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Sir, I have the honor to acknowledge receipt of your letter, datuJ Ist November 1862, transmitting roe a copy of your Report, approved by His Excellency the Governor General in Council oo the 30th October 1862, on the subject of the payment to the Grand Trunk Company for Postal lervicei, and which has been laid before the Directors of this Compnny. Since the receipt of your letter your report has appeared in the public papers, to the great surpriifdl have the effect of plunging the Grand Trunk Company's alTairs into liie arena of party politics, against which poliei' the party out of which the present Government was formed, has hitherto so earnestly declaimed. The fiond and Shareholders of this Company, responding to the strongly expressed wish of the people of Canada, have lately done everything in their power to remove from the conduct of their affairs, every jwnblance of political control, in the confident belief thtt by such a course they would be promoting ; 1^ aommercial success of the undertaking, and be adopting a coarse greatly desired by the people of 'jhe'Wntry through which the railway runs. It cannot be doubted that the publication of an ea^-parte MtrtcnMBt on a matter shortly to be submitted to arbitration must tend to a large extent to defeat, and th^t by the Act of the Government, the success of the measures lately taken to dis-sever the Grand Truk Compaay altogether from political discussions. Having made these remarks upon the unexpected publication of yocr report, I am now instructed to express the great satisfaction which the Directors of this Company feel that the question as to the rate which is to be paid for the carriage of mails upon the Grand Trunk Railw.ay is to be settled by arbitra- tion. They liave always felt that the matter was one that it would not be eitlier fair or equitable to have settled by the Government alone, wlio would in such case have to take the most unusual course of deciding the terms upon which it was to have work performed, without reference to its fair value according to the views of those who have to do the work. As the whole matter will therefore soon be referred to a dis- interested tribunal which will authoritatively settle the question, it would hardly have been necessary at the present moment, to enter into the facts of the case, had it not been that the publication of your Report makes it imperative upon the Directors to prevent an improper opinion being formad by an ex-parte statement of portions of the facts, however strongly they feel that all discussion of these facts should have been reserved for the arbitrators who will have to decide the questiou. I must in the flrst place demur to the opening paragraphs of your Report, in which you entirely discard, in discussing the rate to be paid for Postal services, all the past transactions between the Gov- onment and the Company, although you frankly admit that " the Government may perhaps he asked « with propiiety to take cognizance of these general topics: the Legislature even may be appealed to " fultil impoi-tant conditions expressed or implied." These " general topics" and " important conditions expressed or^ implied" it now becomes my duty to recapitulate. The Parliament of Canada as far back ns 181<9, believed it to be of paramount importance to the progress and welfare of the Countr) lu Lave a Main Trunk Line of Railway throughout the Province, and on the 30th May of that year, passed an Act, the preamble to which was as follows : — ■' Whereas at the present day, the means of rapid and easy communication by Railway, between " the chief centres of population and trade in any country and the more remote parts thereof, are " become not merely advantageous, but essential to its advancement and prosperity : And whereas <' experience has shown, that whatever be the case in long settled, populous and wealthy countries, in '' those which are new and thinly-peopled, and in which capital is scarce, the assistance of Government " i« necessary and may be safely afforded to the construction of Lines of Railway of considerable extent, « und that such assistance is best given ¥y extending to companies engaged in constructing Railways of « a c«rUia Uogtb iwdar obarter tnm ad coaMqMBtly witk tiM approral of tiM ht^dttm, th« I *< of the gawrutcc of Iha GavtriMnt, wdw proper coaditioM awl raatrietioH, for levw raiMd by nab " eonpaaiet to aaable tban to conpMa tkeir work." Aad tba Act thaa procaadt to anaet : •' That tha MM oa wMcb intoraal ba lo gaaraatead tbaR aot ka graator thaa that aipaadad by tha " Compaajr bafore tba guaraalM ia giroa, aad thall ba mMaiaat to eanplela tbair road ia a itMng nan- " aer, aad to the HtiUbctioa af tba Com a Mii io Bari of PabUe Worka." The ParNaroaat aad paopla of Canada wara thareforo, at that tima, ao dtepljr faapraiaed with tha adfaatagaa to ba laearad to than hj a Tnak Um of railway, that thay ware irly too aapr lo fiad half the aBMMBt raqaked fbr ita eoaitruatioa. Aad tha oMtarod eaavktiaaa tt tha paopia aad LegUatara of Qaada mtr oMia, after doe redee- tiOB^"daUtam(«iy W«<«MM -'tMb'^kaMf i^WNUM^ «Ua M-'Ibe^'t^ .^1,'na Aet waa paiMd the preanble to wbieb raaa ia part a« followi : " Wberaaa it ia of the bighett inportaace to the progreaa and welfare of tbi* Pronxca, that a Maia " Trunk Line of Railway abonld be made throughout the length theraof." And tha 5th elawe of that Act ia :— - "And ba it eaaoted, That if the itaidf neeeaaary for oakiag the Main Trunk Line o' Railway " DMBtioned in the n«xt preceding MctioB, ihali not be raiaed by loan under the authority and guarantee " of tha Parliament of the United Kingdom, or adraneed as a loan to tbin Province, under the said " authority, then the nid Main Trunk Line of Railway, or so much thereof as shall not be made by « ftinds so raised or advanced as aforesaid, may be made with funds of which one half shall be raised on " the credit of the Consolidated Rerenue Fund of this Prorince, provided the other half shall bare been " anhscribed for by Munieipaf Corporations in this Province." So momentous, therefore, waa it deemed to be to secure tha construction of a Main Trunk Line of railway, that, in 1849, it was offered to find half the capital by Provincial funds, and, in 1851, that waa eateaded so aa to permit the municipalities along the line, on their credit, to find the other half. If this had been actually carried out, as was then fully intended, Canada would have had to find the whola cost af constructing the Grand Trunk Railvray solely out of her own resources. With these enactmente on the Stotute Book, the Goremment of 1852-3 findfaig a very euy con- dition of monetary affiiirs in Eaj^d endeavored to induce British capitoliste to emWk in the undertak- ing by making great promiaea aa to tha extent to which Canada had praotieaUy goarantead a large return upon the outlay. % V iV Whh ttat view mHahtti ot the GoTemmant proceeded ta London, and'theTCaaH«f tMirMfiMt4 tions is to lie found in the prospectus of the Grand Vimk Railway of Canada, which was puB|ished if England in tha Spring of 1853. That Proapectus waa prepared and issued under oficial authority. Tba following, amongst othera, were announced as Directora of the Company : m LONDON. i Agents of the Province of Canada aad Directors of the Cota- pany on behalf of the Canadian Government. Thomas Baring, Esq., M. P., George Carr Gltn, Esq., M. P., IN CANADA. The Hon. John Rosa, Member of the Legislative Coaneil, Solicitor General for Upper Canadai President. Tha Hon. Francib Hincks, M. P. P., In^)ector General. Tha Hon. E. P. TACufi, M. L. C, Receiver General. Tha Hon. Jas. Morrm, H. L. C, Postmaster General. Tha Hon. Maicolm Cameron, M. P. P., President of Executive CounciL The Hon. R. E. Caron, Speaker of the Legislative Council. The Agents of the PrcTince, their names being set foitii as acting on behalf of the Govemnent, and several membera of the then Government, and a* such, were thus announced u Diractors ; and it was upon the faith of the quasi-governmental cbairacter of the undertakiDg thus esUblished, that the Bond and Shareholders in England invested fthctir money in Canada ia tiM coaslraMiaii of'tbaGtabd IVaak Railway. That Proqiectus, so issued, promised 11) per cent, return upon the Share Capita), after pajring the interest on the Bond debt. The Appendix to this Official Prospectus contaias the following pregnant paragraph : — " This great i< and comprehensive scheme of railway communication throughout the most wealthy, populous, and im- " portent colonial dependency of Great Britain is not now offisred as a new project to the public. Jt "oomes with the guarcmtee (rfthe Pnmnce of Canada, which has embarked upwarda of two millions "sterling in the enterprise ; it is supported by the most intelligent, for sighted men in the Colony, and it " has the security of nearly half a million starling of; private Canadian capital inveeted therein." The half-million of Canadian capital invested proved, however, to be a' myth. And to complete the oflkial connection of the Government and' people of Canada with the incep- tion of and promises of profit on the Grand Trunk Railway,^ official despateh from Lord Elgin, the (. 1 * % I ». I I V V 8 i tkw OoTinor a«Mni of Caaads, to Uw CoIobmI 0(fc«, ii pmlH m • part of dw Appoadit to (ha Praipactoi. That datpatob daah with tlM qoailioa of Aalwaj a adartakiag i, aad ilato* tba tlm ia< toatioa of niadBf Aett of I'arikBaat to ba to prorido fraoi ProrhMiai Aiadi out ka^fcfiht mtirt amoftk$Lim. Oaa half of tboaoat of tiHUaa would hafa baaa M/)00,000 tterUag, iatolriag aa aMwal cbarga of ie360,000,«Mht ladtha Act of 1891 bean earriad oat tha whola «oat. woab* hara baaa raaiad oa Caaadiaa eiadit, with a ahwga of Je720,000 a vmt. Tha aatual aairtMoa, howaror, afbniad bjr Caaada, haa only raaehad £3,113,900, eoating £186,790 a yaar. To *ha ailaat that Caaada bu meceadad in radaeing bar Mibaeriptiea •• autboriied bj ^arliameor, to tha aaat of tha M^ ha*a (bi| )kwh1 ^ad ibar^^ldan nfirad^. tht Joai of4b»latiaa baiaf 'aomptate, wUhont ana aoflntanTtdnwlBia. wUht C«MM|||,ipa( arfjr mMi|a4 thn lafiaMlwi of £9fiWtfiO0 atading of BritM aafilal in hm aMrt, bat haa bad t&'^aiaa af liar toning laada anonnootly anbancad— Iba nwrktl^ Of thn worM thrown opan all tha faar roaad to bar produetiooa— aeceic opanad to alinort avafjr part of bar raat tarritorjr— tha coat of eoarejring bar produetHNu to market and of diitributiBf aaoogit bar p ofal a tion eTarythiing'ihe needi to import, rattljr reduced— and in plaee of being that up for aeari^ half tha year by frost and anow, Caaada has, by raeaiu of tba Grand Trunk Railway, baan nada oaa of the greet highwaya tbroughoat tbe yeot for tlie rut traffic pataing between tba Waatem Stotaa of America and tbe Atlantic seaboard. But what is really the ralue to the Company of the £3,112,500 which Canada wbMribad to aeeura tbe anormoui adrantuges to which I have adverted t It may certainly be qnestionad if mora than that sum has not by politieal preuure been eipended in constructing parts of tbe present Grand Trunk system which though of rast benefit to Canada, arcf commercially entirely worthless, and only drags npon tbe profit of the paying portions of the Railway. Thus the abandonment of the interest on tbe Prarfaicial assistaaea wu aceompaniad by stipulation* of the most stringent character, to compel tha eomplation of a systOD of lines all the way from Riridre du Loup to Saruia, subscriptions to subsidiary undertakings not pravioualy hi any way charged upon the funds of tbe Grand Trunk Company, and the complete equipoeot and ofieient working of tbe whole system thus so greatly enlarged beyond its origuml limits. And indeed, froaa tha adranees made by tba Province of £3,112,900, ought in common fair* aaaa to ba dadwtad the fary large sums, amounting to aereral aiiiiona of dollars, paid into tba Treasury for Caatoma duties for tbe raib, bridge-work, aaginaa, rolling stock of all kinds, tic., &c., imported during /l the CiMutnmtion of the Ime. Altogether it may be said that these obKgationa cpllflr-tinly, bif « Jwve than Mtm^'kt bMifiri>hMb%<»W«^ SbiM'tt^^'lt^VA'da^r^; udt'% iiot:'$i;i|;j<^Wtbat it {would Va fooad paennlarily adrantageous, eran with all tha eiil conseqneneos it might mrolTe to the trade of the Frorinee, to close tha non-paying portions of the line. These facto abow that tbe Company are enuitably entitled, beyond shadow of doubt, to every assist- ance which the Government and Parliament can render. And here it is pertinent to call attention to tbe fact that Canada, of nearly all the countries in tbe world, has had her great arterial system of Railways constructed for her at the least eipense to the public Treasury. India, possessing a vastly denser population per square mile of area, and from that cause, kp4 the fact that her Railways penetrate districto of country not alongside, but rather at right angles, ai> < i butary to ite great water lines of communication, more likely therefore to find her Railways self-supp^ :t - ing, nas absolutely guaranteed the mterest upon tbe cost of her Railways. This will involve an annual chargt. to the revenues of India of not less than £2,500,000 sterling, undertaken, be it remembered, at a period when tha financial credit of India was only susteined by large loanf m England. Australia is buildmg her Railwaya by the issue of her bonds. The snjall colony of Victoria is doing the same, and lately barbonda to the extent of £7,000,000 sterling were sold in England to raise the money to supply her with the facilities of Railway transport. The same plan has been pursued by the Cape of Good Hope. Russia guarantees the intereat upon the capital employed in building her system of Railways. Italy is doing tbe same. France comtnicted the earthworks of her principal railways, and by her legislation amply protacte them from competition. And even poor Brasil both provides some of the cost of ber lines, and guaran- tees the interest on the remainder of the outlay. The Slate of New York spent a large sum on tho Erie Railway and made a praaeat of it aubsequently to tha Company. Tba Stote of ]VIichi|^ did the sanif foraomeofitsBailwaysi lrisTeplttWd,'tUi!ri>foi*«; e^difid^litiy fUat 'C'uiada 'hu'^^a^^ system on much more ndvantageous terms than most other countries, whilst from her sparse population and tiie water competition forced on her Railwaya sba might fairly have been expected to build them solely at her own expense. I will now proceed to consider the portions of your Report wherem you diwuss the rates of payment, to be made for carrying Mails. You correrHy stote that the rate of $110 a mile was agreed upon between tbe Company and the Government in 1853 ; but aa has frequently been explamed that rate was agreed upon when only a section of the Railway, East of Montreal, was opened, and when the only Mail carried upon it was a small local Mail. What is now the main line of tbe Grand Trunk Raihray was not then completed — tbe Railway was not then, as now, conducting the main postol communications of tbe country — it was not carrying tbe large amount of mail matter m connection with the Ocean Steamen to and from Quebec and Portland— (■■' •ml ilif ('>im|):in) liad not then Mppliod ttw vmI ■ccoinmoiUttuii to thu potUI Mrvie* of Um Country iilV»ri|pil liy (lie uomlructiou of the Vietoria llnigt at Montreal. WliiUt, Uwrefore, (be Railwajr wai incomplete, and Itefore the Companjr bad had any eiporiMiea at to tJM) codt which would be incurred in conducting the postal lervice, Ihejr were prepared to acoApt, aa u aiperinwnt, a rata oftt 10 a mile That rati! waaliied upon becauxi* it happened to be the rale at that tima paid bjr tba American GoTomnx^nt for earrying their local mailH on the line betireen Portland and iaiand Fond in tlie United State*. Nothing wa« carried on that line for the American Oorernment but the l» eal mail of the diotrict ; and nothing more ia carried for them now, but it ii an important fact that thia ('oropany in now receiriog from the American Ooferninent more than it did in 185.1, ihewing that eran tba natiml iMraaae of a mere local mail, in Iha opinion of other (;oveniMntoi demandi, after • lapao of 10 ya%r(, incraaaed remaneration. Applying the mme principle to the vaitl) incrcancd wrvice now rendered by the Grand Trunk Company for forei|;n ax well m local mail*, what fihonid be the ratri of payment to ua now 1 Acting npon the view* I have explained, and with a detiire to meet iu tii« most liberal manaor the requiremtnta of tlie Oovernment Mrrice, the rate of ifl 10 a mile wax a«ked by thia Company in 1893— paid by the Goruroment without demur — and treated by all parties a* a idlti! interim arrangement, to be refiaed ud reviewed when the whole of the Railway and ita adrantagen 'o tlii; public aervioe were brought into praetieal operatioD. Up to Sth October, IH.'iR, the Company was paid at the rate of $110, and as the line at that time wa* not opened throughout, it is not proponed to disturb tlic settlomiint to the aboru date The Directors of this Company must, however, entirely demur to thu conclusion at which you appear to have arrived, that from October, 1H58, to October, IHfil, thu Company muHt be taken to have ac- (pHRsced in lb« Government fixing the rate at !{*7C a mile, and for the bent of all reasons, vi^.; — that they were never notified of any such proposal. As regards olllcial or ilocumentary evidence, I assert unhesi- tatingly that there is not one single record to show that the action which it now appears was tnken by tlie Government in September, 18r)8, was ever communicated to the Compu>iy until the early part of the year 18()1. In reply to u letter from the A^tsistant-Secrctary of this Company, enclosing an account for postal services at the rate of ifillO per mile of railway, the Deputy Postmaster-General wrote on tlie 13tb Novwnber, 1858, remitting the sum of !|i.'>0,000 as a payment on account, ond added that he would •hortly write again with reference to the rates to be paid for Railway mail service in future. , A.4..is,st n/ fMj conliniMd to tend in rtguUrly their iccomU at thM rat* of $1 10 • miir, without Mjr dwMr n* Um part of tb« (invfrtMnent to ampwi/ tluit any alteration wii<4 inlendad — ^wilhout even givini Ibmn an opportu- nity of layiag thalr vi*w« and tha faot* of tlie caw fully before the (fovarament, and without avan com- inuflicating for thr*« yean to the Company that any mioIi order Imil bei'ii pamad) waa a Anal adjudiea- tioo of the quaalion. Tbiirittw i» further confirmed by the fact thil, whan th« Company in July, 1800, fell into finaneial difficultleit, an adraoo* waa aiade by the Covaraiaent of Caiuda, on aooouat of potlal wrf i aai, to b* tbareaftar r*nd*rad, auob advance beiug ealeaiiMul upM a rata of $110 par ntta. TTUs toot tivo ytart a/ler t/w Order tn CmincU ./ 8ii]Uemt>tr 18.^8 ; and, if any further erldance in necaaaary to ihow that the matter wui not coiitidereil as of a linal nature, it ii to be found in the fact that tha minute of ('ouncil of October lH(il,paiM(id by tli« itnmit (iovernmont which eiiatad inBeptcnriior 1858, admitted timt thu ratu llivn naineil was inadequate — that it iiud been protested againat by all tlie railway* in the provincu— and tImt in riew of all the facts of tlie cue, it wati dvairabi* to racoaiider the question, and refer it to the deci-iion of lliree disintereated arbitratom. There is another point in yonr Report to which I must demur, and that is whan you alata that tha entire amount of indebtednom tu tint ('oinpany at the rate of l||70 per mile, was discharged up to tha 31at December, 18H0. This is incorrect ax a matter of fact, no payment in cash having been made to Ibis Company for ■ long time prior to that date ; but in the early part of the year, 18(il, without any communication to tbia Company from the I'ost Office Departinunt, u certain sum was passed by that Department to the Receiv- er General on account of postal st> rvicen rendered by this (Company. The transfer so far from being auijuiosced in, or considered by this Company as a aaltlement of its claims, was furinally protested against in writing, and the Company continued, after they were aware of the transfer which had been made to the Receiver (Teneral, to render their accounts to the Post Office Department at the old rate of $110 a mile. No discbarge, therefore, of the claim of this Company was made up to the 3 let December, 1860 ; btt' on tlK cMitrary, as soon as it became known that such transfers bad been made, formal protests were tmy^.hd 4gtiott the course that had bueii pursued, and these protests have continued to be made ever since. ^ ■ I iniist now proceed to deal with the views which you express as to the proper rate to be paid for the service rendered to the Post Office Department; bitter experience having proved that the rate of $110 a mile was entirely inadequate, even before the whole line, including the Victoria Dridge, was opened. The Directors of this Company cannot agree with you tiiat no fair comparison can be made with English Railways. You admit in one part of your Report that this Railway, which does not enjoy a large and remu- nerative Passenger traffic, is entitled, therefore, to higher pay than those lines in the United States which do possess a large Passenger traffic. As lliat argument is unquestionably a sound one, it applies with greater force to England timn to America, because in the former country the Passenger traffic is very great and remunerative, and therefore ensures the running of a great many trains daily, of which the Post OOice Department can take advantage for the carriage of mails. In Ireland the Passenger traffic is less than in Etigland. and in the former country the mail service is paid for at rates, on some of the leading lines, as loi!rv-s :— ^ 8. d. Drogheda and Dundulk 4 a mile. Dublin and Drogheda 2 10^ '< Dundalk and Enniskillen 3 2 " DubliuandCork 2 9 << Dublin and Galway 3 " The average of these is nearly 3s. 2d. a mile. The average rate of 39. 2d. a mile paid in Ireland, would give, on the number of miles of Mail trains run on the Grand Trunk Railway, a rate of $760 per mile of railway, or more than ten times tlie amount suggested by the late Postmaster General. In no country in the world, perhaps, is thu difficulty and cost of working railways in winter so great as it is in Canada, and as this has to be encountered to accommodate a very small amount of Passenger traffic, the payment for carrying Mails should, as you admit, be proportionately increased. The average receipts of all Passenger trains on the Grand Trunk Railway do not amount to more than 75 cents a mile, whilst the average cost of running the trains is proved by the Company's accounts, to be very nearly $1 a mile. TIm) <|iMiilii]r n( mew wliicb Imm to ba rcmovtd (o Mcur* lb« rvguUr ruaniiiK of lb* (reioi cMTjring maili, mvulvi-* a nry hriiv) outlay, tDil III* brvikaft of rail* tiMi inacbincry iluriog winttr i» •ic*ril> in|l/ Kfcat kail r«|iriiiiirc. 'V\w Viclori* HndKi at Monlrt'al i* alif) nf fnoriuouii briiclit lo Ibc I'oilal HarTiee, but proTidcil at a ruiii'iiit i: I r*? I. I \ W A K\ "of lb* wttkl/ TOTtRM if IIm (tnailian I'ackal* throughout tb« jckr, and e/ fAi# comfJrtum of Ih* " Grand Trunk HaUirdy, ntulnf llir Vutmut Bridg* lumtit tkr St, Laurrenir nl Montreal, lo at la " form an unlirolfn htu/imn Ihtrwl to (^¥rfin:—(>nHl to /'.»//«»'/) -«»* Htm thk canaDUN " i>(MT orrici TO orriR auhanuimentii rnii tiu TRANaroRT ur maiu ihtwiin tni unitib "■TA1II ■D'l RUROPB BT TIIC I'AkiADIAN RDUTr. or tO ADVA^TAUBOIM A CIIARACrCR Al TO LIAD " TO TiiriR PROMPT AtcKHTAKCB RT TMK AMRRiCAN (iDvrRNMBNT, — anil closed inaili arfnow UBiltr " regular conviyanr* bstwccn I^ under lliia agraeinant bjr tba f'anadiaR " TackeU." Without, therefore, the (iraud Trunk lUilway and lb« Victoria liridge, the I'oat Ofliea Drpartncit has declared tliat it could not have Micurud tbd tranut of American inaiN through Canada, from wb«ehth« VorI'MHm iwvmi MriiwiO) htrga n benctlt. Tba IIm of SiMaeii betwae* (}MkM w Portland aait Livarprml, I* paid libemlljr for ibi tert.ca tbcjr perform. Wbjr abould the (irand Trunk Raflwnv, which your Dipartment dvrUrea indiiipenaible to aecure tba through maiU i-mivryu.! \iy liiuiin vi-»>cli», bu denieil I'lir payini'iit for the irnporlaot Mtrviic* which it renden, tba more eiprriully m the l'o«t OHice n derivin); n targe and increniing raranue from tba American letteri carricci in \\u: traim ou tlif> (arnnd Trunk Railway ( The incri'tified liusincM uiid rrvcnuci durived by the Post OlTiie, owing to (he inlrothieUoo of Rail* wayi, is enormous, oh tliv lollowinK (^''inpariion will khew : — Year. Nu. of Ullk-i. No. of Uttan by Poal. Pflal AtMniM. 18;il (iOl '2,13'ifiW $230,000 IHtil 177 f) 9,1.00,000 683,000 locrciae IVtl 1,268,000 $468,000 Percent '2'X> 4tl 297 And yet with tiiix va^t and ^Towiiii; iiicrca^u in tliu I'ost OHico husincu, to no gratt an axttnl pr»> duced by Railways, no adequati: rt inunerhtion is proposed for the rcrvices rendered. With reference to theri'inaiks in your Report at to the price paid in IIm United Stale* for Mail icrrice I wholly difler from thu viuvr.n wliicii you have exprer njiniiin, for service predicated upon a single distributing mail each way daily, the companies uiulertiikiii^ lo carry closed bap by any other passenger trains their ordinary trailic may require them tu run. I must demur to your statement that the rale of payment to the New York Central Company between Albany and UulValo is at the rate of $17.') per mile per annum. The New York Central Company whose line extends between Albany and Buffalo, a distance as you state of 298 miles, receives an aggregate from the Post Office Department of $91,550 per annuffl, which is at the rate of $307.21 per mile. It is true that for a portion of the distance they have a double or duplicate line of Railway ; but those double hues do not average twelve miles apart, and they accommodate the same district of country, and for all practical purposes (he amount paid lo the New York Central Company is for the accommoda- tion of a line of country of 2!)8 miles in length, and for which as I have stated they receive an average of $307.2 1 per mile. As in all other cases the New York Central run but one distributing mail train over their line each way daily, upon which service the payment is calculated, and they also carry closed bags in their baggage cars by the several oilier trains which their great passenger traflic requires tbem to run and of which the Post Office gels the benefit without extra charge. Taking a careful review of thu facts — remembering the paucity of the passenger traffic existing on the Grand Trunk Railway — bearing also in mind the great severity of the climate of Canada adding f 8 to largely to tiie cost of carrying on tbe postal service in winter— and further recollecting the great facility aflbrded by tLe constnictinn of the Victoria Bridge, which has cost such an enormoos amount of money, the Directors of this Company submit that the very highest rate paid upon any trunk line of rail- way in the United States (all of which are in the enjoyment of a large and remunerative passenger traffic) would be an inadequate scale of payment for (he Grand Trunk Railway of Canada. In regard to the amount which you say I asked for the carriage of maili upon this Railway, amount- ing to $360 per mile, you must have forgotten that in the official letter which I addressed to you on 22nd September, 1862, 1 asked $300 a mile for the same service as that included in Mr. Brook's award, and if you will refer to that gentleman h paper you will find that he considered $300 a mile the proper sum, but expressed his willingness to accept $2.')0, provided the matter was then (July last) settled so as to per- mit of Ibe Company's finance, being at once arranged. Mr. Watkin argued that the sum of $250 thus propoaed by Mr Brooks to avoid delay, was altogethar inadequate. I asked $360 a mile, in a verbal con- ver8afion,'sli6TCqueo(tyrwbW y6ii° wisieil 'the C6i6p^^^^ perfbrra a partlcuTaf description of service invulving the running on some parts of the line of iip* oial trains tt night for the sole use of the Post Office Department, and not required for the Company's ordinary traffic. The asnumed discrepancy in tbe de- mands made by the Company does not, therefore, exist. In regard to the figure which you quote as having been suggested by the Hon. Mr. Moffatt, the arbitrator on the part of the late Government, I have to remark, as I have done in previous communications, that Mr. Moffatt himself stated in the document which he drew up, that his views were submitted for the consideration of Mr. Brooks, with the object that when the latter gentleman had considered them, they might meet and discuss any points of difference that might be found to exist between them. That further considerdtion was denied to Mr. Moffatt by the abrupt termination of the arbitration, and it is certainly unfair both to]Mr. Moffatt and the Company to assume, as final, bis expression of vicvs which were stated by himself to be submitted for consideration, and for further discussion hereafter, but which discussion never took place. I must also remind you that in a paper discussing Mr. MofTatt's report, (which I placed in the bands of the Government,) a most material error was pointed out as regards the mail service performed by the New York and Erie Railway Company, as stated by Mr. Moffatt, which completely altered the calcula- tions upon which the figure '.le n'>med was based, I must here say that, pending a reference of the whole matter to arbitration, it is most inconvenient, to say no more, to be forced to discuss publicly those questions of fact and figures which should, and must hereafter, be decided semi-judicially, and also to the manifest unpropriety of being obliged to diicu^ the proceedings of an arbitration which has not yet been completed. \ ■,'.•. -^ Having now adverted to some of the prominent points raised in your Heport to Council, {[ ^tj;/t ih\ repeating the satisfaction of the Directors of the Company at finding that the matter is final^' ti^bft determined by a disinterested Tribunal, again most seriously call the attention of the Government Xo^k ,' extreme hardship of the position in which the Company has been placed. As was stated in the letter which the President of this Company an*) myself bad the honor to address to the Provincial Secretary on the 21st July last, and to which letter no reply has been received, or its statements called in question, this Company agreed to the proposal made upwards of a year ago by His Excellency the Governor General in Council to refer tbe question as to the amount to be paid for Postal service to arbitration. They did this as a part of a scheme suggested by tbe Government for the settlement of the Financial difficulties into which the Company had fallen. That scheme involved very large sacrifices on the part of the Bondholders and Creditors of the Company, without which sacrifices the Company would have been led into intermiuable legal contests which must have ended in entirely destroying the credit of the Company, and which would have rendered the continued working of the line impossible. By tbe sacrifices thus made, which insured the continued working of the line, the country secured grent advantages, and the minute of Council of October 1861 referred pointedly to the " disastrous coose- " quences which would flow from a stoppage of the line.'* Up to the present moment no benefit has accrued to those interested in tbe Company who have made such great sacrifices. It was on the faith of an early award by the arbitration ordered by the Governor General in Council in Octcber 1861 that all parties interested iu the Company agreed to the concessions and sacrifices which have been made. In July 1862 the Governor General in Council revoked the submission to arbitration and rendered useless all the proceedings under it to that time. This came upon the Company with the greater surprise because the present Government on the 27tli of May previously had taken a very important step in the progress of the arbitration itself, and because tbe present Government, on the 9th of June, appointed Mr. Chief Justice Draper as the umpire in the arbitration, an oflice which that gentleman accepted. The Company was, after the arbitration had been revoked, informed that the matter should be dis" posed of without delay by the Government itself in a satisfactory manner, without tbe intervention of third parties. Ever since July last we have been pressing for a decision, and now in October 1862, upwards r K i,t.. 9 of twelve montlM after the mtter was first referred to arbitration, and after more than an entire year ba* been loet, to the great injury of the Company, we are informed that the matter n too complicated to be lettled bf the Goremment, and that Parliament will be recommended to authoriie iti being again referred to arbitration. Here ii again further and most ruinous delay. Whilst heartily and fully concurring in the final settlement of the question by arbitration, the Direc- tors of this Company cannot but feel that the caae is one of the most eitreme hardship, inflicting great injury upon the very large number of persons interested in this Company — delaying still further the final settlement of the financial affiiirs of the Company — injuriog its credit, and paralyising ita progreta and use- fulness in developing the material interests of 'be country through which it runs. Thete evils cannot fall upon the Grand Trunk Railway Company without Canada herself saOeriog a corresponding injury | and the Directors of this Comnaor ^O'^^ not hnva dobe tWr duty eith«- o *bosr they represent, or to Canada herself, if they did not i atdcly and nHy place the whole of the farts onee more upon record. As yoqr B«port is an entirely ex-fxirte statement, the Directorn of this Company are sura that yon will debire that this letter should have the same publicity that was given to your Report, and I therefon forward copies to the newspapers. •■:^- I liave the honor to be. Sir, Your most obedient servant. Hon. M. H. Foley, •■'"X- Ike., Su:,, &c., Postmanter-General, Quebec, C. J. BRYDGES, Managiug Dirtttar. -«y; .,V.,- .; -i: •.-■ . 'i. ^. ,,v