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 THE CANADIAN GOVERNMENT 
 
 AXD 
 
 THE CANADIAN PACIFIC RAILWAY, 
 
 SUBMITTED TO THE SENATE COM3IITTEE ON 
 INTERSTATE COMMERCE 
 
 BY 
 
 JOSEPH NIMMO, th^J IS'S^ 
 
 APRIL, 1890. 
 
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 WASHINGTON: 
 
 GOVERNMENT PRINTING OFFICE. 
 
 1890. 
 
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 STATEMENT 
 
 IN REGARD TO 
 
 THE CANADIAN GOVERNMENT 
 
 1 
 
 AND 
 
 THE CANADIAN PACIFIC RAILWAY, 
 
 SUBMITTED TO THE SENATE COMMITTEE ON 
 INTERSTATE COMMERCE 
 
 BY 
 
 JOSEPH NIMMO, Jr., 
 
 APRIL. 1890. 
 
 ^*»* ^ 
 
 WASHINGTON: 
 
 GOVERNMENT PRINTING OFFICE. 
 
 ::^ ^ 1890. 
 
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 648 TRANSPORTATION IN^TERESTS OF 
 
 The following statement from Mr. Joseph Nimmo, jr., was submitted 
 at the request of the committee : 
 
 STATEMENT OF JOSEPH NIMMO, Jr. 
 
 By way of introduction to this large and complex subject, I would 
 invite the attention of the committee to the important fact that the 
 Canadian Government differs radically from the Government of the 
 United States with respect to its relation to the subject of transporta- 
 tion and commerce. For the last fifty years the Canadian Government 
 has been closely allied to the transportation interests of Canada, and 
 that Government is to-day not only a large owner of canals and rail- 
 roads, but it also exercises a control over the operations of its transpor- 
 tation lines, with respect not only to commercial but to political objects. 
 
 On the other hand, the Government of the United States, as you are 
 well aware, has confined itself almost entirely to the regulation of rail- 
 roads, and has never become an owner or practical manager of the sub- 
 ject of transportation, leaving those matters to the interaction of com- 
 mercial forces. A proper appreciation of this distinction, is, in my 
 opinion, vital to a correct understanding of the whole subject of the 
 relations of Canada to the United States. And now I will proceed to 
 state to you in a general way the interests which the Canadian Govern- 
 ment has in transportation. 
 
 CANADA'S INTEREST IN TRANSPORTATION. 
 
 About the time when the State of New York embarked in the work 
 of constructing the Erie Canal, the Dominion of Canada began the 
 construction of its system of canals connecting Lake Erie with ocean 
 navigation at the port of Montreal. This was accomplished by the 
 construction of the Welland Canal, which overcomes the fall between 
 Lake Erie and Lake Ontario; and the system of St. Lawrence River 
 canals which overcomes the rapids in the St. Lawrence River between 
 Kingston and Montreal. 
 
 I will also remark here that from the beginning the Dominion of 
 Canada and Great Britain have had direct interest in transportation 
 lines with reference to military objects. While the systems of canal» 
 of which I have just spoken were being constructed, an interior line of 
 navigation, known as the Ottawa and Rideau canal system, wag con- 
 structed between Montreal and Kingston, mainly for military purposes, 
 as the St. Lawrence Canal was too much exposed to an attack from the 
 United States. 
 
 The canal system of Canada cost a little over $52,000,000, and it i» 
 still owned and operated by the Dominion Government. As we fol- 
 low the history of Canada we shall discover the fact that her Govern- 
 ment is as much a commercial and transportation corporationas a politi- 
 cal corporation. 
 
 That is an important fact and one which muet be kept in mind all 
 the way through. In my opinion it is the most important characteristic 
 of the Dominion Government, in so far as relates to the question of the 
 relations of Canada to the United States. 
 
 CANADA'S INTEREST IN RAILROADS. '..r':;-*' 
 
 I will next mention to you the interests which Canada has in railroads. 
 
 Up to the year 1867 the several British North American provinces 
 
 were entirely independent of each other. The political bond be- 
 
 
THE UNITED STATES AND CANADA. 649 
 
 tween tliem was their common relations to the British Government. 
 During the civil war in this country the question of the political 
 union of these i)rovinces and the project of connecting them by govern- / 
 menl railroads was agitated both in Canada and in Great Britain, and . 
 in 80 far as I have been able to comprehend the subject, it has seemed to 
 me to be part aud parcel of the general si)irit of opposition which at 
 that critical period was manifested by Great Britain and Canada toward • 
 
 «the maintenance of the Union of the States. 
 
 ' By an act of the British Parliament of March 29, 1867, known as the 
 British North American act, the several colonies, excepting Newfound- 
 land aud Prince Edward Island, became united as the Dominion of 
 Canada. One of the conditions under which this union was effected 
 was that a railroad should be built by the Dominion Government con- 
 necting the provinces of Ontario, Quebec, Nova Scotia, and New Bruns- 
 wick. This road was accordingly built by the government. Its main 
 line extends from Point Levis, opi)osite Quebec, to Halifax. It pursues 
 quite a circuitous route. The cost of the intercolonial railway system 
 was about $46,000,000. That system is still owned and operated by the 
 Dominion Government. Commercially it is a non-paying enterprise. 
 
 According to the report for the latest year the cost of operating the 
 system was $232,100 in excess of the receipts. 
 
 THE CANADIAN PACIFIC RAILWAY. 
 
 But the most important railroad enterprise in which the Dominion 
 Government is interested is the Canadian Pacific. The scheme of con- 
 structing a Canadian railroad across the continent is said to have been 
 first suggested thirty or forty years ago, but it did not assume a practi- 
 cal shape until during our civil war. The definite plans for construction . 
 were finally determined upon about the year 1867, the year in which the 
 Dominion Government was inaugurated. The date of the inaugura- 
 tion of that Government was July 1, 1867. That day is celebrated 
 every year in Canada as *' Dominion Day.'^ 
 
 The construction of the Canadian Pacific Railroad is so closely identi- 
 fied with the present administration of government affairs in Canada 
 that I will turn aside here to make a general statement to the commit- 
 tee in regard to that government. 
 
 CONSTRUCTION OF THE CANADIAN PACIFIC RAILWAY. •' 
 
 Sir John A. Macdonald, the present Premier of Canada, was the po- 
 litical leader of the plan of confederation, which embraced not only the 
 political union of the provinces, but their commercial union, by means 
 of railroad construction. As before remarked, one of the fundamental 
 principles of this scheme was the construction of the Intercolonial 
 Railway The other was the construction of the Canadian Pacific 
 Railway. The Macdonald party saw that the natural affinities of trade 
 of all the colonies were with the United States. This they resolved to 
 overcome by means of railway construction, and thus to hold the prov- 
 inces in their allegiance to Great Britain. 
 
 Sir John Macdonald's party assumed control of the affairs of the Do- 
 minion at the time of the inauguration of that government, July 1, 1867. 
 The Canadian Pacific Railway was soon afterwards begun as a govern- 
 ment road, but in the course of a few years difficulties arose, and in 
 consequence of a public scandal concerning the financial management 
 of the enterprise, Sir John Macdonald was driven from power in 1873, 
 
•-»■■, '^r;*' 
 
 650 TRANSPORTATION .NTERESTS OF ' 
 
 But iu 1878 he triumphantly returned to power upon the original issue 
 of constructing the Canadian Pacific Railway, and his pavty has re- 
 mained in power ever since. 
 
 In consequence of public prejudice which had arisen in connection 
 with the attempt of the government to construct the road, its construc- 
 tion was assigned to a private corporation, the Canadian Pacific llailway 
 Company, which corporation in all things touching questions of commer- 
 cial and political policy has been and still is the alter ego of the Dominion 
 Government. All that had been done in the way of construction of 
 the road was at once turned over to the Canadian Pacific Railway Com- 
 pany as a gift. The portions of the completed line, which had cost 
 $35,000,000, were thus donated to the Canadian Pacific. 
 
 The total value of aids of various sorts extended to the Canadian 
 Pacific by the Dominion Government is stated in the following table : 
 
 Revised estimate of gifts from the Dominion Government to the Canadian Pacific Bailicay 
 Company, and securities tchich that companij has been enabled to float {stock and bonds) 
 as the result of the Dominion guaranty and the land grant o/ 25,000,000 a cre« of land. 
 
 (1) Cash subsides as follows: 
 
 (a) Subsidy of |25,000.000 mentioned iu section 3 of act of Febru- 
 
 ary 13, 1881. 
 
 (b) 714 milef^pf railroad constructed by the Dominion Goverumeut, 
 
 costing S35,000, 000, which was presented to the Canadian 
 Paciiic Company as a gift, with interest, to June 30, 18B7 
 (see public accounts of Canada for 1867) $61,760,785 
 
 (2) Capital stock originally ^100,000,000, but reduced to $65,000,000, with 
 
 a minimum dividend of 3 per cent, guarantied for ten years 
 
 (see Poor's Manual) 05,000,000 
 
 (3) During the session of Parliament of 1884, the Dominion Government 
 
 authorized a loan to the company of $29,880,912, to be paid 
 as the work of construction progressed, and for the purpose 
 of expediting construction. This consisted of ;S9,880,912 
 secured by lien on the entire road and land grant, subject to 
 the then outstanding land-grant bonds; also Government 
 bonds to the amount of $20,000,000, which was exchanged 
 for a like amount of the company's loan of $35,000, 000^ which 
 had been issued in the place of the $35,000,000 of original 
 stock which had been retired (see sec. 4, act 20th July, 
 
 1885) 29,&'i0.912 
 
 . (4) Balance of $35,000,000 loan after deducting $20,000,000 placed in the 
 hands of the Government in order to secure the $20,000,000 
 bonds above mentioned ...„ 15, 000, 000 
 
 (5) Land-grant bonds issued by the company as a lien upon the lands 
 
 which it acquired by gift of the Dominion 25, 000, 000 
 
 (6) Bonds, interest guarantied by the Dominion for fifty years at 3^ per 
 
 cent, issued to the company for the purpose of remunerating . 
 
 it for thelossofitsrelinquishmentof the moDopoly of railroad 
 
 building in Manitoba 15,000,000 
 
 (7) Subsidy of $186,000 a year for twenty years for a line through the 
 
 State of Maine 3,720,000 
 
 Total 215,361,697 
 
 Of this sum about $105,000,000 may be classed as cash and gifts 
 available as cash, and $110,000,000 as guaranties of securities. 
 
 According to the balance sheet of the company for December, 1888, 
 the total cost of the road, and its equipment, plant, materials, and sup- 
 plies was $167,093,895. The total stock, bonded debt, and current 
 liabilities of the company on the same day, amounted to $131,350,019. 
 From this it appears that the various aids received from the Govern- 
 ment at their par value were $48,267,802 in excess of the cost of the 
 road, and $84,011,678 in excess of its liabilities. 
 
:rrv: 
 
 *■■:■ ^-"^l i*-- v^ '-^ : •' 
 
 THE UNITED STATES AND CANADA. 
 
 651 
 
 DOMINION AIDS TO THE CANADIAN PACIFIC RAILWAY. 
 
 In order to give you a clear idea of the interest which the Canadian 
 Gove^'nment has in the Canadian Pacific as a commercial and political 
 enterprise, I have prepared for you the following schedule of gifts, 
 guaranties, exemptions, concessions, and franchises granted to the 
 company by the Dominion Government: 
 
 (a) Direct gifts of money, land grant, and other privileges which have 
 
 become available as cash assets in the processes of funding, as 
 
 before stated $105,000,000 
 
 (b) Bonds and stock guarantied by the Dominion Government as before 
 
 stated 110,000,000 
 
 (c) Exemption from taxation for all time. As the taxes on both the Union Pacific 
 
 and Southern Pacific Companies exceed $1,000,000 a year (see Poor's Manual), 
 I assume that the Canadian Pacific taxes remitted would amount to at least 
 §()00,000 a year. 
 
 (d) Remission of duties onrfvilsand all imported material, liiiiountiug to 
 
 at least $7,000,000 
 
 (e) Protection against the construction of competing lines for twenty years, the 
 
 value of which concession can not be accurately estimated. To an American 
 line such a concession would constitute a guaranty of a fair rate of interest 
 on the cost of the road. 
 (/) The Dominion Government has granted an annual subsidy of §180,000 to the por- 
 tion of the line of the Canadian Pacific Railway which extends across the 
 State of Maine. The obvious effect of this line would be to divert American 
 aud Canadian commerce from Boston and Portland, Me. 
 
 COST OF CANALS AND RAILWAYS. 
 
 In the construction of her canals and railways, Canada has expended 
 in cash over $200,000,000, and granted exemptions and franchises which 
 undoubtedlv swell the total value of governmental aid to nearly $300,- 
 000,000. 
 
 The intimate association of the Government of Canada with the trans- 
 portation interests of the Dominion is clearly indicated by the fact that 
 in order to secure the commercial and political union of the Provinces, 
 by means of railroad construction, the i)eople of Canada have su omitted 
 to a burden of debt equal, in proportion to population, to the burden 
 of debt which was assumed by the people of the United States in order 
 to save the Union. This burden has been willingly borne by the people, 
 and to-day this association of x^olitical powers with the control of the 
 transportation interests of the Dominion in such manner as to affect 
 both political and commercial objects, is the predominating political 
 sentiment of the Dominion. 
 
 It is my firm belief that if the i^resent administration of governmental 
 affairs in Canada should go out of power, by the death of Sir John Mac- 
 donald or otherwise, no political party which should attempt to re- 
 verse this political transportation policy of the Dominion could retain 
 power for six months, so intimately has this policy become interwoven 
 into the very fabric of government. 
 
 '' ■ • ' ' ^ ■ PUBLIC DEBT OF CANADA. • n; V 
 
 ' The public debt of Canada increased from $93,000,000 in 1867, the 
 year of the confederation, to $235,107,948 on the 30th of November, 
 1889. This increase in the Dominion debt since the confederation has 
 been due chiefly to the construction of the great political railroads of 
 Canada. -y,^*';'.v^^j:i.-.^r';;t ,^:... 
 
 When we consider our Canadian relationships we must rememljei 
 
 ,.: wu.j!»;;d«y 
 

 652 TEANSPORTATION INTERESTS OF 
 
 that we are dealing not only with ^ government but with a great sy* 
 tem of transportation sharply comi > ting with the ccmmercial and trans- 
 portation interests of the United States. If the Dominion of Canada 
 were as completely separated from actual conduct of commerce and 
 transportation as is the United States, our Canadian relationships would 
 be purely of a political character ; but the difficulty involved in the 
 whole matter is that the United States Goveroment in its foreign policy 
 is ingenuously political while the Dominion Government is shrewdly 
 commercial from the compulsion of proprietary interests and financial 
 obligations. The fact that the ownership and control of railroads is a 
 fundamental part of its policy makes it commercially aggressive. The 
 very fact of its ownership of canals and railroads and its deep interest 
 in commerce and transportation for political purposes subjects it to a 
 sort of public responsibility of which we have no conception in this coun- 
 try. By virtue of these facts the Dominion Government is necessarily 
 aggressive. The veiy fact that the Dominion Government has assumed 
 responsibility for the commercial success of the country brings to bear 
 upon it a public responsibility which compels it to have recourse to all 
 the sharp expedients of transportation and of trade. So we see the Do- 
 minion Government doing toward the transportation lines of the United 
 States just as one great railroad company is doing toward another. 
 
 This fact is now clearly appreciated by the Inter-State Commerce 
 Commission. In their third annual report, just issued, referring to the 
 Canadian railroads generally, the Commission say: 
 
 They are practically under no restrictions imposed by their own statutes in re- 
 spect to long and short, haul trafiBc, but are at liberty to charge high rates on local 
 business to indemnify for losses on through or international business. Their man- 
 agers deny» with more or less emphasis, that their local traffic is subjected to higher 
 rates, but when the liberty to make such charges and the necessity for it can exist, 
 tbe inducement, at least, is strong. The provisions of the Canadian statute on this 
 8ubj«'ct, are as follows: 
 
 "Sec. !;i26. The company in fixing or regulating the tolls to be demanded and ta- 
 ken for the transportation of goods, shall, except in respect to through traffic to or from 
 the United Statts, adopt and conform to any uniform classification of freight which 
 the governor in council on the report of the minister, from time to time prescribes. 
 
 "Sec. "232. No company in fixing any toll or rate shall, under like conditions and 
 oircumstances, make any unjust or partial discrimination between different localities, 
 but no discrimination between localities, winch by reason of competition by water w 
 i ailway, it is necessary to make to secure traffic, shall be deemed to be unjust or partial." 
 
 These enactments give all traffic carried in competion with our carriers unlimited 
 freedom. 
 
 In a word, the Dominion Government in the conduct of its railroad 
 policy is doing as railroad managers are doing everywhere. Railroad 
 managers are engaged in a never ending fight. That is a characteristic 
 of competition. The Canadian aggression upon American interests is 
 therefore a natural expression of the character of their Government. 
 
 That fact to my mind is a very important one, and it seems to me to 
 be the root of the whole matter. Just take the whole case in review. 
 First, the Canadian ownership of canals, which cost $52,000,000; second, 
 the direct ownership and management of the intercolonial system, which 
 cost $46,000,000, and third, the interest of the Dominion Government in 
 the Canadian Pacific Railway, which it has aided in various ways to the 
 amount of $215,000,000. All this has really transformed the Dominion 
 Government from a political organization into a commercial institution — 
 an aggressive transportation system. At least that is the character 
 it assumes towards the United States in all matters of international re- 
 lationships. 
 
 A man gets himself into a certain method of doing business and he 
 has got to follow up that line of policy in order to succeed. Just so it 
 
" - . s ;■ 
 
 THE UNITED STAIES AND CANADA. 
 
 653 
 
 is with a government. It is by a faithful adherence to this sort of 
 l)olicy that the present MacdonaUl government has become so firmly 
 intrenched in power. It is impossible for his party to enter into any 
 treaty agreement which would relieve it from the necessity of having 
 recourse to all those tactical and strategetical expedients with which 
 the great trunk lines of the country are continually competing with each 
 other. So I favor reciprocal legislation with Canada in preference to 
 commercial treaties, and as we hold the advantage over Canada all 
 -along the line we can dictate the detail of our Canadian relationships. 
 It is difl&cult for us in the United States to appreciate the force of 
 public sentiment which in Canada has created a vast public debt for 
 the construction of railways and canals and which compels the admin- 
 istration of the Dominion to manage those enterprises '' ^cording to 
 the dictates of apparent commercial need. 
 
 THE TRANSATLANTIC AND TRANSPACIFIC STEAMER LINES 
 CONNECTIONS OF THE CANADIAN PACIFIC RAILWAY. 
 
 AND 
 
 Upon the completion of the Canadian Pacific Railway, in the spring 
 of 1886, a line of steamers was established between Vancouver, British 
 Columbia, and China and Japan. Recently the preliminary steps have 
 been taken for the establishment of a British steamer line from Van- 
 couver to Australia and New Zealand ; also for the establishment of a 
 steamer line from St. Johns, New Brunswick, and Quebec, to Liv*er- 
 pool. The provisions of law for the establishment of the British lines 
 lust mentioned are embraced in the following act of the Dominion 
 Government, passed at its late session : 
 
 AN ACT relating to ocean steamship subsidies. 
 
 Her Majesty, by and with the advice a nd consent of the Senate and House of Com 
 nions of Canada, enacts as follows: 
 
 1. The governor in council may grant to any individual or company a subsidy 
 not exceeding the sum of twenty-five thousand pounds sterling per annum, to assist 
 in establishing an effective fortnightly steam-ship service between British Columbia 
 and the Australian colonies and New Zealand, or such proportion thereof as is decided 
 up<m by the governor in council to assist in establishing a monthly service with the 
 «aid countries, such subsidy to be granted for such term of years, not exceeding ten, 
 ami on such conditions as the governor in council considers expedient. 
 
 2. The governor in council may grant to any individual or company, to whom 
 there is ^^ranted by the Government of the United Kingdom the aid hereinafter men- 
 tioned, a subsidy not exceeding the sum of fifteen thousand pounds sterling per an- 
 num for a monthly steam-ship service, or a subsidy not exceeding the sum of twenty- 
 five thousand pounds sterling per annum, for a fortnightly steam-ship service between 
 British Columbia and China and Japan, such subsidy to be granted for such term of 
 years and on snch conditions as the governor in council considers expedient : PrO' 
 tided always, That during such term the Government of the United Kingdom grants 
 to such individual or company a subsidy of not less thar. forty-five thousand pounds 
 sterling per annum for the monthly service, or of not less than seventy-five thousand 
 pounds sterling per annum for the fortnightly service above moHtioned. 
 
 3. The governor in council may enter into a contract for a term not exceeding ten 
 years with any individual or company for the performance of a fast weekly steam- 
 ship service between Canada and the United Kingdom, making connection with a 
 French port, on such terms and conditions as to the carriage of mails and otherwise 
 as the governor in council deems expedient, for a subsidy not exceeding the sum of 
 five hundred thousand dollars a year. 
 
 This act provides for the establishment of the following British lines 
 of steamers: 
 
 First. A fortnightly line from Vancouver to Australia and New Zeal- 
 and, with a Canadian subsidy of $125,000 a year, efforts being made 
 for securing an additional subsidy from Australia ajjd Kew Zealand. 
 
 Second. A line from Vancouver to China and Japan, with a subsidy 
 

 
 654 TRANSPORTATION INTERESTS OF 
 
 of about 1300,000 in the case of a monthly service, and of about $500,000 
 in the case of a fortnightly service; and 
 
 Third. A British line of steamers from St. Johns, New Brunswick, to 
 Liverpool, with a Canadian subsidy of $500,000 a year. This is to be 
 supplemented, I understand, by a British subsidy, the amount of which 
 is not known, but is publicly stated at $300,000 a year, making a total 
 subsidy of $800,000 a year. 
 
 The steamers of the Pacific line to China and of the Atlantic line to 
 England are to be so constructed as to be readily available as armed 
 cruisers in the military navy of Great Britain, and in consideration 
 thereof they are to receive in addition to the sums above mentioned, 
 certain admiralty or navy subsidies, the amount of which is not pub- 
 licly known. It is understood, however, that this admiraltj' subsidy 
 consists of a construction bounty and subsequent navigation bounty, 
 which runs for a term of years. The steamers on the Atlantic line are 
 to be of large size and great speed. This scheme has been delayed by 
 Canadian-Pacific scheming to get the control of a part of the intercolo- 
 nial railway system, but there can be little doubt of the final consum- 
 mation of the whole plan as above outlined. 
 
 In the whole history of commerce there is nothing in the nature of 
 governmental promotion which can be compared to this enormous 
 scheme of subvention, embracing the Canadian Pacific Kailway with 
 its enormous grants, privileges, and franchises, and its connecting 
 ocean steamer lines receiving enormous commercial and naval subsidies. 
 
 The object of this scheme is not alone Canadian union and Canadian 
 commercial and political advancement ; it goes far beyond this. It is 
 part and parcel of the gigantic political scheme of imperial confedera- 
 tion. It W3,s in this view that Lord Lansdowne, late governor-general 
 of ('anada, declared that " without the Canadian Pacific Railway the 
 British North American act was not worth the paper it was written 
 upon." 
 
 The ruling political party ia Canada recognizes this fact, and the 
 leaders of that party make no pretense of disguising it. The *' Hand 
 Book of Canada," published by the Dominion Government, states that 
 the Canadian Pacific was constructed **in the interests of the empire at 
 large, as well as those of Canada." And it adds: "Had these far-see- 
 ing plans been taken up when [first] mooted Canada would have been at 
 least two generations in advance of her present position, whilst " Greater 
 Britain" [i. e. British imperial confederation] would have been in a much 
 higher state of development than it is." This signifi-cant remark also 
 
 follows: / • , . : ; ■; . 
 
 It was a singular coincidence, and perhaps a prophetic omen of the future imperial 
 importance of this railway, that the first loaded train that passed over its entire length 
 from ocean to ocean was freighted with naval stores, belonging to the imperial war 
 department, transferred from Quebec to Vancouver. 
 
 This shows the politico-commercial aspect of the Canadian Pacific 
 Railway, in a way which forces the United States Government to 
 consider the question as to whether the United States or the British 
 Empire is to hold the commercial supremacy on this continent. 
 
 These facts emphasize and more clearly bring out the point which 1 
 have before stated, namely, that the United States is confronted at the 
 north by a government which is thoroughly committed to a political 
 policj- involving a participation in commerce which is essentially aggress- 
 ive toward American interests. This is the real question which we 
 have to meet, and it must be determined in order to protect American 
 ships, American sea-ports, and American transportation lines. 
 

 • -V" i -vg 
 
 THE UNITED STATES AND CANADA. 
 
 655 
 
 This view of the case has been very clearly set forth in the recent reso- 
 lutions adopted by the commercial conference on the Pacific coast, 
 wherein it is clearly shown that this Canadian and British policy of 
 subsidized steamer lines and subsidized railroads across the conti- 
 nent will inevitably break down American steamer navigation on the 
 Pacific Ocean, the effect of which will be to divert commerce from the 
 Pacific ports and from our own lines of transportation between Pacific 
 coast ports and the eastern side of the continent. 
 
 THE UNITED STATES AND CANADIAN TRANSIT TRADE. 
 
 A clear understanding of our Canadian relationship of transportation 
 involves a careful consideration of what is commonly known as " the 
 United States and Canadian transit trade." 
 
 The United States and Canadian transit trade had its origin in an 
 exercise of administrative discretion. A bout the year 1848 the inference 
 was raised that if under our laws imported goods held in a government 
 warehouse, for example, in New York City, could be taken out of the 
 warehouse and transported across the streets of New York to a sea- 
 going vessel and re exported without the payment of duties, it might 
 be lawful to take them out of the warehouse in New Y^ork and place 
 them on board of a railroad car and ship them across the United States 
 to Canada without the payment of duty. This was done and con- 
 stituted the beginning of the transit trade. At the same time the 
 l)rivilege was extended to Canadians of shipping their produce across 
 the United States to be exported from New York or from Boston to 
 foreign countries without exacting duties upon them in the United 
 States. This latter privilege was of great value to the Canadians, for the 
 reason that the St. Lawrence River is closed by ice and fogs about six 
 months of each year, during which ])eriod they are practically interior 
 provinces. At the same time this traffic brought business to shipping 
 at the x>ort of New Y^ork and to American transportation lines, and it 
 had about it the essential elements of reciprocity. 
 
 The St. Lawrence system of canals was completed about the year 
 1848. During that year the Canadian Government very gladly ex- 
 tended to the people of the United States the privilege of importing 
 and exporting goods through Montreal without the payment of duties 
 in Canada. The Canadian Government did everything it could to en- 
 courage this traflBc because it tended to promote the commercial uter- 
 ests of Canada. At the same time it afforded to the people of our West- 
 ern and Northwestern States the competitive advantage of an alterna- 
 tive route. This movement also had about it the essential elements of 
 reciprocity. , .' - : :, . • 
 
 » These two movements, embracing the privilege afforded by each 
 country of exporting or importing goods across the territory of the 
 other without the payment of duty, I shall hereinafter designate as ^'the 
 foreign transit trade." It may be remarked in passing that the ad- 
 vantages which the foreign transit trade affords to Canada are pro- 
 portionately very much greater than those afforded to the United States. 
 
 l« ^.THE DOMESTIC TRANSIT TRADE. 
 
 ff -Ui i^fiih': :' - 
 
 There is another and more important branch of the United States 
 and Canadian transit trade to which I would more particularly invite 
 your attention. I refer to the transportation of merchandise from ono 
 
■ ^^v^ r:^-^> r.;?*^-:;; -^j^v- 
 
 >; . 
 
 ^ --^^^ 
 
 656 
 
 Transportation interests of 
 
 point in the United States to another point in the United Stages across 
 the territory of Canada, and to the transportation of goods from one 
 point in Canada to another point in Canada across the territory of the 
 United States, in both cases without ijayment of duty. This I desig- 
 nate as the domestic transit trade. This branch of the transit trade 
 had its origin in the geographical circumstance that east of Minnesota, 
 where the parallel of 49 degrees is the international boundary, the terri- 
 tory of the two countries interject, the one into the other, through a 
 range of 6 degrees, or about 400 miles of longitude. 
 
 The entire settled portions of the provinces of Ontario and Quebec 
 are situated south of a line drawn from the northern boundary of Min- 
 nesota to the northernmost point of Maine. 
 
 Just 73 per cent, of the total population of the Dominion of Canada 
 is embraced in this interjection of territory, as will be seen from the 
 statement of population recently prepared by the statistical bureau of 
 Canada : 
 
 Popalation. 
 
 Ontario 2,189,107 
 
 Quebec 1,496,226 
 
 Nova Scotia 489,618 
 
 New Brunswick 348,568 
 
 Manitoba 146,545 
 
 Popnlatioa. 
 
 British Columbia 150,999 
 
 Prince Edward Island 121,852 
 
 Northwest Territories 106,000 
 
 Total 5,04b,915 
 
 On the other hand, the State of Maine almost separates the province 
 of Quebec from the province of New Brunswick. 
 
 Now, I beg you will carefully observe the fact that the " transit 
 trade^' is based absolutely upon these interjections of territory, and 
 upon the fact that navigation on the St. Lawrence River is closed for 
 about six months each year. But for these phjsical characteristics of 
 the two countries on the east side of the continent, there never would 
 have been any " transit trade." 
 , The origin of the domestic " transit trade '^ was as follows : 
 
 About the 1st of April, 1855, the railway suspension bridge two 
 miles below Niagara Falls was completed. By this means the New 
 York Central Railroad, the Great Western Railroad, of Canada, and the 
 Michigan Central Railroad formed the first all-rail line from New York 
 to Chicago, with the single break caused by the Detroit River, which 
 was crossed by a ferry. A large freight and passenger traffic at once 
 sprung into existence over this line. 
 
 The question arose whether American goods could be loaded into a 
 foreign railroad car at Suspension Bridge and carried across the inter- 
 jecting territory of Canada to Detroit without the payment of duty. 
 The analogy furnished by our navigation laws, which forbid the car- 
 riage of goods from one point in the United States to another point in 
 the United States in any other than an American vessel, was set aside. 
 In the absence of any specific statute on the subject, the authorities at 
 Washington yielded to the popular demand, and thus the domestic 
 transit trade, like the foreign trausit trade, had its origin in the mere 
 exercise of administrative discretion. The Canadian government very 
 freely acceded to the arrangement, for it was one of great advantage 
 to the traffic interests of the then most important railroad in Canada, 
 the Great Western Railroad. 
 
 Since the inauguration of the domestic trausit trade over the Cana- 
 dian route ju^t mentioned, the relative importance of that route has 
 greatly decreased in consequence of the construction of the several 
 powerful trunk lines south of Lake Erie, which carry the great bulk of 
 the commerce between the West and the sea-board. 
 
THE TJNitEb SlAtES AND CANADA. ' * 65 V 
 
 TRANSIT TRADE LEGISLATION AND TREATY STIPULATIONS. 
 
 Both branches of the transit trade hereinbefore described and desig- 
 nated as the foreign trausit trade and the domestic transit trade, existed 
 from the time of their inception by virtue of administrative discretion, 
 and in the absence of any specific provisions of law sanctioning them, 
 until July 28, 18G6, when the following act of Congress was passed 
 (Revised Statutes, sections 3005 and 3006, Chapter CCXCVIII, ap- 
 proved July 28, 1866) : 
 
 AN ACT to protect the rerenae and for other parpoees. 
 
 Sec. 5. And he it further enacted, That from and after the passage of this act, all 
 
 floods, wares, or merchandise arriving at the ports of New York. Boston, and Port- 
 and, or any other port of the United States which may be specially designated by 
 the Secretary of the Treasary, and destined for places in the adjacent British Prov- 
 inces, or arriving at the port of Point Isabel, Texas, or any other port of the United 
 States which may be specially designated by the Secretary of the Treasury, and des- 
 tined for places in the Republic of Mexico, may be entered at the custom-house and 
 conveyed, in transit, through the territory of the United States, without the pay- 
 ment of duties, under such rules, regulations, and conditions for the protection of the 
 revenue as the Secretary of the Treasury may prescribe. 
 
 Sec. 6. And be it further enacted, That imported goods, wares, or merchandise in 
 "bond, or duty paid, and products or manufactures of the United States, may, with 
 the consent of the proper authorities of the provinces or republic aforesaid, be trans- 
 ported from one port or place in the United States to another port or place therein, 
 over the territory of said provinces or republic, by such routes and under such rules 
 jegulations, and conditions as the Secretary of the Treasury may prescribe ; and the 
 goods, wares, or merchandise so transported shall, upon arrival in the United States 
 from the provinces or republic aforesaid, be treated in regard to the liability to. or 
 ■exemption from duty or tax as if the transportation had taken place entirely within 
 the limits of the United States. 
 
 Section 5 of the act above quoted in terms legalized the foreign 
 transit trade, while section 6 as specifically legalized the domestic 
 transit trade. The next measure in the order of time having reference to 
 the establishment of the United States and Canadian transit trade is 
 found in the twenty-ninth article of the treatj^ of Washington, which - ji 
 
 was concluded May 8, 1871. That article is as follows : 
 
 Article XXIX. 
 
 It io agreed that, for the term of years mentioned in Article XXXIII of this treaty, 
 •Koods, wares, or meuchandise arriving at the ports of New York, Boston, and Port- 
 land, and any other ports in the United States which have been or may, from time 
 to time, be specially designated by the President of the United States, and destined 
 'ibr Her Britannic Majesty's possessions in North America, may be entered at the 
 proper custom-house and conveyed in transit, without the payment of duties, 
 through the territory of the United States, under such rules, regulations, and condi- 
 .tious for the protection of the revenue as the Government of the United Stat**s may 
 from time to time prescribe ; and, under like rules, regulations, and conditious, 
 goo<ls, wares, or merchandise may be conveyed in transit, without the payment of 
 duties, from such possessions through the territory of the United States for export 
 from the said ports of the United States. . 
 
 It is further agreed that, for the like period, goods, wares, or merchandise arriving -^ 
 
 «t any of the ports of Her Britannic Majesty's possessions in North America, and 
 destined for the United States, may be entered at the proper cuntom-honse and con- 
 veyed in transit, without the payment of duties, through the said possessions under 
 such rules and regulations and conditions for tlie protection of the revenue as the 
 
 fovemments of the said possessions may from time to time prescribe; and, undei 
 ike rules, regulations, Jind conditions, goods, wares, or merchandise mav be con- 
 veyed in transit, without payment of duties, from the United States through the said 
 possessions to other places in the United States or for export from ports in the said 
 possessions. 
 
 This treaty of Washington was concluded fifteen years before the 
 •Ca iiidian Pacific Bailway was constructed, and only "two years after 
 6543 42 
 
 >• 
 

 658 . TRANSPORTATION INTERESTS OF 
 
 rij 
 
 the first transcontinental railroad was completed in this country. It th 
 is absolutely certain that it never would have been signed by any sane 
 American commissioner nor ratified by any American Congress in the 
 presence of the conditions which now govern the transportation inter- 
 ests of the United States and of the eftbrts which are now being made 
 by the Canadian and British Governments to grasp American commerce 
 and to exploit British imperial confederation on this continent. 
 
 And now let us briefly recapitulate the leading facts hereinbefore 
 stated in regard to the transit trade. 
 
 Both branches of that trade were inaugurated by administrative dis- 
 cretion, ^subsequently they were sanctioned by the act of July 28, 
 18G0, and bj' article 29 of the treaty of Washington. All this was 
 prompted and justified by the particular circumstances of interjecting 
 territory, by the disability under which the provinces of Quebec and 
 Ontario labor of having no winter sea-ports, and by the advantage of 
 competition which the St. Lawrence River route affords to our Western 
 and Northwestern States during the season of navigation. 
 
 On the western side of the continent the case is entirely different. 
 
 Not one of the conditions which justify the transit trade on the east- 
 ern side of the continent exists as a justification of the extension of the 
 privileges of that trade to the western side of the continent; but, not- 
 withstanding this obvious and most important characteristic of the 
 commercial life of the country, upon the completion of the Canadian 
 Pacific Railway to the Pacific Ocean, in the month of May, 188(5, the 
 Secretary of the Treasurj* granted to the Canadian Pacific Railway 
 Company the privileges of the transit trade, so that it was enal^led at 
 once to enter into competition with the American lines for the domestic 
 traffic of the United States across the continent, and also of competing, 
 by the sheer force of British and Canadian governmental subsidy, with 
 American steamer lines, American sea-ports, and American railroads 
 for our Asiatic commerce. 
 
 I am aware of the fact that under a familiar rule of construction, a 
 statute of a general nature, although in its form permissive, is never- 
 theless mandatory upon the officers of the Government charged with 
 its administration, and that Sec. 6, of the act of July 28, 186C, may be 
 regarded in this light. There is, however, a question as to whether the 
 Secretary did or did not err in allowing the transit trade on the Pacific 
 coast to be conducted in i)art by vessel and in part by rail, embracing 
 the transfer of cargo on foreign soil. But I submit to the committee 
 that the historic facts which alone justified the enactment of that law, 
 and the questions of public policy which now confront the country re- 
 garding the encroachment of the Dominion Government upon the navi- 
 gation, transportation, and commercial interests of the United States 
 clearly demand that under specific statutory provisions, the " transit 
 trade" shall be limited to the conditions under which it was origi- 
 nally established, and to the specific purposes which it still subserves on 
 the eastern side of the continent. ■ v 
 
 I maintain, however, that in a certain particular the *' transit trade" 
 as now conducted on the Pacific coast is in open violation of our laws 
 for the protection of the revenue from customs. 
 
 THE TRANSIT TRADE ON THE EASTERN AND ON THE WESTERN SIDE 
 
 OF THE CONTINENT. ^ 
 
 Now, what are the real differences between the apptication of the 
 transit trade on the eastern side of the continent and on the western 
 side ! To make this perfectly clear to your committee, even at the 
 
I 
 
 
 THE UKITKD STATES AND CANADA. 659 " 
 
 risk of repeatinjr what bas already been said, T invite your attention to 
 the following statemeiit, sliowing si)ecitically the radical differences 
 which exist between the conditions under which tlie transist trade ex- 
 ists on the eastern and on the western side of the continent. 
 
 First. The eastern transit trade is across interjecting Canadian ter- 
 ritorj', in part over an American line, the Canada Southern Railway. 
 There is no such inteijecting territory on the west side of the continent, 
 and the exclusive privileges of railway construction granted to the Can- 
 adian Pacific do not tolerate such an American competitor in British 
 Columbia. 
 
 Second. The transit across this interjecting territory at the east, 
 while enabling some of the principal railroads of Canada to i^articipate 
 in our domestic traffic, affords the reciprocal advantage to American 
 shippers of short and direct lines between our l!^orth western and our 
 New England States ; but no such advantage of a shorter line is af- 
 forded by the Canadian Pacific on the western side of the continent. 
 
 Third. The most po])ulou8 and most wealthy portion of the Dominion 
 of Canada is for six months of the year dependent upon transit across 
 the territory of the United States for free commercial intercourse with 
 foreign countries. But no such disability affects British Columbia. In 
 common with all the Pacific coast ports, as far north as Sitka, Alaska, 
 the ports of British Columbia are open all the year. 
 
 Fourth. The eastern transit trade lines tend to bring trade to Amer- 
 ican sea ports, while the Canadian Pacific Kail way, with its British 
 steamer line adjuncts, operates very strongly to turn American com- 
 merce from American sea-ports, a fact which has created great alarm on 
 our Pacific coast and has led the convention of commercial and indus- 
 trial organizations of that section to utter an earnest and entirely non- 
 partisan appeal to Congress for protection against the aggressions of 
 the Canadian and British Governments. 
 
 Fifth. The St. Lawrence River and Canadian canals afford the com- 
 petitive advantages of an alternative route to the people of our Western 
 and Northwestern States for six months of the year ; but no such nat- 
 ural advantages of water transportation through Canada exist on the 
 western side of the continent. We have no nee'^ to cross Canadian 
 territory there, even for the purpose of gaining the advantages of an 
 alternative route. 
 
 Sixth. The railroads of Canada, which were allowed to engage in the 
 transit trade under the privileges of the act of July 28, 1866, and of 
 article 29 of the treaty of Washington, were all constructed as com- 
 mercial enterprises, on commercial principles and to subserve merely 
 commercial purposes, but the Canadian Pacific Railway, as I have be- 
 fore shown, was constructed by the Dominion Government for political 
 i purposes distasteful to and in a measure inimical to the United States. 
 I This is fully evidenced by the contribution of $215,000,000 in gifts 
 and other subventions by the Dominion Government to the Canadian 
 Pacific Railway ; by the exemption of the property of that company 
 from taxation, amounting to $600,000 a year; by the remission of 
 duties on rails and other materials, amounting to $7,000,000 upon the 
 basis of the rates of duty charged in the United States; by protection 
 against the construction of competing lines, and by the subsidy to the 
 Canadian Pacific lines across the State of Maine, amounting to $186,000 
 a year. 
 
 Seventh. The Canadian Pacific Railway has as adjuncts a steamer , 
 line to Asia so heavily subsidized by tae Canadian government as to ' 
 threaten the ruin of American steamer lines between San Francisco and 
 
-*^-.; V " ,■ \ ■• ■ - •■ ■' ■■ ' .■• '.- . ■ -,. •• '-:' '•^:---- , •■ i~ : .-'. 'v- ■''■^-'' .■ ,^li-^-' 
 
 660 TRANSPORTATION INTERESTS OF 
 
 ports in Asia, and to divert our Asiatic commerce from American sea- 
 ports to tbe Canadian port of Vancouver. The Canadian and British 
 Governments, with the idea of the imperial confederation of the British 
 Empire prominently in view, are now planning for the establishment of 
 a heavily subsidized British steamer line to Australia and New Zealand. 
 This will ruin our American line to these islands unless we adopt meas- 
 ures which will protect it against the efforts of the Dominion Govern- 
 ment to destroy it. 
 
 Those governments are also planning for a heavily subsidized trans- 
 Atlantic steam r line from St. John's or Halifax to Liverpool. This line? 
 would tend to divert commerce from New York, Boston, and Portland^ 
 Me. But no schemes for diverting commerce from American ships,, 
 from American sea- ports, and from American transportation lines char- 
 acterized the railroads which were authorized to engage in the transit 
 trade bj' the act of July 28, 1866, or by the treaty of Washington of 
 1871. As I have before remarked, that treaty would never have been 
 signed by any sane commissioner if it had been characterized by any 
 such feature of hostility to American interests. 
 
 Eighth. The Canadian Pacific Railway is closely identified with raili* 
 tary objects, which were at the beginning urged with eff^ect both in Can- 
 ada and Great Britain in favor of the construction of that road. Thi» 
 feature of the enterprise is accentuated by the formidable fortress and 
 naval station at Esquimault on the Island of Vancouver, and it is also 
 indicated by tlie fact already noted that the first train which passed 
 over the Canadian Pacific upon its completion was loaded with material 
 of war. No objectionable feature of this nature characterized the tran- 
 sit trade authorized by the act of July 28, 186^3, and by the treaty of 
 Washington, and it is certain that the privileges of the transit trade 
 should never be grante<l to any railroad which is characterized by any 
 such objectionable features. 
 
 THE POSSIBILITY OF CANADIAN RETALIATION. 
 
 The qnestion of expediency has been suggested as to the eifect which 
 the suspension of the privileges of the transit trade on the western side 
 of the continent might have upon Aniericau interests in case the Cana- 
 dian government should see fit to retaliate by curtailing the privilege 
 of the transit trade on the eastern side of the continent. Nothing could 
 be more absurd than to apprehend evil to any American interests from 
 this source. In the whole matter of the transit trade from New Bruns- 
 wick to Vancouver the United States holds an overpowering advantage 
 over Canada at every point. The entire suspension of this trade would 
 be of comparatively small disadvantage to the United States, whereas 
 it would be utterly disastrous to Canada. If the Dominion Government 
 should forbid the transportation of Canadian goods in bond and free of 
 duty across the State of Maine over the new subsidized Canadian Pacific 
 line, or should forbid the transportation of goods across tbe territory of 
 the United States through the ports of New York, Boston, and Port- 
 land, Me., in the conduct of the foreign commerce of Canada, or should 
 forbid the carriage of American merchandise from one point in the 
 United States to another point in the United States across the inter- 
 jecting territory of the provinces of Ontario and Quebec, or should for- 
 bid the Northwestern States from carrying on foreign commerce through 
 the port of Montreal except upon payment of duty, such action would 
 wreck the commercial, industrial, ami transportation interests of Can- 
 ada and in a moment dispel the cherished dream of Canadian commer- 
 cial supremacy upon this continent. 
 
'r.;j it.:i^: .: V '• 7 -:' -Z \ ■■-} ■'t\ - J ;■ " ' '• '* ■ . <'' ' --'v^ 
 
 THE UNltED STATES AND CANADA. 661 
 
 To assume that the suspension of the privileges of the transit trade 
 on the western ¥ide of the continent, where there is no justifiable ex- 
 cuse for its existence, would lead the Canadian government to retali- 
 ate by any interference whatever with the eastern transit trade would 
 be to impeach the common sense of the exceedingly astute and able 
 men who now control the political affairs of Canada. Nothing could 
 be more puerile than such an assumption. It is to-day entirely within 
 the discretion of the Government of the United States to afford ample 
 protection to American shipping interests, to American sea-ports, and to 
 American transportation lines against Canadian encroachment on the 
 western side of the continent without the slightest ground for appre- 
 hending any sort of Canadian retaliation on the eastern side of the 
 continent. 
 
 It is high time for the people of this country to appreciate the fact 
 that their national Government holds a preponderance of commercial 
 power on this continent as absolute as the preponderance of its mili- 
 tary power, and to demand that those who are charged with the affairs 
 of Government shall adopt such measures as shall prevent any inter- 
 ference by a foreign power with the course of the development of our 
 domestic or foreign commerce. 
 
 THE LEGALITY OP THE ARRANGEMENTS UNDER WHICH THE PRIVI- 
 LEGES OF THE TRANSIT TRADE HAVE BEEN EXTENDED TO THE 
 PACIFIC OCEAN. 
 
 The legality of the arrangement whereby the privileges of the do- 
 mestic transit trade have been secured bj^ the Canadian Pacific Rail- 
 way Company is subject to serious doubt. Such privileges have beea 
 secured by forming a connection with an American steamer line plying 
 between Vancouver and ports in the United States as far south as San 
 Diego, Cal. The abrogation of Article XXX of the treaty of Washington 
 denied this privilege to foreign vessels. The connection made by the 
 Canadian Pacific with an American steamer line is, however, question- 
 able as to its legality. Our navigation laws confine the domestic car- 
 rying trade exclusively to American vessels. Obviously an American ^ 
 vessel can not take a cargo of domestic goods from San Francisco ta 
 Valparaiso, Chili, and there ship them by a foreign vessel to New 
 York, but American vessels are carrying goods from San Francisco to- 
 Vancouver, British Columbia, there to be shipped to New York by the 
 Canadian Pacific and its Eastern railroad connections, under condition* 
 much less favorable to the protection of our revenues from customs than 
 in the former case. It will be easy for the committee to procure in^ 
 
 I formation from the law oflBcers of the Government upon this subject,. 
 
 I and I, therefore, leave the matter with the simple expression of my 
 
 I views in regard to it. 
 
 f There is, however, a feature of the foreign transit trade through 
 
 f Victoria which appears to be openly and flagrantly in violation of the 
 letter and spirit of the law. Our existing laws concerning the trans- 
 portation of dutiable goods from seaports of the United States to inte- 
 rior points in the United States, say, for example, imported goods from 
 San Francisco to Chicago, require that a consular invoice of such goods 
 shall be delivered to the customs officer at San Francisco for examina- 
 tion ; that entry of the goods shall be made at that port j that the 
 goods shall be shipped under a transportation bond for the security of 
 the duties ; that the railroads over which the transportation takes place - 
 shall also be bonded, and that the cars in which they are carried shall be* 
 
 ^ 
 
 I 
 
,■.-.(. *^--.-« J •> s*.. '\ y ■ ^ • ^ - ■ - ■ •y-- , '' ' 'j : K 
 
 N 
 
 662 TRANSPORTATION INTERESTS OF 
 
 sealed. But at the present time foreign goods to be shipped east to points 
 in the United States are received by an inspector of customs of the dis- 
 trict of Puget Sound, who, as I am informed, has been made a consular 
 agent of the United States. He simply certifies to manifests of Amer- 
 ican goods, and forwards them without examining or certifying to the 
 invoices, and the Canadian Pacific being a foreign corporation can not 
 execute a bond to the United States for the faithful performance of any 
 service whatever. The whole proceeding appears to be unwarranted. 
 
 So, without any authority of law and by a manifest abrogation of law, 
 Vancouver is exempted from important requirements which apply at San 
 Francisco. Thus the administrative branch of our own Government is 
 actually aiding the great politico-military railroad of Canada in its 
 work of deflecting commerce from American ships, from American sea- 
 ports, and from American transportation lines by the sheer force of 
 Canadian and British subsidy. 
 
 I hesitate not to characterize this as disgraceful to the Government 
 of the United States and a matter which calls for immediate rectifica- 
 tion, 
 
 THE STEITGGLE MADE BY THE CANADIAN PACIPIC RAILWAY COMPANY 
 FOR THE CONTROL OF AN IMPORTANT PART OF THE INTERNAL AND 
 FOREIGN COMMERCE OF THE UNITED STATES. 
 
 The Canadian Pacific Railway was open for traffic in the month of 
 June, 1886. With a phenomenal audacity the Dominion Government 
 and the Canadian Pacific Railway management assumed that the priv- 
 ileges of both the internal and the foreign transit trade of the United 
 States applied to transcontinental traffic, notwithstanding the historic 
 fact that the entire transit trade was originally established under the 
 peculiar conditions of interjecting territory on the Eastern side of the 
 continent, and by virtue of the fact that the Canadian Provinces of 
 Ontario and Quebec were shut off from foreign commerce by ice and 
 fogs during six months of the year. The act of July 28, 1866, made the 
 extension of the "transit trade" subject to the discretion lodged with 
 the Secretary of the Treasury touching the protection of tlie revenues 
 from customs, and the twenty-ninth article of the treaty of Washington 
 in terms granted the privileges of the transit trade in favor of the par- 
 ticular routes on the East side of the continent described in that article, 
 and to such other routes as might be "specially designated by the Presi- 
 dent of the United States." 
 
 I think that from the stand-point of national interest and honor it is 
 a cause for regret that the late administration should have uncondi- 
 tionallj' extended the privileges of the transit trade to transcontinental 
 traffic and thus have aided the government of Canada in carrying out 
 -a line of policy the objects of which are inimical to the commercial, 
 navigation, and transportation interests of this country and in a polit- 
 ical sense offensive to the United States. As our navigation laws for- 
 bid that any foreign vessel shall engage in our domestic commerce, it 
 was necessary that an American line of steamers should form the con- 
 nection with the Canadian Pacific Railway, whereby that agency of the 
 Dominion Government might be able to compete with the transconti- 
 nental and eastern trunk lines of the United States for the traffic of Cali- 
 fornia, Oregon, and Washington with the east side of the continent. 
 Under the arrangement which was made for carrying that object into 
 effect the Canadian Pacific Railway at once began a bull-dozing j)olicy in 
 regard to rates with the object plainly in view of wresting trom the 
 
. •** 
 
 THfc UNITED STATES AND CANADA. 663 
 
 American lines alarge share of the through traffic. They wanted a larger 
 share than the American lines could afford to grant without imperiling 
 their own interests. Besides it was seen that a very material reduction 
 of through rates, in order to prevent traffic diversion, would compromise 
 the American lines with respect to an equitable adjustment of through 
 and local rates and generally with respect to competing and non-com- 
 peting rates. This, however, would inevitably have led to popular 
 discontent all along their lines and the blame would of course have 
 fallen immediately upon the managers of the American lines. The 
 general manager of one of these lines remarked that with them it was 
 a question of "no traffic or no rates." 
 
 Everything seemed to favor Canadian aggression. The Treasury De- 
 partment had given the whole case away and soon after the interstate- 
 commerce act took effect. For months the managers of the American 
 transcontinental railroads were in a demoralized state, while Mr. Col- 
 lingwood Schreiber, chief engineer and manager of the government 
 railways of Canada, exultingly reported to his government, under date 
 of December 26, i887, that " already notes of alarm have been sounded 
 by the American press at the manner in which the Canadian Pacific 
 Railway is cutting into the business of the transcontinental roads of 
 the United States." The Canadian Pacific Railway, constructed mainly 
 by the gifts and aids of various sorts extended by the Canadian gov- 
 ernment and backed up by that government in every act of aggression 
 upon American interests, was fighting a set of American lines con- 
 structed mainly oi* entirely by private capital with large financial obli- 
 gations and confronted by a jealous and somewhat unfriendly public 
 sentiment in this country toward the railroads generally. The situation 
 seemed to illustrate the irony of fate. 
 
 After a while the Interstate Commerce Commission decided that the 
 competition of the Canadian Pacific Railroad is a cause for departure 
 from the " long and short haul rule." This was a great relief to the 
 transcontinental railroads, but a greater relief to the producing indus- 
 tries of California, which depend for quick markets u[)on that portion 
 of the United States situated east of the Missouri River. To what ex- 
 tent the long and short haul rule may be departed from«the Commis- 
 sion has cautiously refrained from saying, and the country is still at 
 sea upon the vitally important question as to the influence which shall 
 be exerted in the determination of relative rates by rival commercial 
 forces, by mountain ranges and arid wastes, and by the competition of 
 water lines, and by the power exerted by the Dominion Government 
 through its alter ego, the Canadian Pacific Railway Company. This is 
 the emergent question of our railroad problem, which must finally be 
 settled bv judicial determination. For many mouths a war of rates 
 continued between the Canadian Pacific and the American lines, and 
 the situation to day is in the nature of an armistice. The plan adopted 
 for keeping the peace is that of differential rates. By this concession 
 the Canadian Pacific is allowed to charge lower rates in order to secure 
 a share of the through traffic, a virtual concession to the financial 
 power of the Dominion Government behind the Canadian Pacific. 
 
 This is illustrated by the following table showing the rates which 
 now prevail on through traffic from San Francisco to Chicago by direct 
 American routes and by the Canadian Pacific route by steamer to Van- 
 couver, and thence by Canadian Pac^c Railway and its eastern couv '^ 
 nections. 
 
 ». ;i- ■ - . » _....--■■■:. •- .i . / 
 
^JT^*- 
 
 664 
 
 TRANSPORTATION INTERESTS OF 
 Through rate$ from San Franciaco to Chicago. 
 
 llerolumdiae oIam. 
 
 Fint .. 
 
 Second 
 
 Third. 
 
 Fourth 
 
 Fifth., 
 
 Direct 
 
 Americkn 
 
 route. 
 
 $3.iM 
 3.40 
 2.70 
 2.10 
 1.85 
 
 Canadian 
 Pacific 
 roQte. 
 
 $3,724 
 3.26i 
 2.58 
 &00 
 1.75 
 
 Differ- 
 ential. 
 
 $0.17* 
 
 •1*4 
 .12 
 .10 
 .10 
 
 Merchandise oUm. 
 
 ▲ 
 
 B 
 C 
 D 
 E 
 
 Direct 
 
 American 
 
 roate. 
 
 $1.90 
 1.70 
 1.35 
 1.20 
 1.10 
 
 Canadian 
 Pacific 
 route. 
 
 $1.82 
 1.02 
 1.28 
 L15 
 1.06 
 
 Differ- 
 entiid. 
 
 10.08 
 .08 
 .07 
 .06 
 .05 
 
 The discrimination in passenger traflBc is illustrated by the following 
 statement quoted from printed schedule showing the rates in force on 
 the 26th of December, 1889. 
 
 Bates from St. Paid, Minn., to Portland, Oregon. 
 
 Class. 
 
 • 
 
 Via 
 
 Northern 
 
 Pacific. 
 
 Via 
 
 Canadian 
 
 Pacific. 
 
 Limited- 
 First class 
 
 $60 
 35 
 
 $50 
 
 Second class •.•••••.•••••••...•...••••••«•••••••••••••••. ••••...•... 
 
 30 
 
 1 
 
 
 During the year 1888 the Canadian Pacific in its fight with the Amer- 
 ican transcontinental lines secured about 39 per cent, of the traffic 
 between San Francisco and a line of which the principal eastern points 
 are St. Paul, Milwaukee, Chicago, St. Louis, and New Orleans. I 
 have not been able to procure any later information as to the relative 
 magnitude of this movement. 
 
 The Interstate Commerce Commission, in their recently published 
 report, say: 
 
 It is estimatoid that fally oue-third of the through business of the Canadian Paoiiio 
 to and from the Pacific coast consists of traffic furnished from the United States. 
 
 TRAFFIC BETWEEN THE ATLANTIC SEA-BOABD STATES AND CHINA 
 AND JAPAN OVEE THE CANADIAN PACIFIC ROUTE. 
 
 There is a traffic over which neither the Transcontinental Eailway 
 Association or any other American railway organization appears to ex- 
 ercise any sort of control. I refer to the direct traffic between points 
 in the Atlantic Sea-board States and China and Japan, over the Cana- 
 dian Pacific Eailway and its heavily subsidized ocean steamer line. 
 This commerce is being deflected from American steamer lines on the 
 Pacific Ocean, from American sea-ports on the Pacific coast, and from 
 American railroads across the entire continent, by the sheer force of 
 subventions granted by the Dominion and British Governments. 
 Through rates are quoted between Atlantic and Pacific coast cities, 
 but there is no supervision over such traffic such as that which is exer- 
 cised by the Transcontinental Association over traffic west of Chicago 
 and St. Louis. 
 
 The following tables exhibit respectively the kinds and weights of 
 commodities exported from the Atlantic Sea-board States to China and 
 
'>f>,"»,'V. 
 
 >V» \''i'-«.'«9 
 
 r t 
 
 THE UNITED STATES AND CANADA. 
 
 665 
 
 JapaD via British Columbia by the Canadian Paci6c Railway and its 
 heavily subsidized British steamer line across the Pacific Ocean : 
 
 No. 59. — Statement shoicing Ihe kinds and weights of commodities, the production of the 
 United Slates, exported Jrom the United States throuflh Britixh Columbia, via the Cana- 
 dian Pacific Railway, to China and Japan during the year ending June 30, 16S8. 
 
 [From official reports by the United States inspector of customs at Vancouver, British Columbia.] 
 
 Articles. 
 
 Books 
 
 Boots and shoes, India-mbber 
 
 Clocks and watches 
 
 Cottons 
 
 Gypsom 
 
 Hoofs, horns, and bones 
 
 Lubricants 
 
 Machinery 
 
 Merchanuise 
 
 Organs 
 
 Weight 
 
 Foundt. 
 
 5,073 
 
 910 
 
 &07 
 
 4, 660, 168 
 
 27,410 
 
 72,606 
 
 7,896 
 
 678,047 
 
 81,102 
 
 21, 103 
 
 Articles. 
 
 Personal effects 
 
 Plumbago 
 
 Rattan core 
 
 Talc 
 
 Tobacco and cigarettes 
 
 Tram-cars 
 
 Type-writers 
 
 ToUl 
 
 Weight. 
 
 Pounds. 
 
 15, 571 
 
 300 
 
 305 
 
 2,080 
 
 1,725 
 
 45,000 
 
 60 
 
 53,653 
 
 5, 625, 355 
 
 No. 60. — Statement shotting the kinds and weights of commodities, the production of the 
 United States, exported from the United States through British Columbia, via the 
 Canadian Pacific Railway, to China and Japan during the year ending June 30, ldc9. 
 
 [From official report by the United States inspector of customs at Vancouver, British Columbia.] 
 
 Articles. 
 
 Air-gnns 
 
 Apples 
 
 Books, stationery, charts, and printed 
 
 matter 
 
 Boots, India-rubber..... 
 
 Carbons 
 
 Cartridges, m etallic 
 
 Cases of wood ... 
 
 Celluloid 
 
 Clav pipe 
 
 Collars, linen , 
 
 Copper wire 
 
 Cottons 
 
 Cream of tartar 
 
 Cresin , 
 
 Dry goods, not specified 
 
 Drugs, not specified 
 
 Electric fixtures 
 
 Fire-works 
 
 Gas-fixtures 
 
 Ginseng 
 
 Glassware 
 
 Headl-ights for locomotives 
 
 Hoofs and fertilizers 
 
 Iron and steel : 
 
 Castings 
 
 Fire-arms.... 
 
 Hardware 
 
 Locomotive springs 
 
 Machinery, not specified 
 
 Printing-presses 
 
 Scales 
 
 Type-writers 
 
 Wire rope 
 
 Weight. 
 
 Pounds. 
 40 
 310 
 
 40,588 
 
 4,097 
 
 4.140 
 
 3,162 
 
 300 
 
 1,255 
 
 2.861 
 
 534 
 
 10, 070 
 
 , 756. 504 
 
 821 
 
 564 
 
 11, 401 
 
 8,080 
 
 106,451 
 
 1.400 
 
 2,110 
 
 39,933 
 
 lOO 
 
 450 
 
 182,780 
 
 9,762 
 
 361 
 
 12,411 
 
 470 
 
 328,938 
 
 1,819 
 
 3,663 
 
 200 
 
 20,040 
 
 Articles. 
 
 Lamps.... 
 
 Leather, belting 
 
 Mica 
 
 Milk, condensed 
 
 Mercliandise, not specified 
 
 Missionary goods 
 
 Musical instruments: 
 
 Organs 
 
 Pianos 
 
 Oils, lubricating 
 
 Oils and paints 
 
 Paper 
 
 Pencils, of lead 
 
 Personal effects 
 
 Phonographs 
 
 Photographic goods 
 
 Pictures 
 
 Sulphur. 
 
 Silk, raw 
 
 Skates, roller 
 
 Tea 
 
 Telegraphic wire 
 
 Tobacco 
 
 Cigarettes 
 
 Tinware 
 
 Varnish 
 
 Wood manufactures: 
 
 Boats 
 
 One show-case 
 
 Wax-candle &tock ».. 
 
 Total 
 
 Weight. 
 
 Pounds. 
 
 410 
 
 1,713 
 
 65 
 
 1,896 
 
 5,466 
 
 70,460 
 
 2,720 
 
 1,050 
 
 18, 016 
 
 1,150 
 
 100 
 
 880 
 
 12, 085 
 
 2,100 
 
 714 
 
 110 
 
 274 
 
 2,602 
 
 37,700 
 
 480 
 
 3,420 
 
 753 
 
 3,792 
 
 1,531 
 
 1,754 
 
 2,340 
 
 (*) 
 
 7,788 
 
 12, 834, 901 
 
 • 2fo weight given. 
 
 
 
 i .'.>*;• 
 
 -t ■ I ■ - , ; - 
 
 \ . - 1 ; ■ .f • 
 
666 
 
 TRANSPORTATION INTERESTS OP 
 
 No. 61. — Statement ahoiring the kindB and weights of commodities ivijwrted into the United 
 States through British Columbia, via the Canattian Vacifiv Hail way, from China and 
 Japan during the calendar year i8ti6, and the eleven months ending November 30, 18dl). 
 
 [From official reports of the United States inspector of cnatoms at Vancouver, British Columbia.] 
 
 Commodities. 
 
 Tea 
 
 nice 
 
 BawsUk 
 
 Curios 
 
 Mftttinz 
 
 Straw braid 
 
 Flax fiber 
 
 Paper ware 
 
 Silk waste 
 
 Fire-worlts 
 
 Silk goods 
 
 Japan ware 
 
 Personal effects 
 
 1888. 
 
 Pound$. 
 
 14, 687, 627 
 
 216,385 
 
 560,591 
 
 140, 374 
 
 4,030 
 
 180 
 
 Eleven 
 
 months of 
 
 1889. 
 
 Ponndt. 
 
 8, 600, 550 
 
 3,461,382 
 
 790, 791 
 
 361, 277 
 
 305, 912 
 
 100,555 
 
 83,370 
 
 37, 610 
 
 27,920 
 
 16,777 
 
 10,391 
 
 7,387 
 
 7,350 
 
 Commodities. 
 
 Bamboo 
 
 Silk tloss 
 
 Porcelain 
 
 Animal skins 
 
 Art Koods 
 
 Groceries 
 
 Lily bulbs 
 
 Ivories 
 
 Merchandise (not other- 
 wise described) 
 
 Total. 
 
 1888. 
 
 Pounds. 
 
 10,400 
 
 167,040 
 
 19,250 
 
 180 
 
 1, 065, 370 
 
 Eleven 
 
 months of 
 
 1889. 
 
 Pounds. 
 
 6,420 
 
 3,902 
 
 748 
 
 530 
 
 160 
 
 644.411 
 
 16,877,427 14,467,533 
 
 Theasurt Dspartmkmt, Bubrau of Statistics, 
 
 December 27, 1889. 
 
 8. 6. Brock. 
 Chi^fcif Bureau. 
 
 The quantity of tea imported by this route during the year ended 
 June 30, 1889, constituted 20 per cent, of the total imports of tea 
 into the United States during that year. 
 
 The precise question which confronts Congress and the country is : 
 Shall a foreign railroad, built by a foreign government, and a subsidized 
 British steamer line, established in connection with that railroad for 
 commercial and political purposes inimical to the United States, be per- 
 mitted to divert American commerce from American vessels, American 
 sea-ports and American transportation lines, and if not, what measures 
 shall be adopted for the i)rotectiou of these American interests ? 
 
 CANADIAN DISCRIMINATIONS IN THE MATTER OP ENTRANCE AND 
 
 CLEARANCE FEES. 
 
 Almost all the commercial nations on the globe. Great Uritain in- 
 cluded, now allow American vessels to enter their ports from all foreign 
 ports upon the same terms, as to duties of tonnage or i jort, as are 
 levied upon their own vessels entering from foreign ports. In other 
 words, no nation discriminates against the vessels of another in the mat- 
 ter of duties of tonnage or impost. This arrangement of maritime re- 
 ciprocity in its general application is not based upon treaty stipula- 
 tions, but upon reciprocal statutory provisions of a general or special 
 nature. Such legislation was, I think, initiated by the United States 
 in our act of May 24, 1828. But notwithstanding the fact that this 
 reciprocal arrangement now characterizes the maritime intercourse of 
 the civilized globe, and the fact that Canadian vessels are allowed to 
 enter at ports of the United States upon the same terms as to tonnage 
 duty and entrance and clearance fees as are charged American vessels, 
 Canada charges American vessels arriving from American ports an 
 entrance fee of 50 cents and a clearance fee of 50 cents, making $1 
 for every visit to a Canadian port, whereas no entrance or clearance fee 
 whatever is imposed upon Canadian vessels having a license issued by 
 the Canadian authorities, and the Commissioner of Navigation of the 
 United States informs me that '*it is presumed that the license is ob- 
 tained by such vessels, practically, in every case." . 
 
; % » -. . •- ' .T ' 
 
 THE UNITED STATES AND CANADA. 
 
 GG't 
 
 This, in dollars and cents, is comparativelj' a small matter to the ', 
 country at larjje, but it serves to illustrate the general fact that all 
 along the line, from the banks of Newfoundland to the island of Van- 
 couver, this aggressive Canadian Government leaves no chance of en- 
 croachment upon American commerce and no loop-hole of advantage 
 for Canadian vessels or Canadian trade which it does not improve by 
 an unfair discrimination of some sort in favor of Canadian interests. 
 
 In passing I would observe that the United States does not allow 
 Canadian vessels to engage in trade Iwjtween American ports, and that 
 Canada does not allow American vessels to engage in trade between 
 Canadian ports. This is and always has been the case. Each country 
 absolutely protects its own coastwise or domestic carrying trade 
 against foreign competition. 
 
 CANADIAN VIOLATIONS OP THE TERMS OF THE TREATY OF WASHING- 
 TON AND OF THE OBLIGATIONS OF THE TRANSIT TRADE. 
 
 A flagrant and most absurd violation of a treaty stipulation between 
 the United States and Great Britain was brought to the attention of 
 the House of Kepresentatives on the 4th of January, 1888, in the form 
 of a resolution submitted by the Hon. Nelson Dingley, jr., ofMaine. 
 During the three preceding j-ears, through the device of an '* order in 
 council,'^ a rebate of 18 cents per ton had been allowed out of the total 
 toll of 20 cents per ton on grain of all sorts passing through the Wel- 
 land and St. Lawrence Canals, if shipped to Montreal. This constitutes 
 a premium of 18 cents a ton offered by the Canadian Government in 
 favor of the diversion of American commerce from American seaports 
 and American transportation lines. An officer of the revenue depart- 
 ment of Canada has innocently confessed that *^the object of the Do- 
 minion Government in promulgating this order was to encourage trade 
 over the St. Lawrence route instead of allowing it to go to American 
 ports." 
 
 On the 16th of Jjinuary, 1888, Mr. Dingley showed that this discrimina- 
 tion was clearly in violation of Art. XXV^II of the treaty of Washing- 
 ton. It also constitutes a most flagrant and manifest violation of the 
 reciprocal relations under which the '* transit trade" exists. The life 
 of that arrangement subsists in an entire abstinence from any sort of 
 discrimination in favor of the cars, the vessels, or the ports of either 
 country. When the two countries shall attempt to vie with each other 
 by discriminations in favor of their ow i cars, or vessels, or ports, the 
 whole transit trade, with all its conditions of mutual benefit, will be 
 wiped out. * 
 
 It was hoped that the Dominion Government would have recognized 
 the expediency, if not the justice, of receding from this manifest breach of 
 treaty obligation ; but this has not been done. On the 20th of April, 1888, 
 the offensive discriminating order was renewed. The Dominion Govern- 
 ment seemed to be alarmed, and delayed the order about a month, un- 
 til the absorbing issues of our approaching Presidential campaign had 
 oalled the attention of Congress and the country away from Canada. 
 But again, on the 18th of March, 1889, the discriminating order was 
 issued by an order of council for the season of navigation of 1889. 
 Last year there was no awakened public sentiment to be feared in this 
 country, and the order was issued at an unusually early date. 
 
 It is observed that this violation of the provisions of the treaty of 
 W^ashington, and of the conditions under which the transit trade ex- 
 ists, is not committed through an act of Parliament, but by the sly and 
 
668 TRANSPORTATION INTERESTS OP 
 
 facile expedient of an annnal "order in council,'' a method of wrong- 
 dolDg for which Charles I, King of England, was adjudged a tyrant^ 
 and for which he at once lost his crown and head. 
 
 In responding to this indefensible discrimination against American 
 commerce, the Government of the United States ought at once to im- 
 pose a tonnage of at least 10 cents per ton on the gross tonnage of all 
 Canadian vessels passing through the canal at Sault Ste. Marie, the 
 rapids in the strait which connects the navigation of Lake Superior 
 with that of Lake Huron. This canal, with its locks 515 feet long and 
 80 feet wide, was constructed at a cost of about $4,000,000, and is now 
 owned and operated by the Government of the United States. Both 
 American and Canadian vessels are allowed to pass through Sault Ste. 
 Marie Canal free of tolls. That the United States has full power to 
 order such discriminating tax upon Canadian vessels will be readily 
 seen by examining Article XXVII of the treaty oi Washington, con- 
 cluded July 4, 1871. At that time the canal belonged to the State of 
 Michigan, and it was not transferred to the United States until June 
 5, 1881. 
 
 There are also other appropriate and effective means of retaliation 
 upon Canada for this unjust discrimination against American interests, 
 which will readily suggest themselves to the legislative mind. 
 
 THE CANADIAN REFUSAL TO RECIPROCATE IN THE MATTER OF Aip- 
 
 ING VESSELS IN DISTRESS. 
 
 On the 4th of February, 1888, the late Hon. Newton W. Nutting, of 
 New York, brought to the attention of the House of Kepresentativea 
 the fact that the Dominion Government refuses to accept the offer 
 made by the United States by act of June 19, 1878, to allow Canadian 
 wrecking vessels and machinery to assist Canadian vessels wrecked 
 in American waters, provided a like privilege is extended to American 
 wrecking vessels and machinery in Canadian waters. 
 
 This matter has time and again been brought to the attention of the 
 Dominion Government, and the subject has several times been discussed 
 in Parliament. But the political influence of two or three Canadian 
 wrecking companies has been strong enough to prevent the Dominion 
 Government from accepting the terms of our proffered reciprocity^ 
 although the refusal has already resulted in Isss of life. But this re- 
 fusal to reciprocate, in a cause which appeals to the humane impulses 
 of mankind, is perfectly in keeping with the refusal of the Canadian 
 Government to allow American fishing vessels the common privilege of 
 seeking refuge in her ports in time of storm, and for replenishment 
 and necessary repairs. 
 
 AN ATTEMPTED VIOLATION OF THE RECIPROCAL CHARACTER OF THE 
 
 TRANSIT TRADE. 
 
 The grasping and unfriendly disposition of the Canadian Govern- 
 ment toward the United States was strikingly illustrated by the 
 attempted refusal of the Canadian authorities to allow grain produced 
 in the province of Manitoba to be shipped "in bond" from one point in 
 Canada to another point in Canada over American railroads. This took 
 place upon the completion of the Canadian Pacific, early in the year 
 1886. The movement of several million bushels of grain was thus for 
 a time restrained. This was a flagrant violation of the privileges of 
 the "transit trade," under which reciprocal arrangement the railroads 
 
i^ST^^^^-r ■'/■''- i^t ■j'\.-'}\ : ,f :';••*•-■'- v'^-.-J^^^Vi'T-' 
 
 THE UNITED STATES AND CANADA. 669 
 
 of Canada have profited ten times as mach as the railroads of the 
 United States. The ^'transit trade" has also been of enormous advan- 
 tage to the commercial and industrial interests of Canada. The refusal 
 of the Dominion Government to allow grain to be transported **in bond" 
 over American railroads was not openly announced, but it was carried 
 on surreptitiously. 
 
 The Ottawa authorities declared that no instructions had been issued 
 to the officials in Manitoba to prevent the traffic, and the customs offi- 
 cials in Manitoba declared that no instructions had been issued to them 
 whereby they could issue the necessary certificates allowing the move- 
 ment of g^in from one point in Canada to another point in Canada over 
 an American line. The treaty of Washington, concluded May 8, 1871, 
 bore the first marks of this scheme of refusing to be bound by the re- 
 ciprocal conditions of the transit trade. The words ** to other places in 
 the United States," near the end of the second paragraph of article 29, 
 grant to Canadian railroads the right to convey goods from one point 
 in the United States to another point in the United States without pay- 
 ment of duty, whereas there are no corresponding words in the first para- 
 graph of the article referred to, which grant a reciprocal privilege to the 
 railroads of this country. The Canadian Pacific seemed to be trying 
 the experiment of taking advantage of this omission, which was either 
 the result of a blunder or of a fraud. But the gathering storm of indig- 
 nation convinced the Canadians that the whole transit trade might be 
 endangered by their refusal to observe the obligations of its reciprocal 
 character and they prudently withdrew their covert opposition. 
 
 I have presented this case merely as a further illustration of the char- 
 acter of the Dominion Government and to show that the people of 
 Canada carry no friendship into their trade with the United States. 
 
 ACTION OF THE COMMERCIAL AND INDUSTRIAL BODIES OF THE 
 PACIFIC COAST IN REGARD TO CANADIAN PACIFIC RAILWAY EN- 
 CROACHMENT. 
 
 The people of the Pacific coast at last appear to be awake to the 
 dangers of Pacific Eailway encroachment. A resolution was unani- 
 mously adopted by the Chamber of Commerce of San Francisco, on the 
 23d of July last, inviting commercial and industrial bodies of the 
 Pacific coast to meet in conference at San Francisco for the purpose of 
 considering various subjects of interest, but particularly the assault 
 made upon the maritime, commercial, and transportation interests of 
 that section of the country through the enormous subventions granted 
 by the Canadian Government to the Pacific Eailway, and the subsidies 
 granted by the Canadian and British Governmentis to ocean steam 
 lines, which are threatening the entire destruction of American steam 
 navigation on the Pacific Ocean, and the diversion of trade from Pacific 
 Coast ports. 
 
 That conference was held at San Francisco on the 29th and 30th of 
 July last. Referring to the whole scheme of British and Canadian 
 subvention the report of the conference says : " With such special ad- 
 vantages the Canadian Pacific can afford to quote rates which must 
 drive the American lines out of the China trade, and iufiict an almost 
 irreparable injury upon San Francisco.'' : >,, 
 
 The commercial disaster which thfe merchants and other business men 
 of the Pacific coast so clearly see to be impending, and ?. gainst which 
 they ask the Government of the United States to protect them, is not, 
 as before remarked, the result of a struggle between private enterprise 
 
 ^'. 
 

 670 TRANSPORTATION INTERESTS OF^ / *, 
 
 in the two countries, but is the outcome of a struggle between private 
 enterprise in the United States as against a Canadian railroad corpora- 
 tion which has received aid from the Dominion Government in excess 
 of its cost, and which has been appropriately styled " the Dominion 
 Government on wheels." It is also the outcome of a struggle on the 
 sea between private enterprise and British steamer lines so lightly pro- 
 tected by subsidy as to take the contest out of the arena of competition. 
 
 The commercial and political schemes of Canada and Great Britain 
 are re-enforced by the formidable fortress and naval station erected by 
 the governments of those countries at Esquimault on the island of Van- 
 couver. Certain of the chief officers of the Canadian Pacific have de- 
 clared that these works are merely intended to serve as defenses against 
 a possible naval attack by Eussia. This is manifestly absurd, ami is so 
 regarded by military men. Russia sold Alaska to the United States to 
 avoid the risk of having it captured by Great Britain in the event of 
 war, and to avoid warfare with Great Britain in that part of the world. 
 The only object of the Esquimault works is to hold the commercial van- 
 tage of this protected and aggressive transportation line across !North 
 America, and connecting Liverpool with China and Japan. 
 
 In an editorial notice of the assembling of the commercial conference 
 at San Francisco the Evening Bulletin of that city stated the merits 
 of the whole case in a single paragraph: "Briefly stated, all the ques- 
 tions (to be considered) may be resolved in this one. What power is to 
 have the commercial supremacy on that part of the Pacific Ocean bor- 
 dering the western side of North America?" 
 
 This summarizes the whole case which now demands consideration bv 
 the Fifty-first Congress of the United States, 
 
 I need say nothing further in regard to the San Francisco conference, 
 as copies of its proceedings were sent to each Senator and Representa- 
 tive from the Pacific coast, with the request that they would use every 
 consistent endeavor to place the subject properly before Congress. 
 
 CONCLUSION. 
 
 And now, in conclusion, I beg leave briefly to recapitulate the main 
 facts which I have brought to your notice, and the points which I have 
 attempted to establish. 
 
 The most important feature of our Canadian relationship appears to 
 consist in the fact that the Dominion Government is quite as much an 
 active owner and manager of the traflic interests of canals and rail- 
 roads as a government. Besides, it controls, for political purposes, a 
 railroad across the continent. For the creation of this aggressive sys- 
 tem of transportation the people of Canada have submitted to a burden 
 of debt, as great as that assumed by the people of the United States 
 for the preservation of our union. This Canadian governmental sys- 
 tem of transportation encroaches upon the commercial interests of the 
 United States apparently from the very necessities of its being. 
 
 Besides this, 1 have brought to your attention numerous violations 
 of treaties and encroachments upon the commercial interests of the 
 United States. The British Government has no power whatever tore- 
 dress these wrongs. The Cana<lians refuse to allow that Government 
 any sort of interference in their internal affairs. Canada has no army 
 or navy, and while paying no tribute to Great Britain, imposes duties 
 on British goods for the protection of Canadian industries, but at the 
 same time looks to Great Britain for military protection and uses her 
 
THE UNITED STATES AND CANADA. 
 
 671 
 
 lor the purpose of negotiating treaties, the obligation of which the Do- 
 minion Government is unable or unwilling to observe. 
 
 All along the line from Nova Scotia to British Columbia the United 
 States has an hundred times more power to restrain Canadian encroach- 
 ment upon American interests than can possibly be exercised by Great 
 Britain in any peaceful way. 
 
 Do n^t all these facts and considerations clearly prove the folly of any 
 further attempt to cure the evils connected with our Canadian relation- 
 ship by treaty ? 
 
 Appropriate legislation by Congress, prompted not by any hostile or 
 even vengeful feelings, will, I believe, be found sufficient for the cure 
 of all the evils of which we now justly complain. 
 
 ;