IMAGE EVALUATION TEST TARGET (MT-3) // fe C/j m '^ w. <5> CIHM/ICMH Microfiche Seres. CIHM/ICMH Coliection de microfiches. Canadian InQtitute for Historical Microreproductions / Institut Canadian de mEcroreproductions historiques 1 j^. ut it is well to observe, as an indication of the spirit in which the discus- sion has been carried on through the columns of the Money Article, that the writer now and then drops insinuations as if they were of no consequence. He had hinted that the rise in Canadian Eail. t 11 ways was connected with the approach of a finan- cial proposal, afterwards acknowledged to be the Northern Colonisation Eailway, and that the scheme was a "resuscitated" one. Meantime he has obtained better information. For " resus- citated " he now substitutes the words, '' renewed effort to get money. — It was first heard of in 1872." This is his method. Perhaps he has found it to succeed elsewhere ; but in writing Money Articles for the Times he is writing for the sharpest eyes in the world, and they look for accuracy, information, wisdom, and no perver- sion in those articles. Take a statement on this particular occasion — " Ottawa, with a population of some 25,000, find as much out of the region of business as Washington." Now, the population of Ottawa, and its suburb Hull, is about 35,000. That does not much afi'ect the argument ; but it is well to be accurate. The trade of Ottawa is the trade of the sixth or seventh city of the Dominion. Its lumber business is enormous, and I can testify that its rate of increase and the character of its improve- ments are wonderful, even to one familiar with the rapid growth of American cities. Again, *' what trade the district has chiefly lies at Pres- cott." A simple absurdity. Proscott is not fairlj in the district, not* has it the pre-eminence in trade. But I observe from a pamphlet before me that mms&m^mmsmmmmmmmKmmi ■MB ■'.'•i.'i>'i„., .. 12 mi -•: Sir Hugh Allan sent a letter refuting these statements, publicationof^vhich was refused, and which he has since printed. Admission was de- nied to this and other letters, because they were '' long," and because ttte subject had already been ' * sufficiently dealt with. ' ' A few days after, a pro- digious letter from Mr. Potter on the other side was inserted. As for sufficient dealing with the subject, it is plain to anyone that up to that day the writer of the Money Article had himself played three hands in the rubber. Moved by Sir Hugh Allan'? long expostulation — which we may presume he had read — the writer then broke beyond bounds, and the oracle almost raged in a passion of prophecy. ''No amount of argument can, we should hope, lead sensible people in this countrj^ to put more money into railway projects in the Canadian Dominion, for not only is there no traffic for such railways, but, supposing there were, their owners are exposed to the constant danger thai the Dominion Parliament may grant a subsidy for a competitive railway to run half a mile off." Thus '^ sensible people " were invited to take notice, at the very outset of a new and mag- nificent career for Canada, that Canadian railways were likely to prove an abortion and a peril, and that the Government of Canada and Canadian private speculators were equally deficient in in- 13 tegrity and in common sense. Further, Canada Southern had been built to run half a mile off Great Western with the aid of a subsidy from the Dominion Government. At this i)oint I felt it my duty to interfere. The writer of the Money Article was not only aiming at this or that railway — a perfectly proper and wholesome thing, if fairly done — he was flying at higher game — at the Govern- ment of Canada, the credit of its people, and at its prospective railway development. In fact, we were to understand that whether for small railways or large, local or Government, if Canada ventured to approach London with insidious pro- posals for the British capitalist, the wiolder of that mighty power the Money Article of the Times would stand in the breach and defend tlie nation. It was a very delicate and difficult duty — to discharge it was likely to involve mo in all sorts of suspicions ; but I felt that it was time to chal- lenge these wild and wanton generalisations. The position of Canada is at this moment a peculiar one. I venture to assert that there is no country which presents to the world so well-founded a promise of an immediately brilliant and success- ful future. She is passing through the first stage of a great political and natiomd re-construction. The lull resulto of Confederation arc only begin- il'^li 14 / ning to appear; but what hj.vo been the im- mediate effects may be judged of from some of the facts taken from the latest official authorities which I shall append to this pamphlet. In the Maritime Provinces a provincial combi- nation is in a fair way of arrangement which must produce important social and economical results. The Dominion Government has un- dertaken to open the great West to the Euro- pean emigrant, and will do it by i-ailways constructed under its own authority, and ■\>'hich, if they come before the British investor at all, will do so in a form certain to recom- mend itself to his confidence. Population is pouring in ; the uninhabited parts of the old provinces, especially of Ontario, are filling up ; exports and imports are multiplying, production is increasing, the shipping trade and the tonnage are raising Canada to a high rank amongst maritime nations. She is striding along, and to aid her in her progress she is building railways, some of which will undoubtedly, if \\ell and economically built, (^quipped, and managed, be good investments. And in face of this we are to be met with the preposterous objection, "No ; Grand Trunk and Great Western do not pay on an enormously excessive capital. To make them pay there must be monopoly or combination. At all events, until those pay you ought to have 15 M %^ no more money from England.'' All that I say in reply to this is, that it is a wholesale Jind sweeping principle, maintained in the interests of monopoly and against the best interests of Canada ; a principle obviously unjust, since it is based f^oh ly on a past experience, in which English mismanagement has almost wholly con- tributed to the unfortunate results, and it takes no account of improving coiiditions or of the possibixities of better management. I then wrote to the Times my letter of the 9th ult., herewith printed, in which I simply asked the Editor to allow me to object to the too- sweeping criticisms of the Writer of the Money Article. It will be seen that the letter keeps clear of any particular undertaking, and simply •takes exception to those extreme, general, and inaccurate statements which involved the credit of the Dominion ard its people. Moreover, I suggested a number of queries wish regard to the past history of Canadian Kailways and the connection of their disasters with English blunder- ing : queries which it will be seen no one has even attempted to answer. If it were possible to suppose that a mimber of C-anadian capitalists could be found capable of investing money in impracticable undertakings, of building railways at excessive cost, and of carrying out a policy' of absorption and competition, which, even in such jf.'ja mm 16 a populous country as England, -vv^ould be ruin- ous, there could be no more public benefactor than the Writer of the Money Article in the Times were he to assist in exposing the delusion. But there is a great difference between that and telling the public that in a country springing into life with a vigour and rapidity which challenge com- petition, there is not and cannot be for many a long year an opportunitj'^ of safe investment in the railways which are to develop its resources, and to assist in placing its population. I desii'e to keep to this point. I see how hard it is to dispute the unjust portion of the remarks in the Times, and yet admit to the full every word that is correct. I have striven to do so, and I think, upon the whole, after carefully reviewing what I have written, that I may claim to have tolerably succeeded. On the 15th of April the Money Article returned to the charge with some animadversions upon my letter. My answer was contained in the letter of the 9th, and to that I have little to add. I merely wish to draw attention to the incon- sistencies of the arguments furnished by the Tifnes and its correspondents. On the 15th of April the Money Article contained a letter from Mr. Lewis Paine. The article alluded to the letter with obvious approval. In the article 17 were these words, in the same injurious line of insinuation previously pursued : — '' Canada has not dealt fairly by herself nor by the English investor, and no principle can be more sound or just than that which rules that Canada shall have no more English money until she has mended her ways." These be brave words. One would think the l^imes arrogated >o it; If the power to change the course of finance. It is always own- ing the omnipotence of the law of supply and demand: but heie pique and prejudice are to shut up the floodgates '^f investment. I apprehend that, in spite of this somewhat sentimental principle of business, railways in Canada will be built where they are wanted, and all the news- papers in Great Britain can no more dissuade the British investor from ** going into " them under such circumstances than they could stop the tide at London Bridge with one of theii* issues. But take Mr.Paine's statement joerci?«^ra. ''The Canadian lines have been made by foreigners.'' If they have been made by foreigners the re- sponsibility of the management must very con- siderably rest with foreigners, either directly or indirectly, and it cannot be correct to say broadly that *' Canada has not dealt fairly with the English investor." The more Grand Trunk and Great Western history is studied the clearer will B i 'Wm'i U ': «» 18 tliis appear. The responsibiliiy for nearly all their troubles rests upon EngUish management. This let any one challenge and disprove. For this reasou I protest strongly against the attitude assumed by Mr. Potter, and supported by the Times. I believe that everybody in or out of Government in Canada is prepared to do justice to these great railways, which have no doubt done much to develop her two most eminent Provinces; but they cannot be ex- pected to allow English boards to pursue a policy for which all on the spot decline responsibility or approval, and to bind up all the interests of Canada with those of what Mr. Paine is good enough to call " foreign" investors. The letter of Mr. Potter — which is printed herewith, and to which my letter of the 22nd was also a reply — was certainly an important contri- bution to this discussion, approved as it was by the writer of the Money Article as "graphic and veracious." I think it will be generally admitted that, even granting that judgment to be correct, it was eminently impolitic. I do not think it necessary to inquire what motives inspired the President of the Grand Trunk in writing that letter. "Whatever may be said about the past history of his railway, its interests are inex- tricably interwoven with the interests and pro- gress of Canada. The time must come, and is not 19 far off, when, even for the benefit of the Grand Trunk, it will he necessary to have connecting and radiating lines of railway running into the newly-opened districts. The improvement of Canada, the progress of Canada, does, to a large extent, depend upon the construction of such linos ; and although it may for the moment serve the turn of the President of the Grand Trunk to abuse all Canadian railway enterprises, the time may come when he will have to regret his too-successful aspersions. I am bound to say of the remarks with which the Writer of the Money Article closed the dis- cussion, that they were written in a better style and in a somewhat better spirit than those which had preceded theni. It is to be observed that there was an incidental attempt to explain the "broad fact" stated on the 1st April, "that whore the population is thickest the people will not travel by rail at any price," by converting it into " the French part of it (Le.y about one- fourth) mostly refuse to patronise the railways.'* An answer was then offered to some of my state- ments. It was alleged as to the capital borrowed by Canada from England for railway purposes: — " we find that the gross total now traceable in the Stock Exchange List is £40,994,000, ex- clusive of a loan of £2,000,000 raised in 1807 for the Inter-Colonial Bail way, £1,500,000 of which B 2 iHBm 20 bears tho guarantee of England." The follow- ing is, I believe, a correct statement of tho amounts advanced to Canada on railways, as appears by the Stock Exchange Lists, from which I again deduct the £0,076,000 discount on tho issue of Grand Trunk stock in 1873, which was so obviously a toss-up for a chance of profit that it is unfair to charge that large amount against Canada as advanced for her railways. STATEMENT OF CAPITAL IN CANADIAN RAILWAYS, WHICH HAD BEEN WHOLLY OR IN PART SUBSCRIBED IN ENGLAND. Taken from the London Stock Exchange Year-Book, 1875. Buffalo and Lake Huron Railway- Share Capital Bond Debt Canada Southern Railway — Bonds Issued European and North American Railway Bonds Issued Great Western Railway of Canada — Share Capital Bonds and Debentures Levis and Kennebec Railway — Bonds I sued ... Midland Railway of Canada — Bonds still in force Northern Extension Railways — Bonds Issued Northern Railway Company of Canada- . Bonds Issued ... £525,135 763,758 . 1 £1,288,893 • • • • •• 200,000 416,000 £4,469,310 4,198,240 8,657,560 ■*• ■!• 100,000 • •• ■ • • 264,000 ••• • * • 173,900 • •• ••• 685,000 ll 31 Thifl Company has also a share capital of £167,607, and n (h)vernment debt of jE47.'>,()00, both amounts held in Canada. Toronto Grey and Bruce Kailwuy — Bonds Issued Wellington Grey and Uruce Railway — Honds Ibsued Grand Trunk liailway — Ordinary Stock ... £10,925,144 Less Discount on last Issue 6,075,000 £247,000 118,300 Actual Cash paid Debentures and Bonds £4,860,144 lf),704,191 In addition tiie Grand Trunk has re- ceived from tho Canadian Government and the Bank uf Upper Canada the sum of £3j332,690 ; but it is said that fully a million of the Grand Trunk expendituro has been on their leased line, the iiuiiklo and Lake Huron. Total 20,654,335 £32,704,978 It ought to be stated that many of the Bonds of the Railways were issued at a discount ; but except in the flagrant case of the Grand Trunk's last issue of stock no credit has been taken for such deductions. I, of course, kiiv^w, as the writer suggests I ought to have known, that railways in their accounts always reckon capital by its gross nominal amount, aid that they do so because it is the only just way of looking at their liabilities. But a case such as that to which I have referred is clearly one that ought to be excepted; and, at all events, no one can have a right to charge against Canadaover £3,000,000 advanced by the Canadian Government. Besides, the original statement made in the Money Article was in these words, ''Thus, the Grand Trunk Eailway, on which NEARLY £30,000,000 HAS BEEN SPENT ALTOGETHER, 1^. 32 fire-sixths of it being English capital." It is clear, therefore, that the Money Editor of tlie Timer "annot ride oif victorious on the plea that the accounts of Grand Trunk Railway state '' capital expended" to he £29,900,000, including the discount of the last ordinary issue. I need not go over ■';he discussion about Grand Trunk and Great "Western again, because I have dismissed them on the very grojnd, which will be admitted by everybody who knows the history of those undertakings, that thej'' are not a fair specimen of railway n:anageaient in any country, and that it is not upon Canadian mismanagement that their failure is chargeable. Not even the injurious competition so heartily complained of is wholly due to Canadian '*reck- iesjness.'' The Y/riter oi the Money -article seems to think that reiteration of the disasters of these undertakings is a sufficient justilication ot his attempt at a wholesale slaughter of Canadian Railways. Let me, however, call attention to one very important reflection in Mr. Potter's letter. He states that there are already 4000 miles of rail- way in Canada, and 4000 more projected, to only 4,000,000 of people. The latter statement is an exaggeration, but let it pass. Supposing it were admitted ; let this state of things be compared with the popi'lation and mileage of some Western bd'X'fWiW' «iM4tLt4Jfe*tt.iaA-«-- 23 : \ Mi States. The population of Ohio is 2,770,000. She has 4,iI58 miles of railway, constructed at the great average cost of 74,254 dollars per mile. The percentage of dividend to capital stock is 3'22. The population of Illinois is 2,790,000. Shs has 6580 miles of railway, which cost 47,486 dollars per mile. The percentage of dividend to capital stock is 5 '22. The New England States have a population of 3,640,000, with 5314 miles of railway, averaging 6 36 per- centum of dividends to capital stock. Excluding Government railways through thinly-populated districts, and taking the population of the Maritime Provinces, Quebec and Ontario, at 3,300,000 in connection with their present rate of Increase, the existing railway system, instead of being as overgrown as Mr. Potter would have the British public to believe, is but imperfectly developed. The 4000 miles of railways alleged to be impending in Canada includes at least 3000 miles of the Government railway to the Pacific through the vast territories of the North- West, and Mr. Potter will be hard bestead to find the whole of the other thousand miles more of bona fide schemes of railways projected in the older and more inhabited Provinces. 1 submit, therefore, that Mr. Potter's vast generulisations have little importance. They should induce caution on the part of projectors " "ki/^ Jt- ' 34 and of investors, Canadiar or British, but they are far from justifying th«3 general aspersions of the two critics. The injustice of the line of argument pursued in the Money Article and by Mr. Potter is clear from two considerations. In new and unopened countries railways aro the most cheaply con- structed means of communication, and their suc- cess is a question of the extent of their grants and privileges from the Government, and the judgment with which, they arc projected, having regard to route, termini, and the character or resources of the country. The second considera- tion is, that the worst disasters of Canadian Railways scarcely transcend the misfortunes of roads in a country so favourable to railway de- velopment as Great Britain. It must always and everywhere be a question of the prospects of each particular scheme and the management These are reasons why I deprecate the sweeping reflections of the Times ^ and its "graphic and veracious '' correspondent. To damn Canada in the Stock Market and in Lombard Street by threatening to associate her with Honduras is a wiJfiil and almost wicked piece of perversity. It must be left to the reader to judge how far it has been and can be justified, and to brush from his mind any of those wild prejudices which such imputations may create. Then he may fairly 25 turn again to consider any proposal which is pre- sented to him in the light of Canadian improve- ment, vigour, and promise, and accept or reject it by the test of its practicability or its ab- surdity, ■■'-■n-'-^.:- ■:*, I must, before I conclude, say a word or two about the origin and meaning of that general discredit which it is sought from so many quarters to bring upon Canada in relation to her finance. A country with her resources, and with a debt of only a little over £6 per head, exhibiting such evidences of progiess as are shown by the few figures with which I supplement this article, can only be hooted out of the English market by some interested conspiracy of persons who have found that their interests did not coincide with hers. Whether there is any open evidence of a conspiracy — or even a fortuitous concurrence of antagonistic atoms — I will not here presume to say. But I have observed, both in the Times' comments and in those of other news- papers on Canadian financial schemes, an indication that there is somewhere a powerful party endeavouring to excite a feeling in the financial world of general antagonism to Ca- nada. Who is this party? In a long article in the Railway News upon the Government and Kailways of Canada, a contrast is drawn between the despatch of Lord Elgin in 1853, and the then 7z:^zjsi ..nmmmmmtmmmim ;; M su m avowed policy of a GovernmeTit formed by a legislative union of only two pioTinces, and the policy of the existing Government of a great Confederation. It is said, '' a policy which recognises only the material interests of the country, which places no value upon national credit or reputation, and which, in pursuit of the most shadowy and imaginary benefit to itself, has recently endeavoured to coerce a British colony beyond its own jurisdiction into confiscating the rights of those who have brought the Dominion into telegraphic communication with Europe, is that which has been deliberately adopted by a Government which displaced an Administration that did not hesitate to sacrifice public interests for private gain." I draw attention to this paragraph as a significant indi- cation of one quarter from which much of the present antagonism nay possibly spring. The interests of a late Governor-General of Canada and a number of his co -adventurers have been affected by the just and necessary action of the Canadian Government to prevent a monopoly which was interfering with the facilities of trade and of Imperial communication. I am not going iiere to discuss the Telegraph Bill of the late Session. It is enough to say that anyone acquainted with the subject will admit that no more bare-faced attempt to maintain unrighteous monopoly in the 27 teeth of national interests has been made since the days when monopolies were bough i, and sold in Whitehall, than that which a powerful com- pany, carrying with it strong financial and political support, has made to retain its injurious rights, and to injure the credit of a country and Government which had the reso- lution to recognise and to check its arrogant pretensions. The Anglo-American Telegraph Company, having succeeded in stopping the first Bill, had ample opportunity for convincing the Canadian Parliament, which gave it a fair hearing, that it had any rights which that Bill unjustly disregarded. And yet it would appear, from such hints as those in the Railway News^ that there are people who would fasten upon Canada the stigma of bad faith, and discredit her in finance for the correctness of her policy. In conckision, I may say that, though this dis- cussion has been a warm one, I trust it will not be without its good eft'ects, and that it will leave no ill-feeling to follow it. Interest, either of pocket or reputation, may blind men to facts, or lead them to look at them incorrectly. Or a man's anxiety to do the public an honest service may carry him beyond the bounds of fair play and into the region of exaggeration and mis- representation. Then comes the clash of opposing m w ^ 28 opinions, and out of them grows the sober truth. That I should have found myself obliged to differ with two such authorities is a matter of regret to me. I trust that out of my share of the discussion they can find, on a quiet review, nothing to condemn in either spirit or intention. 29 A FEW " BEOAD FACTS." The following statistics ' are drawn from the official reports submitted to the Dominion Parlia- ment, and demonstrate a remarkable advance in the wealth and enterprise of the country, espe- cially during the last seven years, since Con- federation took place : — Population by census of 1861 ... ... ... 8,090,.^61 „ „ 1871 3,485,761 Or, including British Columbia, Manitoba, and Prince Edward Island 3,718,745 Now estimated at 4,000.000 Immiqeation in 10 years, 1861 to 1871 ... 204,698 „ 2 years, 1872 and 1873 ... 86,628 •^1 m * n it DEPOSITS IN SAVINGS BANKS. $1,687,807 2,451,339 3,411,418 4,569,296 6,250,733 6,165,221 7,210,260 Note. — Manitoba joined in 1872, British Columbia in 1873, and Prince Edward Island in 1874. BANKING CAPITAL OF THE DOMINION. June, 1870, returned at $29,801,013 Sept., 1874, „ 71,766,666 Balances, June 30, 1868 It „ 1869 ft „ 1870 M' „ 1871 »# „ 1872 It „ 1873 it „ 1874 ^1 GENERAL TRADE OF THE DOMINION. 1860 1867 1868 1869 1870 1871 1872 1873 1874 Value of Imports and Exports $ 68,955,093 119,797,879 131,027,532 130,889,946 148,387,829 170,266,589 194,070,190 217,304,516 216,756,097 :i*i 30 The returns for 1860 and 1867 are for the two Canadian Provinces only ; from 1868 the Mari- time Provinces are included. In 1872 Manitoba and British Columbia figure for the first time, and Prince Edward Island appears in the 1874 returns. FIRE INSURANCE BUSINESS. $161,475,621 230.753,891 275,754,835 835,680,003 45,409,769 77,500,896 1869 . . . Amount Insured 1871 1873 LIFE INSURANC] 1869 ... Amount Insured 1871 1873 SHIPPING OWNED IN THE DOMINION. By last return it is stated to be 1,200.000 tons, making Canada the FOURTH LAIlCiEST SHirOWNING COUNT KY IN THE WOKLD, ranking next to its neighbour and rival the United States. RAILWAYS OPENED AND WORKING IN THE DOMINION. In 1874 Miles 8850. Traffic in 1872 on 2508 miles, for which returns were given... ^15,436,018 Traffic in 1873 on 2Gi9 miles, for which returns were given 17,139,876 Or equal 10 £23 IBs. 4d. per mile per week in 1872. £25 „ .. IK 1873. ft i> » These returns include the Inter- Colonial Rail- way — a line built for strategic and Imperial reasons, at the instance, and partly at the cost, of the Imperial Government, and which it is well known cannot obtain traffic sufficient to pay its expenses, but is always dependent on Govern- ment aid. However, in spite of this depre- ciating element, the returns for 1873 show, on the whole, Canadian lines which give returns, on a hasis of 75 per cent, for working expenses^ £6 per week per mile clear, or enough to pay a 5 per cent, dividend on a cost of £6000 per mile — a figure at which it is said lines could easily be constructed and equipped. TELEGRAPHS. As a final indication of the activity of Canadian business life, I give the Statistics of Telegraphy from one company only : — 1873— ofiices open, 1118; messages sent, 1,633,282. The following articles have appeared in the Nation J Globe, and Mail of Toronto, and I insert them to show how the unreasonable attacks of the Times ha^^e been received in Canada. (From the Nation of Toronto.) There cannot be the least objection to the London Times advising its readers as to good and bad invest- ments. But it is invidious and unjust to single out a particular country, as it rnoeutly did in the case of the Dominion oi Canada, and condemn all its railways and its people without sufhoiGut reason. It is not alone in Canada that competitive lines are being built, and the Great Western is not the only line that has its Canada Southern. Competition is a law of rail- ways, steamboats, and all branches of commerce in all parts of the world, England included, and if the Times wishes to combat this principle it need not cross the Atlantic to find an example. As to the alleged III fc i m P9P i ii damage done to tho Groat "Western by the Canada Soutliorn, it is the opinion of many here that Great Western losses are due to another source than compe- tition — namely, mismanagement. That the losses are severe is undoubted. From the last half-yearly report of the Company wo learn that the nt^tt receipts are £78,000 sterling less than in the correoponding half of last year. But wo have notliing to show us that this falling otf is due in whole or even in part to com- petition. Very possibly a general decrease in trade, and an unusually severe winter may have had something to do with it. We would also draw the attention of the Ti7nes to the fact that in some cases, at all events, Canada has to thank Imperial policy for our railroads being built in such a roundabout direction that they thereby invite the construction of competitive lines. The Inter-Colonial, costing its millic ns, and built on strategic principles, is a case in point. The railroad contemplated in British Columbia, which is estimated to cost over two millions, is another instance of a political railroad for which the Colonial Secretary is responsible. If the Times has a case of complaint against Canada for building competitive lines, Canadj. may, in some instances, plead as her justification tho Imperial policy that necessitates them. (From the 7'oronto Globe.) The London Times has, it appears by a cable telegram we published yesterday, given one of its wild and reck- less lunges at Canadian credit. The Times warns the people of Great Britain to distrust Canadian railways. "No amount of argument can, we should hope," exclaims the Times^ " lead sensible people in this country to put more money into railroad projects in the Canadian Dominion, for not only is there no traffic for such railways, but, supposing there were, their owners are exposed to the constant danger that the Dominion Parliament may grant a subsidy for a com- petitive railway to run half a mile off. In this way the Canada Southern has been built, to the ruin of the proprietors of the Canada Great Western. If the 33 belief iu the havf 'Iiomes criticised ia too profound umongst Canadians, as wo aro told, we Bay again, lot them find money at homo. Millions enough have been presented to the Dominion already by this country." The TimcH should bo sufficiently well informed to avoid being led into making allegations so wide of the truth. The assertion that there is no traffic for Canadian railways is directly disi)roved by the facts. It is certainly not a want of tramo that lias got the Great Western of Canada into difficulties ; nor is that the cause why the Grand Trunk has presented such unsatisfactory balance-sheets. If the Grand Trunk had b<3en built as economically as the Canada Southern was built, it would long ere this have paid regularly good dividends on its capital. Equally wide of fact is the suggestion that the success of a railway may at any moment be perilled by the '* Dominion Parliament " granting a subsidy to a rival lino. The Dominion Parliament, it is unneces- sary to say, does not subsidise railways at all, except in so far as they form part of the Pacific llailway scheme. There has never been, nor is there ever likely to be, a single instance in which the Dominion Government has subsidised, or will subsidise, " a com- petitive railway." Oddly enough, the Times, to make out its case, stumbles upon a railway that is not even within the jurisdiction of the Dominion Parliament — the Canada Southern — which derives its existence from the Ontario Legislature. Moreover, the Canada Southern was built without one dollar of subsidy from the Ontario Government. True, the Ontario Government aided by a small bonus a short branch road of the Canada Southern at its western extremity ; but that grant was made long aftfjr the Great Western had become involved in its present embarrassments. Unfortunately for the Canada Southern, it has never yet been in cir- cumstances to " ruin " any competing line. If any- body wants to know why the Great Western of Canada is in difficulties they have only to look at the report of the late Committee of Investigation to find out all C 11 I 34 / about it. Thoro lias boon plenty of mismanngomont ; vhiity of foolish t)OinpetitL)n botwoeu tlio Great Western and C>ran enterprise in Canada in the past, and the miserable position of most of the existing lines may well make some manipulation of tlieir stock necessary as a preliminary to a new effort at borrowing — an etfort whicii, I'or the sake of the Dominion as well as of the English investor, we hope will prove entirely abortive." Times, April Is f, 1875. '' A telegram has been received by the Presidents of the Grand Trunk and Great Western Railways of Canada from the General Manager of the former line, Mr. Joseph Hickson, which runs as follows : — " ' We have settled all rates and fares on equal terms over the whole field of competition. They go into force at once.' This is a very satisfactory step, and likely to improve the position of these properties if fairly carried out. Competition in a sparsely-peopled country like Canada couM do neither railway good locally, and where the population is thickest, the people, we believe, will not travel by rail at any price, and as against competing lines in the United States, the more thoroughly the Canadian system is welded together the ,^t: 38 stronger it •will be. At the same time the mere fact that this policy is the first req aisite to any solid impro^e- ment in the financial position of (.'ven the strongest Canadian lines proves how liope' jss any further oom- potitive schemes must bo — schemes suoh as tho North Shore or the Northern Colonisation linos, to which wo alluded some days ago. "When traftio is so small that the public are safe from extortion after all competitive action has been withdrawn, it is madness to spoak of more railways. They would, at all events, pro re ruinous to British investors, and cause the name of tho Dominion to be in as bad repute as that of Honduras." Times, April Srd, 1875. " We are glad to publish the following letter,* because it affords the best evidence we coidd have got of the nature of the enterprise which we condemned and still condemn, so fa.r as it is offered as an investment to the English public. The Northern Colonisation Railway is, as is here admitted, a section of tho groat scheme involving the construction of the Canadian Pacific, and tho ' North Shore Line,' the latter being in direct competition witn the Grand Trunk Railway, the past struggles of which ought to prevent enthusiasm. We have, howeve>", no motive to defend that railway from competition; if people think that where one does not pay, two may, we can have no objection. Our purpose is simply to point out to the English public that this renewed eifoi-t to get monej'' (it was first heard of in 1872) for those railways ought to meet with no encouragement here. Taking the geographical positions as laid down by Sir Hugh Allfvii, what are the facts warranting the suppo- sition that, such a railwn}' a^ his can hope to be worked with a chance of profit for, say, the next twenty years ? It runs between Ottowa and Montreal , the former city being the Dominion capital, with a popidation of some 25,000, and as much out of the region of business as Washington. There is already a railway to it through a more populous country, and in direct contact with t^o system of the United States, where what trade the dis- Letter referred to was one from Sir Hugh Allan. 39 triot hap chiefly lies at Presctjtt, by which the lumber traftlo, almost the only carrying trade there i?t, can be better conducted than it could be by the Northern Colonisation by way of Montreal, where the Grand Trunk liaB a bridge over the St. Lawrence, but Avhere it woidd have none. There is no business, then, be- tween tlio two termini worth competing for ; but i)os- sibly there is some on the route tliat might be capable of keeping a line alive. We should much like to know where ? The country to the north is em]')ty of people ; to the soutJi nearly co ; and in the south the Kne has, or will soon have, to compete with the otlier more direct routes between the political capital and Montreal. Such is the Canadian mania for railway building. It would have to compete in the bulk of its wood carrying with two rivers, besides the Ottawa, tht> St. Lawrence, and one existing railway, the Ottawa and Prescott, oast- ward, while the Canada Central is fully equal to all the trade west and south, and there are no passengers to cany. The 100.000 odd of Montreal have little busi- ness in (Ottawa or the north, and have abundant ac- commodation for travelling in any other direction in which they want to go. Let Sir Hugh Allan build his railway by all means, but with Canadian money.*' '£iMES, April 6t/i, 1875. The s'lbjoined has been sent to us for publi- cation : — . v\ :;'■:•' '^'^ ■' ' '"''"' ' ' "^""-" '^ -''•''■■/"]! ^ . " London, E.C, April 3rd. " Sir, — As one largely interested in Canadian rail- ways, I beg to thank you for the remarks made in your Money Article of the 1st instant. It is satisfactory to find that the respective boards of the Great Western and errand Trunk have had tlie wisdom to abandon o, competition which could only .sacrifice the interests oi' their respevi'tlve constituencies, and benefit those whose personal iu forest in those companie.? is simply niL It seems that the only concern of the Canadian people is to get the money spo it in their country, entirely regard- less as to whether any return accrues to those who find the capital or not. Surely this is a short-siglited policy ^is^^^y //• 40 on their part. At the present time millions of money advanced by the English public yield no return, what- ever ; nearly all the capital represented by the two principal companies is imremunerative. Duiing the last year the entire return on the whole of the Pre- ference and Ordinary Stocks of the railways referred to has been the payment a.t the rate of 2^ per cent, on Grand Trunk 1st Preference Stock. " You may well warn th' public against entering into any other schemes which may be brought before them, notably those to which you refer, which, notwith- standing anything urged to the contrary, are actually competitive lines to those already in existence — lines which may popsibly serve the interests of those who have concoc' i them, but which cannot possibly yield any return tc ' > who ma}' be foolish enough to lend their money tc ds carrying thorn out. After the revelations of Canadian honesty in connection w''h the Pacific Lino and the late elections in that count v, it behoves us to watch narrowly auy fiu'ther attempts to borrow money hero, which can only end as previous ones have done, in the loss of more than hidf tha capital embarked. — I am, &o., ''Ak Ordinarv and Preference Holder." ' TIMES; April m, 1875. " Several further letters have reached us bearing upon the Canadian I^aihvay question, and amonf:j the rest one of very greet length by Sir Hugh Allan, which goes over again minutely the whole position, forming a most elaborate prospeCns of the scheme. Wo regret that we cannot publish these letters, nor any of them, not merely because tliey are long, but because the subject lias been already sufficiently dealt with. No amount of argument can, we should hope, lead sensible people in this country to put more money into railway projects in the Canadian Dominion, for not on!}- is tliere no traffic for such rail- ways, but, suppo iug there were, their owners are ex- posed to the constant clanger that the Dominion Parlia- ment may grant n. subsidy for a competitive railwa^^ to run half a mile otF. In this way the Canada Southern 41 has been built, to the ruin of the proprietors of the Canada Groat Western. If the belief in the value of schemes such as we have criticised is so profound among Canadians as we are iold, Ave say again let them find tlie money at home. Millions enough have been presented to the Dominion already by this country." On tho loth April the following letter from me appefTed in the general columns of the Times : — CAITADA AND ITS RAILWAYS. To the Editor of the Times. '' SiE, — As the remarks which have appeared in the Money Article of several recent issues of the Times have relations to the general interests of the Canadian Government and people, far more wide than those therein directly adverted to, I must ask you in all fairness to permit me, as the representative of Canada, to offer a few words in remonstrance against the tone and bearing of those remarks. I should have askt \ this opportunity at an earlier date, hut that I have been seriously indisposed. " As my concern with the subject is only in relation to its general bearings, I am sure that your courtesy will permit me to withdraw it from the financial corner of your newspaper into your other colunms. *' The immediate subject or cause of the ani- madversions which the writer of the Money Article I has made upon Canada was, I believe, the prospect '■■' of an a])i)eal to the British public for funds on : behalf of the railway to connect Montreal and , Ottawa, which, as it was alleged, would simply be a fatuous rival of the Grand Trunk Railway. *' It is not my business, nor am I personally . interested, to enter into that controversy ; but I desire to point out to you that wliat has been virtually laid down in the Times ^ and requires to be either explicitly defended or withdrawn, is in effect this — that because the Grand Trunk and \ Great TVestern Railways have not paid, and a::, not 1 tying, anything like proper interest or dividends on their immense capital, any other schemes which may be held or proved to com- pete with them, however superior their advan- tages, ought to be discarded by British investors, t And I also understand that a second principle of a far more perilous and gcnv^rul character is insisted upon by you — viz., that it is an immoral ;: thing lor the Government of the Dominion, or %■ for any of the Provincial Governments, to sanc- tion or to aid any schemes which arc likely to be injurious to the interests of the Grand Trunk and ; Great Western Railways. '^ If these principles are not to be dediiced from the words of your Money Article, I am in serious error, and I shall be very glad if it should turn out that I have placed a wrong intcr- sISSl' 43 pretation upon theiu. In the meantime, on be- half of the Gover'rmcnt and people of Canada, v/h'oso good faitij, honour, and responsibility have been deliberately attacked in your columns, I haye to ask the pnblic to inquire for itself on behalf of what enterprises, and on what respon- sibility, they are asked to visit Canada with this drastic punishment. , ; * "The injured tone adopted in your journal would justify ignorant persons in supposing that the people and Government of Canada had con- cocted gigantic railway schemes which they had presented to the British public ; and that now, indifferent to the interests of those who had been half ruined by these schemes, they were preparing to establish other enterprises which would throw them into the background. * * Butf Sir, I ask that the public will tirst inquire — Where were these vast schemes originated? Who built and equipped these railways ? Who were the contractors and the engineers ? How much per mile did these railways cost ? And, at the same time, let the question be asked and answered, llow much per mile have railways managed and financed in Canada, and now pay- ing largo dividends, cost per mile in compari- son ? Let the question also be asked — How much of ell the vast sums of money expended on these enterprises has reached and benefited 44 ^' Canada, and h )W much has remained in Eng- land ? And, again, how much from first to last has the Government of Canada itself advanced and expended in the effort to make these rail- ways property equally advantageous to Canadian and to English interests ? When these questions have been answered, if it should prove that the unfortunate shareholders, in whose interests I have no doubt that you are conscientiously writing, have less to complain of Canadian Governments and Canadian people than of other persons, to me unknown, it will at least be only just that the responsibility for the misfortunes attending these schemes should rest upon the proper persons. '' As regards the uncalled-for attack upon the honour of the Canadian Government, contained in the direct charge published in your money article of the 6th of April, I am obliged to give it an un- qualified contradiction. You say, without refer- ence to locality and necessity, ' 'No amount of argument can, we should hope, lead sensible people in tliis country to put more money into railway projects in the Canadian Dominion, for not only is there no traffic for such railways, but, supposing there were, their owners are exposed to the constant danger that a iJorainion Parlia- ment may grant a subsidy for a competitive railway to run half a mile ofi*. In this way the 45 Canada Southern has been built to the ruin of the proprietors of the Canada Great Western.' With all respect, I am obliged to say that this charge is as ridiculous as it is unfounded. The geography of the Dominion is open to any school- boy, and though they run parallel and near each other it would be interesting to know at what point the Canada Southern and the Great Western come within half a mile of each other. In the second place^ the Canada Southern never received any subsidy from either Dominion or P .ovincial Governments. " In conclusion, I have but one v;iuestion to ask. I appeal to you to know whether you are pre- pared deliberately to insist that all other enter- prises in the Dominion of Canada, developing as it now is with unparalleled rapidity, arc to rest in abeyance ; are to be discountenanced by the people and Government of Canada ; and are not, however promising, to be aided by the capitalists of England until the Grand Trunk and Great Western Eailways are paying interest on their bonds and dividends on their capital ? " I have the honour to be, Sir, " Your obedient servant, " Edward Jenkins, *' Agent-General for Canada. " Canada Government Building, " King Street, Westminster, April 9." I • 415 TlMES, April 15th. "It is witli som3 reluctance that we recnr to tlio sn])ject of Canadian Ivaihvays, their pusitioii bcincr so plain to all men. But Mr. EdwardJenkins, the Agent- General of Canada, has chosen to publi.^h a letter com- plair.lng, in a deeply-injured tone, of our statements, and by his outcry iniplie? that we have dealt unkind blows at the credit of the Dominion. We are sorry that Mr. Jenkins does not better comprehend the state of affairs ; and in publishing the following reply to his letter, we take the liberty of recalling a few prominent facts which will show how the matter stands. At the lowest estimate this comitryhas lent (Canada £38,000,000 for railway purposes, only about £10,000,000 of which yields any return. Thus the Grand Trunk liailway, on which nearly £30,000,000 has been sj)ont altogether, five-sixths of it being English money, pays nothing on about £20,000,000, and only paid 2^ per cent, last time on its first preference stock. The Great Western of Canada, to Mdiich this country has given eight odd millions out of nine odd, -pays nothing now on five of that eight. The Canada Southern is in default on its bonds ; the Midland as well ; while the Prescott and Ottawa — the railway with which the Northern Coloni- sation line is partly to compete — was sold some time ago to pay fci its rails — its capital and bonded debt being thus clean wiped out. So with the small lines that run up to Lake Huron, and towards Georgia Bay, with a view to draw the Western American traffic to Canada, and away from Chicago and Milwaukee. Most, if not all, of them have been disastrous to their owners. Some of these lines paid formerly better than now, but, as our correspondent points out, reckless dis- regard of existing interests in the planning of competing lines, has brought them to the verge of bankruptcy. Surely, with such a state of things, while three-fourths of the English cfipital spent on Canada is unproductive, it cannot be expected that we shall go on lending to all comers, asking r.o (juestions? Canada has not dealt fairly by herself nor by the English investor, and no principle can be more sound or just than that which 47 rules that Canada shall have no more Knglisli money until she has mended her ways. These are the broad facts, and they sjieak for themselves, so that we need not dispute ^vith Mr. Jenkins whether cxistinif railways do race with each other, half a mile apart or not. Some of thorn have been so made as to ruin each other, and that is enough. But, indeed, Mr. Jenkins carefully avoids disputing the facts wc :^ "Stock Exchange, April 13, 1875. " 8ir, — A letter has a])peared in the Tunes of to-day from Mr. Edward Jenkins, Agent- Greneral for Canada, on the subject of Canadian Eailways, which, however convincing to Canadians will not, I apjirehend, bo equally so to the unfortunate shareholders who are re- ceiving no retui'n for thair investments. The letter touches principally on two points— first, that tho Canadian Government is not responsible for the unre- munerative character of the preseni linos ; and, secondly, that this state of things should not deter investors from subscribing to other lines constructed iq^on a cheaper principle, llospecting tho first point, contrast Canada with other British colonies. It will be found that tho Dominion has nearly as many miles of rail- road as all the rest put together, and that the money expended is not far different. The Canadian lines, however, havo been made by foreigners, while other colonies have made their own, raising j^g necessary capital on bonds. ' " " As regards the railways, the Great Western was made first, and for a few years, having no competition, paid a fair dividend. Subsequently the Grand Trunk was projected as a continuation of the Great Western from Toronto — this idea being afterwards modified in favour of a line running parallel nearly the whole length of the Great Western. Tho inevitable result Hi 48 H ensuod ; the Grent "VVostem paid no dividend, and tho Grand Trunk fo • many years scarcely paid working expenses. A few years later, when trade increased, tho Great \^'^estern earned a fair dividend and the Grand Trunk appeared to be overcoming its difficulties, " At this juncture, however, a new line is made — the Canada Soutliern — running in the same direction as the older «^ompanics, and again with similar residts, diverting from the Groat Western enough traffic to destroy tlie dividend, and injuring botli lines by ex- citing lierco competition. It must be remembered that, although these railways weid made by foreign capital, thoy were authorised by special Acts of tho Canadian Legislature, and the shaioholdors are surely entitled to expect that no further mileage will be sanctioned than will yield a pecuniary return and aflbrd suflicient business facilities. " It cannot for a moment be supposed that if, as in the other colonies, tlieso undertakmgs liad been made by tho Canadian Government, the Canada Southern would ever have been sanctioned ; certainly not imtil the existing lines had shown themselves capable of earning fair returns on tho capital expended. " Respecting Mr. Jenkins's second point — viz., that lines of cheaper construction may pay — it may bo stated that the Grand Trunk now only earns a divi- dend on about seven millions of capital, or, say, on a cost of £5,000 a mile ; and even for this the company has expended nearly two millions on the 8t. Lawrence and International Bridges. In fact, at tho present moment the market price of Grand Trunk represents little more than the cost of the rolling stock, rails, and bridges, leaving almost notliing for making the railway. " I am. Sir, yours obediently, "Lew^is Paine." Times, April IWi. The graphic and veracious history set fortli in tho subjoined letter should finally end all dispute upon the question of lending more money to Canada for railway # projects. No othflr country in the world could furnish Buoh a chronicle of disaster extending over so long a period:-— ^ *' Offices of the Grand Trunk Eailway Company of Canada, 21, Old Broad Street, E.G., April 13, 1875. *' Sir, — The letter of Mr. Jenkins, Agent-General for Canada, in youi- columns of this morning, requirns in many of its statements correotiou and elucidation, ■which will not be without value to those who are solicited to invest their capital in the bonds of newly- chartered and largely-subsidised Canadian railways. The greater portion of these lines compete, directly or indirectly, with the existing lines now in operation, and the new schemes are subject to the same conditions of climate, river competition, and incidents of traffic as the existing railways. " There are about 4000 mijes of railways open and at work in the Dominion of Canada, a mileage greatly in excess of the proportion w) h exists in England relatively to population and t*; the industrial products of the two countries. " Beginning with the Maritime Provinces of New Brunswick and Nova Scotia, now an integral part of the Dominion, all the railways there, except the Wind- sor and Annapolis, were constructed by the Provincial Governments before confederation. They connect Halifax through the Piotou coalfields with St. John's by means of a section of the Intercolonial, and the In- tercolonial gives a complete railway communication between the Maritime Provinces through Mcnf^ton, Newcastle, Bathm'st, and the Bay of Ohaleur with the St. Lawrence, and to a junction with the Grand Trunk Bailway at Biviere du Loup, in the Province of Quebec. '* The Windsor and Annapolis Company is a total wreck of British capital, and Mr. Brydges, chief Com- missioner of the Intercolonial and General Manager of the Nova Scotia and New Brunswick Railways, in the month of October last, when I was in Canada, presented to the Dominion Government an able, elaborate, and I' il 10 sxliaustive reporf , in wliicli he showed that the working of the Nova Scotia and Now Brunswick Brilways left a large annual loss to be met by public taxation ; that is to say, the expenses in operating these lines consider- ably exceeded tho gross traffic receipts. " The Intercolonial itself, it is universally acknow- ledged in Canada, caLUot be kept open during the whole year without a heavy loss. I have been over the whole of that line with the engineers and contractors, and have examined various estimates and calculations of the annual loss to be met by taxation which it will cost the Dominion, or the contractors, if the working be let by tender, to work that railway, ranging from £50,000 to £100,000 per annum. " At Eiviere dn Loup, on the St. Lawrence, the Grand Trun^: of Canada commen(;os its course, and at present alone occupies the district to (iuebec, Montreal, and Prescott. To borrow Mr. Jenkins's language, this railway was ' managed and financed ' during its in- ception and construction, and for years after its first opening it was also worked by the Canadian Board, nominated originally by the Prime Minister of Canada, with a committee in London to raise and remit the funds. "The Grand Trunk was largely subsidised by Canada to the extent of three millions sterling, and in the first instance this subsidj'', only a loan, was ulti- mately, by the liberality of Canada, converted into a fre« gift. In addition to this subsidy of £3,000,000, English bondliolders and shareholders contributed £9,000,000 more, and tho contractors, Messrs. Bras^ey, Peto, and Botts, left behind ^hem in Canada a losis of £1,000,000 on its construction. For years after its opening the Grand Trimk did not pay its working ex- penses, and Mr. Jenkins will be good enough to note that to a bondholder cheap construction avails little where gross receipts are bss than working cost. Pro- bably he does not know that cheap construction always means, in tho end, dpar maintenance and excessive renewals. Even after a growth of fifteen years the Grand Trunk of Canada, unompeted with along its whole line from Riviere du Loi'p to Quebec, Montreal, 51 e 1, and Toronto, has only yielded for the first time in its history interest out of iv'venae upon its original bonds and capital of £12,000,000 orof £13,000,000, including the contractors' contribution of £1,000,000, a sum of £80,000 in the year 1874, or about sufficient at 6 per cent, to pay tho interest on .£1,300,000, and this not- withstanding that an additional £1,000,000 fresh capital lias been spent since 1869 in changing the ex- ceptional gauge, in steeling, ballasting, and completing the line, and in providing an entirely fresh rolling stock and eqiapment. "The severe cond.:ions of Canadian climate and traffic, and the competitioi; ^f a bankrupt and subsidised line, the Canada Southern, threaten in 1875 to lessen, if not to extinguish this inadtquatt! pittance of £80,000, nett result on'a capital of £12,000,000 or, £13,000,000. "Proceeding westward li'om Montreal, Canada is supplied with another railway constructed with English capital, the Prescott and Ottawa. That, like the Grand Trunk, has proved a total loss to its original proprietors, and is now working barely able to make both ends meet, and to provide adequately for the maintenance and renewal of its permanent way and rolling stock. " In tlie same direction westward the next Canadian Eailway is the Brockville and Ottaw-a^ also constructed with English capital. The eminent firm of Bolckow, Vaughan, and Co., who supplied the iron rails, and received in payment the bonds of this company, were compelled, owing to default of the bonds, to take possession of the line, and they have recently sold it, at a heavy loss, to Canadian owners. It has been re-con- structed, and is now called the Canada Central. " Immediately west of the Bruckviile and Ottawa comes the Midland of Canada, another railway originally built with English canital. i^ars i^.go the Midland of Canada was also reconsiructed and rechristened, *ts original capital wiped out, and upon an issue of fresh bonds so recently as the year 1873 default has been made and the interest thereon funded. " The Midland connects the Grand Trunk from Coburg and Port Hope with the Georgian Bay. d2 (I 52 I *' Next to the Midland of Canada is the Northern of Canada, from Toronto to Collingwood, on the Georgian Bay, and the oric^inal share capital of this has also been wiped out by a lieconstruction Act. " The present condition of the Great Western of Canada, well located in AVestern Canada for both local and through traffic, is Avell kncvTn to the Elnglish public ; the results of the working for the year 1874 show a 1-rge deficiency in providing the interest on the bonded debt, and the prospects of the current year, so far as it has gone, according to the published returns, indicate results less favourable than for 1874r *' The history of the Buffalo and Lake Huron, also in Western Canada, wliich is now a part of the Grand Trunk Railway west of Toronto, on which a very large amount of English capital has been expended, is as disastrous as the history of the Grand Trunk or the Great Western. " There are in Western Canada two other small lines belonging to English capitalists, the Welland and the Erie and Niagara, and they are more complete wrecks than any of the preceding companies. " In tliis enumeration of Canadian Railways I believe I have exhausted very nearly the whole of the 4,000 miles now in operation. " There are certain branch lines, the Wellington, Grey, and Brucf?, and others, belonging to the above corpora- tions, and which have been mostly constructed since 1871, under the auspices ot the Great Western of Canada, and upon guarantees given by that company to cover the interest of the bonds raised in Londou. It is impossible to ascertain their real condition in respect to gross receipts and working expenses for two reasons: — " They may probably pay the parent line in the traffic which they collect and send over it, and yet they may not recoup the cost of working out of their own proper business. '■ -.i ----- --.-r^-.^y:-,--' -^ ■-,.... ^. .^.-,.-,:-,^-.^:^-. "They are new and very cheaply 'constructed, and in a few yet. rs the renewals of their light iron rails and wooden bridges and imperfect alignments >vill probably 53 ' -^ *-. amount to move than their receipts. They have no rolling stock to maintain and renew. "Mr. Jenkins says there are railways working in Canada, ' managed and financed ' in Canada, now pay- ing large dividends, where the cost per mile in compari- son with the nearly 4000 miles constructed mainly by British capital has been considerably less. I know of no such railways, and yet I have visited every mile of railway in the Dominion. " There are two short 3ft. Gin. narrow gauge lines from Toronto, called the Toronto, Grey, and Bruce, and the Toronto and Nipissing, w^hich have been opened now for two years. They are cheaply constructed, with iron rails under 40 lb. to the yard, and they are not yet old enough to realise the cost of maintenance and re- newal charges, either to their permanent way or roiling stock. They do at present pay the interest on their bonds, but no dividends upon other capital or stock. When they have been open sufficiently long to show an average expenditure for m.aintenance and renewals, and at the same time to pay interest on their bonded debt, then it may fairly be said that they form an exception to the general experience of railway working in Canada. " During tiie past winter the greater portion of theso two railways has been closed to traffic for nearly two months, off and on. They occupy a district north of Toronto, where the rigours of tin* climate make it im- possible in Canada to keep o, i railway except at an actual loss in January, ¥eb'Uar\, and March, the liar-.iS': season of Canadian railways, wb n the rates are not. affected by the water competition. " And now a few words upon the immediate subject of this controversy — viz., the proposals of Sir Hugh Allan and his fellow projectors for the issue of tlu onds of his railway — the Mon+real Northern Cyolor sation Eailway from Montreal to Ottawa. " Wiien Sir Hugh Allan was in England two years ago a« President of the Canadian Pacific Kailwav '■ . brought with him these same proposals ; but his i .re to interest the English public in his Canadian ^ I'acific enterprise doubtless prevented him from offering the // 54 bonds of the Northern Colonisation, itself a subsidiary scheme to his Canadian Paciric. " In the Allan correspondence which was betrayed to the pnblic by one of <-he associated partners in Sir Hugh jMlan's Canadian Pacific scheme, Sir Hugh has left a graphic record of the mode by which he obtained, through French speeches and by an active canvass among the ratepayers of Montreal, the subsidy of £200,000 sterling- He described in this canvassing tour the scope and purpose of the Northern Colonisation. It was to be connected on the east by the North Shore Eailway from Montreal to Quebec, and on the west from Ottawa by a hne running through the district north of the St. Lawrence, from Ottawa to Toronto, and at Toronto tc be brought into communication with the Credit Valley line — another largely subsidised scheme which is now being constr'icted from Toronto towards Detroit and Sarnia, midway between the Grand Trunk and Great "Western of Canada systems. " In the present session of the Dominion Parliament Si** Hugh and his fellow promoters of the Nor; hern Colonisation a^'o applying for an Act to construct a high-level bridge over the St. Lawrence, 150ft. iibove high water, nearly five miles long, and estimated by one of the most experienced and competent engineers in Canada to cost between two and three millions sterling. " In 1873 he also supported a second and a better line from Montreal to Portland. " The success of Sir Hugh Allan's )>resent proposals woidd bring the bonds of the whole of these gigantic schemes over to this country. There are upwards of 4000 miles of them and of kindred companies, and they are more or less competitive with the existing 4000 miles of railway constructed with English capital. According to past experience they could not bo made to earn their working expenses, and therefore, however highly subsi- dised they may be, and however advantageous for the development of the different localities through which they pass, I apprehend that they cannot be considered as safe investments for British capitalists and bond- holders. 65 " The Canada Southern, which is a fair sample of tliese subsidised lines, it is true, did not receive its sub- sidies from the Dominion or the Provincial Govern- ments, but it did receive them from tlie municipalities and counties which it traverses. It does come within half a mile of tlic Great Western at several points, as I can testify from travelling over it. The charter for it was granted to a Canadian gentleman wlio may be fairly called a dealer in charters. The cliarter was purchased by American speculators and promoters, who formed themselves into a Credit Mobilier or ccnstrnction company, and let the making of the line to themselves, without, of course, any practical engineering super- vision. " They appropriated to themselves by means of this construction company, consisting entirely of themselves, the ordinary stock, and issued seven or eight million dollars of bonds in New York, and afterwards two or three millions of the same series of bonds in London ; they divided large profits among themselves upon the construction of the line : but when it was opened eighteen months ago it proved a total failure, with work- ing expenses in excess of receipts, and. inflicted, beyond doubt, severe injury upon the Great Western of Canada, and through them and the competition created upou the Grand Trunk the probable end of this subsidised Canadian Eailway within the next year or so will be its sale under the sheriffs' hammer to some one or more of its solvent American or Canadian neighbours. " Tliere is one characteristic whicli t)io Northern Colonisation and all its kindred proposals have in common with the Canada Southern, they have no share capital held by a solid body of proprietors in the ordinary sense of the term. " The share capital is distributed by the principal pro- moters among themselves ; ten per cent, deposit is written up by the promoters' bank to comply with the law. The bondholder has no vote, and such a consti- tution affords no practical guarantee of sound and economical construction, or after the opening ot the line for eificient and adequate administration. It is true .r-t-' ,'-',■■■ ^ ^1^ 56 that the bondholder in case of default could put a receiver on the line ; but what is the value of this remedy if the locality througji which the line passes will not yield sufficient to pay the expenses of the railway work- *' I ask confidently, is there an;'-thing in the record of railway construction and working in Canada to justify the credulous British capitalist in subscribing to the bonds of fresh and largely-subsidised Canadian railways'? In so doing he is sure to damage, probably ruin, his neiglibour, and not less sure, according to all past experi- ence, to throw away his own savings. " I have the honour to be, your obedient servant, " RiCHAKi) Potter, "President Grand Trunk Railway of Canada." Times of 22n