Mr' Peach and Mr. Whitehead weni tenderin;^ the were boarding' in the b'anie house in Toronto. An arran;»'ement was mad" between them b;^fore the contrart was awarded to Mr. Whitehead, by which Mr. Peach should £^0 to Manitoba as a foreman for Mr. Whitehead. He diil so, and for his servicers received $100 a month and board. He afterward,- sued Mr. Whitehead in^Ianitoba, claiming that he was really a partner in the transaction of this contract, but failed in his suit. The evidence befor; us leads us to lonclude that Mr. IVaeh was a stranger in the country, with but little moans ; that Mr. AVliitehead's obtaining the contract was not duf to any bargain made between thorn, having for its object the failure of Mr. Peach to iind the necessary security. In entering into thi.-§ contract, Mr. Whitehead was acting entirely in his own interest, not being associated in name or in reality with any other person. At the time this contract \va- closed the location of the. line was not finally decided on, but no delay on that account occurred, as the country to be crossed was easy and the enqi neers were a])le to locate in front of the contractor's forces. The specification^ I and the formal contract based upon tbem did not include all the work tlin!| v/as afterwards done by Mr. Whitehead, nominally under this bargain The southern section mentioned in these documents did not include th' township in Manitoba next the international boundary, for the reason tliatl the railway connection in Minnesota was not then established, and uulill that should be done no point of junction could be fixed. Similarly the! northern section did not include the route through the township next 1 1 St. Boniface, because the precise line could not then be settled on. Thoi entered ii no formal which is jN'either \a Joseph "V behalf of taken und InMi^ the Red I provided i ported fror said, to the CONTllACT No. r>. 153 s. 311 till' wrot" [isk'mir at, th'i not ))•• lorizoil ?nt«>n'il ig tliiy ,s mad' ■ which lie (li.l L^Tward.- rtu(>r ill i> bi'for ■ y, \vitii not (Inc of Mr. lact, Mr, ii\tod iii act \vr.' clay on le engi- 1 licatioiis )rktli;i!i bargain ludo til' ton that I id until! |arly thel next ti Tho work dono by tlio contractor at tho prices named in tliis contract iiicludod portions of these distances so omitted, as aforesaid, from the sp(!ci- ilcations. Mr. Whitehead said that he started IVom the south side of l>itilio|> Tacho's estate at St. lloiiiface, and went as far as tho boundary line of ihe Province. "We cf)n(lude that in o])taining this contract, the conlraclor got no undue advantage, and that at the time of awarding it tho Depart nient harl no opportunity of securing tlie same work at a lower price. A dispute arose between the contractor and the Oovernment respecting the measurement of part of tho work, but it was settled to the satisfaction of ;Mr. Whitehead, though at a sum less than that claimed by him, and tho contract was fully completed and paid for. The expenditure under the contract has been as follows : — To June 3Cth, 1875 :.. $18,000 00 187G 175,905 00 1877 13,298 00 Total $208,103 00 ,, - 4 , CoNTIiACT No. 5 A. Railway Construction. Though this is numbered as if it pertained to contract 5, it was not entered into until May, 1877, nearly three years after that one. There is no formal agreement concerning the work done under the arrangement which is distinguished in tho records of the Department as contract 5 A. Neither was there any understnnding, verbal or otherwise, between Mr. Joseph Whitehead, the party who has done the work, and any one on behalf of the Government defining what was to bo done. It was under- taken under tho following circumstances : — In May, 1875, an arrangement was made between the Department and the Red River Transportation Company (sec contract 18) by which it was provided that a quantity of rails (required for section 14) would be trans- ported Irom Duluth to Selkirk. This was not accomplished owing, it is said, to the state of the water in Red River at and near the rapids north of '■'^"W m III tmmm WHO 154 COXTIMCTS. < I I Winnipeg. The Engineer-in-Chief submitted the following memorandum and letter: — '• Canadian PACit-io Hailway, " Officr of tub Enoixker-ix-Ciiief, "Ottawa, I'Jth April, 1877. ■'' {Memorandum.) " Under the contiact with .Suiton, Tlioiiip^oD k Whitehefid,tbe rails have to be furnished th< m, i'l order that tloy may proceed with the track-laying cu section 14. • " Tie rails would, of c ,iir8e,have to be delivtred at some point on, or adjacent to the line, eay at Selkirk. There are now 918 tons at Selkirk, sufficient to lay about ten mile?. It there- fore becomes necessary to tranfjjiit ap many as m»y be required to that point from Winnipeg, where thry are now lying. " The total quantity of rniis rpquired to lay the track, covered by the contract of Sutton Thompson & "Wbitohead, is nesriy 1 1,000 ton?. ♦* I sent a telegram a few days ago to St. Paul, enquiiing of the forwarders there at what rate they would carry (he rails from Winn'p'g ti Selkirk. I also telegraph* d to the sam") elfecl to Winnipeg, and have received replies. "An offer has come from Jlr. Kittson, the Manager of t'le liod Uiver Tiansporiation Com- pany, offering to carry the rails at the rnte of $2.13 per ton (2,'2I0 lbs.) j rnvided his offer he at once accepted, as the whole woik will require to be drne within the next five or eix week?, if done at all ly water this seapon. " Ibe cost of transporting thetio la'Is from Winnipeg to Selkirk, including the haadling between the river's edge and the edge of the track, would probably le newly $3.00 per ton, which would come to over $30,00i). "Mr. Whitehead offers to do iLc grading on the extension of the Pembina Branch at the same rate as bi::i original contract, and Isy the track at (he same rate as the present contract for sections 14 and 15. 1 have examined the profile of the line, and am of opinion that, for the present, the grade may be reduced in Eome places about a foot, so as to decrease the number of yards in tie embankment to alout 8,000 yardc per mile, and on this I have based tie fell jwing estimate : — Grading 20 miles at 8,000c. yards i IrtOOOOc. yards at $ 0.22 $.35,200 Ties iB Track-laying, 20 miles. do 4'>,000 do 0.40 18,000 290.00. .5.800 Bridging strean-s 1,000 Total........ $60,000 '' From this it would appear that the track cauld be Iiid on the Pembina Branch at sub- grade for only $30,000 more than the costof transporting; (he rails I y wat^r ; and I would wish to sugges', for the consideration of the Minister, whether it would not be better (o enter iato the arrangement with Mr. Whitehead. " 1 do not mean that the northern end of the Pembina Branch should remain at wht.t 1 have called sub-grade, as in that condition it would not be so (fficiont; but it would answer I the purpose of conveying material forwaril to the trunk line for eome years to comt*, and it | must be borne in mind that there nill be as much di/'lcdty in getting rolling-stock liken I" as re fern same m: (erms up posal of J "As mile) to 1 vi2,22ce son and 'V lasting, $: « It V fjf (be Pe " It si should be " F. Bbau; "Seer Thei '\Copy of , "On a fttating tha Canadian P layingof " That the Canadi already on "That to Selkirk d tL lia ^•^x CONTRACT No. 6 A. 155 Selkirk vvhen it is required by -and bye, as it is coiv in gettiDg the railn down, uaIe«B the I ranch be extended as now suggested. " I would submit another reason why it would be alvif a1>le at once to carry out the above HUggestion. Tiie line between Winnij-eg and Selkirk passes a deposit of gravel suitable foi' > allast, while the impression is that there is no uatfrial on section 14 suitable for the purpose. " Then the contractor would be enabled to go on with this part of Lis work at an etrly day, if the track Wiis laid as propised, on the f xtens^'on of the Pembina Branch. '•SANDKOKD FLEMING, " Engineerin-Clii''/.'^ "Civ.'tXAN r.vciFio Railway, "OtincK OF TUB Enoinkek-inChiek, " Ottawa, 2nd May, 1877. " j"'iR, — With regard to the extension of the Pembina Branch, from Winnipeg to Selkirk, as referred to in my letter of the 19th April last, and your communication of the 30ih ol the same m'ntb, I would suggest that, in order that there may be no misunderstemling as to the terms uion which the work is it be done, an Order in-Council be jiuse ', accepting the pro- I)08al of Mr. Whiteheal, and defining the terras. •' As I understand tlie proposal is as follows : — The grading (not exceeding 8,()00 yan's per mile) to be done at the price of Mr. Whitehead's original contract for the Pembina Branch, via, 22 cents per yard. The other work to be done at the priu^K of Meatrs. Sutton, 'I'homp- son and WhiteVoid's contract for section I), vis: Ties, 40 cents each ; track-laying and lal- tasting, $290 per mile. " It will to necessary, 1 think, to view this matter in the light of a supplementary contract fjr the Pembina Branch. " It should not be done under the 15 contric', as the a'-iunt for the Pembina Branch should be kept distinct from the main lire. "I am, e'.c, etc , ' « SANDFOIJD FLEMING. " K. Bkau.v, Esq , " Secretary of Pubtio Works." These were followed by an Order-in-Couucil in these terras : — ".Copy '\f « Report of the Committee of the Honourable the Privy Councit, approic^ by Ilii Excellency the Governor-General in Council, on the \lh May, 1877. "On a Report dated the 2Sth April, 1877, from the Hon. the Minister of Puliliu VVorkn, htating that under the contract entered into with the contractors for section No. 14 of the Canadian Pacific Uailtvay, the Qovernment are required to furnish the rails to be used in the Isying of the track. " That the weight of rails necessary for that purpose is stated, by the Obief Eaginaor of the Canadian Pacific Railway, to be nearly 11,030 tons, and he adds that there are 9 IS cona already on the rpot ready lor use, at Selkirk, leaving, say, 10,082 tons still to be supplied. " That it is necessary to provide for the transport of this quantity of rails from Wmnipe,:; to Selkirk during the present season. •■ I wmmmm I' J. 116 CONTRACTS. I ., 11 n . "That it has been acccrtained that the probable cost of trao^portation by water, between tbo points named, woul 1 Ve $30,0(X), and that to enable the service to be performed, at even this cost, the work would have to be done within tbo next five or six weeks, before tbo wxter of the lirer subsides. " That it is su)!gested, that under theBe oirciimstinces, it is expedient to extend the Pom bina an bounibuy . .'.'.r Pembina, ties, 40 cents, tra"-kliyini.', $i'JO per mile, such price being thosf' FpecTieil ii> the contract for ties on the n:an line between Selkirk and Keewatin, on contrtct> 14 and 15 ; brid;'.ing !f 1,00(\ the wliole coit not to exceed S'JO,()00. " He Miui-'er observes that it is rot intended this road should remain in what tin- Engineer terms a ''sub gra'Ie/' as in that state it would not be so (ificient, though it wouM ausiver the purpose for which it was required, for tome years to come, viz : the tranrportation of materials, &c. " The Committee ."ulmiit the above recomaiendatim fjr your EzcoUency's approval. •• Certified, "W. A. UIMSWOUTH, " Clerk, Privy Council." On "Autl ontract, ai cont'a?t (I 'J. IJ. And 'lays later "SlR,- toautborlza ills first cont work as per j JrARClS Smi "A la Jicco !iis letter of meiitaiy co; .^iipplemonti li'ortioii of tl Wjoiniiii*- pi 'n^eii invited fis contract 5 ications on «'ork was to ioutliern and ■aibracing tc 7, 8 and ev«ral miles fact 5, cover iraun, of the lie four item? lying and ] CONTIIACT No. 6 A. 157 On the same day Mr. Braun telegraphed as follows : — *' nth May, 1877. "Authorize ^[r. Whitehead to proceed with the Pembina Esteo^ion, a^t part of the firat cintract, at twenty-two (22) cents for earthwork, and the other work at prices as per hid cont'a'.t (15.) "F. HRAUN, " Secretary:' 'J. IJ. RowAS, Winnipeg." And the following lettor was sont to thi! acting Enginoer-in-Chief five days lator : — " I6lh May, 1877. •' Sir, — I beg to inform you that, on the 7th instant, Mr. Uowan was instructed, by telegraph, to authorize Mr. Whitehead to proceed with the work') on the Tembina Extension, as part of itU Grst contract, at twenty two (22) cents per cubic yard for earth excavation, and the other work as per prices in hi< contract fjr section (1")) Gft?ea. '' I have the bono. ir to be. Sir, " Your obedient servant. "F. BUAUN, [aken to Irsiion^ , Iceetl a', linnippr; Iticns t V cany tebeiiif? ti i\\^' thos*' intr»cl> Ibat tlu' wouM >rtatior. lal. Sccrefanj. i : ■ifARCis Smith. Esq., •' Acting Chief Engineer, * . , " Canadian PdciKo lull way, Ottawa. " 111 accordance with Iho suggestion made by Mr. Fleming at the close of Ihis letter of the 2nd of May, above sot out, this was treated as a supple- mentary contract for the Pembina Branch. It was, nevertheless, not a Isupplementary contract to that one, unless the agreement to build any Iportion of the railway, is supplementary to the agreement by which an jadjoiniug portion was built. No competition, public or otherwise, had i>cu invited at any time for the work done ui"der the arrangement known [is contract 6a. As before mentioned in our report on contract 5, the speci- Bications on which that was based limited the distance within which the kork was to be done, and for which tenders were to be received to the Uithern and central sections of the Pembina Branch, the southern one [mbracing townships numbers 2, 3, 4 and 6, and the central one numbers |. 7, 8 and 9, the northern limit of this whole distance being a point everal miles south of St. Boniface. Moreover, the work itself, under con- Iract 5, covered only one of the items mentioned in the telegram of Mr. praun, of the 11th May. That telegram was intended to cover, at least, lie four items mentioned in the Order-in-Council, viz. : grading, ties, track- |iying and bridging ; contract 5 covered only the road-bed described 1 i i 1 J ■ 1 * I ^ 1 1 1 I i Ui J ! I i 1 158 CONTRACTS. ill Mr. Fleming's specification of the 8th of August, 187G, and relating to that contract as follows : — " Section 5. The work now to be p'aced iinler contract ia the excavation an 1 crading required in the formation of the roadbed, or Binnieh thereof as the Minister of PuHic Work-i may determine within the Jiinitu of the two sections a' ove referred t>." As a fact, this teicj,Tam of Mr. Braun did not limit the work to that described in the Order-in-Council above set out. Neither did his subsi'- quent letter of the IGth May to Mr. Smith. Under the arrangement known as contract 5 A, many diflferent kinds of work have been performed and paid for, some within the meaning of th'» said Order-in-Council, but a large proportion beyond it. The total outlay has been $101,124. No part of the work was submitted to public com- petition. More than $100,000 of the whole cost was expended without tho support of either competition or an Order-in-Council. Some of this $100,000 was consumed by allowing a price for work twice as high cb would have been paid had it been submitted to competition. On one item $24,G82 was given for olF-take ditches at the rate of 45 cents per yard. The contractor himself testified that if this had been let by tender, it might have been done at one-half the price he got. On this section, between St. Boniface and Selkirk, the work performed includes about twenty classes, instead of the four named in the Order-in- Council. They are stated in detail in Mr. Fleming's report of 1879, page 126. The expenditure there mentioned has been increased before the date of our Commission to the sum before mentioned by us. Mr. Mackenzie, Mr. Trudeau and Mr. Braun have been examined by us, with a view of learning the reason for the telegram of the 11th of May, awarding the high prices of section 15 to all the work to be done on this extension of the line except the one item at 22 cents, but no one of them was able to inform m. Mr. Fleming said : — "The whole thing seems it he a mistake. There wm no int'n i}n o." doing offtake ditches in th<^ tirst place." Mr. Smellio, on the 10th of July, 1877, mentioned the matter in a letter] to the Secretary, and called attention to the excess in the expenditure beyond i the $60,000 authorized by the Order-in-Council, and pointed out the high price of 45 cents which had been charged for off-take ditches. Subsequently he called the attention of Mr. Marcus Smith, the acting Chief Engineer, toj this iton to t}w p] section price wa maintain and oiT-ti for the di (he IGth items exci Whet !on874, ta to be let b I lion upon Theei jliave been I advantage, land highei [that the aci pd the efR The W( |it op to the 301 Thesj CO] knied in eac fames of the [rices, are set CONTRACT No. T. A. 151> ormed Ider-in- pago lie date :enzio, levv of le higli tie line irm ne this item ; but Mr. Marcus Smith decided that Mr. Whitehead was entitled to tlie price charged, it being tlit^ same as that which had been allowed on section 15. Mr. Smellie's recollection is that Mr. Marcus Smith said this price was authorized by the Order-in-Council. That view could hardly be maintained, since the Order-in-Council specified the items to which it applied, and oIF-take ditches was not one of them. It is probable that the foundation for the decision was that the telegram of the 11th of May, and the letter of the IGth of May, authorized the prices of section 15 to be applied to all items except the one mentioned in these communications. "Whether sections 3, 4, 12 and 10 of the Canadian Pacific Railway Act I of 1874, taken together, required this the construction of one of the branches to be let by public competition rather than by Order-in-Council, is a ques- [tion upon which we do not think it necessary to give an opinion. The evidence leads us to conclude that in obtaining the prices which [have been paid ostensibly under this contract, the contractor got an undue advantage, namely, a higher price for some of the work than it was worth, and higher than that at w'hich it could have been otherwise procured ; that the action of the Department in directing this work as it was directed |had the effect of increasing unnecessarily the cost of the railway. The work has been completed, and the following sums expended upon |it up to the 30th of June, 1880 :— 30th June, 1877 $ 930 00 " 1878 100,610 00 " 1879 40,200 00 1880 19,324 97 $161,124 97 ! L , , • - 1 • ft- offliv^« letter Contracts Ncs. 0, 7, 8, 9, 10 and 11. Steel Bails and Plates, Bolts and Xuts. )eyond I Thes3 contracts cover the purchase of 50,000 tons of steel rails, accom- le higli|>anied in each case by fish-plates and in some by bolts and nuts. The mently James of the contractors and the quantities taken from each, as W(dl as the lieer, tolrices, are set out below. The prices of bolts and nuts are mentioned 111 160 CONTIJACTS. 1 1 where they were contracted for; that of the fish-plates was the same as tho rails: — \o of coutract. 7 8 10 11 Tons of Rails •I- Gnest & Co lObbw Vale Steel, Iron and Coal Co The Mersey Steel and Iron Co The West Cumberland Iron and Steel Co rice ou the bills of lading in England. " Weight of the rails 08i| oned until the ICitb November next. ^ •' By Order. " F. BltAlTN, ' Sec'ettry, ''Dkpartment OK Puiu.It; Wokks, "Ottawa, 3rd October, 1874." We take up each of these contracts herealter, and n^porl upon it as a separate matter without reference to the expediency of the purchase covered by it ; in the meantime we confine ourselves to the action of thf Department in providing the 50,000 tons. There was no Order-in-Coun reasons whi(;h led to this action, and have examined as witnesses the gentlemen who were at the time filling the respective offices of Minister of Publii; Works, Deputy-Minister and Engi- iieer-in-Chief. The evidence show^s that they who were charged with the responsibility of the purchase wore impressed with the belief that some of the rails ought to be bought without delay, and irrespective of price. We cannot, however, define the extent of the pun base whirh was due to this belief, as distinguished from that to be attributed to other causes, because the need of any particular quantity as a feature of the transaportunity presented itself of providing a quantity of rails, at lower pricM than they would in all probability be obtained for at any future period. Early in August, 1874, the Chief Engineer oaentioned the matter to the Minister of Public Works, and advised that steps should be taken to secure such quantity as might be deemed advisable. On the 1 3th of the same month he renewed his recommendation, and furnished a draft specification to be acted on if thought best. " Tbe Chief Engineer was absent from Ottawa until nes^ tbe end of September, when he again renewed hiu recommendation to secure the rails. A notice calling for tenders on the 8th October was advertised on the 29th September ; on the 3rd October the time was extended for receiving tenders to the 16th November, and specirioations dated October 3rd were printed. By the letter, a copy of which is attached hereto, it was provided that tenders would be received on the 16th November following. " It was felt that to advertise for tenders for rails for the Pacific Railway, or for any con- siderable portion of it, would defeat the object in view, viz., to secure rails at a low rate, and hence the character of the advertisement and specifloation. « < Pacilic Hallway ' is not mentioned in either, and tenders for a large quantity are not invited. *' Tenders for the delivery of 350,000 tons were received, tbe prices ranging from $53 53 to $82.73 per ton, delivered in Montreal. "Tbe average price was |57 per ton. " The lowest tenders were : From Cox & Green, for West Cumberland Co. $53 53 per ton. From Joseph Robinson, for Ebbw Vale Co 53 53 " " From Cooper, Fairman & Co., for Mersey Co. 54 26 ** ** From Post & Co., for Guest A Co. (mean) 54 62 " « were deliver contra< T cousijd proper foUowf with t is to be subject which, We responsi of rails diency o whole, \ The connecte Minister, reason " Duri Mr. Flem reason w] of the 50 wpuld ap "Wed whole tra this occas of the wh Hi CONTRACTS Nos. 6—11. 163 i were :ha8e; jf the under luring chietly ished a nemor- would . It is d is as the price rate, and irer pricw Q August, id advised . On the ecification , when he ra on the extended printed* rould be any con- Irate, and are not Im $53 53 *' Contracts were entered into with these parties at the aboye prices for all the rails thef were wiljiag to deliver, viz : Wpst Cumberland Co 5,000 tons. Mersey Co 20,000 " Ehbw Vale Co 5,000 " Guest & Co 10,000 " Total 40,000 tons. " In additiiiD to the above it was arranged to accept the most favourable term') far the delivery of ibe rails f. o. b. in Enjjland for transportation to British Columbia. Accordinglj contracts w»te uiiide as follows : W«>st Cu'uberland Co., for 5,000 tons, at $48 67 f. o. b. N8\lor, Renzon S: Co., for 5,000 tonu, at $51.10... f. o. b." Tliis is a narrative of two matters concerning the purchase now under cousiideration : one, the reason for action which the Chief Engineer thought proper to hiy before the Head of his Department; the other, the action which followed. For the present we may dismiss that portion of it which deals yrith the action taken. As to the reason thus recordt^d by Mr. Fleming, it is to be noticed that he avoids all mention of requirements ; that was a subject upon which he would have some actual knowledge and upon which, if called upon, he would be expected to assume some responsibility. We interpret his memorandum as a careful declaration that no such responsibility was cast upon him ; that the time when any definite quantity of rails would be required for use, was not a material element in the expe- diency of purchasing at that period, and that the purchase was made, as a whole, without any serious consideration of that feature. The single idea which Mr. Fleming appears to have had at that time connected with the proposition to buy and to have communicated to the Minister, is what ho described while giving evidence as " the principal reason " for the i^urchase, namely, the " supposed low price." During the course of their evidence, however, both Mr. Mackenzie and Mr. Fleming intimated that the need of some rails for early use was a reason which was mingled with the low price as a motive for the purchase of the 50,000 tons, but neither was able to state to what quantity this reason. would apply. We do not think that the necessity of procuring a part can leaven the whole transaction, and that, in considering the action of the Department on this occasion, is it proper to speak of different, though undefined, portions of the whole quantity as if they had been bought for separate reasons. Tha Hi ! ! T 1C4 CONTRACTS. it 1 • . 1 , 1 1 1 ' 1 ' ¥ t t need of some for early use could not b*» «ven a remote cause for buying any of those which were understood not to be needed for early use, and the attractiveness of the market could not have induced the purchase of those which were to be bought " irrespective of price." Therefore, when Mr. Fleming testified that the "supposed low price" was "the principal reason why the rails were purchased," we understood him to mean that that was the reason for purchasing the principal portion. Mr. Fleming stated that he spontaneously approached Mr. Mackenzie with his advice concerning the matter. Ml'. Mackenzie testified that Mr. Fleming first brought the purchase of rails to his notice, saying that it was absolutely necessary that rails should be had as soon as possible, as it would take a long time to transport them, and construction could not go on without their being on the ground ; that the prices of rails were then at the lowest rate which they were likely to reach, and that as large a lot as possible should be secured, Mr. Fleming being very urgent in these representations ; that before adopting a conclu- sion he weighed to some extent the reasons which Mr. Fleming gave ; that it was a mere matter of speculative opinion as to the price being at the lowest, but that he certainly thought Mr. Fleming's representations were right as to the necessity of having rails very soon, irrespective of price ; that, in judging of the necessity for rails, the quantity would be a material element, and would be in proportion to the distance to be provided for, that he could not say precisely the distance over which the railway was then expected to proceed, but that there was then every probability of several hundred miles being placed under construction within a year. His recollection was that, except those to be used on the Pembina Branch, the first necessity was to provide for the line between Thunder Bay and Red E-iver. This branch would require (at the ordinary rate of ninety tons a mile), in all, less than 10,000 tons ; that as to the further quantity, the time at which they would be required weighed in the decision, but he declined to explain whether the necessity of having them for use at any particular period was a reason for the purchase irrespective of price, putting his objection to do so on the ground that the act of every Department must always be assumed to be the act of the Government, and therefore beyond the reach of our enquiry. Our nearest approach to information on the sub- 1 ment the til time M reportf was de explair sation 1 his exp tons ha Engine Railwa as from took pla how lar the adve date; ht required inendati( had foret have rec( mation U got from made of railway ^ rails:— CONTRACTTS Nos. 6—11. 16ft se of lould ;hem, that ely to sming jnclu- ; that t the were rice ; terial , that then vera! His |h, the Red ons a time lined icular g liis must jyond B sub- ject of the quantity which, at that time, might have been deemed requisite, waK through an indirect answer of Mr. Fleming. He was asked il" 20,000 tons were then eon.sidercd as likely to be required His answer was that, if his impression had been right with regard to a speedy rise in the price of rails, it, would iiave been advisable to lay in a much larger quantity than 10,000 tons. The natural inference from this answer seem to u.*- to be that it would not have been deemed advisable to lay in i much larger (juantity than 10,000 tons, but for the expectation that there would bo a rise in the price. Mr. Tvn.doau has stated that there is not in the r^ irds of the Depart- ment any reporter memorandum showing the quantity of rails which, at the time of this purchase, was estimated to be required within any given time or for any specified work. Mr. Fleming said he did not think that before the transactions he ever reported on the quantity which he deemed it advisable to buy ; that that was decided by the Minister after the tenders tame in ; that he cannot explain whether there ever was anything more than an informal conver- sation between him and the Minister concerning this transaction ; that in. his experience he did not remember of a purchase as large as even 5,000 tons having been accomplished without something more formal from the Engineer than a conversation ; that in the case of the Intercolonial Railway there were written reports from the Commissioners as well as from himself advising the purchase of rails ; that when the conversation took place between him and the Minister on this matter it was not known how large the transaction would be ; that they only asked for 5,000 tons in. the advertisement, and the transaction grew to be a larger one at a later date; he could not say at what time he had supposed they would be required when he recommended their purchase ; that he made no recom- mendations as to the quantities till after the tenders came in ; that if he had foreseen that the price would go down as it did, he would not then have recommended the purchase to any great amount, besides the infor- mation to be gained from the testimony of these gentlemen, some is to bo got from returns to Parliament concerning the use which }was afterwards made of the rails included in these purchases, and of the distances of the railway which were subsequently, from time to time, ready for the use of rails: — 1^6 CONTRACTS. »' A rrturn to tb« »f nat« ihcwiDg tile aac wbioh h«d b«en made during the year 1876 of any portion of tbeae rftiU, dated .Oth Marob, 1877, i» ts follows :— Turn. Laid on track from Fort Willi*m westward 25^ ailM 2,295 Delivered at railway wbarf, Fort William 14,057 Delivered oppoHite Winnipeg at St. Boniface 12,0U8 " at Selkirk, Red River 918 " for the Intercolonial Railway at Halifax 11,1^0 " at Penitentiary wbttrf, Kingston 4,575 ** at Nunaimo, Britiith Columbia 5,077 Total 50,090 The evidence taken before ns as to the datos at which rails were •mployed on the different contracts, shows tliat a large proportion of th» 60,000 tons might have been purchased much later than the winter of 1874-76, and have been still in time for the use to which they were actually put. Inasmuch, however, as the oral testimony before us and these returns together fail to show how far the subsequent events differed from those •which in the fall of 1874 appeared probable, we do not feel justified in attempting to define accurately, the quantity which was bought in excess of what was on that day likely to be deemed requisite. The evidence leads us to believe that it was a large quantity, and we proceed to consider separately the action of the Department concerning that undefined portion, which was so bought, beyond the understood requirements of the time, and according to the evidence, bought upon the alleged attractive- ness of the market. The Department in this instance, because of a speculative opinion cdn- ceming the future of the market, purchased property expected to be required for use at a future day, but before there was supposed to be any necessity to procure it. "We do not ofier any remark as to the propriety of a step of this chai:- at;ter, but assuming that such a course was open to a Department, we feel called upon to report whether it was taken with the caution and consider- ation of results, that would be generally shown by private individuals, before investing their own means in similar ventures. Before dealing with the reasonableness of the speculation in these rails at the time it took place, it is well to see if there is any material distinction, in a pecuniary point of view, between a purchase of rails at such a time a& would that, so M In which that of required assuming l/i.OOO to tenders, ai This An ad went there second lot that, at £1 the average ■\ Ending )ints and 5 fhe followin Tht Coo Gut Cooj In order •>000 tons as ' Canadian c 'triage ; the Liverpool, ^ ontreal ; the Mers< Coop* Gruesi Coop€ CONTRACTS Nos. «— 11. lOT 36n- lired [yto Ifeel ler- Lals, would provide them when required, and a purchase without rt»f«'nMir.e to that, solely on the ground that a rise in the price might be expected. In the first place, we must jwint out that the price for that quantity, which was bought beyond tho need of the time, was actually higher than that of the quantity bought for the emergency, because th«^ quantity required would be provided for first from the lowest tenders. For iustjince, assuming for the purpose of illustration, the required quantity to hav«» been 15,000 tons at Montreal, it would have been satisfied by the thren lowest tenders, as follows : — West Cumberland, 5,000 tons at $53 53 KbbwVale " " " 53 63 Guest&Co., " " " 54 00 This would provide 15,000 tons at an average price under S^S.^IO. An additional 5,000 tons at Vancouver, (the quantity which linally [went there), would not raise this average, inasmuch as the acceptance of the Isecond lot of 5,000 tons from the West Cumberland Company, furnished [that, at iJlO 8terling=$48.66, and this would, in fact, slightly diminish ^he average of the whole 20,000 tons. Ending the transactions at these stages, viz : 15,000 tons at Canadian Dints and 6,000 tons in England, would have prevented the acceptance of [he following tenders, all at higher rates, namely : — The Mersey Co., at Montreal, 10,000 tons. Cooper, Fairman & Co., " ^....10,000 " Guest&Co, " 5,000 " Cooper, Fairman & Co., Liverpool, 5,000 " In order to compare the price under these purchases with those of the 0,000 tons assumed to be neodec?, it will be necessary to state the prices Canadian currency. £1 Steriing=$ 4.86, was the price for transatlantic fmage ; therefore, adding that sum to the price of what was bought Liverpool, will show what the price would have been if delivered at Jontreal ; the result would be as follows : — Mersey Co a 10,000 tons at $54 26 Cooper, Fairman & Co 10,000 " " 64 26 Guest&Co 5,000 " " 55 24 Cooper, Fairman & Co 5,000 " " 55 96 '' t ■omiHi 168 CONTRACTS. t ' i ■< •i These prices give an averag*; of about S54.70, higher, by $1.01 per ton, on the last 30,000 tons than on the first 20,000 tons. If the quantity needed was more than 20,000 tons, then the balaih e was bought at an average still higher than $54.70, for each time one of the lower priced lots is taken from the aggregate, the average of the bahuice must be raised. In the next place, the risk att«Miding such a speculation would be greater with a Government than with an individual. A private party, buying in anticipation of a rise, could keep his property in some centre of demand, where it would be available for a rapid sale should the rise take place, rtud he would thus retain a chance of gain or prevention of loss, ■which he would be deprived of, should hie purchase be available only by actual use at the end of an indeiinite period. It is not necessary to dwell on the imi>robabil'ty of selling advan* tagcously stc^el rails lying at Vancouver or on the western lakes, for it is to be assumed that a sale of any part of these rails was never contemplated. In Mr Fleming's memorandum of March, he says that it was thought that rails " iiad all but reached the lowest rate." This is, of course, alluding I to some time not later than August, 1874. Rut either then or later i m December, 1874, or January, 1875, when the rails were bought, if it had been made certain that they bad actually reached their lowest rate, not only for that lime, but for all time to come, still that certainty could not of] itself hi?,\'e made the purchase a prolitable speculation. There was, in fact, l^ut one eveuc possible which could make the] transaction anything but a losing one, and that was a rise in the price, sol high and so continuous that it would keep pace with the interest on tbej purchase, the deterioration of the property, and all expenses incidental to the ownership up to the time at which it would be necessary to procuraj them for use. Anything short of this made a loss inevitable. In order, tht^ivlore, that the Dt»partment might judge of the meriti> o| the speculation, it v^^ould be necessary to have what was believed to bt ■well-founded estimate upon several data. (1). The times at which respectively the different portions of the wholl quantity would be called into use. (2). The amount by which the price would be increased. (8) How far the increase would-be temporary or lasting. —% CONTRACTS Nos. 6—11. 169 The evidence shows that therti was before the Dei>artmeut no estiui:it<' upon any of thes^ particulars. It is obvious that any given day might be " a good time to buy " such rails as were necessary, in view of the period at which they were likoly to be used, and still a poor time to buy those which were not want<'d, and could only be turned to account when used, and for which the time of use was in an undefined future. The tenor of the evidence shows that in the fall of 1874 there was an opinion amongst rail dealers that the price would rise. It had been lalling from about £18 sterling, the price to which it had risen temporarily during the inflated period in 1873, until it was nearly a« low as it had been in 1869- 70, aud consequently they who were obliged to provide rails would iind it a good time to buy- That fact, however, does not touch the transaction we are considering, and it does not help us to see why the state of the market on that occasion, or the chances of it afterwards, should be assumed to be sufficient grounds ior the Chief Engineer urging so earnestly as he did the large purchase, beyond the requirements of the day which took place on this occasion. Mr. Mackenzie was asked what appeared to be the reasons in support of the view that the price of the day made it expedient to buy on thiK occc.iion. He said he knew of none except the fa no CON'TKACTS. Mr. Fleming testified that from all he could learn the price of rails had then reached bottom, and there would be a rebound immediately ; that no one in the trade had experted it would go lower : that, in saying this, he meant of course, according to the information he had received. He explained what he had learned on the subject, and the source from which he had learned it. He thought at one time that he had had letters from two cor- respondents in England, a Mr. Sandberg and a Mr. Levesey, his advices coming " more especially from Mr. Sandberg." Su})sequently, he was not sure that he had heard from Mr. Levesey, but he defined what he had learnt^d from Mr. Sandberg. This gentleman lived in London, and was looking after the interests of the Canadian public in this manner : he was employt'd as the Government Inspector of Hails, and was paid aciordiug to th^' quantity. For his services in this transac- tion he received c€o,90»j l»!s. (Id. sig. Mr. Fleming testified that the inlorma- tv-:: in ^his case had been off«»red voluntarily by Mr. Sandberg. Mv. Flemiim- had, at firwt, no doubt that the letters from Mr. Sandberg were in the offiie. At a later day he said that they might be called eithi-r private or '»n a rery ;« :mal manner. He thought there were several, and had made enquiry for them, but they could iK)t be found. Mr. Burpe who had charge of the correspondeiio' of Mr. r'leming as Engineer-in-Chief was called as a witness. He had heard Mr. Fleming's evidence concerning these letters ami had searched for tWm, but h;id not lound them, and said it would be useless to call anyone t'iise in the I)ei)artment, he having failed to discover them. He had also sear, hed for copies of letters, if there were any, from Mr. Fleming to Mr. Sandber^.^, written prior to the purchase of these rails, and had fou!i(l noil ' Mr. Fleming produced tw^ diagrams, printed for private circulation, by Mr Sandl>'rg, purporting to show the fluctuations of the English rail niark^^Ki (both iron and steel) one from 1802 to midsummer of 3880, and one from 18»)2 to end of 1874. and he thought that a similar one had be»^n sent to him in some of the correspondence before alluded to. He said thai according to his recollection his recommendation to Mr. Mackenzie was based upon the positive opinion of Mr. Sandberg, that rails had reached the lowest point that they were likely to reach, chat Mr. Sandberg had said to him that it was the general opinion of rail makers that the price of rails had certainly reached bottom, and that his impression of the correspondence was that it was not a question of comparative profit to the manufacturers, but that rails could not be made to sell at a lower price, and .auMUP \ 1 I 1862 > ' 1863 « 1 1864 > ( IMS ) ( 1866 > \ 1867 s ( 1868 > 1 1869 * t 1870 1 ( 1871 X 1872 1 -- — -.- . . . --4-4 I ' V \ - V \ / / \ / \ \ / Q AnA Copy of \ 7 -1 SHEWING Tl \ / f PRICESofSTEEL RAILS IN ENGLAND FROM 1862 TO 1880 /te/- 171 Evidsme ! KAO n CKAlKlfl r-1 ivr; r L.C.IVI M\ vj^. Vertical, £tu}h Small Square ^/s \ jj „ Zaye » £i Horizontai,i57' 870 « 1871 » IB72 * 1673 x 1874 » I87S x t876 » 1877 x 1678 * 1879 >« 1880 . "i-i 'TV ' : )\ i--t / / / / \ 1 / 1 \ \/\ \ \ - \ /■ V \ / \ H \ ^ ^ \ A 1 .-j-i- ^1 20 £ 19 t 16 i 17 i 16 i I5i 14 £ 13 i 12 £ ii£ 10 i 9£ 8£ 7£ 6£ 5£ 4£ Ther J from Mr. ■consider a: |sctiou of t really so e: kw far th Mr. F ar. Macke j[oinm()ii,s ( iem, and a jbmard cop pT-i, but vvt In the f ', we ca ►f have no . it, then a VII dill gran II founded So Vera 1 | witnesses N examine pview." We suhn ore inentioj FJeminjr— brs the lon< We find tl [the tendenoi jfore mention ^ay« alike in We accoun ^spapers car Nm actual ti CONTRACTS Nos. 6—11. m that this was the groundwork of his (Mr Fleming's) opinion. He could not remember whether any reasons had been given by Mr. Sandberg, beyond [the bare statement of his opinion that it was a good time to buy. The o-reat weight which Mr. Fleming attached to this correspondence Ifrom Mr. Sandberg made us anxious to see the text of it, not that we Iconsider any views from Mr. Sandberg to be, of themselves, a reason for the [action of the Department, but that we might see whether his opinions were Ully so extreme as Mr. Fleming thought them to be ; and, if so, to see bow far they would bear analysis. Mr. Fh^ming had an impression that he handed these letters to ir. Mac konzie while the matter was being discussed in the House of Commons (March. 1870). At our request he wrote to Mr. Mackenzie for hem, and also sent a cablegram to Mr. Sandberg at London, England, to bmard copies of any letters fiom Mr. Saudb(M'g to him on this subject in 1814, but we have not had the advantase ot seeing either originals or copies. In tlu' fa«e of Mr. Fleming's circumstantial account of this correspond- nce, we cannot say that it was not of the character described by him, but Ifphave no hesitation in saying that if he has correctly stated the substance it, then a very slight investiijation of facts, or a careful inspection of his in diagram would show that Mr. Sandberg's representations were not hll founded. Several perioJirals published in England liavo been mentioned to u» witnesses as authorities on the general state of the rail market. We JVC examined two of them: "Iron" and "The Iron and Coal Trade cvipw." We submit herewith an enlarged copy of one of the two diagrams [fore mentioned, as published l>y Mr. Sandberg and put in evidence by Fleming — so far as it relates to steel rails — having stJected that which rers the longer period, from 1>?62 to 1880. We find that though this diagram agrees generally w ith the fluctuations, [the tendency of the market from time to time, as shown in the periodicals pre mentioned, so far as we have been able to sec them, they aire not ?ays alike in the price given as ruling at the respective dates. We account for this by assuming that neither in the diagram nor in rspapers can prices be given exactly the same as those which laigfat rem actual transactions, and that such authorities do no more than giv» J**! T^^ 1T2 CONTRACTS. what is conceived to be or to have been the average price at rotipective dates. It is in evidence before us that on the same day offers from different individuals will show a wide variation in i)rices. For instance, Mr, Flemiui^, in reporting on the tenders which were received upon this occasion, states that the average price of all the tenders for delivery in Montreal was, as nearly as possible, $5*7.03 per ton, while some of the contracts were based upon the price of $53 53 per ton. We assume that the price named in either the diagram or in any of the periodicals is what waa understood to be the average ruling price at the various dales, but not the lowest which, at those dates resp«'ctiv^ely, could be obtained in actual transactions, especially for large purchases and such prompt terms of pay- ment as would be offered by a Government. These authorities would, nevertheless, be accurate enough to show whether the market was a rising, or a falling, or a steady one, betwoenj various dates or how otherwise, and we take it for granted that the price«l given in any of these authorities as the ruling one for ordinary transactions,! would bear about the same relation, at one time as at another, to thosel which would be named in individual transactions, where the quantities or| the terms of payment might lead to some variation from the general price. There can ">e no doubt that Mr. Fleming's approaching the Minister] " early in August, 18*74," was due to Mr. Sandberg's letters, for Mr. Fleming wai asked the sources of the advices which, in his memorandum of March,! 1876, he mentioned as having led to his recommendation, and he gave us th« names of Mr. Sandberg and Mr. Levesy. Therefore, such letters must hav^ been written not later than .luly, 1874. It becomes ra?terial, in this connection, to bear v\ mind the strond view which Mr. Fleming says was communicated by the correspondence in question, and adopted by him on the strength of it, namely, that " it wa not a question of comparative profit to the manufacturer, but that rails conlij not be made to sell at a lower price." If Mr. Sandberg, in July or August, 1874, expressed the view that railj could not be made to sell at less than they were then selling at, it bocaiii| palpable, in November, 1874, that he was an unreliable authority, for ra had continued to fall steadily from July to that lime. The authorities, abori mentioned, the diagram and the periodicals, show in November, 1874, price, between £2 sterling and £B sterling, less than when Mr. Sandberg! jsaid-summer letter first operated on the mind of Mr. Fleming. Other fact! CONTRACTS Nob. 6—11. however, much more striking than this are exhibited by these authorities, facts which, if understood, could hardly fail to remove any belief that rails id never been so low, and could not be made to sell at that price. " Early im August," the date first named in Mr. Fleming'^ uieniorandum as the time I of his approach to the Minister, the diagiaui gives the price as about =£12 lOs. During the whole of the years of 18G9, 1870 and 1871, they had been selling at prices lower than that, and had, in fact, beeu for part of that time— some seven months (between Nov«»mber, 1869, and August, 1870,) — standing at £10 sterling. When the tenders were opened in November 1S74, the rail market, according to the said authorities, was not so low [as it had been four years before that time. ' From mid-summer. 1870, the price rose, until e.irly the next year, 1871, jit was about £1 sterling higher. At that time the Gov(>niment was receiving tenders lor steel rails for the Intercolenial Railway, of which Mr. Floming was Chief Engineer. On the llth January, 1871, tho.se tenders were opened, and contracts were afterwards entered into based on some of thorn; amongst others, one with the Ebbw Vale Co. »t .€11 sterling for delivery in England, other charges being added for inspection, insurance, laud freight to Canada. Taking these things into consiJt 'ration, we do not see how Mr. Fleming jadopted so readily the fallacious views said to have been communicated by JMr. Sandberg, nor why it should be supposed that, after November, 1874, [rails should not only never get so low as thoy luid been in 1870, but that Ithey should rise so far above the price of that day as to outstrip interest, ietorioration and expenses, up to the time al which it might become neces- sary to buy them. The only letter of Mr. Sanberg, which Mr. Fleming put in evidence, ras written on 17th December, 1874. This was after 40,000 tons had been [bargained for ; and our attention was called to the following portion of it, [the remainder not relating to the subject : — '' It i-, indeed, nol unlikely thit a gtriko wo ild takp pliioe, which would probaWy »end up prices, and; thTefore, I anri anxious to h^ve evprythin;* siiuare. By the enclosed card of prices you will see that you have boii'^ht both this and the lait order at vary f.ivornt.s, on the 18th December, spontaneously offered to the Department 5,000 toiisl jnore than they had previously l)argain('d for, at $53.53 per ton, or 04 ct.'iita per ton less than those obtained by the purchase approved oi' in MrJ JSiindberg's letter. The fact that Mr. Saiid])t rg volunteered his views, having no respoiisH bility in the matter, that he had no interest in limiting the purchase oi rails by the advantage it would bring to Canada, that the views said ta have been advanced by him from time to time could then have been ascer] tained to be not well foundiMl, l(^ad us to think that Mr. Fleming's belief iij the " supposed low price," must have been a weaker element in the recomj mendation to purchase than he now thinks it was. ihere was, then, anothei motive for his advice to tho Minister, which he said was coupled with thj attractiveness of the market, and the presence of it may have made hii careless in testing th»; validity of the other. In Mr. Fleming's evidence, after stating that there had been a goo\ deal of hesitation about the b<»ui nniug of the works, he gave as a reason operating on his mind for the expediency of the transaction, and in addij tion 10 the need of rails and the low price, the fact that he, as a citizen Canada, v;as very anxious to see the railway commenced ; he said ho dij hot separate this from the other reasons ; they all entered his mind at onj time ; and he thought this was one of his motives for recommending thi purchase, though, if standing alone, he would not have been actuated by it] still he said that , according to his view, this might have been a perfoctlj good reason, though the others were positively bad. The unfortunate results of Mr. Mackenzie omitting to examine moij deeply than he did Mr. Fleming's reasons upon the probable future of th CONTRACTS Nos. 6—11. 175 ladian I s thai, itistiou. >ut w«| uiilesbl giving it Mon-I L8 upon! on theiri tie Wwll 1 agt'nt.si )00 tonJ 04 wm i' in MrJ V»'Sp()USlj rchasc o\ fii said to on asceT-j belief ill le n'comj , iinothei wiili M ade hii b a goo-l a rc^asoi rail market, and of adopting tluMn, as of course, is now appar nt. We f the rise in the price. The letters fail to touch any of these points. fhey are as follows : — Id at onl Idiug tbl ted by it| I perfectly line moi| ire ol til IMAGE EVALUATION TEST TARGET (MT-3) 1.0 I.I u 2.0 1.8 1.25 1.4 1.6 = = ^ 6" ► Photographic Sciences Coiporation 33 WEST MAIN STREET WEBSTER, N.Y. 14580 (716) 872-4503 S: N^ iV qv \\ ^9) .V ■ Cooper, Fairman & Go Thos. Reynolds, jr....i None None None Perkins & Co. None None Total. Quantity m tons. 5,000 !5,000 5,000 10,000 5,000 10,000 10,000 15,000 5,000 20,000 10,000 Price. 100,000 $53.53 53.53 54. 58. 58. 54. 34, 65. 59. 55, 55.40 55 60 76 76 64.75 ,00 1 ,16 ,91 ,2G ,75 ,00 ,86 ,17 Delivery at Montreal. do do or Dulutli. 1 .•* or Thunder Bay, Montreal. ■ . do . " -' ^ do ' •' DuluthorTh'derBay Montreal. ,,^ do do Duluth. Vancouver Island ,.!....., « : >»,' .•1 1 The following tenders were received : "(Form of Tender.) "PUBLIC WOEKS OF CANADA. " TKNDEB FOB FISH-JOINTED DBSSEMBR STEEL BAILS. " The undersigned do hereby tender to deliver at the wharf, at Montreal, during the season of navigation, in the year 1875, in accord.ir.oo with the annexed specifications and conditions, 5,000 tons to 10,000 tons Bessemer steel rails, with proportionate quantities of &h-joints, at the following Aiea :— Per ton of 2,240 pounds — Bessemer steel rails and fi^h-plates at $55 per ton ; iron bolts and nuts at $99 per ton. The undersigned are ready to enter into contract for the manufacture and delivery of the above rails and fastenings, or so much thereof as may be required, and will satisfy the Minis' ter of Public Works as to their ability to complete the contract. "BICE, LEWIS & CO., '•Toronto, Ontario," 12i-R 180 CONTRACTS. 1 1 hi r! ' • , f 1 I " (.Form of Tender.) "PUBLIC WORKS OF CANADA. " TENDER FOR FISH-JOINTED BESSEMER STBEI. RAILS. " The undersigned hereby tenders to deliver on the wharf, at Montreal, during the| season of navigation, in the year 1875, in accordance with the annexed specifications and conditions, ten to fifteen thousand tons, Mersey & Bolton Co. make, Bessemer steel rails, at | the following rates : — "Per ton of 2,240 pounds- £11 6s. 9d. sterling ; Bessemer steel fish-plates, £11 ]6«. H \ sterling ; iron bolts and txniA at ($100.80) one hundred dollars and eighty cents per ton. " The undersigned is ready to enter into contract for the manufacture and delivery of th« I above rails and fastenings, or so much thereof as may be required, and will satisfy the Minii-| ter of Public Works as to his ability to complete the contract. " I further tender to deliver at Duluth or Thunder Bay, Bessemer steel rails as above, at I £12 9s. 6d. sterling ; steel fish-plates a.* "Ouluth or Thunder Bay, at £12 19s. 6d. sterling per ton of 2,240 pounds ; fish-bolts delivered at Duluth or Thunder Bay at |107 per ton of 2,240 1 pounds. " I also tender for delivery at French River at a reduction of 2s. per ton on rails and | fish-plates. " The wharfages, or dock or harbour dues at Duluth, Thunder Bay or French Uiver, if | there should be any, are excepted in the above prices. "JOHN FRASER, "Kingston." « (Form of Tender.) PUBLIC WORKS OF CANADA. ''tender for FISH-JOINTED BESSEMER STEEL RAILS. " The undersigned hereby tender to deliver on the wharf, at Montreal, during the seacoD | of navigation, in the year 1875, in accordance with the annexed specifications and conditions, 5,000 to 10,000 tons Bessemer steel rails, with proportionate quantity of fish-jomts, at tb« | following rates : " Per ton of 2,240 pounds— Rails to be of our own manufaoture, ' Dowlais Steel '—5,000 1 tons Bessemer steel rails and fishplates at $54 per ton; 5,000 tons additional at $55.24 per | ton ; iron bolts and nuts at $93.29. ** The undersigned are ready to enter into contract for the manufaoture and delivery of I the above rails and fastenings, or so much thereof as may be required, and wUl satisfy (bt [ Minister of Public Works as to their ability to oomplete contract. "GUEST & ca, i ' • ' "Dowhds, Wales. " Per Perkins, Livinoston, Post & Co. " Agents, 59 Liberty Street, New York. " We beg to say that we have furnished Gaest & Go's, steel rails to the following roadi, I and would refer the Government to the gentlemen mentioned : Sloanes, President,— Delaware, Lackawanna and Western Railway Co., 25,000 tons ; Wm. H. Vandeibilt, President,— Nev York Central and Hudson Railway, 45,000 tons ) Wn. Thomson, DirookMT, Canada Southern | R CONTRACTS Nos. 6—11. 181 Hailwftyi 24,000 tons, and many other roada in the United StstcB, making a total of about [•200,000 tons. "PERKENS, LIVINGSTON, POST A: C0.'» " Ottawa, OxT., November 14tb, 1874. " Deab Sib, — Should the Goremmeni prefer to take these rni^s delivered at the following Ipoints— Dulatb, Fort William and Georgian Bay, instead of Montreal, we can deliver them at Ipuluth or Georgian Bay at $4 per ton additional, and at Fort William at $4.75 additional, [conditional as to the delivery at points namei, that there be a suiticient depth of water for reuels to go thereto, and that the consignees are to unload. Not knowing if it is the intention jof the Governnent to insure the vnrioua cargoes on the lakes, we have not included the lake [ioiuranoes on the inland freights, $4 and $4.75, which would be about 16 cents per ton. " Your obedient servants, ■' •'PERKINS, LIVINGSTON, POST & CO., " Agents of Gukst & Co. "Xiie Minister of Public Works." I {Form of Tender.) " PUBLIC WORKS OF CANADA. "tender for fish-jointed bessgmbr stekl rails. "The undersigned hereby tenders to deliver on the wharf, at Montreal, during the season navigation, in the year 1875, in accordance with the annexed speciHcation and conditions, 0,000 tons Bessemer steel rails, with proportionate quantity of tish-joints, at the following ites:— "Per ton of 2,240 pounds— Bessemer steel rails and Ssh-plates at $55.76 ; iron bolts and |tats at $94.50 per ton of 2,240 lbs., with the option of delivering at Buluth or Georgian Bay at I per ton additional. " The undersigned is ready to enter into contract for tbe manufacture and delivery of the kbove rails and fastenings, or so much thereof aa may be required, and will aatist'y the luioister |lf Public Works as to his ability to complete the contract. "T. V. ALLIS. " Dresel Building, New York. '" Will fumiah from one or more of the following manufacturers, viz : — " Barrow Heematite and Steel Co., England. « Brown, Bally & Dixon's <( "Manchester Steel Co., « Dowlaia Ste«I Co., " C. Cammell & Co. Steel Co., ^< Mersey Steel Ca, ^< Ebbw Vale Steel Co., ^' Limas*Landore " ^' Creuzot " «Terre Noire « ^'Petin Gaudet " n u u u « u It France (I M " Very respectfully, «T. v. ALLIS." 182 CONTRACTS. ** iFoTtn of Tender.") "7 Lawrknck-Pol-ntnky Him,, « London, 29th October, 1874. " PUBLIC WOR^ OF CANADA. " TENDER FOR FISH'JOINTED UESSSMER 3TKBL RAir.S. *' The undersigned hereby tender to deliver on the wharf, at Montreal, during the season of navigation, in the year 1875, in accordance with the annexed Bf.ecifioations and conditions^ fire thousand tons Bessemer steel rails, with proportionate qu;uitity of fish-joints, at the following rates : — " Per ton of 2,240 pounds — Bessemer steel rails and fish-plates at £11 sterling ; iron bolU and nuti at £24 2h. 6d. *' The undersigned are ready to enter into contract for the manufacture and delivery of the above rails and fastenings, or so much thereof as may be required, and will satisfy the Minister of Public Works as to their ability to complete contract. " For the Ebbw Yale Steel, Iron & Coal Co. (Limited). "JOSEPH ROBINSON & Co., ' "Agents. •' Canada Address : — « St. Lawrence and Ottawa Railway Co's. Offic, " Ottawa, Canada." iForm of Tendrr.) L '.'•PUBLIC WORKS OF CANADA. " TENDER FOR FISH-JOINTED BESSEMER STEEL BAIL9. " The undersigned hereby tender to deliver, F.O.B., Liverpool, during the season of navi- gation, in the year 1875, in accordance with the annexed specific ttions and conditions, five to ten thousand tons 'Mersey' or 'Bolton' brands Bessemer steel rails, with proportionate quantity of fish joints, at the following rates : — " Per ton of 2,240 pounds — Bessemer steel rails and fish-plates at £10 lOa. Od. sterling | iron bolts and nuts at £19 10s. Od. sterling. " The undersigned are ready to enter into contract for the manufacture and delivery of the above rails and fastening?, or so much thereof as may be required, and will satisfy the Minister of Public Works as to their ability to complete the contract. We would also tender for delivery cf the above at some good port in Vancouver Island, B.C. : — " Bessemer steel rail?, at £13 5 3 sterling. Fish-bolts, at 22 5 3 do. " COOPER, FAIRMAN & CO., '* Montreal. CONTRACTS Nos. 6—11. 183 ti (Form of Tender.) « PUBLIC WORKS OP CANADA. " TBNDRR FOR KISU-JOINTSD BBSSKMBB STBBI. RAILS. " The undersigned hereby tender to deliver on the wharf, at Duluth or Thunder Bay, during the season of navigation, in the year 1875, in accordance with the anneied ppecification and conditions, five to ten thousand tons, brand ' Mersey Steel and Iron Co./ BesLemer steel rails, with proportionate quantity of fish-joints, at the following rates : — " Per ton of 2,240 pounda— Bessemer steel rails and fishplates at £ i 2 Gs Od sterling ; iron bolts and nuts at $107 currency. •< The undersigned are ready to enter into contract for the manufacture and delivery of the above rails and fastenings, or so much thereof as may be requirfKi, and will satisfy the Minister of Public Works as to their ability to complete the contract. We would also tender for d«livery at French River, at a reduction of two shillings per ton on above prices, any wharfsge or harbour dues on ports, payable by Oovernment. "COOPER, FA IRM AN & CO, « Montreal." ''(Form of Tender.) "PUBLIC WORKS OF CAJ^ADA. 'tender for FISH-JOIKTBD BBSSEMBR STKBIi RAIIJ. <'Tbe undersigned hereby tender to deliver on the wharf, at Montreal, during the season of navigation, in the year 187'*), in accordance with the annexed speciScation and conditions, five to ten thousand tons Bessemer steel rails, withproportioaate quantity offish joint", at the following rates : — "Per ton of 2,240 pounds — Bessemer steel rails »nd fish-plates at £11 3b. Od. sterling^ iron bolts and nuts at $101 currency. " The undersigned are ready to enter i ito contract for the manufacture and delivery of the above rails and fastenings, or so much thereof as may be required, and will satisfy the Mioieter of Public Works as to their ability to compl )te contract. " The Meraey Steel and Iron Co., " of Liverpool. " Per COOPER & FAIRMAN, Agents, "Montreal "TENDER FOR STEEL RAILS. " 13 AND 15 IIosriTAL Strebt, " MoxTREAi, 10th Nov., 1874. " Dbar Sib,— We leg, in the name of our principals, Messrs. The West Cumberland Iron and Steel Co.(Limited),Workington, England, to submit ti you this our tenler for supplying five thousand (5,000) tons of steel rails to the Dominion of Ctnada, in accordance with the terma mentioned in your advertisement in the Montreal Iltrald dated Ottawa, 29th Sept, 1874. ii (I t V I' 184 CONTRACTS. II " Tbndbr. *' We offer to supply .'>,U()0 tons of stvel rails (new) at £1 1 aterling per ton, delivered on the wharf, at Montreal, durin^t the teason of navigation of the year 1875, the last delivery not to be later than October, 1875. We beg herewith to h^nd yoa an original letter received from the West Cumberland Troa and 8teel Co., by which you will see that this firm have, during the past year, supplied upwards of twenty thousand (2<),(X)0) tons if steel rails to the principal railway compsmiei of Great Britain. " We are, dear Sir, " Yours truly, «' COX & GREEN. ** F. Braun, Esq., Secretary, " Public Works Department, "OtUwa." " (.Form of Tender.) " PUBLIC WORKS OF CANADA. "tender for fish-jointed BESSEMER KTEBL RAILS. ''The undersigned hereby tender to deliver on the wharf, at Montreal, during the seawn of navigation, in the year 1875, in accordance with the annexed sp«>clfioation and conditions, five thousand tons of Bessemer steel rails, with proportionate quantity of fiih-joints, at the following rates : — " Per ton of 2,240 pounds— Bessemer steel rails and fish-plates at £11 Os. Od. sterling; iron bolts and nuts at '* The un 'ersigned are ready to enter into contract for the manufacture and delivery of the above raila and fastenings, or so much thereof as may be requiredf and will satisfy the Klnieter of Public Works as to their ability to complete the contract. '* For West Cumberland Steel and Iron Co.i "COX & GREEN, "13 and 15 Hospital Street, ' " Montreal." «» iForm of Tender.) " PUBLIC WORKS OF CANADA. " TBMDIR FOR FISH-JOINTBD BKSSSMBR STEBL RAILS. " The undersigned hereby tenders to deliver on the wharf, at Montreal, during the season «f navigation, in the year 1875, in accordance with the annexed specification and conditions, five thousand tons Bessemer ateil rails, with proportionate quantity of fish-joints, at the follow- ing rates : — " Per ton of 2,240 pounds —Bessemer steel rails and fish-pl*tes at £1 1 Ss. ; iron bolts and uts at £24 2s. Gd. "11 t)ie nboi MiDister ■*' Canada "St. "DEi ■pecificati sgaiDBt bii "The ^ Hod. a. '•Co The and those action wl further re the Hous< the corres sideration tioned ret Wen the suppl] 11, and w Bythi trading un and delive October, n on or befor CONTRACTS Nos. 6—11. IflS 1 on the f not to Dd Iron ipwardB >f Great EN. be seawn iOaditioDi, |U, at the sterling; felivery of aisfy the itreety [onireal." " The undersigned are ready to ^ iter into contract for the manufacture and delivery of the nboTo rails and fastenings, or lo muoh thereof a« may be required, and will latisfy the Minister of Public Works as to their ability to complete the contract. " For the Aberdare Co , " THOS. REYNOIiDS, Ju.v., " J ^CH/, London, E.G. •« Canada Address : — " St. Lawrence and Ottawa Railway Go's. Office, " Ottawa, Canada." " MoNTBBAL, 14th Nov., 1874. " Dear Sir, — I beg to offer you five thousau'l (5,000) tons of flanged steel rails, to approved ipecificfltion and section, at ten pounds five ahillings (£10 53.) sterling per ton, net cash, against bills of lading, delivered at Liverpool, during the summer of next year. " I am, dear Sir, " Yours, Ac, " JAS. CRAWFORD. " The above rails will be manufactured by the Mersey Iron and Steel Go. ^ Hon. A. Mackenzie, <• Commissioner of Public Works, " Ottawa " The tenders above set out include those of the successful parties, and those which, in our opinion, are material in order to understand the action which was finally taken by the Department. The others are not further referred to in our report. They are printed in full in the return to the House of Commons of the tth April, 1876. "We omit such portions of the correspondence, as have no bearingjon the contracts now under con- sideration. This correspondence is also printed in full in the above men- tioned return to the House of Commons. - "We now proceed to take up seriatim the six contracts which embrace the supply of 50,000 tons of rails, numbered respectively 6, 7, 8, 9, 10 and 11, and we deal with them in this order : — Contract No. 6. Steel Rails. By this contract, dated 23rd December, 1874, George Thomas Clark, trading under the name and firm of Guest & Co., undertook to manufacture and deliver at Montreal 5,000 tons of steel rails, on or before the 1st of bolto and l^ctober, 1 875, receiving therefor $54 per ton ; and an additional 6,000 tons Ion or before 1st July, 1876, receiving therefor $55.24 per ton ; and also a Ibe season mditions, lie follow* • , ^vpgv 186 CONTRACTS. ht ih S' ) ' 'S h ' I proportionate quantity of fish-plates and bolts and nuts, receiving per ton for the fish-plates, the same price as for rails ; and for bolts and nuts, $03.25. The tender upon which the contract was awarded is set out above, and it will be seen that it contains offers for distinct quantities at different prices. The schedule hereinbefore mentioned as having been pre- pared by Mr. Fleming, and dated two days after the opening of the tenders, omits to state the particulars of this one as far as it relates to the terms finally accepted by the Government — namely, for delivery at Mon- treal. Mr. Fleming's special report of 1877 describes the contract at having been made for 10,000 tons at $54.62. That conveys a correct idea of the pecuniary results, but it is not in accordance with the terms of the contract itself, or of tenders on which the contract was based. The tender offers 6,000 tons at $;54, and an additional lot of 6,000 tons at $55.24. The pro- posal in this shape would, in a fair competition, other things being equal, secure to the party making it a sale of 6,000 tons against any other offer at a price above $54 (for example, at $54.10) ; but if treated, as was finally done, as an offer of 10,000 tons at $54.62, it would let in that offer at $54.10, and Messrs. Guest & Co. would lose the sale as against it. Under that treatment. Guest & Co., would in our opinion, have a just cause of complaint because their tender was not interpreted according to its exact terms ; or, if no lower offer than $55.25 intervened, Messrs. Guest and Co. would, by that tender, secure a sale of the whole 10,000 tons. At all eve' ts, for reasons of their own, the Guest & Co. elected to take their chances on the offer in the shape in which it was sent, and we can see no good reason why it should be treated as a tender for 10,000 tons at $54.62, particularly as that had the effect of excluding three intervening tenderers, whose prices were lower than that named for the additional lot of 5,000 tons, which Guest & Co. proposed to supply at $55.24, and which was allotted to them. These intervening offers were as follows : — The Aberdare Co . $54 75 Rico, Lewis & Son , 65 00 John Fraser 55 17 At the time of opening the tenders and awarding the contract, Mr. Thomas Reynolds, engineer, representing the Aberdare Ccinpany and the Ebbw Vale Company, as well as Mr. H. A. V. Post, of the firm of Perkins, Livingston, Post & Co., representing Messrs. Guest & Co., were at Ottawa. There is no evidence that the Aberdare Company was not a satisfactory CONTItACTS No. U. U7 firm to doal with, or that they refused to carry out their offer The cou- tract was aw arded by the following letter : — ^ ''Ottawa, Igt Dec, 1874. " Sir, — The lender made on the 14th ultimo by Measra. Perkins, Livingston, Post Sc Cc.,on behalf of Messrs. Guest &. Co., Dowlais, Wales, for tbo supply of 10,000 tons of steel rails, with the bolts and nuts required for that quantity of railf, having been accepted, I am directed to ■end you the enclosed draft articles of agreement (in triplicate), and to request you to be kind enough to have them executed by Messrs. Guest & Co., and to then return them to me. « I have, &c., " F. BRAUN, *^ Secrelanj." ^. " H. A. V. Post, Esq., '' Kussell House, Ottawa." The result of the decision here communicated is to pay a i>ri^' , for the- second lot of 6,000 tons covered by this contract, higher than thut asked by other tenderers. On the item of rails the extra price amount .o $2,460 >)ut this sum was not entirely lout. A portion of it whs saved becuuse Gi^est & Co. had named for bolts and nuts a lower price than tiiat proposed by the Aberdare Co., ihe firm who had made the lowest offer of Un^ three excluded tenderers. The offer of the first lot of 5,000 *ons in the tender of Guest & Co. was |54, and was available without accepting the higher- priced additional lot. It could have been accepted together with the 5,0' tons offered by the Aberdare Co. at $54.76 ; this would have made the aver- age for the 10,000 tons of rails, |54.37 J instead of $54.62. In order to understand the transaction which took place, it is not, necessary to do more than compare the offer of the Aberdare Co. for 5,000 tons, with thatof Gruest & Co. for the additional or second lot of 5,000 tons, inasmuch as the lower-priced lot ot 5,000 tons would be accepted irrespective of these. Comparative Statement. Gruest and Co., — 6,0D0 tons rails® $65.64 $270,200 00 "" under' ''^^ <>«l-«^ |l92 tons fish-plates, t55.24.. 10,606 08 10,000 tons of rails, say :— ) 42 " bolts & nuts @ $93.29 3,918 18 Total $290,724 26 1188 CONTRACTS. * * . hi.--- Aberdare Co : — 5,000 tons rails @ 154.75 $273,750 00 192 " fish-plates ® $54.75 10,512 00 42 " bolts and nuts @ $117.41 4,93122 Total $289,193 22 Loss $1,501 04 Upon the evidence we do not discover any grounds for this preference of Messrs. Guest & Co., and we conclude that in obtaining this contract, the contractors got an undue advantage, and that at the time of awarding it, the Department had an opportunity of procuring the articles provided by this contract at a lower price than was given. The evidence does not disclose the reason for paying the higher price. The contract has been fulfilled, and the following amounts were paid on account of it : — 80th June, 1875 $281,524 57 ^ 30th June, 1876 29 i, 887 02 Total..... $576,411 59 , By a subsequent arrangement some of the rails covered by this contract were transferred to the Intercolonial Railway, and the account of the Pacific Railway was credited accordingly. Mi*. Contract No. 7. ^teel Rails. By this contract, dated 9th of February, 1875, the Ebbw Vale Steel, Iron & Coal Company, undertook to make and deliver at Montreal, during the season of navigation in 1875, 5,000 tons of steel railS; with the propor- tionate quantity of fish-plates, bolts and nuts, receiving therefor per ton for rails and fish-plates <£11 stg., equal to $53.53, and ^or bolts and nuts £2^. 2s 6d., equal to $117.41. The report of the Chief Engineer, dated 19th of November, 1874, on the tenders received, as well as the tenders themselves, both hereinbefore set out, show that the tender of this firm w.s ne of the two lowest received, and was at the rates above specified The acceptance of the lender was communicated by the follow- ing letter to Mr. Reynolds who was the agent of the contractors : CONTRACTS No. 7. 189 erence itract, arding ovided »es not re paid J •' Ottawa, 3rd December, 1874. " Sir,— The tender of the Ebbw Vale Steel, Irou and ^al Company (Limited) enclosed in your letter of the 16th ult., for the supply of five thousand tons steel rails, «&c,, having been accepted, I am directed to request that the accompanying contract in tri]>licate be fcH>warJed« to the company for execution, and that it be returned here for cooapletioa. "I have, t&c, " F. BRAUN, , "Secretary.. «TuoMAallEYMOLDS, Esq., '< Engineer, " Ottawa." We find that in obtaining this contract the contractors got no undue- advantage, and that in awarding it the Department purchased the material covered by it at the lowest available offer. It has been fulfilled, and the following payments were made on ac- count of it : — To 30th June, 1876 $281,117 21 Subsequently some o( the material included in this contract was trans- ferred to the Intercolonial Railway, and the account of the Pacific Railway was credited accordingly. contract Pacific e Steel, during propor- ton for ^d nuts dated tenders lof this above Ifollow- CoNTBACT No. 8. Sleel Rails. By this contract, dated 14th January, 1875, the Mersey Steel and Iron Company undertook to make and deliver at Montreal, half before the 1st October, 1875, and the balance before the 1st July, 187G, 20,000 tons of steel rails, with the i^roportionate quantity of fish-plates, receiving therefor jEll 3s. sterling, equal to $54.26 per ton. The Mersey Steel & Iron Company did not tender for so large a quan- tity as is provided for in this contract. Their tender was for from 5,000 to 10,000 tons at the price above named, and also for bolts and nuts at $101. It was signed in their name by Messrs. Cooper, Fairman & Co., who de- scribed themselves as their agents. This firm of Cooper, Fairman & Co. were also tenderers in their own names for from 6,000 to 10,000 tons, Mersey or Bolton brands, the rails to be delivered at Liverpool at .£10 lOs. sterling, with bolts and nuts at i)19 10s. sterling, oflering at the same time to deliver the same at Vanco; ver Island at the following rates: — Rails ttt i)13 5 3 sterling. Fish-bolts at 22 6 8 \ :pr^ 190 CONTRACTS. H I ; I I J i ■ |l ' i'ti '■ I'-- « 1 • i* Messrs. Cooper, Fainnan & Co. were also tenderers for from 5,000 to 10,000 tons of the Mersey Steel and Iron Company's brand of rails, to be delivered at Duluth or Thunder Bay, at i512 6s. sterling per ton, with bolts and nuts at $107 per ton, and accompanying this offer was one to deliver ' at French River at two shillings less per ton than the above prices. The tender made by the Mersey Company reached the Department in an envelope by itself ; the tender by Messrs. Cooper, Fairman & Co. in an- other. The following letter was written by the Secretary of the Depart- ment : — "Ottawa, 2nd December, 1874. "Gbmlbmen, — ^The tenders yon have made on behalf of 'The Meraey Steel and Iron Company ' of Liverpool, for the supply of steel riiils, &e , having been accepted, I am directed to send you the enclosed draft articles of agreement, and to request you to have the kindness to have them executed by the Company, and to then return them to rac. " I have, &c., «F. BRAUN, * " Messrs. Cooper, Faibmax ife Co., ^^ Secretary.^' " Agents, MoLtreal." This notification is made as if Cooper, Fairman & Co. had made more than one tender on behalf of the Mersey Steel & Iron Company, which was not the fact. In this and in many other instances, throughout the contracts concerning steel rails and bolts and nuts and transportations, it appears that an understanding existed from time to time between this firm and the Department of Public Works, beyond that which is conveyed by letters or papers on record. The tenders above set out as made by Messrs. Cooper, Fairman & Co., relate to delivery at Duluth, Thunder Bay, French River, Liverpool and Vancouver, none of them being named in the advertisement as places at which delivery would be accepted. After the tenders were received, Mr. Fleming describes the effect of some of these tenders in his schedule of the 19th November, as if it was then expected that the Depart- ment would entertain them, though no competition had been invited except for delivery at Montr'-al. There was, in fact, not more than one tender in the name of the Mersey Comi>any. The other tenders were by Messers. Cooper, Fairman & Co., in their own name, and were not for delivery at Montreal. The proceedings which followed this notification of 2nd December, show that it was thereby intimated that not only the offer made in the name of the Mersey Co., for 10,000 tons to be delivered at Montreal, but also ihe offer of Cooper, Fairman & Co. for an additional 10,000 tons with a M as the ] Post& Co. do .. Cooper, Fa; Thh places, b follows : Post & Co do Cooper, Faim Thus & Co. offei at Thunde Fairman & It was though no ^ of them at I contract wa 10,000 each, I lakes. The CONTRACTS No. 8. 9 price for delivery at Duluth and French River, was accepted, though no competition had been invited for the points thus named by Messrs. Cooper, Fairman & Co., and though Messrs. Perkins, Livingston, Post & Co. had made an offer for delivery at the same points, lower than that of Messrs. Cooper, Fairman & Co.'s tender. Mr. Fleming's schedule of 19th November, 1874, stated the ioUowing^ as the result of the offers for delivery on western lakes : Contractor. Po8t& Co do Cooper, Fairman A Co Tons. Thunder Bay. r.,000 5,000 10,000 $ cts. ;-)» 80 Duluth. $ cts. 58 16 59 40 This gives the idea that they did not compete on deliveries at ])oJh places, but they did, and the substance of their respective offers wii^ :;s follows : Contractor. Post& Co do Cooper, Fairman & Co Tons. 5,000 5,000 10,000 Thunder Bay. $ cts. .")8 41 60 15 .-.9 60 Duluth. $ cts. 58 16 59 40 59 60 Thus the tenders before the Department at that time showed that Post iSc Co. offered 10,000 tons at Duluth, or 5,000 tons at Duluth and 5,000 tons at Thunder Bay, at prices lower than those named by Messrs. Cooper, Fairman & Co. It was decided to take 10,000 tons for delivery on the western lakes, though no competition was invited at such ports, and to award the supply of them at the higher prices of Messrs. Cooper, Fairman & Co's. tender. A contract was prepared in the name of the Mersey Company for both lots of 10,000 each, one to be delivered at Montreal, and the other on the western lakes. The Mersey Company declin'" ' to contract for delivery on the ]ake% I u t 192 CONTRACTS. :) !i » .'i and retained the right to deliver the 20,000 tons at Montreal. This led to the necessity of a new contract for transportation the following year, and competition was invited for it by advertisement. Then, after the opening of the tenders, Messrs. Cooper, Fairman & Co. interfered, and, without having taken part in that competition, claimed that in consequence of the accept- ance of their offer in this case, they were entitled to the contract for trans- portation of thes^e rails from Montreal to the western lakes, and it was given to their nominee (see contract 20). Mr. Trudoau testified to the loss which had been sustained in conse- quence of accepting the offer of Cooper, Fairman & Co. in this case, as notified by Mr. IJraun as aforesaid, instead of the lower one of Messrs. Perkins, Livingston, Post & Co. Mr. Trudeau stated that the acceptance of the lower offer of Post & Co. would have saved upon the 10,000 tons covered by their tender, $12,400 if delivered at Duluth, and $4,900 at Fort "William. As a fact about 5,349 tons of rails and accessories were delivered at Duluth, and about 5,4Y7 tons at Fort William, upon which, at the rates stated by Mr. Trudeau, the loss would be over $9,000. A contract was prepared for execution on the basis of the two tenders above mentioned and accepted by Mr. Braun's letter of 2nd December, 1874, and it was expected to be executed by the Mersey Company. The following two letters are the next on record between the Depart- ment and this firm concerning this contract : — " Grby Nuns' Block, 42 and 44, Focndlino Strbet, " MoNTRKAL, Deo. 4th, 1874. « Our Mr. Fairman leaves here for England, via New York, Monday afternoon ; and befora foing we would like to know if you would accept delivery of rails west, and at what point!). By knowing this we may be al le to reduce the pressure on the Montreal freight market hj (-ending a portion via New York, and thus get m more speedy delivery. An early reply will oblige. "COOPER, FAIRMAN* CO. '*< Honourable A. Maokenzib, " OtUwa." " Ottawa, 5th December, 1874. " Gentlemen. — AMth reference to your letter of the 4th inst. relative to the delivery ofl steel rails, I am to state that the Department is not prepared to specify the quantities to b»j delivered at each of the porta mentioned in the contract of the Mersey Steel & Iron Co., bat] Uwt it la not intended to receive any viA New York. ■ "en. A. Jf., This ■'oi" deliver' paiiy, and i^een prepa 311(1 enclos standing th tiie intentic [^ aforesaid land nuts, lAccordinjr l^an, of Coo "d iu his fom the Pr« ^^^t as sent hich perm ffereut in lau & Co. J3 CONTRACTS No. 8. 193 sdto and igof kving icept- traiis- t was conse- ase, as lessrs. &Co. >,400 if ered at be rates tenders cember, JDepart- BET, Lnd before ^at points. larket by CO. 1874. ieliveryof litleBtob* taCo.,bo» " It may, however, bo decidod to have some oF them delivered at an English port, in which case due notice will be given in time. " I have, ic , " F. RUAUN, " Secretary. •Messrs. CooPEU, Fairman «fc Co., " Montreal." « The document evidencing the present contract was not the one first prepared. That was based upon the acceptance of the two tenders above mentioned ; it is not lorthcoming, and never reached the Department after it was sent to Messrs. Cooper, Fairman & Co. with the letter of the 2nd December above mentioned. The subsequent letter of Mr. Braun above set out, and dated the 5th December, 1874, makes it clear that that contract which had been forwarded for execution included delivery of rails at ports on the western lakes. On the 4th January, 1875, the following message reached the De- l)artment : — ' ^.,-,4;. "Ottawa, Jsnuaiy 4th, 187"). Jiy Telejrapfi from Munlreal. "Mersey Co. have riignid tender delivered on'y at Montreal. Cannot now deliver wost. Aliove received by cable. ".\(JEXTS MER.SEY Co. ilon. A. M.^CKl^^fZI^:.'' This communication in elfoct informs the Department, that the tender j lor delivery at western ports was not made on behalf of the Mersey Com- [pauy, and that that firm had declined to adoi)t it. The contract which had [been prepared as above mentioned for execution by the Mersey Company, and enclosed to Messrs. Cooper, Fairman & Co., on the apparent under- btanding that they were authorized agents for these contractors, and with the intention that it shou]' ^>e executed in England, including in its terras as aforesaid; delivery at ports on the western lakes, and the supply of bolts land nuts, as well as rails and fish-plates, was evidently not returned. JAccording to the above-mentioned letter of 4th December, 1874-, Mr. Fair- jman, of Cooper, Fairman & Co., intended to leave Montreal for England, and in his evidence before us he stated that he was in England, and heard llrom tho President of the Company that they would not execute the con- pet as sent to them ; but he knew of no authority from the Government i\'hich permitted a n'>w one to be executed in a different shape. A contract liferent in substance from that which was sent to Messrs. Cooper, Fair- lau & Co., on the 2nd December, was executed in England by the Mersey 13 • -is I '! 194 CONTi?ACTS. ■ ♦ m "h •• i'lH '^'* Company, and is the one now under consideration. By what authority the (change was made does not appear. "When the substituted document reached the Department, Mr. Fissiault discovered that it was difFerent from that which had been forwarded, and applied to Mr. Fleming on the subjoct. The following is a memorandum which at the time he made and attached to the contract : — "remarks on contract no. 4,')?i^, ok tub 14th JANUARY, ]87j, with the Mbrsky Sticki, and ! " Iron Company. " In the original drift prepared by me, there was a priro for the delivery of rails at I Dulutb, and one for delivery at French Kiver, also % price for iron bolts and nuts f.)r each | delivery. "The only price (X'll 38.) in this contract received this day, in for railK delivered »t Mon tpeal— no mention of delivering any portion at Duluth nor at French River. " The bolti and nuta are also omitted. "Mr. Fleming, whom I have consulted on this snys, it makes no difference. "II. A. FISSIA-ULT. "Feby 15tb, 1875." The italics are Mr. Fissiault's. The tenders which had been made in the name of the Mersey Company by Messrs. Cooper, Fairman & Co., as their agents, and by this firm in theirl own name, included bolts and nuts. The contract returned from Englandl was without them. Mr. Fairman was a witness before us, and on this! point said that he had inserted the item " bolts and nuts " in the tenderl made in the name of the Mersey Company, without any authority fromi them. In March, 18Y5, the fact that this item had been in these tenJeKJ was made a ground for the Department awarding the contract to Messrs Cooper, Fairman & Co. for bolts and nuts at the price given in this teuderJ and without competition, although several others of the competing tenderersj had on a former occasion in November, 1874, made offers at much lower] prices for the same articles. (See contract 30.) We find that a tender made by Messrs. Cooper, Fairman & Co in theiij own name, for delivery at points ,other than those at which competiiio^ had been invited, was accepted, and that its terms were included in proposed contract with the Mersey Comjiany for 20,000 tons of rails ; tha the Mersey Company refused to comply with these terms, and elected t(j execute a contract for the rails alone, without the accessories named in tlij tender on which the contract was based ; that the action of the Departmenj throughout the negotiations with Cooper, Fairman & Co. concerning matteij connected with this contract, was calculated to give, and did give that firn ' .•)%. t .imm m mx m CONTEACT Xo. S. ll'fl ity the ciment it from ubjcct. itached iTlCKI. ANI) I f rail:) at I 1 fir each 4 »t Mon lULT. an undue advantage over other competitors in subsequent transactions ; that in obtaining this contract in its final shape, the contractors —the Mersey Steel & Iron Co. — got no undue advantage, and tliat in awarding it the Department purchased the material covered by it at the lowest avail- able offer. The contract was fulfilled, and tlie following sums iiave been paid on it :— . To 30th June, 1875 !s323,944 99 1876 721,738 60 1877 83,053 70 ■' $1,128,737 35 By a subsequent arrangement, some of the rails included in this con- Itract were transferred to tho Intercolonial Railway, and the account of the Pacific Railway was credited accordingly. Company n in thciil Bnglandl on this! [he teuderl ■ity froml le tendewj fo Messisl ^is tenderJ tendeTeTsI .ch lo^veI[ in theii |mpetiiio: ided in lils ; thi [elected ti led in tin jpartmeni itr mattei that fir Contracts Nos. 9 and 10. Steel Raifs. This contract, dated 6th April, 1875, is the result of two distinct bar- ;ains between the contractors and the Government. The first is concern ins: 1,000 tons of rails, &c., and was numbered 9 ; the second was for an idditional lot of 5,000 tons, and the contract, as executed, embodied the terms upon w^hich both lots were purchased. It is referred to in the books I the Department as contracts 9 and 10. By it the West Cumberland Iron ind Steel Co. (Limited), undertook to make and deliver 10,000 tons of steel lils with the proportionate quantity of fish-plates, bolts and nuts, of which 1,000 tons of rails, etc., were to be delivered in Montreal at iJll sterling, ual to $33.53 per ton lor rails and plates, and ^£20 sterling, equal to [97.33 per ton for bolts and nuts, and the residue of 5,000 tons of rails, etc., :ee on board in England, at <£lo sterling, equal to $48.67 per ton, for rails id plates, and <£19 sterling, equal to $92,48 per ton, for bolts and nuts. he first arrangement was the acceptance of the tender sent in by the con- actors in the November competition. It was one of the two lowest, and mod iJll sterling as the price for rails and fish-plates, but omitted to give price for bolts and nuts. This was afterwards fixed by correspondence. Iter the decision to accept the tender, the following correspondence took lace : — I3i ,^ I • ' 196 CONT.iUCTS, I'i "Ottawa, 20th November, 1874. " Telegram to Messrs. Cox parlment, dated October 3rd; will be mado with your principals.' '• Wo presume you are kindly sending us copies of the specifi'iitioa you mootion, on receipt of which we shall have the matter put into proper shape. " Awaiting your valued favour?, '• We are, dear Sir, v " Your obedient sorvantf, " COX & GREEN. '•'!'. TuL'UK.vi;, E.-q., " Deputy CommisBioncr I'ublic Work?, '•Ottawa." " Ottawa, 25th November, 1874. " Gknti.kmkn,— As in the tendtu- you niide on the JOth inst., in behalf of the West Cumber- 1 Unt<^r of Public Works, calling his particular attention to the very low price of the rails. " Soliciting the favour of a reply, " We arp, dear Sir, " Your obedient servants, "COX AGREEX. " F. Bbaun, Esq., Secretary, : • '• Public Works Department, "Ottawa." " Moxtbeal Tkleoeapu Co., ' "Ottawa, December 21 st, 1874- "By Telegnph from Montreal to T. Trudeau, Public Works. "See our letter 18th December to Mr. Braun, offering five thousanl tons more rails if ! wanted : reply q'lick, as a railroid is in treaty. "COX & GKEEN." "Ottawa, 22nd December, 1874. " Telegram to Cox d- Green, Montreal. " No further steel rails wanted. Thanks. "F. BllAUN. " Secretary." '• Ottawa, 5th January, 1875. " Gentlemen— The Minister of Public Works having reconsidered your offer on behalf of llheWest Cumberland Iron and Steel Compary (Limited) of Workingtsn, to supply 5,000 ItODB of steel nils in addition to the quantity stipulated in their contract at jCIO (ten pounds) jsterling per ton, and on the terms and conlitions of their said contract f. o. b. at Working- jton, I am to inform yoa that said oTer is ao jep'eJ, an 1 to raq leit you will advise the Com- Ipsny accordingly. ' "I have, &o , « F. BRAUN, " Secretary. 'iressrs. Cox & Greek, "MoDt'eal." l'J8 CONTJtACTS. H III W i;l ; Accompanying the original tender of this Company, a letter dated 23rd October, 1874, from the Secretary to Messrs. Cox & Green, the agents at Montreal, was sent to the Department. This letter named c€10 sterling as a price at Workington, or iJll sterling at Montreal ; and it seems to have been considered that their offer of December 18th, 18*74, might be treated as still continuing this alternative. Mr. Mackenzie, in his evidence, stated that about the time of accepting this last offer it was considered expedient to pro('ure some rails for delivery in Vancouver, and the fact that the terms of the new offer by these contractors on the 18th December was accepted on the condition that the delivery should not be made in Montreal as proposed by their agents, Messrs. Cox & Green, but at "Workington, in England, as mentioned in Mr. Braun's letter of the loth of January, 1875, indicates, that it was at that time intended, that this second purchase from the West Cum- berland Co., should go to Vancouver. The following letter was subsequently written by the Secretary of the Department : — " Ottawa, 4th March, 1875. " Gkntlemkn, — A new contract with the West Cumberland Iron and Steel Cj. being re- quired for the supply of 5,000 tons steel rails, &o., it has been determined to amalgimate the same w!th the contract executed by the Company on the 2nd February instant, for the fint 5,000 tons. " The accompanying draft baa been prepared accordingly and is endorsed for executioa, *' You will remark that the price per ton for bolts and nuts does not cover duty. " The first contract in triplicate is returned herewith. "I have, &c. F. BRAUN, " Sercetary. " Messrs. Cox & Grekn. "Montreal." The contract was executed. The delivery of 5,000 tons to be at Mon- treal, and of 5,000 at "Workington. Subsequently the Department proposed to change these terms, as shown by the following correspondence : — '• OrTAWA, April 20th, 1875." « Would West Cumberland Company, deliver the whole ten thousand tons raild at Mon' treal at eleven, and bolts and nuts at twenty pounds, sterling. F. BBAUN. ■ '^Secretary. "Cox «& GRK3y, '•Montreal." "1.3 & 15, Hospital Street, Montreal, 20th April, 1875. " Dear Sir, — We have your telegram of to-day and copy enclosed. " The first five thousand tons have already or are about being shipped. We have no doubt the Company could ssnd the other five thousand also, and we dare say can arrstnga to deliTerl CONTRACTS Noa. 9—10. 199 tbem to you here Adding one pound aterlin ^ to the firioe you have agreed to pay Ibem delivered in England, we will lay the matter before them by mail leaving here n^xt Friday, the 23rd inst, and when their reply reaches us we shall have the honour of communicating it to you. " We are your obedient servants, COX & GREEN. '•K. Drau.v, Esq., Secretaiy, *' Public Works Department, " Ottawa." The evidence shows that in obtaining this contract (iiuinbcrod 9 and 10) the contractors obtained no undue advantage, and in awarding it the Depart- ment bought the material covered by it at a price as low as that for which it could have been then obtained from any other source. It was finally arranged that the delivery should be made in Canada, and the contract was fulfilled. The following sums were paid on the I'oniract : — To 30th June, 1875 $230,045 14. To 30th June, 187G 147.284 99. To 30th June, 1877 180,145 73. Total $504,075 86. By a subsequent arrangement some of the rails included in this con- tract were transferred to the Intercolonial Railway, and the account of the Pacific Railway was credited accordingly. Contract No. 11. Sleel Rails. By this contract, dated 9th February, 1875, a firm, composed of persons [whose names are not given, using the style and firm of Naylor, Benzon & [Co , undertook to supply five thousand tons of rails, with the proportionate Iquantity of fish-plates, free on board, at Liverpool, receiving therefor UlO 10s. per ton, deliverable as follows : 2,500 to 3,000 tons in March or [April, 1875 ; the remainder in May, 1875. This contract was the result of ofl^ers by Messrs. Cooper, Fairman & Co.' hvithout competition. The tenders which reached the De- partment in answer to the advertisement issued on this occasion, and yhich had invited oflfers for delivery only at Montreal, were accompanied by two for delivery at Liverpool, one from James Crawford at .£10 5s. ster- \ % 200 CONTRACTS. ■I t tiHir* liiM^ ■ 11; ■ i I Id- ling per ton, and one from Messrs. Cooper.^Fairman & Co. at cfilO 10s. Th* latter tender contained also the only offer for delivery at Vancouver, whicli was jit .£13 fig. 3d. sterling. lli'fore the time named for receii>t of tenders, the following correspuii- dence passed between the Department and a Mr. Justice : — •' Piiii.ADitr,PiUA, 23rd Octobor, 1874. " Dear Sib, — la making tenders for ' stet-l rails,' you require deliveries to bo mini, a: Montro.-vl. " 1 write to asceituin if tonders would bo received for rails to bo delivered at LlviH|.(i():, and all matters of freight and insurance would then bo in your hand^. This course wmiM bring out greater competition in way of i)idf*, thus reducing prices. " Yours truly, " PHI LI r s. .JUSTICE " \<\ Bkattn, Esq., .Secretary, " Public Works Department, " Ottawa. Canada." " Ottawa, 27th October, 1874. »' Sir, — In reply to the enquiry made iu your communication of the 23rd instant m i ' whether the Department would accept tenders for steel rails delivered at Liverpool, England, ^:c., I beg to inform you that no such tenders would be accepted. In addition to the place mentioned in the specification for delivery, the Department would have no objection to tenders for «lelivery on Georgian Bay, I^ke Huron, or Duluth and Thunder Bay, fjik-- Superior. "I have, Ac, ,' ■/ " F. BRAUN, " Secretary. *' Philip S. Justice, Esq , "No. 14 North Fifth Street, Philadelphia, Pa., U.S. Although the Department had requested no competition for delivery in England for Vancouver, nevertheless, after the opening of the tenders. Mr. Fleming, on the 19th November, 18*74, thought it proper, in his report to submit the substance of the one for Vancouver, made by Messrs. Cooper. Fairman & Co. After consideration of the different tenders, the notification of thi'i acceptance of some of thom took place at the dates and for the quantitie> below mentioned : — Nov. 20th, to Cox & Green, 6,000 tons at $53 63 Dec. 1st, 11. A. F. Post, 10,000 tons (at average).. 64 62 Dec. 2nd, Cooper, Fairman & Co., 20,000 tons at. 64 26 Dec 4th, Thos. Reynolds, jun., 5,000 tons at 63 53 CONTUACT No. 11. 201 This provided for 40,000 tons. Tao day followinj^ tho last of theso notices, the following letter was written hy tho Secretary : — "Ottawa, 5th December, IS74. "Gentlhme.v,— With reference to your letter of the 4th intt., reUtivo to the delivery or steel rails, I am tt state that the Departaaent is not prepared to rpeciry t'le (|uantlli«d to hn delivered at each of the ports mentioned ia the contract of tho Mursey Sloel an \ Iron Cjm ])uny, but that it is not intended to receive nny viti New York. " It may, Lowever, Le decided to have some of them delivered at an Kog'ir,_'l'he Minister of Public Works having reconsidered your offer on behalf of the West Cumberland Iron and Steel Co. (Limited), of Workiogton, to supply 5,000 ton9 of steel rails in addition to the quantity stipulated in their contract, £10 (ten pounds) sterling per ton, and ou the terms and conditions of tbe'r said contract f.o.b. at Workington, I am to ■ ■•! I I *■ /• : ■ "l ^ 204 CONTRACTS. .■■'} I inform you tbat said ofier is accepted, and to request you will advise the Company accord- ingly. "T have, Ac, "F. BIHUN, " Secretary. " Mesers. Cox & Greek, *' Montreal." ''Ottawa, 5th January, 1875. '' Sir,— In reply to your communication of the 23rd ult., asking the probable destination of the rails lately purchased by the Government, in order io enable yoj to make offers for the carriage of the same, I beg to inform you that the p'aco of delivery will be ^lontreal and Vancouver Island. "Ihave, &c., '•F. BRAUN, " Secreian/ ",JoHN G. Dai-k, Esq , " New York, U.S." " OTTAWi, 5th January, 1875. *'Sin,— In reply to your communication of the 29th ult., offering to supply 6,409 tons of Bessemer steel rails at £10 10s. f. o. b. at Liverpool, I beg to inform you that the Depart- ment does net require flry more. ; . '•I have, &o , • ; -' «'F. BRAUN, '* Secretary. "Jambs CoorEU. Esq., , ' "Montreal." Two days after this the following acceptance of Messrs. Cooper, Fair- man's proposal was telegraphed : — " Ottawa, January 7th, 1875. '' Telegraph to Messr.i. Cooper, Fairman hl to Britiiilj Columbia can bo got at two pounds sterling, the Government will take 6ve thousand tons of steel tails, shipped at any time. Delivery will be a^, Esjuiaaalt Cowichan Bay or Nanaimo, at all of which places there are good facilities. « F. BRAU J, " Secretary." After \vhicli Ihe following correspondence took place : — " Montreal, 13th January, 1875. "Dbar SiK, In rei»ly to telegram of the 7th instant, we beg to auvise you tbat we have purchased on account of Dominion Government 5,000 tons Bessemer steel rails, at £10 lOi Od., f. o. b. Liverpool ; cash againat bills of lading. " We have also contractod freights to Vancouver ports, viz. :— Esquimalt, Cowichan Bay and Naraimo, at £2 5s. Od. sterling per ton. CONTKACT No. 11. 205 " The Goverament assuming the responsibility of freight, &c., which is to sajr — to pay gbippers, makers not assuming delivery to Vancouvor ports. "Should you require the traok bolts for this lot, we can arrange for them and include. We are advised that steel rails are now held at £11 0.*. Od. We would be glad to be favoured with the address of your Bankers in England, to whom we suppoie the bills of lading will require to be presented to. Kindly confirm the contract as soon as possible to enable us to cable rep'y, the necessary . (JENTi,KME.v,_In reply to your sevfral communicatinoa on bnhalf of Mesars. Naylor, Benz^n & Co., I am to state that the Government acccp s their offer to supply 5,0fK) Ions of steel rails at £10 lOs. Od. sterling per ton f. o. b. »t Liverpool, and allows £2 0<. Od. per ton for freight to the Vancouver ports. " The Agent-Goceral of the Dominion, E. Jenkins, Esq., M.P., will see to the insurance. " Messrs. Morton, Ro»e & Co., are the Financial Agents of the Oovernment in r»ndrn. " I have, &c., " F. BU.\UN, " Stcrciart/. "MesBrs. Cooi'KR, Fairmax The evidence shows that there was no such rise in the market price of rails as that which, in Mr, Cooper's letter to Mr. Buckingham of the 1-lth January, is stated to have taken place, and no such advance as in Mr. Cooper's letter of the 29th December, 1874, to Mr. Mackenzie, was mentioned as pro- bable after New Year. Mr. Reynolds' testimony, as well as Mr, Sandberg's diagram and the periodicals before mentioned as authorities, namely. Iron and The Iron and Coal Trades Review, all indicate that from the latter end of November until after all these transactions were closed there was no general rise in the price of rails, but, on the contrary, if there was any movement it was downwards. It is not, however, inconsistent with such evidence that individual makers may have asked .£11 sterling. In fact, periodicals or other authorities of that nature purport to do no more than to give the general state of the market. The tenders that were sent, in answer to the advertisement in this case, ranged from £\1 to cCH sterling for de- livery at Montreal, equivalent to jGIO to <£16 sterling at English ports, and if, at the time this purchase was being closed, i. e., in January, 1875, any maker asked .£11, or any other price, at an English port, that fact gave no indication of the lowest price at w^hich a Government could purchase rails. On the 4th January, 1875, there were two offers before the Department for rails to be delivered in England, both made spontaneously : one from Cox & Green, made on the 18th December, 1874, at £\0 sterling, which we I say, was still before the Department, because, though it had been refused I by telegram on the 22nd December, it was at this time, the 4th January, 1875, treated as available, and, in fact, accepted. Another was from Cooper, Fairman & Co., made the 29th December, 1874, at .€10 10s. feterling. h: « , \ I ' 1 ! ■' ■ I I » * 208 CONTRACTS. > M It was on this 4th of January, also before the Department, on its records, that Mr. Justice had desired to tender for delivery at Liverpool, and had been informed that — "No such tenders would be accepted:" that Mr, Crawford had offered to take, for delivery at Liverpool, XIO 5s. sterling per ton ; that there were signs of a weakening in the market, for makers were then inclined to take less than they would accept on a -previous occasion. That the market had been firmer is perfectly clear, for Mr. Mac- kenzie testified that, after the opening of the tenders, and before this spontaneous offer of 18th December, the West Cumberland Co. had de- clined to furnish a further quantity at $53.53 ; and there is other evidence to ihow that the Ebbw Vale Co. had, soon after the opening of the tenders, declined to accept that price for an additional supply. Therefore this offer, coming spontaneously from Cox & Green to supply 5,000 tons at a price which they had previously refused, was an intimation that tlie market was weakening. With a knowledge, on the 4th January, 187o, of these facts, the Department took action as follows. On 5th January, 1875, Mr. Braun wrote Cox Sc Green accepting tlnir offer for 5,000 tons at iilO sterling. On 5th January, 1875, Mr. Braun wrote Mr. Cooper, of Cooper, Fairniaii Si Co., declining lo take any more rails. On 7th January, 1875, Mr. Braun telegraphed Messrs. Cooper, Fairmaii & Co. that if freight could be got at £2 sterling the Government would take 5,000 tons shipped at any time. And after some intermediate attempts of this firm to get a higher price for transportation, the purchase was concluded on the terms named in Mr Braun's telegram of 7th January, 1875. Mr. Mackenzie was asked whether, before deciding upon awarding this contract to Cooper, Fairman & Co , the circumstances of these applications from Mr. Justice and Mr. Crawford were taken into consideration, or whether any attention was given to the fact that two days before that he had been offered voluntarily, by the West Cumberland Co , 5,000 tons at a price ten shillings L ■ er than that named by Messrs. Cooper, Fairman & Co. His answer w that he had no doubt they were all considered ; that the fact that there wuci a decision in the case implied consideration ; but he had no recollection of any discussion respecting the matter, and upon being asked why it was not worth while to ask for the competition of Crawford or of| the West Cumberland Co , he said he knew of no reasons whatever, except what w this lasi previoui an Eng this pui increasir 45,000 tc We the Min Cooper, 1 West Cu Mr. iuvariabl officers Trudeau, was re-ca! to were c( Mr. T whether h stated thai Mr. F; first to last unable to 1 Cooper, Fa Thebj 2on & Co. Theev That h price highe that time, a such price That tl Liverpool h Cooper, Fail The CO 1^265,052 36. 14 CONTRACT No. 11. 209 what were in the public documents in the oflice. After the acceplauce of this last lot from Cooper, Fairman & Co., the one of 5,000 which had been previously bargained for with the West Cumberland Co. to be delivered at an English port was arranged to be delivered at Montreal instead, so that this purchase from Cooper, Fairman & Co. had indirectly the effect of increasing the quantity to be delivered at Montreal from 40,000 to 45,000 tons. "We have not been able to get any information upon the question how the Minister was induced, without competition, to concede to Messrs. Cooper, Fairman & Co. r price 10s. sterling higher than that which the West Cumberland were, two days earlier, willing to take. Mr. Mackenzie stated that in awarding contracts, his " decision was invariably not only in concert with, but in acquiescence of the views of the of&cers of the Department," in consequence of which statement Mr. Trudeau, who had been the Deputy Minister at the time of this contract, was re-called, in. order to ascertain how far the circumstances above alluded to were considered before awarding this contract to Cooper, Fairman & Co, Mr. Trudeau testified that it was not a matter of doubt with him as to whether his judgment had been asked concerning the rail contracts, and he stated that the Minister had himself decided. Mr. Fleming, as a witness, said he wished us to understand that from I first to last he took no part in awarding contracts. We have, therefore, been [unable to learn the reasons which led to .£10 10s. being given to Messrs. I Cooper, Fairman & Co. under the circumstances above stated. The bargain was closed by a formal contract with Messrs. Naylor, Ben- Izoii & Co. .... vi The evidence leads us to conclude : That in this case the contractors got an undue advantage, namely, a [price higher than was necessary to be paid in the state of the market at that time, and higher than was then being paid to other manufacturers — I such price being conceded without competition : That the action of the Department concerning rails to be delivered at [Liverpool had the effect of silencing competition and of giving to Messrs. [Cooper, Fairman & Co. an undue advantage over other dealers. The contract has been fulfilled; the amount paid on it being |$265,052 36. 14 • II h > si k; 210 CONTRACTS. CoNTRAcrr No. 12. Georgian Bay Branch. By this contract, dated the 27th of February, 1875, the Hon. Asa Belknap Foster undertook to locate and constrr.ct about eighty-five miles of railway, to be known as the Georgian Bay Branch, from the mouth of French River to a point in the centre of four townships, lettered A, B, C, D, on a map attached to said contract, according to specifications, and within a time men- tioned in said contract ; which railway, on its completion, was to be the property of the contractor, and to be worked for his advantage under certain specified conditions, he receiving therefor ten thousand dollars per mile to- gether with interest at four per cent on $7,400 for each mile of the railway, I this interest to be paid for a period of twenty-five years from its completion, as well as the proceeds of 20,000 acres of land for each mile thereof in the | manner in the said contract set out. This contract is printed (No. 44) in j the Sessional Papers of 1875. A return to the House of Commons dated 5th March, 1875, shows the I tenders for the construction of the Georgian Bay Branch, with Orders in | Council, correspondence and papers relating thereto. A return to the House of Commons, dated 28th of February, 1877, shows ' reports, statements, correspondence and other papers subsequent to the exe- cution of the contract concerning work done under it ; the failure to per- form it, and Orders in Council concerning the cancellation of said contract, | and other matters. On the 23rd of April, 1877, the Select Standing Com- mittee on Public Accounts presented to the House of Commons their fourth | report, which was evidence +aken (not under oath) in reference to the expen- diture for work performed under this contract, together with several docu- ments. An advertisement of the 6th of November, 1874, invited tender«» for the] construction of this branch, stating that, amongst other things, such infor- mation as the Government possessed concerning the country through which! the line passed, might be obtained at the Department. The substance ofj the tenders, and the action taken upon them, appear by the following :— " Dep.\rtment of Public Works, " Ottawa, January, 1875. *' Memorandum. "The undersigned reports that tenders have been invited for the Georgian Bay Brsnchl of the Canada Pacific Kailway in two forms as follows: — CONTRACT X.). 12. 211 Belknap railway, h Rivei n a map me men- ;o be the T certain ' mile to- railway, | npletion, I }of in the ' fo. -44) in ihows the Orders in 7, shows] the exe- re to per- 1 contract, ing Com- eir fourth I he expeu- ral docu- hrsj for the I ich infoT- rh which I Lstance of| |ing :- k 1875. " Form No. l.--ro include ibe delivery of the railway coroi>1et«d to Government. "Form No. 2 To include the oonatruction of the Rniln-ny, and its working after oooa- pletion upon certain regulations as to accomodation for connecting railway lines anJ other- wise to be established by Govemmeut. The road, subject to such regulations, to remain the property of the contractors. "That said tenders are all based on the following conditions as to remuneration : " 1st. — ^The payment, as per cap. 14, Vic. 37, sec. 8, sub-sec. 3, of a sum of «10,000 per mile. " 2nd — A grant of 20,000 acres of land per mile. "3rd.— A guarantee of 4 per cent, for 23 years on a sum to be named by the parties tendering, in the event of said quantity of land per mile not being sutHcient. " That the following is a list of the tenders received : — Form No. 1. Guarantee required on John Wardrop & Co., Brockville $40,01M) James H. Dean, Port Perry 75,000 C. E. English, Toronto 90,000 C. E. Englieb, Toronto 100,000 Form No. 2. J. D. Edgar, Ontario and Pacific Junction Railway 30,000 N. C. Munson. Boston 7,400 A. B. Foster, Waterloo 12,500 C. E. English, Toronto 110,000 " The undersigned, therefore, recommends that the offer of N. C. Munson, of Boston, be accepted, said offer appearing to be most advantageous. " Beapectfully submitted. « A. MACKENZIE, " Minister of Public Works.*' " MEMO, This Report was approved by a Committee of the Honourable the Privy Council on the 4th February, 1875." " BosTox, Mass., « 28th January, 1875. << Sir, We beg to inform you that we have transferred the tender for the construction of the Georgian Bay Branch of the Canadian Pacific Railway to the Hon. A. B. Foster, who has * acquired all the interest we hold in the tenier sent in by us. " Your obedient servant. " N. C. MUNSON. " ilmi. A. MAOKB/fZIE, " Minister of Public Works, « Ottawa." Jay Brsncbl ItJ 213 CONTRACTS. i » ^ " Canada Ogntral Railway Go., • " dKOBBTART AMD TftlASaREn'g OriTICB, "Ottawa, 3rd February, 1876. « Sir,— I beg to inrorm you that I have acquired the interest of N. C. Mui;.i?n in the Georgian Bay Branch of the Canadian PaciQc Railway, and herewith enclose a transfer, and MB prepared to enter into contract for same. " Yours truly, "A. B. FOSTER. *'Hon. A, Maokbnzir, " Minister of Public Works, " Ottawa." The contract was entered into with Mr. Foster in accordance with the above-mentioned recommendation. It contained a stipulation that in no case should the gradients ascending easterly exceed 1 in 200. Subsequently it was cancelled. An Order in Council, dated 28th of February, 1876, authorized the con- tract to be annulled, and the repayment to the contractor of $8&,000, which he had deposited as security, together with the fair value of works which had been performed by him so far as they were necessary to, or could be made available for, the prosecution of the work. The contract was annulled and Mr. Foster was repaid his deposit of $85,000, together with $41,000 to- wards reimbursing him for the expense on the works aforesaid. We do not think it necessary to describe at length the correspondence and other steps which led up to this result. They are set out in the return to the House of Commons dated 26th March, IST'T, before mentioned, (Sessional Papers, No. 57), but some reference to them maybe useful. On 26th October, 1874, Mr. Walter Shanly wrote to Mr. Foster aud used the following language concerning this branch : — " The levels already run, extending from the mouth of the river to the ' Nipissing Eoad,' a distance of about sixty miles, show beyond all question that the maximum gxadients and curvature limited by the contract, namely, 26 feet per mile ascending east and 52 feet on the westwardly ascent, are not obtainable on, or near the line laid down on the contract map." On the 17th November Mr. Fleming reported on this letter, stating that he had had the advantage of the views of Mr. Eidout and Mr. Hazle- wood, and that, in his judgment, the proper course was, "for the contractor to carry on the surveys with every possible energy until a line coming within the torms of the contract be found." Mr. Fleming does not give CONTRACT No. 12. 213 the language in which the views of Mr. Ridout and Mr. Hazlewood were communicated to him, and we are not able to judge how far his own strong view that the contractor by surveying with energy could find the specified grades, was a reasonable deduction from their representations. But from his letter of the Hh of February, 1877, set out in the said return, in which he said that the light gradients which he had expected were not obtained, and in which he indicated that grades had then (February, 1877) been adopted at a maximum twice as steep as those proscribed by the contract, as well as from the information contained in the said return to the House of Commons, and other evidence on the subject, we conclude that in the terms of this contract, a grade for the railway was specified as the maxi- mum which was not obtainable, and that this was the main reason for cancelling the contract. The general route of the line specified in this contract was not selected for engineering reasons. According to Mr. Fleming'* evidence it was due to the policy of the Government. We have not enquired into the expediency of adopting the route. We have endeavoured to learn why the grades described in the contract should have been taken as practicablt> so positively as to make them the basis of a bargain between the contractor and the Government. On the 6th October, 1874, the Chief Engineer submitted a report to the Minister which is hereinafter set out. In order to understand the bearing of this report it must be kept in mind that it relates to a route which included at the westerly end, about 85 miles covered by this contract, and known as the Georgian Bay Branch, and also a continuation of the same line which was subsequently agreed for, by contract 16, and is generally alluded to as the subsidized portion of the Canada Central. "Letter from the Engineer-in-Chief to the Minister of Public Works, giving a sjnopsis of in- formation respecting the country between Rioer French and Renfrew, as well as Pem- broke: from Reports of an Exploration made by Samuel Hazleicood, C,E., in the sea- aon of 1874. "Caxadiav Pacific Railvtat, "Officb of^thb Enoiseeu-in-Chief, « Ottawa, 6th October, 1874. " Sir, — In accordance with your wishes I instructed Mr. HazlewoDd to walk over and ex- amine the country between the mouth of River French and Pembroke, also along the River Bonn^cbere to Renfrew. The following remark s oa the character of the country, its suita- bility for railway construction, Ac, are gleaned from Mr. Hazlewood's letters to me, dated the 14tb July, 5th August, and 1 5th September last. t.!: < , ^ r^ m 1 , ?ii iiii 1 i 14 1 « 1 ; i'i ' 1 214 CONTRACTS. "Mr. Ilaslewood proceeded first to Parry Sound dwiriot, and traTelled up the ^ad lead- log ffom L«ke Kouaaeau to Lake NMpisaing ; he aeleoted the corner poat between Iota 158 and 159 aa the initial point, and atarted from that place on the lat July, on a direct course for the mouth of Kiver French, a distance of about sixty miles. He reportn the country between these pointa aa being favourable for railway construction, no obstaolea cf any importance presenting themselves, except near River French, where the heaviest rook excavation will be necessary. The streams to be oroused are few and unimportant, and there is an ample sup- ply of good atone. The landf as a general rule, is level, and as far as oould be judged, much of it adapted for aettlement. The timber ia large and valuable. Pine, apparently of a fine quality, is to be had in abundance. *'The mouths of River French were reached on the evening of the 7th July. Here Mr. Haxlewood expected to find some Qovernnient stores, but learning that the Hudson Bay Company had lately bro'xen up their post at (his place and removed the stores to Byng Inlet he found it necessary to piooeed there for a supply. " Having procured a sufficient quantity of supplies, Mr. Hazlewood ascended the River French to Lake Nipissing, and thence by River South and Nipissing Road, returned to the camp between lota L'iS and 159. " On the 17th July he left the Nipissing Rpad and walked in as straight a course as poa- MblA easteily towards Pembroke. About ooe and a half miles from the road he cro^soi the River I omonda, about twenty five feet in width, flowing in a northerly direction — a short dis- tance farther up it turns to the wet'tward. '■ For the first eight miles come rough ground was encountered, but with a little time and care Mr. llszUtwood is convinced a fiod line may be secured. At ten and a-half miles he crossed the River South or Namuni agong, 75 feet in width and 8 feet deep, and at sixteen and a-ha'f miles again croEsed this /"er, 50 feet in width. From thf« latter point he fuUowed the general course of the River South to about the twenty-first mile. At seventeen and a- balf milea he came upon a large deposit of gravel, the first seen between this point and River French, a total distance of seventy-seven miles. At the twenty-first mile the River South was lost sisht of, but at the twenty-fourth mile a brook was crossed which he took to be one of its heads, and at the twenty sixth and ahalf mile crossed what he supposed to be the other head ; this latter stream he followed to tae twenty-eighth mile, where it waa finally lost sight of. <* The valley of the River South from this point (twenty-eight UiUes) . ack to the eighth mile ia wide, and ofiTers no serious obstructions to the location of an et ':th July ; and, his provisions fUling short, he considered it advisable to proceed direct to Pembroke by the quickest route. " Having procured supplie.«, Mr. Haxlewood continued his examination. The following is a de'^ .<-iption of the country between lAke Burnt and Renfrew, via the River Bon- ne"' e t— ''Running easterly through the valley of Creek Alder to tbo River Petewawa, the line iday cross at the Narrows, at the foot of Lake Ixyng, by a span of 100 feet ; thence along the south side of Red Lake Pine, and along the southern base of the ridge, which extends along the north side of Lake J^amures to the Little Petewawa, which it m-ty cross at the falls be tween Hogan's and Lake Lamures : thence passing the south-western bays of Lake Hogan to the right wing of Lake Crow. From this p'jint it may follow a valley, leading to the third rapid from the mouth of River Crow ; crossing this river with one span of 50 ieet, rock foundik tions; thence south-easterly across the valley of a little brook which flows northerly into Biver Crow. Along the base of ' Baptist Ridge,' and along the flat land around the Lead of the south-eastern Bay of Lao Laviella to the outlet of Lao la Claie, where a bridge of 30 feet ipau will be required. Good stone may be procured on the spot. Thence along tbe shore of Lac la Clare to its northern bay, and by a valley running easterly to the inlet of Lake White Partridge. " From this point sither the northern or central branches of the bead waters of the Bon- nechere may be followed to what is known as the ' village,' on the north side of the river, a distance of from five to seven miles, thence crossing to the south side of the riverf about a mile east of the tillage,' to Egg Rock, a distance of about sixteen miles. As far as could be judged, rock excavation will be necessary in rounding this rock. Thence along the south side of Lakes Round, (Jolden, and Mud to Eganville, and thence a distance of 22 miles to Renfrew. " If thought desirable the line may cross to the north side of the Bonnechere, about six miles below Eganville, and continue down the north side through the village of Douglass io Benfrew, crossing to the south side again at the latter place ; the south side is, however, re- ported to be the best throughout. "Tbe valley of the River Bonnechere from Renfrew to the ' village,' or head waters, Mr. Hazlewood says, has a uniformily even surface, and there would be no difficulty in construct- ing a railway through it. Very few structures of any importance would occur, and there ia an abundance of good stone to be had close at hand. The grades and curves would be extremely easy. The land is good between Renfrew and Eganville, but between the latter place and the ' village ' it is poor. " On the whole distance from Lake Burnt to Renfrew the gradients need not exceed 1 per 100, and there will be no neceiaity for employing sharper curves than 1910 feet radios. \ 1 216 CONTRACTS. f^ IP. '• With regard to the examination of the country between Lake White Partridge and Pembroke, Mr. Hazlewood was prevented by scarcity of water and the fires in the woods from walking over the whole of this portion of the country. He, however, managed to obtain a good idea of its chaiacter by canoeing along Lakes Crooked and Grand, as well as along the south branch of the Elver Petewawa,und by walking into the interior w^herever an opi, 1875." And on that day Mr. Braun telegraphed to Mr. Campbell : "Time cannot be extended ; matter too urgent, Answer." On the 31st Mr. Campbell telegraphed to Mr. Braun : " When will time expire ? Answer Immediately and oblige." And on the same day Mr. Braun telegraphed to Mr. Campbell : " Time expires Friday, second proximo." On the 3rd April, Mr. Campbell telegraphed to Mr. Braun : . "Our inability to qualify, was owing to Wallace beine pick; will be in Ottawa and [explain. Hope it will have no effect on 15. Notify me at St. Catuariaes on 15." This firm were tenderers for the adjoining section, No 15, which had [been advertised at the same time as section No. 14. Upon the failure of Wallace & Co., to put up the requisite security within the time named as aforesaid, the contract was awarded to Messrs. Sifton & Ward by order of the Minister. This was upon the same day that this firm were closing the I arrangements concerning contract No. 18. According to the account of Mr. John "W. Sifton as a witness before us, Mr. Trudeau asked Mr. Sifton whether he could put up the security imme- diately if the contract should be awarded to him, and said that Parliament was about to be dissolved and it was desired to close the matter before the House prorogued. The contract was executed upon thesame day as that for section No. 13. "We find that in obtaining this contract the contractors got no undue advantage, and that the action of the Department, in awarding it, did not increase unnecessarily the cost of the railway. The time named for the completion of this work, under the contract, was the 1st of August, 18T6, at which time it was not nearly finished. The first delay in the progress of the work, was because the location had not been finally adopted, at the time the contractors reached the ground ready to go on. A location had been made, but at the west end, where it was- 15 M -226 CONTRACTS. I ..-'l I'iii*^! f , illlln i : 1 ■ i > t h intoiid^'d to eomineute work, there was a probability of a change being made, cind the engineers were not ready to lay out the work for the con- tractors. Work really commenced at a point about five miles east of the terminus of the line embraced by this contract. The contractor has stated in evidence that he arrived on the ground in the latter part of April or be- ginning of May, with large numbers of men and horses ; that they had about sixty teams and twelve hundred men, and kept them for some time, paying their board, and becaus(» the work was not ready to proceed these men were scattered, and it was difTicult to get men in again that summer ; that at first they were paying S1-V5 per day ; that afterwards they had to raise the wages in the hope of bringing back men, but even then they failed, for it w^as reported in the States, to which place most of them had gone, | that there was no work going on, and labourers were afraid to come. The engineers went in June to lay out the work. The contractors had to build | a road from Ked River to the point at which they were allowed to com- mence, over which to carry their supi^lies. In the following December the contractors got notice not to proceed further with the work. This notice I to stop was positive and unqualified. The contractor testifies that the stoppage at this time had the effect of delaying the completion of the works as much as a year. Towards the end of 1878 Mr. Marcus Smith, acting Chief Engineer, after visiting this section, stated that the con- tractors were not likely to get it done within the time that the Government | was willing to allow them for that purpose. The country f' about a mile and a-half at the east end of this section! partakes of the cha.dcter of section No. 15, the one next east ot it, and is quite diff"erent from the rest of section No. 14. There was a very deep I filling upon it which could not be completed satisfactorily, without the use of machinery, a train of cars and a steam-shovel, which Sifton & "Ward had not procured, and which were not necessary ui>on the westerly portion of] the work. The contractors claim that they would have procured the neces- sary machinery if time had been given them to do it, but that the Acting! Engineer-in-Chief was urgent, and pressed them to niake an arrangement hy which Mr. Whitehead, the contractor for section 15, should undertake thel finishing of this easterly length of about a mile and a-half, and that in con- sequence of that pressure, they did close such an arrangement subject to thel approval of the Minister. Upon this matter, as well as upon the delayl caused as aforesaid at the beginning of the work, and also in consequence! of some changes in the localities in which the work was by the engineersi CONTRACT No. 14. 227 directed to be done, these contractors were making, at the time of our examination of witnesses, in Winnipeg, a claim against the Government, to the amount of over ^200,000. We were requested by the contractors to consider their claim, evidently with the idea that we had some jurisdiction over it. We intimated to them that we did not think it within our author- ity, and ;,hat it was not likely that we would pass any judgment upon it ; but we would not refuse to hear such evidence as they proposed to bring forward, because, although it was not necessary to hear it in order to ascer- tain the foundation of their claim, it would enable us to learn something of the management by the Q-overnment Engineers of the operations under the contract. We have taken evidence concerning the expediency of loca- ting this line in its present position, and have reported upon that feature of it under the head of " Engineering." The following amounts have been paid on acoount of this contract to 30th June, 1880 :— 30th June, 1875, to Sifton & Ward # 468 1876 " 113,012 " 1877 • " 130,470 " 1878 " 250,750 «* 1879 " 138,780 " 1879, to Joseph Whitehead, on work atEastEnd 18,500 ** 1880 " 73,230 Total......... :,/....,.. $725,210 Contract No. 15. Railway Construction. By this contract, dated 9th of January, 1877, Robert Twiss Sutton, "William Thompson and Joseph Whitehead, covenanted that they would, on or before the first of July, 1879, provide and do all that was necessary to complete the works set out in the specifications thereto annexed ; including amongst other things all the excavation, grading, and other works to be done between station 1940, near Cross Lake, and station at Rat Portage, 15| 228 CONTRACTS. t 1 iiy\ m u together with the track-laying and ballasting (by one lift) between Red River awd Rat Portage, receiving therefor the prices specified in the contract for the respective kinds and quantities of work and material, which should be provided by thera in carrying out their contract. At the time of execut- ing this contract, Mr. Sutton and Mr. Thompson were not interosted in its consequences. They lent their names in pursuance of an agreement be- tween them, of the one part, and the Hon. Donald MacDonald, a member of | the Dominion Senate, and Joseph Whitehead, above mentioned, of the other part,by which they (Sutton and Thompson) should be indemnified for the use of their names until they were released from the undertaking: and that they should be released as soon as potsible, the real understanding concerning this contract and its results, being one which had been made between the said Mr. McDonald and Mr. "Whitehead and Mr. Mitchell McDonald, to the effect, that it should be carried on as a partnership between Mr. Mitchell McDonald and Mr. Joseph "Whitehead aforesaid. Although the track-laying and ballasting in this contract extended over the whole distance from Red River to Rat Portage, the principal portion of the work, namely., construction of the road-bed, extended only over the eastern portion of the whole distance, i.e., from Cross Lake to Rat Portage. This last-named distance has come to be known and generally alluded to as section 15, or contract 15. The work under this contract was tendered for and let upon a schedule of items and estimated quantities for each item, and upon prices to be paid for such items respectively. It was one of a series of contracts for distances between Lake Superior and Red River, in «vhich the qaantities were not stated in the schedules with approximate accuracy, and which were largely exceeded in the execution of the works. The system of letting the contracts in this way was approved by the Eng'neer-in-Chief, as affording a proper means of comparing the relative rank ot tenders without any material disadvantage to the country except in so far as a disappointment might ensue, in consequence of the total out- lay being larger than was to be expected, from the quantities so stated. This system has thus become an engineering question, rather than one to be disposed of when reporting on the action of the Department, in letting the contract. For this reason, as well as because it affects several contracts, •we have reported our conclusions on that system under the head of| «* Engineering," (page 11.) CONTRACT No. 16. 229 Thoro have been several reports to Parlianioiit on subjects which embrace matters connected with this contract. On the 8th of May, 1879, the Select Standing Committee on Public Accounts, in their lirst report, submitted to the House of Commons documents and evidence touching tho letting of this contract, the system on which the tenders wore invited, the consequences of that system, and the proceedings unler the contract. In March, 1879, a Select Committee of the Senate was appointed to enquire into matters relating to this railway, and to take evidence upon most of the subjects above enumerated. The evidence taken before this Committee of the Senate was printed. A printed return to the House of Commons, dated 28th of March, 1877, gives papers and correspondence, &c , connected with the awarding of this contract, and minutes of Council concerning the same. Before entering into this contract tenders concern iui;- the construction of the road-bed included in it had been received on three dilferent occasions. On the first occasion the tenders were received in March, 1875, at the same time as that named for the works to be done under contract 14. Specifica- tions, ted the 25th February, 1875, describe the works intended on that occai o be contracted for. It was then proposed to make the road-bed tor the line with "solid embankments throughout, everything complete," somewhat of the same character as at present constructed, only with more rock and less earth in the embankment, the grade being then at a lower level than that now adopted. The substance of the tenders then sent in was Ireported on by Mr. Fleming, under date of Slst March, 1875, showing thd IfoUowing as the result of the seven lowest : — C.H.Lewis $997,892 60 O.Manson&Co ....1,042,635 00 Wallace & Co 1,109,15H 00 Robinson & Co 1,085,580 00 Steacy & Steacy 1,088,915 00 Rorque & O'Hanley , 1.860,:00 00 H. F. Sharpe 1,888,310 00 These offers involved an expenditure greater than was then considered JBxpedient, ^nd it was decided to ask for tenders for making only such Mtions of the embankments as would be provided from the cuttings, leav- ng the gaps unfilled and to be crossed under some subsequent arrangOF* n 11 230 CONTRACTS. i'lllWii I ifillH ment. Tenders were invited upon that basis, and were received in May, 18'i'6, of which the eight lowest were as follows :— • Names of Contractors. Hunter & Murray, m. Bodgers & Go Siftoii & Farewell Patrick Purcell A. P. McDonald & Go ... Johu Healy, W. Coy O'Brien, Lyons & Martin J. Hifton, J. H. Faiibank W. Barrett, James Purcell P. McRae, R. Ray, J. McKintosh Prown & Ryan...., ;W. Doran, A. Sutherland Joseph Wbil"Ldad J. A. Henry k Co.. J. T. Wilkie, E. Stevenson.. C. W. Phelps, T. Hammill $ 935,025 1,068,60') 1,222,310 1,244,400 1,286,710 1,32<,910 1,460,610 1,616,450 It was decided not to accept any of them. In August, 1876, competition was again invited for work to be done cii Has section, and the specifications then furnished were the basis of the present contract. The main features of the scheme then devised were the excavation of the cuttings which were mainly in rock ; the material from such cuttings to be deposited near them in the embankment, p.nd the gaps left after this and after using such earth as there was in the neighbourhood, were to be crossed by wooden trestle work. The following is the adver- tisement for tenders on this last occasion : — "CANADIAN PACIFIC RAILWAV". "tbndbrs for okading, track laying, &c. "Sealed tenders addressed to the Secretary of Publio Works and endorsed: 'Tender Pacific Railway,' will be received at this office up to noon of Wednesday, the 20th September nest, for works required to be executed on that section of the Faoifio Railway, extending from Bed River eastward to Hat Portage, Lake of the Woods, a distance of about 1 14 milps, viz :- The track-laying and ballasting only of about 77 niile3, and the oonstruotion, as well as track- laying and ballaating, of about 37 miles between Cross Lake and Rat Portage. For plaua apecifications, approjdmate quantities, forma of tender and other information, apply to the office of the Engineer- in-Chief, Ottawa. " No tender will be entertained unless on the printed form and unless the conditicoti ar» oomplied with. " F. BRAUN, " Secretary. ^^J>epartmeni of Publio Works, '< OtUwa, Isk August, 1876." CONTBACT No. 15. 231 Some idea may be formed of the expectation of the Department at that time concerning the character of the work as a whole to be done under this contract, by giving the quantities of the main items mentioned on that occasion in the bill of works. Under the head of " approxima>»> quantities '* they were as follow^ : — 300,000 cubic yards of solid rock excavation, 30,000 " " loose " 80,000 " " earth excavation on line cuttings and borrowing, 1,616,500 lineal feet of timber (square and round) for trestles, bridges, etc. The length of the road-bed was about 3*7 miles altogether. It has been stated in evidence that the wood work provided for in those specifications, woulc. be sufficient lor about eight miles ot trestle viaduct. The following is a report of the substance of the tenders received on this occasion : — List of Tenders received 20lh September, lS*iQ. 1. A. P. Macdonald & Co $1,443,175 2. Martin & Charlton 1,562,090 3. Sutton & Thompson 1,594,085 4. John A. Green 1,679,065 ■ 6. Talbot &.Tmes 1,683,085 6. W. Hinkson 1,695,605 •7. W. S. Booth =, 1,744,120 8. C. C. Gregory 1,745,415 9. Mullen & Whelan 1,749,595 10. O'Brien & Rider 1,806810 11. A. Farewell ...: 1,815,185 12. Hill, Lipe % McKechney 1,827,155 13. Wright, Sm ckhill & Cross 1,8.S2,175 14. Kavanagh & Kieran 1,895,404 15. W. A. Cleveland , 1,899,68^' 16. .Joseph Whitehead 1,899,790 17. Hunter & Murray 1,966,756 18. Campbell &r Faley 2,052,770 19. Macfarlane & McRae 2,093,970 20. Brown&Ryan 2,199,125 21. Reid, Davis & Henry 2,950,000 MARCUS SMITH, Per W. B. SMELLIE. "1^ 5 ! 982 CONTRACTS. M : I'y \'i 'I > I I If I. ' The result of this competition is remarkable in that the lowest tender on this new and supposed cheaper method of providing a road-bed, is nearly fifty per cent, higher than the lowest offer in March, 1875, which latter was made to construct a road-bed of " solid embankments, everything complete." And this comparison is not confined to the lowest offers on the two occa- sions, for the average of them all would be in about the same proportion. By arrangements subsequent to the contract the character of the work has been so far changed, as to make it very similar to that proposed by the first scheme in 18t5, solid embankments throughout. At the date of our com- mission the work was not completed, but the progress estimate of the 31st May, 1380, showed that what was done up to that time amounted, at the prices named in this contract, to $1,951,022. Of this |161,615 was for ballasting and track-laying — items not included in the tenders in 1875, thus leaving the balance of |1,789,407 paid up to the 31st May, 1880, and this was expected to be increased, by the completion of the contract, to the neighbourhood of $2,300,000 as the cost of a road-bed, of the general charac- ter similar to that which was contemplated, at the time of receiving tenders in March, 1876. This is considerably higher than the average of the seven lowest tenders sent in at that time. The following correspondence shows the negotiations between the Department and the firm who made the lowest tender, 20th of September, 1876:— "30th September, 1876. " Please deposit to credit of Receiver General the five (5) per cent, required in connec- tion with contract for Section (15), Canadian Pacific Railway, and forward bank certificate. "F. BRAUN, "Secretary. ♦' Messrs. Macdonald & Kanb, "394 St. An toine Street, Montreal." " 7th October, 1876. •• Macdonai.d & Kane, " 394 St. Antoine Street, Montreal. " In view of advanced atate of season Minister requests you to state by twelfth (U) instant at latest the precise tioie when you will deposit requisite 5 per cent. Section (1^) fifteen, C.P.R. " F. BRAUN, " Secretary." " Ottawa, 13th October, 1876. " Sib,— In making out onr tenders for sections 14 and 15, Canadian Pacific Railway, our figures were ba»ed upon the early completion of section 14, by the present contractor, as • means of transportation Ity rail between section 15 and the Red River, believing that a Urga quantity of the ti nber and ties required would have to come by way of that river. by us in availabl amount From, th aioD of ti carry me laying, bi of sectio •'On contract form of t "No supplies I August, 1 in aocorda "We "We tractors to "Hop entitled to « To the II( " Gent instant, in \ emment foi Governmen materials yc be followed " In ref of the condi "I beg this letter, vi "Messrs. A. CONTEACT No. 15. 233 " The above mentioned means of acoeBs caused a reduction of 25 per cent, to be made by us ia our bid, as we were of the opiuion that the track laying on sectioa 14 would make it available by August, 1877. " This would give us connection with the west eod of section 15, upon which a large amonnt of work has been done with no other means of access without a very heavy outlay. From the best information we have, the contractors ot section 14 have been granted an exten- sion of time ; so that it wiil taive two years before that section could be made available to carry men and supplies. Believing, as we do, that the Government in connecting the track- Isying, ballasting, &c. of section 14 with section 15, that it would facilitate and lessen the cost of section 15. '< On account of the above mentioned facts, it would be imprudent in us to enter into contract unless we were put ino possession of the advantages which the specifioation and form of tender led us to believe and base our calculations upon. " Now if the Government wiil make good to us the differcuce between bringing men and gupplies by rail over section 14, and the most uvailabln route by land and water from the Isi August, 1877, until such time as. c'^ction 14 is completed, and extend our time of oompleti«a in accordance with the delay of getting track to section 15. " We are prepared to enter into contract and furnish the necessary securities required. " We are certain that it will be difficult for the Government to get good experienced coor tractors to take the work unless the advantages of access could be granted them. '' Hoping you will favourably consider our requests, which we believe we are justly entitled to, and should be fairly understood before entering into contract. " We have the honour to be, Sir, •' Yours respectfully, - " A. P. MACDOXALD, " RUBEKT KANE. " To the Hon. AiiEX. Mackenzie, *' Minister of Public Works, • " Ottawa " " Ottawa, 14th October, 1876. "Gentlemen, — I am directed to acknowledge the rtceipt of your letter of the 13th instant, in which you state that you will be prepired to enter into a contract v.itli tLe Gov- ernment for the execution of the work on section 15 of the Canadian Pacific Railway, on the Government agreeing to make good to you the difference of cost in the transport of men and materials you may require by rail over section 14, and by any other route that may have to be followed should section 14 not be ready early enough, and on certain other conditions. " In reply, I am to inform you that the Government cannot consent to any modification of the condition laid down in the specification for these works. " I beg to request that you will inform the Department immediately on the receipt of this letter, whether you intend to sign the contract ot not. " I have tl)e honour to be, Gentlemen, " Your obedient servant, «F. BRAUN, ' * ULeun. A. P. Maodohau) & Kani, •* Ottawa." 234 CONTEACTS. > t . t «« Ottawa, 14th October, 1876. " Sib, — I have the honour to acknowledge the receipt of your letter of the 14th instant, and beg to say, in reply, that I will answer your communication on Monday next. ** I have the honour to be, " Your obedient servant, " ROBERT KANE. "F.Bbaun, Esq., " Secretary, Public Work*." «MoNTBBAL, 16th October, 1876. ** Sir, — Id reply to your communication of the 14th instant, we beg to state that we can- not enter into contract for sections 14 and 15, Canadian Pacific Railway, on rLCcount of reasons stated in our letter of the 13th instant. "We therefore most respectfully decline to sign said contract, but beg to add that if ths Minister of Public Works should see fit to change his decision we would most gladly enter into contract. <' We have the honour to be, Sir, " Your obedient servants, « A. P. MACDONALD, « ROBERT KANE. T. BBATm,E8q., '* Secretary, Public Works Department, " Ottawa." After this refusal by Messrs. Macdonald & Kane to carry out their tender — except on new conditions — the Department passed to the firm first aboye them, Messrs. Martin & Charlton, when the following correspon- dence took place : — " 17th October, 1876. "Gentleman, — With reference to your tender, dated 20th ultimo, for the 15th contract of the CHna i •; ; \'r'l)i, persons who had made offers, that there were several between his and that of Sutt jn & Thompson. This firm knew that they could not put up the security, and were willing to sell out their position. Mr. Whitehead bargained with them that he was to have the privilege of assuming their tender and becoming the sole proprietor of it upon payment to them of $10,000. He procured from them the following letter to the Department : — «Branti-obi), 16th October, 1876. "Sir, — In the event of our tender for the construction of Bection tifteen of the Canadian Paciiic Kuihvay being accepted, we desire to have asBOciated with us in the contract, Mr. Joseph Whitehead, of Clinton, contractor. " Your obedient servauta, " SUTTON & THOMPSON. ^* lion. Ai.Ex. Mackenzie, ■' ^iinister of Public Works, Ottawa." Being thus interested in the withdrawal of Messrs. Charlton & Martin, whose olfer was the only obstacle in his way to the contract, he wrote the following- letter with the intention of furthering his own interest :— "Ottawa, 28th November, 1876. " DaxR Sir,— It is the general impression outside that you are going to give the contract section 15 to Charlton & Co., and be is going to turn the contract over into the hands of some .Americans from New York, and, according to the feeling, vou are going to make a great miitake if you allow such a thing to be done, as it ia wdll known that Charlton says that he never intended to put a spade into the contract of seclioa 15 ; lie only wanted to make some money out of it the 8»me way &% he did out of the Orenville Canal, when be sold out to Cooke .<& Jones, and got six thousand dollars. " Now, if you will give the contract section 15 to Sutton & Thompson's tender, I will guarantee that the grading, track-laying and ballasting shall be done and complete ; the engine into section 15 by the month of August next; and, further, the wh}le of section 15 shall be tiaished complete by the fall of 1878, and for every day over and above, if any, you shall have the best of security that the Grovernment shall be paid live hundred dollars per day for every day over and above the two dates named above, and thif is the only way to put some life into the Pacific ^lailway, as there has been no life in it yet. "Now, 1 hope you will pardon me for taking the liberty of writing you this note, as I have no other object in view than to let you know the feeling outside, aa you must admit that j^utton k Thompson's tender is not an extravagant one, only I know what I have said in this 9gt« can be done. " I remain your obedient servant, "JOSEPH WHITEHEAD. ** Hod, Alex. Mackenzie." It was subsequently arranged between Mr. "Whitehead and the Hon. Mr. McDonald, aforesaid, and as Mr. Whitehead believes at th^ suggestion CONTRACT No. 16. 'i3r d that ip the tehead g their 10,000. '6. Canadian ract, Mr. )N. Martin, rote the 376. » contract ds of some ;e a great s that he lake some It to Cooke jder, 1 will >1ete; the section 15 any, you )d dollars jly way to k aa I have idmit that lid in this le Hon. ion of Mr. McDonald, that Charlton should be paid to withdraw his tender. Mr. Whitehead's evidence on this point was that he said he " would go $20,000, and Mr. McDonald made the rest of the arrangement." About the 20th of December, 1876, the Hon. Mr. McDonald, Mr. Whitehead and Mr. Charlton met in a room at the Prescott Station on the Grand Trunk Rail- way. Then Mr. Whitehead went out of the room and the jurangement was closed between Mr. McDonald and Mr. Charlton, by which Mr. Charlton withdrew his tender. Mr. Whitehead did not see the money paid, but Mr. McDonald told him that the amount was $20,000, and Mr. Whitehead afterwards paid him interest on that sum at the rate of ten per cent, per annum, believing it to have been the amount which was paid over at that time. Mr. Charlton said to a witness who gave evidence before us that he had received a sum of money to withdraw his tender in this case, but he did not name the amount. We have not considered it necessary to ascer- tain, whether he had received the full amount stated by Mr. McDonald to have been paid to him, that being principally a matter of account between Mr. McDonald and Mr. Whitehead. The following letters and telegram appear as the next steps towards the contract in its present shape : — "MoNTREAi,, 2l8t December, 1876. " Sir, — I have the honour to acknowledge receipt of your letter of 19th inat., directing me : to furnish additional paper and mortgage registrations as therein detailed in couuection with the required seoourity for completion of the 15th contract, Canadian Faci6c Railway. I have met with bo many unfortunate difficulties in procuring security for so large a sum so as to ntifify the demands of the Government, and have been so worried and disheartened by the difficulties of the position in which I found myself, and consequent failing health, that I am lielactantly obliged to say that I oannot now undertake so serious an enterprise, more ieepecially as all the most experienced men whose advice or assistance I have asked, have I convinced me and my friends that the work oannot satisfactorily be performed for the price Itendered for. " I beg therefore to ask that the Honourable Minister of Public Works will allow me to Iwithdraw my tender, and will please to return to Mr. Baird of Brooklyn, n ho proposed to join lin the work, his deposit, and also to return to me the papera which I r vposited aa given to |Dake up the balance of the security required. "I have the honour to be, Sir, " Tour obedient servant, "E.J. CHAELTON. pft Braun, Esq., ^ "Seoretaiy, Department of Fublio Works." • h 238 CONTEACTS* "Th pose to a "Th« be accept "MoNTREAf. TeLEURAPH CoMl'ANY. "By Telegraph from Montreal. ** F. Braun, : " Dissension from within, added to extraordinary pressure from without, has left no alter native but withdrawal. « CHARLTON & CO." " 29tb December, 1876. '♦Sutton & TiiompsRrJ' " Brantford. "Are you prepared to deposit five (5) per cent, security in connection with contract fifteen (15), C. P. R., and enter into contract without delay V " F. BRAUN, " Secretary." " Brantford, 29th December, 1876. " To F. Braun, Esq., " Secretary. . " Yes ; we are prepared to comply fully. " SUTTON & THOMPSON." " Ottawa, 2yth December, 1876. ''Sir, --^e section 15 Canada Pacific Railway, I have just learned with much surprise, through your Department, that E. J. Charlton has withdrawn from our Joint tender to build 6&id section 1 5, Canadian Pacific Railway. His withdrawal was without my knowledge of conJsent. " I am prepared to deposit the security required by the Oovernment, and am prepared to perform the work mentioned m or contemplated Vy said tender. And I now offer to oomply with tie conditions and requirements of the Government, as specified in the advertisement calling for tenders for said work, and in our said tender ; and I protest against any and allj acts depriving me of said coutract. " Truiitiug that justice will be done me in the premises, *' I have the honour to be. Sir, " Most respectfully youis, " PATRICK MARTIN." <' To the Honourable the Minister of " Public Works of Canada, Ottawa." " (Memorandum.) • "30th December, 1876. "The undersigned reports that tenders having been invited for construction of sectia Ko. 15, Cauudian Pacific Railway, twenty -one have been received at schedule rates, whiclAbout $30 000 "fan informed 1 on fheir be withdrawin and to ask "Messrs. S '• (Memoran " The ui contract 15 < "Tende] afterwards, Ji ottlieir otfei made which " The De fied the Depa "On the tified that th« diate arrangei tender of a m these 8ecuriti( On the 16 »8 security, on certificate of \ Department, c Darling & Vaj, «a8li value oft '8. Darling when extended, are found to vary between $1,443,175 and $2,050,000. '■ That the firms whose tenders are first and second lowest respectively, Messrs. McDon & Kane, and Messrs, Martin & Charlton, are imable to furnish the necessary security. " That the third loweat tender is from Messrs. Sutton & Thompson, of Brantford, amo ing to $1,594,155 (one million five hundred and ninety-four thousand one hundred and fifty-fi^ dollars). |«wund of their W On the Si (offer additional curitieg woul( »'*''Tork,nBrr Co., and proi CONTRACT No. 15. 239 oalter- O." 876. contract ary. 1876. "That this firm are prepared to make the necessary 5 per cent, cash deposit, and pro- pose to associate with themselves Mr. Joseph Whitehead, contractor, of Clinton, Dntnrio. " The undersigned, therefore, recommends that the tender of Measm. Satton «b Thompson beacoepte<), and that they be allowed to associate Mr. Whitehead with themselves accordingly. " liespectlully submitted, " A. MACKENZIE, "Minister of P%iblic WorJea.^^ " (JTTAWA, 5th January, 1877. " r am directed by the Minister of Public Works to say that the Dopartuient haa been informed by parties interested that the firm, of Sutton k Thompson, or some persons acting on their behalf, have paid Charlton &. Co., or Mr. Charlton individually, a sum of money for withdrawing their tender for the construction of section 15 of the Canadian Pacific liailway, and to ask if there is any truth in this statement. 'Messrs. Sltton Hi Thompson, " Brantford, Ont." , 1876. jh surprise, ■ ler to build .owledge of >reparedto| |r to complyl rertisementl any vaA. a11| Irtin." " F, BRAUN. &r, 1876. In of sectio Utes, whicli Is. McDoi :ity. jrd, am< idaftyft '' (^Memorandum.) « 6th January, 1877. " The undersigned reports for the information of Council, the following facts regarding contract 15 of the Canadian Pacific Railway : — " Tenders were received for this contract on the 20th September, and as soon as possible afterwards, Messrs. McDonald k Kane, the lowest tenderers were notified of the acceptance of their otfer of §1,443,17.5. On the 13th of October they asked for certain changes to be made which would involve a further and indefinite expenditure by the Grovemment. " The Department declined to accede to this request, and on the 1 6th October they noti- fied the Department that they were not prepared to proceed any further. "On the 17th October, Messrs. Charlton & Martin, who were the second lowest, were no- tified that their tender of $1,562,090 was accepted, and they were called upon to mtke >mme- diate arrangements for depositing 5 per cent, as security. On the 27th October they mode tender of a mortgage on certain timber limits ; on the 28th October they were notifi^id that these securities could not be accepted, and that no further delay could be permitted. (Jn the 16th November, Messi-s. Charlton & Co. offered mortgages upon certain property as security, and on the 21st November a lithographed plan of the property so offered, with a certificate of valuation rf the same, representing it to be worth 183,250, was sent to the Department. On the 22nd November these mortgages and this plan were transmitted to Messrs. Darling & Yaiois, the GoverDment valuators in Montreal, with instructions to ascertain the cash value of the property, exclusive of the encumbrances upon it. On the 28 ih .November 's. Darling & Valois reported that this property, if sold, would not realize more than |«bout 130,000. The Department accordingly declined to accei)t these mortgages on the jground of their insufficiency, and Messrs. Charlton & Co. were so notified on the 29th Novem- ber. On the same day Charlton & Co. intimated to Messrs. Darling & Valois that they would lofTer additional security, and wrote to the Departn.ent on the 4th December to say that their lurities would be completed on the 10th December. On the Utb December a firm from ew York, named Baird, Arnold & Stephenson, made a cash deposit of $20,000 for Charlton Co., and promised to make good the remainder of the required security. The remainder 240 CONTRACTS. ■'' 1 It Rf I )!B5 I .-» 1. 1 f I,' I . \l : ■ was nevpr, however, lodged either in cash or in mortgaf^es which couM be acceptftil, and on the 2i8t December Mr. Charlton wrote withdrawing the tender. " On tbe 2Hth December, Meagrs. Baird & Co., of New York, wrote, complaluing that Charlton bad used them Bhamefully ; that they bad gone to Montreal to meet him, ami had staid there three days, but bad been unable to find bira, and they asked to be allowed to lodge cash security and to take the contract themselves ; in accordance with the iorms of I MeesrR. Charton & Co.'s tender. It being contrary to proper practice and to the custom of | the Department to allow such a proceeding, their requsst was not acceded to. " On the 28lh December Meesrd. Sutton & Thompson, tbe third lowest, were notified that their tender of $1, 594,0^5 was accepted, and were required to deposit the necessary secu- { rity. On the 29th December, P. Martin,oue of Charlton's partners, lodged a piotest against Cbirl' ton being allowed to withdraw his tender, and stated that it was done without his knowledge, I and that he (Martin) was prepared to proceed. On the 30th December tbe Honourable Donald McDonald, Senator, presented a letter to the Department from Messrs. Sutton ii Thompson, in which they asked to be allowed to associate Mr. Joseph Whitehead with them in the contract. Mr. McDonald, at the aame time, deposited $80,000 by his cbequ?, accom- 1 panied by a letter from the Honourable A. Campbell, stating that the cheque would accepted upon tbe Consolidated Bank of Canada as security for the firm of Messrs. Sutton X- 1 Thompson ; and was informed that the contract must be completed with the firm of Messrs. Sutton & Thompson, the original tenderers, and the deposit made in their name until it wu I so completed. On tbe same day, a contract was drafted and submitted to the Minister of I .Tustiue. When in ';>he Department of Public Works on the morfiug of the 30th December,! Mr. McDonald's attention was called to a statement in a newspaper of the previous day to the effect '' he or Whitehead, on behalf of Sutton & Thompson, has paid Charlton a sum of monej] to withdrfiW his tender," when he stated that the report was entirely devoid of truth, " Ou the 5th January, the following telegram was addressed to the firm of Messrs. Sutton) & Thompson : ' Messrs. Sutton & Thompson, ' Brantford, Ontario : ' Ottawa, 5th January, 1877. ' I am directed by the Minister of Public Works to say fiat the Department has beesl informed by parties interested that the firm of Sutton & Thomps^on, or some person acting onl their behalf, has paid Charlton & Co., or Mr. Charlton individually, ts sum of money for witbl drawing their tender for the construction of section 15 of the Canadian Pacific Railway ; anii| to ask if there is any truth in this matter. 'F.BRAUN, ' Secretary,' " On the morning of the 6th January, the following reply was received: — CPrivati ) ' Ottawa, 6th January, 1977. * By telegraph from Brantford, i6th, to F. Bbauv, Esq., Secretary of Public Works DepartKenti ' No truth whatever in the statement that we, or any person on our behalf, paid Ch&Ij ton ^. Co., or Mr. CTharlton individually, a sum of money for withdrawing their tender (oi construction of section fifteen of the OAn^ dian Pacific Railway. * SUTTON & THOMPSON.' CONT'lACT No. 16. 341 " It is not necessary to consider tbe effect which the Government might be disposed to give the circumstances alleged, if they proved to be true, as tbe pointed denial given by KeBsrs. Sutton «i^ Thompson and by the Honourable Donald Mo Donald, leaves tbe Qovern- ment free to act upon the rule which governs the letting of contracts. That rule has invari' ably been, when the lowest tender withdraws, to pass on to the next. " The letter of Mr. Martin, one of the principals of the firm of Messrs, Charlton & Co., already referred to, contains a statement thai he is prepared to proceed to give the necessary Rflcurity. But he did not tender any security, and as he bad been given the opportunity for two months to do so, it would have been evidently useless to wait longer on his account, set* ting aside altogether the matter of the rupture of tbe firm of which he was a member. <* The undersigned recommends, for tbe reasons assigned, that the contract be awarded to Messrs. Sutton & Thompson, as tbe next lowest tenderers for the work, and that they be gllowed to associate Mr. Joseph Whitehead with them in the contract. '• RespectfuUy submitted, " A. M.VCKENZIE, " Minister of Public Workt.'* " Copy 0/ a Report of a Committee of the Honourable the Privy Council, approved by His Exeillenejf the Oovernor General in Council on the 8th Jmuary, 1877. " The Committee of the Privy Council have attentively considered the memorandum dated 6!h January, 1877, from the Hon. the Minister of Public Works, having reference to the awarding of the contract for No. 15 section of the Canadian Pacific Railway ; and, for the reasons therein given, they respectfully advise that the tender of Messrs. Sutton & Thomp- son, for the sum of $1,594,085 be accepted, and that the contract be awarded to that firm, and they be allowed to associate Mr. Joseph Whitehead with them in the contract. « Certified. " W. A. UIMSWORTH, " To the Honourable " The Minister of Public Works." Before signing the contract the Hon. Mr. McDonald, his son Mr. Mitchell McDonald, and Mr. Whitehead were together at Toronto, and it was then arranged that Mr. Mitchell McDonald was to be a partner in the contract. Mr. Mitchell McDonald was neither a railway man nor a wealthy man, and Mr. Whitehead, in giving evidence, said that he supposed he was selected because his father being in the Senate could not take the partner- ship himself, and this way was taken " to secure the benefit of it by giving the son the partnership." The contract was executed by Messrs, Sutton and Thompson and Whitehead. It had been previously arranged ihat Messrs. Sutton & Thompson were only to lend their names, and that Mr. Mc- Donald and Mr. Whitehead were to get them released as yoon as possible afterwards, and to indemnify them against any liability in the interval. At the execution of the contract Mr. McDonald paid to Sutton, who was Hi ' 1 242 CONTRACTS. 1^ |{ !ii ' <■ authorized to act on behalf of Messrs. Sutton & Thompson, the sum of |10,000, for having withdrawn from the position held by them under their tender. Subsequently, Mr. Mitchell McDonald entered into writings by which the partnership between himself and Mr. Whitehead was to be dis- solved, Mr. Whitehead promising him as full satisfaction for his claim on the luofits $112,000, out of which amount he then got $20,000 by a warrant from the Department. The Hon. Mr. McDonald was ill at the time, but Mr. Whitehead afterwards saw the warrant in his hands. Mr. White- head understood afterwards that ihe elder Mr. McDonald was not satisliod at the dissolution of the partnership, aud testified that, " Mitchell wrote a deed and put things back as they were." We have not considered it necessary to examine closely into the ques- tion whether in this arrangement Mr. Mitchell McDonald was the party substantially interested, or was a trustee for his father, for the reason that the fact of either of them being a partner with Mr. Whitehead, or interested in the profits of the contract, has not been brought home to anyone ( on- nected with the Department. Mr. Mackenzie testified to the effect that he was not aware at the time of signing the contract that any parties who had withdrawn their tenders had been paid for so doing, or that Mr. Senator McDonald, or his son, m-a^ interested in the contract ; or that Sutton & Thompson were only l«?ndiiig their names as parties to the contract. Upon the evidence we conclude that in obtaining this contract the con- tractors obtained an undue advantage, i.e , the withdrawal of lower tenderers by collusion with thera ; that the action of the Department in awarding the contract was taken in ignorance ^of the facts either as to the parties renlly interested, or as to the collusion which had been practised between thorn and the low^er tenderers. Suljscquently Messrs. Sutton & Thompson were allowed to withdraw from tlie position of contractors, the change being authorized by an Order in Council. This was.'done with such consent as prevented the discharge of the security which had been previously given by the Honourable Mr. McDonald for the due fulfilment of the contra'.t, to the extent of $80,000. This security had been originally in cash, but in its place landed security I to the same extent was afterwards substituted. Work was commenced by the contractor on this section in Feln'uary, 18*77. Changes in the character of the work were made almost continously I Differe mittees, a: work. W the evidei from the c expenditn upon this necessary the changt changes ai that the cc coxTracT No. ir.. 243 and gradually from that timo forward. In Jiiiio following a material change was made by lowering the grade of the line. In the fall of that year other inat(^rial changes were made. It was found that more earth was available lor embankment than had been at first supposed. The contractor was per- mitted to prepare a rock basis or rock protection walls, as for solid earth embankments, instead of for trestle work w^ith ^7hich it had been originally intended to fill the voids. In the prices attached to Sutton & Thonip-son's li'iKler, those lor rock work and earth work were hicrh ; that for timber work Wiis low. Therefore, the changes abov(» mentioned were in the direction of making the contract a more profitable one. These changes not only increased the profits in proportion to the whole receipts for the work, but thoy increased largely the amount to be expended on the contract. After this exc«.'ss over the original estimate reached a lormidal>le .sum, the matter was investigated by Parliamentary Committees, before 'vvhoni con.siderable evidence was taken, one of the main objects being, apparently, to discover the authority, if any, by which the expensive changes had been directed. It appeared that Mr. Fleming and Mr. Mackenzie had discussed the matter, Mr. Fleming r* commending the change, and Mr. Mackenzie expressing hiuiseir favourable to it. Mr. Mackenzie haad, in relation to this contract, as des- cribed in his own tt^stimony, made it apparent to us that he had a strong belief in the corruptibility of public men. We have taken evidence at some ie'igth concerning the dealings between the Government and hii i while he was carrying on this contract, with a view of ascertaining whether he had obtained any favours by improper means, or otherwise, at the expense of the pul)hc The evidence on this subject leads us to conclude that since the execution of thy contract, no inlluence had been exercised on his behalf more t'liective than his own representations were or would have been, and that he has not gained from the Department or any member of Parliament or any engineer, or any other person in the Government employ, an advan- tage t|uit was not consistent with the best interests of the country. 'I l^ ♦ ■ » ?■ ' 1^ 246 CONTRACTS. He was not permitted to complete the works. In 1880 it was found, as he himself states, that he could not supply provisions for tho men, or pay the wages due by him, and that the work was, therefore, not being prosecuted with vigour. This, without any disagreement on his part, induced the Grovernraent to take charge of the construction and to use his plant and machinery, engaging the laborers and others employed on the works, since which time the work has been carried on at the expense of the contractor, the Government in the Jirst place advancing the necessary funds. This arrangement will not result in any loss to the Government. The work provided for in the contract was not complete at the date of our com- mission. The following sums have been paid on it up to the oOth June, 1880 :— 30th June, 1877 $54,300 1878 632,200 . " 1879 877,700 " 1880 411,030 $1,875,830 ,. '!■ Contract No. 16. Railivay Extension. This concerns a subsidy from the Government to the Canada Central Railway Company, to be paid for the extension of a line of railway from the eastern terminus of that portion of the Canadian Pacific Railway known as the Georgian Bay Branch to the town of Pembroke. The existing arrangement was substituted for an earlier one which was also known by this f-nre No. 16. That was for the extension between termini and over a route ditfereut from those covered by the present agreement. The Canadian Pacific Railway Act of 1874, contained, amongst others, the following enactments : — " 14. The Governor in C lunril may »ho grant such bonus or bonuBes, subsidy or snhfidie*, to any compsny or com{)Hni<>8 ulroady incoiportiU <1 or to be heteaJ'ter incorpor.ilt'ii, ni»t ex. oeeding twelve thousand dollars ptT mile, as will B.'cure the construction of the bianoh lines extending fiom the eastern terminus of the sHid Cntiadiun Pacific Knilway to coiincct witli exiitiog or proposed lines of railway.; ilie gnmimk' of su( h bonuses or subsidies to be subject to such conditioos for securi.iii the runuing powers nnd other rights over and with renjpct to the whole or any portion of th& said branch railway, to the owners or lessees of the main lina CONTRACT No. 16. 247 of the said railway or of any section thereof, or to the owners or lessees of any other railway connecting with the Baid branch railway, as the Governor in Council may determine ; but every Order in Council granting such subsidy shall be laid before the House of Commons for iU ratification or rejection, and shall only be operative after its ratification by resolution of the Houie. " 15. The Governor in Council may, at any time after the construction of the said branch railway, make with the company or companies owning any portion of the said branch railway, such arrangement for leasing to such company or companies any portion of the said branch railway which may belong to the Government, on such terms and conditions as may be agreed upon — such lease not to exceed a term of ten years ; and may also make such other arrange- ments as may be deemed advantageous for working the said railway in connection with that portion of the said branch railway belonging to such company or companies : Provided no euch contract for leasing the e»aid branch railway, and no such agreement for working the said railway in connection with any other railway, shall be binding until it shall have been laid before the House of Commons for one month without beini; disapproved, unless sooner approved, by a resolution of the House." lu the summer of 18t4, at the request of the Minister of Public Works, the Chief Engineer instructed a reconnoissance of the country between the mouth of French River, on Georgian Bay, at the west, and Pembroke and Renfrew respectively at the east, to be made under Mr. Hazlewood While this examination was in progress, the following memorial was presented to the Government by the Canada Central Railway : — " To His Excellency the Governor-CJeneral of Canada in Council assembled. "The Memorial of the Canada Central Railway Company, humbly sheweth, — ''That in the year 1861 your Memorialists were incorporated with power to construct ft railway from the city of Ottawa to I^ake Huron. The Legislature of Canada deeming the opening up of the Ottawa Valley by railway communication, and the extention of a line to Lake Huron, a work of euch public importance that to stimulate its construction a hirge land grant was ofiered to the Company to aid in the building of the road ; "That the Company were unable to avail themselves of the offe i- of the subsidy, and build the railway within the time limited for its coastruction, and the grant, therefore, lapsed, except for a short section, to Carleton Place, from which point an extension to the village of Renfrew has been completed and is now in successful operation ; "That your Memorialists were, in the year 1872, allotted a "ubsidy of $i.',(')50 per mile by the Onlario Government, to enoouraue the building of the line through the county of Kenfrew towanls Pembroke. " The country west of Renfrew village being but cparsely settled, the Company has beett unable to receive that substantial aid which it might fHirly expect from the great publio Advantages naturally (lowing from the development through railway enterprize of that important section of Canada ; " That the eastern terminus of the Canadian Pa'^ifio Railway is on the line of the routA wiiich the Canada Central was authorized to construct in reaching Lake Huroo ; 248 CONTRACTS. ^ ! \n J "That with the subsidy of $12,000 per mile, proposed to be given under the Canadian Pflcifio Bailway Act, to a Company capable of construotiag a railway to connect with existing or proposed Mvca, your Memorialists believe they can complete their extension to the eastern terminus of the Canadian Pacific Railway aa soon as the branch railway authorized by the eaid Act has been built ; your Memorialists would therefore pray that an Order in Council be passed granting tbo subsidy of $12,000 per mile from the village of Renfrew to the eastern terminus of the Canadian Pacific Railway, [subject to the provisions prescribed in the 14th section of the said Act. "(Signed) H. L. REDHEAD, " President of the Canada Central Railway Company. "Ottawa, August 22nd, 1874." No definite action was taken upon this memorial until after a report of the 6th October, J 874, by the Chief Engineer, which is set out in full (see contract 12), and from which it was assumed that certain grades and conditions might be specified as feasible over a route from a point then fixed upon as the eastern terminus of the Georgian Bay Branch, and extending eastward to the village of Douglas, in the valley of the Bonnechere River. On the 4th November, 1874, the following Order in Council was passed : — ' ' *'Eeport of a Committee of the Honourable ^*« Privy Council, approved by His Excellency the Governor General in Council, on the -itk November, 1874. " The Committee of Council have had under consideration the application of the Canada Central Railway Company, for the subsidy proposed to be granted to Railway Companies ander the terms of the Act 37th Vic, Cap. 14, intituled " An Act to provide for the construction of the Canadian Pacific Railway,' and they advise that a subsidy of $12,000 per mile be gr.auted to the said Company to aid in constructing their line from the vicinity of the village of Douglas, westward, to the eastern end of the Branch Railway, proposed to be built from Georgian Bay by the Government, being about one hundred and twenty miles, upon and suVject to the follo\ving condition^, namely : — " 1st. That the road shall be built upon a line to be approved by the Minister of F.iblic Works, but which may bu defined generally as ascending the valley of the Bonnechere, from the vicinity of the village of Douglas via Golden Lake and Round Lake, thence by as direct a line as m ' t' ' i" ! , * 't f 232 CONTRACTS. alluding to the application of Mr. Foster to have this one modified, as a matter upon which the Minister would subsequently report. On 23rd March, 18*76, Mr. Foster again addressed the Department in the following letter, which is the fust suggestion on record of a new route for the subidsized extension. Ottawa, 23rd March, 1876. '' iStR,— Since my communication to you on the 20th December, in reference to tbe line of the Georg'an Bay Branch. and Canada Central Kailwny, my engineers have heen continuously at work in exploring and surveying the country between Donglas and French River. " I now beg leave to give you the result. " The shortest possible line between Renfrew and the Amable du Fond is (132) one hundred and thirty-two miles, and from thet point to tbe mouth of French River (105) one hu' Ired and five miles. " 1 enclose a letter from Mr. Shanly ex))re88ing his doubt as to the possibility of obtain- ing a practicable line on the route originally contemplated. " I propose the exploration of the country batween Pembroke and Lake Nipissing, " I how the suggestion will meet with the approval of the Government. " 1 I I'op^se to send out an engineering party immediately to ascertain the character of the rmnit.y and length of that line, and woultl like the Government to send an engineer with tbe pHr'y, wlio would make an independent report for tbe information of the Goverment. *' I have the honour lobe, Sir, " Your obedient servant, "A. B. FOSTER. "The Hon. Minister of Public Worka, '■' Ott wa." On the 6th April, 1876, the Secretary of the Department informed Mr. Foster that his application on this matter would receive due consideration, after which, the next communication on the subject we record, is nine months later, as follows : — "Ottawa, January, 1877. " Sir, Owing to importjiut r<^agoii9 thiit adect the C!anada Central Railway very seriously, but wliicli it is not necetsf^ary to discuss in ih'.s coinajiaiication, it is imperatively necessary that I slionld be at once informed ns io the decision (tf the Government on my propo-al to alter the line of the Canada Central Railway, by continuinj: the extension westward from Pem broke inpt«>a e belief that tbe Government preferred the route wp tin; BoL'ii":here Valley, I spent neiuly two yetUH in tSe eflort to locate a lin« of railway by whiv;U t lo C mad* Central could he extendt-d in tliat direction, to th» proposed eftstera terminus ot the CauudiHn Paiv.fic Riilwjy. After, however, an expenditure of $3o,t*-ined by ibat route ; niiHeover, affer tbe lu-.-t lifiy miiei;, t'tt* • ountry is .-o uninviting as to dispel t^ i hope that settltnifnt would follow the construction of the road. AcUng on tbe udvice orii'P Chief | Eniiiueer of the Company, Mr. Walter Shaidy, I (if'.«potched a i-siity under the iujmediate CONTEACT No. 16. 263 id, as a aent in N route 76. ,be line of itinuously e hundred ) hU' Ired of obtain- ing. haracter of gineer with irment. ER. med Mr. eration, is nine 1877. Beriously, necessBry ropo-al to from Pern the route >f railway 3(1 eagtero n)(iliirty- lino with \ti '..•- that t»v. hope ll'il\p Chief lijjnicdiate charge of Mr. William Murdocli, C.E., to exanaine and report on the route between Fembroke ind Nipissiog. I had the honour to transmit to your Department, in June last, a cipy of Mr. Murdoch's report ; it confirmed the opinion that Mr. Sbanly had previously expressed, that the extension vid Pembroke possessed so many advantages over the other route aa to make ite selection a necessity in the interedt of the Company ; lying nearer the valleys of the Ottawa and Mattawan the country is so much lower than by the Bonnechere route, and less broken by hills, with fewer lakes to avoid, the land seems better adapted to support an agri- cultural population. This is evidenced by the fact that settlements on the Ottawa are rapidly extending westward towards the Mattawan — the latter point is now a thriving village ; the gettlements are also increasing between it and Lake Nipissing. It is now admitted that the Quebec system of railways will shortly be completed from Quebec to Aylmer. The exteneion of the Canada Central Railway up the valley of the Ottawa, inclose proximity to the Province of Quebec, will permit an easy connection at Portage du Fort, or even further west, in the event of an extension in that Province. Mr. Shanly is also of opinion that the distance either to' the south-east corner of Lake Nipissing or to Contin's Bay, on French River, is about the same by Pembroke as by the Bonnechere ; and that the elevations are more favourable. Mr. Harris and Mr. Murdoch, the other engineers employed by the Company, concur in this opinion. " In view of all these facts it is evident that the true interests of the country, fin'l also of the Company, will be better served b/ the construction of the railway from Pembioke rather than Douglas. " I propose to build the Canada Central Railway to the south-eastern coiner of Lake Nipissing, the Government granting the subsidy for an equal number of miles ub proposed from Douglas, namely, 120. " If it is thought best in the public interest, instead of the Government coustructing a line from the south-east end of Lake Mpissing to Contin's Bay, I would undertake to extend the Canada Central to the latter point on the payment of a subsidy of $20,000 a mile, for that portion between Lake Nipissiog and Contin's Bay; the road to be in every respect equal to the newly built portion of the Canada Central between Renfrew and Pembroke. '' 'i'he railway to be completed within five years. " You. will much oblige by giving me an answer as early as possible. " I have the honour to be, " Your obedient servant, «A. B. FOSTER." This was followed by a formal communication from the Canada Central [Railway Company, as shown below : — "Ottawa, lOth Febiutry, 1S77. "Sir, — In November, 1S74, the subsidy of §12,000 a mile was granted to the Canada [Central Railway Company to connect its line with the eastern terminus of tho Cim^dian iPacific Railway, under the authority of the Act for the construction of the Canadian Pacific iRailway. The route then proposed was westward from the village of Douglas by the valley of jthe Bonnechere. Early in the spring of 1875 the Company despatched a staff of surveyors l>nd engineers to explore the country and locate the line for the railway, and although the first fifty miles proved favourable, the country further west wah found to be intersected by I' if" 254 CONTRACTS. 1 to''- i, f ; " . - 1 •i "' '' » • ' im 1 * hillH nnd lidgea with considerable liodies of water, and f Ito^ether unsuitptl for a line with tbo curves bdcI ^'radients of a firBt-olass road. " Affer nn expenditure of upwards of $35,00'.) the Company have been compel Ud to abandon the extenpion ol" the ro.id on that line. " Acting on the advice of W. Sbaaly, Esq., Chief Engineer of the Ompany, an exrdors- tory survey was last year mado un ler the immediate charge of ^Ir. Woo. Murdocli, C E., of the country lying between Pembroke and Lake Nipiasing. The result of the exploration con firincd the opinion that Mr. Sbanly had previously exprosBod, that the extension viu Pern broke possessed bo many advantages over the other route as to make the selection a necessity in the interest of the t'ompany ; following the valley of the Ottaw.A, the country is much lower than V>y the Bonnechere and less broken by hills. " It. is now apparent that the Quebec system of railways will shortly be completed from Quebec to Aylmer, and it is contemplated to extend the Quebec Railway lin'.i to Portage ilu Fort, or some other po'nt further west. •' The extension of the Canad.i ('entral Railway up tho valley of the Ottawa in close j roi imity " the Province of Quebec, will permit of e^sy connection either ot Portage du Fort or at such otiiwr point ns may be conndered desirable. " It is the opinion of Mr. .Sbanly that the distance from Ilenfrew fo Lake Nipissing is not niateri:iily increased by the adoption of the northern over the Bouthern line. Mr. Harris and Mr. Murdoch, the other engineeis employed by the Company, concur in this opinion. In view j of all these fuels it in evident that the true interest of tht) country and also of tho Company, will be better served by the construction of the Hallway from Pombroke, r.vther than fmm Douglas. "The Companj- now jiropose to extend the Canada Central Railway to that point where I the South River enters Lake Nipitsing, being the outlet of tho Nipiasing road, the Government grantiug the subsidy for an equal number of [miles as was proposed from Douglas ; this will] carry the railway line nearly twenty miles further than the point originally settled as the east em termiiujs of the Canadiiin Pacific Railway, and thus save a proportionate mileage on tli8t| line. " Under the original Order in Council granting the subsidy, the Company was bound to j grant running powers, ot. terms to bo approved by the Governor in Council, to the Northern Colonization Railway Company with tlie Kingston acd Pembroke Railwjiy Company, fiom the! point of intersection of their respective lines, provided such point of intersection was on tliel subsidized line, or within five miles of the same; in the case of the former Company tLej connection, five miles east of Douglas, would involve the construction of about eleven milejl of road. The Canada Central is willing to concede to that railway the privilege of runningj powers at any point of intersection opposite I'ortage du Fort, thus shortening, by abouti eleven miles, the proposed connecting line ; it is alsa willing to enter into an agreementj with the Kingeton and Pembroke Railway, to grant running powers from the village of| Renfrew or any other point further west. "The Company request that payment of the subsidy shall be made on the baaio of 80 per| cent, of the expenditure, the drawback of 20 per cent, to be paid on the completion of ever ten miles,- the line to be completed in three years. The provision for the advance on rails t CONTRACT Xo. 16. 25{> be liiailar to thai contnined in the former Order in Council, namely, 7'> per cent, when delivered. " I have the honour to be, Sir, " Your HiOdt obedient servHUt, "J. W. UEAD. ''Vice Prcndciit C. C. liailway. "The Honourable "The Minister of Public Works." This having been submittid to the Chioi' Kngineev, he made the fol- lowing report : — "Ottawa, IGtb, lebruarv 1-77. <' SiK, — I hivo the honour to report on tho proposal, made by tho Cnna'la Cent il Rnilwny Company, in the communication addressed to you, of date 10th instant. "I do not altogether concur with the view oxprc^ed iir to tho impngsjbility of finding a line and building a firBt-class milway, on the route originilly luil down, by tho vslley of the Bonnocbero. "It is due, I think, to an officer on my staff, Mr. Ifczlewood, to state thr.t the surveys I whicli have since been made substantially confirm the repoi t, on the reconnoi->pn,nco which lie laadw in 1874. He wns Instructed to walk ovor ti.e grountl and luport ifit wou'd '.c pr.icticabl«» to buill a railway, noios3 the country, in H direct course. On bis r*^tiirn, he roi)-iited that be felt 'quite safe in stating, that a railway could bt; locatod, on a direct course, between the mouth of French River and Burnt lAke: in fact, that the departure from a stnv.ght line I would probably not increaae tho distance more than five per cent.' '■ l[o faithcr reported on the character of the country between Burnt lj\\<.'. and Renfrew, Iriit the Valley of the Bonnechere River, and expressed the opinion, that there woul 1 not be I my meat diflBculty in flnling a practicable rout© for tho railway. " While I have as yet feeen nothing to alter my own views with respect to the general liccuvacy of Mr. Hazlewood's report; I am i-atisfied that thero are no engineering objections to tho proposal now submitted by the Canada Central Company, to oxteud the line westerly I from Pembroke, instead of from Renfrew. " Indeed the information obtained goes ti show, that a line with miro favouiablo irradi- lent? n\ay be obtained on the route now proposed to be adopted by the C in mI-i CVntial, and that it will serve the interest of the country fully ss well. I have, therefore, no hesitation in I recommending that the proposal be favourably entrrtained. " r think it woidd be well to stipulate with the Cmada C<=ntral Company tbut the gradi- lents Ascending westerly may be as high as 5'i'80 per mile, but th'it the maximum ascending in Ith? opposite direction should be 25'40 per mile; and that the curvature andgmeral align- |inrnt should be approved by the Department. " 1 have the honour to be, Sir, "Your obedient servant, "SANDFORD FLEMING. I" The lion. A. Mackbnzib, " Minister of Public Worka." 256 fJONTRACTS. ; 'i: ;'i llN": On the 18lh April the following' Order in Council was passed: — " Ill-port of a Corainiltee of the lion, the Privy Council, approved by lli* Excellency tii«| Governor (ioneral in Council, on the 18th April, 1878, which is as follown: — " The Comniittt^e of the I'rivy Council have bad under consideration the ciuestionfi re!i.| ting to the construction of the Georgian Bay Branch of the Canadian PaciRo Railway, and th«| eztfUHion wcstvtard of the Canada Central Railway, in consideration of a subsidy to be [ ai by the fiovernment, an provided by the Canadian PaciBo Railway Act of 1874. '• That a contract was entered into in 1874, with Mr. A. B. Foster, for the building of thtl Georgian Bay Brunch, under which Mr. Foster was to execute all ihe surveys, as well as petj form the work of construction from the mouth of the French River, 85 miles eastward. " That crj the 28th February, 187G, this contract was annulled, and Mr. Foster waa paidl such portions of Lis expenditures on the surveys, as were reported by the Chief Engineer toj be serviceable to the Department, in completing the survey. " That rn tlio 4th N'ovembor, 1874, an Order in Council was passed, under the terms ofl the Act ;57 \'ic., cap. 14, known as the Canadian Pacific Railway Act of 1874, whereby a duJ sidy of $12,000 per mile was granted to the Canada Central Railway Company, for a di.stanc«l not exceeding 120 miles from the cubtcrn end of the Georgian Bay Branch above referred to| upon the conditious : — " Idt. That the road i hould b^ built upon a line to be approved by the Minister of Pu'jliel Works, but which was defmod generally, as ascending the valley of the Bonnochere from tbtl vicinity of Douglus Village, oiu GoMen Lake and Round Lake, and thence by as direct a lintl LB mifht be found, to Burnt Lake, ami thence to the proposed terminus of the Georgian Eajl Branch— about L'ae S.ltb mile from Georgian Bay. " 2nd. That the Company should, within one month, satisfy the Minister of Public Work that they had enterod into a bond fide contract for the building of the railway. " ord. That running powers should be given to certain roads on stated conditions. '' 4th. That the Government or the lessees of the Government line from (ieorgian BajJ should 2'Oasess running powers on simillar terms to the Companies designated. " 5tb. That payment of the subsidy should be made on the completion of tho railway ini sections of nob less than 20 miles, upon the certificate of an engineer to be appointed by tit Government. " That in consequence of the annulling of the contract for building the Georgian £a]| Branch, il was considered best to complete the survey of the country to ba traversed wbid ha i b^en, to a groat extent, executed by the engineers of the contractor, with the result i i-aiaiiii^ Lomo tioabts as to the best direction. " That it was deemed unaatched early in the aeanonof IK7'> with a atrong party to do the work. " That tbit engineer baa reported, aa the reault of the aeavon's operationa, that afair lin* can be obtained on Mr. Hazlewood'a plan, but that for a oonaiderable distance the work will baiomewbat heavy, in conaeqiienoe of the prevalence of rock -outtinir, and that the maxiaium grade riaing eaatward would b^ 5l!-80 feet per mile, in an aggregate distance of about seven miles, and that there are three mileH o^ the p-\me grade risin ; weatward. That tbif grade, though no^ <>xopH8ive, \a much hi<];ber than Mr. Ila/lewood rxp ct>d. <* That the engineer employed by the Canada Central Railway Company baa reported thatt 10 far aa works ol couatruction are concerned, a more favourable lio*' coul I be obtained, aaoend- ing from IVmbroke on a line nearly p rallel with the Ottawa Kiver, and distant fr )m the same, after leaving the Petewawa River, an average of 8 or 10 miles, and touching in iU courae the louth-eaat corner of Lake Nipisaing. " That the same engineer reports generally that the alignment of the roal ia good, and Ithat it. will not exceed '> per cent, of curvature ; that from Pembroke t? Nipissing Kotk'i, five Irlvers are croased four requiring bridges of a span of 100 f-ot, and on < Cthe Pt'tewawa) »lian o*" 400 foct ; that 40 miles are through a apruce, tamarac and hardwood country, and IniDety miles through burnt woods and open country, the aoil generally being of a sandy or avelly cbartcter, with c^nsiderabie reachea of clayey aand and sandy loam " That the estimated distance from Pembroke to the south-east corner of Lake Nipissing about 130 miles. Thia point ia about 20 miles furt r and Burnt Uke ; in fact that the departure from a .jtiaightline would probably not increase the distance more than 5 per cent. ' He further reported on the character of the country bet xreen Burnt Liake and Renfrew, via the valley of the Bnnnechere River, and expressed the opinion that there would not be any great dillir^ulty in finding a practicable line for the railway. ' Wijile I have, as yet, seen nothing to alter my own views with respect to the general accuracy of Mr, Ilaz'ewoo I's report, 1 am satisfied that there are no engineering objecti ns to the proposal now submittod by the Canada Centre^ Railway Company, to extend the line westerly from Pembroke instead of from Renfrew. ' Indeed, the information obtained goes to show that a line with more favourable gralionts may be obtained on the route now proposed to be adopted by the Canada Central, and that it will serve the interests of the country ti'Uy as well. I have, '''•refcie, no hesitation in recom- mending that the }>ropo8al be favoura>"ly entertaine I. ' I t'ank it 'Tould be well to stipulale with the Cinada Central Company that the Kradients ahcending weHterly may be as high as r>2'iS0 per mile, but that the maximum ascuading n the oppotilta direction should be 2G--1U per mile ; and that the curvature and general alignment should be approved uj the Departuieui. 'SAXDKORD Fi.EMlNO.' "That th<' House of Aswem^ily of the Province oi' (Quebec, on February 13th, KS7.), pasHed a resolution wLioh was cooimunicated to the Government of Canada stating that, according to the reports of eminent men on the nature and configuration of the ground, it uppears that a tiack which r^ould follow tfaie Mattawcn would present >\bo cheapest, th^ easiest, the shortest route for the develo})ment of t\m vast commerce of the wost and of the Pacifio. as well for the branch of the Pacific to tbe east of the (Georgian Bay ivi for the Hue to be subsidizetl by tlie Government • • * • ^^^^ ^^^^^^ ^^^ ^^^ event the exploration p.ovAs that a preferable line to that of theMattiwan exists to tue south of the River Otiawt, the line to be subsidi/ed by the Qovernment, be brought to I'embroke, and not to Renfrew, where a junction with the railway system of the Province of Quebec is impossible, teeing the enormous expense wnich it would entail. "That since that period the Government of Quebec have commenced the construction of railway* on the northern side of the St. Lawrenoe and Ottawa Rivers, and the railway from Montreal westward to Ottawa has been completad by that Government. "Thatthougi the line would be lengthened by this detl action to the northward, the vestern end of the subsidized line .vonld, as stated, reach a point much further to the west- ward of the previously proposed terminus, or junction wit,h that portion of the Cauad* Pacific Railway proposed to be built under the terms of the Act, to the French River, and would thuH save to the public the cost of constructing about twenty miles of railway. '* The Corjmittee of Council, after fully considering the facts as already summarized, recommend,— '* First.— That the proposition oflhe Canada Central Railway Company to extend the line io such point as may be selected by the GoTernment as the terminus of the Canada Faoifit} CONTRACT No. 16. 259 which h« •ftcticabl* at he fell mouth of I probably Renfrew, iild not be be general jecti ns to id the line ) gra'Jionta sind that it n in recom- y that the ) maximum Tvature and ll 87'), passed iccoriing to ppara that a the ihortest aa wtjU for bflidizetl by exploration ver Ottawa, to Renfrew, teeing the istruction of ■ailway from •th\^9rd, the to the wjsl- the Canada River, and ray- summarized, jnd the line Inadft r^^^'' Railway, at or near the crossing of the Nipissing Road, at the south-east corner of Lake yipissing, for the s'lm of one million and four hundre'i and forty thousand dollars ($1,440,000) should be accepted, upon the condition as to grades recommended by the Chief Engineer, tnd that the total pcyment to be made shall not, und er any ciroumstanoes, exceed the sum of twelve thousand dolUrs (.$12,000) per mile. <■ Second. — That the Company shall, within three months of the ratification of this Order in Counoi! by the House of Commons, s»t,i9fy the Minister of Public Works that they hav* entered into a hondjide oontract or contracts, for the buHding of the railway, and have pro> Tided HiilKcie.it means, with the Government bonus, tn secure the completion of the line indS'O that the Company shall, from the date of such contracts, make continuously such progress lu will justify the hope of the couipletinn of the line within the time mentioned. '* Third.- -That the Com{mny shall enter into an agreement to gram running powers, OD terms to be approved by the (iovernor in Council, to the Montreal, Ottawa and Western Railway, now in process of couMtruotion, from Mon*real, on the north'^rn side of the Ottawa River, op any railw*»y in extension thereof from any p"int of intersection west of the town of Renfrew, that may be approved of by the Governor in Council, and aleo to the Kingston and Pembroke Rniilway Company, frots the intersection of their line, provided such point of intersection is at or west ot Renfrew, and to such other Companies as may have the termini jof their syateais on or towirds Like Ifuron, and which may be de.-iignated by t'le (ioveinorin Council as entitled to such running power.>i : Provided that the terms of such running powers I to any of the naid Comoflnies or roads ma^- be mutually agreed uj>on by the C'tnada Central .Rulwav Company and the (Quebec Government, and the other Companies named ; and in the iMentof a disagreement, the conditions to be settled by arbitration, one arbitrator to be [lelected by each party, and one by the Governor in Council. ''Phe Government of Canada an I thn lessees or future owners at' the Government road, [westward of the western te-mintis of the subsidized lin >, ehall possess running powers in th^ [Mid railway on similnr terrain to the Coiipanies designated. •' Fourth. That payments be made to the exii' ^t of eighty (80) p<»r oent. of the said Ibonusof $I2,(XX) per mile on the completion of erery ten miles — one-half of such payment |may b>^ advanced when work equal to five miios is completed on any one section, on the ertificate of the Chief Engineer that satisf>ictory proijress i* being made — and payment to be extent o*" sixty (60) per cent, may be made on work extenciiiitc over twenty -five mile* upon the ceititicate of the Chief Engineer, that such work is equal to ten miles of completod^ llrack. ''The balance to be paid on the entire completion ui' the railway to the Nipissing road at be eoatheast corner of Lake Nipissing ; I'lovided that payments may be made upon rails peii.'ered, lo the extent of seventy-five (75) per cent, of thi' market value thereof— the Dount <)0 paid on rails to he deducted from each settlement ot ten miUs. " All {tayments to be made on the certificate of the Chief Engineer. "They further recommend that payments be made to the extent of eighty (80) per cent. the work H(;tually exeouted, on the oompletionjof every ten miles, m the proportion ivhioh BD thousand dollars per mile beard to the actu:il cost ot' each section. "The Company, however, to have the option of substituting !he payment by the Govern- peiU of the interest (or part of the interest) on bonds of the Company, running over such Hi I 260 CONTRACTS. I! t«rm of years as may be hereafter approved by the Goveroor in Council, in lieu of tb« milenge subsidy referred to. " The terms and conditions in all other respects to be the same is above provided. "The grant to be operative only after the ratification of this Order in Council by resolu- tion of the House of Commons. "Certified. " W. A. HIMS WORTH, ' " Clerk, Privy Council." This was laid before the House of Commons by the Minister of Public "Works, and on the seventh day of May, 1878, it was ratified by a resolution of the House. On the 26tb of April, the Canada Central Railway Com^iany notified the Minister of Public; Works that on the 20th of that month, the Company had executed a contrn< 1 with Messrs. Worthington & Co. for the construe' tion of the extension from Pembroke to the point of junction with the proposei Georgian Lay Branch, a oopy of which (^ontract was, on the 10th May following, furnisht^d to the Department. "W'' think it sufficient for the present purpose to give no more than the fcllowiug portion of th«' said contract : — 'This I.vuknti je, made \><*ay Com^aoy, bereutafter called the Company, of tho aecoui part; " Witnesseth . that the said p»rtieM hereto have contracted and agre«d, and by these prefionta do contract and agree to and with tmeh otUer in maniiHr fo' lowing, that is to My : — "1. That the oontraotors will, ut their own expense, couutruot ami coiuplet«? a railwiiy for the tranLt of locomotives, «tpam engines, and any other di'scri^.tion of motive power, orJinmily used and applit^d on !ine« c^ like natm-p, and of all carrifgfis an-i waggons ilrawu o: propelieJ theret'y, and in complete rea'iiue«« for «uch transit, at* a sing)*} line, from a point at or near the crossing of the Nipis-jing ro^d, at the south-east corner of Lalie Nipissiug, to be tixel by the Cioveiumeut of Canada a^ iho Eastern I'oroa'nus of the Georgian Bay Bran ^h of the Cana- dian Pacific JviU'vay, to a junction with the presently cooBtituted portion of tlie Ciiuada j Central Railway at or near the town of I'embioke, (the said railway l)eing a section or exten- sion of the Canada Central Railway, being hereinafter designate! and known as the Western! Section, and the presently constructed portion of the said Canada Central R ilway, and being hereinafter Jedignated and known as the Eastern Section); together with all stations ami j station houses, engine houses, sidings, switches, turnouts, turntable", fencing, ami ot'ier appur- tenauces necessary for the due ani cijnvenient use of the said Western Section ; and shall al«o j do and pwrfonu, or cause to be done aud pertbrrjc ^d, at their own expense, all engineering work required in surveying, planning, laying out, preparing for and carrying on thesaiJ wori«i including the making of all ut*cessary plans, 8urye)8 and books of reference, and the perform- CONTRACT No. Ifi. 261 anoe of all the obligations in respect of engineering plana and survey.^! imposed upon railway oompanies l)y tVie general Railway Act of the Dominion, and by th« charter of tbe »»« 1 Com- pany ; of all which plans, surveys, nectious and books of reference, copies shall be d"po-iited with the said Compiiny, free of charge, at soon as conveniently ui'iy be aft«*r the making thereof "2. The said Weateni Section shsU be coDBtructed, and the sai 1 wirks fhill be ;es which may become due and payable in re8|iect thereof. And all title deeds of Ruch land, »n I acquittances for such land d images, shall be taken in the nam-* o' the Compflny. And the coi^tractors shall be, and are hereby, aiitliorizeil and ej:ipri\\ered to trtke all necessary steps and procepdinga, make tend^is and offers, appoint arbiirritor?, and car'-y on arbitratiins, puits and acfions, aiioli as Hliall be useful t or neorssnry in the acquisition or expropriation of land and adjustment of land damages ; the whole in the name of tne Company, but at th^ir own proper cost and charges, to the I entire exoneration of the Companv. ' "5. The said contraciors shall commence the construction of the said railway §o soon as I the Order in Council respecting the suVjfidy is ratified by Parliament, and shall complete and tinisli the said railway according to th"* provisions hereof, in perfect runniiig opler, on or before tho thirty-first day of December, in the year of our Ix)rd one thouHand eight hundred anil eighty. And during the inte val they shall make continuously such progress as will Ijuitify the expectation of the cooapleti'^n of the line within the s-iid perio i ; and if at any Itime during the progress of the work the Company's engineer shall report to the Company Ithatthe contractors are not then making sucb progrers as will justify auch expectation, and if the Company and the Honourable the Minister of Public Work« of the Dominion concur in Ituch report, such report shall be communicated to the contractors ; ani if within three months hherearter they shall not take such steps as eball be prescribed in such report as being neces- Iwy to cause their rate of progress to oonforna to the conditions of this clause, they shall b« «r 262 CONTRACTS. 'if'' 'f- conclusiyely held to be in default in tbe performance of this contract ; and the. Company •ball thereupon have tbe right to take the works hereby contracted for out of the hands of the contractors, and to continue and complete them at the expense of the contractors ; far which expense they shall have immediate right of action against tbe contractors from time to time, as disbursements are made by tbe Company in respect thereof; and the taking om the said works in the said manner and for the said cause, shall not be held to be an acceptanct by tbe Company of the said Western Section within tbe meaning of this contract ; nor shall the said Company thereby become liable either as to it j personalty in any manner whatever nor as to its realty to any extent beyond the said Western Section, for any bonds issued upon the said Western Section, or for any debt whatever contracted in respect thereof j and upon ■uch tnking over, tbe Government and all other subsidies in aid of the said work shall cease to be payable to the said contractors, and shall thereupon and thereafter become payable to the Company ; and all obligation under this contract to deliver bonds to the contractors, and the rigLt of tbe contractors to use and control the said V/estern >Section, shall thereupon cease and determine. •' 6. In conBideiation of the premises, and of the performance by the contractors of tlie several agreements, covenants and conditions on their part herein contained, they Hb';ii be entitled to receive for each mile of the said road, in respect of which a subsidy has been I granted by the Government of Canada, to the extent of twelve thousand dollars per milo, the amount of the said subsidy, upon the terms upon which it has been granted; but without anj warranty by the said Company of the payment thereof, the contra ctors themselves a- sumingi tbe rfsk thereof and undertaking to obtain the s the character of tho line to be built in tbe 2ml| (dause : ' the i)ortlon *of the Canada Central Railway lying between Renfrew and l*einbioke| ■hall be regarded as conftituting a fnir average standard of the character of the wo; k to I done under this contract.' " 2. On enquiry I have found tliat although that section of the CaneJa Central luay strvd the purpoHe of a railway, it is Vy no niejiDs of a high character and I eloro it tie accepted 1 y tbi Ciovernnient as the standard, I would advise that an e^ramination be mxde of it. '* 3. Under the 21iit clause, tbe engineer of the Company appears to have very limit* control over tbe works. " 4. There appears to be no provision for rolling stock and if my information be correcij the contract seems to give the contractors tbe power to build an mferior railway. " 5. As already stated I would advise that an examination be made of the proposed stt dard, and the Government reserve the right to approve of the gradients and curves anJ ^ent rally the plans and profiles of the location survey before being finally adopteil. CONTT?.VCT No. l«. 26^ "6. The western end of the line is rather indefinitely described ; I would sug 'est that it be defined as being opposite the post office of Nipissingan, on the western side of South River. " I have the honour to be, Sir, " Your obedient s<)n'ant, '♦SANDFORft FLEMING, •* Engineer-in- Chief. "F. Braun, Esq., "Secretary Public Works." In pursuance of the recommendation contained in the above report, Messrs. Smellie and Ridout wero, on May 23rd, 1878, directed to make an examination of that portion ol' the Canada Central Railway 'lyini^ between Pembroke and Renfrew, and rt^port thereon. They did so on the Gth June, 1878, and it gave rise to the following letter : — "Ottawa, 7th Juno, 1878. " Sir, — I am directed by the Minister of Public Works to inform you that be has had under ooneideration the contract into which the Canada Central liailway Company have entered with Messrs. Mclntyre & Worthington, for construction of line westward from Pembrokn to be sub- lidized by Government, and that the »ame meeti hi.? approval, subject, however, to the follow- iog being unrletdtood with respect to certain portions thereof. " Section 2 states that the poriion of the Canada Central Kailwiiy lying between Renfrew ud Pembroke shall be regarded as constituting a fair average standard of the cba<'acter of th« work to be done under the contract, but subject to special orders fmm the Government respecting plans, &c. "The Miniatur regards that portion of the Canada Central liailway as being m 80m« ret^iects inferior to the character of the road which should be built under the subsily ; and, first, as retianis the width of the embankments, wlich is at present aboit 14 feet at the finished I ie.'ei, they will rf quire to be at least 16 feet, and iTat certain points theG'^vernnient engineer iboukl deem it necebsary to have the width extended to 17 feet, his requirements in this 'eepect shall be acceded to. The cuttings of that, portion of the rovd are al.so too narrow to iffoni proper dr.iinai-e, and to make allowance for miterisl filling into Mie ditcli*»s, an 1 it will be required that the cuttings on the new line sliall be not less than 22 feet. It will also he re IdeAirsble Ut hikve the abutments nf itume work. " It is further lo be understni.*'! that no portnii of the gradients aaoendin'^ westwird shiH Y* iu ezcess of 02. SU p<>r mile, and that no poiti< n of the gradents extending «a->tward shall ■lie in excpss of the toaximum grade obtainable on thu Geor^i^n Biy Branch, which connects nth the subsidized line at Lake Nipissiog, and that the percentage o( such maximum gra'ta 1 "wa^^ 1 ' • _ J > ■; '\-\ ' , , 1 , f;/.» ^J^^'m 1 1 ' V- ■ i • 264 CONTRACTS. relatively to the whole line shall not exoeei the percentage of aimiiar grades on tho G-eorgiaa Bay Branch. "Moreover, it is to be understood that it will be very desirable to have ateel rails for the whole of the line ; aud although the Minister does not insist upon this as being a condition in the contract, he does insist, if steel rails are not laid, upon the procurement of a superior quality of iroa raild, and tbat such rails be suhject to the inspeotion and approval of Mr. C. C, Sandberg, the Government Agent in London, England. " The contract gives authority in certain instances to the contractors to act in the room and stead of the Company in ne£Otiatioo8 and business engagements with the Government. " There is no special objection to this arrangement ; but such provisoes are approved onlj with the understanding tbat the Company themselves are not by such approval relieved from any of tlie obligations necessarily attiohed to them by virtue of ths urder in Council, saoc- tioned by i'arliamant. " I am, Sir, " Your obedient servant, "F. BUAUN, ^ " Secretary, *• J.NO. 0. IJicHAiiosoN, Esq., "President Cana(^a Central Railway Co., *' Brockville, Ont." On 10th .June, 1878, Messrs. Mclntyre & Worthington, by a letter to the Miuistarol' Public Works, iormally accepted the conditions specified in I the letter of the 7th of that month, above referred to, after which on the| 7th June, 1878, an Order in Council \va.s passed confirming the said contract, subject to the restrictions which had been specified in the above letter, from I the S^'crctary of the Department, to the President of the Canada Central | Bailway. The advance on account of raib which hud been preA'iously made iul the year 1875, as belore mentioned, to the extent of #'38,000, was satislied by the new contractors, Messrs. Mclntyre & Worihingtou, according to the| terms of the following letter from them : — '• MoNTKKAL, 15th July, 1878, •'Sir, — Mr. Asa B. Foster baa this day paid ua the sum of eight thousan'l one bundredandj seventy-two dfilarB for a ubortage of two hundred and twenty-seven ton- iron railroad rail8,ail the rai# of lii.i ly-iix doilarH per ton. An-i we h«»r«»by accept the railroad iron at Kenfrew, BOW -loivd and 'ying there upon our contract for the extension of the Cainda Central Ruilw«jl from Pembroke to I ike .Vipissiiif, for the sum of .sixty-eight thoimand dollars, theamounll advanced hj the (ioverniuant on accoant nf (iovernmeni, subsidy >< t in pace of 10 feet for a di-tance of three {'<) milef, near J'eux Rivierei), ascending eastwards, the formation o\ the country bring stated to be of such a nnture as to ren.i {round is very diffiruit for a few miles at this point, and thtit no serio "s oLj^'ction exists to liie change proposed. " The Minister accordingly recommends that he be empowereil to nuike the von ossion desired bv the contractors fur the change of grade at the point naoi-*!. Such concession to be, howevf r, ciistincily un'lerstood as beir)g exceptional and in no wjkjf to bt» drawn into a precedent. " Tl e Committee submit the above r' commendation for ^ nir Excellency '.* Hppro^al. "Certified. " J, U. c< y\% '• ClerL, Priey Council.^ The works have been carried on under the above mentioned contract np to the date of our commission. S68 CONTKAOTS. (^•.* mi' r The expenditure upon it up to the 30th June, 1880, was as follows :— 80th June. m9 $260,479 80th June, 1880 629,494 Total ♦879,9'78 Contract No. 17. Transportation of Rails. By this contract, dated 8th April, 1875, James Anderson, James Geor;?e Skelton Anderson, Alexander Gavin Anderson and William Richard Ander- son, under the name of Anderson, Anderson & Co., covenanted, for the price of <£2 sterling per ton, to transport in the manner and at the times specified, from Liverpool, England, to j^orts on Vancouver Island, about 6,000 tons of steel rails with their necessary accessories. This contract was entered into without any competion, and arose in consequence of the purchase of a quantity of rails to be delivered at Liver- pool, with a view to sending them to Vancouver Island. As before men- tioned in our reports on contracts respecting steei rails, no tenders had been invited for any to be delivered except at Montreal. The first official inti- mation of the likelihood of requiring some at an English port is to bo found in a letter from the Secretary of the Department to Messrs. Cooper, Fairman & Co., dated the 6th December, 1874 This was written in answer to an enquiry by that firm concerning the delivery of rails upon the western lakes, and it contains the fcUowing closing sentence : — " It may, however, be deciiled to have Bome o' them delivered at an English port, in wbiob case notice will be given in time." This was followed on the 29th Docembor, 1871, by a letter from Mr. Cooper tu the Minister, offering 0,400 tons of rails at Liverpool without any reference to the item of transportation. That offer led to no transaction, and was followed on the 4th January, 1875, by another letter from this firm set out below : — " Montreal, 4th January, 1874, " Drar Sir, — We received cable messagn advising that the Mersey Corar'any have signed tender for delivery in Montreal only. With reference to the 10,000 tons required f. o. b. Liv- erpool, by taking immediate action by cable we can probably arrans^e it, the original tender being all for shipment here. To facilitate niatterii, we would be glad to hnve your instruo- iions with reference to this and the delivery at Vancouver Island. We can probably secure ireight at £'1 per ton, Although £2 10s has been asked. Upon receipt of your instructionir CONTRACT No. 17. 2i;7 w« will o«bIe for figure and make oontraot for delivery on the Pacific coMt. Waiting your early reply, we remain, " Yours respectfully, "COOPER, FAIRMAN & CO., " For MerHey Iron and Steel Company. « Uoif. A. Maokbkzib, "Ottawa." This is the first step in the negotiations concerning freights to Vancouver^ which is recorded in the Department, and from the tenor of this letter, we gather that in some previous communication this firm had been informed that a quantity of rails would be required by the Government, to be der livered at Liverpool, and transported to Vancouver Island. On the day after this, the Secretary of the Department formally declined the offer which had been pu "ously made on the 29th December, 1874, to supply 6,400 tons, as before mentioned. On the 7th January, 1876, the Secretary of the Department telegraphed Messrs. Cooper, Fairman & Co. as follows : — "If freight to British Columbia can bo got at £2 sterling, tlio Govornment will uike .SjOOO tons of steel lails sbipiied at any time. Delivery will be at Esyuininlt, Cowicbiu; I iiy oi'Nanaimo, at all of whic-b places there are good iucilities. "F.BRAUX, ^* Secretary." After which the following correspondence took place : — "MoNTRBAt., 13tb January, 1S75. "Dear Sri?, — In reply to teleNT, "Ottawa, 14th January, 1875. " Ry lehgrnphjrom Montreal to Wm. Tiuckin(/ham, Department of Public Worka. " Have I'abhd for poiitive information ; bolievc insurance; included ; will answer to- morrow. "COOPER, FAIIIMAN & CO." " MowTRBAi. Tblkouapii Comtany, "Ottawa, I -Ith January, 1875. " Ihi Telegraph from Montreal to Wm Bucklntjham, Public Worka Department. " Government have to pay freights at rates averaged 45 shillings to Vancouver ports ; th« makers not assuming delivery beyond Liverpool. I cabled to get freight at 40 shiUingii; after much labour, succeeded in gelling delivery at4ri shillings, being Itetter than allowing raili to be withdrawn. Kails now worth £11 O?. Ud. Assuming ditierence means accepting rates arranged lor, namely. 45 shillings per ton. "JAMhS CUOrEK." 'OfoNTKBAL, 15th January, 1875. " Beau Sir — 1 am in receipt of your telegram in reply to «:jd>le message received to -day. The e::tra live sliillings added was for insurance, which was omitted in quotations lor delivery at Vancouver ])orts. I have cabled again this evening, and will likely have a Unal reply to-morrow afternoon, which I trust will be satisfactory to you. •• I remain, yours respectfully, ''JAMES COOPER. " Wm. Bl'okikuuam, Esq., " Ottawa.' " Mo'»TREAL Tei BORA pii Company, " Ottawa, 15th January, 1875. " P>y Telegraph from Montreal to Wm, Bucki7ignam, Public Works. ** Cable reply received says freight and insurance fifty shillings ; impossible to get less. " JAMES COOPER." " Ottawa, 18th January, 1875. " By Telegraph from Montreal to Wm. Buckingham, Public Works. " Accept your offer made by telegraph on the 7th. Rails, ten pounds ten shillings (£10 lOs.) ; freight, forty 8hillings|; insurance not included. " JAMES COOPER." CONTRACT No. 17. 2fi9' 45 Hhil. freight* 87?). ki. 8wer to- CO." 1875. nt. lorts ; th« ahillingii ; )wiiigriiili I ting ratM •ER." 1875. eel to-day. r delivery nal rpply fPER. 1875. let less. Jer." 1875. ing3 (£10 %EB." " MoNTRKAi, IStli.Tununry, ls75. " Drar Sin, — Wo nio in roooipt of a c.il)lo niossag(» today which onahlos ux to ai'c<»i>t your otter of 7th .rununry for 5,(HK) tons of BeH««>ni(M- .sttul rails at £10 Ids., i'.o.li. [.ivcrpool, termo cash on (h'liveiy and froight to Vancouver ports, viz. : — EH(iuiuialt, Cowichari and Nanaimo, at forty shilling's per ton, insurance an open question. " Makers of rails only delivering f.o.b. Ijverpool. " Please confirm the ahove at your earliest convonionco to enahlo us^to oonfiriu sale in England by cable. " We remain yours faithfully, "COOPER, FAIRMAN & Co. " P.S We would be pla:ah. Naylor, Benzon S: Co., I am to state that thp Government accepts tluMr oflFer to supply ."),0(H) tons of uteel rails at £10 lOs. Od. sterling per ton f.o.b. at Liverpool, and allows £2 Os. (VI. per ton for freight to the Vancouver ports. , " The Agent-General of the Dominion, E. Jenkins, Esq., M.P., will .see to fho insurance. " Messrs. Morton, Rose & Co. are the Financial .\gonts of the (lovernmont in boni rate of ninety percent, on di^livery, and that wp be informeij of the acceptance of thia tender on or before the fifth day of May next. Our address will be Fort Garry uft-T the 30th inst. " We hftve the honour to be, Sir, * " Your obelient servants, " FULLER & MILNE. "F. Bkaun, Esq., "Secretaiy Public Works Department, " Ottawa." On the 2ist A'^ril, 18*75, the two following communications were forwarded to the Department from Mr. Kittson, the G-eneral Manager of the Red "Rivi : Transportation Company : — " OFtlUK OF TUB RkD RiVKK TRAN^'l■OIlTATI<>N CoMPANY, "No. 92 Third Stkkkt, St. Pacl, Mi.nn., 21at April, 1876. •< Slit, I h^rel'y otler to transport railroad iron chairs, fish bars, spikes, and other material for track, from Duluth, Minnesota, to Winnipeg, Manitoba, or «ny point on the Red River between Pembina and Winnipeg, at the rate of $15 (United States currency) per ton of 2,000 Ibc, and I further offer that in Ci^se the channel of the Red River, at the Rapids at St. An<3rpw8, between Winnipeg ami the Stone Fort, is improved, so as to make a channel of six»y feet in width Iree from rocks and boulders, so as to enable bouts and barges to pass with ordinary safety, to make the same rate, namely, J? 15 per ton, from Duluth to the point of crossin .: of the Canadian Pacific Railway, north of said Stone Fort, or in CHi>e the said rapids are not iuipioveil I w.U uUow the barges loaded with such railway material to be run down to said crossing, provided thv.t the Canadian Go^'ernment will receipt for the material at Winnipeg, and will assume all risk of danger of navigation arising from said rapids on down trip to both bo it and cargo. " The above rate to hold good and be in force during tlie season of navi^i' ion on the Red Kiver, as long as there is two feet of water on the rapids and shoals of said i iver, " Tiiis offer includes all labour in handling above material from the d n-k .it Duluth to the bank of the river at point of delivery. « Very respectfully, " Your obedient servant, "N. W. KITTSON, " General Manager. " The Honourable Alexander Mackenzie, " Minister of Public Workt, "Ottawa." ' "OfFlOl OF THK Rkd RiTKR TRANSPORTATION ComPANT, '« No. 92 Third Stbkbt, St. Paul, Mink., 2l8t April, 1875. " SiR^ — In accordance with your wish expressed to our Mr. Hill during his recent visit to | Ottawa, I now desire to put in writing the offer made by him, to transport railway iron, chain and spilies from Duluth to a point in Manitoba. "SiH,_.i ret |y point o.n th< r ton. 18 CONTRACT No. 18. 273 )ns were « With reference to the improvement of the rapids mentioned in my ofTer, I beg leave to |fUt« that from the information I have received, I am of the opinion that it could be made at a Ivery small co?t to the Government. ViTv respectfully, " Your ol.t->.lioiit servant, '•N. W.KITTSON, " General Manager. iion. Ai.KXASDKR Maokkxzik, Minister Publio Works, Otlawi." On the 23rd April, 1875, the Secretary of the Department wrote to lessrs. Fuller & Milne, acknowledging the receipt of their offer without [furtlier reference to it, after which it was not noticed by the Department. jnthe same day the offer of Messrs. Fuller ik Milne was referred to the thief Engineer. The offer of Mr. Kittson was not so referred. On the ph April, 1875, the following letter was written by the Secretary to Mr. iittson : — "Ottawa, 2Sth April, IS75. "Su;, — I bog to ackno-.vledgc the receipt of your letter of the 2 1st. inst., togotlior with Ihe accompanying written offer relative to the proposed transportation from Duluth, U. S., to llanitoba, of steel rails, etc., and to state that Mr. Hill's verbal otl.M* to the Department, then in Ottawa, comprised wharfage or other charges at Duluth. As no mention of these is Me in your written offer, T am rejuestod to ask that it ho a'so i>ut in writing st as ti form ^irtof saivl offo.-. > 1 Inve t'l'i h mo jr to bo, Sir, '• Your obcd e u MTvant, " F. RKAIJN, '' t'ecrelary. |N'. \V. KiTTSo.v, Esq., " 92 Third Street, "St. Paul, Minn., U.S." The records of the Department, in the writing ^of the Deputy Minister, bow the following directions : " Agree^^vith thesj people for 5,000 tons, |oth April, 1875." Subsequently, on May r»+h, 1875, the Chief Engineer furnished the [llowing report : — • "Camadia.v Pa<;ifio Railway, "Office of thi E.^qinker in Cnirr, "Ottawa, May 6tb, 1875. "SiR,_I return the letter of Messrs. Fuller d; Milne offaring to ca^ry rails fron Dulut'a to Ij' point O.I the Rei River between the boundary ^line and Foit Garry at the ra'e of $13.50 r ton. 13 ( < )l 214 CONTRACTS. l! ■';• » I " • • 't ' , ( .1 ■ • "Considering everything, I do not think price unreasonable; but before entering into a contract with these gentlemen, I think it would be advisable to look into the matter men- tioned in the second last paragraph of their letter. . " Yours truly, "SANDFOKD FLEMING. " F. liRAUN, Esq., "Secretary Public Works." On May the 8th Mr. Kittson amended the formal offer which ho had previously made, as follows : — "St. Paui, 8th May, 1875. " Sir, — I have the honoir to acknowledge the receipt of your favour of the 28th ult. " In reference to the omission to include in my offer ' wharfage and other charges' at Duluth, was, so far as the wharfage, an oversight on the part of Mr. Hill in reporting the termi to Hi?, On consulting Mr. Alexander, of the North Pacific Railway, and Mr. Hill, they informed me that they imderstood that wharfage or dockage was to be included in the offer, and I now beg leave to say that these charges are included in my offer. You must, however, allow me to state my offer cannot cover any charges on the material in question which may arise in the United States Customs Department, if any. "If our offer is accepted we respectfully ask that the Dominion Government grant us time to make necessary and indispensable preparations to do the work satisfactorily. " I have the honour to be, " Very regpectfully, " Your obedient servant, "N. W. KITTSOX, " General Manager R. R. Transportation Compan-j, " F. BKAUX.Esq., " Secretary Department Public Works, "Ottawa." The offer thus made on behalf of the Red River Transportation Com- pany was accepted by the followinj^ communication from the Secretary of the Department : — " Ottawa, 22nd May, 1875. " Sib, — Referring to your letters, of the 2Ist ult. and 8th inst., on behalf of the Red River Transportation Company, offering to transport rails and accessories from Duluth, Minnesota, I to a point in Manitoba, on the conditions hereafter mentioned, I beg to infoi-m you that the Honourable Minister of Public Works accepts of said offer, viz. : — " To transport railroad iron, chairs, fish bars, spikes and other material for track, from I Duluth, Mint)., to Winnipeg, Man., or any point on the Red River between Pembina and Winnipeg at rate of ($15) fifteen dollars, United States currency, per ton of two thoimnJ pounds, and in case the channel of the Red River at the Rapids of St. Andrews, between Winnipeg and the Stone Fort, is improved so as to make a channel of sixty feet in width, fieo from rocks and boulders, so as to enable boats and barges to ipass with crdinaT • s-t*" 'y f'^j make the same rate, namely, fifteen dollars per ton from Duluth to the point of crossing of I CONTKACT No. 18. 275 the Canadian Pacific Railway, north of said Stone Fort, or in case the said rapids are not improved to allow the barges loaded witli such railway material to be run down to said cross- ing, provided that the Canadian Government will receipt for the material at Winnipeg, ami will assume all risk of danger of navigation arising from said rapid.s on down trip, to botlj boat and cargo. "The above rate to hold good and be in force during the season of 'lavigation on the Ked Kiver as long as there is two feet of water on the rapids and shoals in said river. "This offer to include all labour in handing above material from the dock at Duluth to the bank of the river at point of delivery, also all wharfage or other charges at Duluth, but not charges which might arise in the United States Customs Department. " The transportation of these rails, about five thousand tons, to take place within one month from their arrival at Duluth. " The points of delivery of those rails. Ac, to be indicated by the Cfovernment. " I have the honour to be, Sir, " Your obedient servant, "F. BRAUN, " Secrttary. |"N. AV. Kittson, Isq., '* General Manager Red River Transportation Company, " St. Paul, Minn., United States. ' This was followed by a letter to the Secretary from Mr. Kittson, closing' [the negotiations, and from that time forward the matter has been treated as I a binding contract. The last-mentioned letter is set out below : — "St. Paul, Minn., 27tk M»y, ISyr). " Sir, — I have the honour to ackoo^ledge the receipt of your favour of May. <*Tbe conditions contained in your commuDication are all in accordance with the prcpo- iiit'on which I bad the honour to make on the 2ht April and 8th inst. for the transport of rails lind other material to Manitoba. Preparations will at once be made for moving the rails with |»8 little delay as possible after tbeir arrival at Duluth, so that as large a proportion as practi- Icable can be delivered before the season of low water. You will please indicate to me in due Itime the point of delivery, and name the Agent for the Government who will receive the rails I Id Manitoba. " Allow me to bring to the notice of the Hor.o'jrable Minister of Public Woikp, thai co Inention has been trade of the time of payment. I presume the usual mode would not be iobjectionable, that is, payment to be made as fast as cur boats deliver the rails at the point of Ideetination. Will you kindly icform me, it this is acceptable, and if so, if any particular form ■of certificate will be required to le obtained by me from the Agent at Manitoba as a aatisfac- jtory Toucher to be paid on presentat'on. " The Northern Pacific Railway Company^will r< ce ive the rails on ariival at Duluth. " I have the honour to be, very respectfully, " Your obedient servant, " N. W. KITTSON, *'Gentral\Manager F. F. T. Co.' |"F.Bhau.v, Esq., " Department of Public Works, " OtUwa." 18i I . *■ I I h 276 CONTRACTS. 1 , ' ft 1 ,. ' 1 1 '' 1 The ofl'er above men (ioned as having been made by Messrs. Fuller & Milne appearing to us to be decidedly more favourable to ncy, when it 8!ioulrmilt\ and fio.n Ifoorehead to point of delivery, in Piovince of Manitoba, $1 per l!>0 lbs., in U.S. currency. *' Passengers or baggage cars, 15 cents per mile, from St. Paul or Diil ith to Moorehead, tncJ 75 cents per 100 lbs. from Moorehead to points of delivery in Pfovince of Munitoba ■' Boxcars, 10 cents per mile, and flatcars, H cents per mile, fioai St. Paul or Duluth to ilonrebead, and 75 cents jier lOl) lbs. from Moorehead to poin's nf dastinicion in Pro/iuco oi' Manitoba, all in U.S. currency. It is uadersto") 1 thit all l-iconi ilives an 1 c irs tiirill bu in sudi coaditioa that they can be hauled over tha railway from St. I'lil or D.ilulh o\ tlieir own wheels. " It IS understood that the officer or engine(-r receiving tbo m«teri yoir letter of th« lOt'a ult., oIFdrinij to transport maleriil rrqiir >d iu connection with tlie Cani'lisn' Pacifio Railway, 1 am to statu that your ofTer is acce'i- ted on the following conilitions: — " All transportation to be done over the Northern Pacitic Railway and by tha sleambost and barg«s of the Red River Transportation Company, at the rates named hereafter, to hold good during the present season of navigation, so long as thero is a depth of thirty inches of water on the rapids and shoals of the Red River, the material to be delivered and piled at any point I deaignated by this Department where a good landing may be obtained in the Province of Manitoba. No delivery to be required north of the rapids at or near St. Andrewy, unless there | be a depth of water on said rapidp, forlpurpoaes of navigation, of six feet. " The rates of transportation to be as follows : — " Fish-plates and Volt?, spikes, points, crossings and switch gear, 75 cents U. S. curreQC),| per lOO lbs. weight. Each ra Iway locomotive with tender, from St. Paul or Duluth to Moote head, 35 cents per mib, and from jMoorehead to point of delivery in "bJ nitoba, $1.00 per lOV lbs. U. S. currency. Each passenger or baggage car, 15 cents per mile liom St. Paul or Duluth | to Moorehead, and from Miorehead to point of delivery in Mitnitoba, 75 cents per 109 lb*. weight. Each box car 10 cents per'mile, and each flat car 8 cents per mile, from St. Paulo. Duluth to Moorehead, and from Moorehead to point of delivery in Manitoba both box and flit| carp, 75 cents per 100 lbs. weight, all in U. S. currency. " All locomotives and cars to be in such condition that they can be hauled over the nil I way on their own wheels; and the otiicer receiving them to furnish sufficient tramway orj trestle for their unloading in the Province of Manitoba. " If, owing to the sta'e of the water.^or to other cause, tranpportation be delayed, tho m-\ terial not to ,be allowed to remain at Duluth or any other pi \ce, where wharfage or demurrage] dues may bo charged against the Government. •' I fciive the 1 onour to he, Sir, ' "Your oledient servant, " F. BRAUN, '• Secreiary " N. W. KiTTSo.v, Esq , '' Oeneral Manager Red River Transf ortiitio-i Co., " St. Paul, Minn." CONTRACT No. 18. 281 Mr. Braun's letter was answered as follows : — > "Urrici your last yeir'd shipment. " I remaio, very respectfully, " Your obedient servant, '• X. W. KITr.'^ON', "General Mnn'i';er. " F. Brack, Esq , " Secretary Department Public Woik*, "Ottawa." In Mr. Braun's ar ptanco of Mr. Kittson's oflei it will be iioli<;i'd that rails arc omitted. The evidence does not show whether that omission wa» due to inadvertence or to the idea that since the same price for rails was asked in tho offers of both years, there was no need of repeating tho bargain. As a fact the new correspondence was numbered contract 28, but as none of the principle articles named in it, except rails, were transported, Mr. Fleming's report of 1877, page 395, states that no work was performed vmder contract No. 28. The books of account show no expenditure charged against it, the Department treating the transportation of rails by these contractors as part of contract 18, and the payments are charged accord- ingly. As before mentioned the failure by these contractors to deliver the rails at Selkirk, was alleged to be, on account of the state of the water in lied River, and that they were thereby relieved from delivering them. Mr. Rowan, the District Engineer, gives the following evidence on this matter : — "The facts are these : The first I knew of such a contract at all v\\as tho rails coming here ("Winnipeg), and parties asking me where they would '.'♦ » < ^llijil'' 282 CONTRACTS. .■%.- nnload them, and I told them at Selkirk ; and they told me they could not go down the rapids at St. Andrew's. I said : ' You must go down ; I want the rails down there.' They said they would not, that their agreement with the Government was that they could navigate the whole of the Eed River from Moorehead to St. Boniface, and were boi.id by the Grovernment to carry the rails as long as there was two feet of water in the river, but to go over the St. Andrew's Rapids they had to have six feet. I thought it was a very peculiar thing, and if my recollection serves me right, I applied to Ottawa to know it" it was the case, and I got a copy of the agreement that was made, and I insisted upon their going down, notwithstanding their contract. I said they must go down, that there was six feet of water there. They went down with the first load part of the way, and then turned back when they got to the head of the rapids, and unloaded them when they got to a place called the Birches, opposite Bird's Hill, Pembina Branch now. I think it was the following year they made the same pretext, and said there was not six feet of water in the rapids; I said there was, they said there was not. It was a question of assertion ; and I hired a small steamboat and had a beam stretched across her forty feet long, and had teeth put into it like a rake three feet apart, and made her go down the river from here to Selkirk, and took the levels in the river when she went down, and there was no denying that there was eight feet of water, without any boulders to strike the teeth three feet apart, and by that means I got the rails, 900 tons, down to Selkirk. Then the water fell to the level that we knew by our levels would not leave more than six feet over some of the boulders, and I ceased to insist. But my own impression is that the diffi- culty was not so much that they could not go down, as that having gone they had not the power to tow their barges back again up the rapids." In June, 1876, the following letter was sent from the Department to the contractors : — '• Ottawa, ]5th June, 1870. " Sir,— The Departaiont is advised that steel rails have been taken to Winnipeg, but that none have been delivered at Selkirk below the rapids. As the Department had a right to I expect that an effort would bo made to transport at least a portion of them to the latter | place, will you please conini'inicato to mo when you anticipate that tl.is delivery will 1h' efFected. "I have the honour to be, Sir, " Your obedient servant, " F. BRAUN, ^^ Secretary. *'N. W. Km. ON Esq., "General Manager lied River Trans. Co." CONTRACT No. 18. 283 The deliveries under the contract were as follows : — Tods. Lbs. Daring 1875, at Pritchards, 9 miles north of Winnipeg 2,3*78 1,360 1876, Selkirk 918 4'55 St. Eonifaoc 11,839 926 1877 " 271 1,080 1880 i ^^* "^^ For delivery at St. Boniface, the prices of Messrs. Falli^r & Mihic were $1.50 per ton less than of these contractors. That difference in the quantity delivered there would amount to about $18,800 American currency. The discount on American currency varied during the period of the payments under that contract, falling gradually from 13 J per cent, in the first year to about 4 per cent, in 1877, and after that there was no discount. The offer of Messrs. Fuller & Milne was intended, and could have been ascertained to mean the long ton instead of the short ton. That would f>ive about 1,G96 fewer tone to be paid for, which, under this contract, cost $25,4 to American currency. On 19th April, 1877, Mr. Fleming reported that about 11,000 tons were wanted at Selkirk for section 14, of which quantity only 918 tons had reached there ; and he stated that this same company of contractors offered to take the rails from where they had been left to Selkirk, at $2.13 per ton, which, with handling, &c., he said would probably increase the cost of the s3cond moving to $3.00 per ton. This left 10,082 tons to be moved forward to Selkirk from the places at which they had been deposited under this contract. It is manifest that it would have been a saving to get the service done and the delivery effected under the Full:^r & Milne offer instead of the way in which it was subsequently accomplished. The handling alone was an item of some thousands of dollars, but the exact loss cannot be calculated under the circumstances, because the service was not performed by contractors— it was done by building the North Pembina Branch under contract 5 A, and taking the rails over that. So far our remarks have been made as if it had been possible to get for the whole quantity- terms as favourable as those offered by Messrs. Fuller & : t., 284 CONTRACTS. Milne for the first 5,000 tons. We have no means of ascertaining whether this was possible. No competition was invited. The price named by Mr. Kittson in 1875 and in 1876 was the same, and as before mentioned th^ transaction has been treated in the books of the Department as an enlarg,^- ment of the contract mac^e with his Company in 1875. The dilFerence between the direct money outlay upon the wliolo quantity at Mr. Kittson's prices, and of those of Messrs. Fuller & Milne, would be about $44,000 American currency. Assuming that the comparison should be made only in the quantity named by Messrs. Fuller & Milne in 1875, the direct loss would be on 5,000 tons instead of on 15,822, and would be diminished in that proportion. This, however, is without taking into account the consequences of tho failure of the Red River Transportation Company to deliver at Selkirk, as proposed to be undertaken unconditionally by Fuller & Milne. The expenditure under this contract was as follows : — 30th June, 187G $80,865 33 1877 125,985 12 1878 3,563 70 " 1879 3.514 04 Total S21C,928 24 .■*■ I CoNTR.\cr No. 19. I Conslruclion of an Engineer's lluusc. IJy this contract, dated 3rd June, 1875, Moses Chevrette agreed to per- form the work described in specifications attached to the agreement, includ- ing amongst other things, the building of an Engineer's house at Read't-, near KaminisI iquia Bridge, for the price of $ 1 ,600. The contract was let under the supervision of the Engineering Depart- ment, and, according to the evidence, was made without giving the con- tractor any undue advantage or causing unnecessary exi^ense. It was duly fulfilled, and the amount mentioned in the contract was paid without extras before the 30th June, 1876. CONTRACT No. 20. 285 Contract No. 20. Transportation of Rails. By this contract, dated the 29th day of July, 1875, the Merchants' Lake «nd River Steamship Company covenanted to transport during the naviga- tion of 1875, from Montreal to Daluth and Fort "William, or cither of them, or part to one and part to the other, 5,000 tons of rails and accessories, at the price of $6 20 per ton of 2,240 i>ounds. In this case the agreement was made hy correspondence, and covered the transportation and other services connected with it of about 10,391 tons of rails and their accessories, from Montreal to Fort "William or Duluth, at the rate of $6.20 per ton. Competition for this work was invited by advertisement, dated 1st April, 1875, which named the 19th of that month for the receipt of tenders -several offers were duly received by the Department and reported on, but the result of the competition was not adopted as a basis for an agreement awing to the preference of spontaneous offers made at different times by Messrs. Cooper, Fairman tS:; Co., who took no part in tho said public com- petition. On the day after that named for the final receipt of tenders, the follow- iuir report of their contents was made to the Department : — ♦•TEXDEllS FOR TRAN.SPOKT 01- RAILS TO LAKS SUPERIOR. A. Charles Steiihenson, Kingston, por ton §r) 50 1^ 0. Edwards, Kingston, per ton 2') 0. T. II, Beutty k Co., TlioroM, por ton 7 0) ]). Ilolconib & Stewart, Kingston, per ton 74 E. W. II. Perry, Euihi'o, per ton 7 00 V. O. E. Jaquo3 «t Co , Montreal, j>er ton 30 ';r<,'//iry. "i\ II. E.VNIS. ■i).HrAurMENT Of ruuiJC Works, •'OTfAWA, 20th April, 1S75." Three days after the opening of the tenders Messrs. Cooper, ""'airman \k Co., addressed the following letter to the Deputy Minister : — "MoNTREAi., 2.3rd April, 18.' 5. "l>eAU Sir,— Owing to our having tendered, and the Department having accepted, the ten- |(ier for delivery from " Montreal " to tho '• West," we have become committed in matter of * i 286 CONTBACTS. . 1 Mm h ; . charter, Ac, for delivery of from (10,000 to 12,000) ten to twelve thousand tons rails, ship. ment to begin immediately. We therefore beg that you would advise to what ports yovi wished the first lot shipped and the quantities required at each place. We have advice fiom the Mersey Company that we will have about 2,00(J tons here by the 1st of May. We also un- derstand that you require cartage, handling and piling to be done by the shippers, wliich was not included in our tender, but wo would be pleased to attend to these for an additional sum of (GO) sixty cents per ton, making a total of $G.'J0 per ton gross for carting, handling, insurance, piling, Sic. Your early reply will oblige. "COOPER, FAIHMAN k CO., *'■ Itepresendng the Merchants^ Lake and Steamship Line, " Consulting of eighteen first class Propellors. " T. TRt'DEAiT, Esq., . " Deputy Minister Public Work*, "Ottawa." The contention hero set up by Messrs. Cooper, Fairman & Co. is shown by the records of the Department to be without foundation, and it is to be remarked that they were silent concerning it during the period which elapsed from the date of the advertisement until three days after the open- ing of the tenders, and after the report u'^on them had been made to the Department. They made their claim, however, before the Department had taken action with any of the regular tenderers. The allusion in their letter to the acceptance of the tender for delivery from ** Montreal to the "West " pointed to tenders which they had made in November, 1874. As mentioned in our report on steel rails, 1874-75, the advertisement issued by the Department in the fall of 1874, called for tenders for delivery at Montreal and at no other place, notwithstanding which fact Messrs. Cooper, Fairman & Co. sent in ^tenders in their own name for delivery at other points as follo^A'^s : — '• {Form of Tender.) " PUBLIC WORKS OF CANADA. " TKNDEa roll riSff-JOINTED BKSSEMICR STIEL RAILS. " The nndersigned hereby tender io deliver, f.o.b., Liverpool, during the season of Daviga- tioo, in the year 1875, in accordance with the annexed specifications and conditions, 5,000 to 10,000 tons 'Mersey' or 'Bolton' brands Bessemer steul r^ils, with proportioaate qiantily of fisb-joints, at the following rates : — " Per ton of 2,240 lbs Bessemer steel rails and fish-plates, at £t0 lOi. OJ. it<^rling; iron bolts and nuts at £19 10s. Od. sterling. " The undersigned are ready to enter into contract for the manufacture and delivery cf the above rails and fastenini/, or ao much thereof as may be required, and will satisfy the Minister of Publio Works as to their a^>iluy to compluLi-t liie couiiact. We would also tenier for delirery of tbe above at some good poit in Vancouver Island, B.C. : GONTBACT No. 20. 28T Per Tod. Beasf mer »teel railci, at £13 5 3 stg. Fish-bolto, at 22 5 3 stg. "COOPEU, FAIRMAX «fe Co, « Montreal." \'i{Form of l^ender.) " PUBLIC WOPvKS OF CANADA. " TENDBR rOR FISH-JOINTKD BBSUMKR 8TBIL HAILS. " The ucdrrBigned hereby tender to deliver on the wharf at Dulutb, or Thunder Bay, I daring the season of navigation, in the year 1875, in accordance with the annexed »pecifica- I lion and condi'.ionB, 5,000 to 10,000 tone, brand ' Meney Steel and Iron Co., ' Betsenier steel raiU, with proportionate quantity of Bsh-jointe, at the following rates : " Per ton of 2,240 lbs., Bedsemer steel rails and fish-plate*, at £12 60. Od. sterling; iron I bolts and nuts, $107 currency. " The undersigned are ready to enter into contract for the manufaotare and delivery of I the above rails and fastenings, or so much thereof as may be required, and will satisfy the Kinister of Public Works as to their ability to complete the contract. We would also tender for delivery at Freach River, at a reduction of two shillings per ton on above prices, any |iiIurrBge or harbour du«>s on ports payable by Government. " COOPER, FAIRMAN & Co., «* Montreal." It is plain that these offers were not within the terms of the advertise- Iment. Nevertheless, Mr. Fleming included the result of them in his report I of the 19th November, 18 Y4. In a separate envelope a tender for 10,000 tons had been made at that I time, in pursuance of the terms of the advertisement, by the Mersey Steel [and Iron Company, as follows : — '{Form of Tender.) ' '' . " " PUBLIC^ WORKS OF CANADA. " TENDKR FOR KWH-JOINTED BBSSBMBR STBEL KAIU. • ' " The undersigned hereby tender to deliver on the wharf, at Montreal, during the season I cf navigation, in the year 1875, in accoAtianco with the annexed specification and conditions, I five to ten thousand tons Bessemer steel rails, with proportionate quantity of fish-joints, at the [Wlowing rates : — " Per ton of 2,'240 pounds— Btwsemer steel rails and fish-plates at £11 33. Od. sterling ; [iron bolts and nuts, at f 101 currency. " The undersigned are ready to enter into contract for the manufacture and delivery of Itlio above rails and fastenings, or so much thereof as may bo required, and will satisfy the |Minister of Public Works as to their ability to complete contract. '< THE MERSEY STEEL AND IRON CO. OF LIVERPOOL, " Per Cor PER, FiiRXiN & Co., Agents, " Montreal." 288 OONTBACTS. On 2nd Decemb r, 18*74, the following letter was addressed to Messrs. Cooper, Fairman & Co. : — . " Ottawa, Cn 1 December, 1874. '•Gbntlkmkk, — ^The tenders you have luado on behalf of 'The Mersey Stool andiron Ojmpany ' of Liverpool, for the supply of steel rails, «fcc., having been accepted, I am directed to send you the enclosed draft articles of agreement, and to Tequest you to hivo the kindness to have them executeil by the Company, .ind to then return them to mo. " I have, &c., "F. BRAUN, " Secretary." '' Messrs. CoopKR, Faiuman f the letter of 28rd April, from Messrs, Cooper, I Fairman & Co., the Secretary of the Department had addressed Mr. Samuel, (the lowest tenderer, as follows : — 19 , 4 tL, iV- 290 CONTRACTS. ': 'i I .; ti in «22nd AprU, 1876. " Furnish list and descriptions of vessels you intend employing; also nature of security for fulfilment of contract. " F. BRAUN, "Secretary. ** Em'i.; Samuel, «P. 0. Box, 483i, •. r "Montreal." I After which the following communications were received from Mr. Samnel : — "No. 110. Ottawa, 26th April, 1876. t^ By Telegraph front Montreal, 26th. "Offer as surety D. Butters & Co., merchants. If more required can furnish security to any amount. Guarantee to ship by first-class propeller. Answer. " E. SAMUEL. »'To P. Bbau.v, Esq , "Secretaryi "Board Public Worki." "No. 82. . , , Ottawa, April 27th, 1875. ... *' By Telegraph from Montreal, 21th. i I "Are you open to more than the quantity ^named in my tender ? If so, please name the '■■ ' quantity of rails you desire carried on same teiuis. « E. SAMUEL." "To F. BuAOv." ■ i| "No. 13. ^ " Ottawa, 29th April, 1876. * " By Telegraph from Montreal, 29/A. " Your early reply to'my tender will oblige,'80 as to regulate [movements of propellers pending arrival of raih. Security and propellers will be made satisfactory to you. ,1. ,-...'■,- ..,..,.. . ., ^^^ SAMUEL. ' To T. TRnoEAn, ' "Deputy ifinisier, : ' . "Board of Public Works." The day before the date of the last letter, the Secretary of the Depart- ment had notified Messrs. Cooper, Fairman^& Co., as follows : — " Ottawa, 28th April, 1875. " Minister of Public Works woald be glad to see you respecting carriage of steel rails westward. ■ "F. BRAUN. " Cooper, Fairuav k Co. "Montreal." CONTI^ACT No. 20. 291 On the 30th April an Order in Council was passed as hereinafter set out : — . . CovY of a Report of a Committee of the Honourable the Privy Council, approred hj Hit Excellency the Oovemor General in Council, on the 30th April, 1875. "On a Report, dated 29th April, 1875, from the Honourable the Minister of I'ublic Works, •toting that proposals have been invited for the transport of 5,000 tons of steel rails and ititeninsa from Montreal to Fort William or Dulutb, Lake Superior, during the spason of ]875; the prire t« isclude all oost of handling, piling, insurance and charges at all points, and that the undermentioned tenders have been received, vii:— Per ton. 1. E. Samuel, Montreal ^ $6 00 2. C. Edwards, Kingston 25 8. O. E, Jaques ACo.,Montreil 6 30 4. Cbas. Stephenson, Kingston « , 6 50 5. Cos & Green, Montreal 6 50 C>. Halcomb i& Stewart, Kingston 6 74 7. J. H. Beatty & Co.,Thorold 7 00 8. W. F. Perry, Buffalo 7 00 "That in a tender made in November last for the supply of steel rails Messrs. Cooper^ Fairman & Co., agents, stated the difference in price for delivering those raUs in Montral or Duluth and French River would be $5.60 per ton exclusive of any harbour or wharfage dues at the ports named. " " That those gentlemen now offer on behalf of the Merchants' Lake and Steamship Line, (coDsistiag of eighteen first-class propellers) for an a iditional sum of not more than sixty cents per ton to the price of $5.60 asked in their tender of November last, or say a total sum of $6.20 per ton, to undertake the transport of 5,000 tons of steel rails from Montreal to Fort William or Duluth, and assume all cost of handling, piling, insurance and charges as required by the advertisement. " That Mr. E. Samuel, who is the lowest bidder on the list given above, is not a steam- boat owner. " The Minister, th■ > . ;i r.r* n .1 .' Contract No. 22. Transportation of Rails. In this case there is no formal contract. The correspondence between the Department and the contractor, shows that Messrs. Holcomb & Stewart undertook to transport from 1,000 to 10,000 tons of steel rails from a wharf or ship's side in Montreal to Kingston, at the price of $1.30 per ton or less, upon the terms and conditions hereinafter set out. Competition was invited by the Chief Engineer at the request of the Deputy Minister of the Department. This was done by a telegram to each of the ibllowing forwarders : — D. McPhie Montreal Miliar & Jones ...Montreal. Jacques & Co Montreal. Holcomb & Stewart Kingston. ' The request for competition was in the following words : — "At what rate per long ton would you take rails from wharf or ship's side, Montreal, and dtiiver thom at the Penitentiary wharf, Kingston ? " ' The answer from each of the firms addressed as aforesaid is shown by the report upon the subject by the Chief Engineer, dated 20th September 1875, and hereinafter set forth. The answers showed that Mesrs. Holcomb & Stewart made the offer which was most favourable to the Grovernment. Before this competition was invited, Mr. Leonard G-. Bell had been directed to examine into the matter and report upon the expediency of storing the rails at Kingston rather than at the Lachine cut at Montreal, to which point Mr. Kenny, under a previous contract (No. 21), had been delive^ ing them. Mr. Bell's report upon the subject having been considered by I the Chief Engineer, he, on September 14th, 18Y6, had recommended that the forwarding should be awarded by competition in the way in which it was subsequently accomplished. Mr. Bell's report had shown that the Warden of the Penitentiary at Kingston was anxious to obtain the work | of piling and re-loading the rails, as there was then not sufficient employ- ment for the convicts, and after the receipt of the tenders showing the I offer of Messrs. Holcomb & Stewart to be the most favourable, the following correspondence took place between that firm and the Department relative] to a deduction from the price named in the tender : — CONTRACT No. 22. 297 le, Montreal, and " Ottawa, September 14th, 1875. " Gbntlbheit, — Referring to your offer of the 2nd ulto., for transporting rails, "Ottawa." On September the 20th, the Chief Enginepr reported as follows : — * " Ottawa, Sept. 20th, 1875. " Sir, — As requested by the Deputy Minister on llie 1 Stli inst., I sent a telegram to the following forwarders : — .» " D. S. McPhie, St. Lawrence Forwarding Company, Montreal. " Millar & Jones, P'orwarders, do " Jacques & Co., do do » •' Holcomb & Stewart, Kingston. • At what rate per English ton would you take rails from wharf or ship's side, Montreal, and deliver them at the Penitentiary wharf, Kingston ? ' " I enclose herewith the replies received :-- "No. 1. From D. McPhie, offering to carry rails between the points named at ?..35 per English ton, exclusive of canal tolls. "No. 2. From Holcomb & Stewart, offering to carry rails at $1.30 per English ton, including canal tolls and all charges. "No. 3. From Millar & Jones, offering to convey rails at 1 1.50 per English ton. "As the canal tolls would probably amount to about 15 cents per ton, it is cleai' that the offer of Holoomb & Stewart is the lowest. * t «• 298 CONTRACTS. w • ■• iflf I i li " These gentlemen further propose to make a deduction of 10 cents per ton, provided the Government assume the expense of unloading and piling the rails. As the Penitentiary labour vrill be available for that purpose, I think, under all the circumstances, it would b« advisable to accept the offer. In the event o' ,this being done, as there is [no time to be lost, I would recommend that a telegram be l omediately sent to Holcomb & Stewart, so that the barges they have in Montreal ready for the work may at once be loaded. Tlie Peni- tentiary authorities should also be notified to make preparations for unloading and piling the rails on their arrival. " I am, Ac, &c.f "SANDFORD FLEMING. " F. Bra UN, Esq., " Secretary, Public Works Department." Upon which the contract was closed by a formal letter from the Secra- tary of the Department to Messrs. Holcomb & Stewart, which is set out below : — • "Ottawa, 22ad September, 1875. "GBNTLEMKy,_Your tender of 27th August last, as modified by your letters of the Uth and 18th instant, to provide standard barge stock of from 3,000 to 4,000 tons capacity, for taking one, five or ten thousand tons of steel rails for the Canadian Pacific Railway from th« wharf or ship's side in Montreal and delivering them at Kingston, in tlie dock yard or Queen's Wharf, or on the penitentiary wharf, has been accepted. " The conditions are as follows : — " That you will from time to time, during the present season of navigation (1875), provide a sutiicient number of standard barges mth proper steam power and transport from the port of Montreal to such wharf or wharves in the port of Kingston as the Minister of Publie Works may direct, about five thousand tons (the ton of 2,240 pounds) of steel rails with their accessories, in manufacturing parcels, or such lesser or greater quantity as may bo then ready for shipment. " That you will despatch the rails, &c., without delay, and deliver and pile the same on the wharf indicated, at and for the price and sum of one dollar and thirty cents ($1.30) per ton, which sum will cover all charges whatsoever from ship's side, including canal tolls, but insurance ugainst damages of navigation and fire excepted : " Provided, however, that in case the unloading at Kingston and piling on the wharf should be done and assumed by Government, a reduction of ten cents (10 cents) pt" ton will be made from the above rate. " Payments to be made on production to this Department of a certificate signed by thi oflScer of tiie Government at Kingston, showing the delivery there of each cargo complete in | every respect. " I have the honour to be, Gentlemen, " Your obedient servant, «F. BRAUN, ^'Secretary. ** Messrs. Holcomb & Sikwaiit, "Forwarders, ko., " KiogatoD, Oat." CONTRACT No. 22. 299 The contract having been thus awarded to the lowest available offer ; it was duly fulfilled, and up to the 30th June, 1880, the following amount was paid on account of it : — 30th June 1876 $5,860.00. Contract No. 28. r Supplying Ties. By this contract, dated 4th October, 1875, Henry Sifton and Frank "Ward, under the name of Sifton & "Ward, bound themselves to furnish 56,000 ties according to specifications agreed upon, at the price of 26 cents each, to be dehvered upon the railway line near Prince Arthur's Landing. This contract was let by Mr. Hazlewood, the District Engineer at Prince Arthur's Landing. The Chief Engineer sent to him, on the 25th September, 1875, the following telegram : — " ' A.' Invite tenders for ties in ten-mile Bections, Fort William to Kaministiquia; M be delivered in proportionate quantities evQty half mile along the track. Receive tenders in ten days and forward here. A cash security of ten per cent, on contract ; amount to be deposited with the Department. "SANDFORD FLEMING/' On the 27th September, advertisements were issued by Mr. Hazle- wood asking for tenders up to six o'clock p.m., of 2nd October, 1875. This advertisement numbered the sections 1 and 2, and asked for 28,000 ties to be delivered along 'each of them, stating that separate offers would be received for each section. Twenty-four tenders were sent in. William McAlister's offer for section 1 was at 25 cents per tie, and for section 2 at 28 cents. Sifton, Ward & Go's, offer for the whole was 26 cents. All the otlier tenders were higher than these. Mr. Hazlewood interpreted the telegram as directing him to close a contract, probably understanding that the words " forward here "' applied to the cash security which was mentioned next after those words, and which would be forwarded only after the contract had been awarded. The intention of the Department, however, was that he should send forward the tenders for consideration at Ottawa. There ^s no reason to think that the tender of Messrs. Sifton & "Ward, the present contractors, would have been available for section 2 alone at 26 r 800 CONTRACTS. ■■ — ■ " -^ cents, the price mentioned by them " for the whole " distance. If it had ben so available, that would have reduced the price a trifle by accepting Mr. Mcl-llister's offer for 25 cents for section 1. As it was, we think that Mr. Hazlewood accepted the tender which was most favourable among those available to the Q-overnment. He closed a bargain and entered into a formal contract, the document above mentioned. This was forwarded by him to the office of the Chief Engineer, with the original advertisement and tenders. Mr. Fleming, on the 13th November, 1875, made the follow- ing report upon it : — "Ottawa, 13th November, 1875. " Sir, — I enclose herewith a contract • • • • • made on behalf of the Publia Works Department by S. Hazlewood with Sifton, Ward & Co., dated 4th inst., for the delivery of 56,000 ties on the 13th contract. " It was not intended that Mr. jiazlewood should enter into a contract, as you will see by the enclosed telegram marked A. He was to receive tenders and forward them here. The telegr.ini, however, as he received it, read as if he was directed to enter into contract and tor- ward liere a ciiih security of ten per cent. '' Ml'. Ilazlewun 1 was very unwilling to assume the responsibility of making a contract, but on consultation with the Chief Surveyor and other gentlemen he felt that he could not decline without defeating the object in view, namely, to provide work for the men and horses in that locality in order to keep them there during the winter. He saw there was no time before the close of navigation to communicate with Ottawa for instructions, and thought it best to make the contract. " I also enclose all the tenders received by him, 1 to 24 inclusive, and other papers con- nected therewith. " I enclose at the same time, paper marked " C," being an order from Sifton, Ward & Co. I to retain out of the monies payable to them on the 13th contract the sum of $1,456 being thej amount to be deposited as security for the performance of their contract • • • • enclose 1, '' I am, Ac, « SANDFORD FLEMING. "F. BnAry, Esq., " Secretary Public Works Department." The contract was duly fulfilled, and the following sums were paid onj account of it : — 30th Juna, 1876 $10,9'78.35 •♦ 1877 3,069.79 Total $14,(148.14 CONTRACT No. 24. 301 er papers con- Contract No. 24. Building an Engine House. By this contract, dated the 6th September, 1875, Adam Oliver, Joseph Davidson and Peter Johnson Brown, under the name of Oliver, Davidson & Co., agreed to erect and finish, on or before the 20th June, 1876, a house, I according to specifications and plans agreed upon, receiving therefor $3,000. "We have not been able to ascertain whether this contract was let after 1 any competition or by accepting a single offer. It was closed by Mr. Hazle- wood, the District Engineer at Prince Arthur's Landing. He seems to have been clothed with a general authority to arrange for the erection of I engineers' houses. On May the 13th, 1876, written instructions were given to him for the I purpose of governing his action as district engineer, as aforesaid. The only clause in these instructions which touches the present subject, is as libllows: — " You are authorized to enter into arrangements on the most favourable terms (or the [erection of a sufficient number of engineers' houses at points where they may hereafter be I utilized in connection with the operating of the road." Under this authority he entered into several contracts for the construc- Ition of houses. Some of these appear among the contracts reported on in JMr. Fleming's special report of 1877, and others do not. The practice was to place funds in the control of Mr. Hazlewood, and lout of them he paid, upon some occasions, the cost of houses erected under Isuch arrangements as were closed by him. He would be credited a<»ainst Ithe funds charged to him in this way, with such sums as he offered Isufficient vouchers for. Those disbursements, not having been made Ithrough the Department at Ottawa, would not be charged against any par- Iticular contract, and thus it happened that only some of the contracts Iclosed by him, are mentioned in the regular reports of the disbursements of Ithe Department here. His practice as to letting by competition or other- rvise was variable. For instance, on the 23rd August, 1875, he informed Ithe Chief Engineer by letter that he had contracted with Messrs. Oliver, iDavidson & Co. for building two dwelling houses at the town plot of Fort pilliam for the use of railway employes there, and he then enclosed a copy of an offer which had been made by that firm and which had been accepted, apparently without competition. , ^ 302 CONTRACTS. « ^ •„ ^ ■ » 1 '* ■ » 1 '■ ? ■i < • ■ i ; ■ ■ ■ ( ^ 1 Upon another occasion, on the 25th October, 1816, Mr. Hazlewood addressed the Chief Engineer, enclosing the copy of a contract which he had entered into with Mr. Chevrette for the erection of an engineer's house near Sunshine Creek. Upon that occasion he mentioned that he had received three tenders and showed that the contractor had made the lowest I of them. Neither of these two last-mentioned bargains m ar'e by Mr. Hazle- wood appears in the ordinary reports upon contracts issued by the Depart- 1 ment. In this particular case we are not able to say whether the contract | was entered into after competition or not. A copy of the contract itself and a bond by two sureties were enclosed I by Mr. Hazlewood, on tho 30th September, 1875, accompanied by the fol- lowing letter : — " Prince Arthur's Landino, "30th September, 1875. " DicAR Sir, — I enclose you herewith a copy of hood and contract for the erection of u| engineer'^ house at the town plot of Fort William. " Yours very truly, "SAMUEL HAZLEWOOD. "S. Fleming, Esq., "Chief Engineer, C. P. R., "Ottawa." Mr. Fleming has expressed before us his confidence in Mr. Hazlewood'sl abilities and integrity, and upon the evidence we have no reason to suppose I that the contractor in this case obtained any undue advantage, or that any! unnecessary amount was paid on account of the erection of the house] mentioned in this agreement. The contract was duly fulfilled, and the following sums were paid upon it, including some extras : — 80th June, me $ 750 00 1877 2,333 70 ♦^ 1878 44140 Total $3,625 10 Contract No. 26. Railway Construction. By this contract, dated 7th June, 1876, Patrick Purcell and Hugh Ryan covenanted that they would, on or before the 1st day of November, 1878J CONTRACT No. 25. 303 complete all the excavation, grading and bridging on the line between Igonshine Creek and English River, in length about eighty miles, together fith the track-laying and ballasting between Fort William and English jHiTer, and so mnch of the works as would allow working trains to run to [the navigable waters of Lac des Mille Lacs on or before the 1st day of liugust, IStY, and so much as would allow working trains to run to Eng- llish River by the Ist day of August, 1878, receiving therefor the prices Ijpecified in the contract for the respective kinds and quantities of work |uid material provided by them in carrying out the contract. The work covered by this contract was submitted to public competi- tion. An advertisement, dated 22nd April, 1876, was issued from the Department of Public Works, giving notice that sealed tenders for the ading from the westerly end of the 13th contract to English River, and for the track-laying and other works west of Fort William would be «ceived up to 22nd May, 1876 ; and that plans, approximate quantities and |other information could be had on application. On the 22nd May, above named, the tenders were opened in presence of the Chief Engineer and two tu Iiis assistants, Mr. Marcus Smith and Mr. llowan. At the time of this ppening a schedule was prepared and certified by these gentlemen. This «cord and the original tenders have been produced before us. There were reive offers, varying from $1,037,061 to $1,636,660. The lowest was made |)y Mr. P. Purcell, and is the foundation of this contract. After the contract had been awarded to Mr. Purcell upon his tender fbove mentioned, and after he had put up all the requisite security, but efore the contract was signed, he addressed the following letter to the linister : — « Ottawa, 30th May, 1876. " Sir, — T beg to be allowed to associate with me Hugh Ryan, as partner in the contract r section 2.5 of the Pacific Railway, and to have his name inserted in the contract. " And oblige /* Your very obedient servant, " P. PURCELU fThe Hon. Minister of Public Works. " We have taken evidence concerning the negotiations which led to the tttroduction of Mr. Ryan as partner in this contract. He had been inter- ested in a tender made in the name of Brown, Brooks & Ryan, and which ^as considerably higher than that of Mr. Purcell. After the contract had en awarded to the latter, he asked Mr. Ryan to join him, and Mr. Ryan ■« ! SiiWi'' mi CONTRACTS. li ' , .» V ■ Uy consented. There is no reason to suppose that the partnership was due to any undue pressure upon Mr. Purcell, or for believing that in obtaining this contract the contractors got any undue advantage, or that the work covered by the contract could then have been provided for at a less cost than that which was promised by the teims of the agreement. This is one of a series of contracts for distances between Lake Superior and Red River which were let upon schedules purporting to give approxi- mate quantities of the diiferent classes of work to be executed, upon which quantities tenders named a price for each class of work, and in which series the quantities so named were exceeded in carrying out the contract— in some cases very largely, in all to a considerable extent. In the case of this contract the quantities furnished to tenderars were I stated and the contract let before the line was located. The whole distance covered by it was something over eighty miles, but the ground over which the railway was to be made was known only to the extent of about sixty miles. A profile, but no cross-sections, had been made for that portion ofl the line, and for the last twenty miles or more at the western end even the centre line had not been ascertained. The work under this contract crosses | a country not very rough, but much of it " is flat, dotted with rocky islands like small hills." The system of letting contracts upon bills of work in which quantities! were not given with approximate accuracy, was advocated by the Engineer- in-Chief as affording a proper means of comparing the relative ranks ofl tenders without any material disadvantage to the country, except in so farl as a disappointment might ensue in consequence of the total outlay beingl larger than was to be expected from the quantities given in the schedules. We have dealt with the expediency of such a practice as an engineeringj question, reporting our conclusions upon it under the head of" Engineering"! (page 71). On this contract the estimated cost at the time of letting it was! $1,037,061. The cost under the last progress estimate was $1,396,824. Tha difforence is not to be attributed entirely to the inaccuracy of the firslj estimates, for ballasting and other improvements have taken place addition to the works contemplated at the time of making the contract! There can be no doubt, however, that irrespective of extras the vvorB intended to be provided for by the contract has cost a very much largej sum than could have reasonably been expected by the Department at thj CONTRACT No. 26. zoty time of making it. There are, apparently, two main causes for this : one I that the nature of the material on this section was not known. Much of the embankment has been formed from excavations in muskegs in which, according to the evidence, the material when moved will furnish in the embankment not more than from 40 to 50 per cent, of its cubic contents [in the place where nature placed it. The other, that the quantities named I in the estimates were not correct, because no sufficient information had been obtained upon which to state them accurately, even if the nature of the material to be worked had been understood. These causes are more fully I alluded to in our report upon Engineering. The.e is, however, another matter touching this particular contract, land the coat which has been incurred under it, which, though somewhat Iwithin the jurisdiction of the engineers, we allude to now for the reason jthat it concerns the conduct of Government officers and the fair dealing of Ithe contractors. The measurement of the work in this case, as in all such cases, was Icertified to the contractor from time to time as it progressed, and on the leertificates so obtained the price was paid by the Government. The Imeasurement was here taken under the superintendence of Mr. McLennan, la Government official known as " resident engineer." It was generally Imade, in the first place, by one or more of his assistants and revised by Ihimself . The measurement of a considerable portion of the work under this Icontract, as first certified by Mr. McLennan, has been disputed, and a re- Imeasurement was directed to be made under Mr. L G. Bell and another lengineer who had been in no way connected with the work. "We set out [below the instructions of the Chief Engineer to Mr. Bell, the report by Mr. iBell, a corroboratory certificate by Mr, Mortimer who assisted him in the lie-measurement, and an accompanying memorandum by Mr. Hill, who was lassociated with him in the work, as well as the report of the Chief Engineer jitt submitting the former documents to the Minister : — , : ; ,,i " May 28th, 1879. " Memorandum of InsUuetions for Mr. L. G. Bell. "Mr. Bell has been appointed by the Honourable the Minister of Public Works, to ^-measure the wrrk on section 25, oonsisting of bridging and grading between Sunshine preek and English River, and ballasting and track-laying betvre m Fort Williatn and English River. " Mr. Bell will at once proceed to Fort William, and report himself to Mr. J. H. Caddy, be senior engineer in that ult task t m«ke accurate raea'^urementa of the work that has been done. In such oases Mr. Bell muii U8» his best ju'lgment in making proper nllowance, so as to arrive at just and fair results. -«zplainod to Mr. ficll, in oases where the cuttings, ditches, and borrowing pits, from whid material ba^ been taken, have been disfigured or seriously altered, it may be expedient i measure the w >rk in embankmont. *' Mr. Bell will bear in min 1 that the obiect of the examination with whioh be is obarg» ii to make :i verification mea^iirAment of all the works, chiefly excavation and embankmein on contract 25, and the £ngiae«r-in-Cbief commends to the diligence and zeal of Mr. Belli important duties entrusted t) bim. Th» Engineer-in-Chief confidently trusts that these dutiij will be performed with judgment, determination and industry, aad that the informatioi obtained will be as })erfect as circumstances will admit. " Mr. Bell will report to t'le head oitice weekly, the progress being made with all particJ lara worthy of note, and on completion, futnish full detailed measurements of the works, witlj report covering the whole. " The Iloaourable tbe Minister has been pleased to associtite wittt Mr. Btill, Mr. A. J. Hilj as an assistant in this important verification measurement ; Messrs. C. Mc* iammon and ^Yi^ Fraser %re appointed rod-men. " The Department will furnish Mr. Bell from time to time, with funds to carry on tkj service, and while the Engineei -in-Chief refers him to the rules established by the Departme^ with respect to the making of payments, the keeping of accounts and the character \ vouchers, &c., attention is directed to the necessity of exercising economy In pe •expenditure. « SANDFORD FLEMING, " Engineer-in-Chief" " CANADIAN'PACiriC RAILWAY, * ' ' "Office of the EKoniBiR-iN-GBiEP, "Ottawa, 17tb April, 1880. " Sir, — I have the honour of reporting that the work of re-measuring contract No. 25 1 was entrusted to me by the Hon. the Minister of Railways and Canals, has now been coi pleted, and I have now to lay before you the accompanying statements of the quantities! excavation by which you will see that according to my measurements the work done in t following items is less than what the engineers in charge have returned it by the follow amounts: — Cubic yards. ''Excavation in solid rock 23,713 " loose rock 103,342 ' " earth in line, cuts and borrows 305,961 « off-takes 30,852 "Total 463,868 " These great differences are, I believe, due partly to the measurements of the enginw in charge '- iving been made on what I consider an erroneous basis, and partly to what I < sider a very grave misinterpretation of the clauses of the specification describing what ii| be classed as loose rock and solid rock* CONTllACT No. 25. 807 " I (lid not measure the n])-rai) on the contract, but I took notes of a considcrahle quan- tity of work done which has beon returned by the engineerH in cliargo as rip-rap, which, in my opinion, ought not to be so clasned, and for which there ought to be a reduction in thai item of 1,722 cubic yards. " In numerous plar<>s tiie engineers in charge have made " allowances," many of which I believe ought not to be admitted. Some others may be admitted, but the amount is rela- tively very small. " I have measured also the several ballast pits on the contract, and cstimateil the qtian tity taken out of each pit up to the date of my measurement of it. But as the work was then in progress in three distinct pits and continued so for some time longer, I iuii able to give only a check on the measurements of tiie engineers in charge at the time of my measurement, which check indicates satisfactorily that the engineer's measurements were then practically correct for progress estimates. " Mr. A. J. Hill, C.E., was assocuated with me in tlie work of re-measurement, and in all respects he concurs with me in the measurements and classification of work. In all our work we acted under a desire to give full and liberal measurements, and we spared no pains to obtain accurate and reliable results. " I have the honour to be, Sir, ' ■ " Your obedient servant, "LEO.VARD G. BELL. " I have read the above report, and hereby confirm all that Mr. Bell has said in it. "ALBERT J. HILL" Canadian Paoifio Railway. * Contract No. 25. Quantities of Excavation, exclusive of that for foundations and culverts, as at SOtli September 1^79. • Stations From. I,6d5 2,215 2,810 3,279 3,825 546 47 560 To. 2,215 2,81o 3,275 3,825 545 47 5eo 1,206 iJOi Excavation. Rock. solid. 19,140 6,414 1,335 1,703 3,295 12,668 5,790 3,081 52,426 Loose. 2,261 483 10 436 384 406 342 686 6,098 Earth. Line cuts and borrows. Offtakes. 267, 35 i 6,671 182,636 483 143,664 613 215,711 13,9 5 178,945 12,615 194,800 1,193 193,083 9,786 172,846 8,411 1,549,036 I 53,697 Totals. 295,424 190,016 145,622 231,775 195,2^ 209,087 209,001 184,033 1,660,167 808 CONTRACTS. iiijih "f I », I ■ ••Ottawa, 17th April, 1880. " We hereby certify that the fthove Htateinont ropreBents the quantities of excavation of rock and earth on contract No. 2>'), between 32^ and 113 miles, as measured by us up to the 30th September, 1889. '•LEONARD 0. BELL, ' ' "A. J. HILL." Canadian Paoifio Raimvay, Contract No. 25. QcANTiTiRS of Excavation, exclusive of that for the foundations and culverts, as at 31st Decent' ber, 1878, according to returns of Engineer in charge. EzcaTation. Statl'«na 1 ».. Rock. Esrtb. Total*. ^ From To Solid. Loose. Line cuts and Borrows. Off-takes. 1686 2216 24,286 31,816 272,636 7,609 338,146 2216 2810 10,019 11,982 196,143 2,777 219,931 2810 3276 1,796 6,200 174,062 3,246 184,293 3376 3826 4,442 9,063 305,147 18,386 337,«37 3826 645 4,795 16,173 211,672 21,571 253,211 646 47—0 20,439 25,795 215,968 2,367 264,564 47—0 660 7,068 3,377 241,627 16,111 267,173 660 1206 3 305 3,955 238,852 13,684 259,696 76,139 108,360 1,864,997 84,64t 2,124,031 "Canadian Pacific Ka'lway, « Office of ihis jSnoinexr-in-Chigf, Ottawa, 1 7th April, 1880. "SiE,— As supplementary to my report of this date, I beg leave to say that in there^ measurement of contract No. 25, Mr. H. J. Mortimer, a civil engineer of many years experi- ence, and for several years in charge of surveys in this railway, being at the time out ofi employment, came with me in a subordinate capacity and wrought in the measurements. As j lie has had considerable experience in works, I had frequent conversations with him on points I wherein 1 differed from the engineers in charge of contract No. 25, and he fully agrees witii| jue in all I have done in the measurements and classification. « I have the honour to be, Sir, " Your obedient servant, "LEONABD G. BELL. CONTRACrr No. 28. 309 Lprll, 1880. of excavation by us up to ] 0. BELL, it 31st Decern- TotftlB, 338,146 219,921 184,293 337,127 253,211 264,564 267,173 259,696 2,124,031 [pril, 1880. lat in there- years experi-l |he time out of I irements. As I him on points I lly agrees witbl la. BELL- "1 have read the above an*l I hereby confirm all that Mr. Bell has aaid in it. " IIENRY J. MOxtTIMER. ''SaNokord FutM'.vo, EHq." » Ottawa, I8th April, 188«. " Sm, — Ah requested by you, I beg to submit the subjoined memorandiun of the methods employed in the re-meaaurement of contract 25, Canadian Pacific Haihvay, and of facta noted :leaD and plumb, with bottoms firm and even rendering accurate measurements easy. '' In many instences packing i!pon the sides of the ditches bad bf en resorted to which, ucdetocted, would have the effect of increasing the measurements, and in several cases, no- tably in a large muck boriow at Upt>ala, uuder packing had been extensively carried out by lifting the turf aud introducing sods of from four to six inches thick, which were then mcstly trioMBed and faced so as to almost defy detection. " On many of the muskegs, moss from one to two feet deep occurs, over the peat, in measuring which we allO'Ved it compressed about two-thirds. « In order to test the p}33ibility of the ditch depths beiug affected by the draining of the adjacent muskeg, we frequently took cross-sectioiia of from 600 to 800 feet across the track and ditches, at points most favourable for the detection of subsidence from this cause, which howdvor, never revealed any appreciable difference of level, due to drainage. The only excep- tion, and that in my opinion a doubtful one, is at the diversion of Mud River, which I believe follows one of the many natural depressions in this vicinity. The bottom ot the ditch ii generally solid and firm and the sides plumb and solid, both ehowing distinctly the spade marks though subjected for a long time to a pretty rapid current. The discrepai cy in the quantities I look upon as suspicious, in view of the fact that a liranchout'-fall of almost eqjal dimensions through the same muskeg shows only a moderate excesp. *' Our method in measuring out-falls was to tape and stake the entire length of the ditch downwards, taking the sectional area at every one hundred feet or oftener on the return. " A portion of the rock from the line cuttings has been put in embankment, but by fur the greater part has been wasted either by being thrown * over the aides of the previously finished embankment or carted out right and left at the cutting. At Up^aU Like and a few other points the broken rock thrown over the embaokmt nt has been returned as rip-rap. Iq addition to the waste of rock, the amount of earth waste upon the line is very large and in xoany cases, I think, unnecessarily and uselessly ^o. " I am, dear Sir, " Yours very recpectfuUy, •'ALBERT J IIILL. >* Sanuporu Flbmixg, " Engineer-in Chi. f, " Canadian Pacitio Railway." " * It is comparatively rare to find the material of a rock cutting put into embankment, though, as mentioned above, in some cases it is utilized. The usual couise appears to have been to waste the rock cuttings and form the embankruents from side borrow. The excessive quantity of loose rock returned may be accountel fOr by the custom of allowing a percental* of loose rock in cuttings and borrows, where, according to the usual interpretation ot the sp^-cificiiMon, none existed, as for instance in the large gravel cutat Upsals, and by the appar «nt estimate and return of boulders of all sizes in borrow ditches and pits, which were never juoved nor utilized for oonstruction purposes. CONTBACT No. 26. an subsequently it was cross- I soil and the irce, however, Brm and even rted to which, eral cases, no- carried out by e then mrstly it the peat, in Iraining of the cross the track is cause, which 'he only excpp- which I believe ot the ditoh ii nctly the spade crepai cy in the of almost eqjal jth of the ditch the return, neat, but by fur the i^reviously Like and a few I as rip-rap. In eiy large and in r J iiiLL. o embankment, appears to have The exoessive ing a percentag* pretation ot th« id by the app" hich were never <* The cutting at Upsala consults of a coarse gravel in which there appears to be but few IlKHiIders above the site of a man's head. la this cut 40 per cent of louaerock has beea lillofred in the original measurements. . "A. J. H." •' Canadian Pacific Railwat, "Office of thk Bnoinerr-in-Crigf, "Ottawa, May \9, 1880. i< Sir, — I beg to submit the forowiog documents relating to the re-measurement of work |0D section No. 25 : — "1. Copy of instructions to L. G. Bell, (A). " 2. Joint Report of L. G. Bell and A.J. Hill, (B). " 3. Letter from L. ii. Bell, (C). "4. Letter from Albert J. Hill, (D). "Tbere-me»surement does not onfirm the accuracy of the returns previously received of work executed. According to this oxomination it appears that the total quantity of excavation bne on section 25 is 463,868 cubic yurds If^ss than that covered by the certificates issued in ! contractor's favour. This is made up of the following classes of work : — " Excavation in solid rock 23,713 cubic yards. « " loose rock 103,342 " " " earth in line cuts and borrows 305,961 " " " otf-takes 30,852 " Total 4r);!,8o8 cubic ytirda. "In the matter of the earth which embraces a critiin proporiion of muskeg work, I un- brstand from Messrs. Bell and Hill thai in the qua-itiiies now furniBhe'l they hr'VJ made no duction for the 8hrin!ia>!e of that material. The discrepancy is therefore very serious and klk for further investigation. " I am, etc., "SAND FORD FLEMING, "^ Eixjineer-in-Chief. [Tbe Honourable Sir Chakles Tdpi'kk, K. C. M.G., " Minister of l-iailways and CanalH." The difference between the original m(»asureraent.s by Mr. McLennan ad those by Mr. Bell is serious. If Mr. Bel) s qnuiititi.^- are correct the aount of the contractors' claim would be largely r»'du' ed. Mr. Bell |pport8 that in the following classes of work his measurement is less than wt previously allowed by Mr McLenaan to the extent bolow stated^ lamely : — Excavation in solid ro^ 2o 713 cubic yards. ^' " " Loose rock 103,342 " " Earth in lime, cuts I onr ogi u and corrows .. ) '' »* " Off-takes 30,862 Total 463,8S8 cubic yards. : 1 T^ 1 m * V } . < 1 ^i'f'^l^ * ^ > i •I 312 CONTRACTS. ' ■" — - - 1^ And he also suggests a further reduction of 1,722 yards of rip-rap. At the contract prices these reductions would lessen the cost of the work ag follows: — Excavation in solid rock $35,569 " Loose rock 93,007 ♦• " Earth in lime, cuts and borrows... 100,967 " " Off-takes 10,798 Total $240,841 Mr. Bell mentions in his report two origins for the discrepancy, one I an error in the basis on which the first measurements were made, and one a misinterpretation of the clauses in the specifications concerning loose rock and solid rock. Ifhe means by "misinterpretation" that executed quantities of one kind of rock were improperly certified under the head of another I kind that might have given to the contractors too high or too low a price! for the class of material which they had moved, but it would not affect thel total cubic contants of the rock which had been excavated under one or thel other class. Therefore the fact of the discrepancy of 463 868 yards wouldj stand altogether unexplained. The other cause to which he alludes is the " erroneous basis," meaning we presume, for no other reason could account for the discrepancy, that work had been certified to have been done which had not been executed in any class. We examined witnesses at some length on the subject of this disputed measurement, not because we intended to decide finally upon the claims of the contractors to have it allowed, but that we might be informed upon m course which had been adopted by the resident engineer and his assistant^ while in charge of the public interests. Under some of the other contracts the works had cost much morethai| was expected, because of the sinking of the abutments at rivers and laki^ on which foundations for the embankments had been placed. In this cas no great disappointment resulted from such a cause. The material wbii has led to the excess in the expenditure under this contract is found i| swamps or muskegs. The nature of the contention of those who uphold th correctness of Mr. McLennan's measurement, is that the effect of excavij ting muskeg material and placing it in the embankment, is to change ti configuration of the particular spot from which it is taken, as well asth CONTRACT No. 25. ai3 general surface in the neighbourhood of the embankment, so much as to make it impossible, after the lapse of several months, to ascertain with any- thing approaching- accuracy the shape of the original surface of the ground, and that without knowing that there are no data from which to judge of the quantities which had been removed. It is the practice of engineers, in settingout works for forming the road- hed of railways, to take levels at the centres and sides of the cvittings and of the embankments, as well as for the lateral and oflf-take drains. These levels, being stated with reference to a given datum, are carefully recorded and preserved for future reference, and they form data from which, at any stage of the work or after its completion, the quantities removed can be calculated with accuracy by the process of running a new set of levels over the same ground. In ordinary cases this proiess holds good, and the results are indisputable We hare ^iam i.t'd witnesses at some length on the subject of this measurement and re-measurement. Mr. Hugh Ryan, one of the contractors, Mr. McLennan before mentioned, Mr. Caddy, who was engineer-in-charge of the works at a later date, and Mr. Schreiber, the present Chief Engineer, have given evidence. Mr. Caddy took charge when trains were running as far west as the 1 13th mile. He said that the construction of this contract was through a country " difficult to get into shape ;" that there w^as a good deal of muskeg which was uneven, and sank and settled a good deal both before and alter roils were laid on it. Mr. Hugh Ryan go 'e j.t* h. evidonco in support of his contention that Mr. McLennan's measurem-i :, was correct, and that a subsequent one could not possibly be correct. He e t iently expected that we would pass upoa his claim against the Gov inment concerning it, but was informed that we had no intention of so doing. Mr McLennan said that in forming the road-ln'd through the muskeg, the material taken out T the borrow pits or side ditches, was principally of a wet nature, and ^ J i*. times light When placed in the embankment, the embankment got coii^^i'essod wi'hin itself and subsided on the original surface of the soil, and he mentioned these as main reasons for the inability of Any pfison going subsequently to make measurements, to determine where ' aii he lines were lost by changes of position, in both lines, side Y'^ San 3U CONTRACTS. 1 '.. ditches and embankments/' He gave a rough estimate of the proportion of the whole excavation which was made in muskeg material, stating it as nearly one-half. In the above report of Mr. Bell he took the measurements of the 31st December, 18 1 8, as those whose accuracy was to be tested by him. Accord- ing to the certificate of that date the whole earth material then moved amounted to about 1,939,000 yards, of which quantity Mr. McLennan's estimate above mentioned would give us the neighbourhood of 900,000 yards, as the quantity of muskeg material which had been moved on this contract up to that date. From the opinions of all the engineers who have given evidejioeon the matter, this material becomes compressed in the embankment tO a propor- tion varying between 40 and 60 per cent, of the space which it occupied in its natural position. Assuming 50 per cent >■ he proportion for the present purpose, the embankments made of this >terial would show a cubic measurement of 450,000 yards less than the spaces from which the material was taken would show, if their outlines remained undisturbed. Tile ( outention of Mr. McLennan and of those who support his measure- ment is that, in fact, the outlines do not remain undisturbed, but, on the contrary, that as soon as a portion of the material is removed that which originally surrounded it moves gradually in the direction of filling up the space left by the removal, and that though the opening is not always en- tirely closed, it is invariably lessened to a considerable extent. Evidence has been given which shows that besides this filling-up in the immediate locality of the excavation, the drainage effected in the neighbourhood of the railway embankment, and the consequent depression caused by the weight of the erabankment, has the effect of lowering the general surface of the surrounding country, sometimes to a distance of hundreds of yards. This makes the material all through that neighbourhood next the surface more compact than it was before, and so lessens the depth of any ditch or other place from vhich the material had been removed It is obvious that even if the fact were established beyond question that 450,000 yards of material had been used beyond that which was expected at the time of the original bill of works, that fact would not of itself touch the difficulty of testing at any subsequent period the accuracy of the first measurement. It only bears upon it, because the same character of the material which male it necessary to increase the quantity excavated so as to supply permanently any given cubic contents iu the embankment, would make it unlikely that COXTRACT No. 26. 3:y the sides or limits of the excavation would remain firm afterwards. In fact, in the immediate locality of the excavation the movement and com- pression of the surrounding material becomes certain. How far that com- pression would affect the cubic measurement of the spaces left after the excavation, is not shown by the effect which compression has had upon i material placed in the embankment. Therefore, no figures which have been placed before us enable us to calculate the extent to which the exist- ing state of the locality would, at any given time after the work was done, I show what had taken place before the first measurement Mr. Schreiber testified, in effect, that these conflicting measurements, when first brought to his notice, were startling to him, and he thought there was something wrong about those taken by Mr. McLennan ; but directly he saw the ground he entirely changed his opinion. He then had not the slightest doubt that the ground, as he saw it, was totally difl'erent Iroiii its condition when originally measured ; that it is quite consistent with the correctness of the subsequent measurements that the previous ones should also be correct under the peculiar circumstances of the case. Those circumstan-*.es were the nature of the soil and of the country through which the line ran ; thatwhen a ditch was excavated and the malerial placed ill the middle of the bank, within a short period afterwards the sides of the ditches would close towards one anotht"r and the bottom would rise up, and so prevent the original depth being visible. In one particular case, within a week he measured a ditch in this muskeg. The day the man dug it, it was exactly 8 feet wide ; one week afterwards it was 7 feet ti inches I wide. The depth of it had also changed. We have ourselves, in passing over a portion of the railway lovnied of laud upon material similar to this, observed the effect produced upon the muskeg by drainage and by the weight of the roadway. The sid(^ ditches were evidently changed in form, their bottoms and sides rounded and distorted from the lines by which they were originally cut, and in that way Imuch reduced in size. The construction under this contract alibrds the most striking example |of the loss occasioned by the presence of muskeg, and the omisfsion of providing for its removal at a price separate from that of earth excavation. We have hereinbefore (page 79) reported our views upon the omission of the Engineering Department, to make itself aware of the existence of this Imaterial in a country where it was so frequent as to become a prominent ''' ' . ■ " ■ ^ : . *■ • •' * * 1 1 1 f ,1 1 , i ! 310 CONTRACTS. feature in the construction of the whole road-bed, and upon the second omission which was a consequence of the first — namely, not inviting the tenderers to state separately the prices at which they would excavate this and ordinary earth. Mr. Rowan, in his evidence concerning another section on which mus- keg is prevalent, gave that fact as one of the main reasons why the cost of railway there had largely exceeded the original estimates, and Mr. Fleming, speaking of this section 25, and explaining that it took from two to two and a half yards of this material to form one yard of solid material in the em- bankmontt, testified that in this case the whole discrepancy betw^een the original estimates and the quantities returned and paid for, arose in that way. Mr. Hill's memorandum, attached to Mr. Bell's report above mentioned, alludes to instances in which packing upon the sides of excavations had been resorted to. Inasmuch as this would not necessarily be noticed by the en:^ineers upon the spot, we did not understand that it reflected in any way upon the conduct of the Grovernment officials, and having been led to understand that the case mentioned (in a borrow pit at Upsala) was not one of much amount, and was, in fact, concerning work done by the sub- contractor and certified to by the Government engineer, we did not think it necessary to take further testimony concerning it, particularly as we had no intention ol deciding finally upon the amount of the contractor's claim concerning his work. After considering the reports by Mr. Bell and his assistants, and the evidence givdi before us by different witnesses, under oath, we were not inclined to impugn the accuracy or integrity of Mr. McLennan's conduct concerning the first measurement, mainly because in such a case as this is shown to be, there is, in our opinion, at a date several months after the first measurements, no tangible means of arriving at a correct measure- ment of the quantities originally removed. At the date of our commission the contractors were still progressing with their ivork, and the dispute between them and the Government con- cerning this matter had not been settled, in fact they had not been informed of the result of the re-measurement by Mr. Bell. Since taking the evidence above alluded to, a document has reached us from Mr. Bell, in which he goes into the particulars of the re-measurement by him, and his conclusions upon it, and his reasons for believing that hw CONTRACT No. 25. IT hich mu8- the cost of . Fleming, two and n the em- tween the se in that aentioned, ations had Lced by the ted in any een led to a) was not f the sub- not think as we had tor's claim ts, and the e were not l's conduct B as this is LS after the measure- ^ is the correct measurement, very much more fully than he states them in his formal report to the Government above mentioned. lie was in Ottawa during a portion of the time covered by our sittings, and after we were aware that his evidence would be desirable concerning this measurement. Owing, however, to the absence for some weeks of Mr. Miall, one of the Commissioners, immediately after the death of his father, and we being of opinion that in the absence of any one of us the others could not properly administer an oath to a witness, we deferred calling Mr. Bell. Before Mr. 'i: I'l' • .ouurn, Mr. Bell left Canada on professional service in a distant territory of the United States, where he has since resided. He was led to understand, from conversations with some of us before he left, as well as by letters afterwards, that we desired to be fully informed concerning the matters within his knowledge, and he has transmitted the writing above referred to, no doubt in furtherance ot what he believed to be our wishes. Inasmuch, however, as it is not accompanied by any formal affidavit corrob- orating its contents, and has been framed without meeting questions which hive occurred to us as being proper to be answered, in order to explain fully what is within his knowledge, we have not felt at liberty to base upon his statement any finding of facts ; and inasmuch as we do not propose to offer any opinion upon the amount due to the contractors con- cerning the work in this, or in any case, we have not thought it necessary to ask Mr. Bell to come to Ottawa to give evidence. We think it proper, nevertheless, to print his last communication in full amongst the exhibits, and it appears in the appendix. Up to the 30th June, 1880, the following sums had been paid on this contract : — 30th June, 1877 $835,800 « 1878 687,600 »^ 1879 241,300 »«^ 1880 81,400 •1 . Total $1,846,100 1 Contract No. 26. Engine House. By this contract, dated 17th July, 1876, James Isbester covenanted to famish a ten-stall engine house at Fort William according to the specifica- Sli'! CONTKACTS. h -i I r » tions reliMT<'cl to in the contract, the same to be completed by the 1st cf' August, 1«77, for the price of $30,989. The v ork was let by public competition. Adrertisements issued bv the Department gave notice that tenders would be received up to the 22nd May, 1876, and that specifications and other information could be had on application. On the day named for the final receipt the tenders were openedl in the presence of the Chief Engineer and two of his assistants, Mr. Marcus Smith and Mr. Rowan. They showed five offers, varying between $30,981i| and 38,900. The lowest was made by Mr. James Isbester, and this contract| is based upon it. Mr. Fl»'ming, in reporting upon the tenders, stated that Mr. Isbesterl had already erected an engine house on precisely the same plan for thel Intercolonial Railway, and he recommended placing this contract in his| hands. The contract has been duly fulfilled, and the property accepted audi used by the Government. There were some extras paid upon it, the wholel disbursement being as follows : — To 30th June, 1877 ^16,600 1878 18,831 total ^35,481 Contract No. 27. Transportation of Rails. There was no formal document containing the agreement in this casej The substance of it is set out in a letter from the Department dated Ma 16th, 1876. This contract was the result of public competition. An advertisemeni dated 19th April, 1876, invited proposals for the transport of 6,000 tons ol steel rails and fastenings from Montreal, Lachine or Kingston, as thi Grovernment might require, to Fort William, Lake Superior, and a furthei quantity, not exceeding 5,000 tons, to Duluth Noon on the 10th Ma was named as the last time for receiving tenders. On the 11th 1876, ten tenders, all that had been received, were opened in the presenci of the Deputy Minister and the Secretary of the Department. The lowesj was that made by G. E. Jaques & Co., on behalf of the Merchants' CONTKACT No. 27. 'A\9 y the Ist cfj I issuod by to the 22n(l| be had onl svere opeiiedl Mr. Marcus I reen $30,9811 this contract I Mr. Isbesterl plan for thel .tract in hisi ccepted andl t, the whole| ,600 831 481 in this case, t dated May vertisement 6,000 tons ston, as thi md a furthei 10th Ma; 11th ^ the presenci The lowesi ihants' Lal^' and "River Steamship Company, at the price named in the lottei before mentioned. The lowest offer above mentioned was accepted by the follow- ing letter : — «' Ottawa, 16th May, 1876. "Gentlbmbx,— Referring to your tender of the 8th inst., on behalf of the Merchants' Lake «nd River Steamship Line, for the transport, during the season of navigation of 1876, of about (10,000) ten thousand tons (of the weight of 2,240 pounds per ton) of steel rails and acces- BOi'ies from Montreal, Laciuine and Kingston to Fort William and Diduth, Lake Superior, I am directed to inform you that it is accepted, the rates to bo paid being as follows, viz. :_ Per ton. From Montreal Harbour wharves to Duluth or Fort William, at the op- tion of tlie Government $4 50 From Tjachine to Duluth or Fort William 4 4 50 From Kingston to Fort William 2 75 From Kingston to Duluth 3 25 these rates to cover all costs of handling, piling, insurance, wharfage dues and other charges if any, at all points . " In the event of the Government requiring to have more than 10,000 tons of rails can-icd to Duluth and Fort William, it is understood that you will be prepared to transport tn those ports, at the above mentioned rates, any quantity of such rails up to 20,(X)0 tons, at thd option of the Government. . ' , " You will please acknowledge the receipt of this letter and state whether you accept all it* conditions. "F. BRAUN. " Secretary. "To Messrs. G. E. Jaques & Co., " General Agents of the Merchants' Lake and River Steamship Line. " Montreal" Messrs. G-. E. Jaques & Co., on behalf of the contractors, accepted the terms above mentioned. The contract was duly fulfilled, and the following amount paid on. it:— To 30th June, 1877 $89,060 Contract No. 28. , <. Transportation of Rails. There was no formal contract in this case. The agreement was con- tained in correspondence, and was without competition. As described in onr report upon contract No. 18, an offer, made by Mr. N. "W. Kittson, as Manager of the Red River Transportation Company, and dated 21st April, 1875, was accepted for the transportation of material con.- ■»fi 320 CONTRACTS. i i s ' pliili! ^■i nected with the Railway from Duluth to "Winnipeg and to other points, as mentioned in that report, at the rate of !|15, American currency, per ton of 2,000 i)ouud8. In that offer he named certain conditions as <'ontrolling the liability to deliver at the point of crossing of the Railway, north of Stone Fort. During that year, about half of the quantity had been carried undor that agreement. The Chief Engineer, on the 13th May, 1876, reported to the Secretary of the Department, that 5,118 tons had been landed at Duluth the previous year, of which 2,558 had been delivered on the banks of the Red River, about eight miles from Winnipeg, and that the remainder, 2,560 tons, should be moved that spring of 1876 ; and he also suggested that arrange- ments should be made at once to take forward to Selkirk a locomotive and some flat cars, remarking that that could only be done while the water in Red River was high, and that as the river was in that condition for only a few weeks no time should be lost. The manager of the Red River Trans- portation Company, had, in a letter, anticipated this recommendation by offering, upon the llHh April, 1876, to the Minister, to transport railway material at rates for each article named in his letter. These rates were given for rails, chairs, joints and spikes at seventy- five cents per 100 pounds in American currency. Rates were also named for locomotives, passenger and baggage cars and box and fiat cars, and he added conditions concerning the depth of water on the rapids and shoals of Red River. This offer was accepted by a letter om the Secretary of the Department naming the rates for transportation applied to each of the articles mentioned in Mr. Kittson's letter, except rails. That item was omitted. Although the terms of Mr. Kittson's offer of 1876 differed from that which was accepted in 1875, in respect to the depth of water in Red River, which would control his liability to perform the transportation, the work which was really done after his offer of May, 1876, has been always treated as if it had been performed under the contract of 1875 ; the price per ton of rails being the same in both instances, and nothing but rails and their j accessories having been carried under their contract. In Mr. Fleming's special report of 1877, he states that no work wasi performed under this contract No. 28 up to that date. The transaction,! therefore, as carried out, has been treated by us under the head of contractj No. 18. as agen [same ti I^olts an I as the p The Mersey ' sending, 20,000 contract |to be dej 21 CONTHACT No. 29. 321 ■)oiuts, as ►or ton of oiling the of Stone led undor Secretary e previous Led River, ,560 tons, it arrange- naotive and e water in for only a iver Trans- udation by art railway rates were : 100 pounds passenger conrerning lis ofler was \cr the rates ned in Mr. from that lied River, I , the work! ^rays treated )rice per ton I IS and their io work was| I transaction, of contract! Contract No. 29. Railway Spikes There is no formal contract in this case ; the agroeraont being contained in a tender, and in the acceptance of it, as hereinafter mentioned. An a'Vertisement, dated 7th July, 1876, asked lor sealed tenders up to noon of the 21th of that month for the supply of from 100 to oOO tons of railway spikes, specifications and other information being offered to appli- cants. On the 25th July, the tenders which had been received in due time, were opened in presence of the Deputy Minister and the Secretary of the Department. They were five in number, ranging from $57 per ton upwards. The lowest was made by Messrs. Cooper, Fairman & Co. Their offer at |67 per [ton of 2,240 lbs. was formally accepted on the 28th July, 1876, without giving them any undue advantage. The agreement has been fulfilled, and the following amount paid on account of it : — 30th June, 1877 !$8,532.90. Contract No. 30. Bolls and Nuts. There was no formal contract in this case, the agreement being contained ill correspondence as hereinafter mentioned. At the competition for rails and accessories, in the fall of 1874, the , Mersey Steel & Iron Co. had tendered for 10,000 tons of rails and for bolts and nuts to be delivered at Montreal, naming s^lOl as the price per ton for bolts and nuts. This tender was signed by Messrs. Cooper, Fairman & Co. as agents for the said tenderers. Messrs. Cooper, Fairman & Co. had, at the same time, tendered in their own name for 10,000 tons of rails, and fr^i- bolts and nuts to be delivered at Duluth or Thunder Bay, and naming $10/ [as the price per ton for such bolts and nuts. The Department treated these two offers as made on behalf of the [Mersey Co., and notified Messrs, Cooper, Fairman & Co. of their acceptance, sending, at the same time, contracts to be executed by the Mersey Co. for [20,000 tons of rails and proportionate quantity of bolts and nuts. This jcontract the Mersey Co. declined to execute except for rails alone, and those Ito be delivered at Montreal. It was closed on that basis. The Department 21 n22 CONTiiACTS. I''^' 1 « '" ' I I 'M . IM- was notifiad, as shown in our roport on contract No. 8, of the refusal of the Merrioy Co. to ct.rry out any offer made by Messrs. Cooper, Fairman & Co., except that for vails alone and their delivery at Montreal. Mr. Fairman testified that he had not been authorized by the Mersey Co. to include in their tender an offer for bolts and nuts. The notice to the Department that the Mersey Co. declined to carry out the offer for bolts and nuts, was conveyed in the following letter : — •• MoNTBKAt,, 2nd March, 1875. "Dear Sib, — In the contract for aleel rails, &c., with the Mersey Steel and Iron C!oinpany, they make strong objections against having bolts and nuts included in their contract, and they were accordingly left out. The price was to have been ($101) one hundred and o-:s dollara per gross ton, delivered in bond at Montreal. "We, as agents for Messrs Ilobb & Co., of the Toronto Bolt and Nut Works, beg to supply the Laird bolts and nuts as per sample bolt, to be furnished by the Inspector, Mr. C. P. Sandb»rg, of London, the price to be ($101) one hundred and one dollars per grosj ton, duty paid, delivered in Montreal or Toronto. '' We ai'e, dear Sir, " Yours, &c., "COOPER, FAIRMAN & Co., " Agents for Ronn & Go. " T'ae Minister of Public Works, "Ottawa." The original offer in November, 1874, was treated as made for tk Mersey Co., the principals of Messrs. Cooper, Fairman & Co. On those principals decliu inn: it, this new offer was made plainly on behalf of other persons, and there is no reason, apparent from the evidence, why the con- tract should be given to the parties named by Messrs. Cooper, Fairman & Co., without learning irhether others would supply the articles at a lower price. Other proposals for bolts and nuts at prices less than $101 had been made to the Department before this letter. Some were in connection wi*h tenders for rails, some not. Messrs. Darling & Co., had, on the 16th November, 1874, opened a correspondence with the Department, concerning bolts and nuts, irrtjspec- tive of rails, which is set out below : — , ^ ■ " 30, St. SuLPica Steeht, "MoNVBGAL, 16th November, 1874. *' Sir. — In reference to the tenders for rails and fastenings asked for in your circular of the 3rd ult., we regret to say, as regards rails, a reply has not reached uB| although we have reason to suppose has been despatched, and we look for a communication by telegraph on the aubject from hour to hour. CONTRACT No. :10. 323 sal of the an & Co., le MerBey ► carry out , 1875. on Compau;, 3ontract, and dred and 0'!& VorkB, beg to lector, Mr. C. per gross ton, Co., OBB & Co. lade for the On those talf of other hy the con- Fairman & at a lower a $101 had connection ^, opened a ts, irrespec- |r, 1874. iir circular of Lgh we have Bgrapb on tb« " As to Qsb-boU ^iid nuts, we are prepared to supply tbem, delivered on tbe wharf here, It £19 sterling per ton of 2,240 pounds, no charge for packa;jeH, with the underBtanding thai «e pay no duty upon the goods, and that tbe Oovernmont assume hII the risk that cannot be coverei by the ordinary policy of insurance. Payment to be made in accordance with terms mentioned in your circular. " Immediutely on receipt of reply regarding rails, we shall take the liberty of communi- cating with you on the subject " We are yours faithfully, "WM. DARLING Sc CO '■ F. BnxuN, Esq , "Secretary Public Works Department, Ottawa." " In exiilanation of the risk above referred to, of which we desire to be held free, we may uy, that under the ordinary policy of insurance, damage by sea-water, where tbe ship is not burnt nor stranded. Is at the owner's risk. Such risk may be insured against by a policy cover- ing 'all risks,' that is not usual, and would involve an a Iditional expense of about 2 per cent. If it be desired to have the goods insured ' all risks,' we would undertake to do so, charging the difference in the premium, as compared with the premium, free of particular average. I This would make the price about £l9 7s. Gd. per ton. " "MOMTBBAL TkLEORAPU CoMPA!^. S. Waddelf, -k Co., Secretary. "Mo.'treal." In the November competition the following offers had been made for] bolts and nuts in connection with tenders for rails : — Guest&Co $93 29 Rice, Lewis .fe Son 99 00 T. F. Allis 94 5C James "Watson & Co 92 47 A. a. Godoffroy , 82 37 Wm. Darling &^ Co 92 47 The Deputy Minister testified that after the notice that the Mersey Coi had excluded the bolts and nuts from their contract, no effort was made b] the Department to ascertain if these articles could be obtained at prio( lower than proposed by Messrs. Cooper, Fairman & Co. The offer of thaj firm wais accepted by the following telegram : — "Ottawa, 5th March, Wo. " Tehyram lo Cooper, Fairman 'v ton is accepted. "F. BKAUN, " Secretary.'' we Depai Minis •-•riiig the ai CONTRACT No. 30. 32ft tied by express. been made fori th Mairli, 187 J. Its and nuta at 0\ On the cover attached to the offer of Messrs. Cooper, Fairman & Co., are these words : — " Recommended, S. R," and " Approved March 5th, 1875, T. T." The latter initials being those of the Deputy Minister, and the former those of the Chief Encrineer. Mr. Fleming stated, in evidence, that he knew nothing of the transac- tiou; thai he had written the word "recommended"' above mentioned; [ that it was likely he did not give it much attention ; that this paper was disposed of amongst hundreds of others referred to him in that manner in the usual routine. He added, however, that he probably looked into it at [the time and thought it a proper thing to do, though from the appearance i of the paper he would say th^t his attention was not specially called to the fact that there was any intention of entering into a contract. Mr. Reynolds, who lives in London, England, and is acquainted with I the fluctuations of the market of iron materials connected with railways, testified that the tendency of that market was downwards in the fall of 1874 ar.d beginning of 18*75, falling away gradually and steadily ; that th« fluctuations would apply to bolts and nuts as well as to railg, so that in March, 1875, the market for thera would be weaker, about £1 sterling less [than in November previous. Mr. Fairman, speaking of th« tendency of the market from November, 11874, forwards, testified that he thought the market dropped after three I months or so. The evidence, therefore, shows that in November, 1874, several offers [for the supply of bolts and nuts were made lower than $101, and that per- sons acquainted with the market believed that from that time forward prices did not rise, but if thore were material fluctuations they were down- Iward.s. Inasmuch as no competition was, invited we have no posi> ive jknow lodge of the price at which the Department could have procur J the [articles covered by this contract at the time it was made. L'pon the whole the evidence shows that the offer was received by the IDepartment and passed through the hands of Mr. Fleming to the Deputy [Minister, who decided to accept it, without either of these officials consid- cfiiig it necessary to investigate the merits of the offer, or to learn whether [the articles could be procured at a lower rate. i. : >.. 326 CONTRACTS. i^ We think that there was at the time strong reason for believing that the bolts and nuts contracted for in this case could have been obtained at a cost less than that which was promised, without competition, to Messrs. Cooper, Fairman & Go. The contract has been fulfilled, and the sum of $16,160 paid upon it before the 30th June, 1876. Contract No. 31. . Bolts and Nuts. There is no formal contract in this case ; the agreement is contained iu | the correspondence hereinafter set out, and was arrived at without compe- tition. On the 21st January, 18*75, the Department of Public "Works, by a| formal letter from the Secretary, accepted the ofier of Messrs. Cooper, Fair- man & Co. for 5,000 tons of rails to be delivered at Liverpool, and whichj were intended by the Government to be shipped thence to Vancouverl Island. No arrangement had been made concerning the supply of boltsi and nuts for these rails, up to 2nd March, 1875, when the following pro] posal was made : — " Montreal, 2ad March, 1875. "Dear Sir, — We beg to quote for bolts and nuts for the 5,000 tons rails for Vancouver r;i >r Island, to be supplied by us to Saadberg's section, at (£19 10s.) nineteen pounds ten shillingi per gross ton, f. o. b., Liverpool, the said bolts to stand Sandberg's test, and to be paid for bj the Financial Agents of the Canadian Government in London, upon presentation of invoice bills of lading and inHpection certificate ; deliveries to be made in March, April and May of thia year. " We are, dear Sir, " Yours truly, « THE PATENT BOLT AND NUT CO., « Per Faiemak & Co., '^AgenU. " F. Braun, Esq , " Secretary Department of Public Works, "Ottawa." This passed through the same process as the offer of the same datej made by the same firm, on which contract No. 30 was based. It was referrei on 4th March to the Chief Engineer, who endorsed it " Recommended, i Fleming, 4th March," after which the Deputy Minister endorsed •• Approved, 6th March, 1875. T. T.," and it was accepted accordingly bJ the following telegram : — CONTRACT No. 31. 327 " Ottawa, 5th March, 1875. •' Telegram to Cooper, Fairman A- Co., Montreal. " Your tender for bolts and nuts for rails to Vancouver Island at jC19 lOs. sterling, (nineteen pounds ten shillings) per ton, is accepted. " F. BRAUN, , ** Secretary." This was equal to $94.90 at Liverpool, or $99.76 at Montreal. Neither Mr. Fleming nor Mr. Trudeau gives any reason for the transac- tion or explains why no competition was invited. In the case of contract No. 30, Messrs Cooper, Fairman & Co , in making their offer, called attention to the fact that $101 had been promised to the Mersey Co. This had been done in <3onnection with a tender sent in for that company by Messrs. Cooper, Fair- man & Co. as their agents ; and that circumstance may have been relied upon as sufficient to induce the Department to waive the test of competi- tion, though the refusal of the Mersey Co. to conclude any bargain except concerning their own manufactures, namely, rails, had freed the Department from any liability to these Montreal agents. In this case there was no such circumstance, nor any other which could be a reason for entertaining the oflPer otherwii^e than on its own merits. As pointed out in our report in contract No. 30, there was on th« 6ih March, 1875, the date of accepting this offer, recorded in the Depart- I ment the following facts : Messrs Darling & Co. had offered, in November, 118'74, irrespective of rails, to deliver bolts and nuts at Montre at <£19 8tg==$92.34 per ton. Messrs. S. "Waddell & Co. had endeavoured lo make oflfers irrespective of rails, and were informed on 21st December, 1874; ["That the quantity required had already been contracted for." Offers had been made in the tenders for rails to deliver bolts and nuts [at Montreal, as follows : — Guest & Co $93 29 Rice, Lewis & Sons 99 00 T. V. Allis 94 50 Jas. Watson & Co 9147 A. G-. Goodefroy 82 8t Wm. Darling & Son 92 47 The price of transportation from England to Montreal was shown to be 1 stg. or $4.86 per ton, thus leaving the price at Liverpool $4.86 lower lan the respective prices above named for delivery at Montreal. 328 CONTRACTS. ' : ■ ■ • There had been, in fact, no rise in the market between November, 1814, and the acceptance of this offer. The price at which bolts and nuts were to be had does not seem to have been considered. The evidence leads us to find that at the time of accepting this offer, facts were recorded in the Department which showed good reasons for believing that the articles covered by this contract could then have been procured at a lower price than was here promised. As there is, however, no such positive means of information as would be afforded had there been a competition, we can only look to the evidence of the general state of the market in March, 1876, as compared with that in November, 1874. The testimony of Mr. Reynolds and Mr. Fairman, referred to in our report on contract No. 30, leads us to believe that at the time of accepting the offer in this case, the articles referred to could have been purchased at Liverpool at a price less than that paid without competition under this contract. The contract was fulfilled. The amount paid on it to the 30th June, 1876, $6,800.69. CoNTRAcrr No. 32. Railway Spikes. By this contract, dated 12th May, 1877, James Cooper and Frederick Fairman, under the name of Cooper, Fairman & Co., bound themselves to supply 250 tons of railway spikes, in accordance with specifications attached to the said contract, at the rate of |64.95 per ton of 2,240 lbs. On the 3l8t January, 1877, the Chief Engineer, in a communication to I the Secretary of the Public Works Department, reported that there would be required, on the opening of navigation, at Fort William 76 tons of spikes, and at Selkirk, 175 tons. On the 19th February, 1877, the Department issued an advertisement I asking for tenders for the supply of from 100 to 300 tons of railway spikes up to noon of the 13th March following, and stating that specifications and other information could be had on application. On the 16th March, seven tenders, which had been received in due time, were opened in presence of | the Secretary and Mr. Smellie. A schedule was made at the time of open- ing and it shows that the prices in the offers sent in varied from S54.J') up I to $76 per ton. The lowest was made by Messrs. Cooper, Fairman & Co,| and is the basis of this contract. CONTRACT No. 32. 329 The acceptance of the tender of this firm was nolified to them by the gtcretary of the Department on the 26th March, 1877. A correspondence betw^een Messrs. Cooper, Fairman & Co. and the Department ensued con- cerning the packages in which the spikes were to be forwarded, they desiring to vary the terms of the specifications by using kegs which would contain two hundred weight, instead of those mentioned in the specification, which were to contain no more than one hundred weight. We do not consider it necessary to set out this correspondence. It re- sulted in the spikes being forwarded in the packages as originally described with thf exception of a small proportion which were packed in kegs of the larger size, under the approval of Mr. Smellie, who inspected them on behalf of the Engineering Department. The contract, made without giving any undue advantage to the con- tractors, was fulfilled, and the following sums were paid on it : — • To 30th June, 1877 $13,645 50 " 1878 90 00 Total $13,737 50 - Contract No. 32a. Ensnneer^s House. By this contract, dated the 10th January, 1877, Edward F. Leinay and William Blair agreed to erect and finish, according to specifications, one round-house and platform, at each of the following pin"""- : — Buda, • * Nordland, ' Linkoping, Port Savanne, Upsala, Carlstadt, . • Bridge River and English River, at the respective times mentioned in the said agreement, receiving the prices mentioned therein, and which varied according as the building should be of logs or of balloon frames, and also varying in price at the different places. This contract, for the building of eight houses, was entered into by Mr. Hazlewood, Resident Engineer, at Prince Arthur's Landing, acting 330 CONTRACTS. I' 1 II on behalf of the Government. It was not altogether fulfilled, haying been withdrawn on the recommendation of Mr. Marcus Smith, after four houses had been built, and after some materials had been collected for others. In addition to the letter of the 13th May, 18*75, from the Chief Engi^ neer to Mr. Hazlewood, of which an extract is given in our report upon contract No. 24, he wrote the following on 6th May, 1875 : — " Canadian Paoific Railway, " Opfick of th« Engingbr-in-Ohiif, « Ottawa, May 8th, 1876. " My Dbar Sir, — With regard to the erection of engineers' houses, on the line of the Paoifio Railway, the Depattment authorizes the erection of the structures required under i contract which the Engineer in charge will make, taking care to have the agreement on the most favourable terms possible to the Government, and to forward a copy of the contract in each case to the head office. " Yours truly, « SANDFORD FLEMING. " Samukl Hazlewood, Esq., "Ottawa." On the 15th November, 1876, Mr. Marcus Smith, acting Engineer-in- Chief, wrote the following letter to Mr. Hazlewood : — " Ottawa, 15th November, 1875. *' Dear Sir, — Your statement of the 18th October, in regard to payments made by Mr. Bethune for trifling works that would be chargeable under the head of 'construction,' hu been laid before the Department, and I enclose herewith a copy of the reply from the Secre- tary (F. Braun, Esq.) '•You will understand that the Minister has strong objections to any work being done, except by contract, for which tenders have been invited by advertisements in the newspapers. And I would suggest, for your consideration, whether there is enough slashing now to be done to make it advisable to call for tenders. For other trifling jobs, you will, of course, iise the the discretionary power given you by the Secretary's letter above referred to, " Yours truly, "MARCUS SMITH. *' S. Hazlewood, Esq , "Prince Arthur's Landing." On the 28th November, 1876, Mr. Hazlewood issued advertisements at Prince Arthur's Landing, asking for tenders up to noon of the 8th January, 1877, for the erection of eight engineers' houses, including wood-sheds, plat- forms, &c., along the line of railway at the following points :-~ Buda, 39^ miles west of town plot. Nordland, 50 1 do Linkoping, 60 do CONTBACT No. 32a. 331 Port Savanne, tl miles -west of town plot. Upsala, 80J do Carlstadt, 89, do Bridge River, 98J do English River, 112 do And stating that plans and other information could be obtained at his office. On December 18th, 1876, Mr. A. Bethume, who was paymaster at Prince Arthur's Landing, forwarded a copy of this advertisement to the Secretary of the Department, and asked to be instructed as to whether the houses were to be paid for through him. This was brought to the notice of the acting Engineer-in-Chief, who wrote the following to Mr. Hazlewood letter: — "Ottawa, 28th December, 1876. " Dbab Sir, — I have received by mail a printed hand-bill calling for tenders on Monday, January 8th, 1877, for the erection of eight engineers' houBes, wood-aheds, platforms, \.c,, on the line of the Canadian Pacific Railway, between Fort William and English River, purporting to be isHued by your authority as District Engineer, and dated November 28 tb, 1876. " I am not informed by what authority you have called for these tenders, and the D<-i uty Minister of Public Work? requests me to call your attention to the letter of the Secretary, dated November 1 4th, 1876. A copy of which was enclosed for you in my lettei dated No- vember 15th, 1876. The Secretary therein distinctly states that:— 'It is desirable that works of construction in connection with the railway be approved by the Depaitmeni before expenditure is incurred.' " In compliance with these instructions, I have to request that you will forward >>y mail to this office all the tenders you may receive on or before the 8th January, 1877, for the con- struction of the works mentioned in the hand-bili, together with copies of the plans, sections^ specifications, &c., relating to the same, to be submitted to the Department before any con- tracts are made. " Yours truly, " MARCUS SMITH. - -' - ^^Actiny Enyineer in Chief , ^' Sam. Hazlewood, Esq., " Prince Arthur's District." The letter of Mr. Bethune, above alluded to, was referred to Mr. Flem- ing, the Chief Engineer, who reported it as follows : — "Canadian Pacific RAiLWi!.Y, " OrricB or tub BNoiNBkR-iN-CRiBr, «' Ottawa, February lOtli, 1877. " Sis,— In reply to your letter dated the 5th inst., enclosing a communication from Mr. Angus Bethune of date 18th, December, relative to construction of houses for engineers along (he line r f the Canadian Pacific Railway. S32 CONTRACTS. ., 'ii^ K " I beg to say that the DiBtricl Enginoer, Mr. Uazlewood, has been directed not to enter into any engagements of that kind without first regularly g<>tting the approval of the Depart- ment, and that the tenders to be received by Mr Hazlowood on the 8th January, are directed to be forwarded by mail to this office in the first place, when, if considered advisable, they will be brought before the Department. " I am, etc., eto., « SANDFORD FLEMINa. <* F. Braun, Esq., " Secretary Public Works." In the meantime Mr. Hazlewood had received the tenders at Prince Arthur's Landing on the day named in the advertisement, and had assumed the responsibility of entering into the contract above-mentioned, which was based upon the lowest of these tenders. There were nine oiFers in which the aggregate of the prices for the eight houses varied from $23,409 to $29,920. In the following June Mr. Marcus JSmitli went over the line on which these houses were being erected and he wrote the following letter to Mr. Smellie, of the Engineering Depart- ment at Ottawa : — "Princr ARxnuR'a Landing, Jnne 11th, 1877. " Mt Dear Sib, — Herewith I enclose a certificate in duplicate of Mr. Hazlewood, th« engineer in chnrije of this district for $7106.75 for work done in the erection of four engineers' houses on the line of the Caijadian Tacifio Railway, under the contract with Messrs. Letuay & Blftir, datod the 10th day of January, 1877, of which yon will find a copy in ray desk in the pigeon hole, Leaded ' Prince Arthur District,' or it mny be amongst Mr Fleming's naperg. Also, a bill of extras for piling, foundation aud other work not comprised in the contract, amounting to $616.50. Mr. Hazlewood let this contract on the authority of a letter from Mr. Flemini?, dat>»d May 6tb, 1n75, a copy of which I herewith enclose with a list of the tenders he received in response to on advf rtisement by ban 1 bills or po.'ters, a copy ot which you will also fipd in mvde.sk. Mr. Hazlewood states that the houses and shan ties bai previously been er<'cted on the same authority, but on the 1 5th November, 1876, I wrote to Mr. Hazle- woo 1 f>no!osing him a copy of the letter of the Secretary, Mr. Braun, to Mr. Bethune, dated Nov. 14, 1876, a copy of which is ht^rewith enclosed. In December, I re<'«'ivt'd a copy of the hanil hillg calling for tenders, and immedii)tion to the Secretary's letterof the 14th of November, and requested him >-H would not be required for years as station houses, for in the rough country betweeu h-tv.-tnii .' and Bat Portage there is very little laud fit for settlement. *' 1 think it would be better to confine the erection of houses during the coDstruotiou of the railway to a few central points convenient for transportation of supplies, &c„ such as Savanne, English Eiver, Bat Portage, «&c.,and construct huts for the engineers where required, these should cot cost more than $500 to $700 at each station, and will be of some use as stables or storehouses after the line is completed. I think this cost would be less (han that of main- taining and watching houses after being vacated by the engineers and altering them to be suitable as station houses. If the department approves thi-t view of the case, then I think the erection of the last four houses in the west of Savanne should be stopped at present bnd the contractors paid for material delivered. Except probably that at English River which '>vill be a main station and an engine house will be required there. Please bring this subject b'^fore the Minister and instruct Mr. Hazlewood. "I am. Sir, " Yours truly, "MARCUS SMITH. « W. B. Smhllie, Esq." In consequence of this recommendation the work under this contract was not further proceeded with. Mr. Marcus Smith was charged with the final settlement with the contractors, in which a considerable amount was paid beyond the price of the four houses which had been erected. The items were as follows ; — 134 CONTRACTS. . 1 IM iiHn. r < ! • Cost of four houses and platforms $11,299 50 Materials burnt at Upsala and Carlstadt 1,893 62 Materials delivered 4,221 54 Provisions and camp equipage i>93 82 Labour upon Upsala station 400 9t Watching fires at Nordland 21 00 Total , $17,780 46 It will be noticed that materials destroyed by fire were paid for. This "was because the fires were the consequence of the operations in the build- ing of the railway. One of the houses which had been erected at Buda, as well as the material above mentioned as having been destroyed, was burnt before the contract was stopped. Upon the evidence we conclude that in making this contract Mr. Ha/lewood exceeded the authority which the Department intended to leave in his hands at that time ; that the directions of the 6th May, 1876, above mentioned, were, to some extent, qualified by Mr. Marcus Smith's letter of the l/^th November, 1876, and were expected to be altogether withdrawn by his letter of 28th December, 1876 ; that the latter having failed to reach Mr. Hazlewood before the date of the contract, and without any fault of his, he was not to blame in assuming that under the circumstances the execution of the contract was still within his jurisdiction. We find that the contractor got no undue advantage in the agreement, and that the Department, at the time of the contract, could not have obtained the work provided for at a cost less than that mentioned in the agreement. The amount paid was, as above mentioned, $17,730.46. Contract No. 83. Railway Construction. By this contract, dated the 21st June, 1878, Timothy Kavanagh, James Murphy and Joseph Upper, covenanted to provide and complete at the times stated therein the excavation, grading, bridging, track-laying, ballast- ing and other work necessary to complete the Pembina Branch between St. Boniface station and the International Boundary, at the respective prices apecifi.ed in the contract for the several classes of work. CONTRACT No. 3L 33& At the time of executing thiz contract, Mr. Kavanagh was not interested in its consequences, having joined as a contractor as a matter of form, and lending his name upon the understanding between him and the other contractors that they should carry it on for their own benefit. The reason for this is hereinafter stated. Under Contract No. 5, Mr. Joseph Whitehead had done earth-work for aroad-bed over most of the distance between St. Boniface and Emerson, leaving openings at the streams. This Contract No. 33, was intended to include the road-bed from a mile south of St. Boniface to the point where Mr. "Whitehead's grading had ended, and " the putting of Mr. "Whitehead's grading over the rest of the line into proper shape " to complete the road, together with all the bridges, culverts, cattle guards, crossings, &<•. On the 7th February, 18t8, the Government issued an advertisement asking for tenders up to noon of the 1st March, following, for the works to be done, naming the distance at 63 miles, and stating that plans, specifica- tions, &c., could be had on application. Fifteen tenders were received in due time, and opened on the 2nd March, 1878, in presence of the Deputy Mini.ster and Mr. Marcus Smith, , engineer. The offers varied from $232,202, made by the above mentioned I Timothy Kavanagh, to $393,885, made by Messrs. Robinson & Robertson. [The tenders included an item of 165,000 ties, which were, however, omitted from the contract in consequence of other arrangements concerning them I having been made by the Grovernment. Mr. Kavanagh's offer for ties was at 27 cents each, equal to $44,550. I His offer for ties being the lowest ; the deduction did not change his rank in the competition. The contract was awarded to him. He made his ten- der intending it to be on behalf of himself and a Mr. Falardoau. The Minister of Public "Works objected to Mr. Falardeau being joined in the arrangement, whereupon Mr. Kavanagh, not being willing to take the con- tract alone, told Mr. Murphy, one of the present contractors, the state of affairs, and mentioned the prices at which he had proposed to do the work. w. Murphy expressed a willingness to take the contract at Mr. Kavanagh's [figures, and Mr. Kavanagh assented. It was then understood that Mr. Kavanagh was to be named in the contract as well as Messrs. Murphy & I Upper, but he had virtually abandoned all interest in it and left the management of it to them. 986 COJi'TRACTS. *, I I it 1 ( i;' 11 ■ j 1 1 1 1 HI • . n- . Messrs. Murphy & Upper had, on their own account, tendered in tho competition above mentioned, their offer being $333,630 for the whole work, or, deducting the item of ties, their offer was |2G2 586, which is $74,934 higher than the price at which they assumed it, in place of Mr. Kavanagh. Before the advertisement in this case, tenders for 165,000 ties had been, on the 4th February, 1878, received at Winnipeg by Mr. Nixon, the pur- veyor (See report on contract No. 36). That quantity was intended to bo used under this contract, and the arrangement made by Mr. Nixon led to the withdrawal of the item of ties from the agreement in this case, as above mentioned. Upon the evidence we find that in obtaining this contract the contrac- tors got no undue advantage, and at the time of awarding it, the work could not have been provided for by the Department at a cost less than that provided by the agreement. The contractors did not i)roceed with the work according to the terms of their agreement, and the G-overnment being dissatisfied with the conduct of it by the contractors, took the work out of their hands. At the date of our commission, several bridges, road-crossings, some ballasting and a portion of the fencing had yet to be done in order to com- plete the work undertaken by Messrs, Kavanagh, Murphy & Upper. This was then being carried on by day's labour under the direction of Mr. Rowan, the District Engineer at Winnipeg. Up to the 30th June, 1880, the following amounts had been paid on it:— 30th .Tune, 1879 , $62,500 30th June, 1880 29,000 Total $91,500 Contract No. 34. Transportation of Rails. The e.x[)enditure under two distinct agreements has been charged iuj tile books of the Department as if there were but one, and that bearing thisj number. The first was a written contract dated 29th May, 1878, by which thel Nortli Wt'sterji Tnnispnrtation Co. covenanted to transport in the manuerj "Sir, [complete for laying luecenary "To , 'wiBporte fctock at F< 22 CONTRACT No. 34. 3)7 i in lh(^ )le work, 3 $74,034 avanagh. had been, , the pur- ded to be on led to 3, as above le contiac- the work s than that ) the terms he conduct sings, some der to com- pper. This iMr. Rowan, ! |en paid on] )00 )00 )00 charged iul [bearing tbisi wbich the Ithe manuei and at the timos therein mentioned, from Kingston to St. lionil'iue, abont 5,000 tons of rails and their accessories, unloading, piling, delivering and insuring the same, and paying all tolls and harbour dues on the route, at |18 per ton ot' 2,240 pounds. The second agreement was contained in a correspondence closed by a letter from Mr. Braun, the Secretary of the Department, to Mr. Henry Beatty, on the 30th September, 1878, to transport 1,000 tons, more or less, from Fort William to Emerson, at $18 per ton, the same price as paid under the first mentioned contract from Kingston to St. Bdnifaco. We report on each of these agreements in the order of dates. Owing to a report of Mr. Marcus Smith, Acting Engineer-in-Chief, dated 15th February, 1878, that it would be necessary to forward to Mani- toba, 4500 tons of rails, the quantity then lying at Kingston, advertisements were issued, dated the 2nd March, 1878, for the transportation of about 5,000 tons Ox rails from Kingston to St. Boniface. On the day named for that purpose, four tenders had been received. They were opened on the day following in presence of Mr. Trudeau, Deputy Minister, and Mr. Braun. The schedule then prepared shows that the tenders varied from $18 to $22.95 per ton. The lowest was made by the North- West Transportation Co., and was accepted by a letter from Mr. Braun to Mr. Sylvester Neelon, the President of the said Company, dated the 15th May, 1878. A formal contract on this basis was closed without any undue advan- tage to the contractor. It has been fulfilled. The amounts paid under it are stated hereinafter, in conjunction with those paid under the subsequent agreement before alluded to. In Mr. Marcus Smith's report of the 15th February, above mentioned, I he stated the probability of 1,500 tons of rails, then at Fort William, being required in 1879 in Manitoba, in addition to the 4,500 tons then at Kings- jton, as follows : — " Office of iiik Ex'-i.NKKU-iN-CniKr, •'Ottawa, 15th February, 1878. " Sir,— In reply to your letter of the 30l.h inst , No, 8629, I beg to state that, in order to jcomplete the track-laying on the Pembina Bianch, and caatract No. 14, and make provision ifor laying a portion on contract No. 15, say twenty miles, during the coming season, it will be |neceasary to forward to Manitoba all the rails now lying at Kingston, said to be 4,500 tons. "To complete the line between Emerion and Keewatin, f),000 tons in all will have to be ransported to Manitoba, but the balance of 1,500 tons, which will have to be taken from the ^tock at Fort WilUaoa, may not be required until the spring of 1879. llowever, to prevent 22 ' t i 838 CONTRACTS. I li i'> •ny chance of the oontraoior being delayed, it ooight, I think, be advisable to remove the 1,500 as far as Duluth, where f hey might remain and be transported by all rail to contract No. 15 when wanted. This precaution will, however, entail a considerable expense for wharfage at Duluth. ** In addition to the above, it will be necessary to transport 12(X) tons of fish-plates and 40 tons of bolts and nuts. " I send you, herewith, form of advertisement for transport from Kingston and l-'ort William to Duluth. " I have the honour to be. Sir, " Your obedient servant, <'M Alices SMITH, " Acting Fmgineer-iniJIiief. *' K. Braun, Esq., '• Secretary, Public Works." Mr. Smith here speaks of a form of advertiseinent for transportation from Kingston and Fort "William to Duluth. It seems not to have been then considered advisable to ask for competition from Fort William. The advertisement appeared in the first instance dated the 21st February, and afterwards in an amended form, dated the 2nd March, omitting in both cases any mention of Fort William. On the 26th September, 1878, Mr. Braun telegraphed Mr. Henry Beatty as follows : — " What price per ton will you charge tor moving say 1,000 tons of rails from Fort William to Emerson ?" Mr. Bejitty answered this the next day from Ottawa as follows : — "Ottawa. 27th September, IS. 8. "DeahSir, — In reply to your telegram of yesterday I beg to say 1 will transport one thousand tons of rails, more or leas, from Fort William to Emercon, Tor eighteen dollars (?18) per ton. This rate includes all charges for loading, unlosding, piling, wharfage harbour duee, storage and insurance. '•This rate may seem out of proportioo to the price you .nre »taying from Kingston, but if you will consider, a f) ecial steamer will have to be aenl to do this woik and tbfit she will return light from Duluth to Fort William, and also that the uftual rates on freight to St. Boni''ace and Emerson are the same, you v\ill readily see that it will not much mere than oover e.vpenses. " Kaspectfully yours, ' '•HENRY BEAITY. «F. Br.AiTN, Esq., " Secretary Department Fulilic Works, " Ottawa." On the 30th September, 1878, this offer was accepted by the followirg letter from the Dopartment : — coxTr.'Af T X(>. :u. 339 remove the 1 to contract expense for plates and 40 ton and Tort eer-in-fyhief. msportatiou ) have been liam. The ebTuary, and ting in both tienry Beatty >m Fort William 0W8 : — mber, 1H.8. 1 transport one en dollars (?1^) e harbour dues, Kingston, but ind thfit Bbe will >n freight to St. juch move than • BKAITY. le following " Ottawa, 30th September, 1878. « Sir, — I am directed to state that the offer contninetl in your letter of the 27th inut, «o transport railroad iron from Foits WiTi^Tn to Eaiersoa at $.s (^i^r'itfen do'Iiirs) per ton, inclusive of load] n/, storage, insui&ncp, &c., is hereby u.^cpted fjr tlic h llo>viii!: (piaiitltips or thereabyut ; 'Jona. 0,800 rails, rqual ],')(«) 12,800 pra. fibh-plates, equal llu Bolts and nuts, equal 11 ''Dplivery will bo made by ilr. K. M-Lannaa, engineer, at Kort William. " I um, Sir, "* Your obedient servant, •' F. BUAUN. ••Hknry Beatty, Esq., " N. W. Transportation C J., "Sarnia, Out." Mr. Trudeau was examined as a witness on this matter. He knew of no reasons, except those stated in Mr. Beatty's letter, why the same price Ishould bp paid for the distance between Fort AVilliam and Emerson as under the contract of the 29th May, for the much loni^c^r distance between JKingston and St. Boniface. lie thoujjht it was probable, but did not know, [hat the points were discussed between Mr. Fleming, the Chief Engineer, iiul Mr. Mackenzie, the Minister. There was no record in the Department, mdhe had no recollection cf the circumstances urged by Mr. Beatty, such the necessity of sending a steamer specially lor this work, its returning- liffht, etc. There were no more c.:tra items, suih as loading, unlonding, lolls, insurance, etc., in this bargain than in the former one, and he said Ihat this agreement was finally made upon the authority ol' Mr. Mac- ;enzie. Mr. Fleming testified that he knew nothing about this contract. Mr. Mackenzie testified that he did not remember any of the circum- |taiicos; that the princip.il pricv- in trunsponini;- rails is ior loading and luloading, the mere matter of a day's sailing not amounting lo much; and sugg sted that ii' $15 was the price to Duluth, the Imlauce. of $3 t ■ Fort illiam would not be very high, but he c mid not say that $15 was thf^ ice between Emerson and DuluMi. Mr. Campbell, who had had an aclive experience in the uiauagement id freighting of vessels for twenty }eirs, thought thee wasu) soaicity of •ssels in September or October, 1878. He gave evidence at tome length tticeruiiig the freight at didereut points on thi Wi'slern lak s. The tenor :2J ii I(1.=f 340 CONTRACTS. 11* 'v of his statement was that the extra labour of loading and nnloading beyond what could be done by a vessel's own men and machinery, would be worth under 20 cents per ton, and that $3 between Fort William and Duluth was, under the circumstances of this last agreement, a very high price. "We have no positive evidence from witnesses on the cost of transport! jn 1878, between Fort William and Emerson, nor between Duluth and! Emerson; neither have we the advantage of knowing what price competition] would have indicated. Messrs. Fuller & Milne had offered to transporti (contract No. 18) at $13.50, American cunency, from Duluth to Winnipeg,! when American currency was subject to a discount of about 13J per cent.;] and these contractors in May, 1878 tendered and contracted at $18, fron Kingston to Winnipeg. We cannot uuderstand, and there is no explanation given, why coniJ petition was not invited. It occurs to us that if Mr. Beatty was willing tq name as low a price as could be done in competition with others he wouli] have done so without coming to Ottawa to answer the Secretary'l telegram. From the evidence concerning this and other contracts on the subjecj of transportation we are led to the conclusion that the work provided for bj this last agreement of September, 1878, could have been secured by tbi Department at a lower price than was paid for it, and that in getting thj price named, the contractors obtained an undue advantage. The contract was fulfilled. The amounts paid upon the two agw ments were, — To 30th June, 1879 $60,600 " 1880 49,800 44 Total $110,400 44 Contract No. 35. Railway Spikes. By this contract, dated the 3rd Juno, 1878, James Cooper and Frcdcricj Fairman, under the name of Cooper, Fairman & Co., bind themselves supply, in accordance with specifications and conditions thereto aniu'xei 480 tons of railway spikes, at the price of $49.75 per ton of 2,240 lbs., toj delivered part at Fort William and part at Duluth. CONTBACT No. 36. 341 . unloading lery, would Villiara and a very high of transport I Duluth and! I competitionl to transportl ;o "Winnipeg, L3J per cent.;] at $18, fron jn, why comj ras willing td ers he would B Secretary! n the subjecj rovided forbj jcured by thj n getting tli| le two agw lo 44 44 On the 21st February, 1878, the Department issued an advertisement [inviting tenders for railway spikes up to noon of the 19th March following. I The specifications stated tho quantity to be 480 tons. On the 22nd March, 1878, sixteen tenders which had been received in Idue time were opened in the presence of Mr.Trudeau, the Deputy Minister, |ind Mr. Braun, the Secretary of the Department. The offers varied from 149.75 to $63.45. The lowest tender was made by Messrs. Cooper, Fairman |& Co., and was accepted as the basis of the contract on the terms above Imentioned. The evidence show^s that the Department awarded this contract on tho {lowest available offer, and giving no undue advantage to the contractors. An offer had been maat> by the Warden of the Kingston Penitentiary, supply the spikes at a price five per cent, under the lowest tender, if Jlowed to purchase machinery. That offer was withdrawn, but before iitering into this contract a report of the Minister recommending it was Approved by an Order in Council dated the I6th May, 1878. The contract was fulfilled and the following sum paid on it : — To 30th June, 1879 $23,880 Contract No. 36. Railway Ties. By this contract, dated the 22nd February, 1878, "William Kobinsoo idertook to supply 165,000 ties according to specifications, at 44 cents ach, of which 75,000 were to be delivered at St. Boniface, 60,000 at Rat |Lver and 30,000 at Rosseau River, at the resjDective times named in the ontract. On the 3rd January, 1878, Mr. Braun, the Secretary of the Department, athorized Mr. Marcus Smith, the acting Chief Engineer, to call for tenders Y the supply of ties for the completion of the Pembina Branch. Mr. [ixon, the Purveyor at "Winnipeg, was directed to receive tenders there for landFrcdcricBie whole quantity, such tenders to state prices for the separate places of Ithemselves Belivery above mentioned. »eto aniiixej q^ ^^^ 22nd February, 1878, the day specified for the receipt, the |240 lbs., w^ii,jgj.g were opened by Mr. Nixon and a schedule of their contents pre- wcd. A copy of this was forwarded forthwith to the Department at FT"^ 1 '<{•.■' ' ' ■■ t » 4 1 1 •» > « ■ ',/:'! • l! i 342 COI^TRA.CTS. Ottawa and has been produced before us. It shows that twciity-eight offers had been made, varying in pri 'e from 25 cents to tO cents per tie. Many of the tenders were found to be for less than the full quantity and fcr less than the quantities re quired at the separate places. The following list gives the tenders, including that of the contractors and all lower ones, the others being higher, are not material to this report: — Name. A. F. Martin Chas. Nolin Augustus Nulia T. W. Quigley , W. 0. Lewis A. Bissonnette k Co McRionon k McDoiiiild Alex, McXabh John NeBhiit Joseph Pillow jt Cu Oeo. Taylor Wm. Robinsoa.. St. Boniface. Cat Purer. 7.'), 000 at 25 cts. 10 000 25 •' 75,000 tit 29 ct3. 75 OUO at 35 cts. (50,000 at 25 cts. 10,000 at 25 cts. 60,000 25 " 60,000 30 " 60,000 33 " RooiMaa Rirer. "0,000 at JS cts. 30,000 at 27 cts. 75,000 Ht 40 cts 7%000 44 " j 60,000 at 35 cts. 10,000 39 " 5,000 40 «' 60,000 49 " 60,000 44 " aO.OOO at 35 CIS. 30,00;> at 40 cts. 30,000 40 •' The lowest tender, by A. F. Martin, for the whole quantity required at each point at the rate of 25 cents per tie, was accepted, but was with- drawn. Mr. Nixon put himself in communication with the Departracritl concerning the state of adairs, and was instructed to pass to Charles and i Angus in Nolin. who had made offers at the same rate for a portion of v,hat| ■was wanted at St. Boniface and at Rat Kiver, and to give the balance toT. M. Quigley, who had made an offer to supply the whol(>, some at 25 cents! and some at 27 eents each. Mr. Chaises Nolin named a day to close the arrangement respecting the quantity to be awarded to him, but failed tol appear. Augustin Nolin did not answer. Mr. Quigley declined to enter a contract unless the Government would make advances to him boforel delivering ties. This condition was communicated to the Department, but CONTRACT No. 36. 343 iity-eight [its per tie. antity and sontraetors ial to thin Heaa Rirer. declined by a telegram to Mr. Nixon from Mr. Braun, dated the 10th February, 1878, in which telegram Mr. Nixon was directed to act quickly. After this, each of the following parties was sent for in the order named, and declined to contract : — .-.. W. C. Lewis, A. Bissonnette & Co , * McKinnon & McDonald, and Alex. McNabb. There were some intervening tenders, left between the parties iiamed and William Robinson, but the latter declined to contract if any inter- mediate offers for portions of the quantity were accepted, and Mr. Nixon closed a bargain with him at 41 cents per tie for the whole quantity. This decision was telegraphed to the Department on the 13th March, 1878, after 0,000 at :5 ct^ ■ ^jj.^j^ ^Yie following Order-in-Council was passed :— Cory o/ a Report of a Committee of the Honourable the Privy CouncU, approved by His Excellency the Governor General in Council on the 'l~nd }farch, 1878. ;0,000 at, 27 ctg. ■ " On a monioiandum dated 13th March, 1878, IVom the lionourahle the Minister of Public Works, representiiij^ tl at tenders having l>een calle I for for the supply of ene hundred and sixty-five thousand railway ties for the Pembina Branch of the Canadian Pacific Railway, twenty-oi,i;ht tenders were received, the liighest bein^r at the rate of seventy five cents and 10,000 at 35 CIS. ■ the lowest twenty-fivo cents. "That the tender of Mr. A. F. Martin aocepte to L| The c-v'idence shows that the contract was awarded upon the lowest I available offer and without any undue advantage to the contractor. The contractor failed to fulfil his contract either as to quantities or as jtotime of delivery, and the matter was taken out of his hands. The ties not supplied by him were procured by the Department from ■other sources, and the cost of them was charged to the contractor. laiauce lat 25 cents |to closo the it lailt'd to to enteral Ihini boforel Irtment, but i ? ■ ^ t ) 1 • 4 » 341 CONTRACTS. I mm To the 30th oi June, 1880, the following sums had been paid on this contract : — To 30th June, 1875) $51,006 88 1880 18,488 04 Total $69,494 92 Contract No. 37. Railway Construction. By this contract, dated 2nd August, 1878, John Heney, Alphonse Charlebois and Thomas Flood covenanted to complete the excavation, grad- ing, bridging, track-laying and ballasting of the Georgian Bay Branch, between station O on the location of 1877 on the western side of the South River, near Nippisingang post office, to the head of navigation on French River, about five miles east of Cantin's Bay, in length about fifty miles, to be finished by the 1st July, 1880, according to specifications, receiving therefor the prices respectively named in said contract for the different classes of work to be done under it. The contract with Mr. Foster, No. 12, concerning the Georgian Bay Branch, having been annulled by Order in Council of the 28th February, 1876, as before mentioned, and the route named in that contract having presented more engineering difficulties than were anticipated, anew survey of the country to be crossed by a railway near Georgian Bay was, in the year 1877, made under the direction of Mr. Marcus Smith, acting Chief | Engineer. This led to the adoption of the route named in this contract and described more fully in the special report of the Chief Engineer for 1877, page 17. On the 20th May, 1878, advertisements were issued inviting, up to noon of the 29th June following, tenders for the work above desciibed. Proposals were to be received in two forms, which, together with other information, might be had on application to the Department. Form A I was upon the basis of a subsidy per mile in cash and in land, together with interest at the rate of four per cent, for a stated period upon the amount to be proposed by the tenderer. There were some offers on this | basis, but they were not entertained. Form B was based upon a schedule of estimated quantities of the I different classes of work to be performed, for each of which the tenderer! CONTRACT No. 37. 346- ^as asked to name his price according to the method generally adopted in letting contracts for this railway. The tenders were opened on the day appointed for their receipt, and a schedule was prepared and certified upon that occasion by Mr. Braun, Mr. Page and Mr. Smellie, officers of the Department. This shows that on form B twenty-six regular tenders had been received in which the total price asked for the work varied from $809,813 to $1,228,448, the lowest of these being made by Messrs. McGreevy & Heney. This one is the foundation of the present contract. The evidence shows that the contract was without any undue advan- tage to the contractors awarded on the lowest available offer. Before the contract was executed, Mr. McGreevy, one of the firm of successful tenderers, asked leave to withdraw, and his partner, Mr. Heney,. asked to associate with him Messrs. Charlebois and Flood. This was acceded to, and an Order-in-Council based on the following memorandum confirmed the arrangement : — " lOth August, 1878. " Memorandum. " The undersigned reports that the lowest tender received for the construction of the Georgian Bay Branch of the Canadian Pacific Railway was from Messrs. Robert McG reevy and Jolin Heney. " That Mr. McGreevy has afterwards asked leave to withdraw his name from tlie tender, and Mr. Heney requested that the names of Alphonse Charlebois, of Montreal, and Thomas Flood, of Sandy Hill, N. Y., be put in lieu thereof in the contract. " As Messrs. Charlebois and Flood have the reputation of being good contractors, the imder- signed agreed to this and therefore recommends that api)roval be given to his accoriling the contract to Messrs. Heney, Charlebois and Flood. " Respectfully submitted, "A. MACKENZIE, " Minister oj" Public Worka.'' On the 10th June following, Mr. Fleming submitted to the Minister of kis Department the following memorandum : — " Memorandum. " Thk Georqiav Bay Brancu, 10th Juno, 187'.!. " Sir,— At the request of the Hon. the Minister, the undersigned begs to reiiort on the present condition of the Georgian Bay Branch. "According to returns received, the total value of work executed up to the 1st of the present month is $1 1,173. Thig consists almost wholly of chopping down the standing timber ; no earth or rock excavations, or any other kind of work, except |45of grubbing has yet been executed. 34G CONTRACTS. h. -'«. " Th(i number ofnuin of all kinds engaged, according to last returns, is 69, but this force appears to havo been on the ground only a few days, as the avciage for the month of May ww only 36, " The average for the previous montlis was about liO. " The contract is dated 2nd August, 1878 ; the date for completion 1st July, 1880, giving 2'.i months for executing the work, which, according to the tender, is estimated at$S0'J,813. " The time which has elapsed between the date of the contract and the 1st June was l(j months, during which period the whole work done amounts to $ 1 1, 71. '5, leaving work to the value of S7y8,643 yet to bo executed in i'-i months. " It is quite obvious from the small amount of work done, and the comparatively very low })rices for work remaining to be done, that it will be impossible for the contractors to bring the «iontract to a satisfactory «;ompletion. " SANDFORD FLEMING. Before much i)rogress had been made under this contract, the Govern- ment adopted the policy of d'scontiauing the construction ot the G-eorgi!\Ti Bay Branch, and the following Order-in-Council was passed :^ "(Jijvwofah'i'-poriof u Committee of the Honorable the rrivy Council, approved by Hix Excellency the Governor General in Council, on the 2bth July, 1879. " ()a the re])ort, dated 24tb July, I>7d, fiom the Hon. J. il.i^ope, aoting in the absence of tho Mini»t.>r of h'ailways and Canals, stating that o-i tbe 2nd day of August, 1878, a oontraot was eat Ted into with Messrs. lleoy, Charlebais «<£ Flood for the grading, bridging, tr', hui without the knowledge or consent of Her Mnjesty, or the Minister of Railways unl <'a'iali acting in that behalf for Her Majesty, assigned and transferred the said contract to M< H^rs. Smith, Ripley & Co. "ThHt the undersigned was not aware, when he recommer (led the Order in Counrilof llie 25th of July, that ouch assignment had been made in contravention of the 17th article of the said contract entered into by SHid contractots with FTer Majesty. " That on th« 5th dvy of August last, he was notified by letter purporting to be signed by the said Messrs. Smith, Ripley k Co.,'that such assignment had been wade to thetii, and at the ■ame time a paper purporting to be an assignment of the said contract, duly e\t'c,:ted, waa deposited in tho Dej;)artment of Railways and Canals. " That by the seventeenth section of the contract entered into by the paid coTitractors, it is provided, and is mide a condition of the said contract, that no a6si,>,;<)n cnt of huch contract Bball be made without the consent of Her >rHJ<'8ty. ''Her Majesty may take the work out o: the contractors' bands an') employ such means »• she may see lit to complete l)u- same. " Tnat such assigniueut was never .issented to by Her Majesty, or 1 y the Minister of Kail- rray'! and Canals acting for Her Majesty. "Tiie undersigned, for the above reason?, as well as for those set forth in the former report, recommends tiiat, in accordmce with the terms of the said contract, the contractors, Messr?. Ilfuey. Cbarlebois & Flood be uotilied that the said contract is taken out of il^ieir hands and annulled. " Respectfully submitted, "J. H. rOPE, "Actiny Minister of Railways and Canals" 348 CONTIUCTS. t lS< f ■: . • ■ This was followed by the Order in Council below sot out : — "Copy of a Report of a Committee of the Honourable the Privy Couneil, approved bg His Excellency the Oovernor General in Couneil on the \4th August, 187'*. "On ft Memorandum, date J 9th Auguat, 1879, from the Hon. J. H. Pope, acting in the •bience of the Minister of Railways and Canals, having reference to the Order in Council passed on the 25th day of July last, cancelling the contract with Messrs. Heney, Charlebois it Flood, for the construction of that section of the Canadian Pacific Railroad knoirn as the Georginn Bay Branch, and recommending for the reasons stated in said memorandum that the oontractvira, Messrs. ileney, Charlebois & Flood, be notified that the said contract is taken out of their hands and annulled. " 'I1ie Committee submit the above recommendation for Your Excellency's apx)rovaI. " CortiHed, " W. A. H IMS WORTH, C. P. C. " The Hon. Mininter of Railways and Canals.'' On the same day the Acting Secretary of the Department wrote to the contractors as follows : — " Ottawa, 9th August, 1879. " Gbntlkmen, — By direction of the Acting Minister of Railways and Canals, I have to inform you that by an Order in Council, dated 2")th July last, a copy of which is herewith enclosed, the contract made with you for the construction of that portion of the Canadian Railway, known as the Georgian Bay Branch Railway, was by virtue and in pursuance of the terms of the said Order .in Council, cancelled and annulled, and you are hereby notified that the said work is, on behalf of Her Mtyesty, taken out of your hands, and you will accordingly cease all further operations under or by virtue of said contract. " I have the honour to bo, Gentlemen, " Your obedient servant, " F. H. ENNIS, '* Acting Secretary, " Messrs. Hknet, Cuarlkbois & Fi,oou." " MoNTPwEAL, 13th August, 1879. " 8iK, ~ We have to acknowledge yours of the 9th instant (No. 12,191), covering a copy of an Order in Council (No. 19,791), of the 2.'>th July, authorizing you to cancel our contract for the construction of the Georgian Bay Branch of the Canadian Pacific Railway ; also your notice of August 9th to us to discontinue operations under said contract. " In pur-uance of your notice, I immediately transmitted your order to discontinue bper» atious to tlie parties temporarily in charge of the work, hy telegraph to Collingwood, the executive office of our firm. " iShould there be a failure of full compliance to your order by the parties teinporarily in charge of the work, on account of certain oflorts to negotiate with us for the entire control of said work, wo would hereby inform and notify you that such negotiations were never com- pleted, or deemed sufficiently likely to become so, to cause us to ask your o£Bcial sanction CONTKACT No. 37. 34 tliereto. Thorofoni, we shall only enumerftto, subject to amicable ncttlenient, siich charges as have become oharyoablo prn/ious to tho receipt of your noti('»» to discontinue oporationM. " We have the honour to be, Sir, " Your obedient servants, "IIENEV, CHAKLEBOIS & FLOOD. " Hon. John Popb, »' Acting Minister of Railways and Canaln.'' At the date of our commission neither the original contractors nor their assignees had been finally settled with. Mr. Fleming, in a report to the Minister, dated 9th February, 1880, stated that the work at thaf date performed under the contract had been measured up, and the final certificate issued for $24,807.94, The expenditure up to the 30th June, 1880, under this contract was as follows : — To 30th June, 1879 .$10,050 1880 %0 Total $11,000 Contract No. 88. Alteration of Building. By this indenture, dated the 26th July, 1878, Edmund Ing'axls, agreed within the time therein stated, to alter and to finish the Government build- ing on lot 34 in the town plot of Fort William, according to specifications and plans annexed to the said contract, receiving therefor $3,261 at the times mentioned. The object of this contract was to alter the Neebing Hotel, so as to afford accommodation for officers and a residence for the Purveyor at Fort William. An advertisement invited tenders to be received up to 4 o'clock p.m., of the 20th July, 1878, which was issued by Mr. McClennan, the engineer iu charge at Prince Arthur's Landing, under directions from the Depart- ment at Ottawa. The tenders received in due time were opened on the 26th July, 1878, by Mr. McClennan, and showed seven offers, varying from $3,2t;l to $4,487. The lowest was made by Edmund Ingalls, and was accepted by Mr. Mc- Clennan, who forwarded a copy of the advertisement and a schedule of the 360 CONTUACTS. J tenders to the office of tho Eiif'-ineer-in-Chi'rut Ottawa. Tho contract wu^ based upon the lowest teiider and without any undue advantapfe to thti contractor. It was supposed, at the time of letting it, that the amount named would bo somewhat reduced by the valuta of doors, windows and materials to be furnished to the contractor from buildings at Fort William, which were not required and whic^h could not then be rented. The amount, how- ever, was not reduced, but increased in consequence of some extras in tbf completion of the work. The amount paid was : — To 30th June, 1879 $8,456 85 mm Contract No. 39. Transportation of Rails. By this contract, dated th* 18th July, 1878, John Irving covenanted to convoy, on or before the Ist November, 1878, 5,266 imperial tons, being all the rails then at Esquiraalt and at Nanaimo, respectively, to Emory's Bar, on the Fraser River, or at a point in the neighbourhood of the toll-gate at Yale, according to spot ifications, receiving therefor $6.44 per ton of 2,000 pounds. This contract was awarded at Victoria, B.C., by Mr. John Robsoii. Purveyor, under instructions from Mr. Braun, the Secretary of the Depart- ment at Ottawa. On the 12th .lune, 1878, Mr. Braun telegraphed Mr. Robson to "Adver- tise lor tenders for the removal of steel rails to Yale, * * -m -^ ^f to be completed by the 1st November next." Two days afterwards, Mr. Robson advertised, inviting tenders up to the 8th July following for the removal and stacking of 3,111 tons then at Nanaimo, and 2,155 tons then at Esquimalt, to be completed before the 1st November, 1878. The character of the vessels to be employed was described, and it was mentioned that the offers were to be made subject to direction afterwards concerning the exact points of delivery. In answer to questions of the 6th July, 1878, by telegram from Mr. Robson, Mr. Brann on that day telegraphed him as follows : — "COI'Y CONTRACT No. MO. .^51 ract was ;c to thw it iiaraod matorials ott, which lilt, how- ras in th<' iiiantcd to , being- all Lory's Bar, oU-gate at n of 2,000 RobBon. 10, Depart - " Adver- * » [ards, Mr. ig for the I tons then J78. The lentioned jncerning from Mr. tt (Tel f gram ) "6th July, 1878. " Ttails to he storflil at Yale. Open tonderR with Cambi*>, both counterHignin;;. Report iQtouot and atandini; of threo lowest by telograph and wait for ioHlructiont. *' 1\ HHAU.N, ' Secretary, ".lOHM Roiisox, "Victoria, BC." On the 10th July, 1878, Mr. Rob.son telegraphed Mr. Braun as followis : — "Three tenders for rails — 17, %^.^iO and $6.44 per ton, r>*»pectively— all from roapotiBJblo parties.'" On the 12th July, 1878, Mr. Braun answered :— " Accept lowest tender for transportation of railH," On the 19th June, 1878, Mr. Robson had addressed a letter to Mr. Bniiiu, enclosing a copy of the advertisement before mentioned, and asking for definite instructions as to the method of dealing with tendiM.s, insurance, &c., and containing the Ibllowing i)assag(» : — "Tbo time (the IhI November) is, in view of exiuting faf^i'it'eF, rai.her linaitel, and 1 hm; to suggest for the cont^Idoration of the Dunartnjfiit, whether it nii;»ht not b(» <|eairal>lo to extend tho time for delivery of tVio major portion of th»< rails tiil iVh latter part ol' n?.xt lummer, provided that by so doing thefreiglit rixte would bo mut^riidly reduced.'' At the time of the first direction from Mr. Braun as above mentioned, it was understood in the Department that Burrard Inlet would be favour- ably recommended to Council as the Pacific terminus for the railway, and that rails would be, therefore, required at Yale. On the 13tli July, 1878, the following Order in Council was passed : — "Corv of a Report of a Committee of the Honourable the J'rivy Council, approved by His Excellency the Governor General in CovvhI, oh the I'dth July, 1S7,S. "On a Memorandum, dated 1 1th July, 1878, fio^o the Honourable the Minister of I'ublic I Workr, reporting thrtt on the let June, 1S77, an Order in Council was passc>d in accord icce I with the provisions of th3 Canadian Piicilic Railway Act, 1S74, defining the route of the rail- way between Fort William, on tho Kaministiqiiia Uivor, and Jasper House and Tete .Tauce I Cschf^ ; "That the same Order in Cjuncil also defined the route from tho laV named i)oint to the [Pacific Ocean, in tho event of the BiU« Inlet or D.^m l-il-'t routes being ultimately ad(>i)ted, these being the routes throu;;b British Columbia, one of wbich^tvt that time it aoemed protiable [would be adopted ; "That later information has shown that it would be in the public interest that the route jof the railway fiom the neighbourhood of the 'lV'*e Jaune Cache should le towards J'urrard [inlet; ■3 ^r 382 CONTRACTS. y ' The Minister, therefore, recommends tbat the route ^cf the railroad shall be defined generally as passing from the neighbourhood of the i'ete Jaune Cache by the Albreda River to tbe North Thompson River, and descending the valley of the said North Thompsun River towards Kamlo3{'8 Lake, to the Fraser Valley at Lytton, and thenoe descending the ▼all.'y of the hVaser by Yale and New Westminster to Port Moody, or such other point on or uear Suirard Inlet, as may be found most convenient for the purpose of harbour aocommodatioo. " The Committee submit the above r»oommendation for Your Excellency's approval. "Certified, " W. A. IlIMSWORTH, «C. P. C." In obedience to Mr, Braun's telegram of the 12th July before men- tioned, the contract was awarded to Mr. Irving, and the following report of the transaction was forwarded by Mr Kobson to the Department at Ottawa: — " Canadian Pacific Railway Sruvsv, , "Wkstbrn Division, "Vic- riA, B.C., 19th July, 1878. '• .'^iii,— Ajireeably to instructions, k.nfl in accordance with advertisement, tenders fnr tran-ii>orti cion of ateel rails were received and the result telegraphed to you. "1 h.'ivo now to report that the contract lias been awarded ii Captain Irving at the lowest liguro ($0.44 ptn* ton), that the contract and bor .1 have been duly exe'-ateu, and that tlie I'nM cargo of the rails will go forward nc.\t week. " 1 have to nail your attention to the fact that I am still without instructions as to iiisiii ance of these vails while in transit. " TIffi'rring to thi.s subject, in my letter of the 19th ultimo, I intimated that it sooir.ed probable not n^.oro than 100 tons would be at one risk. I now ocg to qualify that oiiiuioii l)y stating that it is in contemplation to carry 2,351 tons froia Esquimalt io New WestmiiKstei on the ' WilbwU (i. Hunt,' considoretl a good, staunch steamer j and 760 tons from Esquimalt and 2,15.> tons froiu Naiiaiiuo on the 'Bonan/Bf' a good seaworthy schooner which will ciirry from 2(X) to 2 A) Urns at a time, and will be towetl by the said ' W"'"on G. Hunt.' " i Ivavo I'mtlior to add on this subject that, after consultation with their principals, the insmanc*^ agents inform me that the rate would be l of 1 per cent., with a rebate of 10 per rent. " Unless iustiucted on the subject, I shall assume that it is not the intention of the Department to ellect an insurance upon the property in question. '■ I uia\- 111! porniitteil to ri'inark that the rate at which the contract has been taken is very low. but it is satisfactory to ki.fv that the work has been undertaken by tlie party best lnopared ;iiul most competent to carry it oui. But, even in the best of hands, much must | jiccessarily depend upon the nature of the seascu and consequent stage of water in the Ivaser ;iH to the practieabilily of conveying the whole of the rails to their destinaticn witain so I limited n jieiio 1. ^mawsnoBiv* CONTRACT No 39. HI?. ■hall be defined I Albreda River, 'bompeun Kiver, ng the ralUy of point on or uear tocommodatioD. 'b approval. DRTH, « C. P. C." j^ before men- owing report )epartiiient at L9th July, 1878. lent, tenders for ving at the lowest land that the liM tions as to iiisur ed that it seotned that opiuion In ew Westminster from Esquimalt which will curry nt.' lir principals, the th a rebate of H^ intention of the as been taken i? by the party best lands, much must ater in the r.aset | tinaticn witiiin ^'^ "There need l>e no difficulty, however, about having them all rcniovod iVom wheio tlioy now are to some convenient point on the Frascr within tlie sj>oci(ii'wered that Mr. Robson was in the interior, but would he down the Friday ioUow- iiig. On the 30th October, Mr. Braun lent the Ibllowing mci^^sage : — " 30th October, 1878, j '[Tfle'jram.) " Stop moving rails and other railway mit rials froaa Vancouver Island, I^ in jley and otbef points after 31st instant, when your contraot expires. " K. BRAKN, •• Ftrcfary. j'Moiix I»ivi>r(!, " Now Westminster, B.C." - After sereral intermediate telegrams, which need not be reported, ('i3 lollowing letter was sent by Mr, Robson : — 2;{ ■ I i i ^ t I , . .. 354 CONTRACTS. " Canadian PACiric Railway Subvet, " Wbstkkn Divisian, " Nkw Wkstminsteb, B.C., 6th November, 1878. " Dear Sir, — I have the honour to acknowledge the receipt of three telegrams, dated I 21gt and 29th October, respectively, relating to the transport of ateol rails, &o., all of which oame during my absenco in the interior ; and I now beg to report /or tke information of the Minister as follows :— " 1. Immediately on receiving your telegram of the 29th October, I served a notice upon the contractors to discontinue moving rails and other railway materials ; and I took pOAsessl; of said rails, &c., at the places of deposit, excepting some 242 tons water-borne at the time | but now in oourse of lan'ling at L'lugley. " 2. As the matter stands now, ;),584,J tons have been transportoi from Vancouver Island I (3,484J tons from Esqiiimault ancF lOO tons from Nanaimo) to the Kraser River. Of that amount about 2,0(X) tons are at Vale, and the remainder at Langley and New Weatminslsr, mostly, howover, at Langley. " I have said about two thousand tons are at Yale, because there being only .J625(j?,;! ton* I stacked. I have only the contractor'.-, word, but judging from the piles there seems to bo no | reason to question the aocunif^y of tue statement. "3. The t( lU ton-, or thereabouts, lying at the wharf at New Westminster will, il pei- mittod to remain whoi-« they are, become liablo to v. harfage charges. •4. Oftne rai.s laude*! at Vale, less than 600 tons have beou stacked, the remainiier atili j lying OD the Ueach, where they cannot remain over winter without ri.sk of loss during spring freshet* ; coDsoquently I Mked for instructions in my telegram of 1st iubtant, respecting th« (iiipoMtion of th^'se rails. " 1 am, Sir, " Your obedient servant, •'JOHN KOBSON, " Paymaster and Purveyor, C. P. B, S. " P. S — Since writing the within yoi*- Lelrgrnm «if the 4th initmt Yiha been receivnd, anl will be duly attended to. ••F. Bn AS, Bso., "Secretary I'ublio Works. " Ottawa." This was tbllowt'd by a letter from Mr. Pearse, the rosident ougiiieci;— | " Public Works Dki'artmknt, "VioTORi.*, B,C., 8th November, 187M. "Sir, -T have the honour to •^knowledge thf receipt of your telegram, dated October I 30th, iustructini.' me t possibility of obtaining the services of a war vessel to take me to Nanaimo for the pur])08e of placing gome trustworthy person in cfcarge of the rails. We found, however, that we should lose a gj eat deal of time by thi", even if it were possible, which was very doubt I ful, BO I determinOi\ to sail on Sunday morning the 30th inst., in the American vessel " Cttii- fomifl," whoHo commander courteously cave me a free ; aspage. We arrived at Nanaimo at < COXTItACr Xo. :i9. 355 Ler will, if per- receivfMJ, anl p.m., but on our way up sighted the contractor's yesael, with ^ ctr^o of 250 tons of raiU ou board, juat entering the Frazer. It was inapossibie to oatcb hioo, at) > equally impossible, bad we done bo, to have compelled him to return with the cargo to Nauaiino. I have phused che remainder of the rails, possibly about 2,0CO tons, in charge of the Provincial Government Atient at Xan limo, with instructionn to s'>e that no more railti are removed. Mr. Wulkem placed tiie sorvioes of that i^entlemaa at my (iispoiial in the matter. I have also notified the contractor of tU«) substance of my instructions and warned him against proccoiinjj further in his contract. On my return to Victoria 1 inspected tho line of the proposed telegraph be- tween Nanaimo ant?, that city. " 1 have the honour to be, Sir, '' Your most obedient servant, "V. W. PEAKSE, *' Resident Engineer. " I". Brauv, Esq., *' .*^e.^retary Public W' rks Department, "Ottawa." Oil November IStn, 1878, Mr. Robsoii rei)orU'tl that ;^o.22pt'r ton would he a fair compensation for tho tran.sport of the rails kft at Langloy, and thai the contractor chiimod some compensation for a wharf built by him at that place, as it would be of service in the sub.scqucnt removal of the mih. On the 29th November the contractor wrote a.s follows: — •• New W'K^TMtN.sTKi;, '-".itli NovcmlxM', 1S7S. "Sir, — I have thp lionour most n'spectrully to tuinL' to tlic notice ()(' the llonouraltlo Min- ister of Public Works (througli you), tli(i loss I sustikin ill consotiufno' ot tiic (iovcrnmcnt cai'Of^Hing my contract for transporting sUm-I rails from ErmiuimalL ami Naiiuimo to Yale. Yoii arc aware that th<> preparations neoossary for carrying out tin- contract liav(> been large imd costly ; anii unless I am pcrniitteil to oomplcto tho contrairt, I sulnnit wiiii great ivspeot that the 'joverni/ient pay tho less I sustain. It is certninly correct that ih<' work was not couiiiletcd at the time the contract stipulates, luit it is etiually true and well known tint, con- >iilcring tin- limitod means availalile lor transportation, the very utmost thtit could bo ilono under the circuuistan<'es tlor faitlitully carrying out tho contract has been done by me. " 1, therefore, venture to hope that the Government will favoumbly consider my wise and make me such an uUowaneo as tlicy may deem umler the circimistances reasonal»l« " I have the honour to l>e, " ^^)ur obedient servant, ■'.lOlIN IRVINO. " To .John Ronsox, Esq., " New Westminister." The contractor founded a claim against the (Joverninent on the stop- page of the works as above mentioned. This was settled, without any loss to the Government, by Mr. Irving being permitted to continue the trans- portation under the terms of the original contract L>3i H5i; CO NT I{ ACTS. 1^ ■ The amou!it paid up to tho date of our commission on this matter | "'^ *ud Up To 30th June, 18711 '. $9,Gt>0 Contract No. 40. Engine House. By this contract, dated the 5th August. 1878, Charles Louis Gouin, James Murphy and Joseph Upper covenanted to erect and complete a ten- stall engine house according to spi.'cifnations attached to the contract, to be finished by the 1st b>epteniber, 1871), receiving therefor $30,500, and, if necessity should arise, to add such iurther works as were mentioned in the contract, then an additional piice stated for the extra work in the body of the contract. On the 20th May, 1871^, advertisements were issued from the Depart- ment at Ottawa, asking for tenders for this work up to noon of the 29th June, 1878, stating that speciiications and other particulars could be obtained on ai)plic;ition to the l)istii( t EugincM'r at Winnipeg, or at the office of the Eiigiiu'cr-in-riiicf in Ottawa. On the loth July. 1878, the tenders received were opened in presence of Mr. Trudeau, the Deputy Minisicv, and Mr. Braun, the Secretary of the Department, The schedule prepared upon that occasion, in the usual way, showed that six offers had been made, varying from $30,500 to $45,500. The lowest tender was made by Messrs. Gouin & OMeara, at $30,500. {Subsequently Mr. O'Meara requestt'd to have his name withdrawn from the transaction, and the names of Messrs. James Murphy and Joseph Upper to be inserted instead. This change Avas approved of by the Department, and the following Order in Council passed to confirm it : — "C)i'v of a Report of a ('nmmittce of the Honourable the Privy Cotincil, approved by Hit Excellemy the Governor General in Council, oh the '2nd September, 1S78. "On a report (luted Uitli .\ut{U8t, 1S7S, from the lion, the Minister of T^iblic Works, 8tatii)^' tli.'it thf lovve.st t'^ndt>r re.u-ived for the erection of a ten-stall engiue hoiue at Selkirk for tlie (.'. I', lii.il way Wh.^ i' oiu MeKsiH. C. S. (jouin and M. O'Meara, jr. " Tbfit }>lr. O'.Nreara w^ts al'ternarils a^kcd leave to withdraw his name from the tender, and Mr. (Jouin n ijuosted tlmt the rames of James Murphy and Joseph Upper be put in lieu thereof in the c">iitract, that us Messrs. Murphy and Tppor have ho reputation of being good contractors, he, tlie Minister a^'u'es to this, nnd tho names of Messrs. Murphy & Upper, have accordingly been assoclBted with that of Mr. (iouin in th« contract. I passage q CONTRACT No. 40. 3»T "The MiuiBter recommends that the contract entered into with Messrs. Gouio, Murphj »ud Upper for the erection of the engine housd bu approved. " Tlie Cominittoe submit the above recomuiendattQ i for your Excellencf's approval. "W. A. UIM8W0RTH, "C.P.C" The evidence shows that this contract was let npon tho lowest avail- able offer and without any undue ad/anta^? to the contractor. The work was completed satisfai.'torily and taken of! tho hands of thu contractors. Some eitras were required as provided for in tho terms of the contract, and were paid for as follows : — 180 cubic yards earth at 25 10 " rock " 1.50 117 yards masonry " 5.00 467 " drain " 5.00 Tn addition to these whic^h hal hem provided for hs before mentioned, there wore other charges which wore extras beyond the arrangemout entered into at the time of making the bargain. One was for increasing the diameter of turn-table to 50 feet, $200 ; and removing turn-table from Selkirk to Emerson, $105. The work has been done satisfactorily, and has been paid for as follows : — To 30th June, 1880 $33,785 Contract No. 41. Rai/wdf/ Constntclion. « By this contract, dated the 7th Mar -h, 1870, Thomas; Marks, John Griuty, Patrick Purccll and Ilugb Ryan, covouauted to construct and com- plettN according to specifications, including track-laying and ballasting, the lino of Hail way from English River to Kagle River, about 118 miles, jreoeiving thorefor the prices sot out in the contract as applying to the respective classes of work to be performed. v There wore two sets of prices arranged for, one (tho lower rate) to apply if tho work should be complete 1 by th ' Irst July, 188:i, and ready for the I passage of through trains by the 1st July, 1882. Tho gross sum at these Irates. upon the quantities then estimated would be $2,203,896. 358 CONTRACTS. ^•| I ii". » < " 4 The other, the higher rates, were to apply if the work should be com- pleted by the 1st July, 1882, and ready for the passage of through trains on the 1st July, 1881. The gross sum, at these rates, would be $2,300,196. The contract contained a condition that if it should appear that, at the rates named, the intended total expenditure (2,208,896) would be exceeded, then the work might be stopped ; and that no work beyond that amount should be done unless first authorized by the Minister. Papers connected with the letting of this con tract and the following one. No. 42, are printed (as 43 M and 43 E) in the sessional papers of 1879, and also in a return to the House of Commons upon the subject, dated the 31st March, 1880. In August, 1878, there was a gap of 185 miles between the portions under construction at the two ends of the railw^ay between Thunder Bay and Red River. Tenders wore invited by advertisement, dated the 13ih August, 1878, to be received up to Ist January, 1879. In November, 1878, the Government desiring to get more accurate information concerning the details of the work to be executed than could be afforded in time to permit of satisfactory tonders so early as the day thus named, the Department extended the time until the 15th January, 1879, and then, finding that the iiilbrmation was not so complete as was expected, and was not likely to be obtained so as to be available at the end of that period, the time M^as again extended until the 30th .January, 1879, of which extensions: duo notices were given by adv rtij^ment. Iji^on the first occasion the advertisement stated that the work was to be divided into three sections, (/,) From the Westerly end of the 25th Contract, English River, to Raleigh, about fifty miles. (2.) From Raleigh to Eagle River, about sixty-eight miles. (3.) From Eagle River to Keewatin, about sixty-seven miles. file (Sistanci's thus named were not chaaiged in the advertisements, but all tenders being rt-quired to be made on forms according to spccifica' tions prepar*Hl ut the Department, it was intimated that these would be Jarnished to applicants, and these forms and specifications were framed so as to permit of oRnrs in the three following shapes. Form A. English Rivt'r to Eagle River, 118 miles. CONTRACT No. 41. 359 Form B. Eagle River to Keewatin, 07 miles. Form C. English River to Keewatin, 185 miles. This new feature of inviting, with the others, offers for the whole length, was adopted upon the view of Mr. Fleming, the Chief Engineer, that if contractors possessing sufficient skill and means would undertake the entire distance, the completion would probably be sec^ured at an earlier period than if done under separate contracts, but for fear the work as a whole should be too great to attract proper competition, tenders were also asked for in relation to each of the two sections last mentioned, the easier work being on the longer of such divisions. In the afternoon of the day named for the final receipt, all the tenders were opened in the presence of Mr. Trudeau, the Deputy Minister, Mr. Braun, the Secretary, Mr. Fleming and Mr. Marcus Smith, Engineers. The following report and other documents are recorded in the Depart- ment on this subject : — •• CANAriAN Pacific Railway, . "OfFICB of the ENOINERB-IN-Oajir, Ottawa, ist February, 1879. "The Honourable " The Minister of Public W' orks " Sib,— On the iJOth ultimo, at noon, the time had elai^seJ for the reception of tenden Tor the construction ot that portion of the I'acifio Kailway between English Klver and Keewatin, 185 miles. " It had previously been arranged that the tenders should be opened at 2 o'clock in the afternoon. Accordingly the Secretary, F. Braun, to whom the tenders were addreued, laid on the table all the tenders received. They were opened, numbered an peculiarities of the country through which tho line is to be built. "The next tender (No. 2.'), Frasor & Co.,) Fraser, rails laid tliroughout by .July, 1881. I have always entertained doubts as to the practiinoility, at a reasonable cost, of accomplishing this. There would not bo the slightest difficulty in getting some men to undertake it, regardless of the peculiar circumstances of tho case. It would be quite another matter to get the work out of their hands by the time fixeil, imless their resources were great and their prices very liberal indeed, such, in fact, as would warrant them in pushing the work at whatever cost. " I am aware that it is considered of very great moment that the line should bo opened for public use as early as practicable. I would accordingly suggest that, in addition to the I I I 4 m « t 362 CONTRACTS. Btipulation in the 18th clause of the printed form of indenture, that " time " shall be deemed to be of the ossonco of " this contract," a substantial bonus bo offered the contractors for every montli they may bo in advance of the time, and, on the other hand, a heavy penalty be exacted for cvitry month or week that thoy may be behind, ample funds being retained ill the liands of the Gov<-rnmeiit, out of which to deduct the penalty should it be necessary to eiiforco it. " Wliichover course the Government may adopt, I would strongly advise that no time b« lost ill liaving contracts executed, so as to afford the contractors an opportunity of making on t-arly and vigorous beginning of the work. "In tlie country draining into the Lake of the Woods and Liake Winnipeg, the sun is goiiorally very £)Oworful after tlie month of February, and soon renders the winter roods un- Borviceablo. " Full advantage should be taken of the short period that will elapse before the breaking up of the ice, in conveying to the accessible portions of the sections, food for men and horses, fxplosives, tools, plant and all necessary su^. plies. Unless this be done, I greatly fear that a jjroat part of the coming summer will be lost before an actual beginning [of construction be effected. "I have the honour to be, Sir, " Your obedient servant, " SANDFORD FIJIMING, " Ihigineer-in-Chief" CONTRACT No. 41. FORM OF TENDKR A. OAHiDUt) PaOIFIO RiiltWAT. Eaglish River to Eagle Hirer— 118 miles. {To be opened let July, 1882.) List of Tenders received, 30tb i&j of January, 1879. No. Name. Markg h Oonmee CharleboiB it Shanly , Denis O'Brien Wardrop ft Ross J. R. HcDonell James Qoodwin k Co Robert H. McOreevy Manning, McDonell A Co. James S. Grant k Co 10 Purcell, Ointj k Ryan » 11 F. B. McNamee k Co.... 6 o « p. o ► a 13 17 12 10 18 14 26 19 20 21 13 Walsh k McCarron I 13 Pitblado, Fraser k Grant Stevens, Turner, Burns k Co e.O. O'Reilly , Wm. Hendrie » . Ferguson, Symmes, Mitchell k Co. 14 15 16 17 '•••■•■••• i****^** *••••••« 22 2t 23 5 3 4 IsT Column. As per Tender. $ 2,203,896 2,207,534 2,306,751 2,324,499 2,353,603 2,397,335 2,412,520 2,604,523 2,508,420 2,528,843 2,612,565 2,661,591 2,699,066 2,805,791 2,825,217 3,019,70-; 3,190,291 As Revised. f 2,203,869 2,207,674 2,310,754 2,33i,49» 2,353. li I ! IMAGE EVALUATION TEST TARGET (MT-3) 1.0 I.I 1.25 m |||2j i IIM m m "r m ' m IIM IIM 1.8 1.4 1.6 Photographic Sciences Corporation # \ m :\ \ i^ «• «• ^4 €< <^ 23 WEST MAIN S1!(EET WEBSTER, N.Y .4580 (716) 872-.t503 \ 364 CONTRACTS. FORM OF TENDER 3. Canadian PACirio Railwat. Eagle River to Keewatin — 67 miles. {To be opened Ut July, 1882.) List of Tenders received, 30th day of Jaaaary, IStSl. No. Name. 1 Morse, Nicholson & Marpole 2 Eraser, Grant & Pitblado 3 Manning, MoDonell ic Co 4 JiirrT'.^ Good nip. & Co B WtL.''!rop & Ross I 6 F. B. McNamee 15 ! i r 366 CONTRACTS. li]' ■•■ FORM OF TENDER A. Canadian Pacific Railway. Rnglisb Rirer to Eagle Rirer — 118 miles. (To be completed 1st July, 1881.) List of Tendera receired, 30th day of January, 1879. No. 1 2 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 ^ 20 Name. Andrews, Jones & Co Miirks & Conmee Denia O'Brien Cbarlebois & Shanly., Wardrop & Ross ... Hunter, Murray k Booth J. R. Macdonnell James Goodwin & Co Purcell, Ginty & Ryan James S. Grant & Co illanning, HcDonell & Co Robert H. McGreevy H. C. O'Reilly Pitblado, Fraser & Grant Hurlburt, Crennell & Campbell. P. B, McNamee & Co Stevens, Frazer, Burns k Co Wm. Hendrie a. ■ o I t ! w 11 13 12 17 10 1 18 14 21 20 19 26 r> 25 24 6 23 3 Walsh & McCarron 22 Ferguson, Symmes, Mitchell k Co.. 2nd Column. As per Tender. $ 2,248,585 2,300,196 2,421,041 2,423,036 2,440,724 2,490,980 2,505,747 2,573,297 2,604,643 2,633,842 2,726,172 2,774,328 2,825,217 2,860,199 2,945,707 2,976,565 3,086,37^ 3,160,766 3,202,459 3,366,488 As Revised. $ 2,239,525 2,300,196 2,426,391 2,431,386 2,440,724 CONTEACT No. 41. FORK OF TENDER B. 36T hvun. As Revised. $ 2,239,525 2,300,196 ' 2,426,291 2,431,386 2,440,724 Canadiaji Pacific Railway. Eagle RiTer to Keewatin— 67 miles. (To be completed Ut July, 1881.) List of Tenders receired, 30th day of Jamiarj, I8TD. .Vo. Name. Morse, Nicholson & Marpole. Andrews, Jones & Co Manning, McDonell & Co 4 IWardrop & Ross. James Goodwin & Co Joseph Whitehead.. Ferguson, Symmes, Mitchell & Co Denis O'Brien F. B. McNamee& Co Loss k McRae Hurlbert, Crennell & Campbell 24 Robert H. McGreery o fe5 a 15 11 19 19 14 8 4 12 6 9 2m) Colcm.x. As per Tender. r^,467,506 3,915,042 4,170,275 4,647,809 4,716,60') 4,722,951 4,920,23(1 5,013,477 5,136,796 5,213,544 5,';50,862 6,799,606 As Revised. $ 3,467,568 3,915,942 4,470,272 4,6,')2,196 4,716,606 3G3 CONTRACTS. 'i .V. (Hi:- FOUM OF TKNDER C. Canadian Pacific Railway. English River to Keewatia — 185 miles. {To be completed 1st July, 1881.) Liar of Tenders received .30*.U day of January, 1879. No. Name. lilor.^c. Nicholson it Marpole AndicAvs, Jones k Co Purcell, Ginty & Ryan Denis O'Brien .^ Wardrop it Ross . (') 7 8 9 10 11 12 13 Jatncs Goodwin K Co Manning, .McDoncU & Co F. B. McNamee it Co Joseph \Thiteliea70 CONrJiACTS. ■> I * 4 , « lowest offers, and lie gives what seems to us to be valid reasons for so doing ; but, according to the evidence of Sir Charles Tupper, the Department felt that to be an embarrassing proceeding, owing to the fact that the eligi- bility of the parties had been established according to a prescribed test, namely, the deposit of a stated sum with the tender, and therefore the course of applying first to the lowest tenderers was followed. The lowest tender for section A, on the long term, for comj)!?- tion, was made by Messrs. Marks & Conmee, at $2,203,39^!, and it is the basis of this contract. No. 41, now under consideration. The prices and the total sum named in the tenders M'ore not in this case taken as a matter of course to b(^ those intended by the persons who submitted them. Mr. Fleming asked Mr. Marcus Smith to revis(^ the calculations, and also to consider the offers in respect to their reasonableness The following is Mr. Smith'* report on the subject : — " Canadian' Pacikic Railway, " okfick of the Engineek-ix-Chh:!', ., " Ottawa, January 31st, 1879. "Sir,— fn acconlaucr with iu^tiMctions, 1 lierowith cncloso an iibstract ol" six oi" th" lowest tenders for tlio construction oFtliat portion of the Canadian Pacitic Railway l)etwoen En.E^lish River and Kei'watin, 185 miles, with some remarks On tlie sanie : — "Form A, English River to Eagle River, 118 miles. Thi-r per cubic yard, Tliis corvccted yai'd ; concrete, o of the metal, consiistencio.s li in the settlod j gh timber wotil'l tender betray .^ -i | ettled country. second cohnnu, iiivation. "riib-wliarfiuj,' is 1)111 down at $2. '0 per cubic yard, and ballasting tho same us eartli excavation, maiving no allowance for liaul and lifting track. . " I ho lifth is No. lU, Wardiop S: Ross. Tiie ratns for rock excavation and masonry aro excessively low, otheiwise the items are generally consistent. " I"i)iiii B, Eiiijle Uiver to Kcewatin, 07 miles. The lowest temler for this is No. J.j, >rorse tt Co. Tlie rates on the large items of rock and earth excavation, ties and ballasting are excessively low, and are altogether inconsistfiit with our knowledge oi' tin- didiciiities of access to tlie country, the natine of the rock and the experience of the eost of ccjiitigtioiis works. 1 do not tliink it possible that the works could be carrieil through at the rates in this tender, and, il' attempted, a breakdown may be cxpectetl, involving loss of time and ultimato iiiMitioiiid cost. Tlio next in order i> Xo. II, Andrews iV Co., and the rates areextended only in the '••econd column, which clearly indicates want of knowledge of the dini(^ulties of the country. Tliere arc* some inconsistencies, also, which sJiow a lack of intormation as to tlui nature ol' the rocks. Solid rock excavation is put down at !i0 per cubic yard, and tho rock iiorrowing, that is, widening the cuttings, at 81. St; piT cubic yard. Tin- large-sized timbors wliicli \\\U probably have t<) be imported, ar(> put ilowu at abnut cost price, leavin<' nothin" for labor in work. The rate forties is also low, as timber is scarce in this section. I should doubt the possibility of carrying out the work at the r.ites in this tender without loss. Tiie third in order is No. '2'j, Fraser, Grant A' Pitblado. The inte.s in this tendtM' are rather low OH the large item-", but generally consistent, exce[it those iov timber, wliieh indicate that the ]iarties tendering are not aware of the s(;a.rcity of goo 1 sized timlier i>n this sectimi. i In? next tliree tenders are Xos. 19, Manning; 14, rjoodwin : ami li>, Wiuilinji. 'fiiese call for no s]iccial remarks, as they are generally consistent. The In-^t two aie the b.-t. Form 0, English Itiver to Keewatin, IS.'i milt The low(>st tender on this lorm is No. 1.'). The rates for rock excavation, ties and some other iteni< sei-m ali-iiidly low, and l)etT'ay ignorance of the difficulties of the country, sciU'city of timber, etc., juid a want ril' practical knowledge of the nature of th.e rocks, the gi-eat cost ol'getting forward plant, machinery and siipi>li<>s for men and horses. The rates seem more applicable to sanlstone or limestone, in II well sc.'ttled country, with good inads, and it wr(>akdevrral items, but the tot.ils are those of tho tenders by the same partie- for Forms A and B. 2li , f t 1 372 CONTRACTS. " Attached to No. 14 is a piojiosal to construtit the whole of the works between Enghsh Kwer and Kcowatin for a y a proce>ls that ajfpcars I'easiljhj, though at somewlip.t greater cost per cuhio yard. Tliey could jirohably ctl't-ct a considerable saving on the whole, as also, a rock e.xcavd tion, and long hauls by substituting structures at some points. "I have extended the net ([Uiintitics at rates to bring the whole amount within this bulk 8um. These rates would be moderate, but without a due allowance for contingencies, whioii might be considerable, in crossing the many arms and bays of lakes. The party, however, asks to have the benefit of any other reductions in quantities so as to cover this contingency. " If tlie proposal were in order I would consider it the best tender received, viewed with the light of our experience in otlier contracts where the final amounts have so greatly ex- ceeded those estimated at the letting of the contracts, " I am, yours veiy truly, " ^r ARCUS SMITH." ^' Sandi'ORO Fi.KMist;, Esq., " Engineer-iu-Chief. Abstract of Tenders for the construction of the Railway between EnglLsh River and Eaglo Rivor. FORM OF TEXDKR A.— 118 MILES. No. 13 17 12 11 10 18 I Thoiiiit.s .Mniks ( Jaines Coiimec r A. Charleboi.s JE. Slianly Denis O'Biin lAadrews, Jones & Co 'John P. An(lrt'^^^! ;X. F. Jones (j. II. Drake f Jolin Wardrop I John Ross J. R. Mac-donell Sureties. Year 1883. Year 1882. i \. M Smith ) $ 2,203,869 2,207,674 2,310,754 $ W. W. Keighley J L. /. Mallette. ) A. Bowie J JR. Warmington ) JLouis Pare J ' Albert Cliatfield 1 2,300,196 2,431,386 ( John Ileaey J A. Mvers ) 2,239.525 2,334,499 2,353,602 John" W. Wardrop ) f Joseph Kavanagh ) \R. W. Cruice J 2,440,724 2,505,744 CONTRACT No. 41. 373 ,veen English tity of oarth mt per cul/in rock excjiva thin this 'mlk ;encieH, which rty, however, j contingency. 1, viewed with -.0 greatly fx- MITH." glLsh Elver 83. Year 1882. $ !69 2,300,106 >74 rr)4 2,431,386 L99 B02 2,239,525 2,440,724 2,505,744 Abstract of Tenders for the conHtriiotion of the Railway between Kaglo River and Keowatiri. FORM OF TENDKIl B. -CT MILKS. No. 1.1 11 26 19 14 10 Contractor. G. D. Morse Frank Nicholson. . R. Warpole , /Andrews, Jones ft Co. JJohn P. Andrews yN. F. Jonec! [j. H. Drake .. r James II. Fraser & Co. i George G. fJrant (.James M. Pithlado 'Alex. Manning John Flint Alex. McDonell John J. McDonald . James Isbester James Goodwin. John Wnnlrop , John Ross Sureties. Close :\. J. Thompson Walker .Morley ., Albert Chatficld John lleuey I Wm. FraserA Co. [John M. Hlackie ... \ Joseph Kavnnagh. r'C. II. Mackintosh , E. Griffin A. Mortimer. A. Myers Joiin \V. Wardrop Year 1S8J. Vear 1882. $ 3,:i64,.336 4,1.30,707 4,157,933 4,313,135 4,347,847 $ 3,467,5(58 :5,015,942 4,470,272 4,716,606 4,652,196 Absthact of Tenders for the con.slriietion of the Railway between English River and Kcowatin. FORM OF TE.VDER C— 185 MILES. No. 15 II 12 10 14 21 Contractor. Sureties. Year 1883. Year 1882. rG. P. .Morse Close ) 5,699,707 $ ■< Frank Nicholson H. J. ThouiDSon r 5,937,732 (.Richard Jlarpole Walker Morley ) ' Albert Chatficld ) /Andrews, Jones & Co Vlohn P. Andrews 6,062, 55» 7,012,802 )N. r. Jones (J.H. Drake Denis 0'I>rien John Heney J P Wftrniinu^ton 6,628,859 6,668,240 6,731,015 6,731,614 f John Wardrop A Mvors ) 7,088,533 John Ross .Tnhn W WRrdron I James Goodwin r Patrick Pr.rcell f E Griffin 1 7,428,778 A Mortimpr < John Ginty joDn 1 urner Robert Beatr 6,903,364 (.Hugh Ryan \l 374 CONTBACTS. On the 12lh Fcbruury, Mr. Fleming, having made enquiries concerning the standing of some of the tenderers, reported as follows: — i '■'■ K KTiiKK Communication IVoiii SiimUbrtl Fleming', ICscj., to the Ilonoiirultlt! tins Minister of Pub- lic Works, (luU'fl Ottiivv.i, tlio 12th Folniiary IH7'.\ in roforanco to his Ri^port, datoil Ottawa, 1st. Fisliruiiry. IS7'.', on thi; tt'iidcrs r(M'civi!il fur coiLstnicting the soctiouo of thf ('iiiiinlian I'iuiilio llailw.iy Ix-twoi'ii Eii^'lish River and Koewatin. "Canadian Pacific Railway, ''OKriCK OK TUIC ENtllNKKK-I.N-ClIIKr, "Ottawa, Fi'bnuiry !2tli, 1H79. " Slu, — In my report, dated February 1st., on the tenders) received I'or cosistriK'tiii;^ th>> sections- of tlio Parilic Railway between Eiiirlish Riv r and Ke(!watin, I felt that I could not advise the (iovernnu;ut to a(^eei)t the lowest tender.^ for reasons given. " You deenie(l it advisiible, however, to have en- tween Iii{' ill the Department as a good business man who has recently turned to lontracting, iiut who haihad but little experience in the construction of works of any kind, particularly railways, aud that his moans are limited. In August last, however, Charlobois it Co. entereme difteron c of less tlinn two per centi, on the whole. It remains Por the Government to select one of tliese ; f lie ordinary course being to begin with tnc lowest and pass upwards ta the next, until ;'.irlijs arc reached who can satisfy the ^ivernment as to tho skill and experience they can bring to boar upon the work, so as to have it completed satisfactorily by the time and according to the conditions of the contract. I amy c&c.) '• Your obedient servant, "SANDFOHD FLEMING, " Engtneer-in-Chief.^^ On the 13th February the following letter was written by Messrs, Marks & Conmee : — "Ottawa, 13th February, 1879. '♦.SiK,— In the event of section A, of the Canada Pacific Railway, being awarded to our t«nder, we will associate with us in the contract Messrs. Purcell, Ginty k Ryan, the contrhc- tors for the section east of the one in question, and all preliminary arrangements made by them with the Government respecting our tender will be satisfactory. " We iiave the honour to be. Sir, " Your obedient servants, ' "THOS. MARKS, ■^ ■'■ . « J.VMES CONMEE. ,♦ "Hon. Dr. TuppER, C.B., "^linister of Public Works." 1 1^ -t ■ p ■ I 1 » * 1 • f t ZH OONTEAOTS. 1 — ' -< . 1 ' .■ ■ ■*'■ After which the following correspondence took place : — " Ottawa, 20th February, 1879. "GsNTLEMEif, — In reply to your letter dated 13th February, but received to-day, inform' log me that in the event of section A, of the Canada Pacific Railway, being awarded to you; tender, you will associate Messrs. Furcrll, Ginty & Ryan with you in the contract, and that all preliminary arrangements made by them with the Government respecting your tender trill be satisfactory, I have to say that the Government are prepared to enter into a contract trith you, associated with Messrs, Purcell, Ginty & Ryan, provided the required deposit u made within one week from to-day, but that the contract must be made upon your tender, without any modification of any kind whatever in its terms. " Yours faithfully, , "CHARLES TUPPER. '* Thomas Harks, Ejq., and "Jamks CoMHKK, Esq., Ottawa." r " Ottawa, 21st February, 1879. '' SiB, — We be^ to acknowlege receipt of yours of the 20th inst., informing us that the contract for section A, of the Canada Pacific Railway, had been awarded to our tender, pro- viding that we would associate ourselves with Messrs. Purcell, Ryan & Ginty, aud that the required deposit '^ ould be made in one week from this date, all of which we agree t ^, and request that the uameB of Patrick Purcell, Hugh Ryan and John Ginty be substituted for that of James Couinee in the contract,' having made arrangements with Mr. Conmee to that 'effect. ^ -, .. . .,-., ^^ " ■ " ,.■ s.. , " We have the honour to be. Sir, " Your obedient servants, "MARKS & CONMEE. "Hon. Dr. Tcpper, C.B., " Minister of Public Works.' . ■ < " Ottawa, 27th February, 1879. " Deab Sir,— The tender of Mr. Marks and myself for the construction of section A of Uie Canadian Pacific Railway, having been accepted, I beg to inform you that it has been agreed that Messrs. Patrick Purcell, Hugh Ryan, and John Ginty shall bo associated with Mr. Marks in the contract in my place. I therefore beg that you will allow the said gentlemen, viz., Messrs. Purcell, Ryan and Ginty to sign any contract that may be awarded for the said section, and to substitute tb^ said gentlemen for me in all matters, as if they had tendered instead of myself. *' You will also please allow Mr. Marks to withdraw the deposit of $5,000 paid in on the Mid tender, as he bus put in his proportion of the security in full. "I am Sir, *'.Your obedient servant, " JAMES CONMEE. •< The Honourable " The Minister of Public Works. •« Witness : P. Pdrcbm,." 1 CONTRACT No. 41. 37r lary, 1879. (O'day, inform' rarded to yom tract, and that ig your tender into a contract lired deposit U n your tender, TUPPEU. uary, 1879. ling us that the )ur tender, pro- y, aod that the J agree t-*, and substituted for Conmee to that " Gamadian Pacifio Railway, <■ OrriCB or the £liGINGEB-IN-CuihK, CONMEE. uary, 1879. of section A. of lat it has been ciated with Mr. aid gentlemen, for the said had tendered )aid in on the 'ant, CONMEE. Ottawa, 1st March, 1879. ** Sib,— As the tender of Marks & Conmee, Form A, hat been Accepted, I deem it my duty to a^in point out what appears to be a mistake. " I think it is due to those who oSer to pe/form the work that the mistake should be pointed out io them before they execute the contract. " The price of ordinary earth excavation in the Ist column of the tender is 25 cents, and in the 2nd column 26 cents. " The next item is earth borrowing, with haul of 1 to lil miles, and the price in both col- umns is 10 cents. As this includes a long haul in addition to the cost of excavating, tbe price should really be higher instead of lower than ordinary excavation. " The 18th clause of the specification provideR that under ordinary circumstnnces tbe maximum haul shall be 13 cents, for a haul of 2,500 feet or upward ; this rate is to be added to tbe price of ordinary excavation, viz., 25 cents, making 38 cents per yar(?. " Tbe item to which reference is now made is for extra long haul, from 5,2?^0 io 0,2-10 feet, and which it was intended should have a'special rate. I shall be obliged, however, under the specification and printed form of tender to money out all excavation with this extra lou<; haul at only 10 cents. " I think tbe contractors should be informed that payments can only be mir'>V('d hy His Excellency the Governor General in Council, on the Srd March, 1879. "On a Report from the Honourable the Minister of Public Workp, t^tatinj? t'.:!t tenders have been invited and received for the construction of the 185 miles of the Catii'Ja PaciQc Railway between English River and Keewatin. '' That these 185 miles have been divided into two sections and the tenders raade on, forms called 'A' and 'B,' the first *A' covering tbe 118 miles between English River i;iid Ea^le River, and the second ' B ' the 67 miles between Eagle River and Keewatin . "T!iat the forms of tender used contain two columns, the first being for the insertion of the rates required by the tenderers to complete the works by the 1st July, 1883, and have them ready for the passage of through trains by the Ist July, 1882, and the st cond column for tbe rates required t complete the works by 1st July, 1882, and have them ready f rr \Im pass- Me of through trains by the lit July, 1881. Z1S CONTRACTS. * t -• » i\ ' ' 4V. " That the two lowest tenders received i'or the 07 miles section — form ' B ' — for doing the work in the shorter period are : — " Morse & Co $3,364,274 " Andrews, Jones ife Co 3,915,942 '"' That Messrs. Morse & Co., who have been offered the contract upon their tender, have refused to take it, by a letter addressed to the Department, dated the 25th February, 1879. " /hat by direotioa of Council he, the Minister, has notified Messrs. Andrews, Jones & Co. that a contract would be entered into with them for the section. Form ' B,' provided they made the required deposit of five per cent, upon the amount of their tender by four o'clock p.m., thia dny, Saturday, let March. " That the lowot t tender made lor the 118 miles f.ection, Form *A,' for executing the work in the time stated in tUo fir^t column or the long period, is from — "Marks & Conmte $2,20>,896 "And t'.io two lov.cit for doing the work in the lime stated in the second column, or the short period, are from — "Andrews, Jones & Co .^ $2,248,.585 "Marks & Conmeo 2,300,196 "That at, t'.e wiitteu request of Messrs. Marks it Conmee, the names of Messrs. John Ginty, l\ Purcell and Hugh Ryan, well known and experienced contractors, have been asso- ciated with Mr. Marks in tbe tender in the place of Mr. Conmee. " luat -Uessre. Marks, Ginty, Purcell and Kyan have expressed their ability and willing- ness to conii)lete the work by the shorter period, and have made the required security deposit of five per cent, on the amount of their tender, or say $115,000, and recommending that the tenher ones would be best for the public interest, but the G-overiiment did not feel at lib -'v to take what seemed the wisest course for the reason that a money deposit with each tender was held to give to the party who had |made it rights which could not be overlooked. On the 20th February, 1879, the contract was offered to Morse & Co., [the lowest tenderers, and eight days given to provide the spt^cified security. lOn the 24th February no security being as yet provided, Morse & Co., and lAiidrews, Jones & Co., who were next above them, and $ool,G68 higher, Icombined and agreed that Morse & Co. should not carry out their tender, Ibiit should amalffaraate and share the chances on that of Andrews, Jones & > t m »fi: m\' ^ ■*'■ 382 CONTEACTS. Co. On the 25th February Morse & Co. sigii!\l a withdrawal of their teiidor. and on the 20th delivered it to the f)epartraent. (They were subsequently repaid the deposit which they had made, ostensibly as an evidence of thoir good faith.) On the saim^ day, the 20th February, official notice was givou to Andrews, Jones & Co., that the contract was awarded to them, and that until 4 o'clock p.m., on 1st March, the Saturday following", was allowed for furnishing the specified security. / Under the arrangement between these firms it had been agreed thai if Andrews, Jones & Co. foiled to find half the security they wen* to abandon all their rights to Morse & Co. On the 28th Februarv, the dav before the time M^'as ui>, they knew at New York that they could not find their shore, and telegraphed to a person representing the interests of Morse & Co.. consenting that all their rights should be assumed bv the last named firm. On the 1st March the day named for completing the security (nearly $200,000), Morse & Co. con«^ealing the fact that they claimed the position of Andrews, Jones & Co., deposited at Toronto about one-fourth of this amount, and no more. On the 27th February the Secretary of the Depart- ment had notified Andrews, Jones & Co. that no extension of time would be granted ; nevertheless, Mr. Nicholson, one of the firm of Morse & Co., being at Ottawa, and having reason to believe that the Government might still extend the time if convinced of the financial strength of Andrews, Jones & Co., induced his firm to make such efforts in Toronto as resulted in a deposit on Monday, 3rd March, of a second quarter of the requisite amount, and in the name of Andrews, Jones & Co. On 5th March no fui-| ther deposit having been made, the contract was awarded to the tender of Fraser, Grant <& Pitblado at $214,765 higher than that of Andrews, Jones] & Co., and became the foundation of thi> contract now under (Consideration. We attempt elsewhere, in our report on " Contract-letting," to skAV that the system which has prevailed in letting contracts for the construction | of the Canadian Pacific Eailway is open to this, amongst other objections,! that after weeks or months of time, which can be ill-spared by the country, have been spent in the effort to get available offers from suitable persons.! the tenders which come in, on prescribed forms, for estimated quantities, according to carefully prepared specifications, and which are ceremoneouslyj opened and considered by authorized officials may do no more than an«l nounce to the Government prices, at which the tenderers will not do thel CONTRACT No. 42. 383 work, and which entail as a certain consequence, the loss of still further time to discover their worthlessness. We proceed to give a detailed report of the negotiations amongst ten- derers and other persons who attempted to be interest(>d in this (T^ntract, as far as the evidence discloses them, because they soom to us to illustrat(^ some of the weaknesses of the said system — a system which, though the loss of every day was a serious one, and though the transaction was one of several millions, in this case made the temporary deposit of $5,000 with tenders, which were never believed to be capable of fulfilment, a reason for another month's delay before treating with substantial contractors who, on the re- ception of the tenders, were reported by the Chief Engineer and understood by the Minister to be efficient and able. The firm which made the lowest tend<"r was composed of G. J). Mor.se» F. Nicholson, R. Marpole and A. J. Thompson, the namn of th(^ last appear- ing in the tender only as a surety. * Sometime in January, 1H79. Messrs. Morse & Ni'holson Wvnit to the office of Mr. P. G-. Close, a man of capital in Toronto, and asked him to be one of their sureties in tendering for this work. This LhI to negotiations which ended in an agreement. The parties to this agreement hiive been exaiaiiied Morse &^ Co.. | ^^ witnes.srs. They do not agree in their respective accounts of the object ment mi^'l^t I of the arrangement, or the motives for making it. The following, in our of Andrews, ■ judgment, are the facts properly deducible from their evidence as a whole. |o as resultei ■ Morse tSj: Co. felt their we.akness in not being known as contractors for the 1"^-^.^^^^^ '^l large works, and feared that though the amount of their t to abandon y before the . their share, Vforse & Co.. ; last named •urity (nearly he position of ourth of this 3f the Depart- f time would consideration. [no- " to show construction ler objections, the country, table persons, Mr. Morse was a cattle exporter, and Mr. Close says that he intended to how the Government that Morse & Co. had Messrs. Gooderham & "Worts nd other substantial men " at their back." It does not seem to have d quantities,Bccurred to either of these negotiators that Messrs. Gooderham & "Worts or remoneouslyB^^'^r substantial mien could, by their own act or word, show that they ore than aii*'^r^ at the back of Morse *ki Co. quite as plainly as could bo don.' through .11 ,^p^ ^0 thefry statement of Mr. Close. V ■ I 384 CONTRACTS. iiii' IV 111 fact, Morse & Co. intended and desired to get through Mr. Close, some more tangible advantage than a mere representation of their circum- stances, namely, a consideration of their offer, whatever it might be, more favourable than others of equal merit, and because of influence expected to be exerted by Mr. Close or Mr. Shields over members of the Ministry. Before these negotiations, Mr. Close and Mr. John Shields had been discussing a method by which they might reap some gain in connection with the Government works then advertised to be let, and Mr. Close at first appeared loth to deal with Morse & Co. unless with the acquiescence of Mr. Shields, so a meeting was arranged and took place between Messrs. Close, Shields, Mors3 and Nicholson. After some bargaining an agreement was closed and reduced to writing as follows : — " 'Ibis agreement made this twenty-secood day of January, one thousand eight hundred anrl seventy -nine between G. D. Morse, of the city of Toronto, in the county of York, con- tractor ; K. Marpole, of the town of Barrie, in the county of Simcoe, contractor ; G. F. Thom])- sou, of the said city of Toronto, contractor, and Frank Nicholson, of the said city of Toronto, contractor, of the first part; and Patrick George Close, of the said city of Toronto, merchant, of the second part. " Whereas the said parties of the first part are tendering for the construction of sectioD ]l of the Canadian Pacific Bailway, and have requested the said party of the second pari to assist them in obtaining the said contract for construction, and to waive and abandon all efforts to obtain the said contract on his own behalf, which, in consideration as after mentioned, the sail party of the second part has agreed to do. " Now, therefore, this agreement witnesaeth that if the said party of the second part do exert his utmost and sll legitima te endeavours to procure for the said parties of the firstpart the contract for the said section, and act in their behalf, for this special purpose, as their agent or bioker, oni abandon all application for the said contract upon his own personal behalf, or upon the behalf of any person or persons other than the said parties of the first p \ti X Lucl provided tl at the said parties of the first part, or any of them, obtain the said con- tract, or any portion or part thereof, then it is also agreed and understood as follows, that is to eny : The said parties of the first part covenant to pay to the said party of the second part ; brokeray:o or commission in relation to the said contract, an amount equal to 2 per cent, of | the amount of the said contract, to be paid to the said j^arty of the second part, from time to time, upon the amounts paid to the said parties of the first part, under and by virtue of the | said contract and at the times when such amounts are paid to the said parties of the first part ; but it is understood that the first three monthly payments, under such contract, shall be paid to, and received by, the said parties of the first part free and clear of any deduction | by or payment to the said party of the second part, nevertheless that the said brokerage or commiEsian upon the first three monthly payments bhall be charged against, and payable out I of the fourth monthly i^aj-ment, along with the sni 1 brokerage upon the said fourth monthly | payment to the said party of the second part. CONTRACT No. 42. 38ft L Mr. Close, leir circum- tit be, more ico expected ilinistry. ds had been L connection Close at first cence of Mr. essrs. Close, 3d to writing . eigbt hundred ,y of York, con- • ; G. F. Thomp- Bity of Toronto, onto, merchant, ction of section second pari to nd abandon all ifter mentioned, ) second pari do of the firstpart orpose, as their is own personal ties of the first un the said con- follows, that is the second part 2 per cent, of irt, from time to ty virtue of the ■ties of the first contract, shall any deduction d brokerage or ' and payable out fourth monthly '* It is also agreed that the caid brokerage be the first charge or lien upon the amounts so I paid, from time to time, t? the said parties of the first part, save as aforesaid, and the parties Ur the first part do grant and assign the said 2 per cent, unto the said party of the second part and authorize and direct tlie Government of Canada, or whom<4oeTer pays the amount of the said contract to the siid parties cf the first part, to pay the said brokerage to the said party of the second part. " It is also agreed that this covenant and grant and assignment sliall be binding upon the I aoiouiit j coming, from time to time, under the said contract to the said parties of the first part, whether the said parties of the first part keep the f CONTRACT No. 12. 387 tood by tho m\ dillor iu stated ; one m. all ellorts on of thoir and, indot'd, rested in tlvj McDonald k ;here was ii:\ the livni ol e, though MX liey were not firms above epresented at Marpolo, Ih, Mr. Manning. ndMr. Close from whom s, and that it ong to be in believe that ;rhich others ;ely after the be publicly the figures of Ids was able Ich they were On the next day after it became known that Morse & Co. had made the lowest ofl'er for tho section C (the whole distance), the following agreement was made by which the terms of the previous bargain between Mr. Close and Morse & Co., respecting section B, became applical^lo with some modi- fication to the other portions of tho work : — "This agreement, miiue the lliirty-tirst tlay of .Imiuarv, in the year of Our I/Jnl one thousand eight bundro 1 and seventy nine, between (Jeorge T> Morse, A. .r. 'I'hompson and F. Nicholson, of the city of Toronto, and Kicliard ^larpole, of tl)e town of IJarrie, contractori), of the fir»t i>>rt, and 1'. Ct. Clo?o, of the city of Toronto, merchant, of the second part. " Wl ereus the eaid jarties entored into an .agreement boarini: date tho twenty-second day of January, A.D , 1S70, respecting the loaderinj; Rir and doing the work of section B, of the Canadian Pacitic Railway, and whereas it has been tl oight desiralle to tender also for the w^ork on section A of t'le said railway, and also to tender for both the sections together, now this agreement witnes-jeth, that the said parties agree that in case they, tho raid parties of the first part, s'jould obtain the contract for the said sect'on A, or the two together, that ttieu all the provisions and stipulations contained in the said recite daj^reementisball extend to, ami include the contract for said section A, or the two together, as if ^aid section A bad been originally included in the said agreement o*" the twenty second of .lanuaiy, 1879, fxcepting only that the brokerage or commission which shall be paid to the said party of the second part, in respect of the amount received on account of said section A, shall be only 1 per cent, instead of 2 per cent. " And this agreement shall be >>inding on the heirs, executors atd administrators of tho said parties, " WitneB^ our hands the dny and year first above written. "G.D.MORSE, " per bis attorney, F. NiciiOLSOX. "A. J. T1I0MP.S0N, "R NICHOLSON, " 11. MARPOLE, "P. 0. CLOSE. "Signed in the presence of "Thos. Watts."' On the day after the opening, Mr. Marcus Smith made a report on the tenders received. This is set out in our report on contract 41. Concerning this section B, he points out that Morse & Co.'s tender is, on the main items, excessively low, and is altogether inconsistent with a knowledge of tho difliculties of access to the country, the nature of the rock, and the cost of contiguous works. He did not think it possible that the works could be carried through at the rates named, and if attempted, he said, a breakdown might be expected, involving loss of time and ultimate additional cost. As to the tender of Andrews, Jones & Co , he reports i 'ii. [heir only offer was to finish the work a* the shorter period (t.e, the passage of trains 25^ :i88 CONTRACTS. 1 mt- i ' ;■ oil 1st July, 1881, and completion a year after), that this fact clearly indi- cated a want of knowledge of the country, and he mentions some of tlic prices which were too low, amongst others, rock excavation, at $1.60. Asa fact this was by far the largest item on the work. The contractors on tlio adjoining so(;tion were getting !^2.75 lor it. He also named rock borrowiiifr at $1.80. The importance of a reasonably fair price on these two items will be understood when it is mentioned, that at these low rates they would amount to $2,116,800 out of the total offer of $3,915,942, for the completion -of this work, and Mr. Smith doubted the possibility of carrying out tln' ivork, at the rates in this tender, without loss. On the day after this, viz., on the 1st February, 1870, Mr. Fleming enclosed Mr. Smith's report, accompanied by one of his own, which is also set out in our report on contract No. 41. Mr. Fleming thought that concerning this section the prices named by Morse & Co. were inadequate, and that the prices of Andrews, Jones & Co. were incongruous, and taken with their tender generally indicated a want of due appreciation of the difTicullii^s: and he proceeds to recommend the tender next a])ove Andrews, Jones dt Co., that of Fraser Grant & Pitblado, as a proper one to be accepted, •ii^jrescnting that he knew these contractors to be skilful, energc • men, •who had satisfactorily completed, under his supervision, portions of the Intercolonial Railway and its branches. These reports not having been deemed sullicient to justify a decision, the Chief Engineer proceeded to make further enquiries respecting tln' resources, skill and experience of the tenderers, and on the 12th February. 1870, he reported the results to the Minister. This is to be found in our j report on contract No. 41. In that he states that he believes Morse Sc Co., liad not succeeded in getting men of sufficient skill and experience to join them in tho contract, and that that was not surprising; and after referring to his previous report on the standing of Andrews, Jones & Co., he rdds| that ho had not succeeded in getting any satisfactory information respod- ing them. , ■ At the end of this time, two weeks had been lost at a most critical period of the year, in deference to this system of letting contracts, andl ^still the Department was so trammelled as to be unable to do what, in our| opinion, w^ould have been done on the 1st of February by any private' proprietor — that is, to adopt the report of the Chief Engineer, and of his next! .jU command, by accepting the lowest offer from any firm believed to havej sufficient skill and resources for the undertaking. CONTRACT No. 42. 38lr Tho Minister of tho Di'piirtmoiit gavo cvidcnco boforo us and described the position as ombarrassinsf. lie testified that (»n one side of the <|iiestioii was felt the importance of phicin![!f the contract in thf most vicforous and efficient hands ; and, in the other, gettinfr the work at the lowest possible cost ; that it was not felt to be proper to adopt the recommendations of the engi- neer, to award it to parties having the necessary skill and resoiirc(\s, because- tho Government had apparently lixed a test or (lualification for tlie worlw which was,in the first place, a deposit of i$f>,000 with each tender, and, in the second place, to show their ability to deal with the work by a further deposit of 5 per cent, on the bulk sum of the contract. We do not see how the intention to ask 5 per cent, on the bulk sum of the contract if the contract should be awarded, touches the propriety of deciding not to award it, for. under such a decision the second test could not be applied. In this case the evidence shows that there was n^ason to believe, that the two lowest tenderers had not asked such prices as would enable them to complete the work without loss, and that they had not sufiicient resources to bear a serious loss, and we think the system is not a desirable one which prevented the Department on the 1st of February, irom taking the same course which w^uld, in our oi^inion, have commended itself to a good business man where private funds were at stake, and which after a month's delay was ascertained to be inevitable. "We think this case has clearly proved that the deposit of a small sum w^ith a tender does not establish either the good faith or the ability of a tenderer. And, according to our view of the evidence, it is reasonable to concludt? that if it had been necessary to send in with each tender some such sub- stantial security either in the form of money, or of an undertaking from responsible parties, as is suggested by us in our report on " contract letting," neither the tender of Morse & Co. nor of Andrews, Jones & Co., would have made its appearance to embarrass the Government and delay the work as they did in this case. It is true that about a fortnight after the contract was awarded tothem^ Morse & Co, did put up nearly $100,000 in money, but that was not uponr their own tender, and it was done upon the chance of taking the w^ork at a sum $651,668 higher than that named in their own offer. It is plain upon the evidence of the members of this firm, that they put in their tender, not believing or expecting that the work could be done for the price stated in 390 r- — CONTRACl'S. their offer; they deliberately made a proposal not expecting to fulfil it, in the belief that something would turn up afterwards to save them from loss. The system which encourages such proposals and permits them to be made with impunity, seems to us to require a radical change. On the 20th February the contract was awarded to Morse, Nicholson & Co., the lowest tendc^rers, and that fa(;t was communicated to them by a formal letter from Mr. Braun. the Secretary of the Department. Up to tho 24th January no arrangements were made concerning the deposit required from this firm, but on that day, as before mentioned, they and the firm next above them, Andrews, Jones &; Co.. entered into an arrangement by which Morse & Co. were to decline to fulfil their offer, and the two firms were to amalgamate and take their stand on the ofler of Andrews, Jones & Co., which was more than half a million higher.. On the day fhis agreement was made, Mr. Jones, a partner in the firm of Andrews, Jones & Co., ^, ote the following letter to ihe Secretary of the Department of Public Works : — "Ottaw.\, :J4lh Febiuary, 1879. ".Sir, — W© have the honour to inform you that we have associated with us Mr. A. h\- berge, jun., coDtractor, of Montreal, in connec'icn with our tenders for the works of construe- tion oi the Canadian Pacific Railway between Ivigliah Iliver and Keewatiu, and to elate in case our tenders should be amongst the lowest and the works awarded to us, iliat ivc are ])re])ared io make ihe itecenxary deposit oj [^ per cent, immediately, and cotnnicucc (■peralions at once. " We might add that o'lr firm is composed stiictly of ] radical railroad men of Ii^rge cz- |ierience. '• We have the lumour to be, Sir, '• Your obedient servants, "ANDHEWS, JONES A CO. -^ "TerN. F- .Josk^i. " F. Biur.v, K^q , " tSeoretiiry, Department of Publio Works." This same firm had previously addressed the Minister of Public Works by a letter dated 6th February, which was as follows : — '*Sf. CatuaiiinivS, 6tL February, 1879. "Sir, — It having been rumcireJ that the tuaders in tho uoighbourhooJ of G,O;X),O00, lor that I ortion of tho Pacific Railway between Englisli Ilivor and Eat Portage — 18.') miles — wi'.l not be con.«idered by the Department, we desire to state that we have every confidence in tin' figures that we imve subniiiied, and tliat if the contract is awarded to us, we are prepared to furnish the 5 per cent, required by the Government for its fulfilment, and to proceed with the work imnie\.. 42. 391 len of Iprge tx viblic Works carry out the works to & successful completion. A»' \e .is-'.c is that our tender may be con- sidered on its merits, and if the lowest that it will receiyo at your liands favourable consider- ation. *^ ** We hava the honour to b«, Sir, " Your obedient servants, "ANDREW'S, JONES & CO. " lion. r>R. TUPI'KK, "Minister of Public Woikrf, Ottawa." The firm of Andrews, Jones & Co. were not possessed of means sufficient to enable them to undertake this contract, but lliey had made arrangements with a wealthy party in New York to find the capital iiooassary to carry on the works, provided a confidential ugi'iit to be sent by that party to Canada should, after enquiring- carefully into all the circum- stances, so report, as to satisfy him of the safety o^ the advance. AVhet!ier the party alluded to, was one person or a firm v 'i did not deem it necessary to enquire. A Mr. Dillon was either the only person or one of the persons expected to assist Andrews, Jones & Co, and v/e hereafter mention hiiH as the party. Mr. Dillon named Colonel Smith as his agent to come to Canada on his behalf, and he accompanied Mr. Jones, one of the tendering firm, to Ottawa. After they arrived here, a new arrangement was made by which Colonel Smith might possibly have a direct interest in the contract. He and Mr. Jones agreed that if Andrews, Jones & Co. should get the con- tract and Colonel Smith should find a certain share of the securitj', then Col- joael Smith might become a pirtnci. He was thus occupying the double posi- tion of adviser to his principal in New York, concerning the expediency of lliis finding the money to support a contract by Andrews, Jones & Co , and |of a person to be benefitted by his i>rincipal taking that course Neither Mr. Jones nor Colonel Smith had the power to decide that the necessary money would be forthcoming. Colonel Smith's duty was to [return to New York and report, and then his principal was to decide [whether he would risk his capital. • It was not known amongst the Canadian tenderers t'lat Colonel Smith's position was that of an agent sent on to report to a capitalist, and that Udrevvs, Jones & Co. depended on that report as a step towards their l)rocuring the contraci After the bargain of 24th February, between Mr. Jones and Colonel fmith. 111 the name of Andrews, J^nes & Co., and Morse & Co., by which lie withdrawal of the latter was to take place, Mr. Nicholson, on the 25th, 392 CONTRACTS. ' 1 V * •% in the nivme of his firm, wrote the following letter, and on the 26th February handed it in to the Department : '• Ottawa, 2'f(h February, 1S79. '•S:u, — Jvofoning to the intorvimv whlcli o ir }ilr. Nicholson had tlie honour to hold wiUi you yesterday on tlie Buhject of our tender for section " C " of the raeillc Euilway, and your Htatenient tliat section A, part thereof, liad been awarded to other contractors, and after duiy consideiin;» tlio difficulties to be encountered in the execution of the contract for section "B' alone, especially in view of (lie decided opinions of the Engineer of the Doi^artment. that our prices for the rock .Tork on section " B " are below tlie actual cost, we have concluded to witli draw so luuch of our tend<'r a-; relates to the said section " P»." '• Wo have the honour to be, Sir, " Your obedient servants, " ]^I<)RSE &, CO. " The Hon. Minister of PuMic Work«."' If Col. Smith and Mr. Jones were sincere in day of February, A.D. ISTy. ] (f. D. M'.>K>E it Co. [.^cal] Samuel E. St. O. C»i.\rnac. On this day, the following letter asking for an extension of the time lor making tho deposit was written by Andrews, Jones & Co.: — IPv. 394 CONTRACTS. !i:i " Ottawa, 2Gth February, 1879. " SiK,— We have the honour to ackuowledge the receipt of your letter of this date, inform- ing U8 of tlie acceptance of our tender for the^coustruction of section " B,'' Canadian Pacific Railway. " We regret to observe that you have limited us to less than three days to tlepo;\it the 5 per cent, required as security. If it should be necessary for one of us to visit New York in order to complete the deposit, loe trust you will extend the time for that purpose for iuo or three days. We will be prepared to execute the contract as soon as may be convenient for tlie Department, " Wc have the honour to remain. Sir, " Your very obedient servants, "ANDREWS, JONES .t CO. " The Hon. Minister of Public Work.s" On the same day, 26th Februaiy, Col. Smith and Mr. Jones went to NcAV York to report to Mr. Dillon and to see if the required advance would be made by hi^a. The members of the firm of Morse & Co went to Toronto on a simih\T errand, in the belief that there -would be no hesitation or failure on the part of the New York branch, and therefore not expecting to raise more than one-half of the required deposit, which was in all about $200,000. The time named, as aforesaid, lor putting it up expired on a Saturday, the 1st of March, 1879. Before leaving for New York, Col. Smith and Mr. Jones arranged with Mr. Chapleau, a corresponding clerk in the Department, to ascertain the answer of the Government to the application for an extension of time and communicate it by telegraph to New^ York. That answer was as follows : — "Ottawa, 27th February, 1879. "Gkxtlkmsn, — With refeie.io lo your letter of yesterday's date complaining tliat tlio three 1,3) days time allowed you by the Minister lor making the required deposit of five per cent, on the amount of your tender for section "B " of the Canadian Pacific Eailway, is too limited, and requesting that it be extended two or three days more, — "I am directed by the Minister to state that for some time past you were aware there was a possibility that you would be called ui)on to take the contract upon your tender for Bection " B," and that you cannot reasonably advance the plea that the time allowed you for making your deposit is too short. , , " For this reason and in view of the importance of placing those works under contract with the least possible delay, the Minister regrets that he cannot grant your application fur an extension of time to enable you to make your deposit " I have the honour to be, Gentitmen, " Your obedient servant, " F. BRAUN, " Secretarij. "Mossr:!. Andrews, Jonks & Co." CONTRACT No. 42. 395 The substance of this refusal of the application was communicated by Mr. Chapleau to Andrews, Jones & Co., or to Col. Smith, at New York, on the 28th February. Col. Smith and Mr. Jones reached New York on the evening of Thurs- da) , 27th February, and saw Mr. Dillon on Friday, 28th. After hearing Col. Smith's statement Mr. Dillon " refused, utterly refused to have any- thing to do with it." Col. Smith rei)orted to Mr. Dillon, amongst other things, that the country in which this work was to be done " was made up of inlets of water extending into the land," impossible to cross when the ice on the lakes and rivers broke up, that unless the plant and supplies for ihe work were transported in the winter across the ice, it would be late in the summer before it would be done. It was during this interview that Mr. Cluipleau's telegram announcing ihe Grovernment's refusal to extend the time for depositing the five per ent reached the parties. Col. Smith testified that in his opinion Mr. Dillon would not have put up the money whether time had been extended or not ; that they i^arted on that occasion with the understanding that ilr. Dillon would not give the desired help. They endeavoured to persuade another party, but the time was too limited. In the course of the same examination Col. Smith said that there ])eing 110 hope of persuading Mr. Dillon, he would not have tried to persuade any one else, and that in his opinion Mr. Dillon's decision did not proceed from he shortness of time, but from the fact that from his (Col. Smith's) state- ment, he had " made up his mind that it was not a very safe transaction." In his evidence before us. Col. Smith stated it to be his opinion that it was at that time late to get in supplies, that there ought to have been more I time allowed to get them in, but still, perhaps it was not too late. After he left his friend in New York, on the 28th, Mr. Jones and he [linally gave up the attempt to find the security, partially, he says, because pir. Dillon, did not think it was advisable. Col. Smith testified that some of the parties who were to join Andrews, Jones & Co. had mentioned to Mr. Jones that there was a feeling against pis firm, bacause it was" exclusively American," and in giving his evidence he seemed to suggest, that that was one reason for taking in Morse & Co. as partners in the transaction. < 396 CONTEACTS. if- "We gather from the evidence that, although Col. Smith does not say so, ho did, in fact, leave Ottaw^a without any strong hope that Andrews, Jones & Co. would be able to arrange for the funds requisite to secure them a share in the contract, or that he himself should be finally interested in it. Morse & Co. had emi^loyed Mr. Joseph Macdougall as their solicitor at Toronto, and the lion. "William Macdoug 11 was his agent at Ottawa. On the 28th of February, the day before the time was up for finding security by Andrews, Jones & Co., the following teh'gram was receivf^d by the Hon. "Wm. Macdougall : — " L'8th Tebruary, 1878. " JJi/ Telerjnim from New Yorh to (he Jlon. Win. Macdougall. '* livident hoilile attitude, fatal to project willi friends here, forcea uj io wi',L. have decided th»'y will not take the work, r% t'ley think tiiei liaie given is not enough. , • " J. N. yMlTH." The Toronto firm on that day, 1st March, answered this last communi- cation from the Kew York branch, " urging them to deposit their security." On the some day, Saturday, 1st March, Col. Smith replied to that us^ follows : — " TOKOXTO. -- • '' Ti G'torge J), Morse. '• W'll «(•« tlie i>iit'es Mon liy, wnd will to!«'graph what thoy will do. " J. N. .SMITH." On the same day, Saturday, 1st March, $30,000 was deposited by Mr ■ "Tl A. L. Thompson in the Bank of Montreal, at Toronto, to the credit of tho CONTRACT No. 42. 397 does not say lat Andre\vs, 3 secure thorn Lorested in it. heir solicitor >nt at Ottawa, p for finding was received ibruary, 1ST 8. ■all. o \vi',h-lraw. Use rred. Particulars F. JONES" ted to Morse &: d in the tender February. On ^a to Messr.s. granted by tlio ■so & Co. and ty. On Satnr- loTsc & Co :— I' TOKONTO. \d, Morse. ley tliink t'li:^ lian' N. SMITH." last communi- their security." Iilied to that a^ TOUOSTO. T). Morse. N. f^iiiTIi." )ositedby Mr- credit oi' tho Receiver-Greneral, on " account of contract, section B, Pacific Railway." Without mentioning the name of any party on whose behalf it was deposited, this fact was telegraphed to the Receiver-General on that day as follows : — " Jiif Telegraph from Tjronto. j " Ottawa, Tst March, 1879. " A deposit ol'?t9,'J50 baa been Diade by A. L. Thompson f.)r your credit, account con- tract section B, Pacitio Railway. '•GEOUGPJ W. YARKBR, " Manager. " The Hon. KoC'jiver-beneral. * " Received at 4.30 p.m., let March, 'A.C . v Some one using the name of Andrews, .Tones & Co. wrote from Ottawa to the Minister of Public Works on the 1st March. No one of that firm was then iu Ottawa, and Mr. Nicholson, the only member of Morse & Co. then there, did not know who it was. The following is the letter : — " Ottawa, Jst Marcb, 1879. *'SiR, — We beg t) inform yoj that notwithstanding tho short period allowed to us, we Ijftve deposited to tbo credit of the Receiver General the sum of $.50,000 as security on account of our ten ler for section B of Iho PdciSo Railway. We shsll complete the dopoait of 5 per cent, within one week frooa the date of the notiHoation to us of its accept'ince. Asa proofof our 6ondyj(/ei tho first instalment of the deposit will, we trust, be deemed suflicient. Wo be,;; torei)eat that we are prepared to execute the contract and begin our preparations at once. " We have the honour to be. Sir, •* Yoar very obedient servant, '• ANDREWS, Jl)NE.S & Co. Thft lion, the Minister of Public Works, "Ottawa." On the same day Mr Yurker's telegram was confirmed by this let- ter : — '•J'.A.VK OI' MO.NTIIEAI, "ToKONTo, 1 St March, 187'J. "Sir, — 1 have the honour, at the request of Mr. A. L. Thompson, to enclose herewith our deposit receipt for $48,950.00 payable to your order in six months from date, viiihdut interest, and which confirm my telegram of to-day. " Should the receipt not be used you will please return it cancelled to ni-». •' I liave the honour to be, Sir, " Your obedient servant, "GEORGE W. YARKER, " Manager. " Th-> lion . Reoeiver-General , " Ottawa." 398 CONTRACTS. !^ The default in the deposit on the 1st March, above described, led to no action by the Department on that day. On the follcwing day, the 2ii(l March, Mr. Macdou^all, in company with Mr. Goodwin, a contractor of long experience and known as a man of capital, called on the Minister, and asked whether a day or two longer, to miko the necessary arrangements, would bo given if Mr, Goodwin should Join Andrews, Jones & Co. in tho contract. The Minister understantling Mr. Macdougall to hi acting in thi> interest of Andrews, Jones & Co., and ignorant of the fact that they had abandoned their position to Morse & Co., said that he had no hesitation in stating that if Andrews, Jones & Co. could obtain tho co-operation of any contractor of standing and resources, or would give the Government reason to believe that that would be the case, he would advise his colleagues that the tenderers should receive a day or two longer. The Minister reported to his colleagues this interview and what had been said. They concurred in his view. During Monday, 3rd March, and two following days Mr. Nicholson, a member of the firm of Morse & Co., being at Ottawa, and probably aware of what had been said to the Hon. Mr. Macdougall, the agent for that firm's solicitor, telegraphed several times to his firm at Toronto, encouraging thorn to proceed if possible with furnishing the security. On Monday, the 3rd March, a second deposit of !|50,000 was made hy Morse & Co. on account of this contract, in tho Bank of Montreal at Toronto- In this instance the name of Messrs. Andrews, Jones & Co. was | connected with the deposit. - This second deposit was advised by steps similar to that of the one on| Saturday, namely : - (1.) A telegram of 3rd March from Mr. Yarker to the Receiver-General. (2.^ A letter of the same date confirming it. {3.1 A letter from Mr. Baker, of the Finance Department, to Mr. Braiin.| informing him of the receipt of the money. In each case the actual amount notified was $ 18,950, though alluded toj by some of the witnesses as $50,000. On this day, the 3rd March, al letter was received, ostensibly from Andrews, Jones & Co., but no one ofj that firm was in Ottawa, and Mr. Nicholson, the only member of Morse &| Co. then there, did not know who wrote it ; it is as follows : — CONTKACT Xo. 4-'. 399 , led to no y, the 2ud ntractor of nister, and uigements, ; Co. in the ting in thi> at thoy had esitatioii in Xxon of any neiit reason leagues that • reported to joiicurred in Nicholson, a ibably aware or that firm's uraging thorn was made by Montreal at les & Co. was ] )f the one on kiver ■General. Mr. Braun. jh alluded to 1 3rd March, a mt no one of of Morse &1 "Ottawa, .'Jrcl March, 1S79. " .Sill,— Referring to our letter of the 1st instant, announcing the deposit of sonio $50,000 towards the security for our contract, and asking an extension of time in our case for a period equal to that allowed to our predecessor.-^, wo have now the honour to state that a further sum of $50,000 will be deposited to the credit of the Tleooiver General to day. '• In conseJ, .TONES & Co. ''The Hon. the Minister of Publio Work*, "Ottaw*.*' On that day, the 3rd March, Morse & Co. at Toronto, telegraphed Col. Smith, at New York, as follows : — •' To J. N. Smith, 23 Nassau Street, New York, or 235 Clinton Avenue, Brooklyn. <' Morse & Co'a. deposit made. Urge your frien Is to put up at once. Meet Nicholeoo at 1 liUawa, Wednesday." According to the evidence of Mr. Nicholson this brought no answer. I On Tuesday, the 4th March, Mr. Goodwin notified the Minister in writing that he declined to go into the contract, that the figures were too low. The [Minister then reported that fact to his colleagues. On tho 5th March, Mr, Nicholson being at Ottawa, and misled by ad- Ivices from Toronto, wrote the following letter: — ["Received 2.15 pm, 5th of March. " Ottawa, 5lh March, 1879. " Sir, — We have the honour to inform you that the balance of the five per cent, required Ito be deposited to the credit of the Receiver General on our tender fcr sect'on B, Pacific Rail- Iffay, baa this day been provided through our agents at Toronto, of which you will receive [notice through a b«nk in Ottawa, before the day closes. " We ha^e the honoui* to be, Sir, " Your obedient servants, "ANDREWS, JONES & CO. The Hon. Min'ster of Public Works." 400 CONTltACTS. >. • • ,: pe cent, deposit by 4 p.m., on Saturday, the 1st instant. " They replied ; ' That in the event of one of thoir firm having to go to New York, in order to comi>lete tho deposit, we trust you will extend tho time for that purpose, for tw > or tlirci days.' "They were informed on tho 27th Feliruary : 'That for some time past you were awar. tliere was a poss-ibility that you would bo called upon to take the contract upon your tcudoi for section * 1),' find that you cannot reasonablj' advance tho ploa that the time allowed yo'j for making your deposit is too short. For this reason and in view of the importance of plucia those works under contract with the least possible delay, the Minister regrets that he cuinoj grant your application for an extension ef time to enable you to make your deposit.' " That about 8 o'clock on the evening of Saturday, 1st March, a letter was received froi Andrews, Jones it Co. stating: " Wo have deiiositod to the credit of the Receiver-Goneri 'ome $30,000 as security on account of our tender for section " B;" and that at 4.30 p.m., "Si 1^^8,050, "In M'hoUc " Th( ndrews, '10 Recei "Ths larties. "Unc F^Jnes & i 2G CONTRACT No. 42. 401 ill which hv g 11) ^ I ' ■ jjjp game day, IbI KTurch, the following telegram was received by the Rocoivor-Qonerftl from 3 that it \Vtis I Xoronto : ' A deposit of forty-eight thousand nine hundred and fifty dollars has been made by A. L Thompson for your credit account, contract section ' B ' Pacific Railway. "fJEO. W. YAUKElt, *' I " Manager." ithout delay, the contract, | on Monday, ord March, the following letter waa received by the Keoeiver-Oeneral ; — ith any hop.- _ , ^^^^ ^^ montrba,,, one OCCasiou, ■ «• Toronto, J st March, 1870. ster wnile no ■ «, ^jn^.j \xn\e the honour, at the request of Mr. A. L Thompson, to enclose herewith our ised, and used Idfiposit receipt, $48,950, payable to your order in six months from date, without interest, and a year. Iwhichconfirmflmy telegram of to-day. B " Should the recfliptnot be used, you will X)lease return it cancelled to me. to the Privy I "I have, etc., etc. Council was | « GEORGE W. YAUKER, ^'Manager. The Hon. HecoivtT G»»neral, Ottawa." That at L*: 15 p m., 3id March, the following telegram wa4 received by the Receiver I to furnish tho ■'r , ... ., ,| •' A depohit of forty-eight thousaml nino hundred and {ifty dollars has been made by 0. oodwiLhtho wrtrkj i j o j^ j - n. Morso for your credit account, contract section "1?" Pacific Railway. Antbews, Jones lows :— 'We h;w|'^^"- "G. W. YARKEll '* Manafjer. And on the 4th ^Farcb, the foiiowin:.' letter was received n with our tomloi'l lEnglish Rivor ami t, and the workj cent. immtHliiitplyj form B, for tho G lowes , y ^ J „ Sir,— I have the honor at the request of Mr. G. D, Morse to enclose our deposit receipt I *° ^^^ ^ KlSjOoO, which confirms my telegram of this date. , _ " In the event of your not usinp the receipt, I have to request you to return it to me. ewYork,iuorde| « I have, etc., etc., f;,r tw > or thrcf , , ..,^.^, ^,^ , ^ ^^ ^^ ^^_ YARKER, ^ ' ' BaXK of MONTKKAI., " Toronto, 3rd March, 1879. 1st vou w«ro aWiirB i> • r. i r\LL u I ■' 1 ■^"'^ lion. Receiver General, Ottawa. ' upon your tenJer " Manar/er. tlmo ailowdl vol lortanco of pliicini "That another letter dated 3rd March, has been received liy llu Department from indrews, Jones & Co., stating ' tliat a further sum of $50,000 will bo deposited to tho oreditof 3t3 that he ca""m„ Receiver General to-day.' Idoposi . » ■ " That up to the present, 5th March, nothing further has been received from any of tho Iwas received froi^ Receiver-GoncTil barties. It at 4.30 p.mi " Under the circumstances the undersigned recommends that the tender of Andrews, [ones & Co. be passed over, and that the third lowest tender, that of Messrs. Fraser, Grant 20 402 (JONTUACTS. I lllpiif & PitMttdo, be accoptoil, on condition tliat tlicy inike tlio rcjuin;! 5 p?r (iont at'ouiity flepoHit witliin tlirce dayH from tho jiroseiit limo. " Kt'HiJoctliiUy «uliinitt per cent, seouiity deposit within tlireo days from tho present time. "Tho Committee submit tlio foregoing recommendation for Your E.xeellency's n]r oil. " Certified. ^ ''Vr. A. IIIMSWOHTIi, '■■ Clerk, J'rivi/ Council.^' On the same day, March 5th, Fraser, Grant cSc Pitblado were notified by tho following letter that the contract was awarded to them. '•Ottawa, 5th March, 1S79. " Gentlemen,— I have to inform you that your tender for seclioa " B," of the Canada- diaa Pacific Railway has been accepted, oa condition that you make the deposit required of 5 per cent, on the amount thereof by 4 o'clock p.m. on Saturday next the 8th instant. "Yours faithfully, " CHARLES TUPPER. "Fraskb, Grant & Pitblaro, " Ottawa." After the above Order-iu-Council, and on the same day, the following communication passed between the Department and persons interested in the tender of Andrews, Jones & Co : — {Telegram.) " loROMTO, 5th March, 1879. " ! lorse & Co. with whom I am now associated, w'iii 'je ready to complete the required security depoait to morrow morning. Arrangements all made, but may not be able to for ward the certificate by to-night's mail. Will this be satisfactory ? Please reply to Q. P. Morse. "F. SHANLY. "The Hon. Dr. TcFPBB, "Minuter of Public Works." " Ottawa, 5th March, 7.30 p.m., 1879. " Council r, but he left Ottawa before any arrangement was made. ^Ir. McDonald says, he thinks the arrangement was made while "Morse & Co., were supposed to be the successful tenderers," and Mr. Fraser said it was after Col. Smith went to New York on 26th February, that he was approached by one of tlie firm, Mr. Shields or Mr. Manning. At all events, on or before the first of March, it was agreed between these two firms that if the contract should be awarded on the tender of cither, they would amalgamate, each firm taking a half-interest and divid- ing that amongst its own members in the same proportion as those on which they had been originally formed. After this arrangement Fraser, Grant & Pitblado wrote the following letter :^- " Ottawa, 29th February, 1879. " Siu, —We beg to inform you that should the contract for section B of the Canadian Pacific Raihvay be allotted to us on our tender, we are prepared to associate with us Messrs. Manning, Shields and McDonald, " Yours respectfully, " FRASER, GRANT & PITBLADO. "lion. C. Tui'PER, C.B., "Minister of Public Works.' There was no 29th February in that year, and this date was probably intended for the 1st March, the day on which the time was up for Andrews, Jones & Co. completing their deposit. In consequence of this arrangement, the award of the contract to [ Fraser, Grant & Pitblado had theeflfect of giving a half-interest to Manning, ■Shields & McDonald in case the Governm?nt waS willing that the two firms I should be associated. 26i q^gnnHi 404 CO^' TRACTS. •Before this award was thus made two of the last named firm had bargained with Mr. P. Gr. Close, to give him conditionally an interest in the rights of Manning, Shields & McDonald. We cannot ascertain definitely on what day this understanding was first arrived at. "We think it was ?>fter the 1st of March when the time given to Andrews, Jones & Co. had expired, and during the first half of the next week, while the members of the firm of Morse & Co., then at Toronto, were led to hope from the communication of Mr. Nicholson, who was at Ottawa, that they might yet get the contract on Andrews, Jones & Co.'s figures if they succeeded in making further deposits. Mr. Morse about that time was endeavoring to get Mr. Close to help him to $10,000 of the required $200,000. Mr. Close and he pavted more than once without coming to terms, and in the intervals Mr. Clo.se saw Mr. Shields and was negotiating with him as to an interest in the chances of his firm. This ended in Mr. Morso getting no help from that quarter, and an agreement was made between Mr. Shields and Mr. Close which was reduced to writing on the Olh March. Mr. McDonald was no party to this arrangement. The follow- ing is the agreemont referred to : — "Ta.io.vio, iliircb 6ih, 1879. '' TLti undi r. of the Pacific IJiiilw.iy, an tt Co , if we «ill give him nn inteiest in said contract if the tender is awarded to FrafM', Grant & J'ilblado and Jklanning tt Co., ar.d believing that it will to in the interests of all the pait'es with whom Wpj are as>jociated in ni'd contract, that said P. G. Clote shnll not be Et c uity f<)r Morse & Ci>., do hereby ajrroc f )r ourselves an 1 all the parties to b« benefi'ted in said coi trict, thnt in con^iiieration oi \vs 83 refusing to be pecurity aa afore.s»iiJ, tliat wm [>lec?ge him for nil the piirtieh in the said conlratt that he shall have a oiielwvntj -!"' nrih pait in said contract if the same i-t awar led to I'V.i8^r & Co., or that it < o nes ti rur ten-let, the sill Close to bear his ^liae of th« security and t> do h s port on of tt)e work. "ALEX.ANDEU M.VNMNfi. ..,■- ". , ■ . ",I01IX .SHIELDS. "Witnc's-, .\i,r.x. JArin.NK '' ' ' . About the same time that the negotiations last de.sovibed were goiny public com- petition, it was agreed for by accepting an offer made by one of the con- tractors as hereinafter mentioned. On the 3rd August, 18T8, an agreement had been entered into between Her Majesty of the one part and G-eorge Ste phen of the other part, having for its main objects, first, a connection at the internation al boundary between th? Pembina Branch and an extension of the St. Paul and Pacific Railway, and, second, aftev such connection should be made that trains might ]e run by the said Stephen over the said Branch, on terms therein specified, ivi'u a clause that should the said Branch be equipped, Her JIajesty mighc L.rminate the right of the said Stephen to run such trains as aforesaid, and with a further clause regulating traffic as therein specified over tlie said Branch and the said St. Paul and Pacific Railway. On 27th February, 1870, Mr. Joseph Upper, one of the contractors under contact No. S3, made the following i>roposal : — "Ott-vwa, 27tli Februaiy, 1879. ' "Ho.: i A'^pi'KR, Ksq. C 1!., " Mir);- 'f of Pnblic VVork.^ "SiH, -I have the honour to submit tho folbwing ollor fm* tl)j workmg of tlio Pembina Branch of the Canadian Pacilic Railway : — " 1. I will equip and work the said line a.^ tho assignee of tho Government under the lease or agreement entered into between the Canadian Government and Qoorgo Stephen, dated August 3rd, 1378. wr^ 408 CONTRACTS. ml'- ■ • •I 1' i ■ " 2. I will thoroughly equip tho said line with all the necessary rolling slock on or before the 3l8t (lay of March next, an 1 will thoreaftor efficiontly work tho same for a term of fivp years. " 15. I will pay over to tho Govo;'ninont 2j per cent, of tho gro.ss nirnings of B;iiil lino or such other sum as may be fixed upon by arbitration as provided for in the leaso or agreement before mentioned. " 4. Should I at any time fail to efficiently work the said line, or if for any reasons of State tho (jovernment desire to resume possession of said line, tho Government will at once have the power to cancel this agreement by taking over (he rolling stock and other plant at a fair valuation. " 5 At tho expiration of five yeavs should wo fail to agree upon terms for the conlinuancfr of the agreement to work the said hue the Government are to take ofT my hands all (he rolling stock and plant at a fair valuation. " .Should tho Government favourably consider *.iis olfer, I will furnish satisfactory security for the duo fulfilment of ih^ terms of tho agreement, and beg to refer you to tlio following gentlemen named below. ' liave the honour to be, Sir, " Your obedient servant, "JOSEPH TTPPEII. " Messrs. Calvin it Lrcok, Kingston, " Folger Eros. •' James Swift, EhortoJ a Commiilce of the Honourable the I'rivy Council, approved by Ilit Excellency the Governo7- General in Council, on the IG/A March, 1880. " On a report, dated 13th March, 1S80, from the Honourable thel»finister of Railways and Canals, stating that under the authority given by an Order in Council, of the 26th January last, the agreement made with Messrs. Joseph Upper & Co. for the equipment and working of the Pembina Branch Railway was terminated on the 10th February ; " That under tha terms of clause 14 of the contract with Messrs. Upper & Co., the Government is obliged to take the rolling stock from the contractor at a valuation ; "That a valuation was accordingly made by the Chief Superintendent and tho Locomo- tive Superintendent, and that a telegram was received from the former on the 21st February, in which he estimated tho value of the rolling stock at §70,000, the valuation of tho plant not being then comph ted ; '• That upcn the advice of the Engineer-in-Chief, he, the Minister, authorized the pay- ment to the contractors of the sum of $25,000 on account, which sum :^8b pjiid on the 2l8t ultimo ; CONTRACT No. 43. 411 " Ue now recommends that be le confirmed in the action taken in making such payment, and further that authority be given for the payment of an additlonaT sum of $25,000, ponding a final settlement with Joseph Upper & Co. « The committee submit the foregoing ri?comaien. " The contracts recently entered into, 41 and 42, will require for ra"»in track 18) miles, of which 48 miles are provided as above, leaving to be provided 137 miles. " To which should be added the length of line west of Selkirk, with branch to Winnipeg purposed immediatedly to be built, say 110 miles ; also allowance for sidings and spare track 00 the whole line from Fort William to Selkirk and extension west of Selkirk, siy 30 railej. " Total required lor these service?, 277 miles, equal to, say 25,0)0 tons. " In addition to which the Georgian Bay Branch, contracted to be finished 1st July, 1880, 'Till, if carried out, require nearly 5,000 more. In all, 30,000 tons to be provided. «■ ! ■ , (_ 1 , illi'' " ' 412 CONTliACTS. " I will acoordiDgly recommend that all the rails required, with a sufHoieDt quantity of lasteningp, should at onoe be contracted fir, to be delivered at Montreal by each of the follow ing dates, viz. ; — " One-third by Ist October, 1879. " One-third by Ist June, 1880. " OnetbirJ by Ist October, 18S0. " I liavo the honour to be, Sir, " Your obedient servant, (Signed) " SANDFOUD FLEMING, '•' Engineer in-Vhief " The Hon. "Sir CiiAKi.iJs Tti'i'KH, K.C.M.G., '• Minister of Public Works." On tho iVth Juno Mr. Fleming, under the direction of tho MinisttM- telegraphed to Mr. Reynolds, at London, as follows : — " When, and for what price could 5,000 tons Sandberg's ppecific standard be delivered in Montreil. On the day following, Mr. Keynolds answered by cable : — . ''End of next month and August; five pounds sterling; if advised immediately, pro- bably belter." On the 10th June Mr. Fleming cabled to Mr. lleynolds as follows :— '• Receive tenders ; 5,000 tons delivered Montreal before liilh August. Cable number tenders and lowest. Ivall and fusteningi must be specific standard." On the 21st June, a cablegram (o Mr. Fleming from Mr. Reynolds was received to the following effect : — "Eleven. I/jwest delivered c f. i. Montreal, lifteenlh August, live for reply by cab' c Shall I inspect?' On the 21st June Mr.'Fleming answered by cable as follows : — " OrJer rails and fastenings. Furnish Sandberg's template. Oversee inspection." On the 19th June, the day on which Mr. Fleming sent the directions, Messrs. Stevens and Reynolds addressed the following circular to the par- ties named bolow it : — «' LoxDoy, 19th June, 1879. "Gkxti.eme.v,- Please quote us your lowest price, c. i. f. Montreal, for 5,000 tons steel rails 57i lbs. per yard, with necessary fish plites to enclose section, to be delivered at Montreal by the 15th August next. Sliould you be unable to deliver the whole quantity by date speci fied, please quote for such portion as you can guarantee ti deliver by the time named, and if COMliACT No. 44. 413 , quantity of of the follow ISO, rin-OhieJ t)e delivered in meJiately, pro- follows ;— Cable numlK-r ?ynolds was [■eply by cab'e. rs : — lection." directions, to the par- ^uoe, 1S79. )00 tons Bteel jd at Montreal I by date Bpeci named, and if unwilling to deliver at Montreal, kindly let us have your prico for delivery f. o b. Rails will be inspected durins manufacture. " Paymenta net cash, no commissions being required. " We ftr«», gentleman, '* Yours truly, "STEVENS A URYNOLD.S." This circular was addressed to the following parties : — Guest & Co., Ebbw Vale Co., Bolckow, Vaujjhau & Co., Barrow Ha3matite Co., Charles Cammell & Co., "West Cumberland Co , John Brown & Co., Moss Bay Co., Ehymcny Iron Co., Wilson, Cammell & Co , Brown, Bayley & Dickson. The method of competition adopted in this case was decided upon after discussion between the Chief Engineer and the Minister. Mr. Reynolds, who took part in tho transactions and gave evidence upon the subject before us, stated that he considered it was adapted under the circumstances to bring out as low prices as by public advertise- ment; that sometimes the market is stiffened by public notice of anything like a large quantity being required. Four of the parties addressed declined to make any olFer ; the answers from the others contained two offers free on board at Liverpool, one at £o, and the other at £o 5s. sterling pjr ton, and the offers for delivery at Montreal, which latter ranked in the following order : — West Cumberland Co 2,000 tons at ,jC4 19s. Od. :sterl) ig. '• Barrow Hreraatite Co 5,000 ' 5 Ebbw Vale Co 1,500 '• 5 Bolckow, Vaughan & Co 2,500 '• 5 Guest & Co 2,500 '■ 5 2 > •' The following parties who had been addressed as aforesaid declined to icompete : — The Atlas Steel and Iron Works. The Moss Bay Co. The Rhymeny Iron Co. Wilson, Cammell & Co. It will be seen that in this competition the West Oaml>!3ilaud Co [made the lowest offer, namely, £i 19s. sterling. < • * • • 4 1 . 1 i i 414 CONTRACTS. On the 24th Jane, 1870, Messrs. Stevens & Reynolds wrote accepting their ofier in full. All the correspondence concerninj^ this transaction by Mr. Reynolds accompanied his report upon the subject to the Department. His action was confirmed and approved of, and there has been no expression of dis- satisfaction by the Minister concerning it. In our Judgment the action of the Department secured by this (;outraet, at the lowest possible price, lh'3 material bargained for. The quantity of rails agreed for was delivered, and the amount expended was : — To 30th June, 18S0 !}50,0GI 74 t *; Contract No. 45. Steel Rails. By this agreement the Barrow Hicraatite Steel Co. undertook to supply 1,500 tons of steel rails with the proportionate qiiantity of fish-plates, at Montreal, according to specification, at the rate of £5 sterling per ton. The supply of rails under this contract was submitted to competition in the manner described in our report upon contract No. 44. As shown there, the of! rs resulted in five for delivery at Montreal, of which the lowest was the or nade by the West Cumberland Co., and became the foundation for contract i>fo. 44. There were three other parties who named the price next above that, namely, £5 sterling per ton. Of these the Barrow Hcema- tite Co. was one. The offer of this company w as for the whol?! quantity but in order to ensure as early a delivery as possible, it was decided by Messrs. Stevens & Reynolds to divide the 3,000 tons left after ordering the quantity tendered for by the West Cumberland Co. into two orders. They accordingly wrote on the 25th June, 1879, to the Barrow Haematite Co. stating that " as the time for delivery is short we have decided to divide the order for the 5,000, tons of steel rails and fish-plates which you quoted us for on the 20th, and we this morning telegraphed you, to which we have just received your answer. We have now pleasure in giving you order for 1,500 tons of the rails with the necessary steel fish-plates delivered at Montreal by the 15th August, at the price of £5 per ton, c.i.f., at Mon-j treal." J] l^ree o; pg to T labout CONTRACT No. 45. 415 e accepting "r. Reynolds Ilis action isiou of dis- he action of M prici\ th.> the aiuount I 74 In our jiidg-mont the action of the Department secured by this contract, ill the lowest possible price, the material barj^ainod for, This contract \vas carried out, aner ton. 1. *' )f 2 cwt. as was last named firm wrote accepting id. more favourable the Departme ouiit paid under :en by the Soore- ling the last four Imber 2ncl, 187'.*. Lnder date 9th Sep- 1,000 tons of rails andl Pacific Railway ex I iter has approve lofj I for tie value of the! Irvant, |br.\un, '' Secretary. Contract No. 48. RailiDnif CoHSliurliort. IJy this contract, dated I'Jth Au;,mst, 187!), JdImi Kyan covenanted to roper, and in this instance, before entering into any bargain it was decided that the fencing on this portion of the line, and half of the ballasting should be oir^itted from the works to be placed under contract. The prices named in the tenders for these items were deducted from the whole prices named by each offer. The result of such deduction was not to alter the rank of either the lower tender made by Mr. Hall, or the next one by Mr. Ryan, as compared with any of the others. 27 418 CONTRACTS. ^ ' •■ 1 • r t< • ' ,*}■: in |M ••■A A report by Mr. Smellie, of tkeSth August, 1879, to the Acting Minister of the Department, contains the foiiowing: — " You will al^o observe that by these deductions some of the lenJei^ take a different pi ice from what they would do if the amounts of the tenders, aa sent in, were comparetl. Numbers 1 and 2 on the list are not thus affeclt d. Tlie lowest tender is that of Mr. W, C, Jlall, of Three Ixivers, amounting, after the above deJuctions, to $480,810, or $4,868 per mile. Gener ally the prices in this tender are very low, especially in the items of carrying of rails and fastenings from Montreal, and supply of t es. I have had an Interview with Mr. Hall, who has been summonetl here in connection wit'i this tender, and find that he can alFord very little information as to the ba^is upm which the prices were flxey saying thd he has never hesvlof him. *' Taking all these matt3rs into consideration, I am of opinion that Mr. Hall ha^ neilher the ability, skill, nor resources for carrying on tliis extensive work, and do not think it expe- dient that the Government should award him the contrctct." On the 8th August, 1879, Mr. Hall addressed the following letter to the Minister : — '•This being the first time that 1 tenioredfor any public works, I was not aware that I would have to be ready with a deposit, at once, and having nartnors in the matter, aUhnug'i not appearing on the tender, and not being able to get them h«>re f^r a short time, and beini; informed that there '.s an alteratioa in the specification, I decline to acoept the work, ai; 1 hope you will take ma nwoiirably inti) consideration and not conipel me to forfeit the dcfOiit already made. •' I remain, " Your ol(?(]i.nt servant. •< W IlAI.r. Mr. Hall in this letter speaks of the necessity of being ready with ;i depo'^it at once. Mr. Trudeau, who as well as Mr. Smellie had seen liiiii, and had conversed on this subject, testfied that this language is not in accordance uiih the intimation which was given to him at the time; that he was given to understand that a reasonable period would be niiOwed for furnishing the deposit if it was required. Mr. Ryan has also been examined iu order to ascertain whether he took any part in procuring the withdrawal of ^Ir. Ilall, and we have come to the conclusion th... .'"r. .'T,.'] vw.s n ' al)]o (o underto.ke the contract himsoli, and that his declining to do so was not in any way attributable to inter- CONTBACT No. 48. 4iy ference by Mr. Ryan, or any improper presbure by anyone connocted with the Department. On the 0th August tho oontrnct was awarded b} the following letter :— ' . "9lh August, 187'.;. Sir,— I ,im (jiicctcd bj- tho Acting ^lini^:le^ of liailwayB Htid Civoals to inform joa that your teD'ier for the construc'ion of 100 u-ilps of (Lo Canadian racific Kailwaj', extending westwarJ fio n Winnipeg, is tho present lowcet befi^retlie Department. I am, accordingly, to request you to eta'e whether you are prepared to enter into a contract and depo.^it the n*^cr»- Bary security, say f:19,0(iO. '' I am, Sir, " Your obedient nervant, "K. II. ENXIS, " Acting Secretary, "Jonx Hyan, E--q., Otiawii." On the day before this award of the contract to Mr. Ryan, the Acting Minister of Kaiiways had submitted a memorandum concerning the trans- action to the Privy Council, and it was followed on the 12lh August by an Order in Council, directing that the cheque enclosed by Mr. Hall with his tender should be returned to him On the 13th August, IStO, the Acting Minister of JJail ways and Canals pubmitteci a memorandum concerning tho substance of th(^ tenders, and the withdrawal of Mr. JIall, wJiich was followed on the 22nd August, 1870, by the following Order in Council : — "CoPYo/- a Report of a C nnmillcc of t'te IL'mourahh the Privy C.vnr'.^, approvid Ir/ /fit IJxcel'enc;/ the Gocrrnor General in Council, on thc'l-n^l Aui/usf, IST'.). "On a repo't dated IHth Augupt, 1879, from the Hon. .1. H. Voyc, M'-tiny in the al'snico of the Minister of Kailw.ijs and Canal », st.it in;^ that tliirtyninq lender.-} have been received (let Augusv. 1879) for the finili^ig, track-laying and ball t'^tin^j; of lUO n)il.'.s of the Canadian Pacific lifiiiA'av v/'.>8t from "W'in'dpeg, such ton lerj ran';ing from ^">?,,0(!>) to !?'J04,.j5O. "That the lowest tender 1^ that of Mr. W. C. IlaU, of Thr;e ..Iver^, who oO'crs to do the work tit rates which, when ex'einbi!, amount, to S553,Ojt). "That Mr. Ifyll was notilio) in Men lay, tho Uh, iind camo to Otto.v.4 on th? 7th ia;tant. " That one of the conditlcrjL, of the Bi-ecificatioa upon which tl.eie tenders wi?re basei lo'i'iiroa that ih" contractor shall dpr-ORit with the (iovernment, aionoy or its equivaloat value ht current >at'j9 of public sofurit'eH or Vmnk slock, to the amoiuit of five per cont. of tho bull< si'm of the contriict. "Th't Mr. Hall, by a leit r dated the 8th ins'., hm declared his iuibility to comply with tliB condition, and has verbally stated that his linancial means wf re limited to eight or ten thousand dolhrs. " That the engioBPr in char,;o of the works has reported that, iu n.a c^.^d'.u.i, ^Lr. ilttll could not perform the work (or tho prices natued ia bii ttnler; and further, that from hie 07.1 ^ '^i^rr 420 CO^TKACTS. •H' 1 i-"^iv ■ ?ii ■ ■ -If V • -_ own sthtement be Has neither the GnancUl means or ability to execute the works nilbin the titro fpecified. "That the next lowei-t tender received is fiom Mr, John Kyan, whoae pricep, whoti extended, give a bulk sum of $60O,5OO. "That Mr Ryan has declared his reatiine^s to proceed with the wrirks, and has duly deposited the sura of $29,(X)0 as security. '• The Minister recommends that the wrrk be entruiieil to Mr. John UvHn at the pric>-s iiam"d in his trndf r. '•riie 0r jv^l. '•C(rL.lie.l. ■' W. A. IiniSWOKTII, " Clerk, Vriiy Cuuncil" The requisite, security having b^^eu deposited by Mr. Ryan on the iSth August, 1S70, the contract was entered into as described at the opening of this report. From the evidence we conclude that by the award of this contract the contractor obtained no undue advantage, and that the action of tht! Department secured the work at the lowest avaihibie offer Construction under the contract was not begun lor a cousiderablt! period after its execution. Mr. Jtyan, giving evidence before u.s, stated rthat the line was not located until May, 1880, so that work could be doin; upon it, but that no delay had occurred through his omissions after the line had been sudiciently located to enalde him to proceed. There wen; two lines at first projected from the main one, one <^alled th; fourth bas.> line, and the otiier some four miles north of that The nortlierly one wa.s finally adopted. ' i he work has progressed under this contract very slowly Withth' consent of the engineers, a material change was made in th(«, I'ormalion oi the road-bed : instead of putting earth from side ditches into that, thi^ ties were, over a considerable distance, laid upon the surface of the ground rand ballast hauled and deposited between them, alter which, the ties bMnir lifted, a bed was formed of ballast instead of earth as was at first desiiiiunl, •ditches being omitted except whoi they are rt^quired for draiiia;^.' It is claimed by the contractor that this will make better work than ihm mentioned in the specifications. The width of the bed will not be so great The cost, as a whole, will be somewhat higher. This change was made under the direction of Mr. Schreiber, the Chief Engineer, in 1880. By this means the ballasting under the contract will be largely increased, and the excayatiouof eaftth very much diminished. It i& obvious that this CONTRACT No. 48. 421 change in the character of the work, cannot bo f-aid in any way to ho n breach of the contract by Mr. Eyan. At the time of our taking evidence in "Winnipeg (October, 1880) the trains were running for construction jnirposes over about forty mih's of the hne covered by this contract. The transportation from Montreal of tlie rails, for the whole length, had taken place, and the cost thereof, a disbursement on bihalf of the con- tractor, appears as a <.harge against this contract. The expoiuUture up to the 30th June, 1880, was $153,8 0. (Contract No. 49. S/ation Houses. By this contract, dated the 15th August, 1870, llichard Di<^ksou covenanted to erect and complete combined passenger and freight build- ings, to be used in connection with the Pembina Branch, at several difleient places named in the contract, and at prices stated as applicable respectively to such places, the whole amounting, according to the contract, to §15,802.40. This work was let by public competition. T' >} buildings to be erected were for the stations at Emerson, Penza, Otterburn, Nivervillf, St. Boniface and Selkirk. At other stopping places platforms only were requir.nl, namely, Arnaud, Uufrost, St. Norbert and Gonor. Advertisements were issued on the 17th of June, 187l), for the r( ceipL of tenders up to 15th July following, on which day those received were duly opened by officials of the Department, and they showed offers varying in price according to requirements at the different places, the totals ranging from $15,802.40 up to $t3,000. The respective prices and names are set out at pages 30 and 32 of a Keturn to House of Commons, dated 31st March, 1880. The correspondence on the subject in the possession of the Department is there given. Mr. Dlclcson, the contractor in this case, made the lowest and the contract was awarded to him. In our judgment, the action of the Department secured the work con- tracted for, at the lowest available offer and the contractor got no undue advantage in the bargain. "f"^- 4:2 (CONTRACTS. 1<.> • •• . .. v. 1 ■ * ^ ■ * ■ V i ' ■ ,' » 1 •. Thore liasbeon no difforeuco between the contractor and the Gov arn- ment oflicials concerninjj tlie subject of the contract. The work was ftnishod and taken off his hands without dispute. Th;3 total amount expended up to the 30th June, 18S0, was $13,050. CONTUACT No. 50. Railwat/ Spi/ies, By this contract, dated 4th September, 1879, George Angus MiUor, Charles Herb.Vx-t INIiller and Jaui.'s Miichell, under the firm of Miller Bros. & Mitchell, bound themselves to manufacture and supply 400 tons of rail- way spikes according to s^peeiiicalions, to be delivered at Fort "William, and 300 tons at ]\Iontreal, receiving therefor, per ton of 2,240 lbs., the price of $52.75 for tho.se delivered at Fort William and $47.75 for those delivered at Montreal, deliveries to be at the times mentioned in the contract. On the 30th July, 1879, advertisements were issued, asking for ten- ders of the 20th August following, for the supply of 35 tons of lish-plate bolts and nuts, and 700 tons railway spikes, specifications and other inform- ation to be had at the Engineer's Office in Ottawa. The tenders, which were received in duo time, were opened on the 20th of August by officials of the Dex)artmont. Eiglit offins had been made, varying from $52.75 per ton, at Fort William, and $17.7-^ at Montreal, to $G5 at Fort William and $120 at Mon- treal, The lowest offin- was made by Miller Bros. & Mitchell, the present contractors. On the 2ord August, Mr. Ennis, of the Department, wrote to this lirra asking if they were prepared to supply and deliver 400 tons at Fort William and 300 tons at Montreal at the prices named in their tender, and if so, io deposit security equal to 5 per cent. In answer to this. Miller Bros. & Mitchell telegraphed on the 25lli August to Mr. Ennis, asking: " Is it cbsolutely necessary that spikes must be delivered at dates in tender ?" To which a reply was sent by telegraph in the affirmative. On the 27th August Miller Bros. & Mitchell telegraphed to Mr. Ennia that they would remit their deposit that evening, and this was done accord- ingly. CONTRACT No. 50. 423 In our judgment the action of the Department secured the materials here contracted for at the lowest available offer, and in the bargain the con tractors got no undue advantage. On the 25th August Mr. Tandy, of Moncton, was instructed by the Department to proceed to Montreal, and inspect the iron in process of manufacture by these contractors, and to report upon it as well as the focilities for manufacturing it possessed by that firm, and their capability of "xccuting the contract within the time specified. On the 3d September, 1*?69, Mr. Tandy reported that he had examined and tested the quality of iron being used by these contractors, and had submitted the spikes to various tests, finding the quality satisfactory, and equal to the test mentioned in the specifications ; also, that the faciliti^'s of the manufacturers for completing the contract in the time called for were ;i!nple. The contract has been duly fuHilled, the expenditure under it up to •he 30th June, 1830, being $35,42.3. CoNTKAcr No. ol. Bulla and Nuls, By this contract, dated 8th September, 1879, the Dominion Bolt and Nut Company bound themselves to manufacture and supply thirty-five tons of lish-plates, bolts and nuts, according to specifications, to be delivered at Fort "W^illiam, for the price of $75 per ton of 2,2 iO pounds. On the 30th July, i879, the advertisement described in our report on contract No. 50, asked for the articles covered by this contract, as well as lor spikes mentioned in that one. The tenders which had been reooivt'd in due tim^^ wore opened on the '20th day of August by officials of the Department. Five offers had been made varying from $75 to §S5 per ton. The lowest was made by the.se contractors. On the 23rd August 1879, ^Ir. Ennis, of the Department, enquired of •he Dominion Bolt Company whether they were prepared to furnish the thirty-five tons as tendered for, and if so, to deposit security equal to 5 per cent. L-Ji..:. 424 CONTRACTS. I'' lii M ,.<■ On the 2oth August, Mr. Livingstone, acting for th(3 Dominion Eolt Company, wrote to the Minister accepting the contract, and security was duly provided. The evidenc3 leads us to conclude that in this case the Di^partin'MU secured the materials bargained for at the lowest available oIL'r, aiid with- out giving the contractors any imdue advantage. On the 5th September, 1879, Mr. Tandy, named in our report on tho last contract, was instructed to make such examination as would enabli^ him to report to the Department on the quality of the iron proposed to be used by these manufacturers, and the facilities possessed by them lor com- pleting the contract within the time specified. On the 17th September, 1.870, Mr. Tandy reported that he had visiled the works of these contractors in Toronto, and that the iron used was of first-rate quality, in every way equal to the specifications, and that the manufacturers had all the facilities requisite to complete the contract in the time called for by specification. The contract was performed. The expenditure under it was — To 30th June, 1880 $2,602 50 CO.NTRACT No. 52. Transiportatioti of Raih. This contract is not included in any single document. It is contaiiu'd in correspondence between the Department and the contractors. By thf agreement the North-AVest Transportation Company agreed to transporl 6,000 tons of rails, more or less, from the ocean steamer's tackle at INIontroal to Fort William, at the rate of $0 per ton of 2,240 lbs. This contract was let upon competition invited by circulars addressed to eight different parties, asking for offers to forward 5,000 tons of ^-teel rail.> and fastenings, from ^lontreal to Fort AVilliam. Only four out of the eight replied to the invitation. All the tenders were at about the same figuiv. namely, $l> per ton. Two at that rate were made respectively by Messi> Smith & Keighley and Mr. Henry Beatty. Two others were made respec- tively by Messrs. Calvin & Breck and Messrs. Folger & Bros, at $5.75. Th!'| two former, however, included the Montreal harbour dues, and the tr latter did not. It was found that the harbour dues amounted to 28 cent?. j which had the effect of making the two offers last mentioned inclutlin?| the harbour dues $U.03. COXTllACT No. 52. 425 The result of this competition was reported by Mr. Fleming on the 24th September, 1870. In his report, addressed to theMinister, he states : — " It is important that no time shoull be lost in completing arrangements. I b'g, tho o fore, you will give instructions as to the ollVr It be seleeleil." On the 29th Soptemhor, 1870, Messrs. Smith & Keighloy, who had made one of the two lowest tenders, telegraphed to the ^Minister as follows : — . . " If you fiiTOur Hi wilh coutract fjr Ir inaport sloal nils sDil fasteiiiagii, Montro»l to Fort William, kin lly make cantract to Henry Beatty, OS Lo has niatl'» arrangements with Grand Trunk for prompt transport, and we to carry half quantity. Will this be agreeable to you." On the 80th September, 1870, the following letter awarded the con- tract to the North- West Transportation Company : — " Ottawa, 30th September, 1879. "Sin,— I &m directed by the Minister of Railways and Canals to inform you that theofTer contained in your letter of the 3rd instwnt, for the transport of steel lails fiom Montre«l to Fort William at the rate of six (0) dollars per ton, is accepted, the quantity requiring tiacs po t Veing four thousand toni This rate lo include harbour duPB,canal toll-',innirance to tho value of twenty-five dollars ($25.00) yer ton, end i/iling hi the point of rlcliveiy, (he rail* being lecf ived by you at the ship's tackle. '• I am. e'c, etc., "F. BIJAUN', " Sccrelorif. '' Hknky Beatty, Esq., " Mflnager N. W. T. Co., * " Montreal.'' • ' " ' ' The evidence leads us to conclude that in this instance the Department secured the work covered by the contract, at the lowest available offer, and without giving the contractors any undue advantage Mr. Trudeau, the Deputy Minister, states that this work has been per- formed and paid for without dispute. The amount expended on this contract im to tlie 30th Juno, 1880, was. $15,084. CONTII.^CTS 53, 54 AND 55. Slcef 7ift//.s-, Plalcs, Bolh and Nuts. These contracts cover the purchase of 45,000 tons of steel rails, with the proportionate quantities of fish-plates, bolts and nuts, from the follow- ing parties : — ■ J, ' ■ . ^ • -, 'i' * .". • 426 CONTRACTS. Tons of rails. The Barrow Hcematite Co 30,000 Guest & Co 10,000 The West Cumberland Co 5,000 In each case the c^'itract included the accessories ; the prices of tho articles varying according to the dates of delivery. Further particulars of each contract are hereinafter given in detail. . Out of this quantity 11,000 tons were bought for relaying the liiviero du Loup section of the Intercolonial Railway, and 34,000 tons for tho Pacific Railway. Tho need of 80,000 tons of the latter quantity was stated in a report from the Chief Engineer on 7th June, 1879, as follows : — " Ottawa, 7 th June, 1 879. "Sir, — I beg to diaw your attentioQ lothe fact that it will be necessary utonco to provida for the 8upi)ly of rails for tboie r'ortions of the liuo under construction, and also for those immediately to be put under contract. "Tiiere are on hand, lying at P'ort William, 4S miles of riil?, over an 1 above the length Avanted to lay the main track on contracts 14, 15 & 2'). MiloB. *' The contracts recently entered into, 41 and 42, will require for nnin track 185 miles, of which 43 miles are provided, as above, leavio/i; to be provided 137 *' To which should be added tha length of line west of Selkirk, with branch to Winnipeg, proposed immediately to be built — say ilO " Also allowance for sidings find spare track on whole line from Fort William to Selkirk, and extension west of Selkirk— s^y oO Tot»l required for these services 277 " J:qu8l to, say— io.OOO tcm. »• In addition to whioh the Georgian B»y Branch, contracted to be finiihed I at July, 1880, ■will, if carried out, require nearly 5,000 moro. In all S0,000 tons lobe provided. " I would accordinglv recommend that all the rails required, with a sufficient quantity of fastenings, should at once be contracted for, to be delivered at Jtontreal by each of the fol- lowing dates, viz : — "One-third by 1st October, 1879. " One-third by let June, 1880. " One-third by 1st October. ISSO. "I have the honour to be, Sir, " Your obedient servant, "SANDFORD FLEMING, " En gin ter-in- Chief . ^'Tbo lion. SirCiiAULKS Tuitkb, K.O.M.G., " Minister of Public Work?." CONTRACTS No^. 53-55. 427 ovo the lentith mt quantity of laoh of the fol- Three days afterwards an Order-iu-Couneil authorized this recommen- dation to be acted uj^on : "Copy of a Jleport o/ a Commitlee of the IIoHovrab/c the Privy Council apfroeed hi/ Ilin Excellency the Governor- General in Council, on thf. 13//i June, 187'.>. " (Jn a Memcrau. " Specitications, condition?, form* of tender, and all other informatir>a iivill be furnished oa application at this oilioe, or at the Cftnadiun Emigration Offi3e, 31 Quejn Victoria stroet, S.C., London, England. '' P>y order, «r. BUAUX, '■ i^i'crf.iary. Dkpautmhnt ov Railways and Canals, '< Ottawa, 13th June, 1879." >.i Between the date of this advertisement and the 21st of the same month, the purchase of 5,000 tons of rails had been arranged for by cable telegraph as described in our reports on contracts 44, 45 and 40, leaving 25,000 tons necessary to be got for this railway and 11,000 for the Intercolonial. On the 21st July, 1379, the tenders which had been uceived in due time were opened at London in presence of Sir Leonard Tilley, Sir John Rostf, and the Chief Engineer. An abstract of them was made as they Were opened and initialed by these gentlemen, but no decision was arrived (1 ■ ■ 428 C0NTIUCT3. _ I •. 1 i ii ; t ■ lit, owing to th(3 absence ot the Minister of !^ailways, who was then in Europe, but not in England. On his reaching- London, on 23rd July, it was thiMi decided by Sir John Macdonald, 8ir Charles Tupper, and Sir Leonard Tilloy, in consultation with Mr. Fleming, to ellect the ])urchase of the quantities above mentioned, and whieh included 0,000 tons beyond Iho fC.OOO then understood to b.» required for use on the two railways, Liasmuch as the question whether a Department ought to bo moved byu speculative opinion, concerning the future prices in any market, to purchase property beyond what would b) deem ?d requisite, in view only of the tiin.' at which it was to be used, involves a discussion of the principles upon which public funds may be dispensed by a Department of Government, we avoid comment on this feature, and wo remark only on the judgment exercised concernin*? the financial results of the transactions. Assuming then that this course was open to the Minister of Railways, we have to say that, in our opinion, the probability of a rise in the price o! rails was at that day sufficient to induce a xnivate party requiring 30,000 tons, and expecting in the future to require more, to purchase 1^,000 tons be- yond his immediate wants. AVe are not inlluenced to this view by the subsequent fiicts, and although, according to tlie opinion of Mr. Reynold?, who took part in thi' inspection of the rails and was acquainted with the past fluctuations of tlic rail market, these i)urehases were at " about xhe lowest prices that havo ever been entered into for steel rails cither before or since, of that weight or quality ; " and although the market rose so rapidly afterwards that the do- liveries under the contracts were made at rates considerably less than th" prici's then prevailing, our duty is to look ai the transaction by the ligli" only of the circumstances which existed at that time. In considering the matter which might then have led one to anticipate' a rise in the price of steel rails, we ought not to omit the history of its pre- vious fluctuations. Those are already remarked upon in our report of con- tracts G to 11, ;ind are indicated approximately in the copy of Mr. Sandberg's diagram whidi accompanies that report (page ITl). ft will be there seen that in 1802 the ruling price was £\C stg, from which it fell to XIO in 1870, and after rising again to nearly X18 st^-. duriivi a short inflated period in '873, it fell gradually, with occasional rests until sometime in Julj% 137'.\ when this diagram places it at £\ 10s stg, less, than half the price to which the market had descended in its first great CONTUACTS Noi. &;{-.) •.. 41'.) -as then in rcl July, ii er, and Sir mrchasi! of bu'yond Iho ys. moved by a to purchrist' of the tim*' ciples upon Hovcrnmont, e judgment )f Railways. L the price ol liring 3G,O0o ,000 Ions bo- t livcls, and |k part in tlu' ations of the es that havo at weight or that the d< • lless than th" by the ligh* toanticipaU' iry of its pro- ^port of con- r. Sandberg's lli; stg,fioiH Is st T'. durin'i xl rests until lOs stg , les.^ Its first great JecHno before mentioned. This price, jCt 10s. is, of course, for delivery in England. In this instance, however, the competition broufjht out ofTerH even more favou^ablelhan that, the first delivery under two of the three con- tracts was at cC4 ITs. Gd., and under the other at ,€4 10s. Od., which prices covered the ocean freight to Montreal. A review of the antecedents of the market would be likely, therefore, to create at that time a belief that its futnre wouhl not be so favourable for buyers, but the position actually taken by the competing tenderers seems to us to have removed the subject from the region of theory, and to have given this belief a foundation of fact. . It will be remembered that tenders were invited lor delivery at three (liQerent dites, 1st October, 1870, 1st June, ISSO, 1st October, 1880. Wo set out hereinafter a synopsis of all the tenders ior delivery at Montreal, but it is pertinent to the matter now under consideration, to point out a strong feature of the competition on this occasion. Twenty-eight tenders were opened, seventeen of them for delivery at Montreal, the point named in the contracts; some of these were for the accessories only. In fourteen of them the i)ric.;.s for rails ranged, ae ;ording ta the dates of delivery, as follows : — ' bst October, 1870, iVom €1 17s. Gd. to ,t;> lO.s. Od. l.st June, l^80, " .J Os. Oil. " 5 LVs. Od, 1st October, 1880. " :> -Js. Od. " o 17s. Gd. This tendency to the higher i)rice, as time went on, was not conlined to tiiose tenders which took the highest and the lowest ])laces respectively. IDleven out of the fourteen competitors required higher prices for the l;it''r dates, and the average of them all was a^ follows : — Delivery on Ist October. ISTO t:'. 4s 2d. *■* 1st June, 18^1) o 7,s. od. 1st October, IfeSiJ ;'. its. 5d. From the evidence it appears to us that, while these oilers were being 1 framed, causes within the knowledge of the manufacturers as a class were already at work, which would soon make the production of rails more ex- pensive; and so the tenders, at their opening, declared the time for the [first deliveries to be a turning-point in the market. The concurrence of opinion from so many independent sources, in fact I rival sources, each a serious proposal for a business transaction, might, in 1 ♦ ,. « 1 • 430 CONTRACTS. H *• ourjiK^mcnt, woll conviaco ono that a risu in the prico was more than probable, aiul at the same time the olFors gave some intimation ot th(; mto lit whicli it would go up. Ueforo tlieso contracts wer.* executed, one of the tendering firms, Wallaci' & Co., declined to carry out thiur oiler lor th(> reason, aa Mr. Fleming says, that the i)ri('i; of rails rose between tlie teiulor and the acceptance ol it. * In our Judgment, the i)urcha.se, from his own I'uiids, of one-lburth iiioiv than the quantity immediately required, would, on consideration ol' tho facts above stp*(*d, commend itself to a carelVil bu.sinoss man as a dcsirabu' investment. On 1st October following the Chiel' l']nginei'r gave a history oltlii-; trau.sact ion as follows:— " Canaiman 1'aciku; fUii.WAv, " OkFICH ok TI!B KNdl.SEKIt-I.y-CllIKK. " Ottawa, 1st October, IfTO •' ,^ii:, — I bfliewith tuinnnit lo you tonderB for stoel mils received during the past summer ID Englam?. The tendor.H were invited by adveitlseiu'-ut, dated liUh June, 187'J, and opennJ 21flt July, lS7l), by the lion. Finance Minister, .Sir Leonard Till<>y, in f)res?not> of Sir Jolin Uose and myself. Th'i document A (in No, '20/j9C)) kIiowj tbo nani?8 of the jiirtiert tendoriri,' in the order in which the tenders were opened, number* d from I to 2^, inclusive. " I'he tenders for delivery in Montreal are clasiifio i in Ktatcnu-nt B (in No. 20,a05j. For delivery fo.b. ir, state m-^nt C (iu No. 20,09.")). For delivejy in unscnllaneoui phc»:8 in ^tlt^ mont D (in No 20,.j0:)). " A fiummnry of tendorw for di'Iivery cf rails in Mo ilieid will be frmiul Im stiitemont K (in No. I'Oj'j'J.')). For delive.-y I'o h„ in .Stateni mU V. I'or m's-elltnco'H delivery, n tiiiriv nient C! (m No. '20,^>0:>) *' When tenders weio i-])>nfd Sir Ciiarlea Ttipner, Minitt r of liiihv.iyM un i Cansl--, w >. not in Engl iDii. Ilei arrived in London on the 2".rd Ju'y. " On the iI4!h July a telo^f.'ini was sent lo .lobn "Wallace it C?., copy enclosed II (in N 20,59.')), making enquiries ai? to their teu'ier and their abilty to comiilete the coitnict. " Similar tele^'rira was sent to Mr. A. T. Drumnaond, who represcntfjd this lirra. '• On 2"jlh .Tulv (i»r;eino.in) no reply fioii .Jo'jn Wallaeo & Co. or ilr. rrum.iion 1 h;i in b.en )o."Pivcd, if wan decidecj to pas them over, on the gioimd of irregi;l':rUy of tender mi' lor other r^^nsons, an 1 accept, tantlcrs No. 21, Birrow Stetd Co., fiU" lo,000 tons, and toi c'l No. 17, Ouefit tt Co., fnr 10,000 ; both these romp^ni'^d wstc a-ke-i it 'hey coul 1 deliver n| lirger quantity this year at the sinne jirices. Unfivourable replies W' re receivol. " On tiio 'JUth duly, the tender of the West Cuml>erland C\ for 5,000 tons was acceplpil;| and f I'.al coojpany was a I II or lor thi>. 1 tlio ti'Utlor ■IburLli uioiv ition of tho s a desirable story oC lliis ;>ctobcr, If'TO the psst summer 87'J, an-l opponl 'tioo of Sir .Tolin mrliert tendtrir.'^ (Ircen, bavins oxpreHS**! their williDgn<>9ii to reno* |irnp'»8%l-j for an alitionaI q'iftiiity, that gentleman wus requested to mnko the i-r^poaal by letter, which he t July, mo. " On the .'5Ut .luly Mr. Drununond called in tho intoicBt of John Walloco »t Co. lie w&a told that 88 Mestra. Wallace it Co. had not hot ii honrd from hince tho '21 ih .luly, the matter was coniiiderei closed and otlor nrrangenieot!) mude. On the L'nd Auj;ust, nciir niiilnight, n letter was received from Mr, I'ruinmond on lohalfor.John Wallaco it Cj, whioh nee M (in No. 20,-)%). " On the f:^th August John Wulleoe it Co. wrote that they were reutly to go on with the coutract, enclosed N (in No. 20,5%); and on tho llth August, a reply was E>ent to them, accepting the nroposal, and staling tho terms of contraoi, enclosed O (in No. 120,5',)G). '' On the ITilh August Mr. Stewart and another gentleman from -John Wallace & Co., culled and ]>ron}i!!od a reply that evening by telegraph, whether or not they would undertake the whole 15,000 torrs, or only 10,000 tons, the latter to ho delivered in 1880j the Minister having J Iven them the option. No further communicntion had been r<'oeivi'd irnm McHsrs--. Wallace and Co. up to the time I left Jjoodoi oa the ISth August. " IJeforo I left Ivondon, directions wer« jjiven with r(£ard to the j>reperatitn vl' contract* and other matters Mr. Ttjos. ll'i'y.ioldi, j'iu., wisnpjioiuLed luspc ■ or of RuLilor the Depait- Dikut ou the terms of tho letter dated !2fUh J u'y, l6l'J, euclosei 1' (in Xo. JO,'V.HJ), In this duty he n to he aasisced by Mr. C. P. Sandborg, a former inspector. " On tho execution of the contracts by the ro-inuracturers iu England, Mr. Kcynokia w is 10 forwan' them hero ; but at this dite they have not been received. " ''he U^Jiltrs as opened by Sir I^onard I'illey, Sir John IJose and mjHvlf Bccou;pany thii» I am, itc, itc, "SANDFOHD FLEMING. " ICnyincerinChlef. "F. BiiAC.v, E.^q., " Secretary Department of lluilways and Canals." Messrs. "Wallace & Co referred to in the above reixal; did not carry out their offer, althoug'h it was formally accepted, and a suit at the instance of the Government was instituted against them for the i)urpose of recovering damages for their default. Subsequently the suit was abandoned under tho authority of the following Order-in-Couiicil : — Ly of tonlf^v Mi'lB"Copv nf a Report of a Commitice of the Uonou.ublc Hie /V/r^ CouiicH, apiii-oved bj His ons, fin 1 toi ii'B IhceUencj the Governor General in Council on the C)th Jauuari/, If^HO. co-1 1 1, Tozer & Iliiniplon Th ) John Cockerill Work.-; Co. Br)wn, Hayley & Di.'con W. H. Pillow & Co Wumuel Fox k Co Charles Ciiiiunell k (.'o Bolkow, Vaugimn k Co .., Ilhynitiey Iron Co Katemnn & Co 5,212 10 5,230 5,551 10 5,604 10 5,500 I o! I i .5,075 IC 5,r,12 10 5,071 17 6,005 5,775 1st Oct, 1880.1 C s (1 5,401 10 5,312 10 5,3G0 5,513 6 1' s. U I 5,473 15 6,620 5,489 7 5,025 5,487 10 5,750 5,800 ] 5,753 15 I 1 6,750 I 5,803 2 C 5,867 10 6,88) 5,958 15 .5,758 15 5, 750 6,803 2 .5,807 10 5,880 6,168 15 Moiiii £ s, 5,323 10 I; I 5,3 !2 1« I 5,403 i; s 5,519 I 'I 5,004 10 I 6,625 .1,013 I.') 5,075 ]() 5,710 5,750 6,759 7 5,7h.; 01 5,680 'Ij 5,96/ 10 ol CONTRACTS Nos 63—55. 43r J result to the td racommenilj li expeniM. A approval. . C. P. C." :>[ the papers )duce ill full )riginals, and of the three vailable ofler t. housand tons very at Mont- zest oiler, till' UTIONATK IjUANTlTvB 1) Nl.TS. ■ 880. 1 1 Moan J ' £ s. .i r),:»2.'5 I'l 'i 5,3)2 1« 1 5,403 li >< (! 5,519 1" I n c 5, cot 10 '■ 5,625 ' 5,013 15 " 5,C:5 10 " 5,710 5,750 >' 5,75'J 7 ': 5,7b.; ') 5,680 '>j 5,96; 10 f| This statement shows the order in which the tenders were most favour- able to the Government, who took 30,000 tons, (all they would agree to furnish) from the first ; 10,000 (all they would agree to furnish) from the second, and 5,000 from the third. We are led to conclude that in each of these contracts, the Department thus secured the materials covered by it at a lower rate thaii could have been done by any other means then within its reach, and 'hat in no case did any of the contractors get an undue advantage. Contract No. 58. This was dated 30th August, 1879, and by it the Barrow Hajmatite Steel Company undertook to manufacture, according to specifications attached to the contract, and to supply and deliver at Montreal, steel rails, together with such quantity and number of steel fish-plates, as might bo proportionate to, and required for laying the said rails, and also such quantity and number of iron bolts and nuts, as might be proportionate to and required for' the rails. The quantity of rails, and the respective dates of delivery, and the price of each class of material were as follows : — Date of Delivery. October 1st, 1879 June 1st, 1880 September 1st, 1880. do October lit, 1880 Rates per ton of 2,240 lb3. Rails, Tons. Rails. Fish-plates. Bultii and Xiits. £ s. d. £ s. d. £ .s. (1. 5,000 4 17 6 :. 17 6 10 5 5,000 5 6 10 :. 5^00 4 17 6 5 17 G 10 5 5*00 5 6 10 5 a 10,000 5 2 6 'i 2 6 10 7 6 The time for the fulfilment of the contract had not expired at the date of our commission. It had been partially fulfilled, and up to SOth June, 1880, the amount paid on it was $233,986 for the Canadian Pacific Railway. This covered about three-fourths of the whole quantity which had been delivered np to that time by these contractors ; the remainder had been delivered to the Intercolonial Railway, and charged to that account. 28 •I ■. 'I i I , I i 4S4 CONTRACTS. Contract No. 54. By this agreement, dated 11th September, 1879, George Thomas Clark, under the style of Guest & Co., undertook, in terms similar to those of Con- tract 53, to deliver at Montreal, steel rails, with fish-plates, bolts and nuts, as follows : — • Date of Delivery. October lat, 1879., June l8t, 1880 Rails, Tons. 5,000 5,000 Rate per ton of 2,240 Ibt. Rails. £ s. d. 4 IT « .5 Fish-plates. £ 3. (1. 5 17 6 6 Nuts and Bolts. £ s. d. 12 12 The contract was fulfilled. The amount paid on it up to 30th June, 1880, was 179,480.11, for the Canadian Pacific Railway. This covered about two-fifths of the whole which had been delivered up to that time by these contractors ; the remainder had been delivered to the Intercolonial Hallway, and charged to that account. Contract No. 55. By this agreement, dated 29th August, 1879, the West Cumberland Iron and Steel Company undertook, in terms similar to those of contract •53, to deliver at Montreal steel rails, with fish-plates, bolts and nuts, as follows : — Date of Delivery. I Octobfr Ist, 1879... XoTember 1st, 1870. Rails, Tons. 3,<>00 2,00D Hate per ton ol '2,240 lbs. Rails. £ S. r. 4 19 4 19 Fish-piates. £ 8. d. 4 19 4 19 Bolts and Nut«. £ B. d. 9 15 9 15 The contract was fulfilled. The amount paid on it up to 80th June 1880, was $110,076.66. aas Clark, se of Con- id nuts, a» 240 Ibi. Nats and Bolts. £ s. d. 12 12 iOth June, rered about ae by these al Railway, lumberland if contract iid nuts, as L24U lbs. Bolts and Nuts. £ 8. d. 9 16 9 15 )th June CONTRACT No. 56. 43S Contract No. 66. Constructing a Bridge. This agreement is not contained in a single document ; it was made by accepting, on the 29th November, 1879, a tender sent in by the Kellogg Bridge Co. for the construction of a railway bridge, according to specifi- cations, over Rat River on the Pembina Branch, the price for its com- pletion being $1,384. The following report by the Chief Engineer shows the necessity for the work • id the first steps towards the contract. " Canadian Pacipio Railway, "Office of the Enoinerr-in-Chhf, " Ottawa, 24th November, 1879. " Sir, — On my return from Manitoba I rejiorted, among other things, that a permanent bridge should be erected at Rat River on the Pembina Branch, as tlie present temporarji' ttructure was far from satisfactory, and liable to be washed away by the spring freshets. "Wliileon the spot I directed the contractors to prepare pile abutments for the ne^ bridge, and on reacliing Ottawa, under your authority, I had an advertisement put in the Toronto, Hamilton and Montreal iiapers inviting tenders for a single (U) feet iron span. " Tenders have been received from the Hamilton Bridge Company, the Toronto Bridgo Company and the Kellogg Bridge Company. An abstract of these lt;nleted in this way, and the bridge gives satisfaction. Up to the 30th June, 1880, the amount paid on the contract was $1,160. Contract No. 67. Railway/ Frogs. This agreement is not contained in a single document ; it is embraced in an offer made by the Truro Patent Frog Company, and the acceptance of it, whereby this company undertook to furnish 120 Starrat's adjustable steel tail frogs of specified angles, for the sum of $65 each, and switch frames, signal posts, connecting bars and gearing complete, (which included wood- work, head blocks and sliding chains,) " $35 every switch complete." There was no public competition in this case. The Q-overnmont had previously been getting railway frogs made at the Kingston Penitentiary at $80 each, the connecting bar at $15.60, and the switch gear at $40, in all $136.60, for what cost $100 under this contract. Mr. Schrieber, considering the Truro frog better than that which had been previously used, brought it to the notice of Mr. Fleming, pointing out that the rails were perfectly interchangeable, that it had more inherent strength, and that after using it on the Intercolonial Railway he had found it all that could be desired. On the Ist September, 1879, Mr. Smellie, in the absence of the Chief] Engineer, reported to the Department that a number of frogs with switch gear were wanted for use at Fort William and in Manitoba, and recom* CONTRACT No. 67. 437 stition, but e proposals ,t the sub- it the one next above r that their n, and Mr. was sent to e place for labour, the ompleted in contract was mended that these articles should be manufactured without delay, so as to be delivered before the close of navigation. Mr. Fleming stated in his evidence that" he knew of no other place in the country where these frogs could be made, except by the consent of the present contractors, who either were the patentees, or had secured from the patentees the right to make them. At the request of the Department these contractors stated by telegram their terms for the manufacture of 120 ; these terms being as above men- tioned. Their proposal was accepted, and the acceptance was confirmed by an Order in Council. The saving was not as great as the difference between the price paid pre- viously for those manufactured at Kingston, and those made at Truro, i . e. $36.60. The cost of transportation between those points was to be deducted I from this diJBTerence, to show the actual saving. That cost was not ascer- I taiued by us. We give below the Order in Council to which we have alluded : — "Copy of a Report of a Committee of the Honourable the Privy Council, approved by Hit Excellency the Governor Oeneral in Council, on the 2ird I>ecember, 1S79. ''In a Report, dated 20th December, 1879, from the Honourable the Minister of Railways and CattialB, stating that in the month of November last, upon an intimation from the Engi- neer-in-Chief of the Canadian Pacific Railway, that certain frogs and switch gear were required before the close of navigation for use in the Fort William and Manitoba districts of thai nulway, he authorized the acceptance of an oflFer receive i from the Truro Patent Frog Cbtapany to supply 120 of " Starrat's Patent Adjustable Steel Rail Frog*," for th^ sum of $65 |«Boh, and switch frames, signal posts, connecting ties and gearing complete, for $35 per iwitoh complete, making a total cost 3f $100 per set, and requesting that his action in the ernmcnt had iinatter, for the rf^asons stated in his report, be approved, and that the order given to the Penitentiary BTroro Company be confirmed. "The Committee recommend that the action of the Minialerof Riilvvayii and CanaU be (ned as ifequested. "Certified. «J. O. C():E, " Assistant Cler!.; rrivy CouneiV* t is embraced acceptance of ustable steel itch frames, luded wood- plete." at $40, in all! it which had Ipointing out )re inherent On the evidence we conclude that by this contract the Department e had found procured the property covered by it at as low a price as would have been ssible by any other course, and that the contractor got no undue of the Chiefi^^aiitage- with switch I The contract was fulfilled, and the amount paid on it to 80th Jone^ and recoi&*p80, was $12,000. T^ t 1 418 CONTRACTS. u: v.? I f :■!, \ ■ f ■ Contract No. 68. Railway Turn-tables. By this agreement, dated 26th February, 1880, "W. Hazlehnrst under* took to make, according to specifications, and to deliver one decked turn* table at the price of $2,016, and three open ones at $1,360 each. This agreement was the result of competition, invited by circular, addressed to the Hamilton Bridge Company, the Toronto Bridge Company, the Kingston Engine Works, and "W. Hazlehurst of St. John. The circular vsras as follows : — " Several first-olass iron turn-tables, fifty feet id diameter are required for the Paoifio Rail- way ; tbe first in the engine house at Selkirk must be erected and placed by the 1 5th March next, This must be decked, the deck supported in centre ; for the other tables required, separate prices are invited ; for deck and open work proposals will be received up to 30tb instant, February, 1880. Drawings should accompany proposals.'' The tenders were opened by Mr. Trudeau, Mr. Braun and Mr. Fleming, and were reported on by Mr. Fleming on 14th February, 1880. The lowest offer was by W. Hazlehurst, and this contract was based npon its terms. Mr. Fleming's report recommended its immediate accept- ance ; it was the most favourable for bo\ h decked and open turn-tables. The next highest offer was from the Hamilton Bridge Company at $2,360 for the decked, and $1,700 for the oi)en turn-table. According to the evidence of Mr. Fleming, every one in the business likely to send in a tender was appealed to by the said circular, and all probable Canadian competion was thereby excited. He thought that the mode of inviting tenders which was adopted in this case was the best in the public interest. On the evidence we conclude that in awarding this contract, the De partment provided for the articles covered by it at as low a price as waa then possible, and that the contractor got no undue advantage. The contract was not fulfilled at the date of our commission. The «moTUit paid on it up to 30th June, 1880, was $2,016. CONTR-iCT No. 69. Railway Ties. By this agreement, dated the 7th day of February, 1880, Oharl tlThitehead, Henry N. Buttan and John Byan, undertook to make and d(^ CONTRACT No. 69. 43» liver 100,000 tamarac ties, according to specifications, on the track on sec- tion 14, in sufficient time to admit of their being hauled to the west side oi Red River, over the temporary track then laid upon the ice at Point Douglas, in Winnipeg, receiving therefor 27| cents per tie, if stumpage should be charged against them by the Government, otherwise the price should be three cents per tie less. This contract was brought about because it was deemed expedient by the Government to secure ties for at least a portion of the second hundred miles west of Red Kiver, before the ice broke up in the spring of 1880. The Chief Engineer considered that if the matter were put off until the contract for that portion of the line was let, it would be too late for the contractor to secure the ties necessary to enable him to lay the track, and the Minister concurred in the proposal to invite tenders, before the winter passed away. A letter on the subject was addressed to the Minister by the Chief Engi- neer, recommending that arrangements should be made without delay, and that the ties, when obtained, should be taken to the west side of the river, and there piled at convenient places until wanted. Th»i suggestion was concurred in and the following telegram sent to Mr- Rowan, at Winnipeg, on the 29th January, 1880 :— '' Receive tenders for 100,000 tamarac ties to be delivered along track, section 14, in time to be t^ken across ice bridge to west sitle of Kel River. Telegraph particulais of tenders on. receipt. "SANDFORD FLEMING." On the 5th February Mr. Rowan telegraphed Mr. Fleming as follows : " Ten tenders fir ties received to-day. Tiie f II ming are the lowest, the price covering the Governircnt charge for stumpage. Deduct three cents in ail cases if stumpage will nit be charged . " The names are then given, showing that Charles Whitehead and Henry N. Ruttan made the lowest tender at the rate above mentioned. The prices varied U]> to 83 cents per tie. On the following day Mr. Fleming was authorized to telegraph to Mr. Rowan that the tender of Whitehead & Ruttan was accepted, and Mr. Rowan wivs instructed to make a contract for delivery in good time. Mr. Ryan's nam j was added to the firm of contractors with the approval of the Minister. This contract appears to have been entered into at a price as low as would be paid under any other arrangement. The delivery of the whole quantity agreed upon wa8 completed early in April, 1880. Some delay took place in the settle- ment of the amount due to the contractors, on account of a second inspec- r ' . •* ^ . '$ > ■■ ■' ., * • 1 r./ *■ , 1 ^ ' . I t it" < f . "•1 I « • ■ i "If i \ 440 CONTRACTS. iion which Mr, Rowan considered to be necessary in the public interest. Up to the date of our commission $20,800 had been paid upon the contract Contract No. 60. Railway Construction. By this contract, dated 23rd December, 18*79, Andrew Onderdonk covenanted to complete according to specification s, on or before 31st December, 1883, all the works mentioned therein, including the excavation, grading, bridging, track-laying and ballasting on the railway, from Emory's Bar to Boston Bar, about 29 miles, (known as section A), in British Columbia, receiving therefor the respective prices affixed to the difierc.it items and classes of work mentioned in a schedule in the said contract, and subject to the condition that if it should appear that the total sum therein named as the intended expenditure ($2,727,300) would be exceeded at the said prices, then the work might be stopped, and that no work beyond that total should be done by the contractor unless the Minister should first authorize it. The first advertisement inviting competition for the work in British Columbia was in August, 1878, on which occasion tenders were asked for the distance between Yale and Kamloops, (about 125 miles.) Subsequently the time was extended by advertisement until 12th January, 1879. No action was taken on that occasion, because it had been decided by the Gov- ernment to get fuller information concerning the route to British^Columbia, before placing this construction under contract. On the 3rd October, 1879, advertisements called for tenders up to 17th November, 1879, and forms of tenders, as well as specifications and other memoranda of information, were prepared and furnished to applicants. The distance before mentioned, from Yale to Kamloops, was divided into four sections : — Section A. Emory's Bar to Boston Bar, 29 miles. B. Boston Bar to Lytton, 29 " C. Lytton to Junction Flat, 28J '* D. Junction Flat to Savona's Ferry, 40J and separate tenders invited for each. After it was decided by the Government to place this portion of the line under contract, the mode of inviting tenders was discussed by the Privy Council, and after a statement by the Chief Engineer upon the subject, it was considered that the construction of the whole distance would be an I (( it CONTRACT No. 60. 4it nndertaking so heavy, as to induce competition from only a few persons, and consequently that dividing it into four sections, and inviting oilers on each section, would result in a keener competition, and finally a smaller cost for the whole ; and, therefore, the offers were asked in that shape. The tenders were opened by Mr. Trudeau, Mr. Braun and Mr. Fleming. On 22nd November, 1879, Mr. Fleming reported on the substance and effect of the several tenders, giving also a summary of those four contracttrs who had made offers for the four sections, showing the gross amounts in each case ; this is to be found at page 144, of a Blue-book Return to the House of Oommons, dated 16th February, 1880, which return included all tenders for works on this railway since January, 1879, and other particulars concerning them, each regular tender for each of the sections above men- tioned being set out in fall. The lowest regular tender was accepted for each of the four sections, and became the basis of the contract finally executed. The following are extracts from Mr. Fleming's said report : — , . ^ "I have examined the rates given in the lowest tenders; they generally l)ear a Tair relation to each other, and arejabout the prices for which other work has been roc»uitIy placed under contract on other Beotions of the railway. I do not think experienced and rekponsiblA contractors wquM be saFe in undertaking to do the eame work at lesB rates. "Those who made the fiurveys and calculations inrorm nae that the qnan titles are very full, and that in actual execution they can be largely reduced. I am convinced, moreover, that by making an extremely careful study of final location, by sharpening the curvature ia some places, by usin^ great judgment in a'ljusting the alignment to the sinuonties, and ludden and groat inequalities of the ground, (>y suh-itituting the cheaper olasDes of work for the more costly, wherever it can safely be done, and by doing no work whatever that is not absolutely necessary, a very marked reduction can be made." Some errors were discovered in the addition of some of the tenders — after correction the five lowest stood as follows for section A, (the subject of this contract; : — 1. D. McDonald & Co $2,727,300 2. J. Heney&Co 2,701.380 3. C. Peterson 2,766745 4. Rogers & Farrell 2,940,115 5. Shields & Co 2,993.620 For this section, there were two tenders adjudged, at the time of open- ing, to be irregular, both having reached the Department at 3.30 p.m. of the 17th NoA'-ember, on which day noon had been named as the last hour for the receipt of offers. One was from Messrs. Battle, Symmes and Jackson, «t $2,634,120. The other from Brown and Oorbett, at |2,698,480. The * * • ** , 442 CONTRACTS* „l • >' '•I ' -i: latter was not accompanied by the name of any sureties or by any cheque, aa was required by the stated conditions. At the time of opening these tenders the Minister of Railways was not iu Ottawa, and the tendt'rs were put in a sealed package, and until his Teturn wor*; kept by Mr. Trudeau in a safe in his room. On the return of the Minister the contract for this section was awarded to D. McDonald & Co. ; and they were notified to that effect by a letter from the Secretary of the Department, dated 25th November, 1879, which required them to deposit by the 8th Dect'mber following the sum of $136,000 as security to the Government. This letter was acknowledged on the following day by ft letter from this firm, iu which they stated that they were prepared to com- ply with the conditions of the specifications and tender. On 2nd December, Messrs. D. McDonald & Co., lodged the necessary security for the contracts for sections A and C, with the Department, in the shape of deposit receipts of the Banque d'Hochelaga for $238,000. The evidence shows that this contract was awarded at the lowest rate open to the Department, and that the parties to whom it was awarded got thereby no undue advantage. On the 20th December, 1879, a document to the following effect was received at the Department : — "Ottaw*, 15th December, 1875. '' Sir,— We herebtr author '.z>) the award of the contract for Rections A and C of the Can- adian Pacific Railroad, io British Columbia, being transferred from us to Andrew Onderdonk, •ni to the execution by tbe Clovernment of contract for the said sections with said Onder- donk, and tbe acceptance by the Government of the df^poeit required a» security for such contracts from said Ond»rdoak in lieu of th it deposited by us,which we agree to reoeive back from the Government on tbe security to be put up by said Onderdoak being accepted by the Ooremment. " Your obedirnt servants, " MeDONALD, L0S.-1, CilARIJSBOIS, MoCRAE k CO , " As per subjoined names oT the individual members tbe-eof : •'UDNOAN McDonald, •' , "H. McFARLAND, per D. McD, "L. M. L0:!5S, "Wm. McORaB, "A. CHARLB80IS, ••L Z. MALLBTTB, "ED. S^HANLY, "JOHN SDLLIVAN, "P. MoORBA, per D. McD., "A. P. MAODONALD. '*To the Hon. Sir Giiarlbb Tdppbr, E.O.M.O., " Minister of Railways and Canals, " OtUwa." CONTRACT No 60. 44): The Minster submitted to the Privy Council a memorandum, of vvhicU the substance is shown in the following Order-in Council : — *Go?'i of a Report of a Committee of the Honourable the I'rivy Council, approved by Hit Excellency the Governor General in Council, on the 2'2nil December, 1879. *' On a memorandum dated 2Uth December, 1879,from the Honourable the MinistvrofRaiK ways aod Canals, reporting that Messrs, McDonald i^ Co., the lowest bidders for the 8eotion» of the Canada Pacific Uailway extending from Emory's Bar to Boston Bar (npotion A)and from Lytton to Junction Flat (sr-ction C), have Hied in his Deptrtment letters from th« oashier of the Banquet 'I'lToohplaga stating that Messrs McDonald, Loss, Churlclois, McCrae & Co. bad deposited in his bank to the credit of the Receiver 'General the sums of |198,33< and $39,606, forming together the dum of $23S,(X)0, payable on demand. " That on the 20th instant Messrs. Duncan MoDunnld & Co. have addressed a letter to the Departn ent requesting that the contracts for the two sectious ttid (J be given to Andrew Onderdonk, and that Mr. Onderdonk has deposited to the credit uf the Receiver Generaf in the Bank of Montreal the security required, " The Minister recommends that he be authorized to enter into contract with Mr. An- drew Onderdonk for the construction of sections A and C at the prices named in the tenders igf Messrs. Duncan McDonald & Co. •* The Committee submit the above recommendation for Your Excellency's approval. " Certified. "J. O. C<)Tfi, Aatistant Clerk. The contract was entered into with Mr. Onderdonk under this authority. The firm to whom this contract had been awarded, Messrs. D. Mc- Donald & Co., were also successful tenderers for section C, and the con- tract for that was also awarded to them by letter of 25th November, 1879. For assigning their position ccncerning these two contracts, Mr. Onder- donk paid that firm |100,000. The evidence shows us that there had been, previous to the opening of the tenders, no arrangement by which Mr. Onderdonk, or any one on hi» behalf or for whom he was agent was in any way interested in the- tender of this firm for either of these contracts (A and C). Mr. Onderdonk finally became the contractor for the whole four sec- tions in British Columbia. He executed three of the contracts in his own name, and the other was assigned him after it had been entered into by Purcell & no. "We have examined several witnesses upon the question whether, under the circumstances, placing all the contracts in the hands of this con- tractor was an advantage, or a disadvantage to the public. r^ 444 CONTRACTS. .1 Mr. Trudeau testified, that he thought it better that large works should be platted as much as possible in the hands of a single firm if it had large means ; that the works are more likely to be constructed effectively, because there would be a unity of action in the preparations and in the manner of conducting the work, in the purchase of provisions and the plant required and less competition for labour ; and that it would be a material advantage in this case, because, at all events, all the plant and supplies would probably have to come from one end of the works in British Columbia, and the present arrangements would prevent disputes between •different contractors. Mr. A. P. Macdonald, one of the firm who had made the successful tender, and who had had large experience in contracting, was a witness before us. n«» stated, in effect, that in a country like British Columbia, One company could do the work on the whole distance at from 15 to 20 per <;ent. less than it could be done by dividing it into four sections, and that this would enable a person to pay something for the contract, for the whole, *nd still make as much profit as separate contractors could make on separate sections at the original prices. That in sub-divisions more plant and machinery per mile of the work would be required than on a contract for the whole distance, and he mentioned also the advantage of controlling the labourers better under one management, than by competitors on different sections. Mr. McCrao, another of Mr. McDonald's firm, gave evidence in the 4same direction. Mr, Mills, who represented a syndicate formed to support Mr. Onder- donk in the fulfilment of these contracts, gave his evidence. He had had much experience concerning railways, not as a contractor, but as a proprie- tor and in furnishing money for building them. His opinion was that all these sections being close together, and all very heavy work, that competi- tion for labour and in other ways would be detrimental, that they could all be prosecuted under one head with much greater economy, that, on the ■whole, he believed the work would be more efficiently done by having one contractor than separate firms for different portions of the work. Mr. Fleming testified that, in his opinion, placing all the works in Uie hands of one contractor, would result in considerable advantages. Mr. Goodwin, Mr. Ryan and Col. Smith, all contractors of experience, ^ave evidence to the same effect. CONTRACT No. fJO. 44& kH should had large effectively, find in the iH and the rould be & plant and J in British s between successful s a witness lumbia, one L5 to 20 per 8, and that r the whole, on separate 5 plant and I contract for rolling the on different ince in the Mr. Onder- He had had 8 a proprie- was that all lat competi- ey could all that, on the having one rorks in t^9 1 experience, Sir Charles Tupper testified that it was decided to allow Mr. OikI»t- donk to become the sole contractor, because it was believed tliat ho having the command of great resources, and being a skilled contractor, the work could be executed in a more satisfactory manner, and probably at less cost to the country, than separately by the original parties. It is in evidence before us, that on an earlier occasion when the letting of contracts 41 and 42 was under consideration by the Departmenti the Chief Engineer had tbo impression, that if a firm sulRcieutly strong in resources and skill, " to grapple with the work as a whole," had it in hand, the work would be done earlier than by separate contractors, and it wag then considered by the Minister and his colleagues that it would be proper in the public interest to expend, if necessary, a larger sum for the wholt distance under one contract than under two. In Mr. Fleming's report on the tenders for contracts 41 and 42, he alludes to the advantages to be gained by placing the whole work in the hands of a single firm, provided it was a satisfactory one. The evidence leaves no room to doubt that the arrangement by which the work on these four sections was placed in the hands of one firm of con- tractors, was a very desirable one in the public interest, and that it was secured without paying an extra price on that account. Not much had been done under the contract at the date of our Commission, and nothing had been paid on it. Contract No. 61. Railway Construction. By this contract, dated 10th February, 1880, Patrick Purcell, Hugh Ryan, James Goodwin and James N. Smith covenanted to complete, accord- ing to specifications, on or before the 30th June, 1884, all the works men? tioned therein, including the excavation, grading, bridging, track-layingf and ballasting on the^railway from Boston Bar to Lytton, about 29 mile^ (known as section B) in British Columbia, receiving therelor the respective prices affixed to the different items and classes of work mentioned in a schedule in said contract, and subject to the condition that if it should appear that the total sum therein named as the intended expenditure ($2,673,640) would be exceeded at the said prices, then the work might be stopped, and that no work beyond that total should be done by the con* tractor unless the Minister should first authorize it. V f^ 4I« CONTEACTS. <♦•■ ,' This was submitted to competition, togethfir with other sections known as A, C, and D, in British Columbia by an advertisement dated 3rd October, 1879, which invited tenders for each section, up to noon of 17th November, 18*79, and which gave notice that forms of tenders, specifications and other information would be furnished to applicants. The reasons for the decision to * dyertize the work in British Columbia by separate sections, rather than as a whole, are sttated in our report on contract No. 60. We have also given there some extracts concerning the whole four sections, from the report of Mr. Fleming, dated 22nd No> > mber, 1879, on the tenders receive<^ on that occasion, and which is printed in full at pap-e 144, of a Blue- Book return to the House of Commons, dated 16tb February, 1880, giving the tenders for works on this railway since January 1879. The tenders In this case were opened by Mr. Trudeau, Mr. Braun and Mr. Fleming. After correction of any errors found in the addition in the tenders, the five lowest for this section stood as follcva ; — 1. Purcell&Co , !|2,673,640 2. D. McDonald & Co 2,592,22/i 3 Shields & Co 2,602,185 4. Bannerman &c Co 2.607,702 5. Fraser& Grant 2,678,310 Th,ire was cue irregalav tender, which was higher, however, than the one accepted, and therefore its admission would not have affected the result. The tejiders, after they were opened, were kept by Mr. Trudeau in a safe in his room till the return to Ottawa of the Minister, who was then absent. On his return the lowest tender was accepted, the parties duly notified, and after furnishing the proper security, the contract was executed to the efi'cct above mentioned The evidtiue .shows that the Department, by this contract, secured the work covered by it at the lowest available price, and that the contractors got by it no undue advantage. After the award of this contract to Messrp. Purcell & Co., and before its execution, the members of that firm addressed the following letter totha Minister : — CONTRACT No. 61. 44r as kBOwn [ Octobei, fovember, and other Columbia report on lining the Noxinber, ited in full dated 16tb ce January Braun and :enders, the )40 2^ 85 02 10 r, than the tfected the ludeau in a was then )arties duly ^as executed se cured the contractors "Ottawa, ISthJanmiry, IHHO. I " Sir, Wo hereby authori7,H tho award of the contra-.t for st^otioii " B," of tljo Guiiadiait Ipacific Kiiilioiul in Britiwh Columbia l>eiii>» transfiMTed from us to Amlrow Ondorilonk, and to Itho execution of a contract liy the (iov«rnment for mul soction with said OniUMd')nk, and th« |i»i;cpptan(;e hy the QovernmcMit of tho deposit requirod a« security for such contract from said lOti'lerdonk in lieu of that deposited b • us, which we agree to receive back from the Govern- liiient, on tho seoiiriiy to be put up by saiie«' any objections to the transfer. I " As tliG other tlue(> sections in British Columbia are already nwarded to Mr. Onderdonk, knil the one in <|uestion intervenes i .tw.'en them, it would result in considerabh' ;idvantago<» joiiuve the whole in the bands of one ^.ontractor of suflSciont strength to carry on the work ; kill from the letters furnished by the General Managei' of the Bank of Montreal, :iiitl othera rliijrh standing, there wouUl ai»|)ear io be no doubt of Mr. (,)nderilonk's linancial sibility antl Kjierience. I '• I am, etc.. I "SAND FORD FLICMING, I " Engineer-in (Ihitf. jTlie Hon. Sir CiiAKLBS TirruR, K.C.M.G., ^ '' Minist* r ol Railways and Canals, Ottawa." and before lletter toth«| On ih-> :]Oth of the same month the Minister addressed a letter io the Bon Mr. Trutch, the Age nt in British Columbia for the Dominion Oovern- pit, asking whether, in his opinion it would be in the public interest to p' Mr. Onderdonk as the contractor for this, as well as the other Ihreo ctions. 448 CONTEACTS. ^i ■)» i» On the day following, Mr. Trutch, who was in Ottawa, answered, ^\\m, an opinion decidedly in favour of the arrangement. (See page 191, of th^ above mentioned Blue-Book. ) . On the 10th February, 1880, the firm of Purcell & Co. formally assigned the contract to Andrew Onderdonk, and subsequently an Order-in-Counci| authorized the Minister to accept and confirm it, substituting Mr. Onderdoiil as the party dealing with the Grovernment, and directing the security of thJ first contractors to be released on receiving an equivalent. Mr. Onderdonk paid Purcell & Co. $100,000 for the assignment of thei] contrai f . We have examined as witnesses three of this firm, Mr. Goodwir Mr. Ryan and Col. Smith, and we find that previous to the opening of th^ tend'^rs, there was not any understanding by which Mr. Onderdonk, or aiij one with whom he was connected, was in any way interested in the tendej of Purcell and Co. for this section. In our report on contract No. 60 we have remarked upon the udvantaj. to the jmhlic interest gained by this arrangement, which placed the foul British Columbia sections in the hands of one contracting firm of ability, and ample means. Ther.- was but little done under this contra<;t at the date of our Cor mission, and nothiitg paid. Contract No. 62. Railway Construction. By this contract, dated 23rd Decc^mber, 1879, Andrew Onderdonk covei anted to complete, according to specifications, on or before the 31st day o DecemlxT, 1884, all the ^vorks mentioned therein, including the excavatioi grading, bridging, track-laying and ballasting on the railway from Lytto to Junction Plat, about 28 J miles (known as section C),inBriti.shColumbii receiving therefor the respective prices affixed to the different items, au classes of work, mentioned in a schedule in the said contract, and subject t the condition that if it should appear that the total sum therein named a the intended expenditure (|2,056,950) would at the said prices be exceed then the work might be stopped, and that no work beyond that total shoul be done by the contractor unless the Minister should first authorize it. This was submitted to competition, together with other sections know as A, B and D, in British Columbia, by an advertisement, dated Srd Octok I DonaJ corap* adver sureti safe ii Ottaw duly work parti ( T day, 2 quent Depar This t an Or CONTRACT No. 62. 449 vered, jriviiir :e 191, of tU 1879, which invited tenders for each section up to noon of 17th November, following, and gave notice that forms ot tender, specifications and other information would be furnished to applicants. tally assie exceedo 450 CONTRACTS. -aCto , * •• to enter into tlie two contracts for sections A and C with Andrew Onder- douk, instead ol" the firm to whom they had been awarded. For the tran.sfer of those two contracts Mr. Onderdonk paid tht'in ■$100,000. The evidence shows that previous to opening the tenders there was no understanding by which Mr. Onderdonk, or any one with whom he was connected, was interested in the tender for this work made by Messrs. D. McDonald & Co. In our report on contract No. 60 we mention several witnesses who were examined upon the expediency of substituting, as was done in this case, one contractor for the four sections in British Columbia, for those to whom the several sections had been separately awarded, and we give the geneiai effect of their evidence. They were unanimous in the opinion that it was an advantage to the public interest, to have the whole work in the hands of one able contractor, as is here the case, rather than under the management of several separat«^ firms. There was little done under this contract up to the date of our Com- mission, and nothing paid. Contract No. 63. Railway Construction. By this contract, dated 15th December, 1879, Andrew Onderdonk covenanted to complete, according to specifications, on or before the 30th June, 1885, all the works mentioned therein, including the excavation, grading, bridginir, track-laying and ballasting on the railway from Junction Flat to tSavona's Ferry, about 40J miles (known as section D), in British Columbia, receiving therefor the respective prices afiixed to the different items and classes of work mentioned in a schedule in the said contract, and subject to the condition that if it should appear that at those prices the total sum therein named as the intended expenditure ($1,746,150) would be exceeded, then the work might be stopped, and that no work beyond that total should be done by the contractor unless the Minister should first authorize it. This was submitted to competition, together with other sections known as A, Band C, in British Columbia, by an advertisement, dated 3rd Octolx^r, 1879, which invited tenders for each section up to noon of 17th Noverab(>r CONTRACT No. 63. 451 drew Onder- c paid th»'m tenders there ith whom he le by Messrs. itnesses who done in this bia, for those i we give the antage to the lie contractor, ;reral separate ! of our Com- Onderdonk fore the 30th excavation, om Junction )), in British the different contract, and se prices thf ,150) would : beyond that should tirv! Itions known 3rd October, Ih Novembi^r following, and gave notice that forms of tender, specifications and other information would be furnished to applicants. The reasons for the decision to advertize the work in British Columbia by separate sections rather than as a whole, are stat id in our report on con- tract No. 60. We have also given there some extracts from Mr. Fleming's report, datinl 22nd November, 1879, on all the tenders received on that occa- sion for the different works in British Columbia. This is i)rinted in full at page I U of a Blue- Book return to the House of Commons, concerning^ tenders for works on this railway since January 1879, dated 16th February, 1880. The tenders for the four •=! actions were opened by Mr. Trudeau, Mr. Braun and Mr. Fleming. After correcting some errors in addition the five lowest for section D stood as follows : — 1. T & M. Kavanagh $1,809,150 2. C. C. Gregory & Co 1,844,590 3. Shields & Co 1,928,400 4. Baunerman & Co ... 1 951,000 6. English & Co 1,965,560 At the opening one tender was excluded from the competition, it being accompanied by no cheque or names of sureties, as r 'quired by the condi- tions named to tenderers as those on which offers would be received ; it was also received at the Department some hours after the time advertized for the fhiiil receipt of tenders ; it was higher than the one to which the contract was awarded. The Minister being out of Ottawa tt the +ime of opening t hese tenders, they were kei)t by Mr. Trudeau in a safe in his room I ill his ri'turn ; ana then the contract was awarded to T. & M. Kavanagh. The correspondence is printed in full in the above mentioned returns to the House of Commons. The notification of the said award was by h-tter Irom Mr. Braun dated *25th NoviMubor, 1879, and it requested Messrs. Kavanagh to deposit $90,000 as security at or before 4 o'clock p.m., on the 8th December following. On tht^ 27th Messrs. Kavanagh acknowledged this coriimuuication accepting the contract, and stating that they would make the lequisitti de- posit in due time. On the 8th December, Messrs. Kavanagh wrote to the Minister, stating that Messrs. Davis & Sons had agreed to bo associated with them, and to put 2^^ I 452 CONTEACTS. 4 tk up their share ol' the security, but had unexpec'tedly that morning refused to do so, and they consequently requested two days longer to put up the security. On the 9th December, the Minister reported to the Privy Council this circumstance amongst others conn^jcted with letting the works in British Columbia, recommending an extension of time to Messrs. Kavanagh until 4 pm., on Thursday following (11th). The recommendation was adopted by an Order-in-Council, on 10th December, 1879. (Page 150 of the abovo mfntioned return to the House of Commons.) Before this extension expired Messrs. Onderdonk had arraiigcd with Messrs. Kavanagh to take their position concerning this contract, and thej^ by letter dated the 11th December, formally notified the Minister that Mr. Onderdonk was authorized to take their contract for section D. On the same day they applied for a further extension for two days, and it was granted by the Minister. On the 12th December, the Minister reported to the Privy Council the circumstance of the transfer from Messrs. Kavanagh to Mr. Onderdonk, and the further extension of two days, ret;ommending that authority be granted to enter into the contract with Mr. Onderdonk on Messrs. Kavanagh's tender. A Committee of the Privy Council having advised that such authority be granted, an Order-in-Counc2_ was passed on the 13th December granting the authority asked for. (Page 152 of said return to House of Commons.) On the day before this Order-in-Council was passed, Mr. Onderdonk had furnished the necessary security, and the contract was entered intc -with him on the terms stated a.t the opening of our report on this contract. This contract and those numbered A and C were subsequently assigned by Mr. Onderdonk to a syndicate of capitalists, subject to the sanction ol the Government, which was granted by Order-in-Council, dated 8th March, 1880. This is set out at page 197 of the said return to the House ol CommoKR. The Minister, as a witness, was examined concerning the extensions of e given in this case to Messrs. Kavanagh. After des«^ribing the steps in the proceedings to have beea as set out in the correspondence (pages 148 to 151) in the said return to the House of Goaamms — namely, that they had mentioned to him persons upon whom they Imd relied for assistance in CONTRACT No, 63. 453 making up the money, he explained to us that in this case there was no urgency as to time, and no object to be gained by passing to a higher tender. The evidt^nce shows that in awarding this contract the work covered by it was secured at the lowest rate at which the Department could have secured it, and that no undue advantage was obtained by the con- tractor. In our report on contract No. 60 we give the tenor of some of the evi- dence concerning the advantage gained by placing the four sections in British Columbia in the hands of one strong and experienced firm. All the witnesses who were examined upon it agreed in the opinion, that the arrangement was a very desirable one for the Government. There was little done under this contract at the date of our Commi»- sion, and nothing paid. le House ot Contract No. 64. Pile Bridge over Red River. By this contract, dated the 18th day of March, 1880, John Ryan* Charles Whitehead and Henry N. Ruttan undertook to furnish a pile trestle bridge over the Red River at Winnipeg, completed and ready to receive the rails on or before the 16th May, 1880. This contract was brought about to secure railway connection across Red River, and so to facilitate interconrstt between the Pembina Branch and the town of Winnipeg and the country west of it. On the 3rd March, Mr. Schreiber being then at Winnipeg in the capacity of Superintending'- Engineer, Mr. Fleming telegrai)hed him as fol- lows : — " If you think it advisable and pra'jticable wfiile river is frozen to construct temporary pile bridge at Winnipeg, you can invite tenders, giving a ipeek's notice." On the following day Mr. Schreiber telegraphed this reply : — " It is advisable in the interest of speedy cooi^truotion westwarl lo have a bridge; bufc what about its obstruction to navigation ? It' it is to be built the pil s and timber must b« delivered at once \ but 1 do not consider it would be prudent to erect it until after the io» tiowg." On the 6th March, Mr. Fleming, having r^-ceired authority, directed Mr. Schreiber to get out piles and timbers while the snow lasted ; and, on th* 10th of that month, Mr. Schreiber was requested to apply to the corporation. of Winnit»eg to allow a temi>orary bridge to be erected. 4S4 CONTRACTS. If. .' His suggestion to i)08tpoiie the erection until the ice moved, was '.ftdopted by the Chief Engineer ; but he was directed to obtain the materials ^irithout delay. Accordingly tenders were re(;eived on the 10th March, and a report wa8 made on the subject on the 6th of April, the lowest tender having been, in the meantime, accepted under the authority of the Minis- ter. Nine tenders were received. The lowest of them, at a price of |7,850, was accepted and acted upon, and forms tho basis of the present contract, which was awarded without any undue advantage to the contractor. The work has been completed and paid for without dispute. The sum ex- pended up to the time of our Commission was $2,700. Contract No. 66. Rolling Stock. By this contract, dated the 15th of March, 1880, James Crossen under- took to construct and deliver four first-class passenger cars, capable oi carrying sixty-four passengers each, and one official car, all to be constructed and furnished according to specifications and at the prices below named. That portion of this contract which relates to the four cars above-men- tioned, was brought about by an advertisement for tenders as follows : — Ganadun pAOiric Railwat. Tenders /or Rolling Stock. " Tenders will bp received by the undersigned up to noon of Monday, the 23rd February inatant, for the immediate BU|;>ply of the following rolling stock :<- •* 4 Firat-cIasB cars. '* 2 Postal and baggage oar?. "60 Boxcars. « 60 Platform cars. " Drawings an«1 fpecificatinns may be seen, and other information obtained, on applicai* lion at the office of the £ngineer-in-Cbief, Pacific Railway, Ottawa, and at the Engineer'* ne and Malcolm Mc- Naughton covenanted to complete, according to specificnt ions, the works therein mentioned, including the excavation, grading, bridging, track-lay- ing and ballasting on that portion of the line, commencing at the end of the 48th contract, near the western boundary of Manitoba, and extending to & point on the west side of the valley of Bird Tail Creek, in length about 100 tailes, receiving therefor the respective prices affixed to the different items and classes of work mentioned in a schedule in the said contract, and sub- I ject to the condition, that if it should appear that the total sum therein named as the intended expenditure ($438,914) would be exceeded at the 466 CONTKACTS. If. .. » • said prices, then the work might be stopped, and that no work beyond that total should be done by the contractor unless the Minister should first authorize it. By the terms of the contract, the distame of fifty miles was to be in running order by 1st June, 1881, and the whole to be ready for passage of trains by 31st December, 1881. The contract and specifications are printed in full (Sess. Papers (19 S.), 1880.) Mr. George MacTavish, of "Winnipeg, and Mr. Alexander Bowie, of Ottawa, were silent partners of the said George Bowie & Alexander Mc- Naughton in this contract at the time it was executed, and in the tender ou "which it was founded. Tenders were invited by the following advertisement : — •' Canadian Paoifio Railway. " Tenders for a second 100 miles section west of Rod River will be received by tbe under* •igned until noon on Monday, the 29th March, next. " Tbe section will extend from the end of the 48tb contract,near the western boundary of Manitoba, to a point on tbe west side of the valley of Bird Tail Creek. " Tenders must be on the printed form, which, with all other information, may be had at the Pacific Railway Engineer's Offices, in Ottawa and Winnipeg, on and after the 1st day of March, next. "By Order, "F. BRAUN, " Secretary ** DiPARTUBNT or RaILWATS AMD CaNALS, <* Ottawa, 11th February, 1880.g " The reception of the above tenders is postponed until noon on Friday, 9th April, next " By Order, " F. BRAUN, , ( "(Secretory. " DiPA'iTifiMT or Railways and Oanals, ^^ , ,i , i / ' " Ottawa. 22na March, 1880." On 12th April they were opened, and on the 13th they were reported | upon as folio w^s :— '* • ,( .».,-, , ; ,, . . |- ; "Canadian PAoirio Railway, " OrrioB or the ENOiNiiR-iN-GHizr, "Ottawa, 13th April, 1«8«. " Sir, — A public advertisement of date 11th February, called for Tenders for a second 100 1 inile section west of Red River. The section to extend from the end of the 43th con^Fset | near the western boundary of Manitoba, to a point on the weet side of Bhrd Tail Cresk. CONTRACT No. 66. 457 ern boundary of 9th Apri1| next "Tlie Tend^Pi were opened yesterday in preaence of the Deputy Minister, th«» Secretary of the Department and Mr. Collirijirwood Sobreiber. A lint U enclosed. Tliore ut** twenty-giz regular tenders, the conditions being complied with. Them are four tenders without the required money deposit, therefore irregular, and in oonseiiueuce ruled out. " I have caused the moneying out of the twelve lowest tcnilors to be checkrd— thoaa let- tered G, B, Q, E, O, F, and A, prove correct. Tenders O, M, £, W, and V, are incorrect. Taking the revised total amounts, these twelve tenders stand in the followint' orler: th* lowest being letter D, of Qeorge Bowie and M. McNaughton, Ottawa, 943^,914, for tlie gra'liog bridging and traok-l>iying on tbe 100 miles, on the basis of the estimated quantities printed in the^orm of Tender. . Rovisod Amount. No. I. [.etter D, Geo. Bowie and M. McNaughton $43S,<)|4. " 2. " ti, Marpole, Oliver & Co 4:)4,',)2r>. « 3. « B, C. II. Carrlere 48'2:Ml. " 4. " M, Denis O'Brien fjO'J.US.'). <• 0. « Q, Cbarlebois and Mncdonald 51I,0S2. " 6. '• E, Stevens, Burns and Turner 53l,44ti. " 7. " O, Pefer .1. Brown .'i45,73'>. " 8. '« F, James G. McDonald 557,390. «♦ 9. " K, J. C. Rodgers 5(;u,472. ^ « 10. « W, F. Shanly 571.700. "11. " C.Stewart and S'rachan 573,162. <' 12. " A, Stewart, Gray & Co 580,295. " I have the honour to be, Sir, " Your obedient servant, " SA.NDFORD FLEMING, " EngineerinCMef, «The Hon. Sir C. Tupper, K.C.M.G., *' Minister of Railways and Canals." On the day after the, above report, Mr. Brauii si*iit the following tele- gram to Mr. George Bowie, and a similar one to Mr. McNaughtou, con.- firming it on the same day by a formal letter : — "Ottawa, 14th April, 188a " Your tender for the second hundred miles section, Pacific Railway, is tbe lowest and is accepted . " You are hereby called upon to deposit to the credit of the Receiver-General within eight days of this date, 5 per cent, of the bulk sum of your tender,andare nolified that should you fail to make such deposit your tender will be passed over and the cheque forwarded wili be forfeited. Acknowledge immediately. « F. BRAUN, " Secretary ' OaoBGB Bowii, contractor, '< 4 Plateau Street, Montreal . " IMAGE EVALUATION TEST TARGET (MT-3) 1.0 I.I ■m ili Hi Its IIM 111112^5 112 «10 1.8 1.25 1.4 1 1.6 ^ 6" ► ^%. V} 'el ^m m >> 7 Photographic Sciences Corporation 33 WEST p^rtlN STREET WES^TEr N.Y. 14580 (71.i) 872-4303 *^/% C/a t) \K'*. .,,v,| ', i ^ *••/.. 1 - ■.« \ t ' * »ii ■ (1 - ■ ' , f 458 CONTEACTS. '. V <■ •• !!■ • These were aeknowleged on the 15th, by Messrs. Bowie and McNaughton. The requisite security having been deposited on the 23rd April, the contract was entered into on the terms above mentioned. The evidence shows that the Department awarded the contract, by «iccepting the lowest available tender, and without giving to the contractors any undue advantage. An indenture dated 13th May, 1880, was executed between Mr. Mc- Naughton, Mr. MacTavish and Mr. George Bowie before mentioned, by which it was agreed that Mr. MacNaughton should transfer all his interest in the said contract to Mr. MacTavish, and that MacTavish should indem- nify him against loss. On the 14th May, Mr. MacTavish wrote to the Minister enclosing a copy of this indenture, and requested that his name should be substituted . for that of Mr. McNaughton as the partner of Mr. G-eorge Bowie, or added as additional to theirs in the contract. He stated that he had provided fi»m his own funds the $22,000 which had been deposited as security, and gave this fact as the reason for his desire to be recognized as a principal in the contract. On the 19th May, the Minister submitted a memorandum of these facts and a recommendation to the Privy Council, on which the following order was passed :— Copy of a Frport of a Committee of the Honourahle the Privy Council, approved by Hit Excellency the Governor General in Council, on the 'I'lnd May, 1880. , " On a memoraDdum dated 19th May, 1880, from the Honourable the Minister of Railways and Canals representing that Mr; Malcolm McNaughton, of the firm of Eow ie k McNaughton, contractors for the construction of the second 100 mile section of the Canadian Pacific Railway west from Red River, has executed a deed assigning to Mr. George MacTavish, of Winnipeg, all his right and interest in the said contract ; and, further, that Mr. Mac I'avish haa jiiade application either for the substitution of his own name in place of that of Mr. Mc- Naughton, or for the addition of his own name to that of the firm as now existing. "The Minister states that considering that the public interest would be best BCrved by the adoption of the second of the two alternatives proposed, he recommends that authority be given for the recognition of Mr. MacTavish as a partner in the firm of Bowie k Mac- J^aughton for the purposes of the said contract. " The committee submit the above recommendation for Your Excellency's approval. '•Certified. J. 0. GOlt, •■' '"^^ " » Clerk, Privy Council^ Up to the date of our commission very little had been done, and nothing jpaid under the contract. CONTEACT No. 67. 45» lowie and n the 23rd id. ^ outract, by 3outractor8 n Mr. Mo- tioned, by [lis interest aid indem- jnclosing a substituted Le, or added d provided jcurity, and )rincipal in f these facts wing order proved by Hit er of Railways McNaughton, ladian Pacific MacTavish, of 'ac Tavish has at of Mr. Mc- g- lest served bj that authority Bowie k Mao approval. lOTfi, Council^ nd nothing Contract No. 67. Rolling Stock. By this contract, dated tho Slst March, 1880, the Moncton Car Company^ of New Brunswick, undertook to supply sixty box freight cars, and the same number of platform freight cars, according to specifications, by the 15th o£ June, 1880, at the price of $690 each for the box, and $490 each for the plat- form cars. This contract was brought about by the same advertisement to which we have alluded to in our report upon contract No. 65. The schedule concerning the tenders which were opened at the date named in the adver- tisement for their receipt, and signed by Mr. Trudeau, Mr. Smellie and Mr. Braun, shows that these contractors made the low^est tender for the platform; cars, at the rate mentioned in the contract, $490 each, and that their offer for the box cars was $690 each, the price named in the contract ; but one Simon Peters made a lower offer, namely, $685 each for a number, between, fifteen and thirty, of the box cars. Inasmuch as it would be necessary, even if the offer of Peters had been accepted, to take some of the cars from the present contractors, in order to furnish the requisite number, it was decided not to make a separate bargain with Peters for the sake of saving the differencj of $5 on the quantity he would deliver, and this led to the contract now under consideration, with the Moncton Car Company for the whole quantity required. There is no complaint upon the part of Peters that he was impro- perly passed over, and, in fact, a letter from him asking to with* draw his tender was produced before us. This left the offer of the present contractors the lowest one available to the Department, and we do not find that they obtained any undue advantage in the award of the contract. At the date of our Commission the contract had not been fulfilled, and no money had been paid upon it. The amount involved was $70,800. r Contract No.!B68. *, , , . , Rolling Stock. By this contract, dated the 8th of May, 1880, the Ontario Car Company, ol London, undertook to deliver two postal and baggage cars at the rate of *3,116 each, according to specifications, on or before the 1st of June, 1880. This contract arose out of the advertisement referred to in our report on oontract No. 65, and the schedule of the tenders, dated March i^nd, and «igned by Mr. Trudeau, Mr. Smellie and Mr. Braun, as above mentioned^ ■fsns^fflBP" . '*. 460 CONTEACTS. /• fshows that two tenders were received for these articles, one by the present contractors and the other by Mr. Crossen, the offer of the latter being $3,303 each. The lowest offer was accepted, and this contract was based upon it without giving the contractors any undue advantage. The amount involved in this contract is $6,230, but nothing had been paid upon it up to the date of our Commission. i^.'V* ••. I ■» ■ ■'1 i 1 1 I' ' Contract No. 69. Transportation of Rails. There is no formal contract in this case. In the summer of I8t9, the North- West Transportation Company had contracted to carry 11,000 tona of rails at |16 per ton from Montreal to Manitoba for Mr. John Ryan, the contractor on section 48, for which section he had undertaken to transport the rails from Montreal, and this company had also a contract with the Oovernment (No. 52) to transport 't.OOO tons of rails from Montreal to Port "William at $6 per ton. Late in the autumn of 1879, it was found that the makers in England were sending to Canada more rails than the 16,000 tons which were expected, and these contractors were directed by the Department to carry those charged against this contract at the same rate as that paid on Mr. Ryan's lot. Mr. Trudeau testified that, taking as a basis the previous contracts by 'which the same work had been performed (22 and 34) this arrangement 4Baved $3.30 per ton. The Chief Engineer made a report on this transaction, and the 4,000 ton contract to Fort William, from which the following is extracted : — " Late in the summer 3,000 tons in addition to the 4,000 tons arrived at Montreal, and it was necessary to have them removed from the wharves and forwarded. Mr. Beaity was the •only party available for this purpose, and he offered to take them to Emerson at the same rate as Le Lad contracted to convey 11,000 tons for contractor John Ryan. This offer wai informally accepted, and Mr. Beatty aoted on the acceptance, but no payments have yet been made, as the sum is large. Before certifioates are issued, it would be necessary to hftve tb« undertaking for the transportation of the 3,000 tons confirmed and approved." Mr. Fleming testified that, in his opinion, the arrangement was quite a desirable one, and that he had no reason to think the work could have been •done at a cheaper rate. CONTRACT No. 69. 461 Upon the evidence we conclude that the Department could not have got the work done at a cheaper rate, and that in this case the contractor got no undue advantage. ^ . On the 14th June, 1880, an Order-in-Council was passed confirmiag the arrangement, and before 30th June, 1880, $16,100 was paid under it. Contract No. 70. Transportation of Rails. By this contract dated 25th May, 1880, the North-West Transportation Company undertook to transport from Montreal all the steel rails and acces- sories expected to be received by the Grovernment from England during that season, part to Emerson and part to Fort William, in such proportions as might be directed, at the rate of $5 per ton to Fort William, and $14.50 to Emerson. Public competition was invited by the following advertisement : — "CANADIAN PACIFIC RAILWAY. « TENDERS FOB TRANSPORT OF RAILS AND FASTENINGS. "Sealed tenders, addressed to the undersigned, and endorsed 'Tenders for Transport,* will be received up to noon of Saturday, the 8th day of May next, for the transport of about 23,000 tons of rails and fastenings— about one-half to be delivered on cars at Eiaerson, an Corv f>/ a Report of a Committee of the Honourable the Privy Council, approved by Big Excellency the Governor- General in Council on the I5th May, 1880. " On a memorandum, dated 14th May, 1880, from the Honourable tho Minister of Bail- -ways and Cauala, reporting that tenders having been called for the transport of 23,000 ton* of ruiis from Montreal to Emerson, and to Fort William, the following have been received : § 09 A B O D E F O H Name. R. D. Van Allan & (Jo., Chatbam A. M. Smith and W. H. Keighley, Toronto James Norris, St. Catharines G. E. Jacfjues & Co., Montreal MacPhie, St. Lawrence & Chicago Forwarding Company A. Mclntyre Thorn, Montreal Cooper, Fairman & Co., Montreal Henry Heatty, Sarnia Montreal to Emerson. $ Ct!3. 15 25 17 60 16 25 15 .50 15 90 14 50 Montreal to Ft. William. $ cts. 6 00 5 25 4 37 4 75 4 50 4 «5 5 00 ,3,600 tons. " That the form upon which the above tenders were based states as follows : — '' The quantity expected from England is about 23,000 tons in all, and the present intention is to send about one-hnlf thereof each to Emerson and Fort William." " That upon this basis the tender of Mr. Henry Boatty is the lowest received, and he, the Minister, accordingly recommends its acceptance. " The Committee submit the above recommendation for Your Excellency's approval. " Certified. ",J. O. COTft. " Clerk, Privy Council.^* After which the following notification was sent by telegram to Mr. Beatty, and the contract was afterwards executed accordingly : — " ^Telegram.) « 18th May, 1880. " Your tender for transport of rails from Montreal to Emerson and Fort William respect- ively, is accepted. "F. BRAUN, "Secretary. " To Henkv Bkatty, Sarnia." The evidence shows that the Department accepted the lowest offer made for the work submitted to competition, and that the award of the contract gave no undue advantage to the contractor. Nothing was paid on it up to the 30th June, 1880. This was the last contract entered ihio before the issue. of our| Commission. PURVEYOR AND PAYMASTER. 463 oed hy Bis later of Rail- f 23,000 ton» I received : — m. s. ) |3,600 tons. 5 r5 50 85 00 iVb: — jid the present a." ived, and he, the B approval. ioTfc, CounciV^ jgram to Mr. May, 1880. rilUam respect- fN, Secretary. lowest offer award of the issue of our I Mr. Thomas Nixon, Purveyor and Paym^jter. In the spring of 1875, Mr. Thomas Nixon was appointed Paymaster and Purveyor, at Winnipeg, for the Canadian Pacific Railway. He had an office there in which he transacted his official business. He was also entrusted with powers in connection with the Mounted Pohce and the Indian Department somewhat similar to those which concerned the railway. In his official character he dealt with matters relating to these three distinct branches, and in doing so controlled a large expenditure. Ho kept, how- ever, separate books relating to the disbursements for the railway, of which the aggregate was about half a million of dollars, and we were thus enabled to confine our enquiry to the moneys paid through his office on this account. His duties towards this undertaking included the purchase of different kinds of goods required for persons engaged on the work, engineers, their subordinates and others, and he also took part in the payment of moneys which were placed by the Grovornment under his partial control. These amounts were remitted from Ottawa from time to time to a bank agency at Winnipeg, in the form of credits to his official account as paymaster and purveyor, and were subject to be paid out on cheques signed by him and countersigned by another officer also stationed at Winnipeg and known as "Auditor." The practice generally followed concerning the disbursement of this fund, was that persons having claims upon the matters within the jurisdic- tion of Mr. Nixon would present their accounts to him and obtain his cheque for the whole, or such part of it as he was willing to pay. This account, together with the cheque, would be presented afterwards to the 1 auditor in order that he might supervise the demand and the payment lofit. Mr. Drummond, who was Auditor at Winnipeg from the time that the 1 office of the purveyor was opened, describes his duties to have been to re- ceive the account of each claim in triplicate, together with such certificate as he would consider sufficient to establish the correctness of the demand, and then to countersign the cheque, keeping one copy of the account and. transmitting the other two to Ottawa 1 • 464 PURVEYOR AND PAYMASTER. 1 . • :.■ ' !'■'•;' \'" 1 •. »■ ♦ > In recounting the circumstances of the early transactions through his office, Mr. Drummond stated, that they were not investigated or recorded by him with as much strictness as afterwards ; that it was, however, always intended, that each item of each claim should be supported by some memorandum from the officer of the railway acquainted with the fact of the supply having been furnished as stated in the a«;count. - As to several accounts which were passed by him as sufficiently vouched, and covering many different claims by a Mr. Alloway for horses furnished for the use of engineers and others engaged on the railway, the Auditor countersigned the cheques without any evidence of the correctness of the accounts, beyond Mr. Nixon's signature to the cheque. There seems no reason to doubt that the system thus devised for the disbursement of Government moneys, requiring each cheque to be signed by two in- dependent officers, has had the effect of ensuring the payment of all of it to the persons who made the respective claims on which it has been paid out, but we feel it necessary to point out some of the transactions which gave rise to claims satisfied from this fund, as well as other matters concerning | the course of dealing between Mr. Nixon, and persons accustomed to furnish] supplies on his order as purveyor. In his official character, Mr. Nixon agreed on behalf of the Govern- ment to pay a specified rent to a Mr. Strang, who held the title of a build- ing and lot occupied with stores under the charge of Mr. Nixon. Thel property was owned, during the whole period, by Mr. Nixon, the title to iti also having passed to Mr. Strang in pursuance of an arrangement between themi and by which Mr. Nixon was afterwards to assume the character of tenant inlthe the interest of the Government, and Mr. Strang that of a proprietor inter- ested in the receipt of rent The rents were paid out of the Government^ moneys and went to Mr. Nixon's private use, at the rate of $860 perannum| on a property worth about $2,000. We have taken evidence concerning his mode of dealing with person^ accustomed to furnish supplies through him to the Government, and ii points to the conclusion that Mr. Nixon wished to obtain from Mr. Peteiiand Sutherland, a person who had supplied articles on the official order of Mrl Nixion, the positive discharge of an uncontested claim of about $900, duA^jj^g by Mr. Nixon on his private account to Mr. Sutherland ; that subsequentl)i(,j^j.j. the claim was partially paid, and a balance of about $300 was left unpaid because of the relation of Mr. Nixon to the Government, and the power Jhis hands to order or decline to order supplies from Peter Sutherland. Imos PURVEYOR AND PA Y31 ASTER. 465 III the course of Mr. Nixon's duty ho provided a considerablo nunibor of horses for different services connected with the railway, nearly all of which were furnished under arrangements between him and Mr. AUoway The accounts filed at Ottawa, after having boen settled under the process above described, showed us that Mr. Alloway had not given detailed part- iculars concerning some of the large lots for which ho had been paid, and both Mr. Nixon and Mr. A Ho way were examined ])y us concerning those transactions. Mr. Alloway was a dealer in horses, and in his evidence stated that most of those procured through him were bought on a commission paid to him as an agent for the Government, and a few by Mr. Nixon purchasing them direct from him. Mr. H. A. F. McLeod had charge, in the year 1875, of the instrumental surveys between Fort Telly and Jasper Valley, and the explorations in the Rocky Mountains ; under him Mr. Lucas had charge of party P, on a sur- vey from Fort Pelly, and Mr. Ruttan of party L, on a survey eastward from a point near Root River ; Mr. McLeod himself exploring the country in advance of Mr. Lucas' party. Mr. McLeod, on the 13th April, 1875, filed with Mr. Nixon a requisi- tion for eight half-breed horses, together with carts, harness, &c., to be used for transportation of supplies for party P, and for similar service for party L, a requisition for thirty half-breed horses, together with carts, &c. ; he also filed another requisition on 27th April, 1875, for five additional horses and carts, saddles, &c., for a similar service for his exploring party ; and on the same day Mr. Lucas filed a requisition, " approved " by Mr. McLeod, for two horses and English saddles, one for the Engineer and one for tho Assistant Purveyor for party P. We do not find in Mr. Nixon's " requisition book " any further request for horses until July, 1875, and we are, therefore, led to understand that the facts above mentioned give some indication of the kind of horses which were to be bought, i.e. thirty-eight half-breed horses, two saddle horses, and five not specially described. At that day there was a difference in the price of half-breed horses and those of the larger size, such as imported horses. Mr. Alloway said that cart horses of the native breed would be worth at that date about $90. Mr. Nixon testified that the horses bought from Mr. Alloway were [mostly half-breeds, and that half-breed horses could be bought " from $40, 30 466 PURVEYOK AND PAYMASTEIl. :i'...- ' . . i.« ; • . $60, $80 to $100, a $lOO-horso would be a very good one," but that they varied so much in quality, that it would be impossible to give au average. Mr. Augustin J^olin, an old settler who had been engaged with teams in transportation, and in carrying mails, was a witness before us. lie said his special business had been buying and selling horses ; that $)0 would be about the price, in 1875, of a good cart horse, "that you would buy if you were going to load them to the base of the Rocky Mountains ;" that at that time horses were not very dear at Winnipeg, and that except for horses with "a pedigree, or some peculiar qualities, such as troti^rs," he did not know that more than $50 would be paid. Tho following were the first three accounts paid to Mr. Alloway, including his commission, and they were satisfied by Mr. Nixon's giviiij^ an oflicial cheque on the i^urveyor's fund, kept as before described, and these cheques were countersigned by the Auditor, though the accounts were not certified by any Engineer or other person, having been paid by Mr. Nixon, apparently because of his own knowledge of the price which Mr. Alloway had paid out as Government Agent. •< WiNNiPEO, 0th M»y, 1875. "Canailim I'acitio Railway Survey, Dr, " To W. F. Alloway, "To 18 horee.^, hverajrina?'90.7.') each §1,633 50 " To my commUsion on purchasing the same at 5 per cent 81 67^ "May 7tb, 1S75, $1,715 17i " Received payment per cheque, " W. F. ALLOWAY." . J " WiNXiPEO, 17th May, 1S75. "Canadian racific luail (Mr. Alloway) could not cheat him. That he presumed ho had not kept any record, because he depended on INIr. AUoway's record. Mr. Alloway said that at that time ho did not keep books, having no book-keeper, but kept a sort of memorandum in a po ■■ ■ *♦ ». 4174 FORT FBANCES LOCK. The principal portion of the evidence not susceptible of direct corrobor- ation was the alleged receipt by employes of the amounts stated in the pay- lists. These included large numbers of persons, many of whom were Indians, The correctness of these documents was upheld by the evidence of both Mr. James Sutherland whose duty it was to prepare them from the data furnished by the time book, and by Mr. Thompson, the foreman, who said that he invariably examined them before the men were settled with. Moreover, no exception seems to have been taken to them as vouchers by the officers of the Department, at Ottawa. We are of opinion, from the general tenor of the evidence, that the funds entrusted to Mr Sutherland in connection with the Fort Frances Lock were expended in obedience to the general instructions receivea from Ottawa, and there is no reason to suppose that the method of managing the works and the expenditure in connection therewith was objectionable, or failed to exhibit correctly tho transactions of the Government officials there employed. The "mount expended upon the works up to the 80th Jun'», 1880, was $289,028.51. ■ ♦ 1 Messrs. Cooper, Fairman & Co. We have taken evidence with a view of ascertaining the porsons who constituted this firm during the period of their dealing in matters connected with the Pacific Railway. According to the records under the charge of Mr. Ryland, a liogistrar in Montreal, Messrs. Jamas Cooper, Frederick Fairman and Charles Mac- kenzie bacame partners under the style of Cooper, Fairman & Co., on the first day of January, 1873, and agreed to be partners until the first day of January, 1878. The following is a certificate obtained from the proper officer: — ' ■• • "'. ' . . "'■•■.'-■'/ *' Provinco of Quebec, ) Distiict of Montreal. \ ' " \\ e, tho undersigned, do hereby ceftify that we have entered into co-partnership under the style or Arm of Coopt^r, Fiiirman k, Company, as inerchan's, which firm consists of James Cooper, of the ci*y of Montreal, Frederick Fairman, at present residing at Waterloo, in the ■aid Piovincp, as general partners, and Charles Mackenzie, of Snrnia, in the Province of On- tario, as a special partner, the faid Chiiles Mac^enE'e having contiibuted lifleen thousand dollars to the capital stock of the pai } partnership, which said co partnership commej.^ad on 3t corrobor- in the pay- ^hom were le evidence them from e foreman, ere settled o them as e, that the )Tt Frances ceivea from anaging the tionable, or mt officials , 1880, was COOPER, FAIRMAN & Co. 4t5 ►arsons who s connected a liogistrar larles Mac- Co., on the first day of the proper nersbip under sists of JaaaeB aterloo, in the rovince of On- leen tbousand ommei.^sd on the first day of January, instant, and terminates the firat day of January one thousand eight hundred and seventy-eight. " Dated this second day of January, one thousand eight hundre 1 and seventy- three. " JAMES COOPER, " FREDERICK FAIHMAN, "CHARLES MACKENZIE. " Signed in the prc6<3nce of "JohnC. Grl^fin, N.P." . "I certify that the foregoing is a true copy of a declaration which was entered and registered at full length in the Registry OfHoe, for the Rggistration Division of Mon- treal in Register D. C, vol. 3, page 26, at ten o'clock in the forenoon of tha seventh day of January, eight 3en hundred and seventy-three, under tbo number 5,610, G. II. R. "G. 11. RYLAND, " Registrar .'^ Mr. Charles Mackenzie w^asa special partner, having contributed fifteen thousand dollars to the capital of the firm, upon the understanding that each partner should receive one-third of the profits, and that Mr. Mackenzie should not be answerable for the liabilities of the firm beyond the capital which he had contributed. He said, in giving evidence, that after this firm had secured the contract for steel rails he decided and told his partner, Mr. Cooper (in Toronto) that he would retire from the i^artnership ; that this was the first notification on this subject to any of his firm, inasmuch as he had not thought it necessary that his intention should be communi- cated at an earlier day by writing ; that Mr. Cooper, then in Toronto, informed him that Mr. Fairman was in England, and that consequently a dissolution could not be accomplished until his return ; that immediately after Mr. Fairman's return in the spring or summer of 1875, Mr. Mackenzie went to Montreal and dissolved the partnership, papers for that object being then draw^n up and signed ; that either at the first-mentioned interview with Mr. Cooper, he (Mr. Cooper) had proposed, or subsequently when Mr. Cooper and Mr. Fairman were present, they both had proposed to return him his capital, that is $15,000, by three notes of $5,000 each, and that without any discussion as to the terms upon which he should leave the parinership, it w^as agreed that he should get his whole capital returned to him. Mr. Cooper's recollection differs from Mr. Mackenzie's on the subject of the time of the first notification that Mr. Mackenzie wishei to retire from the partnership, Mr. Cooper thinks he received it at Montreal in writing, but is not positive. Mr Cooper described the partnership as ending on the 31st December, 1874, saying that the understanding of the dissolution r I,. 'i 476 COOPER, FAIIIMAN & Co. I:.!' :r..ft I?*. ^'.F «■«" / ..^■t was that it took place at the end of the year, and he suggested October or November as the time at which he had received the notification of Mr. Mackenzie's intention to withdraw. Mr. Cooper is clearly wrong in this suggestion as to the time, for the first award of the contract to his firm was on the 2nd day of December, 1874, and it was after tliat, when Mr. Charles Mackenzie told Mr. Cooper he intended to go out of the firm. Again the evidence shows that when Mr. Mackenzie proposed to retire no arrange- ment could be finally concluded, because Mr. I'airman was in England, and a letter written by Mr. Fairman himself, in the name of the firm, to the Minister of Public "Works, dated 4 th December, 18*74, states that Mr. Fair- man would start for England on the Monday following. Therefore the intimation by Mr. Mackenzie to Mr. Cooper, at Toronto, was at the earliest some time after the 5th December, 1874. This is assuming that Mr. Fair- man was on the ocean ; for if he was really in England as above stated, Mr. Mackenzie's notification to Mr. Cooper must have taken place as late as th*; 15th December. Mr. Cooper, in his evidence, said that the dissolution could not bo arranged in " October," (meaning the time of the notification), while the business was going on ; that it could not be done until the firm should close the books, take stock, &c. The evidence makes clear to our judgment that about which Mr. Charles Mackenzie seemed uncertain, namely, whether it was when only he and Mr. Cooper were together at Toronto, or after Mr. Fairman had returned from England, and when the three partners were together, that it was proposed that he should get back his whole capital of $15,000. In the first place it is not probable that Mr. Cooper and ho, in the absence of Mr. Fairman, and without his consent, would arrange the terms of a dissolution and the withdrawal of a definite sum from the capital of the partnership ; and in the next place it is proved that closing the books, taking stock, &c., was a thing necessary to be done in view of the intended dissolution, and that this took place not earlier than some time in January, 1875 ; therefore, we think the proposition to give Mr. McKenzie $15,000 (the amount of his original capital) was made when the three were together, after Mr. Fairman's return from England, and after the stock-taking had been concluded. If from the beginning of the negotiations for dissolution the intention was to give Mr. Mackenzie his capital back intact, and without reference to the pro- fits or losses of the business, then the dissolution could have been accompli- shed without stopping the business to close the books, take stock, etc. The mmm COOPKI{, FAIRMAN & Co. 477 October or on of Mr. ng in this s firm was Ir. Charles Again the o arrange- jj-land, and irm, to the t Mr. Fair- erefore the the earliest : Mr. Fair- stated, Mr. late as the uld not be , while the ;hould close which Mr. when only irman had ether, that 00. In the nee of Mr. dissolution rtnership ; stock, &c., ution, and ; therefore, onnt of his Fairman's luded. Itentionwas |e to the pro- |n accompli- :,etc. The manner in which both Mr. Cooper and Mr. Fairman alluded to this feature of the case, inclines us to think that closing the books and stock-taking did take place as a matter material to the terms, on which Mr. Mackenzie finally retired. But it does not therefore follow that no binding agreement for dissolution took place until the books were actually balanced and stock actually taken, for though the result shown by the books and taking stock may have had a bearing on the amount to be finally paid to ^Mr. Mackenzie, a positive agreement could have been closed between the parties before those results became known, and on a basis which w^ould provide for the prospective payment to Mr. Mackenzie being more or less according to the results as subsequently shown. It is obvious, however, that until the minds of the three partners were in accord no agreement for dissolution was arrived at. Up to that time, whenever it was, all notices, negotiations and estimates could be nothing more than features of proposals made by one or more of the firm. Mr. Fairman stated in evidence that he thought he returned from Eng- land about April, 1875 ; that shortly after his arrival in England he received advices that Mr. Mackenzie wished to retire from the partnership, and that on or about the 1st January, 1875, he wrote to Canada assenting to this proposition ; that stock was taken in January, and formal agreements were t^xecuted after his return to Canada. We think it may be assumed, that the letter conveying this assent of Mr. Fairman would reach Canada about the middle of January, 1875, if sent when Mr. Fairman stated it was. "We do not think the terms of the dis.soli:tion of this iirm a matter material to our investigation, except in so far as they aid in the attempt to ascertain the time at w^hich the act itself of dissoluiion, or the mutual agreement for the dissolution took place. The pra-tnership had not been formed on the condition that Mr. Mackenzie, might at his option, select a time at which he would go out of the firm, withdrawing his capital, or on any other definite terms, therefore some mutual agreement on the terms became indispensable. The evidence as a whole tends to the view that some time in January, 1875, not earlier than on or the about 15th, the three partners were in accord on the main fact that a dissolution should take place, and that closing the books and stock-taking thereafter, would be a m^ans of settling upon the amount to be paid to Mr. Mackenzie. «-■•"■*.■■■■■■»'■■ ■ , ' t > \ • • ■, I I*' «. 478 COOPEI?, FAIRMAN & Co.' The following is a certificate of the record of dissolution : — " Province of Quebec, ) District of Montreal. ) " We, the undersigned James Cooper and Frederick Fairoian, both of the City and Dis- trict of Montreal, general partnert), and Charles [Mackenzie of Suniti, in the Province of Ontario, special partner, «?o hereby certify and declare that the limited partnership hereto- fore subsisting between us under the style and firm of Cooper & Co., registered in the office of the Prothonotary and Reg'strsr at Montreal on the seven tli day of January, A,D. 1873, hath been dissolved from the fourlh day of May last, and wo make this declaration to the end that such dissolution may be legally regislerei as waauppoiel had been already done, we having'', some months since sigur'd a similflr declsratiori, and entrusted it lo our agents for the regi'tration ; an.! we hivo signed. "Sarnia, 11th November, 1875. . ''ClIAS. MACKENZIP]. " JA112SC(X)PER. "F. FAIKMAN. •' WilnoBS, "Geo. II. Gkundv, t "Montreal, 17th November, 1S7.5. "I certify that tlie foregoinj; is a true copy of a ceitificuto .ind declaration which was en- tered and registered at full length in the Eegistry Oflice for the R*'^istrition Division of Mon- treal, in Register D.C., vol. 3, page 427, at twelve o'clock at noon on the seventeenth day of November, eight hundred and seventy-five, under the number 7,'^70, G. If. U. "C. [I. RYLANP, " Eenistrar:' The evidence loads ns to conclude that up to, and for some time after the 1st January, 1875, the firm of Cooper, Fairman & Co. included in namo and in fact, Mr. James Cooper, Mr. Frederick Fairman and Mr. Charles Mackenzie as partners, in all transactions connected with this railway and made in the name of that firm; that though the firm was nut formally dissolved till May, 1875, an agreement was made between its members in January, 1875, the exact day wo cannot name, by which all the transactions of that firm connected with the said railway, became thereafter transactions of the Department with Mr. James Cooper and Mr. Frederick Fairman, and no other person. CONTIiACT LETTJX(J. 47D ity and Dis- PrOTince of hip hereto in the office . A,D. 1873, a to the end ly done, we ir agents for which wa!» en- [visionof Moiv ntf enth day of gislrar" k time afior llod ill namo Mr. Charles [railway and Lot formally members in transactions [transactions 'airman, and Contract Letting . Up to the date of our commission 72 contracts had been made in con- nection with the Canadian Pacific Hailway. They were numbered from one to seventy, inclusive, and 5 A and 32 A. Of these forty-two wore by the Department of Public Works, and the remainder by the Department of Railways and Canals, to which the management of this undertaking' was transferred in 1879. In the first Session of the first Parliament of the Dominion, " An Act respecting the Public "Works of Canada" vfus passed (31 Vic, cap 12), of which the following enactments form a part : — " Sec. 20. It shall be the duty of the Minister to invite tenders by pul.Iic ndvertisejopnt for the execution of all woiks, except in casps of pressinfr eoiergrncy, where uelay would be injurioua to tlie public interest, or where, from tho naturo of the work, it cnuld he more ex* peditiously and economically executed by the ollictrs and HervHtits of lhi> Dpp-irtaient. " Sec. 21. The Minister, in all caseB, or where any \ ublic woikisleirg CHirieiJ out by con- tract, shall take all reasonable care that good and sufficient seoiaity be given to and in the name of Her Mnjf sty, for the due performance of tl.e work, witliin tlie amount nmi time fpecified for its completion ; and aUo in all rase^, whtre it seems to the Minister not to be expedient to let Buch work to the lowest bidder, it sIihU be hie duty to report the same and I obtain the authority of the Governor previous to passing by sui-h lowest tender." It will be observed that the language herein contained points only to [security for tlie due fulfilment of contracts, making no allusion to tenderers, [or the expediency of obtaining from them pledges of any kind. " The Canadian Pacific Railway Act" was passed in 1874 ; in which lit was enacted : — " Sec. 7. The said Canadian Pacifio Kailwuy and ti;o branches or sections heioinbefore Itnentioned • • • shall be construe tod under tho general auperintfndence of the [Department of PuHic Works. '■ Sec. 12. In case it shall be found by the Governor in Council more advantageous to con- Istruct the said railway, or any portion thereof, as a public work of tbo Dominion of Canada, the [construction thereof shall be let out by contracts otfeied to jiublic conn etition, and the Gov- lernor in Council may establish, from time to time, the mo » '■ 4=2 CONTJLVCT LKTTING. — • ■■ — =■ ' .1 decline the contract, and it was done accordingly by the following tolo- ffram : — " Oiasention from witliin addod to oxtraordiimry pressure from without has left no alter native but withdrawal. " CHARLTON & CO." And on the 21st December a letter to the same efTect was sent to the Department signed by Mr. Charlton. (Page 23*7) A cheque of $1,000 had accompanied the tender of this firm as a guarantee of their good faith. When presented to the bank on which it was drawn it was dishonoured and protested. On the 29th December the contract was offered to the next lowest ten- derers, Sutton & Thompson. They nominally accepted it by a telegram the same day. The evidence leads us to say, that they never intended or ex- pected to take the contract or carry on the work, and never believed that they could do so successfully. They made their offer, trusting solely to the chance of making a profit by selling out to some other person ; the system of the Department being one which enabled them to do so with impunity. As a fact the Hon. Mr. McDonald had paid them $10,000 for their position, in pursuance of an arrangement made between them and Mr. Whitehead, by which, if the contract should be offered to thera they were to have no in- terest in it ; but they were to go through the rm of taking it with Mr. Whitehead as an additional i^artner ; and this was done, they being subso quently released under an Order in Council. The amounts paid by Mr. McDonald to Martin & Charlton, and to Sutton & Thompson, in all $30,000, were not lost to him or to Mr. White- head ; they were lost to the country, which paid to the contractors a still higher sum as the consequence of Martin & Charlton's withdrawal. The tenders for contract No. 42 opened in January, 187f>, showed the following as the three lowest : — ■ . Tiains— July, '82. Trains— July, '81. Morse, Nicholson & Co $3,364,274 .$3,467,506 Andrews. Jones & Co 8.915.942 Fraser, Grant & Pitblado $4,130,707 * After about three weeks spent in enquiries concerning the ability of the firms who had made the two lowest offers, and ■■••.■ .* .; 484 CONTRACT LETTING. |i i 4 ^.. ■■■?■.•.■' ..V happen the contract was on the 5th March awarded to Fraser, Grant & Pitblado. In our judijment every one of these offers was made without any sufficient ground for believing that the tenderer could fulfil it if accepted ; and nearly every one without any desire that he should fulfil it. It is plain beyond argument that when competitors of this class are amongst tenderers, time is lost to the Department in the process of reaching one whose offer is in earnest, and whose proposal can be made available to the Government, and we think it equally certain, that such competitors will appear unless the conditions under which they may send in tenders are made much more serious than was the case before the date of our com- mission. The saving of the time thus lost, would of itself be 'probably considered "worth the effort to eliminate all but genuine tenders from public compe- tition. But the loss of time is not the only evil ; occasionally it might be no detriment a. 1 a Department could now and then, without much incon- veniejice, work its way from the lowest offer, a sham one, up to some higher one, made by a party ready and desirous to take the contract. But we think the system of requiring deposits so small as to be insig- nificant, compared with the chances of profit by selling out to higher tenderers, creates another difficulty which the legislation aims at destroying, that is, the necessity of paying more for works than would be done under a fair competition .imongst offers made on a business basis Let us take for illustration a case in which the difference between the highest and lowest offer is $200,000— and in many of the cases it was very much more — this difference being made up by gradations of $20,000 each between ten different tenders, a deposit of $2,000 being required with each tender, as an evidence of good faith, with the certainty that the deposit would be forfeited if the tenderer iailed when required to carry out his offer. It is evident that each tenderer to whom the contract was awarded might be tempted to sell his position to a higher tenderer — if he could get more than .$2,000 for doing so— and it is equally clear that the higher tenderer would be tempted to give more than $2,000 for a withdrawal, which would seem to put within his grasp all his calculated profits on so large a contract. And thus would be made more than probable the result which the regu- lations concerning contract letting would be framed to prevent. Even CONTRACT LETTING. 4»6 when the offers are from persons who believe the work could be done at their prices, the system of requiring no forfeits, or trifling ones, offers a sure profit and a quick return to the tenderer who will withdraw for a consider- ation, and a yet higher price to the one who will buy his withdrawal. But the case thus stated as an illustration fails to present the tempta- tion in as strong a light as it existed during these contracts. In the case of section 15, the gradations averaged something like |tO,000 ; the deposit was $1,000 ; and it must have come to be well under- stood in the tendering community, tfiat making the deposit was a formal act of trifling ; for in every case, and there were several, in which it could have been forfeited, it was returned to the defaulting tenderer. "We suggest the expediency of requiring with each tender security of a much more substantial character than any given with those for the contracts we have been considering. "We do not think it would be advisable always to make it of an amount sufficient to cover the difference between the tender which it supports and the one next above it, although this could be done by a covenant of sureties, to be sent in with the offer for such an indefinite amount as would meet that case. It is true that if the security with the tender does not cover the differ- ence in the amount between it and the one next above it, the temptation may occasionally exist, which we have described as leading to the objection- able transaction of selling out; but the differences between tenders vary, and being unknown at the time tenders are being received, a speculator will not be inclined to invest a substantial amount upon the chance, that the difference between him and the one next higher will be so great, as to afford a piofit fo both by a purchase of his position at a price higher than his deposit, and this will exclude him. The elimination of this class of compe- titors will be done by themselves, instead of by the Department as hereto- fore, always at a loss of time, sometimes of money, and it will practically extinguish a class of irresponsible middlemen, through whom reliable contractors are often forced to buy their way to contracts for important public works. The requirement of substantial security with a tender will also have the effect of making parties, who, in good fa:th, desire to enter the competi- tion, apply to themselves some test as to financial ability, before asking their ^ offers to be seriously entertained. Hitherto this has been done only after the contract has been awarded, and at times with the result of showing that 7^7 — ■./ >► i'^v^.^ In I » ■ '•^' •, ' 1 1 1 « I'i. Mi ■ „v ... . •> .^ .i' •t , .^*ty -.'•..A • 1 :*;''v.*v- >86 CONTEACT LETTING. .■,«!4' ■''■' ' it would have been as well for all parties if they had refrained from entering the competition. "We do not suggest that the security with the tender should necessarily be money, but at the option of the tenderers covenants from responsible parties, so worded (if desired) as not to indicate the name of the tenderer, or the amount of his offer. If a tenderer, though in the best of faith concerning his prices, can furnish with his offer, neither money ^lor stocks nor sureties to an amount equal to say one or two per cent, on the total cost of the work, then the attempt to enter into a contract with him, on such sufficient security as the Statute demands for that purpose, would almost certainly lead to dis- appointment. Up to the date at which the tenders were invited for the const ruction of section 15, it was not the practice of the Department to require any guaran- tee from the tenderer. The lowest tenderers for contracts 1, 4, 5, 13 and 14 withdrew their offers, and tenders in lieu thereof were accepted involving on the face of them, an expenditure in excess of those v;ithdrawn aggregat- ing $132,17 1. When the construction of section 15 was submitted for competition, although no Order in Council establishing regulations had been passed, the Department for the first time required each tenderer to deposit with his tender a sum of money (in that case it was s^ 1,000) which, by the terms of the specifications should be forfeited if the person making the offer should decline or fail to fulfil it, and from that time forward to the date at which we began to take evidence, the highest amount required by the De- I>artment, as a deposit with a tender, was $5,000. No general Order in Council established any regulations for contract- letting under the authority of the statute above mentioned, until the fol- lowing : — •* Copy of a Report of a C>mmiitee of the Honourable the Privy Cnincil, approved by Ilii Excellency the Governor General in Cuuncil, on the 2ord March, 1880. "Oa a joint niemoranduai datocl the 2Clli March, 1880, from Ihellonourables the Minister of Public Works and the Minister of Railways and Canals, reco^miending that hereafter all public wotks involving an expenditure of over $5,000 shall be let by public tender and ccn tract, unlesei, owing to uritency or other cause, it be deemed advisable totakediiTt'rentacUoi), end that in all such cases authority be obtained by an Order in Council. *' That with all tenders submitted a monoy guarantee or approved accepted cheque shall be given, to be oi^en to forfeiture in the event of tbo tenderer failing to make the necessary CONTRACT LETTING. 48t fire per cent, deposit hereinafter referred to, within eight daya after receiving notice of the acceptance of the tender or of his declining to enter into contract when requested, the amonnt of such guarantee to be fixed at a sum not less than $1,000 nor more than $5,000. "That upon acceptance of a tender and notification by the Department concerned, the intending contractor shall, within eight days, deposit with the Grovernment a sum of money «qual to five per cent, of the amount of his contract. " That in all cases where tenders have been called for, the lowest receive 1 shall be accepted, unless good and sufilaient reasons appear for passing over such tender. "The Committee submit the above recommendation for Your Excellency's approval " CertiOed. .. "J. 0. COTfi, « C. P. C." Before formulating our suggestions as to future regulations concerning contract letting, wo think it proper to mention some other subjects which might be noticed in them. The evidence shows that the tenders between the times of their receipt and their opening, have not been kept in such a place of safety as to make it certain that the contents of some have not been improperly divulged. They were left in a detached upright wooden desk, standing in the secretary's room ; this was not an official depository ; in it Mr. Braun's private papers were also kept. This gentleman was evidently confident that no one had been able to get at the tenders, and he believed they had been always safe. But we think such important documents, the knowledge of whose contents might be saleable at thousands of dollars, ought to be kept in a place of greater security than the one indicated. It is clear that the substance of one tender, but after the opening, was communicated as mentioned in the following letter : — " Brantford, 27th November, 1876. "Sir,— We have just been infortned t!»at Oron & Co., (by some means) have discovered that there is an error or omission in our tender for section 15, Canadian Pacific Ilailway, in DOt putting a price to the item of rip rap. In case our tender should be reached, we ofr<-'r to accept as a price for the rip-rap, the avemgo taking the two tenders below our lender, and the one re.xt above our tender, and the average of the throe wo will accept as our price for rip-rap. •'J^hould the matter come unl'fT yiur Jioticr, we would ask you to kindly excuse the ortor or emission. " We have no doubt, should you award us tlie contract, we will be able to give you good Batisraction in all mailers connected tlierevitU. " We remain, '•Your most obedient servant*, ••SUrrON & THOMPSON. I "The Hon. A. Mackenzib, « Ottawa." / il >■ il IV:, *;» » •• •• ti' '' ' I r . '•• n* j t . il, Kl '■' ■ ■■•' 11 •\ ii ' W I I !' ^•■•. r, » . 488 CONTEACT LETTING. In another reKp3ct it appears to ns, that an improvement might be made in preserving a record of the receipt of tenders. The practice has been generally to stamp on the envelopejthe day only of the receipt, if before noon ; if after, the hour also. "We found it impossible to ascertain the order in which tenders had reached the ^Department, because in most cases the envelopes had disappeared, although the officials said it had been intended to preserve them, as references from which to learn this order, if desired A regular book might be kept in which the hour of receipt of every tender might be entered without delay, together with a letter or dis- tinguishing number, the same letter or number being marked on the envelope of the tender. This letter or number being afterwards shown m the Schedule made at the opening, would complete a record, which would show the order in which it had been received as well as its amount, In ofFering public w^orks for tender, it seems to us that the first step towards true economy, would be that of obtaining a knowledge as accurate as possible of what is required. The more exact the information offered to tenderers, the more precise will be their calculations of cost, and the narrower the margin of profit deemed necessary to cover possible and unlooked for contingencies, and, therefore, it seems to be expedient before " contracting for works or materials, to have a carefully prepared official estimate of their total cost. This would also be a basis on w^hich to fix the amount of the security to accompany the tender, and without referen jo to the amount of the tender itself, thus preventing the extent of this security revealing the total of the offer, as it would do were it to be a percentage on the price demanded. In addition to this official estimate, we have under the head ot " Engineering " (page 74), suggested that where it is an object to excludo inconsistent tenders — a further estimate should be officially prepared of the value of each item, that is the price which would be fairly remunerative to a contractor, and these prices being affixed to the respective items in the bill of works to ba furnished to tenderers, they should be invited to state simply one general percentage above or below those prices, at which they would undertake the work or supply the material. One important feature of the present system remains to bo noticed Of the seventy-two contracts above mer.tioncd, the highest authority on record, upon which fully two-thirds of them were awarded, was that of th^ CONTKACT LETTING. • 489 might be ractice has »t, if before I the order ,t cases the a. intended ' desired st of every ter or dis- :ed on the s shown in jrd, which its amount. \X the first owledge as loro precist' in of profit itingencies, for works their total mnt of the amount of vealing the n the price ) head of to excludo >ared of the inerative to jms in the ted to state svhich they \ni noticed ithority oti that of th' head of the Department, or one of its officers presumably acting under the Ministers instructions. This, as well as the amount involved in each case, will be seen by tho following table : — Contracts entered into for Works oa the Canadian Pacific Eailway and the Fort Frances Canal, prior to the 16lh Juno, 1830, and of the Amounts ^estimated a.^ being Involved. g a o o >5 1 2 3 4 fi « 7 8 9 10 11 12 13 14 15 16 17 18 19 Name. Sifton, Glass & Co R. Fuller F. J. Barnard Oliver, Davidson & Co Jos. Whitehead J. Whitehead Guest it Co Ebbw Vale Steel and Iron Co. Mersey Steel Co • West Cumberland Co. . Naylor, Benzon & Co Hon. A. B. Foster Sifton k Ward Sifton & Ward Jos. Whitehead Canada Central Anderson, Anderson & Co Red River Transportation Co., Moses Chevrettc Hi(;hest Authority given before closing the Contract, as far as shown by the Records. Authority. Secretary Deputy Minister.... Minister Chief Engineer Minister Order in Council... Minister do do do do Order in Council... do Contract Order in Council... do Minister do Date 6th Oct., 1874... 15th Aug., 1874. Undated 29th Dec, 1874.., 29th Aug., 1874. 11th May, 1877.. Undated do do do .M r . llazlewood, under direction ot Chief Kngincer... 2l8tJan., 1874... 4th Feb., 1875.... 18th March, 1375 3rd April, 1875... Btb Jan., 1877.... 4th Nov., 1874... 7th Jan., 1875.... Undated , Estimate of Amount involved as shown by extension of Tenders. Under 0. in Council, $ cts. Not under 0. in Council. 60,000 00 406,194 00 1,593,085 00 1,410,000 00 •S eta. 127,850 00 117,250 00 272,2J0 00 2;3,850 OO 200,000 00 553,663 00 272,340 00 1,101,300 00 513,085 00 259,581 00 402,950 00 48,606 CO 32,044 OQ 1,600 00 • $10,000 per mile; 20,000 acres ; interest at 4 per cent, on $7,500 per mile for 25 years. m P . '■•. . It ',»■■■'•,■ .'■ Illf, •' «; i. ». .. t ; ' .^♦* »' , «■ .'■ ' 490 •ri CONTRACT LETTING. Contracts entered into for Works on the Canadian Pacific Railway, &c, — Continued. a o o V5 20 21 22 23 24 25 26 27 28 29 30 31 32 32a 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Name. Merchant's L. tc R. SS. Co., Patrick Kenny ., Ilolcomb & Stewart Sifton 4 Ward Highest Authority given befora closing the Contract, as far as shown by the Records. Aut'iority. Order in Council... Secretary do Mr. Hazlewood, under direction ot Chief Engineer. Oliver, Davidson & Co Puroell i Ryan Jas. Isbester Merchant's Lake k River Co.. Red River Transportation Co Cooper, Fairman & Co Robb& Co Patent Bolt & Nut Co Cooper, Fairman k Co Lemay & Blair Kavanagh, Murphy & Upper... North-West Transportation Co Cooper, Fairman & Co VVm. Robinson Ileney, Charlcbois & Flood .... Edmund Ingalls John Irving Gouin, Murphy & Upper do do Order in Council... Secretary Minister do Secretary Minister Deputy Minister.... Minister Chief Engineer Contract Minister Order in Council... Mr. Nixon Contract Minister Secretary Contract Date. 30th April, 1875. I4th July, 1875... 22nd Sept., 1875. Estimate of Amount involved as shown by extension of Tenders. Under 0. in Council. $ cts. 31,000 00 Purcell & Co Manning, McDonald & Co. Joseph Upper West Cumberland Co Barrow Ilaimatite Co. , Ebbw Vale Steel Co 6th June, 1876.... 23rd May, 1876... I6th May. 1876... do 28th July, 1876... Undated do do do 21st June, 1878... 1st May, 1878.... 16th May, 1878... Order in Council, do Minister Chief Engineer .. do do 2nd Aug., 1878. 12th July, 1878. do 5th Aug., 1878. 3rd March, 1879, 5th March, 1879 1,037,061 00 Not under 0. in Council. $ cts. 8,782 00 6,500 00 U,560 00 3,000 00 23,780 00 30,989 00 89,060 00 17i,806 00 8,532 90 16,160 00 6,800 00 13,738 00 11,730 45 2?2,202 00 90,000 00 24th Juno, 1879 . 25th June, 1879 . 26th Jane, 1879 . 72,600 00 809,813 00 3,261 00 33,913 04 30,500 00 md sch. rates. 2,300,196 00 4,130,707 00 Percentage of earnings. 50,064 74 37,844 59 37,972 23 CONTRACT LETTING. 491 -Continued. ount involvad ' extension ders. Not under ). in Council. $ Ct;l. 8,782 00 6,500 00 U,560 00 3,000 00 Contracts onterod into tor Works on tho Canadian Pacific Railway, &c.- -Continued. 30,989 00 89,060 00 171,806 00 8,532 9i) 16,160 00 6,800 00 13,738 00 17,730 45 2?2,202 00 90,000 00 72,600 00 809,813 00 3,2Sl 00 33,913 04 30,500 00 ,nd 8cb. rates. ruing3. 50,064 74 37,844 59 37,972 23 u a o O o 47 43 49 50 51 52 53 54 55 .56 57 58 59 60 t-2 Order in Council do do do Secretary Minister Secretary do lOrderiu Council. do Date. 4th July, 1879.... 18th Aug., 1879. 2Ist July, 1879... 23rd Aug., 1879. do do 2oth July, 1879.. do do 24th Nov., 1879 . 2l8tSept, 1879. 27th Feb., 1880.. •22nd Dec, 1879 25th Nov., 1879 . 13th Dec, 1879 I6th March, 1880 3rd March, 1880 7th March, 1880. nth March, 1880 3rd March, 1880.. 14th June, 1880.. 15th iMay, 1880... Estimate of Amounts involved as shown oy extension of Tenders. Under 0. in Council. cts. Not under 0. in Council. f 2,727,300 00 [2,050,950 00 2,573,640 00 1,746,150 00 7,350 00 48,0CO CO Schedule ratet; $ eta. 2,419 71 000,500 00 15,802 00 35,425 00 2,662 50 24,000 00 781,(00 00 238,000 00 128,500 00 1,384 00 12,000 00 6,096 00 27,750 00 24,961 00 438,914 00 70,800 00 6,230 00 Fort Frances Locks. — No contract made. Work performed by day.'i' labour. Authority sent to Mr. Sutherland to commence work, by letter of the Secretary dated 11th May, 1875. T. TRUDEAU, Deimiy Minister of Jiaiiways and Canals. 49] CONTRACT LETl^ING. t '. .. . <' » • •. X, .* ■ '^- 9 ■ « « ' ' ■ »• ■- •■' % . ^^' * ■* . » . I ■ I ■.;-. ■•^ It will bo seen, that throughout these contracts, a considerable portion were awarded by either the head, or some subordinate of the Department, without having been submitted for "pproval to the Privy Council. It is true that the statute does not require the award to be authorized by the Privy Council, unless where the lowest (available) offer is passed over ; but i<^ is suggested for consideration, whether unless regulations anj to bo adopted of a more stringent character than those in force up to this time, so as to exclude offers of a gambling character, it would not bo well that all contracts involving sums above a specified amount, be awarded only after consideration by some higher authority, for ipstance, a Committee ot the Privy Council, Large sums have been expended on this railway, through transactions originated, directed, and concluded solely by the Department w^ithout the authority of the Privy Council. In addition to the inexpediency of depending in such cases entirely on the judgment of one person, the practice seems to us to cast upon the individ- ual a responsibility which is dangerous to himself and injurious to the com- munity ; it naturally concentrates upon him party and personal pressure for his favours, and often party and personal abuse for his action, while it fosters in the community a habit of bartering for influence, because it is supposed to bo more easily and more effectually exercised over one mind than over more • "We think it would be an advantage, if no transaction involving an expenditure beyond a specified sum, could be arranged for by competition or otherwis<', unless such expenditure should be first directed by some authority higher than a department, and unless the report or recommenda- tion of the Department in w^hich such direction is asked should, amongst otnor things, give a written report from its engineer — when the object of the expenditure involves engineering results— and this whether that report be in accordance or not with the step recommended. In order'to avoid the responsibility of passing over any tender which is known to be low enough to call for the contract but which cannot be accepted owing to some omission in the qualifying conditions, it has occurred to us that it w^ould be well to prevent the knowledge of its contents reach- ing the Department unless and until all preliminary conditions have been first fully performed, and with this object that the tender should be enclosed by itself in a sealed envelope, which, together with the securities and other CONTIJACT LETTING. 403 bio portion department, cil. I authorized sr is passed ;ulation8 arti e up to this not bo well warded only lommittee ol transactions without the s entirely on I the individ- is to the com- )nal pressure tion, while it because it is ler one mind [involving an competition Ited by some •ecommenda- ild, amongst object of the Ihat report he lender which 3h cannot he Ihas occurred itents reach- is have been be enclosed les and other necessary documents, should be enclosed in an outer envelope. If on open- ing the outer envelope, the securities and accompanying documents were not sufficient to entitle the tender to enter the competition, then the inner en- velope should be forthwith transmited unopened to such address as may bii given for that purpose in the outer envelope ; but if from any cause it should be opened by the Department, then it should be entitled to compete on the same terms as all regular tenders. If it should be decided to accept personal covenants by way of security with tenders, questions might arise respecting the financial standing of the sureties, and the regulations might provide that in doubtful cases, the decision of such question would be left to some author! ty,either independent of, or act- ing with the Department. If the tenderers were parties to this covenant, and were well known capitalists, the document would be necessarily sufficient ; if not the parties might, before the last day for receiving offers, learn from the Department whether the sureties they could get would be satisfactory ; or in cases of large contracts, where the difference in amount between the various tenders was likely to be considerable, and a short delay would not be detri- mental, then the advertisement might name two different days, one for opening the outer envelope, and a later one for the consideration of those tenders which should be shown to be entitled to compete — the intervening period permitting enquiries to be made as to the sufficiency of sureties, if any, offered with tenders. We submit for consideration whether it would not be expedient to regulate the letting of contracts by rules to the following, or some similar effect: — No contract expected to involve an expenditure beyond [$50,000j shall be made, and no competition therefor shall be invited by the [Department of Railways and Canals] unless such expenditure be first authorized by a resolution of [the Treasury Board.] Such authority shall not be given wher<3 the object ef the contract in- volves engineering results, unless the recommendation from the head of the department on which such authority is to be based, is accompanied by a re- port of the Government Engineer having charge over the subject. Th^t before submitting to competition the construction of works by the said Department or the supply of material to be used therein, an official estimate shall be prepared concerning the value of each item, on which prices are to be asked. / ■ I' . ' ' 1 ■ t I '. I . V 4 . Tmr ■HX 4\ l» .;• . '. *i ' ■ . 494 CONTRACT LETTING. That in cases where inconsistency in prices would be likely to lead to a material increase or loss of profit to the contractor, according as particular items should after the contract he proportionately increased or diminished, then prices shall be affixed by the Department to the respective items in the bill of works, and competition shall be invited only as to a general percentage above or below tlie prices at which the contract will bo taken. That all tenders in such public competitions shall bo made on forms to be supplied by the Department. That with each tender the party making it shall be required to furnish such security as may be designated in the form, his tender containing a covenant under seal, that such security shall be forfeited if he fail to fulfil his offer, by entering into a contract and furnishing the requisite security. That in each case the amount of security with the tender shall be fixed without relation to the amount of the tender, and shall be such sum or sums as may be stated in the form. ' That the security with the tender may be in cash or debentures, or bank or other valuable stocks, or personal covenants from responsible parties, or partly one and partly the other, as shall be mentioned in the form, which shall also enumerate the companies whose stock will be accepted. That in no case, unless specially directed by an Order in Council, shall the security with the tender be less than [one] per cent, of the probable total outlay according to the official estimate before mentioned. That if the security be given by a personal covenant instead of by any other of the pre" scribed methods, then it shall be [two] per cent., unless otherwise specially directed by Order in Council. That the receipt of such security wuth a tender shall be qualified by a condition, that in no case shall it be forfeited to an extent beyond the difference between the amount of that tender, and the one next above it, which shall have been accompanied by the necessary security, and received and opened as regular. That each tender shall be placed in a sealed envelope by itself, which together with the documents'necessary to comply with all preliminary con- ditions, shall be enclosed to the Department in another outer envelope. That it shall be the duty of the Departmental officials not to open the I inner envelope, until it be decided that all preliminary conditions have CONTRACT LETTING. 405 ^ to lead to ts particular creased or ie respective only as to a itract willbo ide on forms red to furnish containing a ,e fail to fulfil isite security. shall be fixed sucli sum or iebentures, or msible parties, I in the form, be accepted. Council, shall probable total That if the ^her of the pre' fwise specially Iqualified by a lit beyond the Inext above it, and received ly itself, which ! lelimiuary con- [envelope. ^ot to open the I mditions have been fulfilled, and if these conditions be not fulfilled then to transmit forth- with the inner envelope unopened, to such address as may be given for that purpose in the outer envelope. That if this duty be neglected so that the inner envelope cannot be re- turned unopened, then the tender shall be entertained as if all necessary preliminary conditions had been complied with. That the receipt of each tender shall be recorded in a book kept by the Department for that purpose — the entry showing the time of its receipt^ and a number or distinguishing mark by which it may be known — the same number or mark being put on the envelope of the tender. That tenders, after their receipt and before their opening, shall be kept as valuables in some sufficient safe or vault. General Conclusions. As far as concerns the period over which our enquiry has extended, the evidence as a whole leads us to the following conclusions : — That the construction of the Canadian Pacific Railway was carried on as a Public Work at a sacrifice of money, time and efficiency. That in this work numbers of persons were employed as Government officials w^ho were not efficient in the positions to which they were appoint- ed, having been selected on party grounds, irrespective of the question whether their engagement would bo advantageous to the public interests. That during the progress of the undertaking, delays occurred which would not have occurred, but for the necessity of staying operations from time to time until the necessary appropriations were made by Parliament. That the examination of the country over which the line was located was inadequate, failing to give to the Government that information w^hich could have been given, and which was necessary to enable the Government to estimate, with reasonable accuracy, the probable cost of tho railway. That large operations were carried on and extensive purchases made with much less regard to economy than would liave happened under similar circumstances in a private undertaking. That the practice which permits a Department to originate and enter upon transactions involving the expenditure of large sums of money, and, without other authority, to award the contracts under w^hich such ex- penditure is intended to take place, is a disadvantage. > » < K 406 GRNKRAIi CONCLUSIONS. ./ That tho system under which the contracts were let was not calcn- lated to secure the works at the lowest price or the earliest date ; it pledged tho Department to treat with tenderers irrespective of their good faith or Knan(*ial strength, upon the single test of a deposit of money, so small as to be useless as a guarantee, the possible eflicacy of this being neutralized by the invariable practice of returning his deposit to each defaulter. Such a system promises to every tenderer a position which he risks nothing to procure, and which he may at his option abandon, or retain, or sell if ho can. GEO. M. CLARK, SAMUEL KEEPER. EDWARD MIALL. Ottawa, 8th April, 1882. ( ', .W . ,'i. ; , "COITNTY "To "1,^ doolare tl Fort Pell "2. I I BuperinI Htire that instance t were well "3. H tliOHe inst "4. I was BO hai must havt have so sf "5. I build as t and I verj all tho swj country tl of the difli for some t tions bein all possibl « Arjc by virtue Act for th " Declarec in the :22nd dd ♦ ••,■■ r .• I' !' 8 jlemnly c graph Line 32 AITKNDIX. 407 APPENDIX. HTATUTOUY DKCLaKATION OF ALBERT 11. CLAKK. ''COTNTY OK SkLKIRK, ) <'ToWit: S "In tho matter Siirox, Oi,vs3 Sc Co'« Telegraph Contract. " I, Albert II. Clark, of tho City of Winnipeg, in the County of Selkirk, tli; solemnly dofilaro tliat I was foreman on the contract for building tho telegraph lino from Winnipeg to Fort Felly. " 2. 1 have baon over all the lino except a small pieoo from Shoal Lake to Lake Manitoba. I superintended all the work from Felly to within a few miles of Mo.4sy River, and I am quito Hure that in no single instance were poles set in the snow and frost alone, but in every instanco the poles wore tho best that could be obtained in the diSbrent localities, and they were well sunk in the ground, and in wet or boggy places were always well braced. "3. Mr. Sifton gave me the most positive instructions to havo tho work well done, and tliose instructions were carried out always to the best of my ability. " 4. I have seen it stated that the line was carelessly built, and that was tho reason it was so hard to keep it in repair, but I am quito sure that those making such statements must havo known that they wore drawing upon their imaginations ; for, indeed, some who have so spoken have never even seen the line. " 5. I have seen a great many telegraph linos, but have never seen one as difficult to build as this, and have never seen a place where it was so difficult to koop a line in repair ; and I very much doubt if there has ever been a line built insuch'an unfavourable place, whon all tho swamps and vvaterstretches are taken into consideration, together with the fact of the country through which tho line i^assos bflng so thin y settle.l. No person can form any idea of the difficulties except he has been on the ground. Having had tho care of part of the line for some time, I am sure Mr. Sifton did all in his power to keep the line in order, his instruc- tions being to keep communication open, no matter what the expense might be, if it were at all possible. •' And I make this solemn declaration conscientiously believing the same to be true, and by virtue of the Act passed in the thirty-seventh year of Iler Mtyesty's reign, intitulo-i 'An Act for thf suppression of Voluntary and Extra-judicial Oaths.' " A. H. CLARK. " Declared before me, at Winnipeg, in the County of Selkirk, this 22nd day of October, A. D., 1880. "J. A. M. AiKiNs, I A Commissioner." ) ( I i Efey- "STATUTORY DECLARATION OF WILLIAM M. SIFTON. " I, William M. Sifloo, of Lake Manitoba Narrows, of the North- West Territory, do 8 jlemnly declare that I have now, and for over two years have ha^, under my charge the Tele- graph Line from Sho d Lake, fifty miles east of Lake Manitoba, to'Duok Mountain. My instruo- 32 lil ■ ^ • 498 APPENDIX. , '» is «. It f 1 I Ill, ^■^■•■■^C-' ', » '. •. I Si ' »' / *• , t i ^ »: ";x .''v tions ircm Mr. Sifton are to spare no coat ia keeping the line in repair, and I have follovrel these instructions to the best of my ability ; I have read the statement of John ConDers before the Royal CommiHsion, I had this man on the line and had to discharge him for neglect of duty. The statement made by him as to my going away trading and neglecting the line is false, as elso is the statement about the way in which tbe line is built. I have been over the line from one end to the other, and in every case, the poles put in were the best that could be procured in the locality ; and they were pu^ in to a depth of not less than three feet, 8 metimes greater. J consider that the work on the line was well done throughout. As to the work assigned to Conners, if he was dissatisfied, he oould have left at any time. The fact of his remaining until discharsted, shows conclusively that the work was not unreasonably diffi- cult. When found necessary extra hands were always put on to assist. I think I cun explain why there has been so much difficulty in keeping the line in proper repair. The principal trouble has been in and about Dog Lake ; at this place there are miles of swamp, and from Duck Mountam to Selkirk the water has been li.sing for the last two years, and now, I am quiet safe in saying, that in all the swamps the water is from one to two feet higher tbon it was when the line was built. Owing to this rise of water there are district?, many miles in extent, entirely covered with wa'er, which were quite dry at the time of the con'truction of the line. Much of the line has been rebuilt. I am at present renewing poies, and next summer I am sure that the whole of the line will have been renewed and in good orJer. If it were not for the increase in the amount of water, I would have no dilliculty in keeping tbe entire line in perfect repair, but at present, taking the whole line into consideration, I know of no other lineof equal extent which offers such great difficulties to the repairer. And I make thiij solemn declaration, conscientiously believing tbe same to be true, and bjr virtue of an Act passed in a letter from Mr. Fleming, dated about 20th May, 187'J. " My measureaionts were almost all made in excavation, and not in embankment, as has been inliojated ii other evdence. The contents of line cuttings v,-ere afcC3rta'.ned by means of ciois-.cction- of the linisho I work, the form of th? original surface be ng transferred from the cro'^j-sfi^tJons taki".i of it lefore the contract work was commenced. The some mean) of measurement wcie used in such borrow-pits as could not be measure i closely by ordinary tape moisurements. The quantity of excavation in ditches was ascertained by i tape for tho widlb, a levtillin;! rod for tne depth, and by chaining along the line for the length, whore th© the ejgneers' working stakes were not re^ula-ly and satif-fact irily found. In taking .'he ill ths of the ii 1 J- ft. ••;'■;.•/ . 500 APPENDIX. .J- '■-■'■:> ■t'i' ,/.v .' ■■ I. ' )' •> ; 0" ♦' •• ■■?■•. '. ■ "The original lirm surface was always eas'ly found, for though there had been fire almoat all along the Hides of the railway, there were always portions of unconsumed sods, patches with the unburned roots of grasses, or charred fragments of the stems of small shrubs, which showed plainly the level dovrn to which nothing but the greeu growing moss, shrubs and grasses had been destroyed, and at which the true exoavation had been commenced, and in no case where mea>urementa weie made, as given in my return', was there any difficulty in ascertaining the correct dimenijions of the wjrk as executed. In soma cases it was impos- sible for mo to ascertain beyond doubt the corieot quanUty of excavation, though the «mbankmeDt-i were measurable |and were measured, and in other cases neither embankment nor excavation coul 1 be measure 1 ; but in both such cases, which, in the aggregate, had a length of only about two miles out of the eighty of the lemtth of the whole contrtict, I adopted the quantitt(>s returned by the engineer in charge. " There is only one embankment of large size the contents of which was ascertained by measuring the embankment itself. The measuremont was effected by means of cross sections frooi the original firm surfice on on ; side of the ecnbankment, to the same surface on the other side ; and the amount of comprejsibility of the material in the embankment, which ■iv'M almost entirely sandy 1 )am and boulders, was carefully ascertained by direct experiment. " In every case in w^hich there wa3 a possibility that the digging of ditches might have y f APPENDIX. 501 en fire almost sodB, patches shrubs, which B8, shrubs and lenced, and in y difficulty in it was impos- I, though the embaokaaent ;regate, had a ila contract, I acertained by cross sections Ltrface on the cment, which ( experiment. might haro aken to the 'i mentioned j'.\ '< a drain bfue causod 3, excepting oms were also few inches of y bulging of »ned the sides rm, in many lad been cut ?re taken at f about two 3d in heaps ensured cr? ■ e dopput-!' ny shrhiiriii ume of tliH y of opinion lows I abn I 6ie IS m this erneath this ni-fluid peat own, ir king it in m^vjk! id stuck by their ends into the two sides. Those are said to bo for the purpose of keoinng tho bottom from blowing iiji. But inasmuch as thoy arc laid in many j'laces wliere there is no sign of a tendency to such blowing up, in fact in places whore the bottom may he calle I solid ; as they are laid fifteen to eighteen inches apart, and ccn^cquently couM not pos'^iljiy be of any influence to prevent the bottom from blowing up had it been so inclinel | and as even if the bottom had blown up, the emptied stuft", semi-liqui I in itself, would simply Iiuve bcim washiul away by the stream tlirougb the ditch and done no harm to anylhin!?, — ! havrt not allowed anything for them, as thoy are utterly valueless for the purpose preteu led, ;uid in f;:ct aru only a make-believe. " Also in coimection with this ditch, the clearing done is noaily 100 f<>ct \v!do, nino-tenth> of which is ostensibly for the purpose of providing clear ground on which to deposit the stuff from the ditch. But as the ditch is only 8.] feet wide and 4\ foet deep (and the waste heaps have a less cubic content), a clearing of nearly ^JO feet wide gives an extremely and uselessly large area of spread ground. In fact the trees were small and stinted and very thinly scat- tered over the swamp, and all the wasted stuff co'dd have been, without the least difliculty, deposited among them without cutting a single tree, except what wis growing on the exact site of the ditch. The ditch and clearing are about a mile long. '' From some notes which I saw in the books of the engineers in charge at out mos?, from my having seen on the works a certain us? to wh'ch moss was frequently npplied, and from a conversation which I had with one of the assiatnnt engineers, Mr. Wicksteed, I believe tbo chief cause of the difference between my quantities and the q-iantities of the ensiineers in chpr^e is owing to the engineers having measured all the green living moss on top of peat as if it were solid earth, instead of, as it very often was, (according ti llr. Wicksteed, unless I completely misunderstood him), a frozen mass of snow water and mos?, cut with an axe and generally thrown into the embankment. Mr. Wicksteed at first objected to this system, but he afterwards complied with the rule that had been adopted on other sub-sections. In my measurement, I made no allowance for the moss growing on the solid peat, except in a fen places where the depth of the mo33 was so great, that a considerable po.tioa might be said to be partly converted int3 peat, though by no means of the same consistence as peat, and in those placoB I made what I intended lo be, an 1 believe to be, a very full measurement as if of all solid peat. '■ I.-^ the last paragr82:>b, I have said that from a certain use to which I had seen moss fre- quently applied, I had como to the opinion that the engineers had measureil moss, as solid peat. The circumstances are as follows:— Notwithstanding that for a great portion of the contract the moss lying on the firm peat had, at the time of my measurement, been consumed by fire, there were very mny cases when it was evident that the firct sods of moss or peat had been laid carefully elong the sides of the ditches, an 1 so o'resaed that they appetred to be in their natur d poiition. This gave to the ditches an apparent depth considerably greater than the true, and I believe this false depth was in very many cases, if not almost in alt, undetected by tho engine-^rs. I have been told that it was detpc!ed by fome of the engineers, and that former measuremocts were corrected accordingly. But I believe from tbo appearances presented at the time of my me,-\sureaient, that many cases were never detected by the engineers. In one case that caaia under my own observation, tbo falsification wa3 so st.iifully done, by what I may call " untiorpinuing," that it was not detected by any of my party until an accident brought it to light to myself, and after this several cases of the same kind were discovered on other parts of the line. t \t » ■ 502 APPENDIX. ■^>:^-S^ ..I..-! ;.'•>.•"^i W ♦ ■ » ' »• "But besides the difference in the total quantity of work executed according to my measurement, and according to that of the engineers, I make a very eerioui difforerce iu the value of the work done, owing to what I consider a very wrong interpretation of the epecification relative to loose rock and solid rock in boulders. In my report on my measure- ment^, I alluded to this difference under the word " classiScrtion." As fur as I Lave s: en the evidence taken before the CommisKion, I do not see that any ono Ins tiiken tlii-s point ui^, and I consider this a very serious matter, ns it involves the payment of about §. (0,000. "Thespecilicaf on for Iooec rock soeuirt to me very distinct, explicit and easily undfrbtood. It pays tliat lock in silti, tlat i'l rock in ihe place in which n'^ture formed it, which has been eo br('kf?n up by the action of the weather or tb« convulsions of nature, but still lying in its ori made up of boulders aloiu'. " It, was evident to me, in exuuiiuing the works, that during t'n? ino^iesi of excuvutioa such bo.d Jersas ^lild not be readily loaded like ordinary cluy or gravel into the carts or waj.'g'in.^", were u,( down in'o the bottom of the cutting, and when tl.e cutting was rfquired to be clearer out they were loaded on "stone boat^," hauled out, and dumped in til!} most convenient plucfs, generally on the sidfs of the ai'jacent embank- ments within the tirst ."jOO o;* COO f« et of length. In this position tliey were easily tximined anil their gross cubic contents escertoiued. If I noticed in these boulders that a hirg^' lu'opoi'lioii wore, or had been before being broken up, of a much less cubic content than 1-4 cubic feet, I assumed that no boulders of a greater size than 14 cubio feet had been burie