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In view of th(^ exaggerated accounts and persistent mis-statements which have been sent out eon(;ernin"- the railway agitation in, Winnipeg, th'3 Direi^tors of the Com- pany have thought it due to the shareholders to publish a brief statement of the iacts for their information. On the 21st of October, 1880. the contract for the con- struction of the Canadian Pacifit^ |iailway was signed, and for the purpose of carrying it out the Canadian Pacnfic Railway Company was incorporated on the Uth February, 1881. Article 15 of the (X)ntract jn-ovided that for twenty years the Dominion Grovernment should not authorize the construction of any line of railway running south from the main line of the Canadian Pacific Railway to any point within fifteen miles of the International boundary. Tt is asserted and widely believed that this »^lause has no effect in the original province of Manitoba ; but the British North America Act, which settled and defined the Constitution of Canada, distinctly assigns to the juris- di(;tion of the Dominion Parliament all matters not specifically delegated to the Provincial Legislatures and the power to legislate concerning railways extending beyond the Tuiernational boundary, or intended to connect • i with other Hues at such boundary, is nowhere in the Constitution given to the Provinces. Whether or not the fifteen mile limit applies to the orif^inal Province of Manitoba, the matter of a railway connection at th.; International boundary is (;Iearly within the control of the Dominion and as clearly beyond the power of the Province. The object and spirit of the fifteentli clause of the con- tract with the Company was the temjwrary protection of the interests of the Dominion, in the Northwest, as well as the protection of the Canadian Pacific "Railway from the •mcroachmttnt of lines from the south, during the infancy of the enterpris(.'. Could connections be mad<; with the A merican railway system at the southern boundary of the original Province of Manitoba, the clause would be mean- ingless, for once across the bounv'ary line there would be practi(;ally no limit to the extensions that might be made. The Company required protection because it was bound under its contract to make an enormously expensive rail- way through what was thought to be an unproductive wilderness north and east of Lake Superior. It was, also, bound to take over and work the line then being built by the Grovernment, from Lake Superior to lied Kiver, through a similar unpromising district, and it was required to give security for the working of the entire line when com- pleted. It was not expected at the time that sufficient loeal traffic could be developed for many years to make the section from Lake Nipissing to Red River, nearly eleven hundred miles, self-sustaining. It w^as thought* indeed, that this section could never be self-sustaining, and that it must depend for its support upon the through traffic to and from th<> great prairies beyond, and this traffic had yet to be created as the settlement of the prairies had then scarcely begun. Railway lines were pushing northward from Chicago and St. Paul towards the Manitoba jjoundqiy, threatening^ tq tap the prairie section of the Canadiim Northwest and to deprive the Eastern section of the railway of the tratfic so necessary lo its support and efficiency as part of thi* throug'h line. It was, therefore, on the part of the Company, deemed to be absolutely necessary to th<». procuring of the requi- site capital, to the safety of the capital proposed to be invested, and, g(?nerally, to the success of the enterprise, that the tratfio of the territory to he developed by the railway should be secured i;o it for a reasonable period ; and the term of ten years from the time fixed for the com- pletion of the railway was agreed upon. Without thh lirovmoti for protection the necesmrij capital could not have heeu secured and the raHioaij could not have been made. The Grovernment had strong reasons, of a more exclu- sively public; nature, for this protection. It was a poli- tical necessity that the detached Provinces should be connected and bound togt^ther by a railway, and the older Provinces were to be heavily taxed for the building of it Political reasons nlone would not justify the heavy burden it would pui upon the country, but a vast territory was to be opened up. and the older Provinces looked to the extension of their trade and manufactures over the entire northern half of the comiuent, to justify the expenditure. Their interests required protection, and the protection afforded to the Company protected them as well. It was most important to the whole country that the railway, when made, should be in a position to efficiently serve the purposes for which it was intended, and the need of protection was generally recognized. Indeed, the same protection was insisted upon by the (xovernment in respect of the Canadian Paci- fic Eailway, when it was commenced as a public work, long before the Company was thought of. Winnipeg at the time was a mere village, and the set- tlements in Manitoba wfie mainly confined to a narrow fringe along Red River. The province hailed the signing of tho contract with Hatisf'aetion, and hardly a voice was raised iu objection to the so-called ' Monopoly Ciause." The Company set about its work, and ••ompleted it iu less than hall the timo required })y the contract. Feeling" that the protective clause in its contract placed upon it a moral obligation to provide railway tacilities as rapidly as possible in southern Manitoba, where the making' of railways was to sonn; extent restrii;ted, the Company, almost simultaneouf;ly with the commencement of work on its main line, laid out and commenced work on a system of branch lirtes extending south and south-west from Winnipeg ; and up to this time it has expended on branch lines in Manitoba, in addition to those pre- viously made by the Grovernment, more than -■^5,700, 000. Partly m view of the same moral obligation, but chiefly for the purpose of promoting the development of the country, the Company made its rates both ibr freight and passengers on a scale far below the rates of any of the railways in the United States, similarly situated. The immediate ell'ect of the opening of the railway between Lake Superior and Winnipeg was an enormous reduction iu the rates theretolbre paid by the Province to and from the east over the American lines. For the chief products, and for fuel and the commodities most essential to the growth of the country, the ratt>8 were made especially low, ic'd year by year, as the traffic has in(a-eased, these rates, in whole or in part, have been reduced until they are now in many cases less than one hall' the rates origin- ally authorized. The charge that the rates are excessive or unreasonable is simply untrue. The average earnings of the Company for the past three years have been as foUow^s : — 1884. 1885. 1886. Ireight per ton per mile ...... 1 . 45 ct.s. 1 . 20 cts. 1 . 10 eta. Pai«seugers per mile 2.6(1 " 2.45 " 2.10 " And omitting th»' througii traffic Lc and frotu the t\u Pacific from th»' figureb of 1H86, th«'y stand: 1.14 cents \)*\T ton per mile for freight, and 2.13 cents per ra.;e for pasyengers, — a lower average than is shown by any im- portant American liuf, Lvside liom the old Trunk lines in the east. It has been the aim of the Company to so adjust it.s tarilfs that the settlers in the Canadian Northwest should receive mor*' for the products of their farms, and pay K'ss for fuel and no more for the other necessaries of life, than settlers similarly situated in the United States ; and that it has succeeded in this is clearly shewn by a comparison of prices with the neighbouring sections of Minnesota and Dakota. The ('ompany has also dealt in the most liberal manner with all the independent railway ivnterprises in the North-west, and the building and operation of at , least two of these would have been impossible but for its cooperation and liberality. The development of the prairi(» section west of Win- nipeg has been rapid, and on the sc(!tion from Winnipeg- eastward to J^ake Nipissing, where little was at iirst expected, a valuable local traihc from the forests and mines is growing up, giving promise that even this part of thejine will, before long, be self-supporting. It may, there- fore, be argued that the protection aflbrd(Kl by the contract is no longer necessary ; but it should be remembered that the Company, encouraged and aided by the growlh of its traffic, and on the faith of this protection, has I'x- pended a vast amount of money on local lines in Manitoba, and, unless prevented by the acts of the Province itself, will yet expend a large amount in the completion of the system of branch lines it has planned, and has been carrying out as rapidly as its means would permit ; and it should also be remembered that all of the 433 miles ol branch lines operated by the Company in the Northwest are in Manitoba ; that all but sixty-five miles were paid for with the Company's money, and that many miles were made ;■ prt?niati4r«'ly at the urt^ent solicitation of the Proviuciul Govcrnirioiit and without i-xpt'ctatioii of imnuMliato proiits. But, notwitiititauding the liberal policy of the Com- pany as regards branch lines, and independent lines, and rat<.'s of transportation, notwithstanding that the tarilf rates of the Company have as yet hem approved by the Government only from year to year, and are .sul)jeet to annual revision, and notwithstanding that no complaint of these rates has ever been made to the Kailvvay Com- mittee of the Privy Council, the natural and inevitable consequences of over-spei ulation have been mistaken by man^' peo})le in Winnipeg, and some other towns in Mani- toba, for the need of railway eomijetition. I'hih idea has been fostered by individuals with sellish ends to serve ; by towns seeking advantages over others in trade ; by local politicians striving for i)opularity. and by politicians at large for party ends. The usual means have been em- ployed for creating and kee})mg up a ferment — the cry of monopoly and extortionate rates; sensational articles in the local pre.s^i ; unfair and false comparisons of rates ; in- tiarnmatoiy speeches, and appeals to pr)y t\ui Oourts, tho Local Gov^- v^rnrrn^nt will sot the law at d(3fian(3e. ^oy can it bo. oxpectod that the wishes of oven a majority of tho 100,000 people of Manitoba will prevail ajj^aiust the interests of the 5,000,000 people of I he Dominion. lndep(Mident of any constitutional question, and par- ticularly in view of the heavy expenditures by the Com- pany in makinu" bramh lines, larsj^ely at th<^ instance of the Local Government, and of the otln^r i^real expendi- tures that have been made by the Company for the development of the Province, the action of that (lovern- ment in attemptinir lo divert its traffic- by bnildin<]f a railway to the boundary, however insij^uilieant that rail- Wdj may be, is unfair, unjust, and a breach of faith with the Company. The service of the Company has g'iven universal satisfaction, and if the rates were oppressive, no complaint has ever been laid before the eonstituted authorities, that the facts mi|Lrht be authoritatively brought out and redress obtained. It would be absurd to urge that the completion of the sixty-six miles of railway undertaken by the Government of Manitoba, would ruin the vast Canadian Pacific system, but its construction would be a violation of the contract with this Company, and the Directors feel it to be their duty to maintain the rights of the Company in the mat- ter, in every legitimate way. That the Country will carry out the contra(^t with the Company in good faith, the shareholders may rest assured. The Parliament of Canada, at its last session, sustained the Government by an extraordinary majority, in the determination to prevent, if only as a matter of public policy, the building of railways in the North-west to the International boundary,- and the prompt action of the Governor General in disallowing the acts of the Manitoba legislature relating to the Red River Valley Railway, followed by active steps by the Miiiifit.ir of Justi('»» to «top tho work hy injunction, in .surticiont evidence of thear as soon as the people of the country come to undcn-stand the ['iiciH, and discov<»r the motives of thosii 'rty whom it vvas created. GEORGE STEPHEN, I'le.sident.