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Eby & Co., Printers, 65 West ConRress Street. iSiji. ^) 1- P-fc^^' THE CANADIAN RAILROAD QUESTION. ARGUMENTS AND FACTS SUBMITTED TO A COMMITTEE OF THE UNITED STATES SENATE, BY E. W. MEDDAUGH, Esq., AM) A. C. RAYMOND, Esq., AT A HEARING IN DETROIT, MICHIGAN, May I, 1891. i DETROIT: John F. Eby & Co., Printers, 65 West Congress Street. 1891. THE CANADIAN RAILROAD QUESTION ARGUMENT OF E. W. MEDDAUGH. The interests of Detroit and the State of Michigan in the subject-matter of your committee's inquiry is very great. Tiiis city and State are peculiarly situated. On the east we have Canada and the intervening boundary waters between Canada and the United States. Our only way of ingress and egress from and to the east by railway, save through Canada, is via Toledo, around Lake Erie. The distance between Detroit and Buffalo by this route, is 361 miles. The distance between Detroit and Buffalo by the Grand Trunk Railway through Canada, is 259 miles. This is a difference in favor of the Canadian route for Detroit, and for all Michigan lying north of Detroit, of over 100 miles. The distance between Port Huron and Buffalo by the Cana- dian route is 198 miles. This route can accommodate a large section of the State lying north of Detroit. If this section of the State were compelled to seek an outlet east by way of Toledo, the mileage for it would be : Toledo to Buffalo, 296 miles ; Detroit to Toledo, 6-i miles ; Port Huron to Detroit, 63 miles ; making a total of 423 miles, as against the route through Canada of 198 miles. "What any obstruction of these Canadian routes would mean for Michigan, sufficiently appears in what I have said. The Upper Peninsula of the State has its route east across ■ tho Sault river. Shall this lie closed? Must that section and the entire northwest he sncriHcod to accoinniodato American trunk line routes south of Lake Erie? New England, too, is interested largely in this question. Millions of money have hcen invested in American rail- ways in New England and the west, which have Ween con- structed with express reference to connection with the Cana- dian railways, as routes for through trathc between the States. Are these, too, to he sacrificed for the benefit and at the beck of the American trunk line roads i The build- ing of these connecting roads in the United States luis been induced, in part, by the establi^liod policy of tho govern- ment of the United States, as expressed in its laws and in treaty with Great Britain, favorable to transportation through Canada. In addition to the shipping interests of the United States, immediately on the line of of these roads connecting with the Canadian roads, which would bo seriously prejudiced by any obstruction to the Canadian route, there is the interest of the general public by all routes. There can bo no doubt in the minds of intelligent people of the value of the Canadian roads as moderators of both freight and passenger rates for tratiic between the east and the west. It is idle to say, as has been said by some of the American trunk line gentlemen, that the closing of the Canadian routes would not result in higher rates. Competition does its work in the carrying business, as in all other business. We have only to observe what the effect is, on railroad rates, of the opening of navigation each year, to get an idea of tho result that would follow the shutting out of the Canadian routes from competition with American roads. The nominal reason urged for Congressional interference with this Canadian railway transportation is the alleged necessity for more thoroughly subjecting the Canadian roads to the Interstate Commerce law. There are two distinct grounds of this i 8Up|>o8c> flc through Canada, and all traffic between the United States and Canada, and all ocean tratHc to and fron) the United {States passinj;^ through Canadian Atlantic ports, the law is regarded by the Canadian carriers as applying ; and it is observed in every particular quite as fully as it is by the American trunk lino roads. Schedides of all rates, etc., on this traffic are regularly tiled with the Commission, thus recognizing the law's applicability and requirements. These schedules speak for themselves. Not a pound of freight nor a single passenger coming under either of these classes of traffic, IS carried by the Canadian carrier except in connec- tion with an American carrier at the Canadian frontier point. A through line of railway (composed of the Canadian carrier and one or more connecting American roads) exists in connection with this traffic, as in the case of American trunk lines. These lines are, in fact, really American trunk lines with the others, oidy with the diilerence that they have a Canadian cori)oration as one of the links in the chain. It is evident that this traffic — any part of it in fact — could not be successfully carried by the Canadian railroads, under the existing methods of railway transportation (with, per- haps, the exception of the comparatively small tratiic lietwccn the United States anil Canada, embracing the trade simply between the two countries), without this co-operation of the connecting American roads. And we know, as a fact, that the great mass of even this excepted traffic is carried over American roads on through bills under arrangement for continuous transportation. Now it is ovulent to any ono who is fniniliar with tho mnnnor in whicli freight traffic is shipped and carried, that it is not possible for the Canadian carrier to indulge in any practice in disregard of the requirements of the Interstate Commerce Law without the co-operation of its American connection, except in one particular to be hereafter noticed. AH traffic between United States points that is carried through Canada originates with an American road, and tho contract of carriage is made by it. If rates are not main- tained up to tho schedule standard, the American carrier is guilty ; and this is equally true of all export traffic from the United States via the Canadian seaports, and of traffic car- ried through Canada to any of the Atlantic ports, as Boston or Portland. The possible method to which I have referred of tho Canadian carrier's violating the law, without the guilty co-operation of its American connecting carrier, in the transportation ot traffic through Canada, is by the paying of rebates to the shipper. It is, no doubt, possible for the Cana- dian carrier, being one railway in a through line, to do this to some extent. But it is equally possible for any American railway company that is part of ono of the through trunk lines to do the same thing to an equal extent. Tho opportunities and facilities are the same in both cases ; and the chances of detection are equal. To make the payment of rebates a success in procuring traffic, while rates continue as low as they have been for the last two years, and still are, all the carriers in aline would have to sluire in it. No one of them alone could afford to pay it. The long and short haul clause of the act is strictly com- plied with by the company I represent, as I presume it is by the Canadian Pacific Company. The schedules of rates covering all of this traffic are regularly flled with the Inter- state Commerce Commission. They remain there, open and subject to inipection, not only of tlie Coininissioners, bnt of the public. No complaint io haurd that tlicso schedule rates are not made in strict regard of the long and short haul pro- vision of the law. And r. specilic charge is made against the Canadian roads of making rates at variance with the schedules filed. Is it unreasonable to ask, in these circum* stances, that this ground of complaint bo treated as frivolous ? General chargos of this character are easy to make against the Canadian routes, and they have been poured into the ears of meml)ers of Congress and of tho public continually for three years past, but no fact in support of fhem has been stated. We have the right to demand that thuse who have been so persistently ifiaking and publishing the charges now produce some evidence in support of thc'r truth, or Iience- fortli refrain from this cheap method of warfare against these railroad routes. But it has been said, in connection with this charge, that the Canadian roads are exempt from this clause of the uct. m respect to their local Canadian traflic — that is, trafHc between points in Canada — and that they have an advantage over the American roads in this. The Interstate Commerce law, of course, does not affect the purely internal traffic of the Canadian roads. Neither does it affect tho internal State traffic of the American trunk line roads. In this respect the Canadian and American roads stand on equal footing. For instance, the New York Central Kailroad, with its several hundred miles of road within the State of New York, and an exceptionally valuable local State traffic, ip, in respect of this traffic, entirely independent of the act of Congress. Neither the long and short haul clause of the law, nor any other provision of it, applies to this traffic : and the Congress has no power to make it apply. The State of New York alone can legislate concerning this traffic. And this is true of the purely single State traffic of all American railroads. • 8 It would 8eein, therefore, that the privilege of the Cana- dian roads of inalcing rates on tlieir local Canadian traHic without regard to uur law, ought not to cut much figure in this matter. Still another complaint has been made. It has been said that the Canadian railways have an advantage over their American competitors in being able to recoup their losses on unreasonably low through rates for interstate traffic, by charging the Canadian shipper corres|)ondingly higher rates on local Canadian traffic. The Interstate Commerce Com- mission lends respectability to this notion by a reference to it in one of its annual reports. (2d Annual Report, p. 69.) Could anything be more absurd than the idea that our Canadian ticighbors would submit tu be taxed in this way for the benefit of American shippers, even if the Canadian carriers were disposed to do it? Hut, aside from this, I am at a loss to see what motive can exist for the Canadian car- riers adopting such a policy. Revenue is the object of its being. If what it loses by reduced rates on through traffic it simply makes good by higher local rates in Canada, it gains nothing. The carrier would be quite as well off, to say the least, if it charged higher rates on through business, and did loss of it, while maintaining the local rates up to the maximum standard. IJut the same conditions exist on the American trunk lines. Each of them has a greater or less extent of road exclusively within a single State, wiiere it has a local traffic not amenable to the act of Congress. The motive equally exists with them to nuiko a high local tariff of charges to compensate them for losses on low through rates. And yet 1 have never heard of their doing it. liut it is a little strange that in all the talk on this subject, including the report of the Commission to which 1 have referred, there has bean no statement of how the local rates of the Canadian roads compare with the local State rates of 9 he Cana- iii traffic figure in jccn said ver their losses on •affie, by ;her rates I'ce Coin- erence to i-t, p. 69.) I that our this way Canadian ;hi8, I am adian car- jeet of its igh traffic Janada, it irell off, to I business, 5 up to the can trunk nt of road ocal traffic ve equally charges to And yet lis subject, ich I have local rates ate rates of the American roads. The information is accessible. The tariff of rates on all these roads is public, and could be readily obtained. Since the report of the Commission to which I have referred was published, Mr. A. C. Raymond has pro- cured the local State tariffs on .several roads of the United States, and the local Canadian tariffs of the Canadian roads, and has embodied the result in a printed argument, which, I l)clieve, has been furnished to the Interstate Commerce Committee of the Senate. The result of a comparison of his figures is to show that the local Canadian rates are not higher than the local State rates of the American railroads. This ought effectually to dispose of the charge that the American railroads are under any disadvantage in respect of this matter, in comparison with their Canadian competi- tors. What the outside clamorers for additional legislation respecting the Canadian carriers would like, and hope for, no doubt, is a law that will enforce upon these carriers, as a condition of their engaging in the business of interstate carrying, a strict observance of the long and short haul clause in their local Canadian traffic. I will not discuss this. It is too absurd for serious consideration. I think, however, that I may oay that the company I represent will voluntarily yield to such terms, whenever they are imposed on the other trunk line roads in respect of their single State traffic. To require this of the Canadian roads, while l(!aving the Ameri can roads free in respect of their single State business, would be a cowardly method of weighting the Canadian carriers, unworthy of our Congress. If it shall ever be deemed good policy to cut off these roads from competition with Ameri- can railroads, let the purpose be openly avowed, and let the method of its accomplishment be direct and manly, instead of indirect and under false pretenses. Now, as to the service of process on the Caiuidian roads, so as to subject them to the jurisdiction of our tribunals in case of violations of the law. 10 The question that naturally arises is whether the experi- ence of the last four years — the period since the law was enacted — has demonstrated any trouble in this regard? There can be but one answer to this. The American rail- way companies have not been more prompt to obey any citation from the Commission, or to afford information when called upon, than have the Canadian companies. In no instance have these Canadian carriers failed to submit them- selves to the jurisdiction of the Commission in plenary pro- ceedings instituted against them ; and they have always given the Commission full information and opportunity for investigation of their methods, etc., when called upon. If my memory is correct, it was the New York Central ^Railroad Company — an American carrier, and not a Canadian — that refused to disclose to the Commission the facts respecting its issue of passes. I deny that experience has developed necessity for addi- tional legislation in connection with this point. If, however, in spite of this experience as to the sufficiency of the law as it stands, Congress, out of deference to this theory,— or for any better reason, if one exists, — concludes to amend the law so as to meet the several complaints res- pecting the Canadian railroads, I suggest that the amend- ments should he directed to the alleged evils, instead of try- ing to cripple the Canadian roads. The advocates for further legislation openly profess their object to be the subjection of the Canadian railroads to the Interstate Commerce law as completely as the American railroads are subject to it — nothing more. No fair-minded man can object to this. And while I protest that this is fully realized under the law now, there is no reason why additional legislation should not be had in the same direction, if any- body wants it. But the pending bills which provide that the Canadian carrier shall take out a license from the gov- ernment of the United States to engage in carrying interstate bhe experi- le law was is regard ? lerican rail- ) obey any lation when 188. In no ibmit tliem- plenary pro- lave always ortunity for d upon. If tral Railroad ladian — that ts respecting sity for addi- le sufficiency •ence to this 5j — concludes unplaints res- ; the amend - nstead of try- ' profess their lilroads to the he American J fair-minded lat this is fully vhy additional ection, if any- i provide that from the gov- ying interstate 11 and international traffic, and that this license shall he for- feited as a penalty of any violation of the law, can have but one purpose, and that is to get rid of the Canadian routes. I hazard nothing in the statement that there is not a com- mon carrier in the United States subject to the Interstate Commerce Act, but has violated the act repeatedly — some- times intentionally — and often through ignorance. This result is inevitable in a system of business as extensive as this is, and which involves the employment of such a large number of agents in its traffic department. Most of these carriers have been before the Commission for this offense, and some of them many times. What would any of them say to a proposition to make forfeiture of their right to con- tinue their business the penalty for a violation of the law ? Tiiey would probably think it unduly severe, and in this I agree with them. Even if such a penalty were left discre- tionary with the Commission, it would be objectionable, as vesting in that body a power too liable to abuse under the pressure of great influence. No tribunal, whether judicial or political, should be clothed with such power, except where every other remedy has proved inadequate. I have to say generally, in respect of these bills and of any and all other legislation that may be proposed, that the Grand Trunk Railway Company will cheerfully acquiesce in and comply with any law that affects all these interstate carriers alike. But why should the penalty of a violation of the law be made different or more in its case than in the case of the New York Central Railroad Comnany ? If for- feiture of the right to carry is necessary and proper as to the one, it must be equally so as to the other. I defy any- one to point out a difference between them, or the circum- stances that will justify any discrimination in respect of this matter. Neithei the license nor the added penalty would remove the alleged facility of the carrier in Canada for disregarding I 12 the law, nor would either aid in detecting such violations when tliey occur. This must be apparent to anyone. And yet tiie opportunity of the Canadian roads for fraud upon the act, and the difficulty of detecting them in it, was gravely urged by the gentleman who suggested this license legislation, as the reason for it. If it is simply desired to place the Canadian railway com- panies in the same position as the carriers in the States, res- pecting the service of process on then), obedience to final orders, etc. — whether of the Commission or of the courts — and all inquisitorial rights with which the Commission is clothed, here is an opportunity for use of the forfeiture power. Amend the act of Congress so as to impose a pen- alty of forfeiture of the right to continue the interstate business, upon all carriers that are subject to the act, for failure to obey process served upon them, whether served within the United States or in an adjacent foreign country, or to subject themselves to the jurisdiction of the Commis- sion or court from which it issues. And impose a like penalty for refusal or neglect to obey final orders or decrees, or to satisfy final judgment, saving always the right of appeal ; and for refusal or neglect to yield to the Commis- sion in the exercise of its inquisitorial powers. If the American railroad gentlemen are honest in the profession of what they want to accomplish, such an amend- ment of the law will be satisfactory to them. One of the bills now pending in Congress requires these Canadian carriers to give a bond to the United States gov- ernment for obedience to the law. The legislation I sug- gest would be much more effective than a bond, as the remedy would be direct in each case of violation. But, in fairness, the law should apply to all alike. There is no excuse for making in this matter two rules— one for the Canadian roads, and a different one, less stringent, for the American roads. frnn 13 h violations yone. And fraud upon in it, was this license railway com- le States, res- ence to final the courts — ommission is ,he forfeiture impose a pon- tile interstate the act, for hether served •eign country, • the Commis- impose a like icrs or decrees, the right of » the Coinmis- honest in the 5uch an aniend- requires these ;ed States gov- rislation I sug- , bond, as the ition. 11 alike. There ) rules— one for iS stringent, for If the only interests involved were those of the trunk lino railway companies south of Lake Erie, as against the Canadian roads, a narrow and illiberal national policy might favor any legislation to cripple the Caradian roads. But this is not the case. There are, in the first place, large systems of railway in the Ujiited States, representing in the cost of construction a great many millions of dollars, the prosperity — indeed, the very life of which — depends upon the uninterrupted course of interstate traffic through Canada ; and the Congress of the United States is bound not to do anything, save from national necessity, to the injury of these systems of railway ; and surely the desire of these trunk line roads to get rid of Canadian railway competition can hardly form the basis of such national action. It will not do to sacrifice this great America:', interest for the benefit of the American trunk lino railways. But these American railway interests, which are so inex- tricably bound up with the Canadian roads, are not all, even if they are the greater, American interests to be prejudi- cially affected by a disturbance of the Canadian routes. As I have already intimated in the opening of this discussion, there is the shipping public of all Now England, on the east, and of a dozen great States in the west and northwest. If the shippers in these States — the producer, the merchant and the manufacturer, have no interest in this question, it is pretty evident that they think they have. For they have given utterance to most vigorous protests, within the last two years, through boards of trade and other commercial organizations, against any action by our government that might have the effect to impair the efficiency of these Cana- dian routes of transportation for United States traffic. It would not be a difficult task, I believe, to show that they do not overestimate the value of these routes to the sections of the United States for which they speak. But I will not occupy time for this. There is a presumption that such 14 bodies of intelligent American citizens are the best judges of their own interests in such n qnestion. This aspect of it can be safely left to them. The Grand Trunk Railway is one section only of a great American trunk line route extending from Chicago to the Atlantic seaboard points of New York, Boston and Portland. Between Chicago and New York, a distance by its route of 942 miles, there is o?ily 190 miles of the transportation on Canadian territory. All the rest is in the United States and over the railroads of American corporations. Between Chicago and Boston, a distance by this route of 1184 miles, 557 miles of the transportation is in Canada, and the remainder is in the United States, and on railroads of American corporations. Between Chicago and Portland, a distance of 1130 miles, there is transp >rtation in Canada of 050 miles, and the remainder is in the Jnited States, and on American railroads. These American railroads, profoundly interested in the continuance of this route through Canada unembarrassed by obstructive legislation, represent in the aggregate a capital investment of $85,000,000. No words of mine can add anything to the eloquent appeal of this statement against the kind of legislation that Congress has been asked for on this subject. The Grand Trunk Railway Company has another Amer- ican feature that entitles it to some consideration. It has constructed and promoted the construction of, and has a very large pecuniary interest in, more than 1,000 miles of railroad in the United States. Its cai)ital investment in these railroads, every one of which is an American corpora- tion, amounts to many millions of dollars. It is generally well known that the established method among railway companies forming a continuous line for car- rying freight is by the creation of what is known as fast freight lines. These lines are established by agreement of ;i>. 15 best judges lis aspect of y of a great icago to the lul Portland. its route of portation on Jnited States 8. Between )f 1184 miles, ada, and the railroads of nd Portland, ion in Canada ed States, and rested in the mbarrassed by egate a capital the eloquent legislation that another Amer- ration. It has of, and has a 1,000 miles of investment in erican corpora - )lished method )us line for car- known as fast r agreement of ■%t. t the companies composing thorn, each contributing its quota of cars, on an agreed basis, for use in the business of the line. It shows something of the extent of the Grand Trunk Railway Company's traffic arrangements with its American railway connections, that it is a party in the fol- lowing fast freight lines, under agreements with the Amer- ican railway companies named : The Micliigan & Milwaukee Fast Freight Line, in con- nection with the New York Central Railroad Co. The Commercial Express Line, in connection with the New York, Lake Erie *fe Western Railroad Co. The Iloosac Tunnel Line, in connection with the "West Shore & Fitchburg Railroads. The Great Eastern Fast Freight Line, in connection with the Delaware, Lackawanna & Western Railroad Co. and the Central Vermont Railroad Co. The Wabash & Lehigh Valle}' Fast Freight Line, in con- nection with the Lehigh Valley Railroad Co. The Ontario Despatch Line, in connection with the New York, Ontario & Western Railroad Co. The National Despatch Line, in connection with the Cen- tral Vermont R. R., and its connections at White River Junction for New England points. This company has also a through passenger service in connection with the AVest Shore Railroad Co., of which the New York Central Railroad Co. is lessee, and with the New York, Lake Erie & Western R. R. Co. The Grand Trunk road is, in fact, the recognized and established west- tern connection of the West Shore road for both passengers and freight. No one familiar with the railways from New York Cit}' centering at Buffalo, will fail to appreciate at once what the effect would be upon them, if they were deprived of the route through Canada by the Grand Trunk road as a feeder to them of interstate traffic. The New York Central alone would gain by it. The others would suffer great loss. 16 In addition to all its railroad investments in the United States, the Grand Trunk Company has just completed the construction of an international railroad tunnel between Port Huron and Sarnia, under the River St. Clair, at a cost of about $3,000,000. Possibly, however, some timid souls in the United States may sue lurking in all this a deep-laid plan on the part of this corporation, in co-operation with the Canadian government, to afford greater facilities to the Canadian government for moving an army of conquest against us from that country. In the face of these facts, is it not apparent that any action by the government of the United States by the imposition of burdens on the Grand Trunk Railway Com- pany in connection with this interstate traffic, that are not imposed upon the exclusively American trunk lines, would result in a serious injury to other large American railway interests, and to the interests of a large section of American producers, merchants and manufacturers? These aggregate interests are much too large and important to be sacrificed for the benefit of any other interest, either railway or sec- tional. There are many other considerations which have a bear- ing on this Canadian railway transportation question, that I should like to discuss, and only refrain from discussing them liere for fear of consuming more time than justly belongs to me, and possibly trespassing on the patience of the com- mittee. The demand of the American public everywhere is con- tinually heard in all sections for cheap and still cheaper rates of transportation. In this direction lies the hope for greater prosperity in all departments of business. The dif- ference of a few cents jn a hundred in the transportation of grain from the rich fields of its production in the west, to the Atlantic seaboard, determines the possibility of its being profitably marketed abroad. And this is true of all our the United )inpletod the incl hetween lair, at a cost Q timid Bouls lis a deep-laid ation with the silities to the of conquest ent that any States by the Railway Com- , that are not k lines, would erican railway in of American Miese aggregate be sacrificed railway or see- ch have a bear- question, that I discussing thetn 1 justly belongs nee of the com- ry where is con- nd still cheaper ies the hope for liness. The dif- jransportation of n in the west, to >ility of its being true of all our vast surplus of production of every kind. The United States, therefore, cannot afford to close any route now open to it that cheapens the rates of transportation between the places of production and the market. These routes through Canada unquestionably have this effect. This is the invari- able testimony of every shipping centre tributary to t^'esf routes. It may, with equal show of reason, be contended that the waterways of the great lakes do not have a reduc- ing effect on rates, during the season of navigation, as that these Canadian railway routes are ineffective in this respect. The foregoing is the substance of my remarks submitted to the special committee of the United States Senate. Messrs. Henry Russel and Ashley Pond, representing the Michigan Central 11. R. Co., followed me on the occasion. Reference was made by them to the percentage of the east bound traffic out of Chicago taken by the Canadian rail routes, which was claimed to be excessive as against the exclusively American routes; and the inference was indulged in and urged that such a percentage of the business could only be secured for the Canadian routes by the payment of rebates. And the alleged difficulty of investigating the Canadian railway companies in respect of such rebate i)a3'- ments was urged as a reason for so amending the law as to require these corporations to obtain a license for engaging in interstate traffic and imposing a forfeiture of the license as a penalty for violations of the law. Now, if these gentlemen honestly believe that rebates are being so paid, they owe it to the carrier they represent, if not to the public, to call attention of the Interstate Com- merce Commission to the fact, and ask an investigation. * Why do they not try this method of redress, instead of air- ing their suspicions before a Committee of the Senate ? Here is a good opportunity to demonstrate any defects in i 18 the law and the alleged practical difticnlties in tlio way of an otKcial investigation of the practices of the Canadian railways. Hnt it was further said that this undno percent- a^o of the Chicago traffic taken by the Canadian roads was mostly confined to dressed beef shipments, and that this enormous business is in the hands of loss than half a dozen of well-known shippers of beef — which is a fact; and it was assumed that rebates arc being paid to these few shippers. If there is any foundation in fact for this assumption, these shippers are cfjually guilty, under the law, with the carrier that pays the rebate; and they should be punished. What stands in the way of an investigation of this subject in respect of them ? They are all American residents, and have their places of business in the United States. Their account books, papers, etc., can be examined. They arc amenable to process from the Interstate Commerce Com- mission and from the United States courts. AVhy have not these railway gentlemen, so burdened with suspicions of fraud, promoted a judicial inquiry into the facts? They have not the poor excuse here, that they offer in connection with the Canadian railroads, that the parties arc in foreign territory. With American shippers as necessarily guilty parties to any alleged system of rebate payments by the Canadian car- riers, and with these carriers openly declaring their willing- ness to submit theinselves, and all books, accounts, papers, etc., to the inspection of the Commission or court, in any proceeding that may be instituted for an investigation of the facts, the gentlemen who make these gratuitous charges, based solely on their suspicions, in neglecting to take the responsibility of moving, in the way plainly pointed out by the law, for an investigation, lay themselves open to the grave suspicion of not really believing what they profess to believe in this matter. There is an offensive assumption of superior virtue on the 10 ill the wiiy of the Ciinadian ulno porcent- iaii roads was iiiul that this I half a dozen ict ; and it was few siiippere. inption, these til the carrier isiied. What lis 8ni)jcct in residents, and States. Their ed. They arc otnmerce Com- AViiy have not suspicions of 3 facts? They !r in connection 8 are in foreign juilty parties to le Canadian car- ig their willing- ccountp, papers, ov court, in any investigation of atnitous charges, jting to take the Y pointed out by fos open to the it they profess to rior virtue on the part of these gcntloinen, involved in their charges as made against these carriers. They assume that the Canadian rail- way officers and traffic agents are not above resorting to devices for evading the law's requirements, which are equally open to anyone of the railways in the United States, but which the officers and agents of the latter are morally above having recouree to as a meap^ of securing tniffic. They would experience some difficulty I think, in establishing this as a fact in the minds of Anicrican shippers who have had many years of experience in shipping by the ditferent routes. "Comparisons are odious," but the officers and traf- fic agents of the Canadian railways have no reason to shrink from comparison in this connection. They are not unknown to the commercial men in the United States ; and I do not hesitfite to make the assertion that, taken together, they Btand quite as high for manly integrity in all business rela- tions as the officers and agents of any American railway cor- poration. The American shipping public will be slow to believe that these Canadian railway companies, in order to get traffic, have resorted to methods of violating the law that are equally open to the officers and agent* of their American competitors, but which the latter have proved too honest to adopt. If rebates have been paid for traffic by the Canadian rail- ways, I neither know nor have heard of any instance of the kind. The point I made, and wish here to en»i)basi/o, is simply that it is no more liable to be done by the carriers on these routes than by the carriers on any of the routes cxcln- eively within the United States; that the facilities for doing it are no greater by the one route than by the other ; and that the opportunities for detection are the same by all routes. Wiiatever may be done in evasion of the law by the Grand Trunk Railway Co., for instance, in connection with any traffic it may carry — whether it be the payment of rebates or anything else — may also be done. 20 and with no greater risk, hy any one of the trunk line rail- way companies ; and furthermore, ie quite as liable, to Bay tlie least, to ho (lone hy o!Jo of the latter as by the former. I do not feel justified in adding much to what I said to the (Jommittee in opening the discussion, on the subject of requiring the (Canadian railroads to take out a license for engaging in the interstate tratlic business. 1 then pointed out that such a license would not in the slightest degree remove the alleged ditliculty of detecting violations of the law by the Canadian carriers, and that the pemilty of for- feiture of the license for any violation was too severe, an 15.5 200,094 6.7 512,3,55 16.7 1 512,125 16.7 381,786 12.6 530,251 17.3 Jan., Feb., :March, 1891. 3.060,460 100.0 Tons. Per Cent. 101,205 13.1 105.650 21.3 39,020 5.0 115,722 14.8 125,699 16.1 117.016 15.1 113,763 14.6 778,081 100.0 These official statements csirry their own refntatiou of the extravagant figures named by Mr. Rnssel as the per- centage of the Chicago east-bound traffic which had been taken by the Canadian routes. Comment is unnecessary. But I desire in this connection to invite attention to the 28 n , Feb., March, 1891. ons. Per Cent. r.097 18.8 3.851 7.8 4,087 27.6 8,888 16.1 4,268 1.4 5,735 8.5 2 660 17.3 7,087 2.3 412 0.8 4,063 100.0 n , Feb , March, 1891. Tons. Per Cent. 59,794 22.8 i9,854 30.5 15,200 11.6 6.629 4.3 11.528 8.8 6,050 4.6 1,258 1.0 8116 1.6 18,.580 14.2 896 0.6 30,845 100.0 an., Feb., March, 1891. Tons. Per Cent. 01,205 13.1 55.650 21.3 39,026 5.0 15,722 14.8 25,699 16.1 17.016 15.1 18,763 14.6 78,081 100.0 tj refutation of issel as the per- diicli had been unnecessary, ittention to tlie percentages of this traffic shown by these statements to have been carried by some of the other routes. For the year 1800 tiie Lake Shore road, in connection with tlie New York Central, carried of the live stock 18 per cent and a fraction ; and for the three first months of 1891 it carried 27 per cent and a fraction; while the Michigan Central R. R. carried, for the corresponding periods respectively, 11 per cent and 7.8 per cent. According to Mr. Pond's logic the Lake Shore & Michigan Southern Company must have been paying rebates to secure this undue percentage over the Michigan Central Company. The route of the latter from Chicago to Buffalo is quite equal to that of the Lake Shore Company, and the shorter as a matter of fact ; and from Bufifalo east the route is the same for both. During the same period the Michigan Central Railroad can led 22 per cent and a fraction of the dressed beef in the year, and 30 per cent and a fraction in the three months of 1891, as against 19 per cent and a fraction carried by the Lake Shore & Michigan Southern road for the year, and 11 per cent and a fraction for the three months. Is it possible that the Michigan Central Railroad Company was paying rebates on this traffic 1 The inference is not only legiti- mate, but it is irresistible, according to Mr. Pond. Now in respect of the percentages of this Chicago traffic east-bound, I contend that the Michigan Central and Lake Shore Railroads should not be treated fully as two separate and equal factors as against the Chicago & Grand Trunk Railway. The latter has not only its New England connec- tions, but it has several railroads at Buffalo connecting with New York, all of which want a share of this Chicago traffic, and in fairness have a right to it equally with the New York Central Railroad. The Michigan Central and Lake Shore roads are siniplj' feeders of the New York Central road, as to the great bulk of this traffic carried by them. • The situation therefore, I submit, does not justify each of . -^ *»<«iW-*i»-**S*'"V TWSSmssssaTBsa^wm 24 these in the demand for an equal percentage of this traffic with the Chicago & Grand Trunk Railway Company. In concUision, I deny that tlie Canadian routes have taken an undue proportion of the Chicago east-hound traffic. What they have got, they have, I helieve, secured by legitimate business methods, and without violating the law. Courtesy and a spirit of accommodation are as potent in this department of business as in any other. A good deal of the popular favor which the Grand Trunk Railway Com- pany enjoys and reaps benefit from with the shipping pub- lic of the United States, is no doubt due to the civility of its officers and agents. There is more virtue in this as an agency for getting traffic than has yet been dreamed of by some of our xVmerican railway friends. e of this traffic /ompany. ites have taken bound traffic. e, secured by )lating the law. IS potent in this {rood deal of Railway Com- 3 shipping pnb- 10 civility of its in this as an dreamed of by THE CANADIAN RAILROAD QUESTION ARGUMENT OF A. C. RAYMOND. Mr. Chairman— It is now a little more than two years since the agitation of the Canadian railway question began in the Congress of the United States. For more than fif- teen years the competition between American and Canadian railways has been continuous and bitter, and next to the lake and canal route frotn the West to the sea-board, the Canadian railways have exercised the most controlling regu- lative influence upon rates of transportation. From this competition American merchants, shippers, producers and consumers have received inestimable benefits. Large areas of American territory, notably New England and the West and Northwest, have been put in communication with each other at such advantageous rates for transportation as had not been made and indeed could not be made over purely American lines. Nearly all those portions of interior New England lying north of the Boston & Albany Railroad, were formerly compelled to pay by the addition of what is known as " arbitraries," much higher rates than those current to Boston. The advent of the Grand Trunk Railway of Can- ada largely swept away those " arbitraries," and placed all portions of New England upon substantially the Boston basis. Many. and relentless were the attacks upon the Grand Trunk Railway by its American competitors, but although sorely bruised and beaten in the conflict it has always steadily held every field of wiiich it has once pos- sessed itself. With the exception of occasional periods of 26 peace and compromise, this state of warfare was well nis;li continuous up to tlie time of the passage of the Interstate Commerce Act which took effect April 5th, 1887. The novel sensation of national control, and the new adjustments therehy rendered necessarj', diverted the atten- tion of the American railways from their old competitor for nearly a year. The American lines discovering that the Interstate Commerce Act had not bankrupted them, as they had so confidently asserted pending its passage, but that their traffic was enlarging and their revenues were increas- ing, began to seek for new means of chastening their imper- turbable Canadian rival. The former rough and forceful methods of ruinous competition were rendered obsolete by the Interstate Commerce Act, but an ingenious and, if suc- cessful, far more effective one, remained. It was to trans- fer to the halls of Congress, the contest heretofore so fiercely waged in the field, and to appeal to the patriotic instincts of the American people to shield their infant (?) rail- road indnstricE ' jm impending destruction at the hands of menacing foreign corporations. The preliminary skirmishing promptly began under the leadership of that dashing cavalryman of the late civil war, General J. H. Wilson, of Wilmington, Delaware, who appeared at Washington before the Senate Committee of Interstate Commerce February 10th, 1888, and made an elab- orate attack upon Canadian railways. March 16th, 1888, he repeated this attack by a long speech before the Committee on Commei e of the House of Representatives, in which he advocated tiie exclusion of Canadian railways from partici- pation in American traflic, and the abolition of the " Transit in Bond system " which had been in continuous operation since it was authorized by Act of Congress in 1866. Especial prominence was given to these speeches by a certain leading American journal which published them in full, and in vigorous leading articles at frequent intervals, pro- ,^ was well niojh tlie Interstate 1887. and the new erted the atten- competitor for ering that the d them, as they ssage, but that 8 were increas- iig their imper- ;li and forceful red obsolete bj 0U8 and, if suc- It was to trans- heretofore so to the patriotic ir infant (?) rail- at the hands of igan under the e late civil war, Delaware, who Committee of d made an elab- 1 16th, 1888, he the Committee es, in which he s from partici- af the " Transit uous operation ress in 1866. les by a certain them in full, intervals, pro- 27 moted and advocated Wilson's scheme. A set of resolu- tions embodying it was promptly introduced into the House of Representatives and referred to the Committee on Com- merce. Thus was " the leaven hid in the measure of ineal." Instant and overwhelming protests were made by the various commercial organizations in Portland, Boston, Petroit, Chicago, Milwaukee, Minneapolis, St. Paul, Duluth and Peoria. The newspapers in these cities with one voice Renounced the proposed destruction of the competition of tlie Canadian lines, and petitions, remonstrances and mem- orials, came pouring into Congress in a flood, and the House Committee on Commerce took no action on the resolutions. The subject was revived in the 50th Congress by an amendment to tne Senate Tariff Bill, proposed by Senator Morgan, of Alabama, to the effect of prohibiting the impor- tation in bond through American sea-ports, of merchandise designed for Canadian markets. This was, however, defeated. Meanwhile the American competing interests had not been idle, but through the columns of the press and otherwise, continued industriously and unceasingly to com- plain of the ravages of the foreign railway corporations, which resulted in Congress authorizing the Senate Commit- tee on Interstate Commerce, of which Senator Cullom is chairman, to make a tour of the country and investigate the relations of American and Canadian railways and waterways. This Committee visited the cities of New York, Boston, Detroit and Chicago, and were everywhere met by the rep- resentatives of commercial interests with strong protests against any interference with Canadian railways which ahould cripple or destroy their most valuable and desirable competition. The question was, however, invariably asked of every witness by the committee, "Whether bethought Canadian railways should be subjected to the same regula- tions and restraints as were imposed upon American rail- 5* 28 i» ways," Of course every witness invariably answered tliat he did, even if at tlie same time he questioned the necessity of a Senate committee making a tour of the country to ask a question which could have but one answer. Tiiis committee on " The general relations of Canada and the United States" continued the investigation of the rail- road question at the cities of Minneapolis, St. Paul, Tacoiiia, Portland (Oregon) and San Francisco, and met with the same protests from commercial interests. The representa- tives of the competing railway interests, who appeared before the committees almost invariably urged some legis- lation which should, as they diplomatically phrased it, " impose upon the Canadian lines the same regulations and restrictions as those placed by law upon American lines." This fair seeming proposition was, as before mentioned, cordially assented to by all classes of witnesses, and it only remained to point out the particulars wherein the law dis- criminated in the carrying of American traffic in favor of the Canadian lines and against their American rivals. The testimony, however, reveals no attempt by any American railway rejjresentative to specifically pohit out such a dis- crimitiatioH. As there was no cross-examination of witnesses, and some of the testimony consists of elaborately written statements or briefs, some extremely ill-founded and inaccurate state- ments of alleged facts, necessarily passed unchallenged. The reasons alleged by their American competitors for furtlier legislative restriction or regulation of Canadian railroads group themselves as follows: 1st. The advantages of Canadian railroads by reason of excessive governmental subsidies and foreign capital. 2d. The diversion to Canadian railroads of traffic which naturally belongs to American railroads. (a) Transcontinental traffic of American origin and des- tination ; (J) transpacific traffic to the Canadian Pacific railroad. 1 ,; i 1 29 ly answered that )ned the necessity he country to ask er. >ns of Canada and Ration of the rail- St. Paul, Taconia, nd met with tlie The represen ta- ts, who appeared irged some legis- cally phrased it, le regnhitions and American lines." )efore mentioned, esses, and it only jrein the law dis- traffic in favor of rican rivals. The y any American it out such a dis- itnesses, and some irritten statements inaccurate state- unchallenged. II competitors for ion of Canadian 3ads by reason of gn capital. s of trafHc which m origin and des- Canadian Pacific 3d. The advantage of the Canadian railroads in their local trafiic, the Interstate Commerce Act enabling them to recoup their losses on long-haul American traffic by high local ratcF 4th. The lower cost of operation of Canadian railroads. 5th. The differentials which American railroads are com- pelled to grant to their Canadian competitors. 6th. The destruction of the revenues of American lines by excessive competition. 7th. The national policy of protection should apply to American railroads as well as to American merchants and manufacturers. Six of these reasons must stand or fall according to the facts which either sustain or disprove them. The seventh reason rests upon a theory which, to be consistently advo- cated, must coincide with the general policy of those who proclaim it. My purpose is, therefore, to confine myself mainly to the facts which underlie this great question, in full confidence that their unprejudiced consideration will disprove each and every one of these alleged reasons. First Rkason — Excessive Subsidies and Foreign Capital. These features of railwav construction are as characteristic of American as of Canadian lines. The vast sums con- tributed to American railways by federal, State and muni- cipal authorities are well known. Mr. Patterson, a member of the Union Pacific Railroad Commission, states in his report, that "governmental aid to that corporation will have amounted in 1895, when the ol)ligations mature, to J^our hundred and forty-seven millions of dollars y Mr. C, P. Huntington, president of the Southern Pacific Railroad said to the House Committee on Pacific Railroads, in the Fiftieth Congress, that " the government made a land grant to the Northern Pacific Railroad of much greater value than the lands and bonds together which were granted to the Central and the Union Pacific companies." M '^^i 80 The iintiiensely valuable subventions to the Southern Pacific and Atlantic and Pacific companies are matters of history. Pennsylvania, Maryland, New York, Massachu- setts and Illinois, and tlie cities of Piiiladelphia, Baltimore and Cincinnati are notable examples of State and municipal aid to railroads. Our friends across the border have been but feeble imitators of ourselves in those matters. It is absurd to claim that either country in thus seeking to develop its transportation interests has been influenced by a feeling of political or commercial hostility to the other. The Grand Trunk railroad, as at present organized, has not been the recipient of any considerable government aiil. One of the original companies now consolidated into the main organization did, in 1852, receive a governnient loan of $15,000,000, which has never been returned and on which no interest is paid. The Canadian Pacific company has received fairly liberal assistance from the Dominion Gov- ernment, but small in comparison with American transcon- tinental lines, and very much less than the amount claimed by its American competitors. The following table was submitted to the committee last year by one witness, who claimed it to be a reliable state- ment of the subventions granted to the Canadian Pacific company. Notwithstanding repeated denials from oflicial sources, this table has been widely quoted as authoritative and true by the press, and even on the floor of the United States Senate. In view of the fact that Mr. Van Home, the president of the Canadian Pacific company, at a hearing of the Senate Committee on Interstate commerce held in New York in May, 18S9, showed the utter untruthfulness of the table, it is difficult to understand the statement by its author to this committee in April, 1890, that " the president of the Can- adian Pacific railroad has conceded that this is a correct statement of the direct aids which the company has received ^1 o. the Soutlieni ire matters of irk, Massaehn- liia, Baltimore and municipal :ler have been matters. It is us seeking to nflueneed by a the other, organized, has Dvernnient aid. dated into the vernment loan :l and on which 3 con)pany has dominion Gov- rican transcon- mount claimed committee last reliable state- luadian Pacific 8 from offtciid IS authoritative of the United le president of of the Senate New York in of the table, it s author to this ent of the Caii- lis is a correct ny has receivcij from the Dominion Government." The following is the table as found on page 896 of the testimony already taken by this committee : Bavlged estimate of gifts from the Dominion Government to the Canadian Paclflc Railway Company, and securities which that company has been enabled to float (stock and bondu) as the result of the Dominion guaranty and the land grant of 25,000,000 acres of land : Oash subsidies as follows: 1. (a) Subsidy of Si2S,000,000 mentioned In section 8 of act of February 15, 1E81 : (b) 714 milen of railroad constructed by the Dominion Govern- ment, costing S35,0U0,C0O, which was presented to the Canadian Paclflc Company as a gift, with interest to June 80, 1887;. (See Pub- lic Accounts of Canada for 1887) 861,760,786 a. CapiUI stock originally 8100,(00,000, but reduced to 955,000,000, with a dividend of 3 per cent, guaranteed for ten years. (See Poor's Manual) 65,000,000 9, During the session of Parliament of 1884 the Dominion Government authorized a loan to the company of $20,880,016, to be paid as the work of constiuction continued, and for the purpose of expediting construction. Of this amount $0,880 912 Is secured by lien on the entire road and land grant, subject to the then outstanding land- grant bonds; also government bonds to the amount of $20,000,000, which were exchanged fur a like amount of the company's loan of $35,000,000, which had been issued in the place of the $35,000,000 of original stock which had been retired. (See f>ec. 4, act 30, July, 1885) 20,880,912 4i Balance of $.35,000 000 loan, after deducting $20,000,000, placed in the hands of the govtrnmeut, in order to secure the $20,000,000 bonds above mrntioned 15,000,000 5. Land-grant bonds issued by the company as a lien upon the lands which it acquired by gift of the Dominion 25,000,000 8, Bonds, interei't guaranteed by the Dominion for flfty years at S% per cent., issued to the company for the purpose of remuneratii (^ it for the loss of its relirquishmeut of the monopoly of railroad building in Manitoba 16,000,000 Subsidy of $186,000 a year for twenty years to line through the State of Maine 3,720,000 Total $215,361,697 ". " Of this total eiim about $105,000,000 may be classed as cash and gifts available as cash, and $110,000,000 as guaran- ties of secuiities. The president of the Canadian Pacific Railroad has con- deded that this is a correct statement of direct aids which the company has received from the Dominion Government." The joining by the northwestern British Provinces of the Canadian Federation, in 1867, was made conditional upon the building by the government of a trans continental railroad affording direct communication between thei". and the middle and maritime provinces. The government accordingly under- took the construction of the Canadian Pacific Railroad. Xjarge sums of money were wastefuUy spent in surveying •ftveral possible routes, and finally 714 miles were con- structed in the extravagant and unbusinesslike manner 32 characteristic of most govenunontal enterprises. Tijc line consisted of three detaclied portions, one extending eastward from the Pacific coast, one along a portion of tlio north shore of Laly tho cotnpiiny and sociirod by the lands givon to it by tho govorninont. Thoso bonds have sinco that time been redccniod by tho company and tho lands are now pledged for other pnrposos, as will subsequently appear, This item should therefore stand at $25,000,000. The sixth item states correctly the transaction involved. but has no place in a schedule of }?ift8. Upon the organiza- tion of tho Canadian Pacific Company, the governinoiit agreed that no lino of railroad leading southward from the Canadian Pacific Railroad to the United States boundary, should be built for a period of twenty years. This was to insure traffic to tho division of the railroad lying north of Lake Superior, as tho barren country through which it v\\\i could furnish it little or no local traffic. The Manitoba peo pie desired to build a railroad of their own to the interna tional boundary, and vigorously and oven violently demanded a rescission by the government of its contract with the Caiia dian Pacific Company. This monopoly privilege was oi material value to the company in marketing its securities, and its cancellation was likely to interfere with their sale To relieve the company from this embarrassment and at tlit same time placate tho people of Manitoba, the governiueiii agreed that for the surrender of so much of the contract, i: would guarantee 3^ percent, interest on $15,000,000 uf tin company's fifty year bonds. The government's guaranty! secured by a lien on all the unsold lands of the companv proceeds of all sales of which are to be received directi; into the Dominion treasury, until such a sinking fund slia! be accumulated as will reimburse the government for tl; interest and principal of the bonds at maturity. The lieni then to be cancelled, and the unsold lands are to revert t the control of tho company. This item should cleark therefore, be stricken from the list of "gifts." The seventh item also rests on misstatement. Some year 1< riio bonds were laiula j;ivon to it since that time 3 lands nro now eqnontly appear. 3,000. saction involved, poTi the orgiuiiza- the government thward from the States bonndiin', ars. This was to id lying north o( lUgh which it vn\: Che Manitoba pco m to the interna violently demanded ract with the Cuna privilege was oi eting its securities, re with their sale rassment and at tlit a, the governmeii; I of the contract, i $15,000,000 uf til. iment's guaranty! 8 of the compaiiv J received directl I sinking fund slin rovernment for tli iturity. The lien: da are to revert t em should cleiirl; gifts." ement. Some year 85 •gOf before the Canadian Pacific Kaih'oad was built, the Mari- time Provinces complained of the long and round about ronte via the [ntercolonial Railroad, and demanded a shorter line to Montreal. The Dominion government thereupon o£fered a subsidy of $160,000 per annum for twenty years to any company which would build a short line via the State of Haine. The International Railroad Co. of Canada and Maine was formed to build the line. It failed to do so, and •abaeqnently sold its franchise, including the subsidy, to the Atlantic & Northwestern Railroad Co. This company, unable to complete the line, transferred its franchise, and sub- sidy to the Canadian Pacific company under a lease. This snbiidy was therefore acquired by the Canadian Paci- fic oompany by purchase, and not by gift. This item must alao be stricken from the table. To recapitulate: Conected list of gifts received by the Canadian Pacific Railroad from the Dominion Government. In cash $25,000,000 In partly built railroad lines 12,000,000 In -cash for lands surrendered 10,000,000 In lands on which bonds have been issued for . . 25,000,000 Total direct gifts $72;00{),000 To stretch a point, it might be assumed that without the hmd grant as security, the government would never have gl«|ranteed the interest on the $15,000,000 of 50-year bonds, aiid adding this to the amount produced by the donated lands, and it would only show a total of $87,000,000. Even thiB amount as compared with the $215,361,697, given in tJie table of the witness referred to, shows either a sad degree of ignorance or a serious misstatement of facts. The bete noir of the American railroads is the annual sub- ti^ granted the Canada Pacific Railway by the imperial g<$Yernment for the carriage of the mails between Halifax and Asiatic ports (not between Vancouver and Asiatic ports, popularly st ited), amounting to three hundred thou- 36 sand dollars, one-half of which goes to the land portion u. one-half to the ocean portion of the route. [Jp to thistiiiif none of this subsidy has been paid, and none is due nnti the completion of certain steamships now building unde the supervision of the British admiralty, and which are t begin service some time in April, 1891. The followin. figures are compiled from the Second Annual Report c: Kailway Statistics to the Interstate Commerce Commissio: for the year ending June 30, 1889. For the purpose c painting the advantages of the foreign line in the strongcj colors the unearned and unreceived subsidy shall be adde: to the postal compensation received by the Canada Paciti railway for the year ending June 30, 1889, and the tok compared with that received by some of Its American con. petitors for the same time. Canadian Pacific Railway — Mail compensation. $306,591 subsidy, $150,000 ; total, $456,591. Vanderbilt System — Composed of various roads, $3,40&, 482. Pennsylvania System — Composed of various roatli $2,262,001. Union Pacific System— $1,056,711. Southern Pacific Railway— $979,499. Northern Pacific Railway— $443,638. If, therefore, postal subsidies or postal compensation, ( both, measure the ability of one railroad system to compel with another, the American systems are in no danger ( losiiig the race. If legislation is to be directed against railroads becaii; they are built by foreign capital, many of our Amoricii: roads would be in a pitiable condition, for it is a well-know fact that some of our leading roads are largely owiie abroad, and the foreign capital now invested in America railroads would build several Canadian Pacific systems, Tli stock and bond capital of that system is, as given on paj m 87 e land portion m. 5. Up to tliis tillK none is due nnti )\v building unde and which are t The foUowiii: Annual Report o: merce Comniissio: or the purpose c le in the stronget dy shall be adde •he Canada Pacii 889, and the tota lU American con jnsation. $306,591 ions roads, $3,409, of various roadi al compensation, ( system to compel •e in no danger t st railroads becaii; y of our America r it is a well-know are largely owiic vrested in America 'acific systems. Tl. is, as given on pag 212 of the Annual Report, etc., above mentioned, a frac- tion in excess of one hundred and thirteen millions of dol- larSj while the annual remittance for interest and dividends on American railroads to England, Germany and Holland, is stated on reliable authority to aggregate about one hun- dred millions of dollars. If foreign capital />er se is deserving of hostile legislation, some tax or restriction should at once be imposed upon the English millions now i^^^resented in our great breweries, flouring mills, elevators, tobacco factories and other enter- prisfes. Second Reason. — Diversion of Traffic from American Railroads. The iirst subdivision of this reason is the diversion of traffic which has an American origin and destination, viz., between San Francisco via steamer to Vancouver (some 800 miles), thence via Canadian Pacific to American cities east of the Missouri River. Tlie subjoined table tells ils own story and destroys tliis scarecrow : Tons. Earnings. Total transcontinental traffic car- ried by all the Transconti- nental Association lines for twelve months ending June 31, 1889 744,921 $17,146,641 24 Total " States to States " traffic carried by the Canadian Pacific Railway via Vancouver for same period 12,852^ 214,811 90 Percentage carried by the Cana- dian Pacific ] .72 1.25 The utter insignificance of this diversion renders it almost nnnecessary to make further reference to east-bound trans- continental traffic, but the peculiar methods of dealing witjj '\l i ^\ ; '5 38 it displayed by Mr. A. M. Tovvne, general manager of the Soutliern Pacific Eailway, in his "open letter" to this Senate Committee, deserve a passing notice. Mr. Towne makes a startling display of items of freight and the weight of each, all nicely reduced to j>ounds. To the unaccus- tomed eye the ravages of the Canadian competitor thus present a harrowing picture. Reduce Mr. Towne's figures to car-loads of fifteen tons each and the following is the result : Number of car-loads via Canadian Pacific, 12 months of 1887 485 Number of car-loads via Canadian Pacific, 16 months to April 30, 1889 333 Average number of cars per month, 29 ; per day, 1. Average number of cars crossing Detroit river (Customs Report) per day, 1,000 (about). I make the comparison of " the diversion " with the daily traffic at this city merely to give a clearer idea of its insig- nificance. The average on west-bound States to States traflfio is slightly higher, but does not merit further atten- tion. The second subdivision of this reason is the diversion of transpacific traffic, which, it is claimed, naturally belongs to, and but for the Canadian Pacific Railway would be carried by the American lines. The principal items composing this traflic are tea, domestics, and silk. I subjoin a table of the tea imports from Japan for fourteen years into the United States and Canada and the routes by which they were car- ried. The statistics are reliable, and were obtained from Messrs. Smith, Baker & Co., one of the oldest and most influential American firms in the tea trade, having houses established in Yokohama and Kobe, Japan, and a house in New York under the supervision of Mr. R. B. Smith, the resident partner there : I 'J. 39 Imports of Teas into United States and Canada from Japan, 1875 to 1889, Inclusive. Season. 1876-'6.. 1876-'7.. 1877-*8.. 1878-'9.. 1879-'80. 1880-'!.. 1881-''2 . 1882-'3.. 1883-'4.. l884-'5.. 1885-'6.. 1880-'7.. 1887-''8.. 1888-'9.. 1889*. . . Via San Francisco. Via Van- couver. 13,32 ),946 11,110.057 14.448 289 12.809 728 17,822,899 18,317.027 19.718.806 12,333 987 16,.I7,369 15,589,961 ig,0t8.0'>2 21,972,565 17.414,689 11,903 814 14,242,700 10 322,368 10,063,761 9,676,680 6,175,557 Via Suez. Sailer to New Yorlt.' Via Taco- ma. 1,906,2.35 5.337,980 6 .'590,617 12,028,604 15,092,653 20 167.157 14,549,262 21,668 376 18,017,876 19,818,428 16,730,911 12,994 .502 8.779.827 8,848.056 11,559,994 9,980 621 5,982,3(10 3.282.708 1.2 i2 248 2,881 527 1,013.776 532 422 22,538 815 951 248,693 103,981 2,998,517 "'6,840,971' 9,248,404 6,862,637 Total. 23,210,802 22,430,887 23,271,584 25,500,580 34,649,479 39,497,960 84,288,068 31,534,785 34,257,788 35,408,889 39 093,401 45,289.423 43.099,253 39,820,047 37,924,769 ♦(Up to November 28, 1889, from Yolcotiama.) New Yorlc, January 13, 1890. This tea "season" extends from June 1 to May 31 in each twelve months. An inspection of the table makes it clear that " the diver- sion" can neither be proved nor disproved by a comparison of the quantities carried each season by any line (Mr. Towne's inetliod), but only by a comparison of the percent- ages of each season's total carried by any line, as per follow- ing table : Table Showing PercentaRC of Total Imports of Tea from Japan into the United states and Canada, Carried via Various Routes at Dates Named Below. Season. 1876-'6 :882-'3 1885-'6 1886-'7 1887-''8 1883-'9 To November 23, 1889 5 as > I. > 529ir^ 35->i^ 48^>' 48^^ 3i) ?: a7H;t i.W 23i4r^ a n X e < a a o — s e > CO o 56I45; 5614;; 58;4!* 55^rfc 7^;^ 62 % 28)^:i; 20}4;i 22M;- 30 1^ 3m% -mi I 100 100 100 23 ;S i 100 SKJ)^;,' ; 100 ZM'i 1 100 uH,% 1 100 The percentage via San Francisco and via Tacoina must be added to show the total percentage via American lines for comparison with any other route or routes for the given season. 40 The percentage carried by the American lines for the "season" then in progress, which ended May 31, 1890, indi- cates, as shown by the table, that the American lines would that " season " carry a larger share of the traffic than at any time since 1875, both in tonnage and percentage. The irre- sistible conclusion is that "the diversion" via the Canada Pacific rente has been almost wholly at the expense of British steamers and sailing vessels, and that the disastrous effect of its competition claimed by the American lines is a pure myth. That this statement is correct, is placed absolutely beyond controversy,* by the following extracts from the testimony in a case tried before the Interstate Commerce Commission in June last. This case is known as the " Import Eate Case," in which I had the honor to appear as counsel for the Canadian Pacific Railroad Co., which was one of twenty-eight respondents. The complainants were the New York Board of Trade and Transportation, tlie Com- mercial Exchange of Philadelphia, and the San Franci'sco Board of Trade. Extract from testimony on pages 193, 194, and 195 : Mr. Raymond — So these figures are probably the net figures. But you say that three-fourths of the teas, anyway, that come to the Pacific coast are Japan teas ? Mr. Stubbs (Vice-president Southern Pacific Railway Co.) — That is my estimate — that about three- fourths of the teas that pass through the Pacific coast are Japan teas. Northern Pacific teas, I believe, are all Japan teas. Mr. Raymond — Do you know, Mr. Stubbs, whether the percentages of the totals received on the Pacific coast car- ried by San Francisco and Tacoma togetlier have, relative to the total receipts on the coast, increased or decreased dur- ing the last three years? Mr. Stubbs — I think they have increased, sir. 41 Mb. Raymond — The Amei'ican lines, then, have increased their tonnage f Mr. Stubbs — 1 think so ; yes, sir. Mb. Raymond — Do you know anything about wliat the percentage of increase has been ? Mr. Stubbs — No, sir ; I have not figured it. The increase is slight. The reason for it is that we have been forced to make low rates, and the tea has been diverted from Suez to these lines. Mr. Raymond — Wiiat has been the course of the per- centage of the total brought via Vancouver during the last three years ? Mr. Stubbs — I do not know. I have not gone into that. Mr. Raymond — Then on what do you base your state- ment that the competition of the Canadian Pacific is taking your traffic away ? Mr. Stubbs — I gave you the figures as to 1 889-90 — one year. Mr. Raymond— But I am asking you about percentages for three or four years previous. Mr. Stubbs— I say I do not know, because I have not figured it out. I did not charge my mind with that. Mr. Raymond— If it is true, Mr. Stubbs, that the per- centages of the total imports of tea on the coast during the last three years have increased via San Francisco and Tacoma, and have decreased at Vancouver, then it is not true, is it, that the Canadian Pacific is diverting your traftic by cut- ting rates all to pieces, or that sort of thing ? Mr. Stubbs-— What might be true— Mr. Raymond— Can't you answer that question 1 Mb. Martin, counsel for the Southern Pacific R. R. Co. — Let him answer in his own way. Mr. Stubbs— What might l)e true as to last year need not be true as to this year, and what I say as to the Canadian Pacific's doings today is true— exactly true. They are doing just exactly what I say. v; 42 CJ Testimony on page 231 : Mr. Pettit, counsel of Pliiladelphia Exchange— In the east-bound business from San Francisco, as I understand you, you got a better rate when you had only the vessel competition to meet. Mr. Stubbs— Because we were content with a less propor- tion of the total traffic. Mr. Pettit— As soon as you wanted a greater proportion of the traffic, then you had to reduce the rate ? Mr. Stubbs— More lines came on, and that necessitated it. We could not keep our nroportion. The Canadian Pacific came on, and it mM ^ - ome traffic. Necessarily that traffic must either cou . i. j... us or from the other competi- tors. It made the rat«3 to get it. That forced the rates down by all the lines, and :! ey ^i> o.^d them low enough to get a good proportion. We have reiu-ued o^ir 2)iWortion at lower rates, and they took what they got, you may say, />'t>m the other coinpetltors. Testimony on page 167 : Mr. Martin — Tiiis Suez route lias heretofore dictated the rate ? Mr. Stubbs — Always/ Yes, sir ^ with the exception of the small quantity that we were enabled to get of the early teas, on which we arbitrarily cliarged, regardless of any competition, 5 cents a pound before tiie Canadian Pacific came in. We were able to get that on one or two cargoes, but after the desire for quick transportation ceased we had to follow them right down to get any share of it. The testimony of Mr. Ileiman, a tea merchant with houses in Yokohama and Hiogo, Japan, is conclusive as to the influence of the Suez route upon traffic. Page 125 : Mr. Martin — How do these rates ordinarily compare with each other, the Suez by steamer, and rail across the continent, and Suez by sailing vessels? 43 Mb. Heiman— The Suez route is generally slightly the cheapest. Tlie cause of that is the sail and rail via Tacoma to the United States and steamer and rail via San Francisco and Vancouver. Page 128 : Mr. Martin — "What would be the effect upon the traffic across the continent by steamer to the Pacific coast and by rail from the Pacific coast, if we should make any material increase in rates ? Mb. Heiman— "We would not ship that way at all. Mb. Mabtin — "Would the traffic be lost to the American ships ? Mb. Heiman— We would give it to Sues. Sometimes it does come that way. Last year the steamships kept rates up, and they lost a great deal of cargo in consequence. It came by Suez. Page 129 : Me. Martin— This rate on tea to the Pacific coast is con- trolled by the rate made by the Suez steamers ? Mr. Heiman— Yes, sir ; certainhj. Mr. Martin— They can carry it cheaper than the others, can they not ? Mr. Heiman— Except for the first boat of the season, then the steamers get a much higher rate. This year they had one cargo at 3^ cents a pound, hut directly the crop comes forwaixl in quantity the Suez rate rides the market. Page 131 : Commissioner "V^eazt— How does it happen that it costs you $1.50 by San Francisco when you could get it at 70 cents via Suez ? Mr. Heiman— There is a saving in time and insurance, and probably they may not keep their rate at 1^ cents ; it may go down in the next week. Mb. Mabtin— This question of rate becomes a question of carriage. When they cannot meet this competition by Sues the railroads then get the trade ? 44 ■>'!: Mk. Heiman — Ye8, sir. The statistics before referred to, also justify the state- ment, that the total tea tonnage of the Canadian Pacific route does not equal the local Gonsuviption of Canada herself. The annual average imports of tea from China and Japan into Canada for the last five years equals about 19,000,000 pounds, of this amount 37.40/100 per cent comes through American seaports and over American railroads. American railroads claim serious damage from the diver- sion to the Canadian Pacific route of the transportation of domestics or cotton goods to China and Japan. The fact is that the American transcontinental lines have never carried any considerable tonnage of domestics or cotton goods for any trans-pacific destination. I would be glad to have the American lines produce any figures which will disprove my assertion. Before the Canadian Pacific route was opened, the small export trade in American cottons was done by rail from the mills to Fall River, Mass., thence by water to New York, and thence to China and Japan by British vessels, via the Suez canal. A suggestive and instructive prophecy, which is being rapidly fulfilled, was made by Hon. George F. Page, of Concord, N. H., \\\ his argument on behalf of the business interests of New Hamp- shire before the railroad committee of the New Hampshire Legislature, July 28, 1887, in favor of the passage of House Bill No. 28. Mr. Page says : "On behalf of a largo number of business men, and especially the manufacturers in Merrimac Valley, I desire to submit a few suggestions for your consideration. I am not here in the interest of any railroad corporation or of the agent of any railroad corporation. What I say to-night will be said as my own voluntary action. * * * "Before the civil war, New England had a large trade in cotton cloth with China. The war destroyed that trade, as it did nearly all our export business. England, I, '" W 45 with her commercial enterprise, seized the trade, and has practically monopolized it since. Prior to the war, there was an open competition in the Chinese markets between old England and New England, cotton cloth being shipped by both peoples aronnd the Cape of Good Hope ; bnt it was necessary to put it into tin cases or otherwise sealed packages to protect the cloth from atmospheric changes, for without this precaution through the long voyage throngh the southern seas it would mildew, and therefore would not arrive in a merchantable condition. You will remember that before we could recover our export trade after the war, England secured control of the Suez Canal, and she has ever since held this cotton trade with China almost exclusively by virtue of that fact, for in shipping through the Suez Canal by steamer, the English manufacturers are not obliged to pack their goods in tin cases, but they put a kind of var- nish or dressing as a coating over their packages, which, while it does not entirely exclude the air, does it to a suffi- cient extent to protect the goods on a short voyage through a moist climate. These conditions have put an embargo upon the shipment of cotton cloth in any considerable amount from the United States to those markets, while the amount of cloth shipped by English manufacturers to Cliina yearly has already reached 400,000,000 yards and to Java 100,000,000 yards. That trade belongs to New England, and may he recovered, at least in part^ if not entirely, hy New Enoland. '" With the completion of the Canadian Pacific Railway and the putting on of a regular line of steamers from Van- couver to Shanghai and Hong Kong, the way is open to this consummation, provided we can make proper connec- tions with that road. By this route, cotton goods can be shipped from New England even without the expense of the dressing which the English manufacturers apply to their packages shipped through the Suez Canal. Instead of that, 46 we can ship the cloth in ordinary bales or boxes, because, the voyage being a short one and wholly in a northern lati- tude, the condition of the goods upon arrival will be the same as when they left the factory. " The time required for the shipping of the goods from the New England mills to Shanghai is about thirty days ; the time from England, via the Suez Canal, is about fifty- three days. Some one may say that England may ship her cloth across the Atlantic and thence over the Canadian route to Shanghai ; but suppose she does. The raw cotton must be taken across the Atlantic and the finished goods returned, and both the expense and time are against the English manufacturer. So it is that, while New England has not been able in the past successfully to compete with old Eng- land, with this proposed transportation system completed, old England cannot successfully compete with New England. "This, gentlemen, is no picture of the imagination, for while we discuss this question here, a train of twenty cars is on its wav with fifteen hundred bales of cotton cloth for Japan and China. That train passed up through the Merri- mac Valley, thence over the Canadian Pacific Railway to Vancouver, from which points these goods will be taken by steamer to Yokohama and Shanghai. To-night a vast com- merce has its birth, for China, as if impatient of delay and unwilling to await the slow process of legislation, but antici- pating what that legislation is to be, reaches out her hand and bids New England ' welcome.'" A year ago while I was in the office of the Canadian Pacific Steamship Company, in New York, an agent of one of the New England mills called for the purpose of obtain- ing a rate on 1,000 cases of twills to Bombay. This simple fact speaks volumes, indicating as it does that by means of this foreign railway corporation, America may yet market her domestic manufactures among the teeming millions of Britain's own India. In view of these facts, how can your 47 honorable committee heed the complaints of American trans-continental lines which have never been willing to make any rates by which New England could be aided in securing this business ? As to the item of raw silk. It is true that the Canadian Pacific Railway, by means of special silk express trains and groat energy, has diverted from American lines a portion of the traffic which was wholly their own. The extent of the diversion is shown by the foilowing table: Impoits of Raw Silk. May 1, 1888, to March 37, 1889. American lines. Via Pacific Mail '^^eamship Company 8,521 bales. " Occidental and Oriental Steamship Com- pany '^'^^* " Canadian Pacific Steamship Company... 3,353 " Total 19,728 bales. Proportion of Canadian Pacific, 17 per cent. Third Reason— Local Takiffs. In order to intelligently consider this reason I have caused to be compiled from the books of the Grand Trunk Railway Company and from the books of the Canadian Pacific Railway Company the local tariffs in force m 1889 on certain staple articles of freight for distances from five miles to four hundred miles inclusive. The comparison is made with the rates in force at the same time upon twenty Ameri- can railroads for the same articles of freight for the same distances. The articles of freight are as follows : Flour and wheat Iron Sugar. _ r 48 Boots and ehocs. Agncultiirnl implements. Suit. Lumber. Hardware (N. 0. S.*) It will be noted that on the article of salt the comparison is made with seventeen, but on all other articles with twenty railroads. The names of the American railroads are : Northern Pacific. Southern Pacific. Pennsylvania. Illinois Central. Chicaoro, Milwaukee & St Paul. Boston & Lowell. Chicago & Northwestern. Chicago, St. Paul, Minneapolis & Omaha. Chicago tS' Alton. Chicago, S'l. Paul & Kansas City. Chicago, Kansas & Nebraska. Chicago, Burlington & Quincy. Deleware, Lackawanna & Western. Hannibal & St. Joe. Minneapolis, St Paul & Sault St. Marie. New York & New England. Passu mpsic. Toledo, Ann Arbor & North Michigan. Wabash. Cincinnati, Jackson & Mackinaw. I subjoin a table showing the comparison iti extenao of the Canadian lines with the first four American lines men- tioned, selecting the two highest and two lowest. The tariffs of the remaining sixteen lines I have filed with the Com- (*Not otherwise specifled.) 40 mitieo on Intoratate Cominorco for tho voriflcation of my lumiysisand oonolusion. Tlio Canadian linos sliow two local tariffs, mileage and special, tho former being used in small station to station business where volumo of tratHc is email and non-competitive, the special being ap'plicable to all sta- tions of any considerable size or importance. A careful comparison of the Grand Trnnk tariffs with those of the Canadian Pacific shows very little difference, the latter being slightly the lowest, so that the conclusions favorable to the Grand Trunk are even more so to itsCana- dian rival. TuovH AND Wheat— In Car- Loads lo OenU per 100 Lbi. 0. T. R. C. F '. R. N. Pac. S. Pac Pa.RR. Local. ni. Cen. 1 MUease. ., Special. Mileage. Special. Local. Local. Local. n 3 4 3 3 4 5 ^H 10 4 4 4 4 6 4 3 lA 5 4 S iH 10 6 5 M 6 4 tt 5 14 7 5 85 7 6 7 5^ 17 7 5U ftO 8 5 8 6 31 8 5v2 8 6 8 B 6^ 34 8 5|l 6 g 6 7 39 9 6 Jjj 6 6 7M 88 9 6 10 6 10 8 30 9 ¥ rn ISS 7 12 7 10 54 11 100 14 7 14 7 18 78 18 8 16 7 15 8 13 90 15 894 iS' 16 18 10 10 16 18 10 10 iJSJ 100 110 10 17 1^ 13^ 901 ' 19 11 19 13 17 110 18 8Bl 1 30 13 30 15 1»M 110 19 g; 33 14M 33 15 32 110 31 l^^i 24 16^ 3i \^ 34 110 33 ]*3 400 85 i 85 86 110 34 16k I 50 Iron— In Car-Loads in Cents per 100 Lb s. ' i Q.I .R. C. P. R. N. Pac. S. Pac. Pa.R.R. 111. Oen. Mileage. Special. Mileage. Special. Local. Local. Local. Local. 5 10 in 4 6 6 4 5 6 5 7 9 4 6 10 4 5 6 6 5^ 6 sa 90 7 7 6 10 14 6 m| ar» 8 8 7 11 17 1 6 80 9 9 8 13 21 7 6 85 10 10 8 14 24 7 6W 4n 11 11 8 15 29 7 6M 4A 12 12 8 16 3> 7J^ 6% nn 12 12 8 17 36 i}Z 7 75 15 15 8 22 54 10 794 inn 18 15 18 8 27 72 12 8)^ isn 10 18 19 8 30 90 13 9>i I.V) 30 18 20 9 82 109 14 IIM 12^ 175 2:2 18 Hi 9 35 110 15 300 S3 20 23 11 37 110 16^ 14^ 250 26 23 2« 11 42 110 18 17 800 30 25 30 11 47 110 20 20 850 38 27 33 15 .52 liO 21 22^ 400 35 30 35 15 57 110 22« 25 SCOAR- -In Car-Loads in Cents per 100 Lbs. i G. T. R. c. r . R. N. Pac. S. Pac. PaR.R 111. Gen. s Mileage. Special. Mileage. 4 5 6 Special. Local. Local. Local. Local. 5 4 5 5 i 9 4 6 10 5 6 e 4 10 6ki 15 6 6 SH 2U 7 6 1 6 10 14 i ^4 25 8 7 8 7 11 17 7 6 30 9 8 9 8 13 21 8 S/4 ^ 10 8 10 8 14 24 8 6m 40 11 8 11 8 15 29 9 mi 45 12 8 12 8 16 82 9 6^ 50 12 8 12 8 17 36 9 7 75 15 8 15 8 22 54 11 7 100 18 8 18 8 27 72 13 8 125 19 8 19 8 29 90 15 m 150 20 9 20 9 32 110 16 11 175 21 9 22 9 34 110 17 12^ 200 23 11 23 1! 87 110 18 14 250 26 11 26 11 42 110 19 17 8UU ao 11 80 11 47 110 21 20 mi 33 12 33 15 52 110 23 22 400 35 15 35 15 57 110 24 25 51 Boots and SRosa— Iq Less than Car-Loads ia Cents per 100 Lbs. 1 G.T 1 .R. ! C. F . R. N. Pac. S. Pac. Pa.R.R. III. Cen. 1 i MileaRe. Special. MileaKe. 8 . 10 12 Special. Local. I Local. Local. Local. 6 10 1ft 8 10 12 10 14 17 4 7 11 S 9 14 12 ■" 14 12 15 qa 14 12 14 12 20 15 10 16 95 16 14 16 14 22 18 13 17 RO 18 15 18 15 25 22 14 17 36 20 16 20 16 27 25 14 18 40 22 16 22 16 30 30 16 18 45 24 •16 24 16 32 35 18 19 50 24 18 24 lb 34 37 20 20 75 80 20 80 20 44 55 26 22 100 36 2i 36 22 54 75 29 24 195 38 22 38 22 60 93 32 28 150 40 22 40 22 64 112 34 32 175 44 22 44 22 70 130 38 36 900 46 24 46 21 74 150 42 40 -960 52 28 52 28 84 168 48 48 BOO 60 28 60 28 01 187 51 56 850 66 30 66 30 104 200 58 58 400 TO 40 70 1 31 114 200 61 61 AoRicuLTOBAL IMPLEMENTS— Iq Car-Loads in Cents per 100 Lbs. G. T. R. C. P. R. III. N. Pac. S. Pac.; Pa.R.R. cen. a Mileage. | Special. Mileage. 6 10 15 4 5 4 5 6 6 90 6 6 95 7 6 7 80 8 7 8 :35 9 7 9 40 10 7 10 45 11 7 11 50 11 7. 11 75 14 9 14 •100 16 10 16 125 17 10 17 150 18 10 18 175 20 10 2? 200 21 11 21 «>0 24 18 24 300 30 18 i 30 JiMf 81 14 81 400 38 18 33 1 Special. Local. Local. | Local. Local. 9 10 12 13 13 13 13 13 14 18 4 6 7 8 9 10 11 \2 14 18 22 24 26 27 30 34 38 42 46 4 6 10 14 17 21 21 aw 32 7« 86 7H 51 10 i 72 12 ' 90 13 109 14 110 15 110 16^ no 18 no 20 11 > 21 v.o 22« 52 Salt— In Car- Loads In Cents per 100 Lbs. •i I G. T. R. C. P. R. N. Pac. S. Pac. Pa.R.R. 111. Cen. 1 i Mileage. Special. Mileagre. Special. Local i Local. Local. Local. 6 10 3 3 3 ayi 4 ii| 4 4 4 6** 5 IS 4 5 5 4 5 5 4 6 5 Q 3Vd SO 3M 96 f* 80 6 6 6 6 5 5 5 6 10 6 6 85 4 40 7 7 7 7 7 7 6 6 7 8 11 6 7 g 4A no IsSt 7 75 10 8 10 7 11 18^ 9 5 100 11 9 11 8^ 13 25 lOJiJ 6p 186 13 10 13 15 30 11 160 14 10 14 10 16 35 12 175 15 10 15 IC 18 40 13 7i2 SOO 16 11 16 11 19 45 !SS 7^ S50 18 12 18 12 2t 50 11^ 800 80 13 20 12« 83 55 Uii 850 22 14 22 14 22 60 17 400 24 15 24 15 27 65 18« Lumber— In Car-Loads in Cents per 100 Lba. G. T. R. 5 3 10 4 IS 4 80 5 85 5 80 6 86 6 40 7 45 7 50 7 75 10 100 11 18S 13 180 14 m 15 800 16 860 18 800 20 850 82 400 ■ 24 C. p. R. g I Mileage. | Special. Mileage. 3 3 m 4 4 4 4 6 5 5 5 6 ss 6 4 6 7 G 7 8 10 9 11 9\i 13 10 14 10 15 11 16 12^ 18 14 20 15« 22 17 24 Special. 3^ 4 4 5 5 6 6 8 9 1^ 10 11 \f N. Pac.; 8. Pac. Pa.R.R. Local. Local. Local. 3 3^ 4 6 6^' 7- 9Ji 1^^ 14 15! 16] 19 21 « 34 26^ 3 4 5 8| 8' 8Ji 9 11 15 18! 82: 26 30 35 40 46 £0 4 6 5 6 6 6 6 6 7 7 9 10^ 12 13 \^ ,.« 18« 111. Cen. Local. I' !'^ 1 1 53 Hardware (N. O. 8.)— Less than Car-Loads In Cents per 100 Lbs. C. P. R. N. Pac. 8. Pac. Pa,R.R.| c^ 0. T. R. a 6 10 15 30 25 30 35 40 45 50 76 100 126 150 176 aoo 260 300 850 400 Mileage. Special. I Mileage. Special, i Local. \ Local. Local. Local. 8 11 12 14 16 18 19 21 21 26 32 33 35 39 40 46 63 68 61 11 11 12 13 14 14 14 14 18 18 19 19 19 21 25 25 26 35 7 8 11 12 14 16 18 10 21 21 26 32 33 35 89 40 46 53 58 61 11 11 12 13 14 14 14 14 18 18 23 25 25 25 25 25 26 35 12 14 17 19 21 23 26 2!' 29 37 46 51 54 60 63 71 80 88 07 4 7 11 16 18 22 25 30 6 6 9 10 11 12 13 09 37 16 ' 55 20 75 28 i 93 26 ! 112 29 130 32 ■. 150 36 168 41 170 46 170 50 170 58 12 13^ 14 14^ 15 15V6 16 16^ 17 18% 22^1 25a 279| 30^ 35 40 42^ 45 I have compared each of the Grand Trunk local tarififs with the tariff of each American railroad, making 314 com- parisons, in 133 of which the average of both the Canadian mileage and special tariffs are higher and in 181 compari- sons lower than their American competitors, as per the fol- lowing table : Analysis of comparisons of Grand Trunk Local Tariffs. Mileage and Special, with ThoM of Twenty American Railroads (Except on the Item of Salt, when the Com- parison is with Seventeen). Flour and ( Q. T. mileage higher than 15, lower than 5, total of ag wheat. 1 '' special " 6, ^_ i*. .. •■;;;:::;. 20 t *' mileage J'J. ,, /,' .. 20 t " mileage 14. ir •• 20 sugar.... ] » gpecial - 4. ;; 6, .. ■•..;;::::•.: 55 Boots and] " mileage 10, „ }"- „ ^ shoes. 1 " special 1. ^^' • Agricultu-| .. n,„eage " 9, *;. 11, .. ^ ral im-V .. gpedal " 1, ^^< ^" plements) ""^ ,, .„ „ 7 >• 17 ^" I " special 6. .. li' .. 20 u i " mileage 1^, '' .. 20 Lumber.. -J .. special ;; 9. [[ J' .. •••••.:;::::: 20 „ J ( " mileage 10. „ on " " 20 Hardware] .. gpgci^i " j), 20, _^ Average " ^si " m " 314 Or, in other words, the average of both mileage and spe- cial Grand Trunk tariffs is Idlper cent less than American local tariffs. I: 54 A fairer comparison would be between the Grand Trunk special and American local tariffs, in which the result would be as follows : Grand Trunk higher than 39, lower than 118, total of 157 ; or in other words, the Grand Trunk special tariff is 34: pe?' cent less than American local tariffs. The relative cheapness of Grand Trunk local rates is not the result of a new policy, but has prevailed for many years,^ as proven by the following table, which shows a comparison in 1875 of the local rates of the then five great trunk lines of railway. The data for this table were furnished by J. L. Ringwalt, Esq., editor of "The Railway World," published at Philadelphia, Pa., and are found on page 254 of his book,, entitled "Development of Transportation Systems in the United States : " ■fl 55 Miles from fclven point to station nearest the distance taken. Kind of Freight. 1st Class. For 50 miles : Erie 50.. New York Central 55. Pennsylvania 50.. Grand Trunk 55.. Baltimore & Ohio 50.. For 75 miles : Erie ; 75.. New York Central <4. . Pennsylvania Xt ' " Grand Trunk 75.. Baltimore & Ohio 75.. For 100 miles : Erie lOO • New York Central 101 . . Pennsylvania ijJO. • Grand Trunk J^-- Baltimore & Ohio 100. . For 150 miles : Erie 153.. New York Central 156. . Pennsylvania 150. . Grand Trunk 150 • Baltimore & Ohio 158. • For 200 miles : Erie 200.. New York Central 199.. Pennsylvania *00. . Grand Truuk 203.. Baltimore & Ohio 201. . For 250 miles : Erie 248., New York Central 263., Pennsylvania 260. Grand Trunk 250. Baltimore & Ohio 253. For 303 miles : Erie 300. New York Central 30). Pennsylvania 300. Grand Trunk 300. Baltimore & Ohio aOO. For 350 miles : j{g 351 . New York i'entral 3*9 Pennsylvania ^^■ Grand Trunk ^9"- Baltimore & Ohio 350. 22 24 19 28 20 2d Class. 17 21 16 23 20 3d Class. 12 IB 14 19 19 4th Class. 9 9 11 14 16 27 21 15 11 26 23 19 13 25 21 18 15 30 25 20 15 30 30 25 23 34 26 19 14 33 28 25 15 30 25 20 15 36 30 24 18 40 40 34 30 45 34 24 19 48 42 36 22 44 37 33 26 44 37 29 22 61 50 42 36 5)5 42 30 23 61 50 40 24 66 56 46 36 64 45 36 27 72 59 52 40 67 50 36 28 65 53 49 28 71 56 46 £6 W , 50 40 JO 95 73 60 40 78 59 43 33 70 55 51 31 71 56 46 36 60 50 40 30 95 80 60 40 i 86 66 47 38 76 71 60 56 50 46 34 36 70 58 47 35 95 80 60 40 1 The following analysis of the above table is based on fourth-class freight alone as a saving of time and space. A comparison of the other three classes of freight would give equally or even more favorable results. . It will be noted that the name of the Baltimore & Ohio Eailroad, like that 5G of Abon Ben Adetn, " leads all the rest " in higli rates in 1875, as that of the Southern Pacific Railroad does in 1890 : Comparisons of Local Bates on Fourth-Class Freight of the Grand Trunk Railway Company in 1875 with those of Four American Trunic Lines. Distances. 50 miles. 75 100 160 200 250 300 850 Qrand Trunk higher than 1, same or lower than 3. or total of Qrand result • 12, 8. 1. 3, 2. 2, 4. _3, 20, 4 4 4 4 4 4 4 4 32 Or in other wordd tlie Grand Trunk locil tariff in 1875 was ttoenty per cent, less than its trunk line competitors. I have filed with the Senate Committee on Inter-State Commerce local freight tariff No. 99 of the Canadian Pacific Railway, put into effect February 1, 1888, and covering all local traffic between Winnipeg and Vancouver. This ter- titory is absolutely free from all competition by either rail or water, and the traffic is wholly dependent upon the Can- adian Pacific Railway; yet for tliat long distance of 1,483 miles the rates are as carefully adjusted to the long-and- short-haul clause of our interstate law as by any American road. I select a few examples from this tariff : Classes of Freight. 123456789 10 Winnipeg to Aikins, 505 miles 151 127 102 77 70 57 39 30 57 33 Winnipeg to Golden, 1,007 miles 345 294 161 124 114 97 68 58 95)^50 ^ 'innipeg to Vancouver, M83 miles 337 281 225 169 156 140 102 83 136 83 Tlie faciiedule shows 111 stations between Winnipeg and Aikins, but not one of them pays a higher rate than as shown above. There are 168 stations between Winnipeg and Golden, 219 stations between Winnipeg and Vancouver, but no intermediate station pays more than the long-haul rate. Many of these stations are, of course, only flag sta- tions, but tlie principle of the long-and-short-h;iul clause of our law is rigidly applied, while on, the American transconti- nental lines this pi'inciple is not applied. I select a single example from the transcontinental tariff: 57 Coal oil from Pittsburgh or Buffalo to Pacific coast terminals only .... $1 05 „^,. .^^ ,, Coal oil from Pittsburgh or Buffalo to in ' ''' '''' termediate points east of 97th me- • ''^'''' $1.95 " .« » These rates can be found on pages 37 and 10, respectively, o the west bound transcontinental tariff now in force. Tins tariff also discloses that substantially the lowest rate on any American traffic from Minneapolis to Pacific coast IS 99 cents per 100 lbs., while the lowest class rate for simi- lar Canadian traffic for practically the same distance, as per Tariff No. 99, is only 83 cents per 100 lbs. As confirmatory of the relatively lower gross earnings of the Canadian railways, 1 submit the following table, com- piled from the Second Annual Report on the Statistics of Railways in the United States to the Interstate Commerce Commission for the year ending June 30, 1889, from page Total Traffic Earnings per Train Mile in Dollars and Fractions of a Dollar. Canadian Pacific ^^ 2^2 New York Central & Hudson Biver Railroad . 1593 Korthern Pacific ; ^^qq Pennsylvania Railroad . '. .......*.." i 707 Southern Pacific l'gj3 !^"^*^» p««ifi« '."■■.■.■.■.■..■■.■.;.■.;;;; 2:050 Chicago & Grand Trunk j 153 Michigan Central 1.352 Lake Shore & Michigan Southern 1.632 58 (( u a n a a (i Fourth Reason.— Lower Cost of Operation of Canadian Railroads, The following table compiled from the Second Annual Report on the Statistics of Railways in the United States, etc., referred to above, pages 354 to 384, proves this " reason " to be without foundation. Percentage of Operating Expenses to Operating Income. Canadian PaciHc 65.52 per cent. New York Central & Hudson River Rail- road 64.50 Pennsylvania Railroad 68.11 Northern Pacific 60.37 Southern Pacific 67.44 Union Pacific 56.51 Chicago & Grand Trunk 73.27 Michigan Central 70.54 Lake Shore & Michigan Southern 63.02 Also the following table, compiled from the same source, pages 398 to 448 : Cost to the Following Railways of CarrviuK One Passenger One Mile and of Moving One Ton of Freight One Mile. CSanadiau Pacific Passenger, New Yorlt Central & Hudson River Railroad Pennsylvania Railroad " Northern Pacific " Southern Pacific (Pacific system) " Union Pacific " Chicago & Grand Trunk " Michigan Central " Lake Shore & Michigan Southern " The net earnings of the Canadian Pacific may, however, be relatively greater than its leading competitors, owing to its lower capitalization and fixed charges, as shown by the following tables. Both its American and Canadian patrons are surely entitled to the benefit of its honest and economi- cal construction. These tables are compiled from the same annual report of railway statistics previously cited, pages 212 to 265 and pages 398 to 448 : 1.49 cents ; ( reight .639 cents 1.28 " .549 " 1.56 'i .486 " 1.61 " .910 " 1.64 " .829 " t.83 " .618 " 1.41 " .41 " 1.92 " .49 " 1.70 " .43 " 59 Amount of railway capital per mile of line operated at the close ( f the year ending June 80, 1889. Canadian Pacific 36,002 dollars Northern Pacific 81,986 " Southern Pacific 48,550 " Union Pacific 109,478 " Percentage of total expenditures covered by fixed charges of the Transcontinental lines. Canadian Pacific 28.90 per cent Northern Pacific 39.14 " Union Pacific 35.86 " Soiitliern Pacific 34.91 " Food for thought concerning the capitalization of Ameri- can transcontinental lines is found in the following remarks of Mr. C. P. Huntington before the house committee on Pacific railroads, before referred to : " I don't like to talk about it ; but, if obliged to, the Cen- tral Pacific could build a line connecting with the Union Pacific and replace the subsidised section at one-quarter the cost of that section, and without Government aid^ Fifth Reason — Differential Rates Granted Canadian Railroads. This reason has absolutely no force, from the fact that differential rates are now and always have been freely granted to numerous American railroads by the standard lines, like the V^anderbilt and Pennsylvania systems. It is merely a device for equalizing the disadvantages of greater length of line between same points, poorer equipment, less convenient terminal facilities, lack of dining car or restau- rant privileges, etc. If all hotels had strictly first-class appointments, prices would be uniform ; but, as many of them are of a lower class, they attract patronage by lower prices. GO Railroads follow precisely the same course, whether they are American or Canadian, with the exception that the lower prices are fixed by the consent and agreement of the first-class lines. Present standard rates from New Class. York to Chicago. Ist 9d 3d 4th 6th 6th Freight traffic 75 65 60 36 80 26c. per 100 lbs. DifTerentials allowed the National Dispatch 10 8 4 4 3 " Kanawha Line 15 12 9 6 4 New Yorlt, Ontario & Western.. 8 B 4 3 2}^ 2 " The West Shore. Erie, Delaware, Lackawanna & Western, and Lehigh Valley 5 4 3 8 1 1 Present standard rates from Chicago to New York. 1st class. iid class. Passenger traffic 20 dollars. 17 dollars per ticket. Differential allowed Wabash, Chicago & Grand Trunk, Chicago & Atlantic, Nickel-Plate, and Baltimore & Ohio. 2 dollars. 1 dollar per ticket. The above differential is allowed only when route is made in connection with the Erie, We.st Shore, Lackawanna, Ontario & Western, and Lehigh Valley. All of these are American railroads. Between Boston and Chicago, the Boston & Albany railroad rates are the standard ones, and differentials are allowied other lines both on freight and passenger traffic. The following item in the New York Herald of Februarv 2, 1890, explains itself : "The dispute over through rates between the Boston & Albany and Fitchburg roads has been settled by arbitra- tion. The Fitchburgh road has been awarded a differential of two dollars on each first-class passenger by the West Shore route, and three dollars by the Erie route." The distance from Vancouver to San Francisco is 800 miles, and the only means of communication for the Cana- dian Pacific Railway is one steamer per week. This is a disadvantage in point of time of four or five days, whicii, by consent and agreement of all the transcon- tinental lines, is equalized to the Canadian Pacific route as follows, as per transcontinental tariff, October 1, 1889 : "The rates to San Franoiscy only from points named 61 below via tlie Canadian Pacific railway will bo the follow- ing differentials in cents per 100 lbs. less than the through rates shown above : " Olasaea of Freight. From- 1 28 45 ABODE St. Paul and MInneapolia 15 13 10 10 lo 8 8 7 5 & Cbica^ro, Milwaukee, and common polnta 17^6 14Ji 18 10 10 8 8 7 5 5 Cincinnati, Detroit, and common points 31 17 14 11 11 9 9 7 5 5 Pittsburgh, Buffalo, and common points 28 18 15 18 18 10^ lOW 8 7 5 New Yorif, Boston, Philadelphia, ^ Baltimore, and common points.... 88 81 17 14 14 18 18 8 8 5 The differential on passenger traffic is, I think, five dol- lars per ticket. It will be noted that the differentials above given apply to San Francisco only, the rates to all other Pacific coast points being precisely the same via Canadian Pacific as via other routes. The Canadian Pacific Railway did not make a rate on American business south of the international boundary until after it was discovered that contracts were being made and rates quoted for British Columbia traffic via Puget's Sound by its American rivals. This naturally and instantly provoked retaliation and forced the Canadian Pacific to attack its competitors by seeking American traffic at Puget's Sound and San Francisco. The original purpose and policy of the Canadian Pacific is clearly shown by the following letter : Canadian Pacific Railway Company, Montreal, Sth December, 1885. T. F. Oakes, Esq , Vice-President Northern Pacijw Railroad, St. Paul, Minn.: " Deak Sir— Our line will be open for through traffic between Eastern points and the Pacific coast in May next. " We wish as soon as possible to consider the question of through freight and passenger tariffs. We desire to make the least possible disturbance in existing through rates and to co-operate with the existing lines in the preservation of 02 paying tariffs. To this end I will loglad if you will liave sent m the fullest possible information as to your present rates, both regular and special, including rates on fish, fruit, etc., carried on express trains or under special conditions as to time, etc. So far as possible, we wish to adopt your existing rates, and should there bo any cases in which cir- cumstances will prevent our doing this we will communicate with you on the subject before taking any action. Yours truly, " (Signed) ^V^ C. Van Horn, Vice-PreHiilent, iri Sixth Reason — Destruction of Revenues of American Lines. If the Canadian railways are diverting a large vohune of traffic from their American rivals U!ider the operation of the Interstate Commerce Act as is persistently claimed, the truth of the statement can certainly be proven by the course of their respective earnings since April, 1887, when that act took effect. I suhjoin a table taken from the New York Financial Review for 1891, showing the gross earnings for the last four years inclusive, of the more prominent com- petitive American lines : Northern Pacific Co. Gross Earnings for 1887....tl3.8U3'20 " 1888 ... 18,0CO,104 " " " 1889 ... 21,741,891 " " " 1890.... 84,40J,091 Union Paciflc Co. Gross Earnings for 1887.... $28 .557, 766 '• 1888 ... 30,19-),5-.Jl " " " 1889.... 31,a?0,l82 " " " 1890*... 41.871,813 N. Y. Central & H. R. R. R. Co. Gross Earnings for 1887.... $36,206,034 " 1888.... 35,:ii83,68: •' 1889.... 86,066,698 " 1890.... 36 258,641 Southern Paciflc Co. Gross Earnings for 1887... 838, 773,146 " " " 1888 ... 46.699,614 " " *' 1889.... 46,843,208 " " " I860.... 48,243,300 Pennsylvania (Lines East of Pittsburg.) Gross Earnings for 1887....$'*,671,3I3 " 1888.... 68,172,07 " " " 1889.... 61,511 n " " " 1890... 60,3 Canadian Pacific C*" Gross Earnings for 1887 ...$ll,60o,,..i " " 1888.... 18,193,536 " " " 1889.... 16,030,660 " " "1890... 16,610,088 ^Increased mileage accounts for a part of the large Earnings of 1890. This table shows that with one exception the earnings of the lines mentioned, and especially of the immediate rivals OB of the Ciinadian Pacific Co., have boon and are steadily and rapidly increasing. I bog leave to snbinit the following confirmatory article from The Railway Age, the leading railroad journal of this country under date of January 25, 1890, showing the effect upon the Northern Pacific Railway : " The Northern Pacific Company at the commencement of the present year had about 3,725 miles of completed track owned and operated, and the addition of the Wis- consin Central lines make up the grand total of a little over 4,450 miles, forming a vast and far-reaching system, now extending from Lake Michigan to the Pacific Ocean, with main line and branches lying in the States of Illinois, Wis- consin, Minnesota, Dakota, Washington, and Oregon, and the Territories of Montana and Idaho. The Northern Pacific has, moreover, pushed northward into Manitoba, •where, under the title of the Northern Pacific & Manitoba Railroad, it already has nearly 200 miles of lines in opera- tion, with important extensions under way and contem- plated. The company will also naturally continue the work of opening up new terrttory along its main lines by other extensions, so that it is evidently the question of but a short time when the mileage of the Northern Pacific system will have passed the 5,000-mile point, with possibilities of almost indefinite growth. Looking back only ten years, when the road consisted of only 530 miles of bankrupt line, ending at the Missouri River, and contrasting with that the vast mileage and prosperous condition of the company to-day, we have an impressive example of the changed con- ditions of this company and of many other railway proper- ties which have arisen within comparatively so short a time. The Northern Pacific Company has fought its way from the depths of depression to a commanding position among the great railway systems of the land, and the remarkable increase in its earnings during the last year, when they 64 reached the grand total of 31,763,000 dollara, gives its owners reason to hope for still better things." The most bitter and determined rivals of the Grand Trunk Co. are the Lake Shore & Michigan Southern Co. and the Michigan Central Co. These two companies have, in their imagination, been almost bankrupted by the com- petition of the Grand Trunk Co. Poor's Manual for 1890, however, tells quite a different story. It shows that while the average annual gross earnings of the Lake Shore & Michigan Southern Co. from 1883 to 1889 inclusive, were $17,082,571; for 1890 they reached the sum of $20,874,200. That the average annual gross earnings of the Michigan Central Co, for the same period were $12,931,429, while for 1890 they reached $14,340,000. These figures do not seem to require any comment. It lias been testified before this committee that the Can- adian Pacific Company is "the alter ego of the Dominion," " the Canadian governmenton wheels," " that it is dependent upon American traffic, without which it could not be suc- cessfully operated," and one very prominent witness, Mr. Henry V. Poor, declares " that its end, like that of the Intercolonial Railroad (which is owned and operated by the government), will be to become a burden on the Dominion treasury and create an annual deficit." The truth is that every one of its obligations to the Dominion Government has either been paid or absolutely provided for, so that the government is no more financially interested in the Can- adian Pacific system to- day than is the government of the United States in the Pennsylvania system. The Canadian Pacific Eailway is as purely a commercial enterprise as is the Pennsylvania, Railway, and a marvelously successful one, as shown by the balance sheet for the year ending December 31st, 1889: 05 The gross earnings for the year were $15,030,660 38 The working expenses were 9,024,601 04 The net earnings were $6,006,059 34 Deduct the fixed charges accruing during the year 3,779,132 94 The surphis was $2,226,926 40 Dividend of one per cent, paid February 17th, 1890 650,000 00 Leaving a surplus carried forward. . . $1,576,926 40 Surpkis of previous year 326,423 92 Total surplus carried forward $1,903,350 32 Of the above gross earnings of $15,030,660.38, American interstate traffic furnished $999,732.23, or 6.65 per cent, of the whole. Deduct operating expenses, say 66 per cent., and tiie net earnings dependent tipon American Interstate traffic will be seen to cut a ridiculously small figure in the company's revenue. The significance of these igures is greatly enhanced when we remember that the ro;id was not completed to the Pacific coast until 1886, and the short line across the State of Maine was not completed until the mid-summer of 1889. Another remarkable fact in view of this balance sheet is shown by the statistics of railways for 1889, recently issued by the Inter-State Commerce Commission. On page 21 of this volume is a table showing revenue and density of traffic for all roads whose aimual gross revenue exceeds $3,000,000, in which it appears that the Canadian Pacific Railway, with two exceprions, earns the loioest gross revenue 2)er' mile of line of any of the seventy-eight roads with lohieh it is com- pared. Tiie comparison, with the exceptions, is as follows : Canadian Pacific, $2,769 ; Missouri, Kansas & Texas, $2,704 ; Chicago, Kansas & Nebraska, $1,926. How can the Canadian Pacific pay dividends and accumu- 06 late a surplus from such a small revenue ? Its operating expenses in proportion to operating income is even greater than those of the leading rivals, as shown by the same vol- ume of statistics, as follows : Canadian Pacific, 65.52 per cent.; Northern Pacific, 60.37 per cent; Union Pacific, 56.51 per cent. How, then, can the Canadian Pacific pay divi- dends and accumulate a surplus on such a small revenue ? Because it was honestly built and is economically managed. Its stock has not been watered ; no construction companies are gnawing its vitals, and the profits on every collateral enterprise connected with it, such as express, telegraph, ele- vators, hotels, restaurants, sleeping, dining and parlor cars, all go into the treasury of the company for the henejit of it^ shareholders. It presents in these respects a great object lesson to American railway managers. The existence of the Canadian Pacific Railroad is asserted to be a military menace to the United States. On the con- trary, it seems to me a military weakness so far as offensive operations against this country are concerned. A line of comnmnication stretching along our border fifteen hundred miles, from Winnipeg to Vancouver, and largely over open prairies, could scarcely be defended by all the forces of the British Empire. Gen. Miles has testified before this com- mittee that the United States Government would be able to take possession of this line within ten days from the outbreak of hostilities. Seventh Reason. — Protection To American Industry. This reason was most plausibly stated to this Committee by Mr. A. N. Towne, vice-pres. of the Southern Pacific Raih'oad, who insists that the national policy is now settled, and should apply to railroads as well as to other forms of industry. I will not discuss the logical strength of the position, but I strongly suspect that such an application of the doctrine would detuch so many Republican voters in the 67 northeast, west and northwest as to endanger the further existence of the policy. The utter inconsistency of Mr. Towne's practice with his theory cannot be better iUustrated tlian to sliow the measure of protection given the American merchant and manufacturer by tiie Southern Pacific Railroad Co., as per the following table, which is taken from the findings in the opinion of the Interstate Commerce Commission recently rendered in the case of the New York Board of Trade and Transportation et at. vs. I'he Pennsylvania R. R. Co. et al. or the Import Rate case as before referred to. I subjoin also a portion of the opinion which holds that such rates are a direct violation of the law. " The following table, compiled from data in the office of the Interstate Commerce Commission in regard to the tariff rates in evidence, shows through rates and divisions of throngh rates for the ocean and inland carriage on freights destined to the Pacific coast and imported from Liverpool through the Port of New Orleans ; and also freight rates on domestic trafiic : G8 Freight Rates la Cents per Hundred Pounds, to San Francisco, Sacramento, Marys- viUe, Stockton, San Jose, Oakland (Sixteenth Street), and Los Angeles, Cal. COMMODITIES. Agricultural Implements. Blacking Books BoolS and Shoes Burlaps Buttons Candles Canned Fish Carpets Cashmeres Cement China ware Chocolate Cigars Clothing Confectionery Cordage Crayons and Chalks Crockery Cutlery Drugs, Common Dry Qoods Earthenware Feathers Glassware, Common Gloves Glycerine Groceries, N.O.S Hair Goods Hardware Hats and Caps Hosiery Lace Leather Linen Linen Goods Milk, Condensed Nails . From Liverpool, Eng, via New Or- leans. Optical Goods.. Pins Saddlers' Goods. Soap. Soda, Caustic, 3,480,162 lbs. Tallow Woolen Goods , 6 p , u . ftS *§ '-•?. •s= ta la ►H 19 70 19 70 27 80 27 80 19 70 27 80 19 70 19 70 27 80 27 80 19 70 27 80 27 80 27 80 'XT 80 27 80 19 70 27 80 19 70 27 80 19 70 27 80 19 70 27 80 19 70 27 80 27 80 19 70 27 80 27 80 27 80 27 80 27 80 27 80 27 80 27 80 19 70 19 70 27 80 27 80 27 80 j 19 70 19 70 19 70 27 80 a 2 89 89 107 107 89 107 89 89 107 107 89 107 107 107 107 107 89 107 89 107 89 107 89 107 89 107 107 89 107 107 107 107 107 107 107 107 89 89 107 107 107 69 89 89 107 a el £ O a 2 114 106 264 370 180 374 125 106 288 s o 130 120 300 420 200 420 150 120 330 106 163 125 370 874 187 125 125 123 826 187 374 106 374 125 106 370 187 370 374 120 190 150 420 420 215 215 150 ISO 370 215 420 120 420 150 120 420 215 420 430 826 j 370 106 106 120 120 264 370 106 106 106 a 119 110 275 390 185 390 130 no 300 110 170 130 390 390 195 130 130 130 340 196 390 110 390 130 no 390 195 390 890 340 110 110 300 275 420 890 120 no 120 no 120 no " The road's import traffic is increasin^r and has ahout doubled, comparing 1885 witli 1889. All tliis traffic went by sailings vessels and steamship lines via Panama until the Southern Pacific Company opened the New Orleans line. The claim of the company now is that not one-tenth of it is carried by its line, and that without the reduced through rate and the through line the road would get none of it." 60 " So far as Europe is concerned the Southern Pacific Com- pany does not regard tlie Canada lines as being serious com- petitors with it. Tiie Northern Pacific Raih-oad Company carries little, if any, of this particular traffic. The nine- tenths of the traffic not carried by the Southern Pacific Company, it is estimated, is carried by sailing vessels via Cape Horn and steamships via Panama. " "■ These circumstances and conditions are indeed svldely different in many respects from the circumstances and con- ditions surrounding the carriage of domestic interstate traffic between the States of the American Union by rail carriers ; but as the regulation provided for by the Act to Ilegulate Commerce does not undertake to regulate or govern them, they cannot be held to constitute reasons in themselves why imported freight brought to a port of entry of the United States or a port of entry of an adjacent foreign country destined to a place within the United States should be car- ried at a lower rate than domestic traffic from such ports of entry respectively to the places of destination in the United States over the same line and in the same direction. To hold otherwise would be for the Commission to create excep- tions to the operation of the statute not found in the stat- ute ; and no other power but Congress can create such exceptions in the exercise of legislative authority." " One paramount purpose of the Act to Regulate Com- merce, manifest in all its provisions, is to give to all dealers and shippers the same rates for similar services rendered by the carrier in transporting similar freight over its line. Now, it is apparent from evidence in this case that many American manufacturers, dealers and localities, in almost every line of manufacture and business, are the competitors of foreign manufacturers, dealers and localities, for supply- ing the wants of the American consumers at interior places in the United States, and that under domestic bills of lading they seek to require from American carriers like service as their foreign competitors in order to place their manufac- tured goods, property and merchandise with interior con- sumers. The Act to Regulate Commerce secures them this right. To deprive them of it by any course of transporta- tion business or device is to violate the Statute. Such a deprivation would be so obviously unjust as to shock the general sense of justice of all the people of the country except the few " who would receive the immediate and direct benefit of it." An examination of the long list of articles in this table 70 shows the freight on all of them with a single exception to be greater from New Orleans to San Francisco, than from Liverpool to San Francisco via New Orleans. Tiie excep- tion is glycerine, which pays 107 cents per 100 lbs. from Liv- erpool to San Francisco, and lOG cents per 100 lbs, from New Orleans to San Francisco. Upon the English shipment of this article the Sonthern Pacific Railroad (the balance going to the foreign steamship) receives 70 cents per 100 lbs. while upon the American shipment, the service being pre- cisely the same in both cases, it receives 106 cents per 100 lbs., in other words, this patriotic Railroad company charges its American putrons Jlfti/-o?ie per cent, more than it does its English patrons. Upon all other articles the discrimination is still greater, requiring in the shipment of groceries, N. O. S. (not otherwise specified), 4^^S per cent, more freigld money from the American than from the English shippers. This vociferous advocate of protection against the competi- tion of foreign railways, thus favors English at the expense of American interests. I respectfnll}' submit, therefore, that none of the seven alleged reasons for further legislative control of the Cana- dian railroads have any foundation in fact, and unless some better ones can be adduced, that the Congress of the United States ought not to be placed in the position of a quasi side partner with any set of railroad corporations, in their purel}' business struggles with others for an increased traflie. It should be borne in mind that no official of the Cana- dian railroads lias evei- claimed exemption from the Inter- State Commerce act of any traffic carried in connection with an Auierican railroad, but on the contrary the General Man- ager of the Grand Trunk Compan Sir Joseph Hickson, and the President of the Canadian Pacific Company, Mr. W. C. Van Ilorne, both swore at the hearing in New York, in May, 1889, that they consider "that all traffic going over their 71 lines in wliicli American railroads participated, is subject to the Inter-State Commerce Act in all respects, and further that their tariffs covering such traffic were all on file with the Interstate Commerce Commission as required by law, and were accessible for examination by anyone." The Interstate Commerce Commission have lield in the only two cases before it, in which the question of jurisdic- tion over Canadian railroads could be raised, that any traffic moving over a single foot of American territory, even though never out of the possession and control of the Cana- dian carrier and non-competitive with any American carrier, is nevertheless subject to the act. The Commission has thus asserted its jurisdiction over the carriage of coal from Buffalo to Canada, and over the carriage of Asiatic products from Yokohama via Vancouver to the United States, and to Canada, if touching American territory en route. Thus far the Canadian railroads have cheerfully and promptly conformed to every suggestion and requirement of the Commission and until they refuse onjurisdictio7ial groimds to be bound by the rules to which their American rivals submit, there can be no necessity for legislative action against tliem. The feeling in American commercial circles adverse to congressional action which would unnecessarily cripple the competitionof Canadian with American railroads cannot be better expressed than in the reply to an interroga- tory propounded to the Chicago Board of T'-ade by the Senate Committee on Interstate Commerce, in J uly, 1889. The interrogatory was : "Do you consider any additional legislation expedient or desirable for the regulation of the commerce carried on by railroad or water routes between the United States and Canada ?" The reply was : *' We do not consider any additional legislation necessary. The adoption of any legislative measures calculated to restrict the transportation facilities now enjoyed by the farmers, en if the jurisdictional objection should be waived by our Canadian neighbors, which is quite improbable, the configuration of Canadian territory is snch, that a general application to its purely local traffic of the long and short haul clause of our law would be fraught with marked injus- tice. For example, the Canadian interstation traffic lying between Sault Ste. Marie, Port Huron, and Detroit on the west, and the St Lawrence and Niagara frontiers of the State of New York on the east, could not be expected to submit to restrictions from which the entire interstation traffic of the great States of New York, Pennsylvania, Illinois, and every other State is exempted by the very terms of the Interstate Commerce Act, which reads as follows : " Provided, however, That the provisions of this act shall not apply to the transportation of passengers or prop- erty wholly within one State and not shipped to or froiri a foreign country from or to any State or Territory as afore- said.'' I will close these necessarily somewhat desultory remarks,, with the consideration of one more statement made to this Committee by a prominent witness be fore referred to, which 78 also the Interstate Commerce Commission have hastily indorsed. A very slight examination of the matter will demonstrate, beyond all controversy, the error into which both have fallen. I quote from page 897 of the testimony already printed by this Committee : " How the Dominion Oovernment by Statutory Enactment Aids tlie Cana- dian Railroads in Competing with the Railroads of the United States. " While the Interstate Commerce Act of the United States operates as a restraint upon our railroads in their attempt to meet the competition of Canadian lines, the laws of Canada by special statutory exemption aid the railroads of that country in their persistent efforts to encroach upon American railroads. This fact is clearly set forth by the Interstate Commerce Commission in its recently published third annual report. Referring to the Canadian raih'oads the Commission says : '' They are practically under no restrictions imposed by their own statutes in respect to long and short haul traffic, but are at liberty to charge iiigh rates on local business, to idemnify for losses on through or international business. Their managers deny witli more or less emphasis that their local traffic is subjected to higher rates, but wlien the liberty to make such charges and the necessity for it co-exists, the inducement at least is strong. The provisions of the Canadian statute on this subject arc as follows: " Sec. 226. The company, in fixing or regulating the tolls to be demanded and taken for the transportation of goods shall, except in respect to through traffic to or fi'om the United States, adopt and conform to any uniform classifi- cation of freight which the governor in council, on the report of the minister, from time to time prescribes. "Sec. 232. Xo company, in fixing any toll or rate, shall, under like conditions and circumstances, make any unjust or partial discrimination between different localities ; but no discrimination between localities, which by reason of competition by water or railway, it is necessary to make to secure traffic, shall be deemed to be unjust or partial," "These enactments give all traffic carried in competition with our carriers unlimited freedom." "Mr. Chairman, these statutory provisions of the Domin- ion Government are part and parcel of a general line of political encroachment upon American interests." 74 T Tlie Railway- Committee. What matters Railway Com- mittee may hear and deter- mine. Powers of in- quiry, etc. Compelling at tendance of witnesses, etc. I beg leave in this connection to Bubmit the following sections from the Canadian Railway Act of 1888 : Seo. 8. The Railway Committee of the Privy Council shall consist of the Minister of Railways and Canals, who shall bo chairman thereof ; of the Minister of Justice, and of two or moi'e of the other members of the Queen's Privy Council for Canada, to be from time to time appointed by the Govei'nor in Council, three of whom shall form a quorum ; and such committee shall have the powers and perform the duties assigned to it by this act. Sec 11. " The Railway Committe shall have power to inquire into, hear and determine any application, complaint or dispute respecting (among other things) : {a) Unjust ])reference8, discrimination or extortion; (h) Any matter, act or thing which, by this or the special act is sanctioned, required to be done or prohibited. Sec 13. The Railway Committee, the Minister, inspect- ing engineei", commissioner for inquiry into accident or casualty, or person appointed to make inquiry or report, ma}', among other things : (a) Require the attendance of all such persons as it or he thinks lit to call before it or him and examine and require answei's or returns to such inquiries as it or he thinks fit to make. {b) Requii-e the pi'oduction of all books, papers, plans, specifications, di'awings and documents relating to the mat- ter before him. Sec 15, The Railway Committee, the Minister and every such engineei', commissioner or person shall have the same power to enforce the attendance of witnesses and to compel them to give evidence and produce the books, papers or things, which they are required to produce, as is vested in any court in civil cases. Se:c 17. Any decision or order made by the Railway committee under this act may be made an order of the 75 Exchequer court of Canada, or of any Superior court of any province of Canada, and shall he enforced hi like manner as any rule of such court. Sec. 214. The company may, subject to the provisions company^may and restrictions in this and in the special act contained, make J,"'",^'^**" p"'- by-laws, rules or regulations for the following purposes, * 4* * * (various matters). Sec. 217. All such by-laws, rules and rej^ulations shall be s^onction of by- submitted from time to time to the Governor in Council for approval, and no such by-law, rule or regulation shall have any force or effect until it is approved by the Governor in Council. Sec. 223. Subject to the provisions and restrictions in ^o^'^- Z^**^ this and in the special act contained, the company may, by by-laws, or the directors if thereunto authorized by the by- laws may, from time to time fix and regulate the tolls to be demanded and taken for all passengers and goods trans- ported upon the railway or in steam vessels belonging to the company. Sec. 224. Such tolls may be fixed either for the whole or N°„t,te"'""'" for any particular portions of the railway ; but all such tolls °"'^«- shall always under the same circumstances, be charged equally to all persons, and at the same rate, whether per ton, per mile or otherwise, in respect of all passengers and goods and railway carriages of the same description, and conveyed or propelled by a like railway carriage or engine, passing only over the same portion of the line of railway ; and no reduction or advance in any such tolls shall he made either directly or indirectly, in favor of or against any particular company or person traveling upon or using the railway. Sec. 225. Tiie tolls fixed for large quantities or long dis- Special rates, tances may be proportionately less than the tolls fixed for small quantities or short distances, if such tolls are, under the same circumstances charged equally to all persons ; but in respect of quantity no special toll or rate shall be given 76 ClaBHlflcatiun of f relKiit. Tolls to be ap- proved by Gov ernor in Couu- cil. Revision of by- law fixing tolls, Tariflfs to be posted up. Discriminatiou when allow- able. No secret special rates to be given. or fixed for any quantity less than one car load of at least ton tons. Sko. 226. The company in fi,\in^