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Maps, plates, charts, etc., may be filmed at different reduction ratios. Those too large to be entirely included in one exposure are filmed beginning in tha upper left hand corner, left to right and top to bottom, as many frames as required. The following diagrams illustrate the method: Les cartes, planches, tableaux, etc., peuvent dtre film6s d des taux do reduction diff6rents. Lorsque le document est trop grand pour dtre reproduit en un seul clich6, il est film6 d partir de Tangle sup^rieur gauche, de gauche d droite, et de haut en bas, en prenant le nombre d'images ndcessaire. Les diagrammes suivants illustrent la m6thode. 1 2 3 1 2 3 4 5 6 ^:^ (^ ^.-j:^^- THE 9 GRAND TRUNK RAII.WAY OF CANADA BY GENERAL M. BUTT HEWSON, CIVIL ENGINEER. #• "i^*, ^^ ■ TORONTO: BELFORD BROTHERS, PUBLISHERS. LON DON:— TRU BN E '. A Co. 187 6. ClTI&l Sr»«Srs (S^u^i % ■ J|Ju^ii|R^f)MuW"J" ).i . ■.^^■■|PW)M|l*piWBPWti^^F^p!»Wr"^rijFf T THE GRAND TRUNK EAILWAY OF CANADA; BY .1 - 1 GENERAL M. BUTT HEWSON, CIVIL ENGINEER. i -■^^KSO^^^s: TORONTO: BELFORD BROTHERS, PUBLISHERS. LOND.ON:— TRU BNER & Co. 187 6. i ik GENERAL M. BUTT HEWSON, CtriM, M^rSl^MMM» QFFERS his services to BONDHOLDERS or STOCKHOLDERS in England anxious to obtain Professional Reports on the condition, working, or general merits, of particular Railways in Canada or the United States. '- .•' Applications addressed to him on the subject io P. O. Box i68g, Toronto, Ontario, rvill receive his immediate attention. ■A :::^^ PREFACE. } Civil Engineering in England received its tone from the days of George Hudson. Fostered into life by the original railway -?«ajjm, it held in contempt all considerations of the economical. The temper of the i)rofession at home was shown by an associate of mine twenty- seven years ago, on the Great Munster Kailway of Ireland, who met my remark that he could cross the Eiver Deel half a mile up-stream by an ordinary bridge, with the reply that he had selected the crossing lower down ia order that the construction should be of a magnificence to give him "immortality I" Educated in that school, my views had, it is true, undergone sobering by subsequeTit service as an Engineer xuidor the Imperial Government ; but had left me Avhen I left home to practice in the United States, a gi-eat deal to learn and to unlearn. The limit of means in construction addressed itself to me for the first time in America. It pressed itself there upon ray acceptance as even the controlling element in railway design. RivalrioR of the carrying-trade operate in the United States under circumstances which bring considerations of transportation so forcibly upon the attention of the thoughtful Engineer, as to place their study and application amongst his most important duties. A service of many years as Chief Engineer on several great railways of that country havinc given that development to my professional thinking, I attempted, on transferring my practice back after a long absence to Canada, to point out in the paper re])roduced here the causes of the misfortunes of the Grand Trunk and the means by which those misfortunes may be remedied. The original form of this pamphlet was placed about the close of May, 1876, in the hands of the publishers of the Canadian Monthly. The promise of those persons tliat it would appear on the first of July, was broken. The publication was put off from month to month until the following October, under a series of remarkabhj evasions. In the meantime my attention was directed to a similarity of a group of facts in my manuscript to a group in a letter from a •• railway-speculator of this city, which had just appeared in the London IV PREFACE. Times. My artiolo had, 1 distxirerotl subscnuenrty, Ijorti actually fiiibniitto)lication. I should disdain to complain thus of an aefc of that character if I did not fear that it may i.u,ve had some relation to perturbations of last summer in flio prices of Grand Trunk .securities. A sense of professional honor having held nie always aloof from connection M'ith performances of those acute creatures, the "Bulls" and the "Bears," I cannot consent to aj)pear, after an absence of twenty-five years, boforo Engineers to whom I am known in England or Ireland, under a suspicion of voliuitary participation in a jiossible work of sharping. My article in the Canadian Monthly has been treated somewhat after the fashion of that repast known to the Americans as "a free lunch." While several individuals have not hesitiited to make use of it, they have done so not only without paying for "a drink," but without even nodding to the bar keeper. The conditions of the "spread" appear, however, to have been violated in one instance which demands sjjecial mention — that supplied in the latest use which has, I must suppose, been made of it by the Directors of the Grand Trunk. Within two months I have learned of a startling stroke of financiering by Mr. Potter, All I know of it, howe>^er, may be sui.imed up in this extract from HerepatKs Journal — an extract whose italics arc mine : — "It is intended that the £8,000,000 of debenture stock shall take the place of all the preferential charges, now amountiag to some £400,000 a year, including the Postal and Military bonds interest, interest on laud mortgages, on bank mortgages. Island Pond, Atlnntic and St. Lawrcnci; rent, Portland loan sittki7ij fund, Detroit rent, Montreal and Chuiwplain rent or interest, Buffalo and Lakt Huron rent, 1st Equipment bond interest, 2nd ditto. International bridge eapital interest, interest and rents on cars hired and stations rented, Ac, Ac, in fact ever;/ charge for rents, interest, &c., on the profits and now ranking before the 1st preference stock, and which is now paid in cash." Now if the status of the leases be changed by the trausaction refer- red to here from one within the possibility of sweeping them away, as I had proposed, under a foreclomiro of the bondholders in the interest of the stockholders, that stroke of financiering is certainly less nice than sharp. To place the masses of the people in England Avho are sufferers by the Grand Trunk on their guard, if it be not now too late, or if it be too late, then to show them tl«?i one undtrhjing cause of the miibCarriago of their investments, I call attention in the present form to the extraordinary facta of those leases under the light of the :l I PREFACE. startlmg zeal wliicli lias boon shown for their maintenance hy the body that is rosponfiiblc for -what would be if my reading of tho referoncc of Herepath ho correct, tho very sinister blunder of their original execution. Sharp practice bas wrecked several admirable ruilway-enterprisca in the United States. The Erie, the Atlantic and Groat Western, and seyoral other lines of umxuestionable merit now ruined, would have been highly profitable if carried out Avitb singleness of j)urpose. From the hour at Avhich they had become active subjects of the money-market, from the. hour at which the ownership had fallen under tlie influence of capitalists, those undertakings had entered upon a career oT chicane on the highway to ruin. Aware of this I had no sanguine hope that my appeal to the Grand Trunk's stockholders would have worked good results for their interests ; but my corres- pondence and obsei-vation during the last seven months satisfy me that railways Avhich have ever had the misfortune to become shuttlecocks of the Stock Exchange, not only in New York but also in London, may be held to have passed in one form or anotlier out of the control of their original owners — to have passed from the conditions of legi- timate business to those of a more or less unscrupulous finesse. If this general proposition have obtained special application in the late financiering for fastening on the stockholders of the Grand Trunk beyond release, the Bridge-outrage and the lease-ruin which wero pointed out originally last October and are now again pointed out, in this article, then does there remain no room whatever for difficulty in charging the misfortunes of that enterpi isc, not to Canada, but to London. , ^ , The intrinsic merits of railway-investment in Canada are certainly outside any reasoning from the miscarriage of the Grand Trunk. Tho general fact remains, however, that but a few of the many lines of tho country pay interest on their bonds; and perhaps but one, dividends on its stocks. T shall employ this opportunity to show briefly that these failures do not justify the conclusion that Canada as a field for railway-enterprise, is inferior to the United States. The physical character of the Dominion is, at least, as favorable for railway-construction as the country South of the Lakes. Tho earnings of the Grand Trunk prove on very broad evidence that Canada is as fruitful as the United States in railway-traffic. The f! VI PREFACE. arguTricnt on that point in this j)ani|>hl('t shows that tlioro is no (lifrcrenco betwonn th(> two oountrios in thti rato of working-oxitonsos by reason of difference of climate. All the eloni(nits of intrinsic merit in railway-enterprise being seen, therefore, to exist in full force here, the general fact that Canadian railways are not prolitablo must be referred to some extraneous cause. The Public Land Surveyor has been, with but a few exceptions, the best material offering here to the local ilemand for Civil Engineers. Those gentlemen had to study their new work as they wont on with its execution ; and while they deserve credit for tlujir mastery of field- formulary, should br^ blamed l)ut tenderly for their want of profes- sional breadth. The Englisii routine which they have succeeded gene- rally in carrying out, they have sijldom ventured to modify even at the iemand of overruling reasons. Their practice wanted originality. But be this iisit may, the confused mass of lines shewn by an inspection of a rail way -map of Ontario, Iwtrays a want of knowledge of railway- economics by what is ordinarily the guiding intelligence in pojudar action — that of the j)rofession within whose province the subje^^t lies. While making tliis statement as a duty to the reformation of a great interest of the country, I beg leave to cover any seeming of discour- tesy in the case to gentlemen Avho have como into the pi'ofession, by confessing frankly that, had I not unlcjarned my own British training I should, in all probability, have done no Ijctter in giving system to the raihvays of Canada than they. The ex])orience at the service of railway-design hero has been obtained umler conditions totally inapi)licable. Tliat design found in England its Liverpools and its Londons established beyond dis- turbance; and had before it, therefore, but the simple (hityof moving out its lines from those fixed points to their points of sui)i)ly. Even those points of supply — the Manchestcrs, the Wolverhamptons, &c.— had been all settled a priori ; and the new conditions of transportation involved disturbances too small to overcome the state of facts by which they had been determined. Here, however, all this is different. While Baltimore, New York, Boston, Portland, Montreal, are engaged in an undecided race for the trade of the same regions of the Continent, the aggregating points of those regions are engaged in a concurrent race of their o\vn ; met at every tiirn l)y competitors in the form cf new developemcnts J and all this while the vast distances by v/hich PREFACE. Vll thoy arc connected with the sea involve distnrbaiices of their linos of outlet hy the opening of new routes, the shortening of old routes, the reduction of through-charges by expansion of local traffic, &c., &c. • The economics of transportation having found neither space nor circumstance for evoluiion at home, have been evolved on this Con- tinent under a free and wide competition ; and iu an extent and Tolume of result so great as to have forced themselves upoa thouglit- ful observers in American practice, in the form of generalisations unknown to the jjrofessional training which has given shape to the railways of England and of Canada. The Great ViTosteni follows the bend of a bow — that error of design subsequently leading to a ruinous competition along the string. The Grand Trunk goes to Quebec by Avay of Kichmond — to strive for through -bushiess under the disadvantage of an unnecessary length of 19 miles, Avith the North Shore. These arc errors of the past; but they are reproduced in the recent blunder which lays an embargo on intercourse between the Upper and tlie Lower Provinces over the Intercolonial, by an addition to the proper length of the line of per- haps 35 per cent. The alignment that we see on the map meandering for 20 years from Toronto to Barrie, and from Barrie to the East and to the JVest, comes down to us reproduced by the experience at the service of Canadian raih\ ys to-day, in a line not even yet finished — that wliich wanders from Toronto to Orangeville, and from Orange- ville to the West and North. A similar ignorau< e of movement on a great Continent lays down a line which is to go on from Montreal to failure at Ottawa ; whereas by following its mission, it could grasp success at a junction Avith the Canadian Pacific on a direct line to the crossing of the Eiver above Allumette. And not only the routes and the linos, but also even the gi-adients, of the railways of the country conflict with the Continental teaching which carries considerations of the carrying-trade into the determination of even a . ^ilway's mechanics. I * i \ The trunk lines of Canada having been glanced at, the remainder are but a series of short branches. That branches do not pay. as distinct properties, is an axiom of universal ? jceptation by experience in the United States ; but it is still not truer than that trunks whose directions are determined at random, or though determined on principle, take a shape in contempt of important considerations of economy, cannot be expected to pay. In short, then, the railways of Canada, ^ PREFACE. although unencumbered by heavy works, free from any necessity of severe gradients, unalTocted in their operations to any extent more serious than American lines by snoAv, and traversing a field rich in supplies of business, do not pay for the simple reason that they liave not bcGU i)lanned and carried out in accordance Avith thoj j conditions of suf'cess proper to a new country and great Continent. Want of breadth, want of dash, want of a free and generous spirit in legisla- tion, are the only reasons why a railway planned by thor.ghtful enlightenment and executed by a professional skill up to the level of its work, does not present itself here as in the United States, striking cat boldly into the Avilderness, enriching commerce and expanding set- tlement, wliile paying its owners a fair, if not even a generous, profit. M. BUTT HEWSON. Toronto, Ontario, May 18th, 1876. GEN'L M. BUTT KEV/SON, , CIVIL ENGINEER, JJA S resumed the practice of his Profession in Canada after a long and varied experience in the United States. He offers his services to the Public as Consulting 6r as Chief Engineer in the dcaign or execution of Ratlxcay or Sanitary Works, He will also attend to cases of Arbitration. £»x 1689 Posi Office, . Toronto, Ontario. ^ i THE GRAND TRUNK RAILWAY. -» < ♦ »-<- The Grand Trunk Eailway refxects by its unprofitableness on the material interests of Canada. Mr. Potter's mistake in arraying the line against the character of the Canadian people and the progress of Canadian development, does not alter the fact that the financial result of its investments is a misfortune to this Dominion. A duty to the continued growth of the country demands that the failure of that gentleman's road to reward its owners, be placed upon its real merits ; and that the placing be done in a spirit of sympathy for him and them, with a view to the reversal, as far as is now practicable, of what is a disaster applying in common to English capital and to Canadian progress. In seeking a remedy for the unprofitableness of the Grand Trunk, the search should commence in an enquiry into the cause. Is there, then, any reasou in the traflic resources of Canada, why it should not yield dividends '? The answer to this question can be given with the authority of a demon- stration by comparing certain facts of railways in the United States with corresponding facts of the Grand Trunk ; and as recent discussion bases the failure ^f that line upon the overdoing of railway-construction in Canada, by applying the comparison to the field in which that alleged overdoing takes its extreme form — the Province of Ontario. '■t :9 The following table is compiled mainly from " Poor's Ma- nual" of 1873-4.* It may not be severely accurate ; Imt is p3rfectly trustworthy as authority for the conclusions to \\liich it points! : — * Manual of the Railroads of the United States for 1873-4, by H. "V. ite H. W. Poor. New York, 1873. t Since the first appearance of this piipor on the Grand Trnnk, tlm defence whispers that the facts cited here are not reliable. Mr. Vf^oT is a puiustaking, conscientiouE, collector of data , and is excellent authority so far aa he is pei- Honally concerned, even though the facts called in question had not bee u received by him directly from the several companies— «/;(()«(/«« oilwrs from the iirand Trunk. The hint that the specilicatious made in tlio following coiuparieoua are not correct, is worth uothiug. f 1 'l ii M 10 Railways in Ontario, ao a o Gmtiii Trunk I485 Buffalo and Lake HuronjlOl Great Western 342 G. W. leased lines ;102 Canada Southern 1 324 Northfirn !l40 o o o ft-g o 67,000,000 140,000 6,443,000 130,773,000 il7,000,0«) Toronto, Grey and Bruce Toronto and Nipissing.... Midland Brockville and Ottawa .. Central St. Lawrence and Ottawa C.jb'jurg Line Whitby Line 88 87 109 84 28 53 46 19 1 4,233,000 I fi,390,000 COHG.OOO 43,0001 895,200 90,000 52,000 3,348,000 691,000 31,000 24,000 304,000 278,000 32,000 162,000 (0 — 00 00 S-Sg M o »<^ •a S^ <6 ■3. «1 Pi P <4J O fk «m 3 o pa §:a Ch s 1,647,000 794 510,0'JO '208 1, il6,000 360 o . no m A 03 l1 • ID t>> Pig m ^ So . 9 O 1,120,000 630,000 3.'0,000 332,000 1,280,000 1,730,000 595 723 395 407 B72 443 11,291,000 3,51,'i,000 8,969,M0 7,812,000 4.653,00») 3,626,000 4,2t»O,000 11,921,000 24,415,000 « 5,444 2,113 3,280 4,22} 4,988 5,aio 7,500 6,261 6,514 O 03 Pi-g "Pi i|l « 6 85 6 89 6 82 6 99 7 38 11 33 12 83 9 31 14 11 a o to OS 1 00 2 06 2 92 2 57 6 7U 3 91 4 85 50 The table just given goes directly to the question of oxces- eivo railway-consti-uction in Ontario. It shows that, in pro- portion to population, that Province lias less length of railway ., than Maine, Michigan, Indiana; only one-half of the length . in New Hampshire ; and only one-third of the length in ir Minnesota. Excluding though it does all the earnings of ' one-third of herliius — those for which the returns are not. i 11 given in Poor's Manual — it shows that every inhabitant of Ontario contributed, notwithstanding, as much to railway- earnings as every inhabitant of Minnesota, of Iowa, of Wis- consin ; and very nearly as much as every inhabitant of the old State of Maine. These points of comparison on the basis of population may be held as disposing of the allegation of excessive length of railway in Ontario, whether as a matter of fact or as an explanation of the failure of the Grand Trunk to yield dividends. ., . Over-construction being inadmissible, what, then, are the causes, of the unprofitableness of the great highway of Canada to its proprietors ? The gross receipts set opposite Ontario in the table next preceding, do not, it will be seen by recurring to the first table, include new and unfinished lines. The earnings of 700 miles are thus, it may be repeated, emitted. The income per'^mile is, therefore, not $5,444 as set forth ; but is in fact $8,186. Taking the figures of the table, how ever, regardless of this correction, they are good for the conclusion, that, when the railways of New Hampshire, with receipts of $5,830 per mile, those of Maine, with receipts of $4,988 per mile, those of Wisconsin, with receipts of $4,224, those of Iowa, with receipts of $3,280, and even those of MinneBota> with receipts of but $2,113, all pay dividends on their stocks, the reason why Canadian railways do not, the reason why the Grand Trunk with receipts of $G,568 per mile does not, must clearly be sought for elsewhere than in the activity of the people as measured by the volume of the traffic. i ,1 P if ^ What of the severity of the Canfidian climate ? Does not that cause an extraordinary absorption of earnirgs in working expenses; and make thus the reasoning from the figures cited above, illusive ? As this suggestion has been addressed recently to popular misapprehension in England, it demands, in order to avert the injury which it is calculated to do the railway-progress of the Dominion, an examination in fulness of evidence. The selection of American States presented in the last table, has not been made in contemplation of a foregone conclusion. It has proceeded with the single purpose of eliminating frcm the question under review at this point, any disturbing consi- derations of climate. It includes, be it observed, all the States that border upon the Dominion, from Nova S 3otia to Manitoba. * It embraces in its averages several linen which i i 12 i u ' traverse regions whose winters are much more severe than the average winter of those traversed by the railways of Canada. Maine, New Hampshire, and Vermont, are represented on the one hand, and Michigan, Wisconsin, and Minnesota, are represented on the other hand, by items of the table which exclude from the comparison with those of Ontario, any special application of the question of climate against that Province, for the reason, prima facie, that the first group being mountainous, and the latter group being situated on plains of greater elevation, they embody averages of higher altitudes, while a glance at a map of North America will show that both groups embody averages including even higher latitudes. The popular misapprehension slh to the exceptional effect of climate on railway- working here, may be held disposed of by the foregoing figures under the reading of this explana- tion ; but the special force necessary in proof which is designed to " reason down what has not been reasoned up," demands, now that the consideration of the management of our great railway is being approached, that that misapprehen- sion be met in direct issue on its merits in the special case of the Grand Trunk. The earnings apportioned to the great Canadian highway in Ontario yield, according to the first table given in this paper, an average per mile of $6,558. The working expenses of that line, although paid out of receipts higher than in the case of any but one of the roads whose averages are given in that statement, stand, be it observed, in percentage of the gross earnings, at 80.4. Now, the value of climate in determining that percentage may be traced in general by a comparison with the corresponding facts in the country at each end of the line, and as far as may be, along its route, including even those lines which run from it 50 or 80 miles northerly into basins of greater elevation and higher latitude. A review of the question in that light presents it thus : — Working expenses of all lines in Michi- gan , 1904 miles... 62. 6 per ct. Working expenses of the Great Western of Canada 444 miles. ..69.7 per ct. Working expenses of five lines running northerly from the Grand Trunk in Ontario 420 miles. ..72.4 per ct. Working expenses of all the roads in Maine, exclusive of the Atlantic and St. Lawrence 788 miles. ..72.2 per ct. Working expensesof the Grand Trunk.. 1877 miles. ..80.4 per ct. 13 The specification of working-expenses given here shows that all the roads of Michigan — a region situated at one end of the line — are worked at a cost of 17.9 per cent. less. It shows that, with the exception of one railway managed by the' Grand Trunk Company, all the lines of Maine — a region situated at the other end — are worked at a cost 8.2 per cent, less. It sets forth that the Great Western of Canada, includ- ing a trunk which runs within twenty miles of it for a diatance of 180 miles, and a branch which extends to the north of it for 90 miles, is worked at a cost 20.7 per cent. less. Show- ing, besides these facts, that five tracks extending northerly from it, in Ontario, into the colder regions of Ottawa, Pem- broke, CoUingwood, transact their business at a cost 8 per cent, loss, the conclusion is irresistible that the excessive absorption of the receipts of the chief railway of the Domi- nion in working-expenses, does not find its explanation in climate. .. a A comparison such as that just made is met by the hint that the extraordinary proportion of the working-expenses of the Grand Trunk is referable, mainly, to the severity of the climate along its extension eastwardly from Montreal. That part of the line being but one-fourth of ail, the cause which, operating on that length only, can affect the running cost on the whole to such an extent as it is said to do, must stand out very broadly in the case of other lines worked under similar conditions. What, then, are the facts of roads situated in the same latitudes '? V The European and North American Railway oi the State of Maine begins in the latitude of Prescott, on the Grand Trunk, and ends in the latitude of Richmond, on the branch of that line to Quebec. One hundred and fourteen miles in length, it was worked at the date of the latest returns given in Poor's Manual of 1873-4, for a proportion of its gross earnings no greater than 55.0 per cent. The Intercolonial Railway includes in the results given for it, the European and North American line of New Brunswick. The Government of the Dominion of Canada manages that line ; and may be supposed to do so under the usual penalty of a control so remote and loose — extravagance. And yet what is the result in that case ? Beginning at St. John's, and running as far to the north as the Gulf of St. Lawrence, the 149 miles included in the report of that, line by Poor, though tliey correspond in latitude almost exactly with the Grand Trunk from Montreal 'f ,ii 14 m |i to Quebec, consume gross eamings in the businesB to the extent of but 67.8 per cent. Several railways of the North-west of the United States operate in winters as severe as those of the Province of Quebec. Incorporated with other lines, they do not stand out in special facts ; and are, therefore, excluded from use here. One, however, there is, which presents an extreme illustration of the value of climate on the lower sections of the Grand Trunk. — The Marquette, Houghton and Ontonagon Railway is 49 miles in length. Making a connection at an intermediate point with the lines of Northern Wisconsin, it begins at one port of Lake Superior, Marquette, and ends at another port of that lake, L'Anse. Situated on a Peninsula swept in winter by winds from an ice-bound sea on the one side, and from another ice-bound sea on the other side, it runs, further- more, through a region whoso elevation above the banks of the St. Lawrence below Montreal must be held, according to Humboldt's equation of heights, to assign it a climate over two degrees more northerly than that proper to its parallel of latitude.* But waiving all consideration of its exposure and ot its elevation, the Marquette, Houghton and Ontonagon, if moved eastwardly along its geographical parallels, would, placing one of its termini at Quebec, extend from that city towards Thiee Rivers, its whole length lying on the northern nhore of the St. Lawrence. Yet, while its gradients are highly unfavom'able to cheap work, that line, which traverses a climate more severe perhaps than any known to settlement in the Province of Quebec, transacted its business for the year represented by its last report in Poor's Manual, at a cost to its gross earnings of but o6.2 per cent.t Facts in the States containing its eastern and its western termini, and in tlie country along its route, show that om* chief higlnvay is worked at a cost excessive to an extent var3dng from 8.0 to 20.7 per cent. The excess has been shown to hold in the case of a road in Maine having an average latitude equal to that of Montreal, in the ratio of 25.4 • The isothermals of the maps rest, m reference to this region, u no data. Mere filUngs-in at random between remote points known to obserT.tion, they aro worth nothinR against the above inference as to the climate of the Michigan- Superior Peninsula. t The detention of trains caused by snow on the Marquette, Houghton and Ontonagon Railway during last winter — the severest known for 40 years — agptregated, according to a letter of the officer chai'ged with its saperinteudenoe, 85^ hours. 15 per cent. ; and in the case of a road in New Brunswick con- ducted with the extravagance fairly supposable in the trans- action of such a business by a Government, has beeu siiowu to hold, in a latitude corresponding with that of the bri jh connecting Montreal with Quebec, in the ratio of 12.6 er cent. And the returns of a railway in the terrible climate ^f the Peninsula lying between Lake Michigan and Lake Supe- rior, have confirmed those proofs of the insufficiency, if not of even the irrelevance, of the plea of climate in explanation of the working expenses of the Grand Trunk, by declaring their consumption of the gross earnings to be excessive to the extent of even 24.2 per cent. Overdone construction of railways does not apply in Ontario as a matter of fact ; and is, therefore, not admissible as the explanation of the failure of our great line to reward its owners. Insufficiency in the volume of traffic does not hold in the case ; and must consequently be set aside as the cause of the misfortunes of that enterprise. What then is the true cause, seeing that those offered by the Directors cannot be accepted ? Earnings that, on the evidence of the results in all other cases, might be supposed available to a large amount as profits for the proprietors, are absorbed in the working ; and as this exceptional absorption has been shown not to be referable, as the Chairman of the Company says it is, to incidents of climate, it must be referred under a strong presumption to the only other cause remaining for its explana- tion — the management.* A review of the gover:ument of our chief railway in relation to the failm'e of that undertaking to yieid pvofits, must begin here in a general form at the question of \*\-rking expenses. — The Atlantic and St. Lawrence Eailway is worked under lease by the Grand Trunk. Its owners keep an account of its transactions ; and supply thus an illustration of the lessee's adaptation to railway-service on this Continent. The follow- * The word " management" is nsed throughout this review in the sense of a legal entity holding perpetual succession. To put any other interpretation upon it would bo not only painful to the writer, but also unjust to individual directors. Indifferent as he is to any conflict that may rage, as usual in largo companies, between the Ins and the Outs amongst the stockholders, his words do not admit fairly of any rendering outside the scope of the object with which he has devoted so much labor to this article — that of a conscientious anxiety to be the means of placing the investments in the (irraud Trunk on tbe best possible footing, in order to improve the prospects of railway-construction in the field of practice to which ho has again — after a long absence — transferred his interests as a Civil Engineer. V 16 ing table exhibits the results in that case under contrast with corresponding results of ordinary management in the case of every other railway of the State of Maine : — RAILWAY- WORKINO IN MAINE. The Railways in Maine for which the Net and the Gross earnings ai'« given in Poor's Manual of 1873-4. (2 3 CO "3 to O 09 on "a 9 o a S," I* a ©"-is .!? M a • ill O rt K Bangor and Piscataquis 48.20 Enox and Lincoln j 49.00 Maine Central Portland and Ogdenaburg Portland and Oxford Central Portland and Rochester Portland, Saco, and Portsmouth St. Croix and Penobscot Atlantic and St Lawrence (worked by Grand Trunk) 310.00 60.00 27.60 52.60 51.30 21.00 149.50 114,000 88,000 1,928,000 115,000 20,000 132,000 659,000 81,000 1,140,157 73.7 59.1 68.9 65.2 70.0 71.2 73.0 68.0 95.6 The table just given sets forth the fact that the Grand Trunk Company works the Atlantic and St. Lawrence Railway at an excess above even the high average of its whole line, to the extent of 15.2 per cent, of the income. In showing this, and in showing, further, that its transaction of the business of that road of the State of Maine, costs more of the gross ; earnings than any of the lines on either side of it, by so great an excess as 21.9 per cent., it leaves, after all that has been said above in proof of the inadmissibility of other explana- tions, no escape from the conclusion that the absorption of so exceptional a proportion of the receipts of the Grand Trunk in the cost of its business, is chargeable to the direct- i ing body. - The working-expenses reflect pointedly on the management. ■- They suggest a general review of its doings from the outset, beginning with that mot^t striking evidence of its want of ; adaptation to the circumstances in which it has acted — the Victoria Bridge. — Those who have had experience on lines in the United States, may have seen, as they entered that struc- ture on theu* passage of the St. Lawrence, a foreshadow of the monetary results of railways in Canada. The millions of capital sunk in that admirable work of British engineering might have proved, as in the case from which it is cojjied, a 17 wise expenditure in a country of dense population ; but must be regarded worse than waste since, expended on a mile of track in a country thinly peopled, they have been hung, in a very madness of formulary, a millstone around the neck of a great enterprise. And the moral pointed in that instance may be drawn through this review at each of the general facts which lie at the bottom of the failure of our chief railway as a subject of investment — that the circumstances existing here declare to be totally out of place, an administration based on ideas formed on railways in a country so old and thickly settled as England.* To give point to subsequen' criti "sms on the management, it may be well to lay down here a few simple premises : — Economy of length is a consideration in railway-carriage overlooked or undervalued at home. Its violation in any serious degree is not a danger in a system whose linea are so short. On a great Continent, however, where the spaces operated on are va.ii, and in a new country where the lines of intercourse, not setted by immemorial usage or final ad- justments of trade, are in progress of determination by a competition which knows little restraint in statu quo, every rod in the length of a railway has a creative value. While, for instance, 20 miles of unnecessary length in a line tapping a great stream of traffic, might result in the diversion of that stream io a rival, it would at the same time bm-den the through and the way-business remaining, by an unnecessary outlay in transportation. If six trains each way should prove to be the measure of the business in that case, the excess of working would represent. '240 train-miles per day ; and this waste of effect, put at, say $240, would amount to a waste of money at the rate of $87, GOO a year. Capitalizing that annuity at 6 per cent., it would represent $1,460,000 •, and would show, thus, the saving of every mile of distance in the case of a line of 12 trains a day to be worth $73,000 on the ground of economy in working. * Canadian management, whether in legislation, design, or execution, stands in evidence in the railways of the country, as in no respect different from a management purely English. The censure passed in the text disregards tho question, whether the responsibility for the blunders it points out rest with the promoters on this side of the Atlantic, or with those on the other side. It refers to ideas applied here in a routine bUnd to radical differences in things — • ideas which, common to all our managements, Canadian as well as English, hold in the railways of the Dominion generally to an extent which has left its blight upon the dovelopmeut of the country, in the ruin of their stocks. 18 Distance and cost may be taken in railway generalizations as convertible terms. A line equidistant at all its points from two ports, represents, therefore, a succession of instances of equality of cost of transportation to either port. In the competition of the two for the freights of the interior, that line may be said to traverse a route of neutrality. Like waters dividing on a ridge, the surpluses on either side take • different directions, one outflow going to one port, the other other outflow to the other port. In an analogy from nature, it may be said that the division of those two volumes takes place on a trade-.s/nn?«lt ,- while the area bounded by two such summits — one on one side of the surface tributary to the business of a port, and the other on the other side — may be said, in pursuance of the same analogy, to constitute a tr&de-hasin. #• 1 ■' ■I ill The products offering for transportation within any trade- basin, belong economically to the shipments of the corres- ponding sea-port. They constitute the proper traflfic of the railway or railways designed to tap that basin for discharge into its proper port. The restriction put by inference from this upon railway-rivalry, may, it is true, be made by disturb- ing considerations to vibrate over a certain breath of debatable ground ; but still cannot be pressed aside beyond a limited extent, in pursuit of a carrying-trade conducted legitimately. To make this important point of application to the present case more plain, it may be added that, as no competition can be maintained profitably with a rival who obtains his wares at a first cost necessarily lower — and as length of transportation is, in general, the measure of first cost in railway-competition —distance must be held to put upon that competition an impassable limit of range. The elementary considerations laid down here may be applied, in the next place, to a preliminary survey of the field of the Grand Trunk. Montreal is nearer by 18 miles of railway than New York to the Niagara frontier at Suspension Bridge. It is further by 25 miles of railway than New York from the Niagara frontier at Buffalo, During her direct intercourse with the sea, our commercial capital includes, therefore, in her trade- basin — the area, be it recollected, tributary economically to her commerce— the whole Province of Ontario. In winter, however, the ocean recedes from her to a distance which, ^■i 19 measured on her outlet to it, is 297 miles. At that time, ahstract economy forces Montreal back from her summer-area of tribute, to hand over to her rival, New York, all that part of it — about 27,000 square miles — which lies west of a line running from a point between Whitby and Port Hope in a direction north-eastwardly towards the Valley of the Ottawa. And in application of this generalization, it may be stated for the purpose in hand that, while the Grand Trunk in summer occupies west of Whitby, a strong position subject to but a feeble competition by the railways of New York, it does so on a field that must still be considered debatable, seeing that it may be held by either party at one season of the year by right and at the other season of the year, so far as it may be held at all, but by policy. Abstract economy would assign to Montreal in a railway- compiBtition with New York during the navigation of the St. Lawrence, the trade of all the Penisula of Michigan and of the Upper Lakes. At Detroit, the commercial capital of Canada has the ascendancy in the struggle at that time of the year, by virtue of an economy equal to the cost of trans- portation over 96 miles ; at Sarnia, of a transportation over 122 miles. Experience declares, however, that so far as existing attempts to divert the commerce of the Upper Lakes go to prove the contrary, their steamships, abhorring short voyages, cannot be arrested on their way to transhipment at Buffalo. And their rates commanding all the great aggrega- tions of the shore-line of those inland seas, the railways have but comparatively little of the through-business to struggle for in summer beyond that which the outlying lines may have gathered by the way. The traffic offering at Detroit and Sarnia offers in a double competition — with a navigation that can underbid the railway, and with railways which bring to a reduction of their disad- vantage in distance, the advantage of superior support by the way. But the excess of their length disappears altogether in their rivalry with the Grand Trunk, when winter, closing the St. Lawrence, makes them masters of the freights offering at Sarnia and Detroit, by right of an economy of transporta- tion representing the cost, in one case on 175 miles of track, and in the other case on 201 miles. And, thus, obtainable at but low rates in summer, and subject to the control of rivals in winter, the through freights within reach of the great Canadian line at Sarnia and Detroit must be held, not only ■r i ! - : 20 because of their cheapness, but because also of their unsteadi- ness, to constitute a business which is, at best, a (j[ucBtiouablo subject of efifoi't. Let this review of the field pass now from the West to the East. — Between Montreal and Toronto the way-freights of the Grand Trunk are disputed in summer by navigation. Ameri- can ships bring to bear within that extent of the route, an active rivalry at all points of large aggregations from the back country ; while the freedom of the coast to Canadian vessels extends a similar rivalry, by a system of touchings at ports along the line, to several of the smaller stations. At that season of the year, concessions adapted to these circum- stances are the only means of obtaining business along that part of the road, while th(* business of the points thus acted upon may be commanded in winter as far west as Port Hope on any judicious schedule. Even then, however, Whitby being but 555 miles by railway from the harbor of New York, while Port Hope is 567 by railway from the harbor of Montreal — Portland — the footing of the Grand Trunk west of Port Hope can, as stated above, be sustained, so far as it may bo sustained at all, but by address. The survey that has been just made of the field shows, it may be observed in passing, that the mR,nagement of our great railway demands originality of thinking, closeness of observation, and flexibility of method. The object of that survey, however, has been to point out views and circum- stances which enter into a proper judgment of the leading facts of the administration of our most important railway. The Company had a choice of two routes between Montreal and Sarnia. Following the direct line, the track would have been laid 15 or 20 miles to the north of Lake Ontario with a considerable economy of length. In that event it would have runnearthe "rain-divide;" and, by crossing thedrainage about its source would have effected a large saving in the character of the bridges. But an experience disregarding all the sm-- rounding circumstances, decided that the route should pursue the shore of the Lake ; and thus burdened the capital of the Company with an unnecessary length of track, a more expensive system of bridging, and many stretches of heavy and difficult embankment. Waste of capital was committed by the management in other forms than that of the blunder as to route. English T m i 21 practice adlicred to ita routine by contracting for the con- struction of the road aa for a coat completed to order. Economy should have suggested that Messrs. Pcto, Brassey, & Jietts bo confined to the taking out of thi centre of the cuts, leaving the slopes to be removed by the Company ; and should have suggested, further, that those gentlemen bo limited at swamp-crossings and such places, to the laying of a temporary track on " corduroy" or trestling, lea\dng the ultimate road bed for construction in the permanence of embankment by the Company. This course wouM not only have saved interest on capital which lay unproductive for a long time, by opening the line two or three years in advance for traffic ; but would have effected a still further economy by giving additional employment during the development of business to the Company's half-idle track and rolling stock. But an experience incapable of modification to the expe- diencies of the case, pursued a routine that, incurring from one year's to three years' interest on millions of expenditure, and adding to the necessary cost oi the earthwork so much as perhaps even 20 per cent., may be traced to-day in the volume of the Company's balance-sheet. On the direct route between Montreal and Toronto, the road would have commanded for a distance of 300 miles, way- business from both sides of its track. The area of the local traffic — evidently the only source of income on which it could have counted with confidence — would have expanded in that case into the interior to the <:,]'eatest possible extent, beyond all danger on either hand of future loss by competition. — A body of producers separated from a railway by a waggon - haulage of 30 miles is much more likely than one separated from it by a waggon-haulage of but 15 miles, to bring that line into competition, or having brought it, to stray off to its rival. — Ideas formed in a practice not at all adapted to this great and new Continent determined, however, that the line should follow the lake ; and in doing so not only exposed it to an ultimate reduction of tributary surface by rivalry on the north, but gave it from the outset a reduced area of local traffic subject to competition for six months of the year with a free navigation. And thus has the management become responsible for aggravating its waste of capital, by a contrac- tion and an embarrassment of its more profitable business. The experience that decided en the route disregarded economy of length when it settled on a total abandonment of c ■•■ I., 22 II, ., the direct line. It did so to a further extent when it laid down its track in general conformity with the meanderings of the Lake-shore. Adding to these items of loss caused by a management governed by an inapplicable training, the further lengths of route incurred unnecessarily in the windings bet cen Toronto and Sarnia, the whole sums up to the waste of income and crippling of grosp represented by an excess of distance to the extent of about 20 miles ! Conceived though the Grand Trunk was in a design for delivering American freights on board British bottoms, the agents of that design did not stop at its embarassTiient by the blunders between Sarnia a,Dd Montreal; but put the map de grace to those evidences of unfitness for their work by the further blunder of embarrassing the road's intercourse with the sea for six months in the year, by a detour on the rouxe between Montreal and Portland, to an extent which gives an aggre- gate of wanton excess of transportation, equal to a prohibi- tion on freights in favor of rival lines, at the rate of a dollar per ton ! . The railway reached Sarnia with its objects placed by waste of capital and waste of distance, under serious diffi- culties. At that point, however, if it were wise to have adhered to its original purpose, the duty of the management demanded the encouragement, by its moral support, of a direct extension giving it the shctest possib':) connection with the granary of the West, Chicago.* It left tha,t connec- tion open to be occupied by the rival now about to enter into the enjoj^ment of the " Air Line" that discharges upon the Canada Southern at St. Clair. Full, however, of stiff expe- rience, full of a spirit of competition which does not hesitate to grasp at what it cannot hold, the Company decided that its l3est way to Chicago la}' in encouraging first and leasing afterwards, the line which, by giving it a terminus at Detroit, initiated its mistaken policy of hostility to the Great Western. And wiiat was tlie result of that error ? The Grand Trunk was enabled by it to deposit freights at Toronto in a trans- portation of 561 miles, while the Great Western could deposit them there in a transpcvtatiL n five miles shorter, and at rates v;hich, sustained by its great resources in general business, might have been held to have declare d the competition, if not • This very measwre was urgeu upon the Company at the t'me in a full and formal statemtiit protbstiug nsjaiust the exton.t U-t 28 Trunk for five months of the year to the reduction of volume incident to its delivery upon the sea at a point so remote as Portland. The lease of the Atlantic and St. Lawrence stands con- demned, furthermore, in the indirectness of the route. Even if the contract had been expedient in any other, or in every other point of view, it was clearly inexpedient in this. And now arises a rebuke of its folly in the fact, that while it ties the Grand Trunk for ever, if allowed to stand, to the cost and restricted traffic incident to an outlet upon the sea over a line of 297 miles, another line has grown up which offers in vain to reduce the cost and expand the traffic by performing the same work with a transportation 60 miles less. To digress for a moment here, it may be observed that the chief disadvantage of the Grand Trunk lies in the fact that one-half of the lengtli of its main line — the half west of Port Hope — runs for five months of the year across the direc- tion of the economic outflow of trade. The freights which it acquires under these circumstances must be carried at rates fixed closely to the actual cost of transportation ; and even then can be counted on but in a stream more or less reduced. Traversing great lengths of the track, that traffic would be a source of large income if it could be retained under a schedule independent of a competition of disadvantage. Now the reason why this cannot be done in winter, lies in the recession of the seaport from Montreal to Portland; and that reason followed out, shows that the extent in Western Ontario of the reversal of the attitude of the line in winter, depends on the extent of that recession. If, instead of the Atlantic and St. Lawrence, the outlet to Portland lay over the shorter line offering for that purpose, the degree o^ the reversal would be very much reduced ; but if the wintor-terminus were estab- lished in conjunction with ocean-navigation at Quebec, the reduction would have been carried still further in a gain to the Grand Trunk by the increase of its business and the strength of its control. Removing the limit of traffic proper to that great railway to a line beginning about ten miles west of Toronto, and passing — leaving Guelph en the left — mid- ways between the roads to Owen Sound and Southampton, it would, while adding 13,000 square miles to the permanent area tributary to Montreal, ena])le that railway to command in winter, the local business at full rates as far west as Guelph. V' i ri !' \ 29 V '■■-. ., Passing from the imiiolicy of the lease to its terms, be it remembered that when the City of Portland invested her credit in the Atlantic and St. Lawrence, phe would have done so as a gift. The profits she looked for were other than dividends. Now, the Grand Trunk-management, in keeijing with the character of its bargains, bound itself in its lease of the Atlantic and St. Lawrence to pay six per cent, interest on the bonds, four per cent, on the stock, and to maintain for the City of Portland a sinking fund for the redemption at maturity of her stock-debentures ! In comment on these stipulations it may be added, on the faith of the owners of the line, that the lease costs the proprietors of the Grand Trunk a draught upon their income — a loss without any supposable necessity whatever — to the amount of $280,000 a year I* The errors of a(^ ministration which have been pointed out above, have been confined to instances admitting of an ap- proach to an estimate of their equivalents in money. But the waste of income that may be held chargeable to the management under the head of working-expenses, cannot be put fully in that way, because of want of information as to the details. Entering on tha* branch of this subject now, with the intention of considering it as far as practicable in speci- fication, this review will treat it, in the first place, in the form of general suggestion. The psculiarities of the field of the Grand Trunk's opera- tions make its working a duty of nicety When even one per cent, of the cost of that service represents such a sum as $70,000, the ordinary shareholder can understand how ex- pensive may be its direction under a want of flexibility and tact. The result as it exists cannot be scrutinized in detail without incurring a risk of violating the propriety which sustains the administration of a great practical business under any suspicion not resting on proof.! But it may be said on * It Ib to be hoped earnestly that the interpretation put in the preface to thii> pamphlet upon the late fiuanclering of Mr. Potter, is incorrect. An attempt to iHHten upon the unfortunate stockholdera of the Grand Trunk such a lease as this of the Atlantic and St. Lawrence an -soo/i ns pDi.fiblc aftiT my article had Bhown it to those stockholders to be a ruinous blunder, would have no escape from the condemnation of all men of honor as a stroke of vary sharp practice. \ The writer of this article would feel wronged grievousl) by any application of the text to the disparagement of the Company's employees. Even thuvgh he were not saved by liis sympathies as an old railway-oilicer from an intaution so unjust, ho would certainly be restrained by his sense of honor from injuring a body of worthy men in the esteem of their employers. His remarks fio to * 30 one head of the subject, that, while there are consideraiions which point to the belief that the throii}:;h-trailic of the Grand Trunk is carried on at even an ultimate Iosh, injustice might still be done by pronouncing on that point beyond the sugges- tion that no mere showy returns of t(mnago and passengers are of any real worth when obtained in violation of the rule that every use of the property should bring with it a demon- strable profit. So long as Portland is its nearest outlet on the sea, the throu^li-business of the highway of Canada should be but a secondary consideration. Development of way-traffic should be held by the management its primary duty. Subject to the diversions of attractive forces, at one season or another, along the whole length of the lino, the local business can bo held at its largest volume but by close watching, exact thinking, and nice adjustment of means to an end. Whether or not a want of these may be the cause, this review does not venture to say ; but it submits to those who have access to the facts ' that loss of ATay-business west of Toronto may be suspected on general grounds ; and may be suspected east of Toronto on the special ground that imports of Canadian products were i>hlj)ped from the line of the Grand Trunk at Toronto, Whitby, Port Hope, &c., into the American ports of Lake Ontario to an amount that reached, in 1874, a value in breadstuffs alone, of $4,500,000 ! The loss of way-business and the charges for through- business, though probably constituting evidences of a vicious system, cannot be reduced here to the positive. They are there- fore disposed of in the foregoing remarks in order to j^lace this review again on the footing of proof. With that object it takes up the subject of the working-expenses in connection with one branch of the superintendence — the disposition of the rolling-stock and the making up of the freight-trains. About 1864-5, our great railway made additions to its rolling-stock by hiring. The cars obtained in that way for the service of the Company numbered in 1871 so many as 2,089. Eepresenting in the expenditures of that year, a special pay- the system. The General Manager, for example, may be non« tha lesB capable and energetic than he ia held to be by Mr. Potter, while his administ-rat'on mftj be looea and feeble ; for the latter proposition is but a epecial form of t'.i» general one that there ii a breadth of field in which any amount of capacity and vigor may be dissipated. ment of $142,100, the cost of their employment gives i rate per car per annum of $70. The following table will show the number of cars in use, and the work which hired cars assisted in performing each year since 1862 : — Tear. No. Owned. No Hired. Tons per Car. Excess of Gars. No. 1862 3001 232 ^_ 1863 3001 222 1864 3332 — not known. ■> , 1866 3847 not known. not known. 1866 39 18 323 239 298 1867 3948 787 214 791 1868 8968 459 233 407 1869 3968 692 231 465 , 1870 8844 2030 208 1108 1871 3807 not known. not known. — 1872 3837 2089 257 — ■"- 257 tons having been established in 1872 as a practicable load per car per annum, all the other years of the table show the rolling-stock to liav6 been in excess. The Company's property four cars tno7-c than the number seen thus to have been necessary in 1867, but 25 f irs less than necessary in 1866, and but 52 cars less in 1868, the employment of extra stock during those years does not appear to have been actually unavoidable. In 1869, the deficit amounted to 227 cars, the hiring to 692 ; and in 1870 the deficit amounting to 922 cars, the hiring amounted to 2,030. On the five years from 1866 to 1870, the insufficiency of the rolling-stock having been equal to 1,222 cars, and the hiring to 4,291, an average excess of hired cars must be held to have been employed in the working to the extent of two-thirds of all. Each of the freight cars of the Northern of Canada moves, annually 560 tons ; and of the Great Western 540 tons. That 257 tons should be the best working result obtainable on the Grand Trunk becomes, under contrast with these averages, a subject of question. These several loads, however, not being assigned their several mileages, can be reduced to specific dimensions of work but by equating the carrying- payments on each in terms of distance. — The average receipts per ton on the Northern of Canada is $2; on the Great Western $2.70; and on the Grand Trunk $2.70. By an inference from this, it must be held that each freight-car of the Great Western transports for a certain distance 540 tons a year ; while each freight-car of the Grand Trunk transports for a distance that ought not to be very widely different, but -is i 32 257 tons a year ! Circumstances arising in the groat extent of the line may explain some of tliis apparent want of economy in the working ; hut whatever may he held to remain of that want, involving as it does, hesides payment for hire and for repairs, an increase of " dead weight," and an addi- tion to the cost of maintaining the track and machinery, must he held, in the case of a management which consumes gross earnings in working expenses to an extent so exceptional as 80 per cent., highly suggestive of a saving in the disposition of the cars and the arrangement of the trains. Even though it should not prove a clear gain to the net earnings to reject 20 per cent, of the tcmnage, the irrresistihle presumption that the average load may he raised hy judicious superintendence to 400 tons per car, is all that is necessary for the conclusion that the Company's l)U8ines8 may be transacted without any car-hiring whatever.^ i f I !; ■ The management of tlie Grand Trunk has been arraigned here under the check of iusufitciency of proof. The specifi- cations given are, however, of the very gravest character ; and require in conclusion hut a summing up to place their aggregate in the form of an equivalent loss of net income. The following statement is offered as an approximation to the amount : — On lease of the Atlantic and St. Lawrence, a waste of 9280,000 Bo. do. Buffalo and Lake Huron, a waste of 100,000 Do. do. Detroit Junction, a waste of 60,000 Do. do. Montreal and Champlain, a waste of 50,000 * Do. do. Buffalo Bridge, a waste of 50,000 ' On 'J.OH'J hired earn, rent $142,000 \ Do. repairs 201,000t . , T\ • -a waste of sav . Do. running i """"^ "' ««•/• Do. track renewals 970,000 Annual waste $1,600,000 Violent diseases are said to require violent remedies. This review has, therefore, dealt with the case of the management vigorously : but in every instance with qualms of sympathy. Tlie more painful part of the probing it has undertaken having now been brought to a conclusion, it proceeds to enter on the • The average haul on the Great Western and that on the Grand Trunk are not within reach of the writer of this article. They aro estimated hero rela- tively on the basis of the average receipts per ton ; but may show, in fact, that the conclusion drawn is more or less overdone. t This amount is pro 'ala toi the hired cars in the sum set forth by the Company for repairs of all cars. .33 less disagreeable otBce of the remedy — a remedy, liowever, that no squeamishness cau bo allowed to offer in a form less radical than the distemper. » The Direction has boon placed at great disadvantage by its reservations. Its statements are so broad as to deprive it of the benefit of intelligent suggestion from outside. The points put, for example, in this examination are put in several instances at hazard, because of the public want of knowledge of details. The owners of the Atlantic and St. Lawrence give a specific basis for condemnation of the management of the great Canadian railway in leasing their line ; in paying so extravagant a rent for it ; and in working it at so extraor- dinary a proportion of its earnings. If these special facts had appeared on the face of the accounts of the Grand Trunk, that series of blunders would, no doubt, have found a remedy long before they had cost the stock-holders so many millions which ought to have been applied to dividends. But details being wanting in all other instances of the errors that have been glanced at in this survey, the condemnation of these errors has proceeded on but general reasons ; and loses, thereforce, some of the force necessary to command their correction. On these grounds, then, be it said that the first condition of bettering the fortunes of the enterprise is that of the publication of its transactions in detail. Publicity in all its operations is a duty passing beyond the stockholders of the Grand Trunk to those other parties totlie enterprise — the Canadian people. And at this point, the omission of the management in that particular constitutes a special reason for the immediate discharge of a general duty of the Goveixmient of the Dominion. — The railway is an interest of such great dimensions even now, and of such vast dimensions in the approaching future, that it requires super- vision in the interest of the public. A law providing that annual reports be submitted by the several companies to Parliament, is a measure demanded for the protection of railway capital, and for the development of the country.* * This suggestion as to railway-). 'turns by the Government has attracted attention. Immediately after its ori,;iual appearance a telegram from Ottawa to the organ of the Government in Toronto stated that the Hon. Mr. Mackenzie intended to bring down a measiuo for tlie creation of a Railway-Bureau. A subsequent despatch said that ]n\ proposed, instead, to obtain the statistics pointed out here, under the operati >u of a bill already in existence. I am not Bware, however, that anything has linon actually done in the matter yet. The right of property in ideas has beuu ignored so generally in the case of my y id'li* iy'5' 34 . Creating a Bureau with authority to shape those reports, and to even go behind them, whenever such a course might be deemed necessary to the Companies books, such a law would not only place our railways on their merits beyond the reach of market-rigging, but would also hold those merits at a high level by restraining inflations in the balance-sheet and extra- vagance in the direction. English ideas in the design, execution, and working of existing lines, are chargeable mainly with the reputation of Canadian railway -securities in the money-market. They should, therefore,' be held in the interest of the Dominion, under the fullest check consistent with the rights of the stock- holders. A system of reports to Parliament would be an effective form of restraint in that case ; and should be pro- vided for with that view in creating the proposed Bureau — the reports covering all new projects to the extent of their gradients, their ahgnmf^nts, their works, their merits ; and covering existing lines to the extent of their schedules, their workings, their renewals, their leasingg, their credits, their additions to capital. Besides returns showing the several heads of mileage, the earnings, the distribu'^3d cost of work- ing, the volume of business under the several divisions, " way passengers," "through passengers," "way freights" " through freights," &c., the Bureau should be authorised to obtain statements of station-transactions, distinct reports for sub- divisions of a company's business, and all other details called for in its discretion to give point to its annual criticisms on the several manae;ements.* Reports of the Grand Trunk obtained by law, will let in article that I have learned to acquiesce in the trespass with perfectly good humor ; but, seeing that the country may bi-* benefitted, do so with gi-eat plea- sure in the case of the Prime Minister. To withdraw him from the counsel of special interests and English and Canadian experience, I should be willing to give him even special advic oa the same free terms, in the hope of ['ncing the railway-policy of the count.T v n a footing to attract outside capital to the cou- stniction here of lines -ijiii, based on broad principles of transportation, with gradients and lines ar j,nged on conditions of cheap working, would prove profitable to the proprietors, while launching out boldly into the wilderness, they would serve the purpose of freight-creating settlement in all that plenitude of energy which they throw out in converting wild lands of the United States to the uses of progress. * The reports of the companies should include specifications of their working expenses during each month — certainly so as to the cost of keeping the tracks clear of snow, and as to the duration of and loss caused by the interruption of traffic by reason of snow. This would dispel a general misapprehension an to the actual disadvantages of railway business in Canada, by reducing that dis- advantage to exact dimensions. ^< 35 some light on its working:;. But the fi'llness of knowledge proper to give the Htockholderfl a basiH of intelligont Huper- vision of tlieir biiHinoHH, cannot he obtained short of a radical change in the form of the administration. Tlie general mode of working and accounting shuts out from them any know- ledge of the " profit and loss" of the Lake Huron steamers, of the Detroit- Junction lease, of the Buffalo and Lake Huron lease, of the Buffalo-Bridge, of the Montreal and Champlain lease, of the Atlantic and St. Lawrence lease. The same methods of centralization keep the parties concerned in the dark as to the details of biisiness on the different sections. Besides these objections to an absolute direction at the centre, a still further objection applies to it on the ground that it loses all the effects of the principle of rewards and punishments, by suppressing public competition amongst its employees. For the reasons glanced at here, the working should be parcelled out into six, seven, or eiglit divisions, each having an inde- pendent head, with a system of subordination shaped as far as possible on the basis of individual freedom and responsi- bility. Separate accounts kept by each of these bodies for its division, and for such parts of its division as might be held to constitute properly special concerns, the working of the line and the result of its several outside parts, might be brought under corrective contrast with all the advantage of that individual interest which quickens the wit and stimulates the energy of competition. The breaking up of the centralisation at Montrenl is a vital condition of the proper working of the Grand Trunk. It had better, therefore, be gone into here somewiiat more at length in order to impress the reason and mode of its supercedure on the understanding of the stockholders. • Under the present system, the management in London is the fifth wheel of a coach. As that of the body subject to the Bufferage of the proprietory its supervision ought»not to bo carried out under a delegation of authority by which it is reduced to a false pretence. It should be real, direct and intelligent, operating with its eyes virtually upon the working for which it is responsible. Wise administration constructs its machinery on the pro- babilities of failings, mental or moral, amongst its agents. In giving an officer sole control of the Grand Trunk Eailway, the owners of the property proceed in violation of 36 that principle. Wliorc tbc patronage of place and purchase is BO vast, r.n executivo syBtem shaped to meet the shortcom- ings of the average man in uecesBary in order to reduce the management to the conditions of practical wisdom. In giving the control of 1,300 miles of railwa}' to any individual the Board supposeH the impracticable. His personal presence at the points of work being impossible, he can operate l3ut from his office. With the faciliticH of ocean telegraphy he could fill that form of service just as well whether his office be in Montreal or in London. Supervision may be just as effective from one of those places as from another ; l)ut an active rontrol one thousand or three thousand miles off — a brain in an office, acting on the business of brain in the field — can work but a hindrance. Whether from Montreal or from London it is, within the limits of good working, imprac- ticable. Vigour and intellect upon the spot are the conditions proper t^ a vast administration. Uninformed and meddlesome as remote direction, whether from one or three thousand miles away, must be, it is Imt an embarrassment to present intelli- gence, a discouragement to present zeal. The timidity, the indifference, the langour, which it inspires in the agents of execution, constitute a vast loss in the depreciation of effect through a body so large as 8,000 men. , In placing oud man here in sole control, the Grand Trunk becomes removed from the supervision of the stock- holders. 'Whether that one be the slave as he may be, or the master as he might be, of the Directors — and ibis writing speaks of no particular individual — he and they are, in the nature of things, one. He — any "General Manager" — and the Board are alike put on trial at the semi-annual and annual meetings ; and yet he it is who determines the scope and matter of the testimony ! Appearing before the judges with his chosen facts, specifications, and explanations, lie is free* to mould what should be disinterested testimony above just suspicion into special-pleading defence. The mutual admiration of the Manager and the Board so common in all such modes of administration, gives point to the mockery of those pretended trials even though that mockery were not inherent in the form. Condemnation of the centralised management comes to us in overwhelming proof with the working results— those few which a system close as any other of personal ab- .■\ 37 solutism, allows us to see. Eyen though it were not the original instigator, the one-man-management has been the strenuous advocate, of all the Board's astounding blunders — International bridges, Sarnia steamers, J3uffalo and Lake Huron leases, etc., etc. If it have not created or encouraged several vampire-interests that it has permitted to fasten on the railway, it has certainly helped them to become bloated upon its life-blood. One of these it has allowed to pocket, it is said by one of the most respectable merchants of Montreal, a hundred per cent, on its use of the Grand Trunk ; while the managerial autocrat at whose feet it worked, should have, and could have, garnered three-fourths of that extrava- gant; profit for his employers in England. And so of several other interests under the eyes of that management — so many as eight others — which concur with this in showing that, in practice as well as in the nature of things, the personal abso- utism here should be abolished as a fatal mistake. The functions of a " General Manager" ought to be distri- buted. The divisional managements by which that may be accomplished, should be independent. To obtain the ac- countability proper as a check upon their independence, the managers should meet in a monthly Council under the chair- manship of an Inspector. They should make separately the purchases necessary for their respective divisions ; but on tenders to be opened and dealt Avith by the Council. Monthly returns of work should be submitted to that body by each of its members, setting forth in addition to full statements of facta, the average cost of some unit of work, or at all events be put in a shape +o present such a basis of comparison as to bring the consumption of cash, muscle, and supply in each division under the check of sharp contiasts. Every exccoS thus brought out, should be explained «)y the manager responsible ; and the whole proceedings sent to the elected representatives of the business in London.* • Tlio transfer to Londou of a liealthj supervisiou in substitution for the paralysing absolutism at Montreal, becomes possible but under the proposed system of contnists. The ivritor has tested the clliciency of that mode of surveillance under circumstances wliioh are perfectly good an an illustration of its operation.— Having employed about 1,000 men on an extensive line of works remote from sottlemeut, he was oblij^ed to provide them with housing and board. The fifty in each " shanty" having been placed in tlio charge of a " boarding boss," the consumption of provisions was so extraordinary as to show not only waste but even theft. The distance over which the operations extended too great for personal supervision, the only check possible was found to be that of a system of contrasts. Each " boarding boss" was, therefore, Wijuired to send to the office, at the end of the week, a return of his stock on ■»ilfj i 38 The recast contemplated liorc proceeds on the principle that the busincHs of a railway-manager is out-door. It propoBes to keep the chief of each division on that footing ; and with that view would cut down tc the smallest practicable dimen- sions the creation in his case of a head-quarters or a staff. Living from station to station, a room at each should usually be ample as his office, and the local telegrapher sufficient as his clerk. While considerations of working convenience might call for his presence generally at a particular point, even there he should })e denied all forms of conflict with the theory that his duty is that of a ubiquitous presence.* All short-comings in that ideal, after efforts of the superior activity which the functions the Manager suppose, should be filled out by unavoidable delegations of freedom of action made under a system based on the fullest application consis- tent with wisdom, of the principle of individual responsibility amongst the subordinates. Small savings in salaries may perhaps be allowet' wit- propriety to hold the Engineering service as it now is, ger vt' To bring its works and expenditures, however, under review of local knowledge of the practical men serving as managers, the Engineer and his transactions should be included in the persoiiA and the business of the Council. All his contracts should be let by pubhc tender to be o])encd and acted on by that body ; and all payments for w^crk dono or material hand. The quantities thus shown deducted from those supplied during the week, gave an average per man fed, of the consumption of Hour, beef, coffee, 8u^ar, potatoes, &c., Ao., in weight and in money. Confronted hj those averages (headed by those of one " boss" under the constant surveillance of a clerk) the whole were brought under review oneo a week, the greatest derelict dismissed upon the spot, and the others warned. A few repetitious of this brought the outlay down one-half, and gave us much control of the working as if the writer had stood in person beside each '' boarding boss'" from one end of the week to the other. His eyes were tlius virtually upon " the bosses," arresting their dishonesty, quickeuiug their wits, and stimnlatiug their activity — accomplishing the results at which the machinery of any business conducted by (Kji.'hts should arrive. * The present mode of operating from a bureau is intended by the method proposed to be suporsbded ;,v toto for a system of constant service on the line. The magnate who has always found time to meddle in politics, T'ho has always affected a corps of secretaries, who delegated his responsibility by telegraph to the actual workers, who has been able to keep but one eye on the railway- staif, because his nmnagemcnt includes tlie direcfjrs and the stockholders, would dis- appear under the system contempla.,ed. The plan of working skrtched out, would strain to the utmost the mind and muscle of the chief oflicers who would not face the peralties of being caught napping under the tell-tale light of the monthly contrasts — would hold the whole under a surveillance which could not fail to make every individual connected with the out-door and the mechanical service, a worker earnest even to anxiety. *..j. ■/ -> 39 supplied in his case, as in all other cases, should be made but after approval by the Council. The mechanical operatioDs are now without check. All there depends on one man. So vast an absorber of material and wages ought to be made to work under full light. No better means presents itself for effecting this than that of competitive shops — two at, leaet, but the more the better. The additional expenditure will be repaid by the knowledge it will give that the business is conducted before the stockholders ; but apaii iioiii the valuo nf proceeding on that essential principle, it may be said without any reflection whatever on the officer in charge, that that expenditure v»'ill yield largo returns in the form of saving on both wage and material. The chief of each machine shop should be included in the Council, and his returns subjected to the system of contrasts, expla?Tn,tions, and reports, for information of the authorities in London. Each shop should make and repair its own rolling stock, that stock to be distinguished from all others, so as to give point and reach to the contrasts. — But be the mode in which light may be let in upon the immense business of the mechanical service what it may, that light should be let in, and fully, is demanded by every consideration of sound practice. While the Managers should be the Company's hands, the Inspector should be its ei/cs. His duties should be those of presiding at the Council, and of reporting to London on all excesses brought out by the contrasts in the cost of worki- ;, &c., his reports to be made from personal investigation ta the spot. He, too, should be as far as practicable an officer whose duties arc on the line ; but beyond the use of his eyes should have no other duty when thei-c. The business should bo transacted on a system of accountability from the lowest officer up to the Manager — an accountability based on corres- ponding freedom of action. The Inspector should watcL> the com*se of rival railways. Changes '>f schedule, i.Vc., on the part of competing lines, he should lay without dolay before a call-Council. But beyond this neither he nor any one else should take notice on the part of the Grand Trunk of the endless shuffles of the Ame- rican carrying-trade. The High Diplomatic Beprescntative of tens of millions of stock who goes to International Con- 40 f.' gresses of Eailway tricksters on the pr.rt of the Grand Trunk, may be suspected to be, at best, a fool for his pains. But the gin-palace mj,gmficence of his special carriage and the need- less expenditure of his special train, while finding ample precedent on the other side of the Lakes, belong to the pecu- liar order of things which has produced those very superb people, the Goulds and the Fisks. Where the roads are individual nionoplies or chess-boards for the movements of stock-jobbing knaves, 9 system of glitter, extravagance and chicane may be all very well. The introduction of that sort of thing into what ought to be the close and careful manage- ment of a property belonging to an honest body of small stockholders, serves to show how badly the individual central- isation of the present system of working the Grand Trunk is suiter! to the actual character of the Company — serves to show '^ ^he more pointedly when it is recollected that the interveL. )f the Gbnerul Manager in American railway- intriguesi, under any circumstances within the proper scope of his business, is j,t best a waste of money, mind and muscle. The economy which may be effected by the reform proposed in the management, will amount to Imndreds of thousands. But though it were not a dollar, though instead of an economy the result were an unproductive addition to expenditiu'e, that change is none the less an expediency in order to bring the operations of the road under the supervision of its owners, in order to bring these operations within the conditions of sound principles of working. But the machinery proposed will, per- haps, cost considerably less than that now in existence. First- class men can be obtained for division-managers at $4,000 a year. An Inspector fully up to the itvel of his duties, may be had for $5,000. Any saving that may be effected on the higher salaries of the present system could be applied with advantage in obtaining satisfied service from officers of lower grade. If, indeed, twenty-live per cent, of the employeee could, as is probable, be removed, the Company would obtain very much better service in botli quality and quantity by increaning the pay of the remainder proportionately. The mode of working suggested above, would transfer the control of the road to London. And the control thus trans- ferred would be, unlike that now exercised in Montreal, one of an effective surveillance which would not embarrass the operations. To separate the executive service, however, from private tampering of the Directors, all communications be- 1 tlu 41 tween members of the Board and the Managers should be made through the Inspector ; and, being included in the pro- ceedings of the Council, should be held open to the examina- tion in London of any duly authorised stockholder — all other communication between the two to be dealt with by disquali- fication for office. The sketch made here of the proposed form of management is necessarily a mere outline. Inferences may, however, supply the details. One of perhaps several points omitted, had better be touched on — the relations of the office-service to that in the field. The desig]i is to keep these as far as practicable distinct — holding the former as a mere machine of record. Of the greatest simplicity in its plan, it should be reduced severely to the exclusion of all surplusage in its dimensions. If not independent of the out-door chiefs, it should be so as far as practicable. The cheese -paring which has cut down the salaries of all the officers to rates very questionable, should hardly be allowed to apply to the extent it does amongst the clerks ; but should certainly be set aside in tliat primarily important branch of the Company'^ business, the working. But no change in the form of the management will yield full fruit if not accompanied by a change in its spirit. The ambition with which the Company entered on its work was almost as boundless as the North-West of this Continent. The exhaustion resulting has, it is true, had some effect iv moderating a temper so extravagant ; but has left much to be done yet Co bring it within the restraints of the "ctual. Instead of putting itself in open hostility to the developement of this Dominion, the management is called on by every con- sideration of reason to accept the conclusion that, while freights outside its proper field wiH be transported, in any event, by lines other than the Grand Trunk, the real interests of the stockholders demand that, looking the inevitable in the face, it direct its expectations and its efforts mainly to the fullest possible development of the way-business between Sarnia and Montreal. Clipping its vings, confining itself strictly to its own proper business, rejecting all traffic that does not leave a distinct balance in the revenue account, pro- voking no rivalries, and expending no energy, excejit on inter- nal economy, in guarding against them, the Direction of our great highway having undergone thus a total change of spirit, will have but to reconstruct its administration on the basis of U # indiv ill iial responsibility and of public accounting by divisions, to reach the highest obtainable results by carrying its reform one step farther. No business can be conducted economically on a footing of insolvency. A penalty attaches in the management to the plaint that the Grand Trunk represents a loss of English Capital to the amount of so many millions Sterling. The parties concerned in London appear, nevertheless, to even relish that cry ; for they swell the nominal amount by includ- ing in their very balance sheet i£3,110,500 of a liability from which the Government of Canada has granted a release ! A reversal of the insolvency thus proclaimed is, however, a necessary reform, in order to stimulate the vigilance of the ' projjrietors in the future, and to brace the energies of tho enterprise for the work of a new career. With that view, and with the further view of the moral effect upon the employees, the inflation of the Capital account ought to V" reduced to the basis of cash_^ Eliminating the sum represented by the Canadian release, the remaining liabilities ought to bere-issued under authority of a special Act of Bankruptcy in amounts determined on the basis of their values in the market.* The Grand Trunk Railway has been for several years vir- , tually insolvent. A question of morality can, therefore, not be supposed to arise from a proposition to give that matter of fact the form of law. True, that giving is suggested on the condition that the rights applyin,-?; under a foreclosure of the mortgages be exercised in recognition of the market values ■ of the stocks, and with, on the other hand, the design of setting aside the obligations incurred by the stockholders through the exercise of delusions little short of the insane. The bondholders to whom the Company is in default have, however, a right to obtain possession ;. and their right in that case is not a whit better in morals than their further right to - give back an interest in the property to other innocent sufferers who have invested money in its creation. The lessors deserve no more sympathy than is due to men checked in the continu- ance of despoliation under the form of a bargain over -sharp ■• ' A reconstruction of the Company by the bond-holdera in any iadi£terenc« to those pioneers of railway development in Canada, the stockholders, would be regarded here with indignation. And wise heads iu London will not forget how important to the best interests of the property is the sympathy of this Gorerumeut and people. No concession as to the section below Montreal, or any other favorable legislation could be obtained under a foreclosure which did not recognise to the full aiaouut of the market value all the preient parties to .. the ownership. » 43 — especially when they carry off, under the check, such a large remainder as that represented by the development of their business and the maintenance of their property during sn many years of exLf jiiive outlay. , A new railway offeis, be it repeated here, an economy of distance between Montreal and Portland, to the extent, it is said, of 60 miles. A surrender of the lease of the Atlantic and St. Lawrence would place this opportunity at the service of the Grand Trunk ; and would affect thus on the sea-going business of that great line in winter — until that business be established with a much greater saving on the St. Lawrence — a saving equal to at least 60 or 70 cents a ton. The abandonment of the present route of the Grand Trunk to Portland would carry with it much, if not all, of the Com- pany's interest in its lines east of Montreal. The question arises, therefore, what should be done with those lines on the surrender of the lease of the Atlantic and St. Lawrence — arises, be it recollected, under circumstances demanding the boldness with which life is sometimes saved bj' amputation. Of the 893 miles below Montreal, the length — 144 miles — between that city and Island Pond, taken ai the rate of the remainder of that route to Portland, pays a profit of about five per cent, of its earnings — say $50,000 a year. The 249 miles remaining are said, with some seeming of accuracy, to absorb that surplus, if they do not encroach upon income elsewhere. The abandonment of those lines would be a grievous necessity, if a necessity it were, to not only the Company, but to the public : and this consideration makes the question oui' for the joint action of both. The political power being, in fact, mainly responsible for the addition of at least that part of the whole which lies east of Pdchmond, there is a reason in morals as well as in policy why a dispo- sition of the Company's lines below Montreal should be practi- cable under an arrangement with the Government.* At a low * In a letter to a stoekbolder I advised that the lines not payitig expenses in winter be immediately stopped workiug, so that that measure of self-defence by the Company might bring up the question of lease or purchase by the Crown. The ungracious am' unnecessary craft which did not make even an acknow- ledf^uierit c! my letter, appears to characterize the whole proceedings of the mauagemert ; for not until Parliament had brought out the information had I become av/ive that .>',o« oft^r the (irifihiul iniliJirntion of t},i^ pampliht, the Company bad entered on an attempt to carry out my suggestion of an arrange- ment ^vi'.h the Government. I may add here that several circumstances make it appfcRi- possible that large stockholders in the Company may have attempted to " hedge" their' original investments by association with what may be des- cribed with perhaps much truth as its jockeyicg interests. 44 rental, or by purchase at a price representing the balance left after deducting the amount of the relinquished Uen from the actual cost since opening those stretches, the Crown may be induced to take them off the Company's hands in the interest of the local population, and of the completeness of its purpose . in the construction of the Intercolonial. And Parliament ha\ing assisted, in that wise, the placing of the great railway • of Canada on a good footing before the English public, will have done to the standing of the railway- securities of the country a service which will yield a fifty-fold return upon the ' expenditure in its effect upon the settlement of the lands of . the Crown. . >; ^ r*;-'-^' ;'- , -; -;::T'\'^: The lease of the lin^s below Montreal by the Government, ought to yield at least $300,000 a year. This would, it may be assumed, constitute a clear addition to income. Holding the results of reform in the working at simply the estimated saving effected by rejecting the hired cars, the measures pro- posed — including the sale of the Buffalo Bridge at half its cost — would yield a gross addition to net earnings in the sum of $1,800,000. One million of dollars being applicable now for interest, the income available for profits would, therefore, aggregate, under the radical treatment pointed out, about two millions eight hundred thousand. The adoption of real values reducing the total liabilities to about one-half their nominal amount, that clear profit would meet all the interest on the bonds; and going beyond to the stock preferences, would extend to the remainder of the capital in the form of at least a small return. Now that, with even its present system of management, its local traffic is increasing, its loco- motites doing more work, its passenger cars carrying more passengers, its freight cars greater loads, these evidences of inherent vitality declare that the measures proposed are all that are wanting to do what cannot be done otherwise — to raise the Grand Trunk into a condition of vigorous health. That point once arrived at, the line would go on thenceforth, in an experience bought dearly, it is true, under the vigilant supervision and close economy of expectant gain, until it should reach, as it would have reached originally if its ma- nagement had been different, a condition of jarosperity which, superior to all future inflations of an insolvent's financiering, will hold every dollar of its stock in the enjoyment of an assured dividend. ^K ■'■11