(Srcat ^tstenv |iatlfaag of Caitalja, x/ 
 
 — — — Q-nn^ 
 
 t 
 
 REPLY OF THE DIRECTORS 
 
 ,.,- , • TO THf; 
 
 REPORT OF THE COMMITTEE OF INVESTIGATION 
 
 APPOINTS L) aOTii OCTOBER, 1873; , 
 
 TO HE . • . 
 
 ••• ^ , <: .'■ .■■■ :■ i -■■> i//^ ■ " ■ 
 
 SUBMITTED TO A SPECIAL MEETING OF SHAREHOLbERS 
 
 TO BR HELD IN LONDON, WEDNESDAY, tw 
 
 r" . 2Gth AUGUST, 1874. ^ -.:;;,:, 
 
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 Great Western Hallway Of Canada. 
 
 NOTICR is hereby given, that a SPECIAL GENERAL 
 MEETINO of Sbai-oboldertt is appointed to be hold on 
 ' .' Wcflnesday, the 28th day of August, 18i4, at the London Tavern, 
 
 DisLopsfiato-Rtruut, London, KiiKliind, nt Twelve o'clock at noon 
 r , % i)reci8ely, for the purpose of consi<lcrin,it tho Report of the Com- 
 
 ' ' initteo of luvcstiKatiou uppointcit nt tho half-yearly incetinj; 
 
 hold on the 30th October, 1S73. 
 • - And notice is further Kivou, that tho TransCiir Uooks of tho . ' " 
 
 Company will be closed for the space of fourteen (lays precedinj^ 
 tho said meeting, and tmnsfera cauuot bo rcceiveii during that 
 V. period. ,-•' '/i 
 
 By order, 
 
 BRAC'KSrONE BAKER, Secretory. , 
 126, Qresham-houBo. Old Broad-Btrcct, London, E.G., 
 22nd July, 1874. 
 
 LONDON : 
 TRrXTED BY WATEUI-OW & SONS, GREAT WINCHESTER STREET. 
 
 1»H. 
 
CONTENTS. 
 
 PAGE 
 
 Beply of the Directors... ... ... ... ... ... 3 
 
 Letter from Mr. Gilson Homan 76 
 
 EspoBT of Messrs. S. Keefer, C. Paine, and L. H. Clarke, 
 
 on the Condition of the Main Line and Branches ... 80 
 Letters from the Presidents of the Chicago Burlington and 
 Quincy, the Chicago and Alton, and the Michigan 
 
 Central Bailroads 82 
 
 Beport of Mr. G. L. Beid, formerly Chief Engineer of the 
 
 Great Western Bailway of Canada 85 
 
 Beport of Mr. J. Kennedy, now Chief Engineer of that 
 
 Bailway • 94 
 
 Extracts from a Beport pi Mr; T. 0,' ISeefei- on ihe condition 
 
 of the "Wellington Grey- find Bruc3 Bailway ... 97 
 Bemarks of Mr. John Y6ini^ arid Mr. Sidney Snlith, Auditors 
 
 of the Great Western Bailway of Canada on the 
 
 Beport of the Accountants employed by the 
 
 Committee ... ... ... . • • • • • • • • 99 
 
 Map showing the Eastern and Western Bailway Connections 
 Plan showing the District aroimd the Canfield section and- 
 
 the Suspension Bridge. 
 
(^xtnt MtBttxn llailfoag of €m^ix. 
 
 LIST OF THE DIRECTORS, 
 
 President. 
 Alderman SIR THOMAS DAKIN, Croe Church Lane, London. 
 
 Vice-Pt'esitlent. 
 
 GILSON HOMAN, Esq., Sandford House, Kirkstall, near Leeds. 
 
 THOMAS BARKWORTH, Eaa, 16, Austin Friars. 
 HONBLE. JOHN CARLING, M.P., London, Ontario, Canada. 
 JOHN CLEGHORN, Esq., 3, Spring Gardens, S.W. 
 THOMAS FAULCONER, Esq., 66, New Finchley Road, N.W. 
 EDWD. H. GREEN, Esq., 22, Old Broad Street, London. 
 LIEUT.-COL. FRAS. D. GREY, Clement House, Clement's Lane. 
 SIR KEITH JACKSON, Bart., Kingston, Ontario. 
 HONBLE. WILLIAM MACMASTER, Senator, Toronto, Ontario. 
 PAUL MARGETSON, Esq., Clapham Common. 
 
 Auditors, , 
 
 JOHN YOUNG, Esq., 16, Tokenhouse Yard, London. 
 SIDNEY SMITH, Esq., 46, Watling Street, London. 
 SAMUEL SPREULL, Esq., Toronto, Ontario. 
 
 Officers in Canada. 
 
 Mr. JOSEPH PRICE, General Manager. 
 
 „ W. K. MUER, General Superintendent. 
 
 „ SAMUEL BARKER, Solicitor. 
 .„ JOSEPH METCALF, Treasurer. 
 
 „ JOHN KENNEDY, Chief Engineer. 
 
 „ W- A. ROBINSON, Mechanical Superintendent. 
 
 „ JOHN CRAMPTON, General Freight Agent. 
 
 „ ROBERT BEATTY, General Purchasing Agent. 
 ' „ W. MoMILLAN, Fuel Agent. 
 
 ... ■--, ■' .. .J 
 
 London Offices. 
 126, Gbesham House, Old Broad Street, E.C. 
 
 Mr. BRACKSTONE BAKBB, Secretary. 
 Mr. WALTER LINDLEY, Aceountmt. 
 
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GREAT WESTERN RAILWAY OF 
 
 CANADA. 
 
 BEPLY OF THE DIRECTORS TO THE REPORT OF 
 THE COMMITTEE OF INVESTIGATION APPOINTED 
 30tu OCTOBER, 1873. 
 
 TO THE SHAREHOLDERS OP THE GREAT WESTERN OP 
 CANADA RAILWAY COMPANY. 
 
 Before proceeding to reply iu detail to the Report of 
 the Committee there are some preliminary observations 
 to which the Directors wish to call the attention of the 
 Proprietors. 
 
 Those who were present at the meeting on the 30th 
 October last, when the Committee were appointed, will 
 reipember the circumstances under which their appoint- 
 ment took place. A succession of adverse occurrences 
 in Ca^da, over which the Board in London had no con- 
 trol, having resulted in a reduction in the rate of dividend, 
 feelings of disappointment arose in the minds of a con- 
 siderable section of the ^^ihareholders, who pressed that a 
 Committee should be appointed to enquire into the Com- 
 pa^y> affairs. The majority of the Shareholders repre- 
 sented at that Meeting did not upon a poll confirm 
 th^t desire, but the Directors anxious, if they could, to 
 nUay the existing agitation which was most injurious to 
 tlie Company's interests, and having done nothing which 
 they felt would not bear the light of inquiry, consented 
 
to meet the wishes of the minority, and a Committee 
 was accordingly appointed invested with the amplest 
 possible powers. 
 
 The Directors did more. They distinctly declined to 
 nominate even one IMemher of the Committee, and left 
 the appointment wholly in the hands of those who de- 
 mnnded the enquiry. Never, probably under such cir- 
 cumstances, did any Board of Directors so entirely give 
 up the advantages which they possessed, and place them- 
 selves so unreservedly in the hands of those who it might 
 be assumed were ready to find them blameworthy if 
 they could. As events have turned out, it may now be 
 doubted whether the Board acted prudently in thus 
 abdicating their position, and in not having secured, as 
 tliey might have done, at least one Member on the Com- 
 mittee who would have seen that the enquiry was fairly 
 conducted. 
 
 Mr. Stitt, who took the lead in moving for the Com- 
 mittee and who has since acted as its Chairman, stated 
 at the meeting that the enquiry was intended to be con- 
 ducted " in a friendly spirit towards the Board," but 
 whether the Committee have acted consistently with 
 that profession, those who have read their report, and 
 who also read the following reply will be able to form 
 their own conclusions. ■ * ^ • 
 
 Immediately after their appointment, the Committee, 
 to use their own phrase, met " in session." They engaged 
 professional Accountants and a short-hand writer. They 
 called for Account Books, Share E/Cgisters, Minutes, 
 Letters, Ueports and Documents of every description, 
 and all their requisitions (although often at great incon- 
 venience and interruption to the ordinary business) were 
 freely and promptly met. They examined the Secretary 
 and Accountant, and one of the Clerks in London, as 
 well as the Company's late Chief Engineer, all in the 
 
presence of their short-bund writer, but they never 
 afforded these witnesses the opportunity of revising their 
 evidence. 
 
 Three of tlieir number then proceeded to Canada, 
 accompanied by a clerk from the office of the profes- 
 sional Accountants, the short-hand writer, and a gentle, 
 man from Scotland whom they describe as " an expe- 
 rienced engineer." The Committee state what their dele- 
 gates did when in Canada, and after spending six weeks 
 there, they returned, and the " sessions " were resumed 
 in England. 
 
 During the whole of this period the Committee never 
 once communicated with the Board on the subject of 
 their inquiry; they never asked the Directors either 
 collectively or individually for an explanation on any 
 point whatever; they never onca indicated what sub- 
 jects were occupying their attention ; they never so much 
 as hinted that they had before them matters involving 
 personal character ; they gave no opportunity to any 
 one whom they were about publicly to accuse, to confront 
 his accusers or rebut their testimony ; and they incurred 
 the risk of damaging the Shareholders' property by pub- 
 lishing information or opinions the accuracy of which 
 they had not taken proper means to verify. ' 
 
 Seven months elapsed, and on the 1st June last, 
 when the report of the Committee was about to bo 
 issued, the Directors received the following communi- 
 cation : — • 
 ' ■ '" « ' ■ ^ 
 
 Louduu, lat June, 1874. 
 Sii* Tho8. Dakik. 
 Dear Sir, 
 
 I am requested by the Committee of Investigation to say 
 that they are completing their Report, but before doing so, they will 
 be glad to see your Board or any of its members, if they have any 
 wish to communicate with tljem imdev the present circumstances of 
 the Company's aflfaira. 
 
Perhaps jou will b« good t-nuugh to bring thia under the notice 
 of each member of your Boiinl. 
 
 r Hill, doar Sir, ' 
 
 Yours trulj, '. 
 
 JOHN J. STITT, 
 ,. Ohaii'inua, Couiiuitteu of luvestigatiou. 
 
 It is not easy to divine what the Committee intended 
 by this loiter. Instead of saying in a straightforward 
 manner that certain specified subjects had engaged 
 tiieir attention, and that charges affecting personal 
 character had been made to them, on which they 
 were ready to hear such explanations as the 
 Directors or any of them might wish to make, they 
 simply say that " they will be glad to see your Board or 
 any of its members if they have any wish to com- 
 municate with them.*' 
 
 It need scarcely be added that upon such a letter, 
 and being entirely ignorant of the Committee's pro- 
 ceedings, none of the Directors saw that any advantage 
 could arise by having an interview with them. 
 
 What have been the consequences of the Committee's 
 course of action ? Giving them credit, for the moment, 
 for perfect candour and fairness of purpose, the Directors 
 are persuaded that if they had obtained from them, as 
 they might readily have done, information on many of 
 the subjects with which they have dealt, they would not 
 only have saved both themselves and the Directors much 
 trouble, but what is greatly more important, would have 
 prevented much unnecessary alarm and damage to the 
 Proprietors. 
 
 As matters stand, the Directors regret to be compelled 
 to say that a Eeport has been presented which abounds 
 in mis-statements, disingenuous remarks, and ungenerous 
 imputations. , > - , ^^ 
 
The "Postscript " to the Report may bo hero alluiUil 
 to. Therein the Committee seek to prejudice the 
 Directors iu the minds of the SharchoUlers, by stating 
 that " the Board refused to call a Meeting for the 8th 
 " of July, to receive their Report." The Board had no 
 desire to postpone the Meeting of the Shareholders 
 for a day beyond what was necessary, but for the Com- 
 mittee to ask that the Meeting should bo convened for 
 a date which proved to be but fifteen days after tbe 
 receipt of a Report, which it had taken them eight 
 months to prepare, was, to say the least, unreasonable 
 and unfair. 
 
 Although a comparatively small matter, the Directors 
 may also hero notice the disingenuous way in which the 
 Ootnniittee in the last sentence of their Report refer to a 
 power which the;^ say the Shat'chblders formerly possessed 
 *' to cause the Directors to sumiiion General Meetings." 
 Any one unacquainted with the facts would infer from 
 tills that the present Directors had in some surreptitious 
 way procured the repeal of that power. The simple facts 
 are, that in an Act passed in 1846, when the constitution 
 of the Company was altogether different from what it sub- 
 Seqiiiently biecame, there wds sueh a poWer, but in aUother 
 Act passed in 1849 (25 years ago), that clause, albtig 
 with twenty other sections in the same Act, was repealed. 
 The Committee must have been sorely at a loss to find a 
 grievance when they were reduced to I'cfer to a matter 
 so antiquated, with which none of the present Direc- 
 tors had any concern. 
 
 As a fitting sequel to this history, the Directors must 
 ngain bring under the notice of the Shareholders tbe ex- 
 traordinary course followed by the Committee after the 
 publication of their Report, as disclosed in the following 
 correspondence:— 
 
Great Western Railway of Canada, ' 
 
 126, Gresham House, Old Broad Street, 
 
 June 26th, 1874. 
 J. J. Stitt, Esq., ■ - 
 
 Ghainuan, Committee of Investigation, 
 Liverpool. 
 Dear Sir, 
 
 At a Board Meeting held to-day reference was made 
 to sundry allegations at page 23 of the Eeport of the Committee, 
 viz. : that the Board Room of the Company was the constant 
 resort of Stock-brokers ; that a telegraphic code book had been 
 used for private stock-jobbing purposes ; that telegrams had passed 
 between Members of the Board and the officials on private matters. 
 I am now directed to enquire whether these allegations are 
 intended to apply to the whole collective Board, or to certain 
 individual Members of it ; and, if the latter, I am to ask you to 
 which of them the Committee refer ? 
 
 The Board feel this enquiry to be necessary, as they are not 
 content to remain under an undefined imputation, which, in their 
 collective capacity, they emphatically declare to be absolutely 
 untrue. • . i i i; 
 
 I am also to request that you will accompany your reply 
 with a copy of the evidence you have ooUeoted in support of the 
 above statement, and which the report mentions is at the disposal 
 of the Shareholders. 
 
 : ■. if:: ■>■■■■" ^'' an ju Iam,&c., v . .: . : ^-./i 
 
 BRACKSTONE BAKER, 
 
 » '^ ■■■■-'' Secretary. 
 
 P.S. — ^The Board direct me to ask you to be good enough 
 to send a copy in externa of Mr. GKbson's report, of which a 
 Bummary is given in that of the Committee. 
 
 
 "i f 
 
8 
 
 LivERPooi,, 27th June, 1874. 
 B. Baker, Esq., 
 
 Secretary. 
 Dear Sir, 
 
 The absence from home of some members of the 
 
 Committee has prevented me laying before them yet your letter of 
 
 the 25th. This shall be done as early as possible, after which you 
 
 shall have a reply. 
 
 I am, &o., 
 
 JOHN J. STITT. 
 
 126, Gresham House, Old Broad Street, 
 
 Jttne 2m, 1874. 
 J. J. Stitt, Esq. 
 
 Dear Sir, . 
 
 I beg to acknowledge the receipt of your letter dated the 
 
 27th instant. 
 
 The Board met specially to-day to receive your promised 
 
 reply to my letter of 2dth instant, and they are disappointed that 
 
 it is not yet to hand. 
 
 The Board adjourned to Wednesday next, 1st proximo, at 
 
 12 o'clock noon, by which time they rely on hearing from you, as 
 
 (I am to repeat that) they are not prepared to remain imder 
 
 imputations affecting their personal honour. 
 
 I am, &o., 
 
 BRACKSTONE BAKER, 
 
 J • Secretary, 
 
 Liverpool, 'SOth June, 1874. 
 Brackstone Baker, Esq., 
 
 Secretary. 
 Dear Sir, 
 
 Your letter of the 25th instant has been laid before a 
 Meeting of the Committee to-day. 
 
 It seems to us almost unnecessary to state that the charges 
 we have made in our report do not apply to the whole Board, and 
 although the statements made are based on most reliable informa- 
 tion, and the evidence necessary to prove the truth of them against 
 the Jculpable parties is ready to be laid before a Special General 
 Meeting of the Shareholders, the Committee do not deem it 
 
10 
 
 expedient at tho ]tresent moiuout to answer your questions 
 categorically. 
 
 The. Comiuitteo doclino to do this, the more decidedly, 
 because it is apparent that the iJireotors themselves have better 
 means of testing the aeomaoy of these statements than the Com- 
 mittee hail of obtaining the evidences on which the charges are 
 founded. 
 
 With respect to the numerous reports made to us by 
 Mr. Gibson, we think that we are not justified in forwarding 
 copies of them. These reports, together with the other evidence 
 collected by the Committee, will bo placed at the disposal of the 
 Shareholders at the forthcoming General Meeting. 
 
 I am, &c., 
 
 JOHN J. STITt, 
 Chairman of the Investigation 
 Committee. 
 
 These letters speak for tbeuiselv(»s. The Sliareholders 
 Trill judge whether the Committee were justified in de- 
 clining to give the Directors the information asked for, 
 and in withholdibg from them evidence which the Com- 
 mittee in their report had said " was at the disposal of 
 the Shareholders." 
 
 With these observations tlie Directors now proceed to 
 reply to the Report, and they confidently rely on the 
 Shareholders giving to their statements a careful and 
 unbiassed consideration. 
 
 r , ;. > 
 
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11 
 
 I.— INCREASE OF CAlITAL. 
 
 IFuder the headiug " Capital," tiie Committee, f oundiiig 
 their case on facts already well known to every Pro- 
 prietor, namely, that the Capital Expenditure on exten- 
 sions and improvements during the four years ending 
 31st January, 1874-, amounted to £2,616,300, and that a 
 further issue of Capital amounting to £500,000 hdslifean 
 since autliorised, proceed to state (page 4) thah their en- 
 quiries have failed to " disclose any sufficient justification 
 " for the policy which has led to it." 
 
 This opinion of the Committee renders it necessary for 
 the Board to explain at length their policy, which is 
 impugned, and, in doing this, they must of necessity 
 repeat much that has been already stated from time to 
 time in the half-yearly reports, and at the General Meet- 
 ings, and of which the Proprietors have always approved. 
 
 The progressive increase of the traffic, as well as that 
 of the Engine and Car service required to carry it, may 
 bo seen by the following table : — 
 
 
 Total 
 En Kino 
 Miles 
 run. 
 
 raesongcr Service. 
 
 Freight Service. 
 
 > ; 
 
 i 
 
 Car 
 Miles 
 run. 
 
 Passengers 
 
 carried 
 ono mile. 
 
 Car 
 
 milcfl 
 
 run. 
 
 tons 
 
 of freight 
 
 carried 
 
 ono milo. 
 
 Total 
 Car 
 
 Milea 
 rufl. 
 
 1868 
 1869 
 1870 
 1871 
 1872 
 1873 
 
 2,520,776 
 2,767,133 
 3,076,311 
 3,520,732 
 4,410,442 
 5,109,841 
 
 6,570,464 
 6,720,228 
 6,108,936 
 6,634,408 
 7,842,036 
 8,369,251 
 
 61,530,400 
 62,312,078 
 59,986,292 
 63,538,470 
 77,076,320 
 76,548,268 
 
 17,068,891 
 20,102,951 
 25,831,743 
 33,122,314 
 39,014,650 
 45,465,002 
 
 101,668,345 
 125,346,493 
 140,779,686 
 192,737,633 
 223,546,125 
 268,167,139 
 
 23,639,345 
 26,823,180 
 31,940,679 
 39,766,722 
 46,857,586 
 63,834,253 
 
12 
 
 The Capital Expenditure of the four years 1870, 1871, 
 1872 and 1873, may be classified under tlie following 
 heads : — • 
 
 
 1870-1. 
 
 1871-2. 
 
 1872-3. 
 
 1873-4. 
 
 Total. 
 
 (1) Gloncoo Loop Line, Tiand, 
 Vi'orks, &c., including Inte- 
 rest during construction. . . . 
 
 £ 
 46,124 
 
 £ 
 203,816 
 
 £ 
 461,876 
 
 £ 
 266,872 
 
 £ 
 966,687 
 
 (2) General Impi-ovemonts on Main 
 Line and Branches, includ- 
 ing the doubling of tho 
 former from Windsor to 
 Glencoe 
 
 37,962 
 
 33,224 
 
 92,660 
 
 413,208 
 
 677,064 
 
 (3) New Locomotives, Cars, and 
 Ferry Steamers 
 
 8,872 
 
 86,432 
 
 234,609 
 
 441,194 
 
 770,107 
 
 (4) Branches — Brantf ord Branch . . 
 
 143 
 
 24,709 
 
 747 
 
 • ■ 
 
 25,659 
 
 (6)* „ Allanburg Branch . . 
 
 
 ■ • 
 
 • t 
 
 37,759 
 
 37,759 
 
 (6) Detroit Kivcr Bridge Survey . . 
 
 •• 
 
 • • 
 
 •• 
 
 924 
 
 924 
 
 (7) Commissions, Exchange, Dis- 
 counts, &c., on Stock and 
 Bonds 
 
 4 
 
 58,780 
 
 12,878 
 
 166,452 
 
 238,114 
 
 Total £ 
 
 92,106 
 
 406,020 
 
 802,770 
 
 1,315,409 
 
 2,616,30 4 
 
 1. Glencoe Loop Line. — Dealing, first with the lai'gest 
 item of expenditure, namely, the construction of the Glen- 
 coe Loop Line, which up to Jan. 31st, 1874, amounted to 
 £966,687 (including £113,613 for interest during con- 
 struction, and discounts) it is necessary to explain the 
 position in which your undertaking stood in 1869. 
 
 In that year your Railway consisted of 33(5^ miles, of 
 which 229 were Main Line and 107^ Branches, viz. : — 
 
 f MiUiL > >'*'^-''* ■<;' 
 
 :<i,» " . • k , 
 
 Maik Linb. — Niagara Suspension Bridge to Windsor 
 
 BaANCHEs. — Hamilton to Toronto 
 
 Komoka to Samia 
 
 \ . .. Fetrolia Junction to Petrolia . . 
 
 Harrisburg to Gait 
 
 
 Miles. Miles. 
 
 
 — 229 
 
 
 39^ — 
 
 
 61 — 
 
 
 4| _ 
 
 
 12 107i 
 
 Total Miles 336^ 
 
13 
 The Company also worked : 
 
 Gait and Guelph Railway 15 J miles. 
 
 Erie and Niagani Railway .. ,, .. .. 31^. „ 
 
 Total .. 46| miles. 
 
 The whole of tlie Company's system was then single 
 track, and the extent of siding accommodation alto- 
 gether insufficient for the rapidly increasing traffic. 
 
 In the twelve months ending Slst January, 1870, the 
 gross traffic receipts amounted to $3,938,284, or equal 
 to $225. 40c. per mile of road per week, the traffic on 
 the main line being greater than on any single line rail- 
 road of similar length even in this country. 
 
 In December, 1872, the Company's undertaking was 
 enlarged to 358f miles by the opening of 
 
 The Branch from Brantford to Harrisburg . . . . . . 8 miles. 
 
 And the acquisition of running powers over part of the 
 Welland Railway 14^ „ 
 
 Total . . 22J „ 
 
 The extent of foreign lines worked having, not- 
 withstanding the expiration of the lease of the Erie 
 arid Niagara Railway 31^ miles, increased to 95^ 
 miles, by the opening of the "Wellington Grey and Bruce 
 Railway 102 J miles, and the London and Port Stanley 
 Railway 25 miles, the gross traffic receipts had increased 
 to $5,679,994, or equal on the 368f miles of line to $311. 
 94c. per mile of road per week. 
 
 But these figures of gross traffic receipts form but a 
 very imperfect test of the development of the traffic. 
 Consequent on a general reduction in the rates charged 
 by other and competitive routes, this increase was 
 earned only by the transport of a largely augmented 
 tonnage. Comparing the figures of 1872-3 with those 
 of 1869-70, it will be seen that while the gross traffic 
 receipts per mile per week were, $311. 94c. in the former 
 and $225. 40c. in the latter period, showing an increase 
 
14 
 
 of $86. 54c. per mile per week, or 38 per cent., the 
 weight of goods and live stock carried was tons 1,337,289 
 ill the formei, as compared with 775,306 in the latter 
 period, an increase of tons ')61,923, or 72 per cent. 
 
 The effect of this was a v ery heavy strain upon the re- 
 sourcesof the railway as a single track, and in consciquence 
 serious delays occurred, (notwithstanding the most stre- 
 nuous exertions on the part of th*e Company's officials,) 
 entailing a large extent of uniu-ofitablc engine mileage 
 and car work, which is strikingly shown by the fact that 
 while the receipts per train mile in consequence of lower 
 rates fell from $2. 02c. to $1. 90c., a fall of 12 cents per 
 mile, or 6 percent., the receipts per engine mile fell from 
 $1. 42c. to $1. 26c., a fall of 16 cents per mile, or ll^^per 
 cent. 
 
 The question pressing upon the Board was, therefore, 
 not how to increase the traffic, but how to carry the 
 increasing traffic with the limited facilities. 
 
 In consequence of the delays which arose in the 
 carriage of the traffic, your Directors were repeatedly 
 threatened by the representatives of the Michigan 
 Central, with whom, on the one hand, and the New York 
 Ge^tral and the Erie Railroads on the otiier, the larger 
 part of the Company's through business was transacted, 
 that unless these delects were remedied, they would be 
 compelled to form other alliances. 
 
 The Directors did their ut^iost to improve thej 
 accommodation on the main Hue by increasing the 
 sidings, freight yards, &c. 
 
 For some time previously a direct line from Buffalo to 
 Detroit had been in contemplation. This scheme eventu- 
 ally assigned a matured shape, and thereupon the 
 Pipsctors were forced into qxstion, if they would defend 
 the Company from p.dditional competition. >., 
 
 With a desire not unduly to increage the capital 
 i^o^ouat* jfQHC directors considered a propo$(^l to doi^hlf^ 
 
15 
 
 the track of the main line, but were advised that the 
 cost of doing so would, in consequence of the nature 
 of the district tlirough which the lino passes, he at 
 least equal to that of constiiicting an independent 
 loop line, with gradients superior to those on the 
 exi ing main line, such loop line to be constructed 
 from Glencoe to Fort Erie, from which access to Buffalo 
 could bo obtained by the International Bridge, then in 
 course of construction. 
 
 The Board caused surveys and estimates to bo 
 made, the result being that while £5,000 per mile would 
 be needed to double the track on the main line, a similar 
 amount " ould provide a line which would afford the 
 accommodation for which the rival scheme was pro- 
 posed, and at the same time relieve the pressure on the 
 main line. 
 
 The promoters of the above-mentioned scheme having 
 deposited in the Provincial Parliament a Bill to renew 
 the powers obtained by thern for the construction of 
 the line now known as the Canada Southern Railway, 
 your Directors also deposited a Bill for a loop line 
 from Glencoe to Fort Erie, occupying the same 
 territory. By this proceeding your Directors believed 
 that the rival enterprise would be abandoned, especially 
 as the President qf the Michigan Central Road was, 
 conjointly with this Company, a promoter of the 
 Glencoe Loop Act. The Act for the competing line 
 was, however, sanctioned simultaneously with the Act 
 authorizing the construction joi this Company's line. 
 
 Whilst on the subject of the Glencoe Loop, your 
 Directors will reply to the remarks of the Committee, dis- 
 paraging its capabilities. 
 
 The Committee state that, ** the results are quite con- 
 " trary to the assurances given by the Chairman at the 
 *f half-yearly meetmg 13th Ap^il, 1870, to the effect that 
 *i the local traffic alone would realise a dividend of 6 per 
 
16 
 
 " cent, on the cost of the loop line, a statement which 
 " personal observation warrants the Committee in 
 " saying was most uiijastiflable." Your Directors call 
 attention to the fact that the line was opened 
 throughout on the 16th December, 1873, while the 
 figures, on which the Committcv^ base their opinion, 
 extend but to the 3l8t January, 1874. It is premature, 
 therefore — to say the least — for the Committee so con- 
 fidently to express an opinion as to the value of a line 
 which had only been opened six weeks. When the 
 President made the statement to which the Committee 
 refer (from data received from Canada), he included 
 traffic to and from Buffalo, which has a population of 
 150,000 inhabitants, and to which direct access to the 
 loop line for freight business is not yet available on the 
 American side ; besides, when this announcement was 
 made, it was upon the assumption that the Canada 
 Southern Line would not be proceeded with. 
 • The Committee assert that the loop line is defective 
 in construction, and does not a£Fbrd superior gradients 
 to those on the main line. Quoting from the report 
 of their Engineer, the Committee state that " on 
 " the loop line the work should now be completed 
 " and the expenditure ascertained, but the gradients 
 " at the principal stations may yet require alteration, and 
 " this will form a large item of expense which might 
 " have been avoided when the line was under construc- 
 " tion." Your Directors reply that the works are 
 now completed and the expense has been ascertained. 
 They cannot conceive on what grounds the remarks as to 
 the gradients are made, and refer the Proprietors to 
 the report of the Company's Engineer (Appendix, page 
 88) from which it will be seen that throughout the whole 
 length of the loop line there are only five short inclines, 
 measuring in all about 6^ miles, having gradients of 1 
 in 160 to 1 in 188, and how an engineer from Scotland 
 
17 
 
 with any pretension lo experience can spo.ik of tl.cse «s 
 heavy grndienN,is to the Directors, inexplicable. Some of 
 the gradients on the main line avo such as to require th'.* 
 aid of assistant cngiues oa three separate sections, for 
 between 4)0 to 50 miles, while no such assistance is required 
 on any part of the loop line. 'J he train loads on the loop 
 line are 15 per cent, greater than those on the main line 
 — a fact demonstrated by tlie daily working of the line, 
 thirty cars being taken through with one engine, between 
 Windsor and Suspension Bridge via the loop line, while 
 the load on the main line is only twenty-six cars, and that 
 with assistant engines. Thus, in the words of the Com- 
 pany's Consulting Engineer, " having secured gradients 
 " more favoumble than those of the Michigan Central, 
 " the Lake Shore and New York Central Railways, and 
 " much superior to those of our own main line, one great 
 "object of the loop lino has been attained." 
 
 Tlie Committee state (page 8) that their Engineer 
 "testifies to the hasty, ill-considered and expensive 
 " manner in which the line has in many respects been 
 " located and built." The grounds on which this is stated 
 being withheld, your Directors cunnot deal with it, ex- 
 cept to give it an emphatic denial, and they refer the 
 Proprietors to the observations of the Engineer at page 
 85 of the A-ppendix. The Committee have suppressed 
 the important fact that by tlie terms of their Act, the 
 Company were obliged to locate their line on the route 
 adopted. 
 
 The Committee lead the Proprietors to infer that your 
 Directors have lost access to Buffalo, and to the railways 
 beyond, vi^ the International Bridge. This is a mistake, 
 as the passenger traffic of the Great Western Railway to 
 and from Buffalo is, and has been, carried by way of the 
 International Bridge since, it was opened — the Company 
 paying tolls in the ordinary way on such traffic. 
 
18 
 
 The present airangemeiit by which traffic for the City 
 of BuffaU) is sent xik tlie International Bridge, while 
 traffic for the New York C'ontral and Erie Eoads, is sent 
 vii\ the Loop Lino and the Allanhurgh Branch and the 
 Suspension Bridge, is the most natural, direct, and re- 
 rnuuerative to the Company. 
 
 2. iMniovEMENTS ON THE Main Line. — Under this 
 head the Expenditure amounted to £577,054. 
 
 Of this £2M,4;4iJ represents the cost of doubling Id} 
 miles of the Main Line, from AVindsor to Glencoe. 
 
 The balance of ^£332,011 represents the total Expendi- 
 ture on improvements to the Main Lino generally. 
 Consisting of : — 
 
 Sidings at nearly cA^ery Station, improv(iments 
 in lloadwav. Works for new Station Yards 
 at Clifton, London, and Windsor . . £143,318 
 
 Proportion charged to capital for steel rails . 73,124 
 
 Construction of new car-building and repairing 
 shops at London, new freight Avarehouse at 
 Detroit, Avharf at Saniia, and additions to 
 various station buildings .... 94,126 
 
 Additional land at Clifton, London, Sarnia, 
 
 Windsor and Detroit .... 22,043 
 
 £332,611 
 
 3. Rolling Stock and rEuiiv BoaTvS. — The Expen- 
 diture for these objects amounts to £770,107, of which 
 £313,258 Avas for LoconiotlAos, £101,715 for Cars, and 
 £55,413 for Ferry Boats. 
 
 The additions represented hy this Expenditure are : . j,. 
 
 113 NcAV Locomotives, 
 
 74 Passenger and Baggage Cars, 
 2119 Freight Cars, ^ "^" 
 
 524 Platform Cars, 
 
10 
 
 Two Nuw iVny Steamers, the *' Alieliiy;aii " aucl tho 
 " Sairinasv." Makiutj tUo total stock as follows : — 
 
 217 Locomotives, 
 
 275 I'assengcr aud Baggage Cars, 
 3170 Freight Cars, 
 
 i)8() Platform aud Gravel Cars, 
 5 Ferry Steamers. 
 With regard to the necessity of constructing tho 
 Glencoo Loop Line, and increasing traffic facilities on the 
 main line, and the provision of additional rolling stock 
 and ferry steamers, if any lurther evidence is Avunting, 
 it is to be found in the annual report of tho Presi- 
 dent of tho IMiehigan Central llailroad to the Share- 
 holders of that line, whieii was issued in June, 1873. 
 The quotation is too long to 1)0 inserted here, but 
 tho substance of the reference in it, to tho Great 
 Western Road, is : — That during the previous autumn 
 and winter that line was clogged with business, that 
 instead of having ampl(3 sidings for the passage of tmins 
 it was choked at almost every point — that it was worked 
 with half the number of locomotives, and a thousand less 
 cars than were requisite to do the business— that the , 
 ferriage arrangements across the Detroit River were 
 AvhoUy inadequate even before the winter set in, so that 
 large numbers of loaded cars, often as many as from 700 
 to 1,000, were waiting in tlu? Michigan Central Station 
 Yard to be moved across the river — that for about three 
 months of that very severe winter, the Michigan Central 
 Company were compelled to refuse through freight from 
 the west, and for two-thirds of that time there were 
 from 2,000 to 3,000 cars waiting the passage of tho 
 Detroit River, and when they had been ultimately ferried 
 across, nearly a month elapsed before they were re- 
 turned, so that during the winter the Michigan 
 Central Company lost traffic amounting to about half a 
 million of dollars, and the Great Western nearly as much, 
 
20 
 
 whilo tlio cost of doing the business to both Companies 
 had been greatly enhanced. 
 
 This Report concludes as follows : — " It gives your 
 " Board and the Managers of your road unqualified 
 " satisfaction to be able to say that the Great Western 
 " Company is beginning, though but beginning, to make 
 " adequate provision for present and coming business. 
 " It is announced, and is* no doubt true, that contracts 
 " are let for their double track from Detroit to Glencoe, 
 " the point where their loop line diverges to Buffalo, and 
 •' the work is in progress, to be finished in time for the 
 " "winter business. Tiiis will give that Compauy two 
 *' tracks from Detroit, to connect with the New York 
 " Central and Erie Railroads. They have contracted 
 " for locomotives enough to make their whole number 
 " 207, for freight cars enough to make their present 
 *' stock 4>,754< for business purposes ; also a new ferry 
 " boat of large dimensions, ample new sidings for all 
 " purposes, and with enlarged shops and stations, &c., 
 •* all to be ready before winter, and have provided and 
 " obtained the money therefor. These are estimated to 
 " cost $5,210,000, and with the cost of the loop 'line iu- 
 '" eluded, $9,710,000 exnended, and to be expended, in 
 " bringing that road up to the necessary standard to 
 " meet the pressing business which has been so long 
 " crowding it. These things should have been done before, 
 " and will probably, so far as power and stock is con- 
 " cerned, be inadequate now when done. 
 
 " It is however, so large an effort in the right direo- 
 " tion, and evinces so clear a conviction at last of the 
 ** importance of the exigency, that it is regarded as a 
 " policy now settled, that that road shall progress and 
 " be made adequate to all the necessities of business, 
 " both now and in the future. It is doubtless the only 
 '* policy which can by possibility maintain the value of 
 " the property.'* 
 
91 
 
 These remarks, coming from one of the ablest and 
 most experienced Eaih'oad Administrators in tiic United 
 States, the Shareholders will doubtless con&ider mueh 
 more deserving of attention than the hasty and crude 
 conclusion, conic to by tluj Committee, who have no 
 practical knowledge of American railroads or American 
 traffic. 
 
 Looking back on this expenditure with the experience 
 which time has since afforded, your Directors are con- 
 vinced that the course adopted as explained in the 
 following paragraph of their printed llcport for the 
 half-year ending July 31, 1872, which the Proprietors 
 approved, was the best under the circumHtuncos : — 
 
 " It may he obNervod thut the gi-oHs carningN upon the main lino 
 "during the past half-year have amounted to the sum of 810,103 
 " per mile of open i*ailway, being the large»t earning.H of any hinglo 
 " track railway. The Dircctoi-s are led to conclude that the maxi- 
 " nuim amoinit of traffic which can Hafely bo carried on a single line of 
 " rails, even with extended sidingH, hah now been reached. The in- 
 " creasing demands of the through business will tax the resources of 
 " the Company to the utmost in the cotding year ; but with the relief 
 " to bo afforded by the Glencoo Loop Line, the increased sidings be- 
 " tween Glencoe and Windsor, the new Car Ferry-boat, and the aug- 
 " mentcd equipment of rolling stock, the Dircctcs Lave no <loubt the 
 "traffic will be successfully conducted." 
 
 4. Brantford Branch. — The Expenditure upon this 
 branch, including its extension to the Grain Ware- 
 homes, has been £25,659 ; a further sum of £15,000 
 having been subscrihcd as a bonus towards the cost by 
 the town of Brantford. A considerable tralTic has been 
 brought on to the main line by this branch at but a 
 small capital outlay. 
 
 5. Allanburgh Branch. — The cost of the Allanburgh 
 Branch amounts to £37,759. 
 
 With regard to the construction of tiiis branch which 
 the Committee condemn, your Directors arc of opinion 
 that the greatest credit is due to the Canadian Directors, 
 and the Company's officers, for the energy and expedi- 
 
22 
 
 tiou with which the construction was compkted, and 
 they feel astonished that the Committee should make 
 this promptness of action a ground of complaint. Tlie 
 original estimate was c^40,000, and it will be completed 
 for that amount. 
 
 The Committee fall into error \vhen at page 14 
 of their report they say, "But Avcre the Wellaud 
 " and Allanburgh free from any defects, their 
 "principal work, as already stated, is to throw again 
 " upon the main line and suspension bridge that very 
 "traffic of which it was tie design of the costly loop line 
 "to relieve them." In reply, your Directors state 
 that the Allanburgh Branch does not throw any of 
 the loop line traffic on to a single yard of the main line. 
 It does, however, bring the traffic to the suspension 
 bridge ; and proper siding accommodation for marshalling 
 the trains having been provided there, the bridge has not 
 been over-taxed. If the traffic had been sent viti the 
 International Bridge, the Company would either have 
 had to pay interest on half the cost of that bridge, or 
 tolls, at the rate of two dollars for each loaded car, and 
 one dollar for each empty car, and in addition a toll of 
 75 cents for each loaded car taken over the " Belt Liue," 
 between the bridge and the eily of Buffalo. 
 
 The advantages resulting from the Allanburgh Branch, 
 are demonstrated conclusively by the following state 
 ment. 
 
 The through freight traflic passing by the Loop Line and 
 the Allanburgh route to the Suspension Bridge up to the 
 latest dates was as follows : — 
 
23 
 
 
 
 Westwiinl r 
 
 ouuil Tiuttic. 
 
 East yard Bound Traffic. 
 
 
 lioaded L'aiii. 
 
 Empty Car«. 
 
 1,095 
 
 Loaded Cais. 
 
 2,141 
 
 Emi)ty Cars. 
 
 Novembci'j 
 
 1873 
 
 778 
 
 3 
 
 December 
 
 •> 
 
 742 
 
 3,448 
 
 4,539 
 
 6 
 
 January, 
 
 1874 
 
 1,265 
 
 4,407 
 
 0,102 
 
 2 
 
 February 
 
 » 
 
 1,534 
 
 3,354 
 
 5,102 
 
 15 
 
 March 
 
 -•» 
 
 1,878 
 
 2,429 
 
 4,388 
 
 1 
 
 April 
 
 j> 
 
 2,022 
 
 ;'.,212 
 
 0,345 
 
 
 
 May 
 
 ."> 
 
 2,002 
 
 ■1,032 
 
 5,410 
 
 
 
 Juno 
 
 }> 
 
 1,324 
 
 2,130 
 
 3,559 
 
 37,082 
 
 
 
 
 11,005 
 
 24,800 
 
 27 
 
 The Internatioual Bridge Tolls upon tlu!;* traflic would 
 have been : 
 
 On 49,287 Loaded Cars at $2 per car 
 „ 24,833 Empty Cars at 81 » . 
 Tolls payable to the New York Central 
 
 Railway, for use of their Belt Line round 
 
 the City of Buffalo, from the American 
 
 $98,574 
 24,833 
 
 m 
 
 side of the Internatioual Bridge to their 
 Buffalo Station, on 49,287 Loaded Cars 
 at 76 cents per car .... 
 Empty Return Cars being free. 
 
 30,9G5 25 
 
 Total Tolls for 8 months . $1G0,372 25 
 
 Equal in Sterling to £32,953, or at the rate of 
 £49,429 per annum. 
 
 It is therefore obvious that tlie Tolls saved by send- 
 ing TUB Traffic via the Allanbuugii Branch will in 
 
 ONE year amount TO MORE THAN THE ENTIRE COST OP 
 
 THE Branch. 
 
24 
 
 With tliis indisputablo statement the Directors 
 dismiss this part of the Committee's report. 
 
 6. Detroit Riveh Bridge Survey.— The expenditure 
 under this head amounted, as stated by the Committee, 
 to £924), and arose out of an attempt to overcome the 
 difl&culties of ferriage at Detroit, which constituted a 
 great obstruction to the passage of traffic and a great 
 expense to this Company and the Michigan Central 
 Company. As will be explained hereafter, the most 
 active steps had previously been taken by your Directors 
 with your sanction, conjointly with the Michigan Central 
 Company, to overcome the difficulty by the construction 
 of a tunnel. 
 
 7. Commissions, Exchange, Discounts, &c. — In the 
 statement of capital expenditure is included ,£238,114 
 under this head. This sum chiefly consists of the differ- 
 ence between the nominal value of the debenture stock 
 and the price of issue. 
 
 Further observations on the exceess of expenditure 
 over estimates will be found at page 63. 
 
 II.— REVENUE AND WORKING EXPENSES. 
 
 The Committee in their Report (page 5), furnish a 
 statement of Revenue, &c., extracted from the half-yearly 
 accounts submitted to the Proprietors. It will be more 
 convenient and correct to deal with the figures in yearly, 
 rather than in half-yearly, periods as given by the Com- 
 mittee. Put into this form the figure for the four years 
 1870 to 1873 stand as follows :— 
 
 Year 
 
 Cndinp 
 
 31.->t 
 
 Jany. 
 
 1871 
 1872 
 1873 
 1874 
 
 f'npital 
 
 Kxpiu<liture 
 
 (.n 31st 
 
 J.tnuury. 
 
 5,o79,.j00 
 5,98o,o00 
 0,783,300 
 8,103,700 
 
 Car Mileage, 
 Miles ran. 
 
 31,910,679 
 39,756,722 
 46,8.57,686 
 53,834,263 
 
 Gross 
 Receipts. 
 
 £ 
 
 653,247 
 
 986,241 
 
 1,146,573 
 
 1,245,755 
 
 Ofiiiiiary 
 
 Working 
 
 Expenses. 
 
 _je 
 
 502,011 
 
 564,310 
 
 684,529 
 
 826,427 
 
 Xet 
 
 Dalance of 
 
 Income. 
 
 851,236 
 421,931 
 462,044 
 419,398 
 
 Other I Interest on 
 ekurgesto M*^"'! 
 Reve^uue. P'gef«|°<=« 
 
 £ 
 
 63,355 
 96,739 
 107,110 
 104,825 
 
 £ 
 
 111,049 
 
 104,731 
 
 87,686 
 
 157,449 
 
 Amonnt 
 available 
 for Divi- 
 dend on 
 Ordinary 
 
 Shares. 
 
 176,832 
 220,461 
 267,248 
 167,054 
 
 Rate of 
 UiTi- 
 dend 
 per 
 
 Annoiii 
 
 Perl 
 6 ceni 
 
 H „ 
 3i „ 
 
25 
 
 On this important subject, to euquire into which, the 
 appointment of the Committee is mainly due, they only 
 make the following vague and general remark : — 
 
 " Without entering into detjiil, the Committee are of opinion that the 
 " ordinaiy expenditure of the Compuny may be considei'ably reduced." 
 
 The Cominittee entirely ignore the fact thnt there 
 are exceptional circumstances to account for the in- 
 creased expenses of working, but so important is 
 it in tlie eyes of your Directors that the Proprietors 
 should correctly understand the causes and extent 
 of the reduction of rates and increase of working 
 expenses, that they deem it proper fully to state the 
 facts. 
 
 In explaining, at page 13, the reasons which led up 
 to the construction of the Loop Line, your Directors 
 have already indicated generally, how, consequent on 
 various causes altogether beyond their control, and 
 aifecting other Uailvvay Companies in a precisely 
 similar manner, the rates on tlie through trafl&c 
 between the Western States of the Union and the 
 Atlantic seaboard, were reduced in the three'years from 
 1870-72. But serious as the consequences of that reduc- 
 tion was, the further reduction in 1873, resulting from 
 the financial crisis in the United States, was even greater, 
 and unfortunatciv still continues. 
 
 Of the existence of a serious and widespread depression 
 of trade throughout both the United States and Canada, 
 consequent on the recent financial crisis, the Committee 
 could not have been ignorant, but nowhere in their 
 report is this referred to, as in fairness it ought to have 
 been. In order to earn a given amount of receipts 
 under such circumstances an exceptionally large weight 
 of traffic had to be carried, with consequent increase of 
 expenditure. 
 
 Notwithstanding the avoidance of this explanation by 
 the Committee, the disproportionately greater increase in 
 
the number of miles run by the cars, as compared with 
 the increase of receipts, would alone lead the merest tyro 
 in railway management to the explanation of an increase 
 of expenditure, which nothing but a very large accession 
 of traflB-C could recoup to the Company. A reference to 
 the statement before c?ivon will show thattho car miles run 
 in 1873 were 53,8'^ ,_.j3 miles, which, as compared with 
 31,940,679 miles run in 1870, shows an increase of 69 
 per cent., whereas the gross traffic receipts in 1873 
 amounted to £1,245,755, which, as compared witli 
 4^853,217 in 1870, shows an increase of 46 per cent. only. 
 In order to dispel the illusions of the accountants em- 
 ployed by the Committee on the subject of unprotitablc 
 engine mileage, your Directors submit a statement show- 
 ing the actual increase in the volume of the foreign traffic 
 during the 5 years 1869 to 1873, and of the reduced 
 rates at which that traffic had to be carried. 
 
 
 1809 
 
 1870 
 
 1871 
 
 1872 
 
 1873 
 
 Aggregate weight in \ 
 
 
 
 
 
 
 tonsof through freight > 
 
 432,859 
 
 509,550 
 
 095,962 
 
 808,038 
 
 997,301 
 
 canicd ) 
 
 
 
 
 
 
 Amount earned, in dulliir.s 
 
 1,477,121 
 
 1,')9.),883 
 
 2,022,409 
 
 2,358,063 
 
 2,720,889 
 
 Average rate per ton 
 
 P.41 
 
 *3.132 
 
 §2.900 
 
 $2,917 
 
 12.728 
 
 If the rates of 1869 had ruled in 1873, the 
 earnings for the actual tonnage transported would have 
 been $3,403,262, or $682,673 more than the amount 
 actually earned, and after allowing for loss by exchange 
 would have been equal to an additional dividend of 
 3 per cent, per annum. 
 
 Purther explanation appears to your Directors need- 
 IcF in the face of such figures ; the true cause of the 
 reduced revenue receipts, and of the increased ex- 
 penses, is apparent from them. T/ie volume of traific 
 carried has practically doubled in the space of three 
 i/earSy whilst the rates for its carriage has fallen thirteen 
 per cent. 
 
27 
 
 To those unacquainted with these circumstances, the 
 increase in the working expenses from £502,011 in 1870, 
 to £820,427 in 1873, might suggest the idea of mis- 
 management or extravagance, but it must be obvious to 
 the most uninitiated in railway management, that the 
 enormous increase in the number of miles run and in the 
 weight carried, combined witli the great increase in the 
 price of materials, and the rate of wages, which your 
 Directors were powerless to prevent, fully accounts for 
 the increase. 
 
 The actiud revenue expenditure, including taxes, &c., 
 in the last four years, was as follows : — 
 
 
 1870. 
 
 1871. 
 
 1872. 
 
 1873. 
 
 KXI'EXDITURE. 
 
 Or equal to— 
 
 Per tar mile run . . 
 Per engine mile run 
 Per train mile run . . 
 Per mile of road per week 
 Percentage of gross receipts 
 
 $2,527,280 
 
 •07i{h,cU. 
 •82iVo » 
 $115 
 !$144-64 
 CO-860/a 
 
 $2,831,973 
 
 •07, V» eta- 
 : -SOxVu „ 
 
 $114 
 .$162-14 
 ! 59«'a 
 
 <j3,431,G21 
 
 •07i1,''r,ct9. 
 •78 
 $1-17 
 $192-06 „ 
 01-57''/,, 
 
 $4,122,941 
 
 •07,';,V-ts, 
 '8O101, ,, 
 
 1-23 
 $179-38 
 68-01-/O 
 
 Prom it will be seen that although the percentage of 
 working expenses has increased, the cost per car mile 
 and per engine mile has on the whole decreased, the 
 former, viz., per car mile, from 7*uu) cents to 7'i^^ 
 cents, and the latter, viz. per engine mile, from 82* f^ 
 
 to80-fi&,. 
 
 Among other subjects deserving of special mention 
 in connection with the revenue expenditure, it may be 
 stated that during the four years under review the re- 
 newals of the permanent way included the re-rolling 
 of 20,020 tons of iron rails and the purchase of 22,916 tons 
 of steel rails, and 707,225 sleepers, and that over and above 
 the actual outlay on the repair and renewal of the rolling 
 stock, $230,395, or £47,341, has been set aside to meet 
 future renewals — all of which has been provided out of 
 revenue. A competent Committee could not have 
 
28 
 
 failed to discover these facts, and a candid Committee 
 would not have failed to state them. 
 
 The remarks of the Committee's accountants in their 
 report at page 42, calling attention to the increase in the 
 expenditure in 1873, as compared with the expenditure 
 of 1872, wherein they admit that the increase is to some 
 extent accounted for, among other things, by the increase 
 in traffic, the increased consumption and cost of fuel, 
 and the recent advance in salaries and Avages, if read 
 in conjunction with these explanations, will lead 
 the Proprietors to differ from the Committee in their 
 conclusions. 
 
 The opinions expressed by the Committee's accountants 
 at the same page to the effect that the " large increase in 
 " the stock of engines and carriages apparently out of pro- 
 " portion with the increase in traffic cannot fail to be a 
 " source of Avaste," though altogether outside the province 
 of an accountant's duties, and of little weight as against 
 the opinions of those charged with the transport of the 
 traffic, was, together with the opinion expressed by the 
 same gentlemen as to the unproductive train mileage, 
 evidently written after a hurried personal inspection of 
 the traflfic during a period of exceptional dulness, and 
 after the opening of the loop line had permitted the 
 traffic to flow smoothly on. As bearing on the question 
 of unprofitable engine mileage, it may be stated that a 
 comparison of the results of the working of the first 
 four months of the present year in Avhich the loop line 
 has been open, as compared with the corresponding 
 period of 1873 before the loop line Avas opened, 
 shows a reduction in the unprofitable engine mileage of 
 219,652 miles. 
 
 The Board cannot leave this subject without referring 
 
29 
 
 to circumstances which occurred since the appointment 
 of the Committee, hut of which no mention is made in 
 their Report as a part of their investigation. Your Direc- 
 tors allude to the magnitude of the unexpected financial 
 panic in the United States last year, and the disastrous 
 results of it to railway companies in the paralysis it caused 
 to the carrying trade. 
 
 Tliose memhers of the delegation who crossed the 
 Atlantic, visited New York, Chicago, and Montreal; 
 and from what they saw and heard in those cities, the 
 effects of that panic must have been patent and con- 
 spicuous. In candour it might have been expected 
 that they would have referred to them, as at all events 
 partially explaining the decrease in receipts on your 
 Railway, two thirds of the gross earnings of which con- 
 sists of through or American traffic. 
 
 As a matter of course, the same causes affect the rail- 
 ways connecting with your Road and produce similar 
 results. The Michigan Central Railroad formerly declared 
 a dividend of ten per cent, per annum to its stockholders, 
 but for the half-year ending May, 1874, no dividend was 
 paid. The Lake Shore and Michigan Southern Railroad, 
 running from Chicago to Buffalo parallel to the Michigan 
 Central and Great Western Roads, and forming there- 
 fore a direct competing line, for some years past has paid 
 a regular dividend of 8 per cent, per annum. Their 
 Report for the half-year ending June 30th, 1874, has 
 just been issued, and announces that a dividend of 3 per 
 cent, per annum only has been earned, and it is not con- 
 sidered advisable to pay even this reduced dividend. 
 
 The published traffic of the Erie Railway for twenty- 
 six weeks, to 30th June, 1874, shows a decrease of 
 $648,892. 
 
30 
 
 The New York Central Itailroatl do not publtsh their 
 weekly earnings, and therefore no comparison can he 
 made. 
 
 The great pressure of traffic in the past led the con- 
 necting, as well as the competing, Eailways to increase 
 largely then* capital by increasing their carrying facilities. 
 The Michigan Central have constructed a loop lino of 
 100 miles, and have doubled the remainder of their main 
 line. The Lake Shore have, likewise, double-tracked a 
 large portion of their raih'oacl. 
 
 It seems needless to add that if the panic in the latter 
 part of 1873 could have been foreseen, neither of the 
 Companies referred to, nor would your Board, have 
 entered upon the additional works at that time. 
 
 III.— LINES LEASED OR WORKED BY THE 
 
 COMPANY. 
 
 Welland Railway. — The lease of the Welland Rail- 
 way, or rather the right of running trains over 15 miles 
 out of 25 miles of its total length, Avas in no way the 
 result of the failure of the negotiations as to the Inter- 
 national Bridge, a fact of which the Committee could 
 have assured themselves, for although the formal agree- 
 ment is dated 20th December, 1872, it was actually con- 
 cluded on 12th July, 1872 ; whereas the negotiations in 
 regard to the International Bridge were not broken off 
 by resolution of the Grand Trunk Board, until 4th 
 September, 1872. 
 
 The Committee have apparently altogether lost sight 
 of the fact, that up to June, 1872, the Company worked 
 the Erie and Niagara Railroad, extending from Port Erie 
 
ou Lake Eric, to the towu of Niagara on Lake Ontario, 
 31| miles in length, and tiiat by this means communi- 
 cation would have existed between the loop line at its 
 extreme point, and the eastern terminus of the main 
 lino at the Suspension Bridge. 
 
 Desiring to keep down the capital expenditure, the 
 Directors would have continued this lease (which was 
 cntcied into in April, 1867, and was for five years from 
 that date). But the control of the Erie and Niagara 
 Railway being held by parties interested in the Canada 
 Southern Railway rendered this impossible, and, as 
 stated in the Report for the half-year ending 31st July, 
 1872, " Tiie arrangement sanctioned by the Sharc- 
 *' holders at tlic last General JNIeeting for the purch^ at 
 " the price of £75,000 of the Erie and Niagara Raihvay, 
 •' has been frustrated, owin^ to difficulties between the 
 " parties who claimed to be owners of this short line of 
 " 31 J miles." The junction between the main line and 
 the eastern extremity of the loop line, is even better 
 accomplished by the use of the AVelland Railway ; the 
 Board, therefore, proposed to enter into an agreement 
 with the Directors of tliat Railway to use for a term of 
 twenty-one years 15 miles of their Railway between 
 the points where it intersects the main line at St. Cathe- 
 rine's, and the loop line at Welland Junction. 
 
 Except under exti-aordinary circumstances, your Direc- 
 tors never intended to use the Welland Railway for 
 through traffic. The chief objects of the arrangement 
 were to obtain a connection from the main line on 
 the Canada side with the City of Buffalo, and to 
 acquire the means of interchanging rolling stock between 
 the main and loop lines at their eastern extremities, 
 as the London and Port Stanley Railway accomplishes 
 for the western extremity. Instead of the gradients of 
 the line between Welland Junction and Allanburgh 
 (being that portion used in connection with the Allan* 
 
32 
 
 burgh Drancli for the through traflSc for Suspension 
 Bridge) being, as tlie Committee allege, " heavy," they 
 are exceptionally good, being almost a perfect level, and 
 the Committee have therefore fallen into another pal- 
 pable mistake. The steep gradients on the Welland 
 Railway are on the portion of the line which ia not used 
 for through trains^ and when the Committee state at 
 page 14 of their report that " It was absurd to expect this 
 " line with its heavy gradients to carry satisfactorily the 
 *' traffic from the loop to the main line," the ahaurdity 
 consists in supposing that it was ever intended to carry 
 such traffic over these gradients. 
 
 As an answer to the charge of the agreement being 
 entered into with undue haste, the Directors point to the 
 fact that five months were occupied in its settlement, 
 and they believe the terms to be both fair and equitable. 
 Shortly stated, the agreement provides for the free run 
 of this Company's trains over 15 miles of the Welland 
 Railway, in consideration of the Great Western laying 
 down a third rail for their narrow gauge trains (the 
 Welland at that time being broad gauge) ; the mainten- 
 ance of that portion of the road ; and the payment. of a 
 fixed rental of £1,800 per annum. The agreement in- 
 cludes other minor conditions and restrictions, which 
 are of no practical importance. This Company receives 
 under their lease the whole gross receipts of the traffic 
 which they carry over the road. 
 
 When the Allanburgh branch was decided upon, the 
 Board replaced the iron rails upon eight miles of the 
 Welland line by steel rails, being the portion over which 
 the through traffic passes, and, as has been explained to 
 the Proprietors, they have charged the cost to a separate 
 account, thus distributing it as a charge against Revenue 
 for twenty- one years, the duration of the lease. 
 
 Wellington Grey and Bruce. — The Committee 
 state (page 16) :— 
 
33 
 
 "That whilH considering it their duty to condemn tlio rnannei* 
 " and terms under which the arrangement between the Great "Western 
 "and this Company (referring to the Wellington Grey and Bruce 
 " Company), have been conducted, regard the line itself as likely 
 " to prove of increasing value as a feeder to our system." 
 
 Your Direotors entirely concur with the Committco 
 in the opinion expressed by them upon the value of 
 this line, which is receiving practical confirmation day 
 by day, and they therefore confine their remarks to the 
 terms of the arrangement. 
 
 The desire of your Directors throughout the negocia- 
 tion was to secure the completion and working of the 
 road, so as to obtain the traffic from a new district of 
 Ontario over this Company's line. 
 
 The road, 102^ miles in length, forms a connection 
 between Southampton on Lake Huron, (which is a 
 shippmg point to Lake Superior,) and Guelph, the 
 terminus of this Company's Gait and Guelph Branch. 
 
 The arrangement is as follows : This Company work 
 the line at 70 per cent, of the gross earnings, and out 
 of the receipts of the Great Western Company from 
 the traffic interchanged with the Wellington Grey 
 and Bruce Company, 20 per cent, is set aside as a fund 
 with which to acquire the bonds of the Wellington Grey 
 and Bruce at par. 
 
 If there be no traffic brought on to this Company's 
 road, there is no money to be laid aside, but the 
 larger the traffic, the faster will the Company acquire 
 the bonds, until it will eventually possess the whole of the 
 bonds issued by the Wellington Grey and Bruce Company. 
 
 Your Company does not guarantee a shilling of the 
 interest or principal of the Bonds. 
 
 Ten years ago the question of a line of railway to 
 penetrate into the country north of Guelph was 
 agitated, and an Act htid passed the Legislature to 
 authorize its construction, your Company being 
 
 3 
 
iii'jljently solicited to onooiivni^c it. No loss a sura than 
 ClSl,r)()0 as bonuses or fi-oo fjifts were subscribed by the 
 l')(;al towusbips and counties (including a subsidy from 
 t !ie Ontario J^rovincial Government). Some sliaro capital 
 \Mis nlso subscribed. The AVellington Grey and Bruce 
 (.'ompany issued bonds to the extent of $12,000, or 
 C2,l()5. 15s. per mile of railway. At first it was con- 
 sidered that .S10,000 per mile of bond issue would bo 
 sufBcient, but tbis was afterwards found to be inadequate, 
 the price of iron, timber and wages having considerably 
 advanced. All that your Company were called upon to 
 do, was to agree, in order to give the bonds a value, to 
 acquire them at par to the extent of 20 per cent, of the 
 additional traffic brought from this new line over the 
 Great Western Company's system. The bonds which 
 this Company acquire, continue to carry interest at the 
 rate of 7 per cent, per annum, which the Great Western 
 Company collect and add to their net revenue, and the 
 bonds thus acquired, if deemed desirable, can at any 
 time be sold at a small discount, to meet which, 10 per 
 cent, of their par value has always been written off 
 before they are carried into the Company's assets. The 
 amount of bonds acquired by this Company, under this 
 arrangement, to the present time, amounts to £11,800. 
 
 The outstanding balance in connection with this road, 
 which, as stated by the Committee, amounted to 
 £6,048. 12s. 3d., has since been reduced by the payment 
 of £2,155. 7s. 5d. 
 
 The Wellington Grey and Bruce Company have been 
 unable to discharge the whole of their liability for the 
 construction of the South Bruce extension from Palmer, 
 ston to Kincardine, 66^ miles in length, and so far as at 
 present appears, this liability can only be discharged by an 
 issue of bonds on sidings, as they are authorized to do by 
 their charter of incorporation. It may be desirable for 
 this Company to acquiesce in such a further issue of bonds 
 
35 
 
 on propoi" torms, nnd it is of imporlnncp tlinttlio sulypct 
 sliould receive nttcntion as early as possible. 
 
 Tlie Committee state at page 15 that the bonds of the 
 South Bruce Extension were to he acquired at market 
 price, and not at par ; this is incorrect, thcn^ was only 
 one agreement on this subject, and that was in terms 
 identical with the original agreement as to tiie mainline. 
 
 The Directors refer to a report of Mr. Thos. C. Keeler, 
 C.E., dated 15th July, 187 1, on the condition of the works 
 and permanent way of this lino in the Appendix, page 97. 
 
 With these explanations the Shareholders can now 
 judge whether the animadversions of the Committee on 
 this subject are borne out by the facts. 
 
 London Huron and Bruce Railway. — The London 
 Huron and Bruce Road referred to by the Committee is 
 a projected line of sixty-eight miles, running north from 
 London on the Company's main lino to the town of 
 Wingbam, on the South Bruce Extension of the "Wel- 
 lington Grey and Bruce Railway. The Board were urged 
 by the Canadian Directors and Executive to make with the 
 London Huron and Bruce Company, working and traffic 
 arrangements, including the provision for the acquisition 
 of bonds, similar to those which had been made with the 
 Wellington Grey and Bruce Company. 
 
 Your Directors believed, and still believe, that the 
 proposed arrangement would be advantageous to this 
 Company, and they afterwards learned that an agree- 
 ment had been so far completed as that the seal of the 
 Company had been affixed to it in Canada under the 
 authority of a Minute passed at a Board Meeting held 
 in Canada on 5th September, 1873. 
 
 The Committee would lead the Shareholders to believe 
 that in consequence of their appointment on October 
 30th, 1873, the London Board on November 6th, 1873, 
 passed the resolution quoted by them at page 17, viz. : — 
 
 " Inasmuch as the text of the Agreement has not yet 
 
36 
 
 tt 
 
 tt 
 
 tc 
 tt 
 tt 
 tt 
 
 been approved by the Board, nor has the matter been 
 " submitted to the Shareholders, the Board are not i^re- 
 " pared to authorise its execution." 
 
 The Committee are in error, as on October 11th, 1873, 
 the Secretary wrote to Canada to the effect that the 
 Board objected to the agreement being sealed, and again 
 on October 20th, 1873 (and therefore previous to their 
 appointment), the following cable message was sent to 
 Mr. Price : — 
 
 " Question raised as to London Huron and Bruce 
 " agreement ; do not seal till further advice." 
 And a cable reply was received from Mr. Price on tho 
 following day, October 21st, as under : — 
 
 Agreement entered into with the London Huron 
 and Bruce not executed yet. It was sent (to 
 England) on the 14ith instant. Mr. Barker (our 
 Solicitor) advises that the Great "Western had no 
 authority to agree last April, therefore agreement 
 *' should be submitted at the Shareholders' meeting, 
 « 29th October. Bonuses $450,000, forfeited unless the 
 " Railway opened by December, 1874!. Shareholders afc 
 " general meeting should confirm. Bonuses could not 
 " again be procured." 
 
 Understanding from this cable message that the words 
 " not executed yet " implied that it was not sealed, the 
 President was justified in stating to the General Meeting 
 on October 29th, 1873, that the Agreement would not 
 be sealed without being previously submitted to the 
 Shareholders. The copy of the Agreement above re- 
 ferred to did not reach London till October 27th, 1873, 
 and therefore no reference could be made to it in the 
 half-year's report which had been previously issued. 
 
 So soon as it was known in Canada that the London 
 Board disapproved of the immediate sealing of the agree- 
 ment, it was cancelled. 
 Under the « Great Western Railway Act, 1873," 
 
37 
 
 authority is given to enter into an Agreement with the 
 London Huron and Bruce Company, but this Act also 
 provides that no liability or expenditure shall be in- 
 curred unless with the consent of the Great Western 
 Shareholders. * 
 
 The Committee have devoted two pages of their Report 
 to this matter, and the facts, as now laid before the Pro- 
 prietors, prove that their interests have not been ad- 
 versely affected. 
 
 London and Port Stanley Railway. — The Com- 
 mittee, at page 17, state that — 
 
 " Under the circumstances in which the Great Western was placed 
 " towards the Canada Southem, the Committee do not disapprove of the 
 " acquisition of this line, but the agreement entered into dated the 1st 
 " September, 1872, is marked by precipitancy and abounds with coii- 
 " ditions of a character burdensome out of all proportion to the ad- 
 *' vantages." 
 
 Prom the use of the word " precipitancy" the Pro- 
 prietors may be led to believe that your Directors entered 
 into the agreement in haste, and without due care. 
 The Board, together with the Canadian Executive, prose- 
 cuted* the negotiations with energy, notwithstanding 
 which they extended over several months. 
 
 Besides protecting the traffic of the Great Western to 
 and from the City of London, the lease yields the Com- 
 pany a profit, after paying the tent and renewals, as 
 will be seen by the accounts. The Directors refer the 
 Proprietors to the remarks of the Auditors in the Ap- 
 pendix, page 110, for the expenditure upon this Railway. 
 
 When the subject of the lease of this line of 27 miles 
 was introduced to the Proprietors in the Report for the 
 half-year, to 31st July, 1872, it was stated that — 
 
 " By the control of this short line, the rolling stock on the loop line 
 " can be repaired at the London workshops, and the Company will 
 " obtain at Port Stanley the most convenient access to the coal fields o 
 " Ohio, as cordwood for fuel is becoming scarce along the main line ; this 
 " facility for obtaining coals will prove most important." 
 
38 
 
 IV.— RELATIONS WIl^H OTHER COMPANIES. 
 
 Intehnational Bridge at Buffalo. — Although it 
 would have been more aq-reeable to vour Directors to 
 have been saved the task of entering again into the 
 question of joint ownership of the International Bridge 
 — they feel that the charges brought forward by the 
 Committee are so serious, and at the same time 
 so calculated to mislead the Proprietors, that they 
 do not hesitate to repeat the story of the abortive 
 negociations, the reasons why they were abortive, 
 and the effect upon this Company of their being so ; and 
 that your interests have not been disregarded, as the 
 Committee would wish to make it appear, either from the 
 indifference or the negligence of your Directors. This 
 history involves, to some extent, a repetition of what has 
 already been adverted to while treating of the Glencoe 
 line. 
 
 A clause in the Act authorising the construction of the 
 Glencoe line provided that under certain conditions, 
 terms might be agreed upon, previous to Dec. 24th, 1870, 
 between your Company and the Grand Trunk Company, 
 ibr the joint use of the section from Canfield to Fort 
 Erie of the Buffalo and Lake Huron Railway (which 
 railway had been leased by the Grand Trunk Company), 
 and up to the foot of the proposed International Bridge, 
 a distance of about forty-six miles. 
 
 On the 9th September, 1870, an agreement with tliis 
 object, and specially providing for the construction of a 
 second track on this section was made at Montreal, be- 
 tween the Local Representatives of the two Companies, 
 i.e., Mr. Brydges, for the Grand Trunk, and Mr. Price, 
 for the Great Western, subject, of course, to ratification 
 by the two Boards. As stated by the Committee, this 
 came to nothing. Your Directors in London approved 
 of the agreement, as it " seemed to them to involve a 
 
fair principle," but tiie Graud Trunk Board dccliiuul to 
 ratify the arrangement. There was no provision id this 
 agreement for the joint ownership of the bridge. 
 
 The President of the Grand Trunk Company, however, 
 wrote to your Board on November 21th, 1870, proposing 
 that the forty-six miles of the Caniield section, with the 
 bridge and its approaches, should be joint propi^rty, and 
 that your Company should pay £125,000 for th( se I'orty- 
 six miles, being one half of their supposed value, gua- 
 rantee one half of £20,000 per annum for intoicst and 
 sinking fund on the Bridge capital, and at once pay 
 ^620,000 in cash towards the foundations of the Biidge as 
 the Grand Trunk had recently done. Now the Com- 
 mittee, at page 10, most disingenuously would wisli tlio 
 Shareholders to understand that this request for a pay- 
 ment of £20,000 is identical with the demand for a 
 similar sum made by them in August, 1872, which they 
 say " was not a new stipulation." The facts are that the 
 Grand Trunk Company advanced this amount under an 
 authorization of their Shareholders in April, 1870, as a 
 LOAN to be repaid out of moneys to be thereafter raised 
 for the Bridge construction, and ii was so repaid, and at 
 the Grand Trunk meeting of April, 1870, their President 
 stated : — . 
 
 " It is very important that the Bridge should belong 
 " to the Grand Trunk and the Grand Trunk alone; other 
 ** Railway Companies of course will have power to run 
 " through traflBc over it upon paying tolls, for instance 
 " there is the Great Western of Canada — of course it is 
 " an immense advantage to us that it should belony solely 
 « to us." 
 
 To Mr. Potter's letter of November 24:th, 1870, your 
 Directors replied that as to the praciicability of working 
 the joint traffic of both Companies, they must consult 
 their Canada colleagues and officials, and as regards the 
 International Bridge, they might not be disinclined to 
 
40 
 
 guarantei part of the tolls, but to this the consent of the 
 Proprietors was necessary. 
 
 The Canada officials made a written report on De- 
 cember 12th, 1870, in which they said : — 
 
 " It has always been i-egai-ded by us as very objectionable to use so 
 " long a distance of single track in conjunction with another Company. 
 " It would cripple entirely the benefits of the Glencoe line to our Company 
 " if we were obliged to use forty-seven miles of a joint single track for 
 " all the business of the Grand Tnink, and all the business of the Glencoe 
 "Line of the Great Western. With respect to the International 
 " Bridge, the Canadian and American charters put all companies on the 
 " same footing. The Grand Trunk Company have, therefore, no exclu- 
 " sive right or privilege in the way of tolls over any other Company. It 
 " would be to our interast to assume half the guarantee, but in so doing 
 •' we should have something to say as to the nature of the work, the 
 ** cost and the character of the stracture. In this connection we would 
 " point out that the piers, instead of being of stone built from the rock, 
 " are wooden cribs filled with concrete, and masoniy only built upon 
 «' them." 
 
 The end of the year 1870 having now arrived, and the 
 powers in the Glencoe Act for the joint use of the 
 Canfield section having expu'ed, a prospectus was issued 
 in March following under the auspices of the Grand 
 Trunk Company for raising £271,000 for the con- 
 struction of the International Bridge, the Grand 
 Trunk Company guaranteeing £20,000 a year to cover 
 the interest and sinking fund of the bridge bonds; 
 such amount being the assumed cost of the ferry across 
 the Niagara River, would therefore, as the pro- 
 spectus states, form part of the Grand Trunk tcorking 
 expenses. The Grand Trunk Company had, consequently, 
 no longer any need of Great Western assistance to raise 
 the capital for the bridge, or to. share in the annual 
 charges. .^ 
 
 In July, 1871, Messrs. Smith and Weir, then two of 
 your Directors, being in Canada, accompanied by the 
 Secretary of the Company, entered into a second agree- 
 ment with Mr. Brydges, which agreement was also 
 
4.1 
 
 subject to ratification by the two Boards. But this 
 agreement the Grand Trunk Board declined to ratify, 
 and passed the following resolution quoted by the Com- 
 mittee at page 11 : — 
 
 " Eesolved, that the Grand Trunk 6oai-d was, and is still, prepared 
 "to confirm in substance the Memorandum of Agreement of 4th July, 
 " 1871, subject to the interpretation of clause 8 (£20,000), as explained 
 " to the President of the Great Western Board, but otherwise the Grand 
 " Trunk Board declines to adopt the tenns of that Memorandum." 
 
 Clause 8 provided as follows, viz. : — 
 
 " Great Western to pay ^10,000 sterling annually as commutation 
 " of their tolls for traffic passing over the bridge. Grand Trunk to pay 
 " £20,000j[sterling ; and surplus of bridge receipts, after payment of 
 " interest, to be applied to redemption of bridge capital, as provided in 
 " existing agreements. When bridge capital is paid oflf, bridge to be 
 *' joint property of the two Companies, free of tolls to them." 
 
 On September 4, 1871, Mr. Potter wrote to the Board 
 giving his explanation of Clause 8, as follows : — 
 
 " That the two Companies shall share equally in all the responsibili- 
 " ties, payments, and obligations of the bridge capital and the bridge 
 " construction and maintenance, in exchange for an equal share in the 
 " structure itself, its approaches, tolls, and rights." 
 
 The effect of this proposed alteration was a demand 
 that the Grand Trunk payment should be reduced by 
 £10,000 per annum — an alteration, as the Proprietors 
 will see, striking at the very root of the agreement — 
 Clause 8, as it stood, having been the inducement which 
 chiefly influenced your Directors to approve of the agree- 
 ment. 
 
 The Committee say the Board took the " singular step " 
 of referring back the agreement to the officers in Canada 
 for a report, not however upon the policy, but upon the 
 practicability of working the traffic of both Companies 
 on a single narrow gauge track. After the written report 
 of the executive in Canada — already mentioned — of 
 December 12th, 1870, not to have done so the Directors 
 consider would have been a ** singular step," and more- 
 
42 
 
 over in order to satisfy their minds upon the stability of 
 the bridge as designed, they requested the professional 
 opinion of two eminent American engineers, Mr. T. S. 
 Chesbrough, of Chicago, and Mr. J. B. Eads, the 
 engineer of the bridge over the Mississippi, at St. Louis, 
 and their report was communicated to the Grand Trunk 
 Company. 
 
 In April, 1871, the Dii*ectors were advised that a 
 bridge could be built across the Niagara Hiver, at 
 Tonawanda, between the International and Suspension 
 Bridges, at less cost than the International Bridge, not 
 requiring drawbridges for the passage of vessels, and 
 with equally convenient access to the New York Central 
 and Erie Lines, and also to the City of Buffalo, 
 and they were urged by their Executive in Canada 
 to have a survey made for a bridge at the point 
 indicated, "as a precautionary and politic measure,'* 
 which was accordingly done. 
 
 In consequence of this step, the Grand Trunk Com- 
 pany in January, 1872, made overtures with a view 
 to a reconsideration of the question of the proposed joint 
 ownership of the International Bridge. A correspon- 
 dence, as given by the Committee, passed between the 
 two Companies on the subject. These letters stated the 
 main principle of an agreement which, subject to the 
 settlement of detail, was to be carried into effect, and the 
 formal agreement was ordered to be prepared. The Presi- 
 dent of your Company, at the meeting of Proprietors in 
 April,1872,informedtbe Shareholders that when a definite 
 agreement had been concluded, it would be submitted for 
 their approval. Contrary to the statement made by the 
 Committee, all proceedings relative to the Tonawanda 
 Bridge were then discontinued, and your President and 
 Vie I -President went to Canada on May, 10th, 1872, 
 but instead of " leaving this important arrangement un- 
 completed " as the Committee allege, they took tcith them 
 
4» 
 
 for the examination of their Solicitor in Canada the draft 
 agreement, which had been prepared by Mr. J. B. Batten, 
 the Solicitor of the Grand Trunk Company. But, as 
 your Directors had been advisod that doubt still existed 
 as to the stability of the bridge piers, and that the cost 
 was expected largely to exceed the estimatea, they deter- 
 mined to cause a second inspection of the works to bo 
 made by Messrs. Chesbrough and Eads, in order to ascer- 
 tain if the improvements suggested by them had been 
 made; and, in confirmation of the correctness of the 
 doubts, it is a fact that the tben unfi.nished piers which 
 on the plans submitted to your Chief Engineer, had 
 been originally designed to be eight feet wide, had 
 been enlarged to eleven feet — an increase of 37 J per cent., 
 thereby considerably increasing the cost over the ori- 
 ginal estimate. Previous to the departure of your 
 President from New York, oii July 3rd, 1872, he sent a 
 cable message to the President of the Grand Trunk 
 Company, who, it was expected, would shortly leave for 
 Canada : — 
 
 " Sir Thomas Dakin, New YorJ: to Mr. B. Pottery 21, 
 ** Old Broad St. — I arrive in Englaud about Ibth inatanty 
 " and shall be glad to meet you before leaving to complete 
 " Bridge arrangements.^* 
 
 It should be stated that this meeting did not take 
 place, as Mr. Potter was absent from London between 
 July 15tli and 20th, 1872, on which day he embarked 
 from Liverpool. 
 
 The President arrived in London on July 16, 1872, 
 bringing with him the draft agreement as approved by 
 your Solicitor in Canada, which on the same day was 
 transmitted to the Secretary of the Grand Trunk Com- 
 pany ; and Mr. J. B. Batten, on behalf of his Company, 
 laid it before Mr. J. Horatio Lloyd, for settlement, and 
 returned it to yom* Company, on August 6th, 1872, 
 accompanied by a resolution of the Grand Trunk Board 
 
44 
 
 to the effect that they would recommend it to the adop- 
 tion of their shareholders, provided the Great Western 
 Board assented thereto within a week of that date, adding 
 that otlierwise negotiations would he finally closed. 
 
 On the next day^ August 7th, 1872, your Board passed 
 the following resolution : — 
 
 " It was resolved that the agi'eement now sent be submitted to 
 " Messrs. Ashui-st, Morris and Co., and, subject to their approval and 
 " that the agreement canies out the objects contemplated in the original 
 " correspondence with Mr. Potter, a letter be written to the Grand 
 " Trunk Board, intimating the approval op the ageeement by this 
 " Board, and that the matter is referred to theii' Solicitors to carry 
 " out." 
 
 It will, therefore, he seen that the assertion of the 
 Committee that the delay in completing the agreement 
 from July 13th to August 6th, rested with the Great 
 Western Board, is not in accordance with the facts. 
 
 On August 13th, ]872 — and therefore within the 
 stipulated week — Messrs. Ashurst, Morris and Co. 
 wrote to Mr. J. B. Batten, returning his copy of the draft 
 agreement, adding "which is approved hy the Great 
 " Western Company." The agreement having thus 
 heen approved by resolution of both Boards, nothing 
 more was required than its engrossment and the 
 affixing to it of the corporate seals of the two Companies. 
 As a matter of course the approval of the respective share- 
 holders was required to render the agreement legally 
 binding. The general meeting of the Great Western 
 Shareholders had been appointed to be held on October 
 16th, 1872, and was to be made special in order to 
 sanction this agreement. A reference to its having 
 been negotiated was introduced in the half-year's report 
 to July 31, 1872 ; and, as the Committee say in their 
 report, " all seemed now happily settled." 
 
 On August 28, 1872, Mr. J. B. Batten, however, wrote 
 to Messrs. Ashurst, Morris and Co., asking for the ex- 
 change of the sealed engrossments, '* otherwise the Grand 
 
45 
 
 ** Trunk would consider that all negotiations were broken 
 "off," and requesting that in the same letter a cheque 
 for £20,000 might ba sent " on acoouat of the propor- 
 " tion of the extra outlay already incurred on the Inter- 
 " national Bridge beyond the amount received on account 
 " of bonds and stock." 
 
 Notwithstanding the assertion of the Committee, 
 at page 10 of their Report, that ever since Novem- 
 ber, 1870, " the demand for £20,000 plays a prominent 
 "part in subsequent negotiations," this was the first 
 intimation your Directors had received that any such 
 amount was required for this purpose. 
 
 This demand was answered in a letter from the Great 
 Western Board to the Grand Trunk Board on September 
 3rd, as follows : — 
 
 " With respect to the £20,000 to which you refer in your letter, I 
 " think you will see on reflection that it will be impossible for the Board 
 " to make any such payment until the agreement has been approved by 
 " the Shareholders of the two Companies. Will you in the meantime be 
 " good enough to let me have a statement as to how that amount is arrived 
 " at, and perhaps you will also kindly furnish me with a complete state- 
 " ment of the financial position of the undertaking for the information 
 " of the Directors." 
 
 As to the immediate payment of £20,000, that was 
 under the circumstances impossible, for although an Act 
 of the Dominion Parliament of Canada had received the 
 Boyal Assent on June 14, 1872, empowering the Great 
 Western Company to loan its credit or make money 
 advances to the International Bridge Company, it was 
 expressly enacted that no liability or expenditure should 
 be incurred or powers exercised under its provisions except 
 with the consent of a majority of the Shareholders in 
 general meeting assembled. And the solicitors of the 
 Company therefore advised your Directors that, unless on 
 their personal liability, no such advance could be made. 
 On September 4th, 1872, the Grand Trunk Board passed 
 
46 
 
 tlK! following resolution, quoted hy f lie Committee nt page 
 13 of their Report : — 
 
 " Tlmt thoy consiilorod tlio lately ponding negotiations with tlieni with 
 " rpferenco to the Intomationiil Uridge nt an end.'' 
 
 The proprietors of this Company sanctioned the agree- 
 ment at the Special Meeting on KJtli October, 1872, and 
 on 18th October the Grand Trunk were informed of this 
 fact, and that the Great Western Board were then pre- 
 pared to make the required payment of £20,000 in ex- 
 change of sealed agreements ; to this, however, the Grand 
 Trunk Company refused to accede, but the Great Western 
 Board did not endeavour to revive the subject, which, as 
 stated by the Committee, the Grand Trunk Company by 
 letter of 10th December, 1872, declined to do. 
 
 The Committee state that " one of the consequences 
 " to the Great Western has been " the unnecessary con- 
 struction of 45 miles of road from Canfield to Fort Erie. 
 The actual distance is 41^ miles. This conclusion is 
 erroneous; the fact being, that ever since the early 
 part of November, 1871, when the Grand Trunk Board 
 rejected the Montreal agreement of July, 1871, it had 
 been determined that the Great Western Company should 
 build an independent line from Canfield to Fort Erie, 
 therefore the failure of the Bridge negotiations in Sep- 
 tember, 1872, in no way contributed to this determina- 
 tion. 
 
 Further, they say " that it involved the leasing of the 
 " Welland Bailway." This also is incorrect, as your 
 Directors have already shewn that the lease of 16 miles of 
 this Railway to form a connection between the main line 
 and the loop line arose out of the impossibility of renewing 
 the lease of or purchasing the Erie and Niagara Railway, 
 which passed into the control of the Canada Southern 
 Railway, some of the promoters of the latter being also 
 proprietors in the former line. In proof of this the lease 
 of the Welland Railway was negotiated in July, 1872, and 
 
47 
 
 the agreement for part ownership of the Bridge was 
 broken off in September, 1872. 
 
 It should have boon also stated, that the position of 
 the route, vit\ the Suspension Bridge, has been im- 
 proved by the construction of a eonnectini; railway with 
 that bridge, from Buffalo on the American side, belong- 
 ing to the Erie Company; but that Company to tlio 
 present day have not succeeded in completing a connec- 
 tion with the International Bridge, and communication 
 is thus maintained with that connecting railway, for the 
 Main Line as well as for the Loop Line, by means of 
 the Allanburgh Branch. 
 
 The Committee further allege that ** it involved the 
 "aggravated competition of the two Companies "; but 
 this is simply a misstatement, as no more competition 
 exists at present than has always existed since the Buffalo 
 and Lake Huron Railway was leased by the Grand Trunk 
 Company ; and your Directors cannot understand how 
 the substitution of a right still secured to all Rail- 
 ways and by the Bridge Charters, of transporting 
 traffic over the International Bridge, as a common high 
 road or post road, on the payment of a fixed scale of 
 tolls, governed if necessary by arbitration, in lieu of 
 part ownership, with its attendant responsibilities, can 
 be treated as aggravating the competition. 
 
 Your Directors in no way depreciate the value of the 
 property in the International Bridge, and on fair terms 
 they would have been willing to recommend the Pro- 
 prietors to concur in the acquisition of a half-share ; but 
 seeing that the Company possessed an alternative route 
 by the Suspension Bridge and could not be deprived of 
 the right to use the International Bridge, on payment of 
 fair tolls, your Directors felt in no way compelled to 
 enter on the joint ownership on the terms proposed, and 
 they see no cause to think that the Company's present 
 position is any way worse than it would liave been, had 
 
48 
 
 nny one of the three proposed agrooments with tlio Grand 
 Trunk Company been carried into effect. The Company 
 have secured a good and direct communication between 
 the main line and the loop line and between each of those 
 lines and the Suspension Bridge and the International 
 Bridge, and have been saved half the cost of the Inter- 
 national Bridge, by the expenditure of £40,000 for the 
 construction of the AUanburgh Branch. 
 
 Michigan Central Eailboad. — The Committee con- 
 sider it " of importance that the most friendly relations 
 " should exist between this Company and our own," — a 
 remark which the Board readily endorse. The Committee 
 add that they would be glad to see efforts on both sides 
 to place their relations on a somewhat " more satisfac- 
 " tory basis than haa recently existed." What the 
 Committee mean by that the Directors do not under- 
 stand, as the most friendly relations already exist between 
 the two Companies. 
 
 Suspension B&edge. — The Committee refrain from 
 commenting on the question of this Company's rights 
 over the Suspension Bridge; but, lest this reticence 
 might be misinterpreted, your Directors deem it better to 
 make the Proprietors acquainted with the circumstances. 
 
 The lease under which this Company acquired the 
 right to the sole use of the upper floor of the bridge, was 
 made in 1853, before your present Directors acceded to 
 office, was to last for 999 years, and the consideration to 
 be paid, over and above the maintenance of that portion 
 of the bridge used by this Company, was an annual rent 
 of $46,000. 
 
 Until 1873 no question arose as to this Company's 
 lease, but in that year the Canada Southern Railway 
 Company sought to obtain a joint use of the bridge, and 
 commenced legal proceedings to enforce it, which are 
 now pending. In the meantime, as stated in the last 
 
40 
 
 lmir-yeni*'s repori, negotiations linvo boon opcnod in 
 Canada with a viow of acquirin;^ tlie wholo property 
 of the bridge for a iixod snm, subject, of conrso, to the 
 sanction of tlio rro])iiotors. 
 
 Detrott ANn ArriiWAUKiiE llAiiiiioAi). — Tn order tlint 
 the Proprietors may appreciate the relation in wliiob tbo 
 Detroit and Milwaukee Road stands towards tbo Groat 
 Western Eailway reference must be made to tiio accom- 
 panying map — whieli sbows that tbo Detroit and Mil- 
 waukee forms next to tbe Miebigan Central the most 
 important feeder of tbe Company's system, obtaining 
 traffic from the States of Wisconsin, Minnesota, and 
 Iowa. 
 
 Tbe Committee bave challenged tbe statement made 
 by your Directors in their ro])ort of October, 1S7.S, to the 
 effect that " the present valn«» of tbe gross traffic to tbe 
 " Great Western may be taken at least at $000,000 per 
 '• annum." But the Directors maintain that tiiat statement 
 was peru'ctly justified, and is moreover substantially cor- 
 rect. Tho Committee adduce certain figures in suppcn't of 
 their viow that tbe actual traffic intorcbangod bad 
 been : — 
 
 1808 ftl07,003 
 
 1800 271,725 
 
 1870 .'^0,500 
 
 1871 ^555,4 12 
 
 1872 122,911 
 
 Totnl Sl,581,577 
 
 In addition to which they state that for tbe year ending 
 31st July, 1873, tbe traffic amounted to $455,558. This 
 amoimt, however, deals only with traffic sent over theGreat 
 Western Kailwayon through bills of lading, and there- 
 
50 
 
 fore does not include traffic to and from local stations on 
 the Detroit and Milwaukee Line passini? over the Great 
 Western, which amounts to a considerahle sum. In 
 criticising? the estimate of $600,000 as the probahle value 
 of the traffic to the Great Western, mentioned in the 
 "Red Book," the Committee omit to state that for the 
 half-year ending January, 1873, the interchanged traffic 
 showed an increase of $59,000 over the corresponding 
 period of the previous year, and but for tlie total cessa- 
 tion of through traffic during two months of the first half 
 of 1873, owing to the ice blockade on Lake Michigan and 
 the subsequent depression arising out of the financial crisis 
 greatly reducing the increase diu'ing the second half of the 
 year, the estimate of $600,000 would have been fully 
 realized. The statement put forward by your Directors 
 that the traffic of the past five years had amounted 
 to $1,683,678 was actually greatly exceeded if the above- 
 mentioned local traffic had been included. 
 
 The Annual Reports of the Directors of the Detroit 
 and Milwaukee Company shov; the results of their 
 operations since the re-organization to be as follows : — 
 
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52 
 
 As these results have a hearing on the all-important 
 question of the future relations with the Detroit and 
 Milwaukee 'Road, your Directors ask for them parti- 
 cular attention, and they add, by way of explanation 
 (1), That the receipts since 18G9 excludes the earn- 
 ings from the Lake Michigan Steamboat Service, 
 previous to which date the Company owned the Lake 
 steamers ; (2), That the falling off in the Receipts be- 
 tween 1869 and 1873 arose partly out of the reduction in 
 the through rates to which the Detroit and Milwaukee 
 Company had to submit in common with all other 
 American railways, and partly also from a falling off in 
 the traffic consequent on the construction of some com- 
 peting lines of railway in the State of Michigan, as will 
 be seen from the map ; (3), That the increase in the 
 expenses in 1873 arose in great measure from the very 
 large and exceptional expenditure in the Renewal of 
 one-third of the line with steel rails, charged to Revenue 
 Account, and in a smaller degree from the increase in 
 prices of materials, and in the rates of wages. 
 
 Between 1869 and 1873, considerable sums, amount- 
 ing to $566,000, were expended on improvements 
 on the road, partly provided out of Revenue, and 
 the Detroit and Milwaukee Company are now liable for 
 the balance. 
 
 In 1873, a pressin ^ demand for money having arisen 
 in consequence of the heavy expenditure for steel rails 
 renewals, your Directors, believing that it was the true 
 policy of this Company to endeavour to prevent the 
 calamity of bankruptcy which threatened the Detroit 
 and Milwaukee Company, after mature deliberation, 
 advanced to the Company a sum of $100,000 in 
 American currency as a loan, on the security of 
 bonds of that Company, on which interest had hitherto 
 been punctually paid. 
 
53 
 
 With the certain knowledge that the control exercised 
 by the Great Western Company could not continue long 
 in the face of maturing interest and principal of bonds — 
 Avithout some definite steps being taken — and fully 
 conscious of tlie responsibility incurred, your Directors 
 felt that the time had arrived when action liad to 
 be taken, and in that belief they submitted a scheme, 
 refen*ed to by the Committee as the "Red Book 
 scheme." 
 
 The basis of this scheme may be shortly stated 
 as follows — (1) To secure the traffic now brought on to 
 the Great Western Road ; (2) To reduce the interest 
 payable on the Detroit and Milwaukee Company's 
 Bonded debt, ranging from 6 to 8 per cent., to a 
 fixed rate of 5^ per cent., thereby effecting a largo 
 saving in the fixed annual charge of the Company ; 
 (3), To raise the further sum of $1,000,000, with 
 which to improve the road and its equipment, in- 
 cluding the completion of the relaying of the entire 
 line with steel rails; (4), And to assume a liability 
 for interest of £75,000, which amount would, judging 
 from past experience, be met by the actual earnings 
 of the Detroit and Milwaukee Road, but which could, 
 if wished by the Company, be covered by the lease 
 of the line to responsible parties, as explained in the 
 scheme. 
 
 The Committee congratulate tlie Proprietors on the 
 rejection of this scheme, but it will be evident that the 
 figures produced by them afford a very narrow basis for 
 such an opinion. With the advantages of the light 
 thrown on the matter by subsequent events, they attack 
 the estimates made by the Company's officials of the 
 value of the traffic interchanged with the Detroit ami 
 Milwaukee Company, but only to prove them substan- 
 tially correct, while they appear to attach little impor- 
 
54 
 
 tanco to the fact that oveuon the hgui'cs given by thorn 
 the vitality and capabilities of the traffic bvoug-ht by the 
 Detroit and Milwaukee Company to this Company's 
 road is demonstrated by the steady increase in the amount 
 from $197,903 in 1868, to $422,941 in 1872; and this in 
 the face of the diminished rates. 
 
 Ignoring the exceptional circumstances accounting 
 for the sudden increase in the expenses of 1873, they 
 would also lead the Proprietors to the final conclusion 
 that the ordinary working expenses exceed the earnings 
 of the road, although on the figures adduced by them 
 it will be seen that the normal rate of the expenditure 
 of the years 1868 to 1872, was 62*56 per cent, of the 
 receipts, leaving a surplus of 37'34 per cent., which 
 would, on the income of 1872, yield more than suffi- 
 cient to relieve this Company from any responsibility 
 on the capital, including provision for the improvements 
 of the line. 
 
 Your Directors have not the benefit of knowing what 
 is the nature of the proposition which the Committee lead 
 the Proprietors to believe they are prepared to make, 
 and are of course unable to offer any opinion on it, but 
 the importance of dealing speedily with the Detroit 
 and Milwaukee the pirectors believe is now felt on all 
 sides. 
 
 v.— LONDON BOAUD AND MANAGEMENT. 
 
 In their remarks on the London Board, Office Man- 
 agement, &c., the Committee make a series of most 
 extraordinary statements, affecting the personal charac- 
 ters of the Members of the Board collectively. So 
 strongly did the 3oard feel that they could not remain 
 
55 
 
 silent even for a day under such imputations, that imme- 
 diately after the puljlication of the Eeport they asked 
 the Committee whether their allegations referred to the 
 whole Board or only to certain Members of it, and also 
 to furnish the evidence on which they made their state- 
 mcr).ts. 
 
 The correspondence referring to this subject will be 
 found at page 8 et seq. of this reply. 
 
 The Directors arc much mistaken if the Proprietors 
 do not agree with them in thinking the conduct of the 
 Committee in refusing to grant the information asked 
 for most unfair ; charges of such a nature should not 
 be lightly made or published, and certainly not without 
 the accused parties having previously an opportunity of 
 explaining or defending their conduct. The Committee, 
 setting aside all the ordinary principles of justice and 
 fair dealing, without ever asking the Board for any expla- 
 nations, or holding the slightest communication with 
 them on the subject, prepare and publish statements 
 which, ir TRUE, must render them altogether unworthy 
 of confidence. 
 
 The Committee on being pressed admit that the 
 charges do not apply to the whole Board, but if so, 
 why were they originally made in terms that applied 
 to the whole Board ? Had the Committee been in 
 the same position, would they have liked charges ot 
 this nature launched against them Tvithout notice, and 
 to have the evidence on which they were made refused 
 on the pretext that it was not "expedient" to produce 
 it? 
 
 But the Committee stillasscrt that there are "culpable 
 parties," and that the evidence to prove the truth of 
 their statements is ready to be laid before the Special 
 Meeting of Shareholders. Thus the charges still 
 hang over the Board generally, no one in particular 
 
56 
 
 knowing' who is accused. Whether such a mode of 
 treating personal character is consonant with candour 
 and justice, or with fair and honourable dealing between 
 man and man, the Directors confidently leave to the 
 impartial judgment of the Shareholders. 
 
 The Directors will now notice in detail the charges 
 so far as they atTect the Board collectively : 
 
 " The Bourd rooui was tlic constant i-esoit of Stock-brokei-s." 
 
 'JMiis, as regards the Board, is simply untrue. The 
 only foundation for such a charge the Board believe 
 to be, that one Member of the Board, not having an 
 office in tlie City, did at one time receive calls in the 
 Board-room from brokers and others on private business. 
 
 " The (.'oui])any's code books contams many phrases suitable only for 
 " stock-jobbing, and, as the result of their enquiries, the Committee 
 '• have no hesitation in saying that it has been so used for private 
 "purposes." 
 
 The latter part of this charge, so far as regards the 
 Board generally, is also untrue ; and with respect to 
 the code book alluded to, the history of it is very simple, 
 and looked at through an unprejudiced medium, cannot 
 possibly bear the construction implied. In order to en- 
 sure privacy, and save expense in telegraphing, the then 
 Treasurer, when in England in October, 1872, recom- 
 mended the adoption of a cypher code book, which 
 belonged to a London iirm, a copy of Avhich was then 
 obtained. This book, as all code books do, contained 
 phrases suitable for stock transactions, but it also con- 
 tained others applicable to the Company's business. The 
 book was adopted as it stood, with the addition of 
 words and phrases, suitable only to this C(mipany, 
 and used as between the London and Canadian offices 
 for a short period. There was no secrecy observed in 
 regard to this book, copies being open to all the officers 
 who had to use it, and it was not " withheld," but was 
 
67 
 
 handed to the Committee when asked for iu^ Canada. lu 
 the early part of 1873 (and not " quite rceently," as 
 the Committee state), tlie Secretary and Accountant in 
 London revised the hook l)y striking out all the phrases 
 unsuitable for the Company's use, and adding others which 
 experience had shown to he necessary ; and that is the 
 hook which lias heen used ever since, much to the Com- 
 pany's advantage, both in point of economy and other- 
 wise. With regard to private telegrams the Board 
 have no knowledge. All tliat they consider either them- 
 selves or the Committee have any right to enquire into is 
 that no private telegrams were sent at the Company's 
 expense, and with only a few un copied messages during 
 the course of three years the Committee were furnished 
 with copies of those paid for by the Company, all of 
 which were on the Company's business. 
 
 Jb^'orn this plain statement of the facts the Proprietors 
 will see how disingenuous the remarks of the Com- 
 mittee are on. this subject, and liowthey have attempted 
 to excite suspicious, for which there is no foundation. 
 
 Another charge or insinuation against the Board is, that 
 they withheld from improper motives the publication 
 of the monthly returji of receipts and expenses ; 
 this tiie Board also deny. The circumstances are 
 briefly these : — At the close of the meeting in April, 
 1873, one Shareholder asked that such returns should be 
 published, and tlie President said it sliould be done, but 
 at the same time waracd the meeting that they could not 
 be relied on, as from the nature of the case, tliey (especi- 
 ally the expenses) must be founded largely on estimates, 
 and not on actual accounts. After the meeting the 
 oflBcials in Canada were informed of what had been pro- 
 mised, and instructed to make the best arrangements in 
 their power for having the returns prepared as accurately 
 as possible, with a view^ to publication. 
 
58 
 
 This necessarily required lime,aiid instead of publishing 
 the returns for the preceding months Avhich the Directors 
 felt might not be reliable, they deferred the publication 
 until those for May (made up after their instructions on 
 the subject had reached Canada,) arrived by telegram on 
 the 20th June, when they were published on the same day, 
 and not at "the end of Juno," as the Committee allege. In 
 this matter the Directors simply did their best to publish 
 accurate information and to consult the interests of the 
 Shareholders ; and they give the most unqualified denial 
 to the unworthy insinuations which the Committee make 
 against them. 
 
 It is not diflScult to see what impression the Committee 
 intend to producfi by the paragraphs in their Keport, on 
 which the Directors have now commented, but to all 
 such imputations the Board give an indignant and 
 emphatic denial, and they repeat their surprise that any 
 Committee of Englishmen should have so far forgotten 
 the first principles of honour and justice as to have- 
 without even a whisper of what they intended to. do — 
 sown broadcast charges of that nature against a body 
 of gentlemen whose character and standing in society 
 should have been to them a sufficient protection. 
 
 The Committee, at page 24, refer specifically to one of 
 the Directors (Mr. Homan), and make statements and in- 
 sinuations respecting him, to which he has himself 
 answered in a letter to the Proprietors which is printed at 
 the end of this reply. The Directors feel persuaded that 
 the Shareholders wdll give to Mr. Homan's explanations a 
 careful and impartial consideration. 
 
 With regard to the mode of keeping the Board Minute 
 Book, of which the Committee disapprove, the Directors 
 think it only necessary to say that it is in exact con- 
 formity with the practice of all the leading railways in 
 England. .. 
 
59 
 
 What tlio Committee tjesij^nate ii " rule " was simply 
 an instniction given in 1801 by the then Board. No 
 Director, liowover, has ever been precluded fron; re- 
 cording his dissent il' he wished to do so, and it was 
 always open to a dissentient, who felt that he could 
 not acquiesce in the views of the majority, either to 
 resign his seat or to appeal to the Shareholders at a 
 half-yearly Meeting, and if he did not do so, the assump- 
 tion was that he had either altered his views or deter- 
 mined not to press them. 
 
 What tlu; Committee designate a "private Record 
 " kept by the Secretary " is nothing of the kind. Jt is 
 a book in which the Secretary takes rough notes of the 
 proceedings at the Board Meetings, and from which l^e 
 afterwards writes the full minutes and correspondence, 
 and it is no more private than any other of the Com- 
 pany's books. 
 
 In speaking of the subject of Direction, the Com- 
 mittee give in detail the number of shares held by the 
 present Directors. With this the Directors find no 
 fault, but they consider the Committee ought in can- 
 dour to have also stated what they well knew, viz., that 
 four Members had joined the Board, subsequent to 
 the proceedings to which they take exception. 
 
 The Committee consider the existing qualification for 
 a Director too small. If the Shareholders take the 
 same view, it will be necessary to get the sanction of the 
 Legislature to any change. The Dii*ectors may remind 
 the Proprietors that the qualification was originally less 
 than it is now, having been raised in 1870. A large 
 share qualification for Directors is a favourite idea with 
 some people; but it does not follow, as a [logical 
 sequence, that the largest Shareholders always make 
 the best Directors. 
 
 While on this point it may not be irrelevant to ask 
 whether if the present qualification for a Director be too 
 
60 
 
 low, what uumber of shares ought to qualify for Leiug 
 a Member of a Committee 'J Investigation ? Out of the 
 present Committee of seven, two of their number held 
 fifty shares each on their appointment," two hold forty 
 shares each, and two of these were only*registered as 
 shareholders in the Company a few days prior to their 
 appointment, while two have since considerably reduced 
 their holding. 
 
 The Committee further think that an alteration should 
 be made in the mode of electing Directors. To this the 
 Board can have no objection if the Proprietors wish it, 
 but the authority of Parliament must be obtained for 
 any change of that nature; as a matter of fact, an 
 application made in 1870 by tlie Board with that object 
 was refused by Parliament. 
 
 Yl.— CANADA BOARD. 
 The Committee remark (page 24) : — 
 
 " That the absence of clearly cletined responsibility on the part of the 
 " Canadian Board operates detrimentally to the interest3 of the Coni- 
 " pany, produces a want of control o\"er the ex«'eiitive, and leads to lavish 
 •' expenditure and its attendant abuses." 
 
 The Proprietors may be reminded tliat originally the 
 whole control of this Company was vested in a 
 Canadian Board sitting in Canada; until under tlie 
 authority of an Act of the Canadian Parliament, of 
 May 5th, 1863, it was decided that future Meetings of 
 the Board should be held in London, and it was then 
 arranged that the Canadian Directors should constitute 
 an Executive Committee. This continued until Decem- 
 ber, 1869, when a delegation of your Board then in 
 Canada, passed at a Board Meeting in Canada a resolu- 
 tion, giving the Directors resident in that country 
 a more active share in the management of the Company's 
 
(11 
 
 affairs ; the office of Gonoral Manager being at the same 
 time discontinued, and in order the better to define the 
 duties of th(i staff, and their relations to the Canada 
 Board as then rc-constituted, the following Minute was 
 passed, which has been acted on ever since : — 
 
 " WORKINO OK THK LiNE — DlTIES OF HtaFF. 
 
 " In order to avoid a coq/lict of anthority, and fn define the dutieH of 
 " the management under the new si/stem, it was resolved that tlie Through 
 " Traffic Committeo, appointed under the agreement of December 16th, 
 •' 1869, consisting on behalf of the Great Western Railway, of Mr. D. 
 " Mclnnea and Mr. .Tosejih Price, (at the next meeting, Hon. W. 
 " McMaster was substituted for Mr. Price,) shall confer on all questions 
 " of Through Traffic ; and that its duty shall be to regulate the same, 
 *' reporting to the Canada Board (Jipretnfore cnlfed the Executive Com- 
 " mittee), what, in their judgment, is necessary to be accomplished for 
 " the efficient conduct of the same. 
 
 " That the Traffic Superintendent (Mr. W. K. Muir) shall have 
 " charge of and control the working of the trains, and the management 
 " of the traffic, and the reporting on the condition of the track and 
 " rolling stock to the Traffic Committee what in his judgment may be 
 '* necessary for the efficient and econoniical working of the through 
 " tmffic on the line ; moreover especially addressing himself to the 
 " development of the Local Traffic, reporting hereon in the same manner 
 " to the Canada Board. 
 
 " That the Treasurer shall fill the office of Secretary to the Canada 
 " Board, and bo their organ in all matters of correspondence, keeping 
 " of minutes, ifec. 
 
 " That the Engineer shall continue to be responsible for keeping 
 " up the permanent way and bridges, (fee, and for repairing all defi- 
 " ciencies. 
 
 " That the appointment of all officers, not being heads of depart 
 " ments, and the fixing of salaries and duties, be made to the Canada 
 " Board, rejiorting the same to the London Board for their concurrence ; 
 " and that the entire services of all employes be devoted to the Company, 
 " and no deviation therefrom pennitted without the sanction of the 
 " Board." . . 
 
 Having regard to this arrangement the London Board 
 were greatly surprised to read the following paragraph 
 in the Committee's Report (page 4) :— 
 
 " When the Directora from time to time brought schemes before the 
 
6ft 
 
 " SliarehoIdeiM, it was underMtood tliivt tliey imd boen recommoinlod nflei 
 "careful connidemtioa tiy tlio Catmdiun Dii-ectors, wlinso hiyli chnrnntot 
 "and ability wfvo rognrdod itsi reasons for adopting tlioni. Tlio Com 
 " iiiittoo, however, wore HurpriHod to fmd timt the Cauadiiin ])ir«)ctors 
 " rt^iudiiitod roHponnibility, htatiag tluit they nu-ndy gave nominal coi 
 "sidoration to jjrojeots put bofort' tlieni ' cut aud t/ned,' and tliat (liey 
 " worn coiktroUed and guidod by tlio oUicials in Canada, who were 
 " appointed by, and communicated dii-cctly with, tho liondon Board. 
 " The Committcp are quite unable to exonerate cither the London or the 
 " Canadian Board from tlio blanio attachiiiir to a portition ho anomaioii.s 
 " and which has largely contiibutod to the |)refient crisis in tiio affairs of 
 " the Company." 
 
 At a mooting of the London Board, held immediately 
 after the receipt of the Committee's Tleport, a minute 
 was unanimously adopted, of which the foUoAviug is a 
 copy :— 
 
 '* Referring to page 4 of the Report of the Committef of Investiga- 
 " tion, in which they assei't that ' the (latiadiaa DIrrctor.'f repudiate 
 " ' responsibility, statwff that thetj merehj gave a wyminal consideration 
 " ' to projects put before them ' cut and dried,^ ' and that thoy were con- 
 " trolled and ginded by the otticials in Canada wlio were appointed 
 " by and communicated directly with the London Board, the Committee 
 "adding that a 'position so anomalous has largehi contrilnted to the pre- 
 " ' sent crinls in the affairs of the Compani/.' Resolved — Timt tho 
 "attention of tho Canadian Directoi-s bo called to the above statements 
 " of thft Committee, that they be asked whether they gave any infor- 
 " mation to the Committee which could justify tlioni in making suoli 
 " statements, and if so, on what principle they explain such assertions." 
 
 This minute was transmitted to the Canada Board, and 
 one of the Members, the Hon. John Carling, has replied 
 enclosing copy of a minute of the Canada Board of »Tuly 
 17, 1874, as follows :— 
 
 " Loudon, Ontario, 23rd Julv, 1874. 
 " Dear Sir, 
 
 " I have to acknowledge the receipt of your letter of the 2nd 
 
 " insti, enclosing an extract from the minutes of the Loudon Board of 
 
 " July Ist, relating to page 4 of the report of the Committee of Investi- 
 
 " gatidh, in reference to the alleged repudiation of responsibility by the 
 
 " Canadian Board. This itiatter catne up at our Board last Friday, and 
 
 " a ihliitite, bf which the inclosed is a copy, wa3 passed, which is also 
 
 " my reply to the allegations made by the Committee of Investigation , 
 
68 
 
 " wlioan stiitoinentH on this «iibjftct onn Imvo no roftrflnce to me, for I 
 " am certiiinly not ftwaro of over havinf^ Hai<l, or convoyed anything on 
 " which such stnteinnntH could by any poMsihility have been founded, 
 
 '• I am, dear uir, 
 " VourH truly, 
 
 • .FOffX OARTJNO. 
 
 " Braekstono Baker, Ka((." 
 
 Tho following is a cdju- of the Canailn Board Miuuto 
 of Jitly 17, 1874 :— 
 
 " iNVRSTUiATION COMMITTER'^ UeI'OHT As In f).\X.M)A BoAUD. 
 
 " Tiie Cinmda Hoiird rocord tlieir dJHflent from tlio Htatomont in tho 
 '■ latp report of tho (Jomniittoo of InvcHtijration tliat it repudiates 
 " responsibility for any schomos I'ocommondod by it, and deny tliat it 
 " has over expressed itselfas liuving given a merely nominal consideration 
 '' to projects ptit befoip it ' cut anddrieil.' or as being controlled by the 
 " officials in Canadn. 
 
 " To all matters coming before it it has given its best consideration 
 " upon the ftvcts known at tho time, and whilst giving due weight to 
 " the opinions of jtractical Railway Men amongst the oflicers of the 
 " Company, it has exercised its own Judgn)ent in a]»j»r(»ving or dis- 
 " approving of any proposition submitted to it, and in doing so It 
 " deems itself as fully responsible for its actions as the London Uoard. 
 
 *• The Chairman adheres to the positi<jn taken l)y him personally, and 
 " declines being a party to any joint action with reference to the Report." 
 
 The concluding paragraph, it is presumed, refers to 
 tlie remarks made by the Committee above quoted. Tho 
 Honble. ^V. McMaster having acted as Chairman in 
 Canada during the eleven years since 1863, the Board 
 in London submit this stcMtement without further com- 
 ment to the consideration of the Shareholders, leaving to 
 that gentleman the duty of reconciling tin; extraordinary 
 and self-condemnatory position he lias assumed. 
 
 Excess of Expenditure over Estibiates. — At page 
 24 of their Report, the Committee say " The absence of 
 " clearly defined responsibility . . . leads to lavish ex- 
 " penditure," and tbe inference to be drawn from this and 
 the context is that the Canadian Directors join with the 
 Committee in condemning the expenditure incurred. The 
 Board express their surprise at an inference so totally 
 
fit 
 
 erroneous. If tlierc has been any " want of control over 
 " the Executive," the Canadian Directors have not com- 
 prehended the scope of their functions. The Directors in 
 England have always acted in the most perfect harmony 
 with the Canadian Directors, no material points of differ- 
 ence having ever existed between them, and they have over 
 appreciated and valued the opniion of those Directors in 
 all matters where their local experience gave weight to 
 their judgment, and while your Board, as stated by the 
 Committee, both by " instructions and resolutions en- 
 " joined economy," they never had, and have not now, 
 any reason to believe that those instructions and resolu- 
 tions were ever neglected by the Canadian Directors. It 
 is a gratuitous assertion on the part of the Committee that 
 any wasteful extravagance took place. All works of suffi- 
 cient magnitude have been contracted for by public tender 
 and so also has the supply of stores, and the most strin- 
 gent conditions and specifications as to quality, &c., have 
 been enforced. 
 
 It has been a subject of regret to both sections of you" 
 Board that, amid the pressure of work incident to the con- 
 struction and completion of the loop line, and other works, 
 under circumstances of unusual difficulty, the Engineer's 
 original estimates, upon which your Directors based their 
 financial statement of March, 1873, on which the new 
 capital was raised, proved insufficient ; but the extraordi- 
 nary advance in wages and materials of all kinds, over 
 which the Engineer and Executive could have no control, 
 and the enlargement of some of the works, Avill account 
 for the excess. The Board believe that they have, in every 
 instance, obtained the full value for the expenditure in- 
 curred, and they are convinced that the extra accommo- 
 dation would have been needed for the working of the 
 traffic had it not been unexpectedly diminished by the 
 depression of trade. • 
 
65 
 
 The sole instance of any works being' executed before 
 the authority of the London Board was obtained, being 
 additional sidings costing £39,461, such departure from 
 the regular rules, being an isolated instance, under the cir- 
 cumstances before narrated, of the great pressure of traffic, 
 allowance lias to be made for the anxiety of the Company's 
 officials to avoid the delays then constantly occurring in 
 the conveyance of the increasing freight traffic. 
 
 The remainder of the increased outlay Avas regularly 
 shown in the half-year's accounts for 30th June, 1873, 
 and 31st January, 1871, and was incurred for additional 
 rolling stock not included in the estimates made in 
 March, 1873, but was sanctioned by your Directors as 
 necessary to meet the expected increase of business. • 
 
 The actual excess upon works contemplated in the 
 original estimate of the requirements to 31st January, 
 1871', was £214,838, of which £131,495 occurred in the 
 construction of the Glencoe Loop Line, £55,647 for im- 
 provements on the IVEain Lino, including the double track, 
 and £24,696 for ferry steamers. These amounts being 
 the actual expenditure, there is a trifling difference 
 between them and the figures given at page 48 of the 
 Committee's lloport, which was partly estimated outlay. 
 
 Of tlic increase in the cost of the loop line, no less than 
 £36,000 arose out of the increased price of steel rails, 
 £47,000 was represented by lO-^- miles of additional 
 sidings, enlargement of station buildings, and additional 
 water stations, and the balance arose from increased 
 cost of materials and labour, and discounts and interest 
 during construction. 
 
 The original estimate for the line was $25,000 per mile, 
 or on 146 miles a total of £750,000. The actual cost of a 
 road constructed in a much more complete and efficient 
 manner than was originally contemplated has been 
 £860,983 (excluding interest during construction, dis- 
 count, &c., amoimting to £113,513), or an increase of 
 
 i 
 
06 
 
 £110,983. The excess of £55,647 in the improvements 
 on the main line arose out of increased rnquireraents 
 and partly from the increased cost of labour and materials. 
 Mr. Reid refers to this in his Report at page 86 of the 
 Appendix. 
 
 VII.— SUBSIDIARY SUBJECTS. 
 
 PuBL. — This department, as stated by the President 
 at the half-yearly Meeting in October last, has been re- 
 organized, and is now placed under the charge of a com- 
 petent officer. In the winter of 1872-3, some difficulty 
 arose from the insufficient supply of seasoned cord wood, 
 mainly attributable to the want of foresight of the per- 
 son then in charge of the wood department. The stock 
 of fuel now on hand is ample for the requirements of the 
 Company. 
 
 Rails. — The statements of the Committee as to an 
 error in the stock of old rails on hand are based on 
 unreliable returns. The quantity showji in the Company's 
 Books was verified by stock taken by the proper officers 
 at 30th November, 1873. The returns obtained by the 
 Committee made the stock of old iron rails largely in 
 excess, but this may be explained by the fact that the 
 measurement made at their instance was done by sectional 
 foremen unused to this duty — as an instance of which it 
 may be stated, that one foreman returned to the Com- 
 mittee that he had 30,000 feet of rails on his section, while 
 he really only had 3,000 feet. 
 
 The Committee express regret that your Directors did 
 not dispose of their old rails at a time when there was a 
 demand at good prices. They then call attention to the 
 fact that there were on hand on the 28th February last, 
 according to the Company's Books, 14,396 tons, which 
 they say were held in a falling market, and deteriorating 
 by exposure to the weather. The answer of the Board is, 
 that of this quantity 6,135 tons represented the third rail 
 
67 
 
 taken up between Hamilton and London — 2,369 tons 
 were rails laid aside as fit for sidings and repairs, and 
 5,886 tons were worn-out rails for sale. Of the rails to be 
 sold, such of them as were taken out prior to the winter 
 of 1872-3, were sold in the manner recommended by the 
 (Jommittee, but could not be delivered in consequence of 
 the block of traffic on the line, and those which taken 
 up, together with the 0,135 tons representing the third 
 rail taken up from the line between Hamilton and 
 London, in June, 1873, it is only necessary to say there 
 has not been a market for them since, consequent on 
 the panic, and it was not considered prudent to sacrifice 
 them, but to await better markets. 
 
 The Committee characterise as reprehensible a prac- 
 tice which they allege to exist, of charging out old rails 
 for sidings at excessive prices. The picked rails intended 
 for the sidings, as explained by the Engineer, are good 
 serviceable rails talcen out of the main line in lavinsr 
 down steel rails, while those sold as scrap iron are entirely 
 worn out. This is the practice followed by all railways, 
 and is the correct one. 
 
 Your Directors cannot understand the remark of the 
 Committee to the effect that the Company have suffered 
 much from the peculiarity in the specification of the rails, 
 &c. They have always desired to obtain the best quality 
 of rail; and, for this purpose, obtained through their 
 Engineer, tlie very best specification ; they refer to Mr. 
 Reid's report on tiiis subject (??ic?e Appendix, p. 92). 
 
 General Stores. — The statement that no stock of 
 General Stores has been taken since 1870, is incorrect — 
 for the stock .was taken in 1872. The stock, taken at 
 March, 187'1<, as shown in the books, was tested by the 
 Committee when in Canada, and it is satisfactory to find 
 that it showed a surplus sufficient to cover any possible loss 
 from stores having become obsolete from change of guage. 
 
 The Committee also censure the plan adopted for 
 
08 
 
 obtaining and openiog tenders. The rule adopted by 
 the Company is to advertise the articles to bo tendered 
 for in the principal journals of the Province and the 
 United States, and when the tenders are received they arc 
 laid unopened on the Board-room tabic. In the case 
 of the General Stores supplies for the half-year (when 
 as ifiany as 150 separate tenders are received) two reliable 
 clerks are employed to tabulate them, recommendations 
 are then made by a Committee, consisting of one 
 Director, General Manager, and the Storekeeper to the 
 Board, who decide as to acceptance of the tenders. 
 
 EoLLiNG Stock. — The Committee admit that the EoU- 
 ing Stock is generally in good order — but call attention 
 to the remarks of the firm of accountants, whose assistant 
 accompanied the Committee, in which the opinion is ex- 
 pressed that the Rolling Stock is in excess of the require- 
 ments. Your Directors have already pointed out the 
 misleading data on which this opinion was expressed, 
 and would only add here n statement showing the miles 
 run per engine, which will demonstrate the groundlessness 
 of the opinion — adding that the experience of railway 
 men leads them to see economy and not w^aste in an ade- 
 quate supply of Rolling Stock. 
 
 Year ending 
 
 No. cf Engines. 
 
 Totnl Engine Milos, 
 
 3[ilc3 per annum 
 
 January. 
 
 including construction. 
 
 per Engine. 
 
 1865 
 
 U 
 
 2,019,009 
 
 21,475 
 
 1866 
 
 94 
 
 1,952,512 
 
 20,771 
 
 1867 
 
 94 
 
 2,121,008 
 
 22,564 
 
 1868 
 
 94 
 
 2,453,388 
 
 26,099 
 
 1869 
 
 99 
 
 2,713,029 
 
 27,494 
 
 1870 
 
 99 
 
 2,988,958 
 
 30,191 
 
 1871 
 
 133 
 
 3,313,151 
 
 24,911 
 
 1872 
 
 140 
 
 3,782,535 
 
 27,018 
 
 1873 
 
 177 
 
 4,808,418 
 
 27,5U5 
 
 1874 
 
 201* 
 
 5,954,977 
 
 29,027 
 
 * stock of Engines 216, but only 201 in service durin:^ the year. 
 
60 
 
 Agencies. — The Committee condemn the practice of 
 allowing commissions on the sale of tickets. This, how- 
 ever, is a practice universally prevailing both in Canada 
 and the United States, where tickets can be purchased 
 net only at the station, as in this country, but also in the 
 train, at hotels, and other agencies throughout towns. 
 Thfc practice is no doubt objectionable, but there is a 
 difficulty in altering it so long as other companies pay 
 commissions to agents ; it, however, saves the Company 
 the expense of maintaining distinct offices in the various 
 tow^ns, and it also affords great facilities to passengers. 
 
 Your Directors have ever condemned in the strongest 
 terms the practice of their own agents accepting com- 
 missions — in evidence of Avliich the following cu'cular 
 was issued in December last ; — 
 
 " Groat Western Eailway, 
 
 " General Freight Agent's OflS.cc, 
 
 " Hamilton, December 4tli, 1873. 
 " (Circular No. 395.) 
 
 " Comiilaiuts have from time to time been received from the New 
 " York Central Company that the agents of this Company use their 
 " influence to divert trafRc from the New York Central to the Great 
 " Western Despatch vtd Erie Railway ; it is also stated that the agents 
 ' ' of this Company received a commission on freight so diverted. 
 
 " Agents, freight-clerks, and others are hereby notified that they 
 " must be entirely neutral as between tlio New York Central and Erie 
 " Eailways, or freight lines running over those roads, leaving to 
 '•■ shippers the choice of route; and if, after this notice, any employe 
 " of this Company uses his influence to divert freight, or receives a 
 " commission on freight from any connecting line or freight organiza- 
 " tion, it will be deemed sufiicieut cause for dismissal. 
 
 "Approved: " Jno. Crampton, 
 
 " Joseph Price, " Gen. Freight Agent. 
 
 " General Manager." 
 
 Pree Passes. — The practice of issuing free passes is 
 carried to a great excess throughout Canada and the 
 United States, and, as far as practicable, this Company 
 refuses to grant them, and the issue by this Comj^any 
 
70 
 
 has always been less than on other lines, and instruc- 
 tions were given by the Directors, long before the ap- 
 pointment of the Committee, to restrict their issue to the 
 utmost. 
 
 UNREMUNERATrvB Rates. — It is an unfortunate cir- 
 cumstance that there has been a serious falling off in the 
 through-rates on traffic, the result of competition, not 
 only from competing lines, but from water competition. 
 The question has been repeatedly referred to in the 
 half-year's reports. Your Directors fear, however, that 
 the Committee's suggestion of a combination among the 
 English proprietors in American railways will be of little 
 effect, seeing that the Capital in most of the lines with 
 which this Company comes into competition is held 
 almost entirely in the United States. Your Directors 
 have urged that an effort should be made to bring about 
 a common understanding between the executive officers 
 of the several lines, and they are not without hope that 
 this may be accomplished, with great benefit to this 
 Company. 
 
 Unadjusted Items of Account. — The Committee 
 direct attention to the remarks made by the firm of 
 Accountants employed by them. On this subject your 
 Directors refer the Proprietors to the report of the 
 Company's Auditors, given in the Appendix, only 
 remarking thereon as follows : — 
 
 Interest accrued on Bonds. — The practice has 
 prevailed with this Company from a time long anterior 
 to the accession of your Directors to office, of charging 
 to the Revenue account of each half-year the interest 
 coupons maturing on bonds as distinguished from the 
 interest accrued to the end of the half-year. The ques- 
 tion was placed before the Proprietors by the Investiga- 
 ting Committee of 1S60, and no action was then 
 taken on it. The practice was wrong in its origin, 
 
n 
 
 but it Avill be obvious that so long as eacli half- 
 year bears a full half-year's interest, uo injustice is done 
 to Revenue. The practice can only affect terminable 
 bonds, and the custom has been to adjust the interest 
 when the bonds mature. 
 
 Outstandings on Revenue Account. — Reference to 
 the details supplied by the Accountants to the Committee 
 at page 31, will show that the larger portion of these 
 liabilities were rebates, overcharges, and car mileage, 
 which could not therefore be entered in the Company's 
 accounts at the time the books were made up, and 
 reference to the Accountant's statement will show that 
 on the half-year, ended 31st January— 
 
 The total amount left undealt with, at the close of 
 
 the half-year, was £15,237 10 7 
 
 And deducting from this the balance brought into 
 account from the previous half-year, which the 
 Accountants admit amounted to at least... ... 12,000 
 
 There is left, a diflerence of only ii3,237 10 7 
 
 It is evident that in accounts of such magnitude 
 there must of necessity arise items in each half-year 
 belonghig to a prior period, and which at the close of 
 the half-year are not ascertainable. 
 
 A small portion of the sum referred to, arose through 
 a clerical error, but the greater part is owing to the 
 cause stated. 
 
 Capital Chauge £85,800. 13s. 8d, under the head 
 Ferry StExVMERS. — The remarks of the Committee 
 under this head are a mere repetition of remarks made by 
 the former Committee of 1860. The two Steamers 
 referred to, the " Canada** and " America^* ceased to 
 exist seventeen years ago. Your Directors cannot now 
 recommend the Proprietors to write off the amount 
 when, thirteen years since, the Proprietors did not 
 acquiesce in the recommendation then made by that 
 Committee of Investigation. 
 
72 
 
 The Accountants in their report state that certain 
 balances appearing in the Company's books as assets 
 appear to them of very doubtful value. This is an 
 opinion only, but its value may be judged of by the fact 
 that since the date of the Accountant's inspection three 
 of the six balances alluded to are already either settled 
 or in course of liquidation. Your Directors are advised 
 that none of those accounts are bad, and therefore they 
 cannot approve the recommendation of writing them off, 
 especially as that might possibly embarrass their action 
 in enforcing payment. 
 
 State of the Road. — One of the points in the Report 
 which most surprised the Directors were the remarks 
 of the gentleman employed by the Committee to advise 
 them on engineering questions and the condition of 
 the road. Conscious of the very damaging ten- 
 dency of such a statement, your Directors at once took 
 steps to secure an independent examination of the road 
 by Engineers of the largest experience and highest 
 standing in the country, viz., Mr. Charles Paine, formerly 
 Chief Engineer, now General Superintendent of the 
 Lake Shore and Michigan Southern Railroad from 
 Chicago to Buffalo ; Mr. L. H. Clarke, Chief Engineer 
 of the Illinois Central Railroad, and Mr. S. Keefer, Civil 
 Engineer of Canada. They consented to perform this duty, 
 and their report (from which the following extract is 
 taken) will be found in the Appendix : — 
 
 " "We have to say that the condition of the pekmanent way, 
 " ballasting, bridges, itc, upox the main line, the loop line, 
 
 " AND UPON THE WeLLAND AND AlLANBURGH BRANCHES IS EXCELLENT, 
 " WHEN COMPARED WITH THAT OF OTHER THEOUGII LINES IN AMERICA 
 " OF EQUAL TRAFFIC." 
 
 The Appendix also contains letters from Presidents 
 of Raih'oads in the Western States, who from their 
 experience and position arc well qualified to pass judg- 
 ment upon the condition of the permanent way of the 
 Great Western of Canada. 
 
73 
 
 Your Directors believe that no words of theirs on tin's 
 subject will be necessary to lead the Proprietors to 
 appreciate the importance and reliability of these docu- 
 ments, or to estimate, at their true worth, such extraor- 
 dinary and wanton statements as those advanced by the 
 professional advisers employed by the Committee. 
 
 As an evidence of the superficial character of the ex- 
 amination of the loop line by the Engineer taken to Canada 
 by the Committee, the Directors call atiention to the 
 following passage in the Engineer's Report, page 87 : — 
 
 " Your Engineer, who accompanied Mr. Gibson in all 
 
 * his inspections, writes to me, * The loop line was exa- 
 * ' mined by starting from Clifton, viii AUanburg Branch, 
 ' ' in the morning about eight, and reaching Glencoe about 
 * ' four. The eastern end and Weliand Railway were 
 
 * * examined the afternoon before. A critical examina- 
 
 * * tion as to location, &c., such as entitles him to a shadow 
 
 * * of right to give an opinion, was not attempted.^ " 
 
 CONCLUSION. 
 
 The Directors have now completed their task. They 
 might have said more on several points, but being averse 
 to tax unduly the x^atience of the Proprietors, they have 
 refrained, believing they have said enough. 
 
 To the various Appendices they again beg special atten- 
 tion, particularly those containing the Remarks of the 
 Auditors and the Reports of the Engineers, which dispose 
 effectually of the depreciatory allegations of the Ac- 
 countant and Engineer employed by the Committee. 
 
 A map showing the Company's lines and connections, 
 and a plan on a larger scale of the district between Can- 
 field, the International Bridge, and the Suspension Bridge 
 accompany this reply, in order to enable the Share- 
 holders better to understand the numerous references in 
 
74 
 
 the preceding pages to places and districts, and to realize 
 more clearly the important position which this Company's 
 lines hold, hoth as supplying railway accommodation to 
 a fertile and improving part of Canada, and as forming 
 a long link in one of the great chains of through com- 
 munication hetween the East and the West. 
 
 In their administration of the Company's affairs, your 
 Directors lay no claim to infallibility. They arc liable 
 to err like other men, and labouring under the great dis- 
 advantage of managing a property on the other side of 
 the Atlantic, it would be strange if some mistakes had 
 not occasionally been committed. They fearlessly assert, 
 however, that they have ever striven to promote the 
 Company's interest to the utmost of their power, they 
 have spared no pains to keep themselves informed of the 
 state and prospects of the line and of the position of 
 affairs generally, both in Canada and America, and in 
 the instructions they have given they have always acted 
 according to the best information they could obtain, 
 and as appeared to be most for the Company's advantage 
 at the time. 
 
 Over certain events they had no control. They could 
 not mitigate the rigour of the unprecedented Canadian 
 winter of 1872-73 ; — they could not stop the rapid advance 
 in the price paid for labour and materials of all kinds ; — 
 they conld not do more than they did to ward off the con- 
 struction of rival lines, — they could not prevent the re- 
 duction of through rates by competing companies, — and 
 above all, they could not foresee or control the aggra- 
 vated financial American crisis of last autumn, from the 
 effects of which your property is at the present moment, 
 in common with all other railways in that part of the 
 world, suffering severely. 
 
 A large amount of capital expended in providing ac- 
 commodation for a rapidly increasing traffic, which the 
 Directors were informed had no limit, except the ability 
 
75 
 
 of tbo Company to carry it, is for the moment pai-tially 
 unproductive, hut when the present depression passes 
 aAvay and the ordinary course of trade is v^sumed, there 
 
 CAN BE NO DOUBT THAT EVEllY SHILLING WUICK HAS BEEN 
 LAID OUT WILL YIELD AN ADEQUATE RETUllN TO THE 
 SHAREHOLDERS. 
 
 Althoug'li, tlicrcfore, the Company's present position is 
 much to he regretted (and none can feel this more 
 than your Directors) they would ask the Shareholders 
 not to bo unnecessarily alarmed or discouraged, or to bo 
 led away by prtyudiced and one-sided reports. There 
 are immense resources in that great continent to be de- 
 veloped, for much of which your railway is the best 
 outlet. 
 
 This is not the first time in which the affairs of the 
 Great Western Hallway of Canada have been subjected 
 to a Committee of Investigation. In 18G0 a similar 
 Committee sat and printed a Eeport condemnatory of 
 the then Board, which the Shareholders refused to adopt. 
 
 What course may be taken on the present occasion 
 remains to be seen. Conscious of their own integrity 
 of motive, and having vindicated themselves from the 
 aspersions of the Committee, your Directors leave the 
 whole case to the calm and dispassionate judgment of 
 the Shareholders. 
 
 The Committee conclude by recommending a comjiletc 
 reorganization of the Board. To which the Board 
 respond, — Let it be so by all means, if the Shareholders 
 wish it. They have no desire to remain in office, 
 and if the Shareholders should be of opinion that 
 they can find others who will administer their affairs 
 better, the Directors beg them distinctly to understand 
 that every facility will be afforded for their wishes being 
 immediately carried out. 
 
 But, if on the other hand the Shareholders decline to 
 adopt the recommendation of the Committee, thf 
 
76 
 
 Directors arc willing to continuo their services lor the 
 jiresent, and to do their best to proiuole the interests of 
 the Company, and endeavour to restore its prosperity. 
 On behalf of the Board, 
 
 THOMAS DAKIN, 
 
 President. 
 Ofl&ces of the 
 
 Great Western Hail way of Canada, 
 126, Grcsbam House, 
 
 Old Broad Street, E.C., 
 IQih August, 1871. 
 
 In order to enable each Proprietor to express his 
 opinion on this important subject, a proxy in favour of 
 the President is forwarded under a separate cover, 
 which, to be available, must be signed and received at 
 the ofQces of the Company not later than noon on 
 Monday, 24th August, 1874. 
 
 LETTEU EllOM Mil. GILSON HOMAN TO THE 
 
 SHAREHOLDEllS. 
 
 Gentlemen, 
 
 At page 24 of tlie report of the Committee of Investi- 
 gation is the following passage : — 
 
 " One of tho Duvctora stuteJ lit the half-VL'arly mcctiug on the 16th 
 " Octoboi', 1872, that the accounts just received of the earnings for the first 
 "two months of the half-year afforded a prospect of a considerable in- 
 " crease in dividend for the current half-year ; and he further said he had 
 ''no doubt that, unless something unforeseen occurred, they would have 
 " the pleasiiro of announcing when they next met a considerable addition 
 " to the dividend. The dividend then announced was Q\ per cent. 
 
 " This Director transferred out of his name on the 28th November, 
 " 1872, 600 shares, and on the 12th December following 500 shares, as 
 " appears by the Company's Register. 
 
 " The price of the Company's shares at that time ranged from £22 to 
 "£23." 
 
 The remarks quoted above were made by me in 
 seconding the report at the meeting on October 16th, 
 
77 
 
 1872, and were strictly correct, l)oing hased upon a 
 cable telegram received the same day from Canada. 
 
 The Coramittco could have sceu by rdVrring to the 
 printed report of that meeting, that ^ir. Price, thou 
 treasurer of the Company (wlio was in England at the 
 time) also made the following observaliou ; — 
 
 ** I have I'occis'otl a cable tclcgviun from Canndn stating tlmt the profit 
 " available for (liviilend for tlic I'li'st two iiioiitli.s of tlio prosoiit half-year, 
 "is 5J272,OnO, bflng au iiicroa.so of S-'J'V^'*-', "»" i: 10,0(10 sterling, uh 
 " coniparcMl with the corrosponcling two jiiontliH of last year. The not 
 '* profit gives a dividend of 2^ per cent, for the firnt two months of that 
 " half-year." 
 
 The results of the monthly operations for the half- 
 year, of which the firsl lv:o mrnitha only, were then 
 ascertained, were as follows : — 
 
 ^"f^^V !2^?i'f \ 278,538 First Two Months Clviimlto a .Hvi- 
 
 September l<5,;j_>lj \ >\cm\ for four 
 
 -l months ..f 6J «/„ 
 
 October ...174,598) .„-,r ,/.i « „ , m Ar „ J "•; fqa-^l to Hi 
 
 November ISoisGG j •^'^••'^^* fe'cond Two Months (^./^ p,, anmm.. 
 
 December 
 January 
 
 ••• 'J!i'7,^g| 75,003 Third Two Mouths 
 
 SG59,0tt5 Total for the Half-year, G "/„. 
 
 The dates when I transferred the sliarcs referred to were, 
 as stated bv the Commillcc, on Xovcmber 28th and De- 
 cember 10th,1872,and the bad result of December (arising 
 from the ice blockade in the Detroit lUver) could not 
 possibly have been known to any one in England before 
 the December return was received in England on January 
 21st, wdiile the January result was not known till 
 Eebruary 28th. It will, therefore, be plainly seen that 
 I could have had no knowledge whatever of those 
 results when I sold my shares in the latter part of 
 November. It w^ill also be seen that the third and 
 fourth months of the half-year showed a larger net profit 
 than the two months to which I rcfen'cd at the meeting. 
 
78 
 
 Tho groundlessness, therefore, of tlio insinuation of 
 the Committee will be evident. 
 
 I needed tlie money for other purposes, and I sold 
 those and other shares, preliminarily to an absence from 
 England for several months. 
 
 A week before the Committee made their report I 
 sent them a message to the effect tliat I was prepared to 
 answer any questions they desired to put to me on any 
 matters in which I was personally concerned ; instead of 
 availing tlicmselves of this offer, they preferred to pub- 
 lish their personal charges without giving me an oppor- 
 tunity of making explanations, which would have rendered 
 their remarks and this reply equally unnecessary. 
 
 Having no private office in London I was present in 
 tlie Board Ttoom most of the time when in the City, 
 and brokers and other parties wore in the liabit of call- 
 ing upon mo there, in regard to matters entirely un- 
 connected with the Great Western of Canada. So far 
 from the interests of tlie Company suffering, I was en- 
 abled, by making the offices of the Company my head- 
 quarters while in London, to give an amount of time and 
 attention to the affairs of the Company which I could 
 not otherwise have done. 
 
 I can only add that since I have been a Director of 
 the Company I have given much valuable time to its 
 affairs and, so far as my judgment allowed, I have done 
 my best to promoLe the interests of the Shareholders. 
 
 Faithfully yours, 
 
 GILSON HOMAN. 
 12th Atignst, 1874. 
 
APPENDIX. 
 
80 
 
 APPENDIX No. I. 
 
 PvErORT ON TTTE CONDITION OF THE ]\IATN LINKS AND 
 BRANCilKR, by tlio folluwiug Civil Engineers :-- 
 
 Ml'. Samuicl Kkf.feu, 2[. 1ml. CI''.; for incrhj Chief Engineer, Bcjiart- 
 tneni of ruUic Worls, Caiiadd ; a ml Impcctor of LaiJicitys to the 
 Gorernmcnf of Ctiiudht. 
 
 Mr, Ch.vmles Paini:, formcrh/ f'hhf J'hxjinccr of Lake. Shore and 
 Jrichif/aii Southern Itailroa^l, mul i/nir fUencral Sa^hrinteiident ; 
 Kv-Prcsi(lc)it of Smivlj of Ciril HiH/inerr'i, Ciiicajo. 
 
 Mr. L. II. CLAUicn, Chief EiVjincer of ihe JlUiivis Central litiilrodd. 
 
 IIa.mh.tox, Ontaiuo, 
 
 J>(f>/ \lth, 1874. 
 
 To the Board of Director,-j of the Great Westf.un Kailway or Canada, 
 
 Loiuloii, Enghuul. 
 
 Gkntlemen, — This Iieport is niacl(> iu eoinpliauco with a request 
 received by us from Joseph ruiCE, Esq,, CJeucral Manager, of which 
 tlie following is a cojiy ; — 
 
 "•!//( July, 1871. 
 
 " CiiAUii.-. rAiNi:, ]'.s(i., L. II. Clauki:, F.sh., Samii-l Kickiim;, Ksq. 
 
 " Genti.emex,— By request of tlio Boiird of Directors of this t'uiiipuny, nceiveil 
 " by eiible, I am directed toiislc if you will make ;in examiiiiitioii of the iiermaiient 
 '« w;iy, works, bridi^e.i. iS:e., of tliis C'iim[);iny's niaiii liiii'iind bniiiehes, and to report 
 "the eonditioii of tlie saiui^ to the Board. 
 
 " To inform you of tin.' oliji-'ct of the inspection, I s 'nd you a report of the 
 '• Committee of Invistin'atiiin, recrnlly iippointed liy oui' Sliarehuldeis in Knfi;lami, 
 " to enquire into the affairs of the Comjiany. You will src by their Kngiiiecr.s' 
 " report on the last page, the condition of our lines is adverst^ly reported upon, and 
 " on page 27 you will see the Committcje adopt these virws." 
 
 Wo were furnished with a copy of thn report of the Cununitteo of 
 Investigation to the ShareholdorH, dated at Liverpool, iJune lath, 1874, 
 and made ourselves familiar with the summary of the Committee's 
 Engineers' re])ort, A])pendix IV,, before jiroceeding to our examination, 
 in order that our attention might be ilxed upon the matt<'rs criticised 
 in it. At the same time, wo have had the beiu'fit of the escort of 
 Mr. Kennedy, your Engineer in-Chief, who lias pointed out tlie particulars 
 alluded to in the Summary, and has explained to us the plans and inten- 
 
81 
 
 iioiis of tlio EiigiiK'crs' dt^pavtinout, in tliu luotliuils of cuiiHtniL-tlun, aiul 
 of repairs wliich liiivc V)eon piusuod. 
 
 Wo Wi'w prcpaivd by tlic suiimiaiy of tlic Committer's Eugincer's 
 llf'port to find upon your linos a statu <if things wliicli, in our judgmont, 
 docs not now o.xist. Wo liavc; oxaminiMl tlio cntiro system of railways 
 operated by your Company, witli tlie exeeptiou of the Petrolia Brancli 
 (i'l miles long), wliieh it was not convenient for us to pass over, and we 
 
 hav.! to say that the condition of the permanent way, 
 ballasting, bridges, Sec, upon the main line, the loop 
 line, and upon theWelland and Allanburgh branches, 
 is excellent, whsn compared with that of other 
 through lioes in America of equal traffic. 
 
 The same may be said of the branches, if compared with the branches 
 of other similar lines having a similar light burden of trallic, which are 
 maintained in an economical manner, by the use of rej)aired rails, or of 
 iron rails not worn out, which have been takeii uj) from the main linea 
 in the laying down of steel. 
 
 We are able to account for thediflerent view expressed by Mr. Gibwon, 
 only by the supposition that he assumed a standard of comparison difter- 
 ing fiom ours, and that he saw the roads of the Company during the 
 spring, when, in Canada and in the Northern Statea of America, the 
 track ia always disordered by the coming out of the frost, and by tho 
 imperfect drainage wliich exists at that time. 
 
 We find a considerable number of Inidges which rcfpiiro extenaive 
 repairs, and others that are being re-built ; but wo cannot think there 
 are more requiring renewal than we should exjiect, when taking into 
 account the age of the road ; nor more than will probably, at any futnre 
 time, require I'opairs or renewal until jiermanent .structures of iron ond 
 stone .shall have been substituted for those of wood. 
 
 Via liave found a careful distinction observed by the management 
 V)ctween expenditures which are essential and those which would bo 
 desirable if circumstances woidd admit of improvements affecting only 
 the appearance of the road and works. 
 
 We are unanimous in the opinion that the projjerty is not suffering 
 <leterioration, but that it is being gradually improved, and that the 
 renewals which have been made and which are now in progress, are 
 more than suflScient to compensate for depreciation. 
 
 Respectfully submitted, 
 
 CHARLES PAINE, 
 L. H. CLARKE, 
 SAMUEL KEEFER. 
 
 e 
 
82 
 
 APPENDIX No. II. 
 
 [.ETTERS FROM PRESIDENTS OF AMERICAN RAILROADS 
 AS TO THE PRESENT CONDITION OF THE LEADINC 
 MAIN LINE OF THE GREAT AVESTERN OF CANADA. 
 
 L 
 
 Chicago, Brni.iNXiTON and Quincy Railroad Co., 
 Peesident's Office, 
 
 Chicago, July ^th, 1874. 
 
 Dear Sir, — I am just in receipt of yours of the 4th relating to the 
 condition of your track. 
 
 My business rcq\xires nie frequently to pass over your road. I think 
 I have been east over it, and returned six times, since the 1 st January 
 last, making twelve trips over the road. 
 
 Aside from the roads of which I am in charge, I am tolerably well 
 acquainted with other roads, especially those leading from here to New 
 York, the New York Central, Michigan Central and Pennsylvania 
 Central, — and it gives me pleasure to state to you that I consider vour 
 ROAD TO BE IN FIRST CLASS CONDITION, anil kuosv of uo road among 
 those I have mentioned whose track to-day is any superior to yoiu's, or 
 in a better condition than yours has been during the last six months. 
 It is safe to say that it is equal to the best tracks in this country. 
 
 Yours truly, 
 
 J. M. WALKER, 
 
 President, Chicayo, Burlington and Quincy liaif.roaff. 
 
 II. 
 
 President's (Office, 
 Chicago and Alton Railroad Company, 
 
 Chicago, Jvli/ 1th, 1874. 
 Dear Sir, — I have your letter of the 4tli inst., asking my opinion 
 of the present condition of the Permanent Way, Ballasting and Tracks 
 of the Great Western Railway of Canada, compared with the other 
 through truck lines in this country, and whether the stat,>ment which 
 you quote from the Repoi-fc of the Engineer sent out from England, that 
 the same is not in good condition, is warranted by the fa"ts. I have 
 been actively engaged for the past 27 years in the construction and 
 management of railways, with the exception of 12 months in 1868 and 
 1869, which were spent in travelling in Great Britain and .a the 
 Continent of Europe. I have passed over your line several times each 
 
83 
 
 yortv sinco its i;oiiii»k'tiuu, uiid luivc passed twice o\ev it within the past 
 
 week in going to iind returning from Now York. I cau confidently 
 
 state that its condition has never been so good before as it is at present, 
 
 audits Permanent Way, BaUasiing and Tracks are equal to the uest 
 
 ON THIS CONTINENT. More labour has been exi)ended on some of the 
 
 English lines in what may be called ornamental work, calculated to catch 
 
 and please the eye, but very few if any of the lines in England or on the 
 
 Continent of H)uropo can bo found on which the carriages run ns smoothly 
 
 as upon yours. I am in the habit of travcslliug over your line in an 
 
 Hotel car, and taking refreshments while going at full spetul. I have 
 
 often noticed that a goblet tilled rpiite full of water and placed upon a 
 
 table is carried without s[tilling ;i drop. Had not careful attention boon 
 
 ;;iven 'to i)ermanent way and tracks, that conld not 1)0 done. I think 
 
 it could be done on ^-ery few liurs in England. I might enlarge uj)on 
 
 this matter, but it seems unnecessary. The Engineer to whoso report 
 
 you refer has certainly formed an erroneous opinion. His statements 
 
 are not warranted by the facts, as you can show, if you take the trouble, 
 
 by abundant testimony. 
 
 Very i'es[)ectfully yours, 
 
 T. B. BLACKHTONE, 
 
 President. 
 
 III. 
 
 JVIicuiGAN Central Railroad Co., 
 
 President's Office, 
 
 Detroit, July Qth, 1874. 
 Dear Sib, — I have your note enclosing extracts from the Report 
 of the Committee sent out to examine the Grea> Western Road lelative 
 to the condition of its track, which surprise mo greatly. 
 
 The best statement which I can make in answer to your inquiry of 
 the opinion we have upon that subject, will be probably to give you an 
 extract from the Annual Report of the Boar<l of this r'omi)any to the 
 Stockholders, whicli is abont to be publisluKl. 
 
 After alluding to the irregularity of trains upon your i-oad the last 
 year in consequence of your work of reconstruction, &c., as a cause of 
 some increased expense in worlcing our road, our Board continue iu 
 their Report as follows, viz. : 
 
 "The Board however ai-e glad to be able to say that for some time 
 " past this cause of increased expense is obviated, and that all trains upon 
 " that road are run with great regularity. They gladly bear testimony 
 " that the road of that Company is ix all respects equal to the best 
 " IN THE country, and at least ample in all its appointments for the 
 " business which it may bo required to do. This is the first time in very 
 
S|. 
 
 " mauy yeavs tliat tliis could be Eiiid of it. Its liut-s ure stuol tliiougli- 
 " out, its roadbed excellent, aud its eqiiiiniieut equal to the businens." 
 
 Theas lines were written some time ago, and before the Keport of 
 the Committee was known. After having had occasion to complain 
 so much of the slowness with which your Company undertook the 
 absolutely necessary work of bringing your road up to the necessities 
 of business, it gives us great pleasure to bear our testimony to the 
 vigor with which the work was pushed when once resolved upon, and 
 the thorough manner in M-hich, in our judgment, it has been done. 
 
 Yours tiuly, 
 
 JAMES F. JOY, 
 
 J'reaidcnt. 
 
85 
 
 APPENDIX. No. III. 
 
 REPORT OF Mk. O. L. RE^r), c.E., formerly CHIEF ENGINEER 
 OF THE GREAT WESTERN RAILWAY OF CANADA. 
 
 London, Gth Av<)u«t, 1874. 
 
 To THE PhESIDENT AND DlRECTOHS. 
 
 Gentlemen, 
 
 At your roquest, I beg to submit to you the following observations 
 nix>n those remarks contained in the " Report of the Committee of 
 " Investigation," which pertain to the engineering department of your 
 •' Railway. 
 
 The report of your Chief Engineer, Air. Kennedy, dated 2()th July, 
 deals so fully with the suljjects of the permanent way, bridges and works 
 of the ^lain Line and branches ; and the special reports respectively of 
 Messrs. Keefer, Paine and Clarke, three civil engineers of the highest 
 standing in Canada and the United States, contradictso emphatically the 
 assertions of Mr. Gibson the Committee's Engineer, that I shall confine 
 my observations to the subject of the Loop Line, and to the specificition 
 and manufactiire of the iron rails. 
 
 When I resigned the post of Cliief Engineer to your Company, and 
 returned to England early in December, 1872, the Loop Line was 
 virtually completed between Glencoe and Welland Junction, a distance 
 of 128i miles. The remaining 17 miles were well advanced ; but the 
 sidings and station buildings along the whole line had not made much 
 progi-ess, owing to the exti'eme scarcity of skilled workmen, and to the 
 high prices of all building materials. 
 
 COST OF THE LOOP LINE. 
 
 My original estimate of the Loop Line, prepared in June, 1870, was 
 £750,000 or £5,1.37 per mile for the 1-16 miles. As it was considered 
 desirable to have the line constructed with rapidity (in the expectation 
 of defeating the Canada Southern scheme) and in as economical a manner 
 as was compatible with efficiency of working, I was of course obliged to 
 adopt timber structures on the greater part of the line, where building 
 stone could not be found, and to establish such gradients as should avoid 
 unusually deep cuttings and heavy embankments. The wooden bridges 
 are of the best description, in regard both to strength and durability, 
 which it is possible to build, and the gradients have fulfilled all that was 
 expected of them, as will be more particularly set forth in the course of 
 this report. The width and stability of embankments, the drainage 
 
86 
 
 \\ork8, the steel tinck of GC lb. rails, untl the station biiikUugs uutl 
 appurtenances, are beyond nil 4uestion fully ocjual to tlie loadiuf]; trunk 
 railways east ot the Niagara Eivor, and superior to any American Lines 
 Avest of the Detroit lliver. 
 
 When I left Canada, the unexpended balance of the capital provided 
 was amply sufReient to conii)letc the Loop Line ; and oven in the 
 spring of 1873, my successor did not anticipate any likelihood of the cost 
 exceeding tlie original estimate. As, however, it was deemed advisable, 
 in anticipation of a largely increased tratlic, to construct many new 
 sidings, and to extend the existing ones, and to enlarge the freight 
 l)uildings and ])latforms (to a similar extent an was then being cflected 
 on tho ilain Lino, at the urgent re(|uest of the General Superintendent), 
 the final cost of this line Avas brought up to a sum of £8(')0,983, or 
 £110,983 beyond my estimate of June, 1870, which did not include 
 interest during construction or cost of rolling stock, &c. 
 
 Your Chief Engu _er, Mr. Kennedy, says on this subject, in his 
 half-yearly printed report, dated 2Gth August, 1873 : — " The number and 
 " length of sidings have been increased to an aggregate of nearly double 
 " the amount originally contemplated, in order to provide for the large 
 " amount of traffic which will certainly be thrown over the line in con- 
 " sequence of the construction of tla; AUanburg Branch." And again, 
 in his printed report dated 6th Marchlast, he says : — " The rapid expansion 
 " of traffic felt u])on all neighbouring lailways for some time previous 
 " to the recent American panic, necessitated a corresponding enlarge- 
 " ment of the sidings and other accessories of the line iu the same way 
 " that the increasing traffic upon the Main Line demanded very large 
 " expenditures during the same 2>eriod, and for works of a precisely 
 " similar character." 
 
 The items of expenditure which together formed this excess are the 
 following : — 
 
 1. Increased cost of steel rails and fastenings pur* 
 
 chased in a rising market ... ... ;£36,00(» 
 
 2. Sidings, station buildings, pumping stations, Avells, 
 
 tivnks, signals, itc. ... ... .,. 17,000 
 
 3. Telegraph line, and lumber and stores purcliased 
 
 from contractors... .., ... .., 4,000 
 
 4. Kxcess due to increa.sed rate of wages and cost of 
 
 materials after Janupry, 1873, and to the extra 
 cost incurred by the ojiening of the line when in 
 an unfinished state in the spring of 1873 ... 23,983 
 
 Total excess ...£110,983 
 
87 
 
 Tlie 1a)(»}» Lino, as now IIiusIkmI, luvHCtmta voiy inodci'at*' piioo itulecd 
 for tilt) ((iiulity of tho railway whicli you liavo ohtaiiicd, and an aiaouiit 
 within wliicli it certainly coulil not be Wiiilt at the ja-ewent day. 
 
 LOCATION AND GKAJ^II^^NTS OK THE LOOP LINE. 
 
 The Coainiittoe state in their report that tlioir enginoer " testifies to 
 " tho hasty, ill-considered and expensive manner in wliicli the line has 
 " in many respects been located and built." They give no particulars 
 and do not state to what heads of construction those charges apply. 
 I can hardly believe it possible that their engineer has jierniitted himself 
 to use these words, seeing that hiswxaniination of the line, having been 
 limited to twelve hours, must of necessity have been both " hasty and 
 " ill-considered," to ado])t his own language. Your Engineer, who 
 accompauied Mr. Cribsoii in all his inspections, writes to nie, " tho Loop 
 " Line was exaiuiued by starting at Clifton, via Allanburg Bran';h, in 
 " the morning about eight, anil reaching Gleucoe about four. The 
 " eastern end and AVelland Railway were examined the afternoon 
 " before. A critical txaniinalion as to location itc, such as entitles 
 " him to a shadow of right to give an opinion, ir<ts nut dfteiiipicd." 
 
 i think any comment of mine upon opinions fouiuled on such 
 " inspection " is totally unnecessary, and X shall content myself by 
 quoting ou this subject the authoritative opinion of a gentleniiin who 
 knew what he was writing about, viz,, from tho rejjoi't iif Mr. ]^lunro, 
 the present Inspector of Railways to the Canadian (Jovernment and 
 the able engineer of the New Welland Canal. He oflicially inspected 
 the line and works in the end of May, 1873, prior to itsbfing opened for 
 trafHc and whilst the ballasting and station buildings were uufini.shed. 
 He says : — " The linear arratigement is good, a large portion of the track 
 " being straight. The curves are easy, and the maximum grade of 
 " 35 feet to the mile occurs but seldom, so that the railway may reason- 
 " ably bo expected to carry through freight at cheap rates. Tho 
 " materials and work of the bridges are throughout excellent of their 
 " respective classes. I am of ojjinion that the line and its equipment 
 " when completed will prove thoroughly fit for the work which may 
 " offer." 
 
 The location of the Loop Line would undoubtedly have been in some 
 respects better if 1 had been free to lay it out wherever the ground was 
 most favourable ; but as your charter rigidly demanded that the line 
 should pass " through " the towns of St. Thomas and Cayuga, and " at 
 '* or near" the town of Simcoe, I was confined within comparatively 
 
HH 
 
 narrow liinitu in its loe.itioii. As it is, I siiceciMlod in obtaining a lint' 
 so nearly stniiglit tluoiighout, tint it is only four laiK's longer tliau a 
 80-callocl " air line " in tlio whole 14G miles between (.Jleucoe and the 
 lutcrnationiil Bridge, whereas your Main Line between (Heueoe and tlio 
 Suaponsiou Bridge exceeds the length of an " air lino " by 12 miles. 
 
 I may add that the gradients of your Loop Line are decidedly lighter 
 than were those of the originally projected Southern Eailway between the 
 Niagira and Di'ti'oit Rivers (as laid out in 18r»8, ami estimated to cost 
 £8,000 per mile), the plans ami sections of which I made use of in 
 surveying and designing your Loop Line. 
 
 riRADIKXTS OF THK LOOP LINK. 
 
 Mr. Gibson says of the Loop Line, " l>ut the gradients at the principal 
 " stations may yet rerpiire alterations, nml thi.s will form a largo 
 " item of expense which might have been avoided when the line was 
 " under construction." 
 
 Before describing in detail the gradients above referred to, I shall 
 briefly state the principal features of the respective profiles or sections 
 of the ltOO\) and Main Lines. 
 
 The Looj) liiue commencfs at the Niagara International Bridge at a 
 level of 20 feet above the water of Lake Erie, and varies little from a 
 perfect level for the first tO miles, when it reaches Cayuga, 22 feet 
 above the International Bridge. The fo;k froni Welland Junction via 
 the Welland and Allanburg extension to the Suspension Bridge 17 miles 
 in length is also nearly quite level, the rails of the Suspension Bridge 
 being 20 feet lower than those of the International Bridge. From 
 Cayuga the line ascends in a series of easy undulations for a length of 
 47 miles to the summit level west of Tilsonburg, where it attains its 
 maximum elevation of 218 feet al)o\e the International Bridge. Thence 
 to Glencoe it falls 84 feet in a second series of gentle undulations 
 extending over a distance of 50 miles. 
 
 On the other hand the Main Line, shortly after leaving the Suspension 
 Bridge at Clifton, descends 2G1 feet in 7i miles, and contimies gradually 
 to descend till it reaches the level of Lake Ontario at Hamilton, 325 feet 
 below the level of Lake Erie and of the Clifton Suspension Bridge. 
 Thence the line ascends 494 feet in ten miles, and reaches the summit 
 level at Eastwood at an elevation of 762 feet above Lake Ontario, dis- 
 tant 44 miles from Hamilton. From the summit it descends 230 feet 
 to Loudon in a distance of 33 miles, and again rises 106 feet in 2k miles 
 on the Komoka incline, whence it gradually falls 158 feet in the next 
 26 miles to Glencoe. The fall from Glencoe to Wirdsor is 1 40 feet in 
 80 miles, common to both Lines. 
 
S!) 
 
 Aa eoinpiir'Hl with tlio Dtlier Trunk l,iiic.s lit the Westciu Peninsula 
 of Ciiuailu, tho following figures show tin? favouruhle lueatioii of the 
 Loo)) Line. In attaining tho auniiuit level tho Ciranil Trunk Ruilway 
 ascends 907 feet in 38 miles. The Great Westeiu Main Lino ascends 
 702 feet in 44 miles. Tho Loop Lino ascends 2!18 feet in 96 miles. 
 
 Thoro are on tho whole Loop Lino only tivo short gradients to which 
 Mr. Gibson's remarks can vcfer. These are : — 
 
 Iflt. One of 1700 yards in length, eastward of 8t. Thomas Station, 
 
 having a rise of 35 feet in that distauce, being at tho rate of 
 
 1 foot in 150. 
 2nd. One about a mile west of Tilsonburg Station, having a lise of 
 
 30 feet in a length of 1,.")00 yards (1 foot in 150), and an 
 
 additional length of 900 yards at the rate of 1 foot in 188. 
 .Trd, One to the east of Fredericksburg Station having a riso of 33 
 
 feet in 1,6GG yards, being at tho rate of 1 foot in 151^. 
 4th. One to the east of Sinicoe Station, having a riso of 3U feet in 
 
 2,000 yards, being at the I'ato of 1 foot in 154. 
 5th. One to the West of Cayuga Station, having a riso of GG feet in 
 
 4,107 yards, or 1 foot in 157 A. 
 
 Three of those gradients, viz., those of St. Thomas, Fredericksburg 
 and Simcoe, ascend to the east ; the other two, those of Tilsonburg and 
 (.'ayuga, ascend to the west. 
 
 The.se gradients being individually of short length do not perceptibly 
 diminish tho speed of passenger trains ; tlie only eft'ect of them is to cavise 
 a slightly reduced rate of speed, and an extra pressun; of steam for a few- 
 minutes in the case of heavy freight trains, as any practical lailway 
 engineer would know, and as daily happens on the secondary gradients 
 of the Main Lino and Toronto Branch. 
 
 The maximum number of loaded cars in the freight trains of the 
 Western Division of tho Main Line west ofGlencoe, on which therulint' 
 gradient is under 20 feet per mile, nscd to be 20 in summer and 24 in 
 winter (each car carrying 9 tons of merchandise), but this load is now- 
 increased to 30 cars and upwards as the usual summer load since the 
 introduction of more powerful engines ; and these same loads are hauled 
 over the whole length of the Tjoop Line without any assistance. T am 
 therefore unable to see any reason whatever for Mr. Gibson's sugges- 
 tion that the gradients at some of the Stations may yet require 
 alteration. 
 
 On the Main Line rising to the east from Hamilton Station there is 
 one of the secondary class of gradients of nearly the same length and 
 rate of ascent as that of St. Thomas on the Loop Line, but it has never 
 
90 
 
 bi-en found duviug the past 20 years to intcifcre witli tlie lumlago of the 
 longest fi'oiglit or passenger trains. 
 
 Of course, I could have planned the Loop Line so that no gradient 
 should exceed a rise of 15 or 20 feet in the mile, but this would have 
 added largely to its cost, and would have involved fi'om 6 to 9 months' 
 additional time in the construction of the Cayuga section, where a lower 
 gradient than the present one of 1 in 157i could only have been 
 obtained by encountering a long and decj^ rock cutting. 
 
 By the terms of the charter, as already mentioned, you were obliged 
 to touch certain towns on the route, and there was no way of avoiding 
 the heavy ground on the west side of the Grand Kiver at Cayuga. 
 Having secured gradients more favourable than those of the Michigan 
 Central, Lake Shore and New York Central Railways, and much supe- 
 rior to those of your Main Lino, one great object of the Loop Line was 
 attained. I may here add that the ruling gradi»;uts of the whole 
 Grand Trunk Railway of Canada are 1 in 100, or 52^'^^ feet per 
 mile. 
 
 But whilst Mr. Gibson tinds fault with the gradients of the Loop 
 Line he altogether ignores the inclines upon our Main Line, which 
 i-equire the use of assistant engines, and which it was one important 
 object of the Loop Line to avoid. On the Main Line there are three 
 long, heavy gradients, on which assistant engines are constantly employed 
 for all through freight trains and ex])ress passenger trains, and a large 
 proportion of local trains. Those gradients are the following : — 
 
 1st. An incline connnencing half-a-mile east of St. Catherines, and 
 extending to within 3 miles of the Suspension Bridge, having 
 a rise to the east of 2G1 feet, in a distance of 7 J miles. It con- 
 sists of a series of gradients varying from 1 in 150 to 1 in 135, 
 with a level break at Thorold Station, 2 miles east of St. 
 Cathei-ines. The assistant engines \isually work between 
 St. Catherines and the Suspension Bridge, a distance of 11^ 
 miles. * - 
 
 2nd. An incline commencing at Hamilton Station and extending 
 to Copetown, a distance of ten miles, having a ris* to the west 
 If of 494 feet, consisting of gradients varying from one foot in 
 
 . ' 116 to one foot in 94. This long incline is followed by a 
 
 ■ , I second gi-adient to the west of Harrisburg Station, having a 
 rise of llGfeetin 5,005 yai-ds (nearly 3 miles), being at the 
 ,;' , rate of one foot in 131. It is generally found necessary to 
 
 continue the assistant engines over this second gradient as far 
 as Paris Station, n distance of 20 miles from Hamilton, and 
 tliis especially in the case of express passenger trains, to en- 
 •j . ... Hui-e their making the regulation time. 
 
91 
 
 The maximum load for a single en^ne up the Copetown incline is 
 only 17 loaded cara, the usual load being considerably less. 
 
 The Copetown incline is not only the longest and steepest gradient 
 on the Great Western Railway, but by reason of its numerous 
 sharp curves, heavy cuttings through the treacherous debris of 
 the steep mountain slopes, and frequent slips of great masses 
 of the overhanging escarpment, its cost of maintenance has 
 always been more than double that of any other section of the 
 line of the same length. 
 
 3rd. The other incline which requires the use of an assistant 
 engine is that ascendinj; to the west from London, having a 
 rise of lOG feet in a distance of 2| miles, being at the average 
 rate of one foot in 123, but the summit is at the rate of 1 in 
 UO. The assistant engines push the freight trains from 
 London to the summit of the gi-adient, a distance of *1| miles, 
 but in the case of expi'ess passenger trains, they are required 
 to assist in hauling to Komoka, a distance of 11 miles. This 
 incline passes through two of the deepest clay cuttings on the 
 railway, which are full (jf springs and quicksand, and involve 
 a heavy annual cost in maintenance. 
 
 In addition to the above described gradients, there are some others of 
 a secondary class on the Main Line, but none of them require additional 
 engine power. The principal of these secondary gradients is that between 
 Paris and I'rincetou, having, a rise to tlie west of Go feet in a distance 
 of 3,012 yards, being at the rate of one foot iu 139, whicli is stoeijer than 
 any on the Loop Line. Another is that already referred to, rising to the 
 east from Hamilton for about tluee-fourths of a mile, at the rate of one 
 foot in 151. 
 
 The aggregate length of the inclines of the Main Lino requiring the 
 use of assistant engines is 23 miles, but the additional engines actually 
 work over a length of from -iO to 50 miles, in three separate sections, 
 viz., 11^ miles for eastern-bound trains, and 33^ miles (or for express 
 trains 40 miles) for western-bound trains. As these assistant engines 
 have to return without loads, the mileage is doubled, and thus becomes 
 an average of say 45 miles each way, being very nearly twenty per cent, 
 of the engine mileage of all the Main Line through trains. ' 
 
 On the other hand the total length of the five gradients of the Loop 
 Line, which I have already fully described, is only G^''^ miles, and they 
 involve no extra engine power, nor additional expense of any kind in their 
 working. As a matter of fact, passenger trains on the Loop Line, either 
 from the Sus])ensiou Bridge or International Bi'idge, can peiibrm the trip 
 to Windsor in one hour less time than the same trains take on the Main 
 
92 
 
 Line, whilst the latter require assistant engines from Hamilton to Paris, 
 29 miles, and from Loudon to Komoka, 1 1 miles, whereas the former 
 require no extra engine power whatever. Going eastwards from Windsor 
 to the Niagai-a river the same class of trains gain fully half-an-hour in 
 time on the Loop Line as compared with the Main Line, where an 
 assistant engine is i-equired between St. Catherines and Clifton, a distance 
 of 11^ miles. 
 
 But if in tiie coiirse of future yeai-s it should be deemed advisable to 
 reduce these Loop Line gradients, it can be df»ne much more cheaply by 
 making use of tlio present track for the removal of the earth and rock 
 excavated than could have been done during the construction of the 
 line. 
 
 The same remark does not apply to the gradients of the Main Line 
 liecause the summit of the long Copetown incline cannot possibly be 
 reduced even a few feet, owing to the configuration of the ground, and 
 to the presence of form'dable quicksands in the bottom of the long 
 cutting at the head of the incline. And the series of gradients which 
 form the Thorold incline, east of St. Catherine's Station, can only 
 be lowered by an enormous expenditure. These gradients were 
 tompomrily formed at a rise of 1 in 06 (ov 80 feet per mile), when the 
 line was opened in November, 1853, and they were subsequently reduced 
 to their present inclination of 1 in 137, during the years 18r)4 and 
 18^)5, when the utmost was done towards improving them which wns 
 deemed practicable. 
 
 4 
 
 SPECIFICATION OF RAILS. 
 
 The Committee report on page 25, that " they have no hesitation in 
 " saying that they consider that the Company has suffered seriously by 
 " the peculiar specifications of the rails, and the manner in which the 
 " contracts have in some instances been carried out." 
 
 The Committee of courae refer to your iron raik. Only one specifica- 
 tion, that I am aware of, was ever submitted by you to rail manufixcturers 
 for tenders, viz. : that on which the contract for 13,000 tons was let to 
 the Ebbw Vale Company, in February, 18G6. As 1,500 tons of this 
 contract consisted of 75 lb. rails, there was a separate specification for 
 that quantity, but the mode of manufactui'e was precisely the same as for 
 the 66 lb. mils. 
 
 Prior to 1 866, the rails sent to Canada, after the fii-st construction 
 of the Main Line, were made without submitting any specification to the 
 makers, but they did not turn out well. When it was decided in 1 865, to lay 
 down a third rail on the Main Line so as to introduce a mixed gauge, it 
 
93 
 
 wa» tleomed iieceBsary to have the rails made in coiifonnity with a 
 stringCiit specification and undei' rigid inspoction, and aUo with a 
 guarantee from responsible makers, and as I was desirous of having the 
 very best specification which could be obtained, previously to deciding 
 upon its terms I visited the principal rail-rolling mills in England 
 and Wales, and examined the different systems of manufacture in use. 
 I also consulted with the managers of the several rolling mills, and 
 with some of the most experienced railway engineera in England, and 
 I finally determined upon the several clauses of the specification, which 
 as the contract was finally sigued, required the following : — 
 
 Rail piles of 8 in. by 9 in., of which the top slab consisted of No. 2 
 iron, hammered into a bloom from a puddle ball of one-half Cumberland 
 Hematite, and one-half grey mine pig; then rolled down into a slab 2 in. 
 thick. The i-e^nuiinder of the pile consisted of puddled bai"S of No. 1 iron, 
 each ^ths of an in. thick, all of pure mine, having the bottom layer of 
 No. 2 iron A an in. thick. The rail was to be rolled out to a bloom of 
 •5 in. by 7 in., then re-heated and rolled into the rail. 
 
 The rails wore under constant inspection during their manufacture and 
 were subjected to specified rigid tests. They were also guaranteed for 
 two years from the date of their being laid down, and the guarantee has 
 been enforced for those which failed. 
 
 Now theit) was nothing whatever "peculiar" in the abt^c sjieciti- 
 cation, excepting [K'rhai)s to this extent, that it was not then usual 
 to have so much care bestowed ui)on the manufacture of rails destined 
 for exportation from England. 
 
 GEO. LOWE EEID, 
 
 ComuUimj Engineer to the 
 
 (t. W. o/ Canada Railway Compani/. 
 
94 
 
 APPENDIX No. IV. 
 
 EEPOET OF MR. JOHN KENNEDY, CHIEF ENGINEER 
 OF THE GREAT WESTERN RAILWAY, 
 
 In Reply to the Committbk's Summary of Mb. Gibson's Remarks. 
 
 Engineeh's Office, Hamilton, Canada, 
 
 20fhJnli/, 1874. 
 To the President 
 
 AND Directors, Great Western Railway. 
 
 Gentlemen, 
 
 As requested, I bog to offer the following observations on such portions 
 of the Report of the Committee of Investigation as relate to this 
 department. 
 
 As a general answer to the unexpectedly sweeping condemnation of 
 the condition of both the Main Line and branches by the Committee's 
 Engineer, I bog to refer to the i-eport made by JMessrs. Paine, Clarke, 
 and Keefer, uU of whom are engineers of the highest standing, who have 
 spent many years in coiniection with American Railways, and whose 
 opinion is certainly entitled to greater weight than that of any gentleman, 
 however otherwise well qualified, whose acquaintance with the roads of 
 this continent is limited to a rapid inspection of the Great Western and 
 Detroit and Milwaukee Lines, made chiefly in a special train, and oftCTt 
 running at high speeds. 
 
 It must be noted too that the inspection by the Committee's Engineer 
 was made at the close of winter (which is notoriously the most unfavor- 
 able season of the year in Canada), and precisely at the time when the 
 ballast was partially thawed, and therefore soft and yielding in some 
 places, and solid and heaved up in othei-s, thus thi'owing the track into 
 a state of temporary irregularity. 
 
 The rail joints complained of in a general way are, in all the steel 
 tracks, made with strong fish plates, well bolted and secured by lock- 
 washers, and further su))porte<l by a wi'ought-iron cliair under each end, 
 making the joints of great stiti'ness, and certainly much superior to those 
 ordinarily in use. The fish j lates of the branches and sidings are of 
 the usual universally approved patterns, but no chairs are used iinder 
 the joints. 
 
 The 8leepei*s also complained of, are of excellent average quality. 
 Those on the Main Line are of white oak, 8 inches wide x 6 inches 
 thick, and 8 feet long, two feet apart from centre to centre ; and they 
 are all in pei'fect condition, with the exception of the small percentage 
 to be renewed as usual during summei", now nearly accomplished. 
 The sleepers on the branches are of similar size, but of different kinds 
 of timber, the description of which were nearly all unknown to the 
 
95 
 
 Eugiuutr iiH 1k! oonfobsod, iiiicl of tlio qualitios fjf which lie is of course 
 iinablu to jiulge. 
 
 The ballast, Avhich is said " not to be in excellent condition," was of 
 c(ui»sc somewhat uneven in surface at the time of inspection, as it is on 
 every line in this latitude at the same season. It is quite impossible to 
 pack up the frozen ballast during the winter months, and the continual 
 heavings of the surface can therefore only be couuteracteil by the 
 temporary use of thin wedges between the rails and sleepers, which 
 certainly present a rough appearance to one jiot accustomed to this 
 universal Canadian and American practice. 
 
 As regards the bridges, the following pai-agraph occurs in the Engineer's 
 summary : " The bridges must be extensively renewed, and the annual 
 expenditure will be considerable for some time'till their general restoration 
 is overtaken." This statement is of so general a character that the exact 
 meaning is scarcely clear ; but if it is intended to convey the impression 
 that the majority of the bridges on the Main Line i-equire immediate 
 or early renewal, and at such cost as to materially affect the ordinary 
 expense of maintenance, it is f.ntlrehf incorrect. Thus far the repairs 
 and renewals have been promptly undertaken as required, and the 
 average cost per mile for the past live yrmrs has been in excess of 
 what will be required for a like time to come. All the principal 
 structures of the Main Line have been rebuilt within recent years, and 
 many of them have been renewed in stone and iron. Only a comparatively 
 small number (principally west of Chatham) require heavy repairs or 
 renewals at an early date, but these are low structures not involving 
 serious outlay. 
 
 The bridges of the Toj-onto Branch, with very few exceptions, are 
 built with maaonry piers and abutments, and all the bridges on the 
 Line, except three, have been recently renewed, and are in excellent 
 condition throughout. Mr. Gibson did not think proper to stop and 
 examine one twentieth of the bridges on this branch at all, and he is 
 therefore almost totally ignorant of their state, and unwarranted in 
 including them in his indiscriminate condemnation. The bridges of the 
 Welland Railway are also included, while of the only three on the line 
 two have excellent iron girders ; the remaining one I'f timber, was 
 rebuilt last winter, and all have stone foundations of the best chai-acter. 
 
 The statement respecting the timber culverts on the Welland Railway 
 is still more exti-aordiuary, as with three or four trifling exceptions, they 
 are not timber at all, but ma.som'y of the very best description. All 
 the timber culverts on the line can be completely rebuilt when reqtiired 
 for less than one hundred pounds. 
 
 About half the bridges on the Gait and Gait and Guelph Branches have 
 been renewed, and these include all the principal structures except one. 
 
on 
 
 The majority of the liridges (including some of the largest) on tho 
 Sarnia branch, require renewals as stated ; but a number had been already 
 done, and the remaining ones are being taken in hand as considered 
 ne(iessary, in ordinary course, and without materially increasing the 
 general maintenance expenses. 
 
 Tho bridges of the London and Port Stanley Railway, though old, 
 have stood remarkably well, and the heavy repairs already put upon 
 them since the acquisition of the line by this Company, will maintain 
 them in efficient condition for some time to come. 
 
 All the bridges on the new double track of the Main Line, the Loop 
 Line, Bmntford Branch, and Wellington Grey and Bruce Railway, com- 
 prising over half tho aggregate timber bridging on the Company's lines, 
 are of course new, and will require only trifling repaii*s for sevoi-al yeara 
 to come. 
 
 The repairs of bridges, which the Conmiittee's Engineer has chosen to 
 call "patching," have I maintain, been carefully and judiciously made 
 as usually practised in this country, and have avoided premature renewal^ 
 and extravagant outlay. 
 
 The Accountants state that no infomnation could be had as to stock- 
 taking of rails, while I supposed, until this was stated, that every 
 re(iuix*ed information had been furnished. As a matter of fact, howevei', 
 stock is actually taken at the end of July, every year. At the end of 
 last year, stock was again taken with special cai-e, and the quantity of 
 iron mils on hand found to be li,39G tons, as stated in the report, and 
 which is 3,61-it tons less than the result of the stock-taking under the 
 direction of the Committee. 
 
 The Committee have, however, assumed their inventory to be the 
 correct one, and note the discrepancy as an example of laxity on our 
 j>art. I bog i'esi)ectfully to submit that the laxity is quite the other way. 
 (Jur stock wtw taken in the most exact manner by intelligent clerks, who 
 had every pile of rails turned o\ev and properly measured, while the 
 stock taken imder direction of the Committee, was hurriedly done by tho 
 " .section foi"emen," who ai-c for the most part illiterate and quite inconi. 
 l»eteut to deal conx^ctly with the quantities of figures involved. 
 
 Exception was taken to the practice of charging rails for the con- 
 struction of sidings at more than the market price of old rails, but it appears 
 to have been lost sight of, that those use<l for sidings are good serviceable 
 rails taken out of the Main Line in laying down steel, whilst those sold 
 as scmp ai-e entirely worn out. The rule has been to value the siding 
 rails at about half the cost of ro-rolling, added to the cuiTent market 
 
 ptice of old rails. 
 
 .tt.a i^.a.>« ,« .,., JOHN KENNEDY, C.E. 
 
97 
 
 APPENDIX No. V. 
 
 WELLINGTON GREY & BRUCE RAILWAY OP CANADA, 
 
 EXTRACTS FROM A REPORT ON THE CONDITION OF 
 THIP LINE, BY THOS. C. KEEFER, Esq., C.E. 
 
 Ottawa, 15th J%ily, 1874. 
 Sir, 
 
 I haA'e the honor to acknowledge receipt of your letter of 2nd 
 inst., asking my opinion upon the track and works of the Wellington 
 Grey <k Bruce Railway, between Guelph and Soutlianipton. * * ♦ 
 The Wellington Grey & Bruce Railway is, in my opinion, a good road, 
 and an economical one. Lighter grades and heavier rails would have 
 improved it, but I believe its cost to be fully represented in the line and 
 its appurtenances, and its character all that was warranted by the profile 
 and prospective traflSc of the route, as well as by the means available for 
 its construction. 
 
 It was in competition with the proposed 3ft. Gin. gauge system of 
 railways in Western Canada that the Wellington Grey & Bruce Railway 
 was projected. If this gauge was adequate to the wants of the country, 
 the standard gauge could only embark in the venture on the same 
 economical principle. There being no water competition, nor any 
 superior railway competition, there was no necessity for a larger expen- 
 diture in reducing the gradients below those dictated by the route. 
 
 If the working expenses are greater than they would have been on a 
 more costly road, the rates may always correspond with these. If the 
 traffic, with rates proportioned to working expenses, will not pay interest 
 and sinking fund on Bonds, and provide for renewals, the road has 
 already cost too much ; if it pays and provides for these now, its futui-e is 
 secui-ed, and improvement becomes only a question of time. 
 
 The Wellington Grey & Bruce Railway Comi)any have, in the interests 
 of Ontario and of the Great Western Railway system, demonstrated that 
 an economical and efficient railway can be built upon mo standard as 
 well as upon the narrow gauge. ****** 
 
 The question of how far it is advisable to go in the reduction of 
 gi-adients is an old and unsettled one. The Trunk Lines of Canada 
 lying lengthwise of the valley of the St. Lawrence are on our most level 
 routes, while the branches north of these are at right angles to the 
 coui'se of the valley, and must encounter heavier grades. When 
 sui*veying for the Grand Trunk Railway in 1851, I found the average 
 rise of the streams North of Ontario was 50 feet per mile while that of 
 
 7 
 
98 
 
 the land was more mpid. The Port Whitby and Port PeiTy Railway 
 therefore has giudes exceeding 100 feet per mile, and all the roads in this 
 direction have grades as great or gi-eater than those of the Wellington 
 Grey & Bruce Railway. 
 
 As to the grades, though heavy, they cannot be considered excessive, 
 being less than those of the narrow gauge and some other Ontario Lines 
 and of many important ones in the United States. The wooden bridges 
 and trestles us well as station accommodation and appliances are rather 
 above the standard of similarly situated lines, Canadian or American ; 
 while the road-bed, owing to facilities for drainage and the abundance of 
 ballast, is better than the average of roads. The recourse to trestle work 
 over deep and wide valleys saves time and money in the outset, and 
 affords opportunity for determining safely the requisite culverts or bridges 
 required by the several streams. The duration of the trestle work can 
 be relied upon for at least a dozen years, and in the meantime it would 
 be subject to less annual outlay than an embankment in a similar 
 position. 
 
 In this climate, where winter frosts and spring thaws are so trying 
 to slopes and where the snow fall is so gi'eat, deep cuttings are a source 
 of annual cost for many years. The lighter the earth-works and the 
 more the track is above the surface, the less the cost of maintenance of 
 way and of working the trains in winter. 
 
 I have the honor to be, 
 Sir, 
 Your obedient Servant, 
 
 THOS. C. KEEFER, C.E. 
 JoHK Kenkedt, Esq., 
 
 Chi0f Engineer, G. W. M.of Canada, 
 Samilton. 
 
00 
 
 APPENDIX No. VI. 
 
 Remarks of the Anditors on the Report of the Aooonntants employed 
 
 by the Committee. 
 
 To THE President and Directors of 
 
 The Great Western Railway Company of Canada. 
 
 Wo have at your request pei used tlic report of Messrs. 
 Price, Holyland and Watorhouso, the Accountants employed by the 
 Committeo of Investigation, with a view to deal with tlioiio mutters 
 which they havn treated as affecting tlie published accounts of the 
 Company. 
 
 The remainder of their report docs not require notice, as it appears to 
 us merely to repeat in a somewhat condensed form infoi-mation 
 furnished from time to time by the published accounts or reports. 
 
 We observe that the only items in the Accountant's report to which 
 the Committee consider it necessary to call the particular attention of the 
 Shai'eholders, are those referred to in the report of the Committee under 
 the head of " Unadjusted items of account ;" they are ;— 
 
 1. Interest accrued on bonds omitted from the half-yearly balance- 
 
 sheet, £20,432. 
 
 2. Outstandings on revenue account, £16,237. 10s. 7d. 
 
 These two sums the Committee recommend shall be liquidated by 
 instalments charged against the revenue during tbe next few 
 half-years. 
 
 3. Amount standing to debit of capital account in respect of the 
 
 steamers " Canada " and " America," £85,806. 13s. 8d. 
 
 4. Bad debts debited to capital, £11,601. 7s. 4d. 
 
 6. Amount expended on " Detroit Tunnel," £10,876. 10s. 9d. 
 As regards the three sums last-mentioned, the Committee state 
 they leave the shareholders to determine whether they shall 
 remain undisturbed, or be written off by annual charges. 
 We have to remark that items 1 and 3 (interest accrued on Bonds, 
 and loss on steamers "Canada" and "America,") were both brought 
 to the notice of the Shareholders in the report of the Committee of Investi- 
 gation of 1860, but were, nevertheless, allowed to remain aa they then 
 stood in the accounts of the Company, and have so remained to the 
 present time. 
 
 We think that this fact should have been stated in bringing forward 
 items which have remained unquestioned for a period of 13 or 14 years, 
 — litems which, if dcw disturbed, as sapgeateji by the Committee, would 
 affect materially the intenate of tie prsaent body of Shareholders. 
 
100 
 
 Witli refei-enco to item No. 4 (Biil debts to debit of Capital), it 
 conaists of 
 Debt due by the Port Huron and Milwaukee Railway 
 
 Company £8,219 .3.7 
 
 Amount at debit of Erie and Niagara Railway ... £3,382 .3.9 
 
 £11,G01 .7.4 
 
 Tlie debt of the Port Huron Company was carried to capital in the 
 accounts for the half-year ending Slat January, 1873, and was referred 
 to specially in our report to the Shareholders on the audit of those 
 accounts. 
 
 The amount at the debit of the Erie and Niagai-a Railway Company 
 was not a " bad debt," but was for expenditure on the Great Western 
 line, and in our opinion properly chargeable to capital for the reasons 
 given in our remarks on the Accountants' repoi-t under head number 
 VII. We see no groun<l for disturbing these two items. 
 
 Item No. 5 (amount expended on Detroit Tunnel) is dealt with in our 
 remarks under head No. YIII.; when the time arrives for closing this 
 account, it is an item which the Directors propose to charge to capital. 
 
 There remains only item No. 2, Outstandings on Revenue Account, 
 amounting to £15,237. 10s. 7d. Our explanations on these items will 
 be found in our reply under head No. II. 
 
 In dealing with the matters referred to in the Accountants' report, 
 upon which, as we have stated, we think any observations necessary, we 
 may be permitted to express our regret that they did not call upon 
 us before issuing it, to afford explanations on matters appearing to 
 them to be open to question, as we venture to think our remarks will 
 show that if they had done so some of theii* statements would have been 
 much qualified, and others rendered altogether unnecessary. 
 
 The matters to which we allude are as follows : — 
 
 I. 
 
 Jn*^nd8^tted '"^^ custom which has prevailed from the commencement of the 
 ywlyBjdanoe ^"® °^ Debenture Bonds has been to charge only to Revenue the 
 •**"«*»• interest maturing during the half-year, but the Accountants omit to 
 
 mention that the attention of the Shareholders was called to this fact 
 by the Committee of Investigation of 1860, and further, that each 
 half-year, with the exception of that in which the issue was made, has 
 borne a full half-year's charge for interest. At the date of the Colii- 
 mittee's report referred to, the airt-aw' amounc«d to ^22,141. 2s. 4d., 
 the present arrears iateing £20,4324 
 
 ,.t « ♦• 
 
101 
 
 II. 
 
 Tho Accountants admit that tlio outstanding wages and accounts for Ontatandliigs 
 tho purciiase of stores appear to bo duly entered and provided for. Most Aoooont, 
 of tho items which thoy stnto have not been provided for out of tho 
 receipts of tlio half-year, consist of rebates, over-charges and other 
 deductions from traffic, car mileage, <l'c. 
 
 Some of these items do not come before the Auditors, being entered 
 only in tho departmental accounts kept in Canada, and others are of 
 such a nature that they cannot bo ascertained with accuracy at tho 
 time when it is necessary to close the half-yearly accounts for transmission 
 to En;:;lrtnd ; besides it must be evident that the officers of tho Company 
 cannot with propriety recognise or admit such claims imtil they are fully 
 satisfied of their correctness. 
 
 Some of the amounts it appears were ascertained in the month of 
 February, and should have been charged in the accounts for the half- 
 year ending 31st Januaiy, 1874, but that half-year's revenue was not 
 relieved to the full extent of tho aiTcars refeired to by the Accountants, 
 inasmuch as, according to their statement, it has borne a charge of about 
 £12,000 in respect of similar arrears belonging to the previous half-year. 
 
 III. 
 
 The Accountants state there was " no inventory of stores taken from stowi. 
 " actual survey of recent date that could be produced to us." 
 
 In reply to this, Mr. Metcalf, the Treasurer, states that stock 
 has been taken every alternate year, and that the results for a series of 
 years were produced to tho Accountants, but the documents referring to 
 the stock-taking of 1872 could not bo found, although there was 
 corroborative evidence of its having been attended to, and further, that an 
 inventory made under the direction of the Committee showed a surplus 
 of stores over the amount called for by the books, more than sufficient to 
 cover any probable loss from obsolete stores, which consist chiefly of 
 materials rendered useless to the Company in consequence of change of 
 gauge, such loss in his opinion, being chargeable to change of gauge 
 account. 
 
 IV. 
 
 The details of the Rail Stock Accounts do not appear in the books n^u stock. 
 kept in London. The balance in the London books against the Engineer- 
 ing Department is represented by the value of stores and rails certified 
 by the Engineer to be on hand at the close of the half-year ; we therefor* 
 give the following extract from a statement lately received from Mr. 
 
102 
 
 Kennedy, the Company's Chief Engineer, in reply to the remarks of 
 the Committee, and of the Accountants on the subject : 
 
 "The Accountants state that no information cotild be had as to stock- 
 " taking of rails, while we supposed, until this was stated, that every 
 " required information had been furnished. As a matter of fact, how- 
 " ever, stock is actually taken at the end of July every year. At the 
 " end of last year stock was again taken with especial care, and the 
 " quantity of ii'on rails on hand found to bo 14,396 tons, as stated in 
 " the report, and which is 3,G14 tons less than tho rcKiilt of the stock- 
 " taking under the dii'cction of the Committee. 
 
 " The Committee have, however, assumed their inventory to be the 
 " correct one, and note the discrepancy as uu example of laxity on our 
 " part ; I beg respectfully to sul)mit that the laxity is quite the other 
 " way. Our stock was taken in the most exact manner by intelligent 
 " clerks, who had every pile of rails turned over and properly measured, 
 " while the stock taken under direction of the Committee was hurriedly 
 " done by the section foremen, who are for the most part illiterate, and 
 " really quite incompetent to deal correctly with the quantities of 
 " figures involved. * 
 
 " Exception is taken to the practice of charging rails for the con- 
 " stmction of sidings at more than the market price of old rails, but it 
 " appears to have been lost sight of that those used forsid'"ngsare good, 
 " serviceable i-ails, taken out of the ]\lain Lino in laying down steel, 
 " while those sold as scrap ai-e entirely worn out. 
 
 " The rulo has been to value the siding rails at about half the cost of 
 " re-rolling added to the curi*eut market i^iice of old rails," 
 
 " The statements of value and stock of steel rails given by the 
 " Committee's Accountants are not correct. The ciTors have probably 
 " arisen to some extent from their confuying rails and fastenings with 
 " rails alone." 
 
 V, 
 
 Steel Rdl8 In reference to the price at ■which the steel rails stand in the Com- 
 
 pany's books the Accountants say " this is no estimate of their average 
 «* cost, but is the balance of an account which has been charged among 
 "other items with the following" : — 
 
 " Rails lost at sea in transit (duly covered by 
 " ;iu amount i-ecovcrcd from the under- 
 "writoi-s to credit in the London books) £3,94C .3.1 
 " Short charged in price of rails used on 
 "Revenue Account in 1872 and 1873 ... 829 . 2 . 2 
 
 Carried forward .», ... j£4,775 .5.3 
 
103 
 
 Brought forward .. ... £4^775.5,3 
 
 "Short charged in price of rails u^ed on 
 
 " Revenue Account in 1872 and 1873 during 
 
 "half-year to 31st January, 1874, •written 
 
 " off in February 997.4.6 
 
 '* Amount written back from coat of Glencoa 
 
 " Line, in respect of higher price of rails 
 
 " Bupplied in 1873, the rails bought at cheap 
 
 " rates for the Glencoe Line in 1872 having 
 
 " been used on Revenue Account. . . ... 4,516 . 8 . 9 
 
 iilO,288 .18 . 6 
 
 The Accountants are in error in stilting that the Rail Stock Account 
 has been charged with these items, the fact being that the first item 
 only is charged, but this, as they state, is " duly covered by an amount 
 " recovered from the underwriters to credit in the London books." 
 The remaining items, if correct, will have to l)o carried to the credit of 
 Rail Stock account ; but wo have further to remark, as regards tho 
 second and third iteds, which are stated to be amounts short charged 
 in the price of rails used, on Revenue account, they did not appear in 
 the accounts of the Company at the 3l8t January last, nor could we 
 have had any knowledge of such entries being necessary. 
 
 The fourth item appears only in the monthly statement of the Engineer 
 for December, 1873, where it is described as "overcharge of $21,980 
 (£4,516. 88. 9d.) for Steel Rails in September, 1873," 
 
 This amount does not affect Revenue, but should be charged to the cost 
 of the Glencoe Line, and credited to Rail Stock accounc through the 
 Engineer's department, thus reducing the amount at the debit of the 
 Rail Stock account. 
 
 VI. 
 
 The Accountants say that ** old rails used for new sidings have been oidlro&BaUi. 
 *' charged out to capital during the hist half-year at £8, 10s., anil prc- 
 " viously at £10. 5s., thus unfairly reducing tho debit in respect of ohi 
 " rails at the expense of capital." 
 
 It will be seen from the extmct given from Mr. Kennedy's statement 
 that the rails used for Sidings "are good serviceable rails ttikon out of 
 '' the main line in laying down steel, while those sold as scrap are entirely 
 t' worn out." 
 
 Under this head, tho Accountants say they wero informed in Canada 
 that tho principle Adopted of carrying over a portion of tho amount 
 expended for re-laying the line in each January half year to the next 
 
104 
 
 half-year, was adopted from the first, with the view of spreading the 
 heavier expenditure incurred during the Januai-y half-yeai' over the 
 12 months. 
 
 We can only say that we had no knowledge that such a system 
 was being pursued until the receipt of the Manager's letter, in the 
 month of April last. The certificate of the Engineer for the correctness 
 of the stock of rails in hand had always been relied upon, and there 
 was nothing to lead to the supposition that a portion of those repre- 
 sented as being in stock had already been placed on the line. 
 
 As soon as this irregularity was brought to the notice of the Executive 
 in this country, the Board directed that the total cost of the rails laid 
 during the half-year should be charged out to capital and revenue in 
 their proper proportions. This course, the Shareholdera will doubtless 
 recollect— as explained in the Directors' Report — reduced the dividend 
 for the half-year ending Slst January, 1874, from 3J per cent., as had 
 been previously announced, to 2J per cent. 
 
 Amonnta to tba 
 d3blt of other 
 (.'ompanles of 
 (ioubtfUl Taint. 
 
 VIT. 
 
 We have been assured from time to time by the Directors that these 
 debts would be ultimately realised without loss. We believe that 
 with respect to some of them, reasons exist which render it undesirable 
 that settlements should be pressed for, and we cannot help feeling that 
 the observations which the Accountants have made in reference to these 
 items may be detrimental to the interests of the Company. 
 
 We may, however, remark that the statement of the Accountants 
 that a previous balance of £3,382. Ss. 9d. standing to the debit of the 
 Erie and Niagara Railway Company was transfeired to capital as a 
 " bad debt " is incorrect, inasmuch as this amount was the cost of 2 J 
 miles of track of the Erie and Niagara Railway laid on the land of 
 the Great Western, alongside its own line of railway, and is now in 
 use by the Great Western Company as a double track to the Suspen- 
 sion Bridge. It was accordingly charged to capital in the half- 
 year's account, ending 31st January, 1866. It appears as a special item 
 on the face of the capital account, and was also alluded to in the Directors' 
 Report for that half-year. 
 
 As regards the amount at the debit of the Wellington Grey and Bruce 
 Railway Company, we refer to our i-emarks under the head of " Agroe- 
 " ments with other Companies — Wellington Grey and Bruce Railway." 
 
 Detroit Tonnel \ 
 ad«uoe. 
 
 VIII. 
 
 The expense of ascertaiiiing, by a ** test or drainage tunnel," whether a 
 tunnel for the conveyance of goods and passengers could be coosU'ucted 
 
105 
 
 under llio Detroit Eivor from Windsor on the Canada side to Detroit on 
 the American side, was undertaken at the joint cost of the Michigan 
 Central and the Great "Western Railway. The progress of this work 
 was alluded to in several of the Directora' Reports, and the sums ex- 
 pended out of the deposit of $100,000 made by the Great V^estern 
 Railway Company to meet their share of the expenditure amounted at 
 31st January last to £10,876. 10s. 9d. 
 
 So soon as the accounts connected with this experiment have been 
 finally adjusted, the Directors propose to transfer the amount to capital 
 account. 
 
 IX. 
 
 The only point to which it is necessary for us to direct our observations Recent exrer.ei- 
 under this heading is the statement made by the Accountants that " it account. 
 " will be seen from tho details of the Engireev's Report that a large 
 " amount is charged in respect of small works stated to be additional," 
 and further " it is difficult to judge of the legitimacy of these charges 
 " to capital, but we would point out that no credit is given for the 
 " value of the buildings destroyed in making way for improvements." 
 In answer to these objections we may remark, that if the works are 
 additional, which there is no reason to doubt, when they are so described, 
 there would be no buildings destroyed, nor does it follow that improve- 
 ments necessitate the destruction of old biiildings; and although the 
 works of which the details are given in the Engineer's report, may, 
 as the Accountants state, appear small, it does not necessarily follow 
 that the outlay is not properly chargeable to capital. "With such details 
 before them, coupled with the evidence of the Engineer, which we pre- 
 sume was at their disposal, it would have been more satisfactory had 
 the Accountants — if they found it necessary after such inquiry — 
 questioned particular items instead of impugning the aggregate in such 
 general terms. 
 
 Neither the Directors nor the Auditors can be on the spot to ascer- 
 tain the nature and extent of such works, but must accept the certificate 
 of the Engineer, as furnished in his half-yearly reports. 
 
 X. 
 
 Upon the subject of this account (which the Accountants have jateration of 
 described as "Alteration of Gauge Account," the title in the Com- SooSttt!"'*"*' 
 pany's books being "Alteration of Gauge Suspense Account"), the 
 Accountants refer to a report made by us under date the 9th October, 
 1871, on the audit of the accounts for the ''preceding half-vear, as 
 stating the object of the account and the manner in which it waa 
 propoHed to apportion the cost of the alteration of gauge between 
 
106 
 
 Capital and Reveaue, but they state that the account representing the 
 anticipated expenditure has not been kept with due regard to the distinc- 
 tion between capital and revenue which we drew, inasmuch as a sum of 
 J45,077. 198. lOd., the proceeds of 7,000 tons of old rails sold, which 
 should "properly have been credited to capital direct,'' has been 
 " wrongly" credited to this account. 
 
 The Accountants are altogether in error. The accu..^at has been kept in 
 accordatce with the terms of our Report, and also with due regard to the 
 distinction bet ween Capital and Revenue ; in fact, the question which they 
 raise is not one affecting Revenue at all, and the use of the term is 
 calculated to mislead ; it is merely a question as to whether the proceeds 
 of the old rail as realised should be credited to capital account direct, or 
 indirectly through this suspense account. 
 
 The cost of laying down the third, or narrow gauge i-ail, completed in 
 the year 1866, £133,472, was, with the approval of the shareholders, 
 earned direct to the debit of the capital account, but thei*e was neces- 
 sarily a further large expenditure required for the " replacement, re- 
 " construction and conversion " of the rolling stock from the broad to the 
 narrow gauge. This exi)enditure was estimated to amount to £153,786, 
 and on analysis it appeared, as stated in our report, that it was properly 
 divisible under two heads, viz. : — 
 
 Cost of replacement and reconstruction of rolling 
 
 stock ... ... ... ... ... £90,984 
 
 Cost of conversion of rolling stock from broad to 
 
 narrow gauge ... ... ... ... 62,802 
 
 £153,786 
 
 The Directors proposed (and properly, as the Accountants admit) to 
 debit the estimated coat of " replacement and reconstruction," £90,984, 
 to Revenue, and to do so by spreading it over a period of five yeai-s, by half- 
 yearly debits of £9,100. This course has been strictly adhered to. 
 
 The estimated cost of " conversion," £62,802, was to be charged to 
 capital when completed ; in the meantime the expenditure, as it was 
 incuiTed, was carried to the debit of this " suspense " account, and the 
 proceeds of the old or outer rail as realised, to the credit of the same 
 account. ■ - , 
 
 When the conversion has been completed, and tbe remainder of the old 
 rails, G,154 tons, sold, and the cost of the one and the proceeds of the other 
 carried to the debit and credit of this suspense account, the balance will be 
 transferred to the debit or credit of the capital account, as the result may 
 require. If, in accordance with the Accountants' views, the proceeds of 
 the outer rail had been credited as realised " direct " to capital, the cost 
 
107 
 
 of converaion sbould in like manner as it was incurred have been debited 
 direct to the same account, but in no way would this operation have 
 affected Revenue. The result at the present time would, according to 
 the Accountants' statement, be only ii debit to capital of £5,08!). 18s. 4d., 
 the difference between the expenditure already incurred on conversion, 
 £50,167. 18s. 2d., and the proceeds of 7,000 tons of rails already sold, 
 £45,077. 19s. lOd. 
 
 XL 
 
 The Accountants state that they entirely approve of the raising of this £j°|^i?i Jgfiw 
 renewal fund, which, at the 21st Januaiy last, amounted to 
 £47,341. lis. 2d. This result has been obtained by adopting the 
 principle of chax'ging revenue half-yearly, with a fixed rate per train 
 mile to provide for the repair and renewal of the rolling stock. 
 
 XTI. 
 
 Upon this point the Accountants qiiestion the sufficiency of the annual Eenowal Fund 
 
 Jir Steamers, 
 sum of £5,000 set apart for " renewals," as well as the amount of in- 
 surance against fire. 
 
 As to the sufficiency of the fire insiu-ance we offer no opinion, but 
 with resjiect to the " renewal fund " the figures given by the Accountants 
 shew that, up to the present time, the sum set apart has been sufficient 
 to replace one steamer, the " Transit," to " overhaul " the " Gi-eat 
 Western" at a cost together of £28,931. Os. lOd., and still leave a 
 balance of £10,531. 13s. at the credit of the fund. 
 
 We may also remark that the "Transit" replaced in 1872, at a cost 
 of £17,204. 12s., the " Great Western " overhauled during the last half- 
 year at a cost of £11,726. 83. lOd., the "Saginaw," a new steamei-, 
 completed during the last half-year, at a cost of £9,960. 6s. 9d. 
 (but erroneously stated by the Accountants to be £18,412. 16b. 2d.) ; 
 the "Michigan," a new steamer completed since the 31st of last 
 January, at a cost of £45,173. 18s. 3d. (but erroneously stated by the 
 Accountants to be £36,902. 18s. 3d.), all therefore comparatively new 
 vessels, represent £107,461. 7s. 3d. out of the £132,206. 28. 5d., at • 
 which the steamers stand in the balance-sheet ; and we may further 
 draw attention to the fact that the " Transit," replaced at a cost, us 
 stated, of £17,204. 12s., stands in the capital account at £11,385. 2s.lld. 
 only — the cost of the old vessel — the difference, £5,819. 9s. Id., having 
 been provided for out of the lenewal fund, whereas this extra cost might 
 with propriety have been charged to capital. 
 
 It will be observed that the Accountants under this head refer 
 
108 
 
 pai'enthetically, with what object wo do not understand, to the fact that 
 j the cost of the steamei-s "Canada" and "America" " lost many years 
 
 '! ago>" amounting to £85,806, " in the absence of any reserNo fund, 
 
 [ " was allowed to remain to the debit of capital." 
 
 The Accountants omit to state that £48,820. 7s. 4d., paH; of this 
 ' amount, stood in the capital account in 1 57, and the remainder, 
 
 £36,086. Gs. in the balance-sheet as an asset, and that this was 
 brought to the notice of the Shareholders in the report of the Com- 
 mittee of Investigation of 1860. There being, as the Accountants state, 
 no reserve fund provided, the latter amount, with the knowledge of the 
 Shareholders, was also carried to the debit of " capital " in the ac- 
 counts of the half-year ending 31st January, 1861, and both have so 
 remained unquestioned to the present time, a period of upwards of 13 
 years. 
 
 XIII. 
 
 ACTcementB with The Accountants state the tonns of the agreement with this Company 
 The Wellington, *^® result of the working of the line, and the amount of expenditure 
 Baifway.* thereon by the Great Western Railway Company, and seem to imply 
 
 a doubt as to whether the balance of the expenditure on works, 
 £6,048. 12s. 3d., will be repaid to the Great "Western Railway 
 Company. We are informed that since the close of the last half-year's 
 accounts the sum of £2,155. 7s. 5d. has been received on account of 
 this balance, and it is expected that the remainder will be arranged for 
 on the opening of the soiithern extension of the Wellington Grey and 
 Bruce Line. 
 
 Attention is also called by the Accountants to certain expenditure 
 debited to the capital account of the Great Western Railway Company, 
 amounting to £2,347. 13s. 5d. on account of works on this line, a 
 jrortion of which expenditure they, on the contrary, consider is clearly 
 repayable by the Wellington Grey and Bruce Company. 
 
 The expenditure was certified by the Company's Engineer, as appears 
 
 in his two last half-yearly reports, as chargeable to the capital of the 
 
 ' Great Western Company, on the ground, as we are informed, that this 
 
 expenditure was found to be necessary to meet the requirements of the 
 
 increasing traflSc. 
 
 i . - 
 
 \[ XIV. 
 
 The o«lt and This is a matter which was also reported upon by the Committee of 
 
 Gtelph Bailwayj j^^^^^.^^^.^^ ^^ jgg^^ ^^ which time the Great Western Railway Com- 
 
 I ! pany, being the sole bondholders, had taken possession of the line, under 
 
 I an agreement between the two Companies, the debt due by the Gait and 
 
 L Guelph Company then amoimting to £76,183. 7s. 5d. 
 
109 
 
 The Accountants only give the profit on tlie working for last year, 
 and state, somewhat incorrectly, that there remains a balance of 
 £5,588. Os. 8d. " towards the airears of Interest due." No credit has 
 been taken in the accounts in i-espett of Intei-est due on the original 
 debt. The line has been worked by the Great Western Eailway Com- 
 pany from the time they t>ok possession, and the profit or loss ci-edited 
 or debited to revenue half yearly. 
 
 Since the arrangement with :he Wellington Grey & Bruce Railway 
 which brought the traffic from that line over the Gait and Guelph 
 Railway the profits have considerably increased; it will be seen from the 
 figures given by the Accountants that for the past year they exceeded 
 7 per cent, on the amount of the debt. 
 
 VV. 
 
 As the statements of the Accoimtants in reference to these lines, and The London and 
 
 PortStonleyBoU- 
 our remarks thereon, practically apply to the two, we take them together, war 
 
 These lines are leased by the Great Western Railway Company on the WeU«idK«Uway. 
 teims and conditions stated in the Accountants' Report, one of the 
 conditions being that, as the lines were of old construction, and requiring 
 considerable repairs and improvements, the expenditure necessary to put 
 them in proper working order should be incurred and defrayed by the 
 Great Western Railway Company. 
 
 The total expenditure necessary for this purpose in respect of each of 
 these lines was accordingly estimated by the Company's Engineer. The 
 expenditure, as it was incurred, was debited to accounts opened in 
 the Company's books, under the respective headings of " The London 
 and Port Stanley Lease," and " The Welland Eailway Lease," and not, 
 as stated by the Accountants, carried to " suspense " accounts. 
 
 The principle adopted with regard to this expenditure has been to 
 debit revenue half-yearly with such a sum as will provide for the ex- 
 tinction of the whole outlay by the expiration of the lease. The 
 Accountants do not object to this principle, but question the sufficiency 
 of the half-yearly amounts so charged to revenue, on the groimd that as 
 the gi'eater portion of the account consists of old rails charged out at a 
 cost of £10. 5s. a ton — which are not likely to last the term of the lease — 
 the present revenue does not bear a proper proportion of the renewals. 
 
 Li making these observations the Accountants appear to have lost 
 sight of the distinction between the expenditure necessary for putting 
 the lines in working order, and the cost of renewals. The accounts 
 referred to do not include the cost of repairs or renewals, they 
 represent solely the expenditure for putting the lines into working 
 
110 
 
 order. When the lines require repairs and rouawals the cost will be pro- 
 vided for, — as in the case of any othei' portion of the Company's line, — 
 out of revenue. 
 
 In the case of the London and Port Stanley Line, the expenditure 
 
 necessary to put the lino into working order was estimated at $100,000 
 
 ' or £20,647, and although the actual expenditure to the close of the half- 
 
 ) yearhas only amounted to j£lG,004. 15s. Td.ithepropoi-tion of the estimate, 
 
 ' or larger amount, ha.s been periodically written off. In the case of the 
 
 Welland Railway, where the expenditure was in excess of the estimate, 
 
 the amount to bo provided for b}- half-yearly charges to revenue was 
 
 increased to meet the excess, and at the same time provision was made 
 
 for the amounts short charged in previous half-years, by reason of the 
 
 estimate being below the actual expenditiirc. 
 
 We have further to remark that the Accountants are in error in 
 stating that the greater portion of the account consists of old iron rails 
 charged out at a cost of £10. 5s. per ton, the fact being that only i$20 or 
 
 £4. 2s. per ton, amounting to $20,220 (£4,154) is charged. 
 1 
 
 B XVI. 
 
 Interest and The Accountants call attention to the amount of interest charged to 
 
 Biohange. . , 
 
 capital in respect of unproductive works ; and under the heading of 
 
 " Recent Expenditure on Capital Account," they say " the practice of 
 
 " charging interest on the amount expended on branch lines during 
 
 " construction to capital has also been condemned on principle by 
 
 " the leading Railway Companies in this countiy, as open to abuse." 
 
 As from these remarks it might be inferred that interest had been 
 charged to capital, on the expenditure, in respect of all the branch lines 
 belonging to the Company, we think it right to state that interest on 
 unproductive works has been charged to capital in the case of the 
 Glencoe Loop Line only. 
 
 This was in accordance with the prospectus issued inviting sub- 
 
 1 scriptions for the capital, which contained the following paragraph, 
 " Until the new line is opened to traffic, the interest on the new issue 
 " will form a part of the cost of construction." 
 
 I 
 
 i xvn. 
 
 Lose on Oon- The Accountants remark that " The ledger accounts of the Company 
 
 V Iffl«n»nTimdi " "^ Canada are kept in dollars, without distinguishing between the 
 
 « Canadian and the United States currency," and say " the want of this 
 
 I « distinction when the rate of exchange is high, leads to en'or," and 
 
 I further that " no accurate statement of the Company's assets and 
 
Ill 
 
 " liabilities can be prepa>'eu without oitlier keeping the currencies 
 " distinct, or converting all amounts into the same medium of exchange." 
 They, however, omit to state thiic the question of converting the 
 amount due for outstanding traffic receivable in American currency was 
 brought before the Shareholders by us in our roport for the half-year 
 ending 31st July, 18G8, and that tlieir attention was also drawn to the 
 matter by the President at the meeting. In the accounts for the 
 half-year ending Slst July, 1872, the loss which would have arisen by 
 the conversion of the Amei'icau funds in hand was charged to revenue, 
 and amounted to .£3,260 ; but provision was not then made for the balance 
 of loss which would have resulted from the conversion of the amounts 
 receivable or payable on account of outstanding traffic or other balances, 
 although the practice of providing for the loss of converting the American 
 funds in hand at the close of each half-year has been uniformly observed 
 ever since. 
 
 • To distinguish between the American and Canadian currency in the 
 ledger accounts, or to convei-t all the amounts into the same medium, as 
 suggested by the Accountants, would, in our oi)inion, serve no useful 
 purpose, but would entail considerable additional labour on the Com- 
 pany's staff. 
 
 To convert all the amounts into the same medium of currency would 
 necessitate the conversion of each item at the exchange of the day of entry 
 in the books, and would inevit.ably require a re-valuation of all the debtor 
 and credit* balances, receivable and payable in American cnn-ency at 
 the close of each half-year, and again, when such balances were actually 
 received or paid. 
 
 JOHN YOUNG, » 
 
 SIDNEY SMITH. ;^«^»^o«- 
 
 August \^th, 1874. 
 
 Waterlow and Sons, Printi -. Great "Winchester Street, E.C. 
 
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