o<_ ' .t an end to a state of things which is hurtful in the highest degree to the best interests of the people of Canada. Have you considered what the result of united harmo- nious action by the two Companies, in P^urope, working for 2 the promotion of the settlement of the North West and the advancement of the interests of Canada generally, would be? I need not repeat in this letter what I so recently said to you as to the way in which an arrangement might be brought about and some measure of justice meted out to investors in the Grand Trunk Railway. My object in writing to-day is to ask that you will let me know what decision you have come to in regard to my representation, if possible on Monday. You will realize doubtless that unless I can secure the intervention of the Government, it will be incumbent upon me, situated as I am, to make an appeal for justice to Parlia- ment in such matiner as constitutional usages permit. Thanking you again for your courtesy in giving me an opportunity of placing the position of matters before you. Believe me always, Yours very truly, J. HICKSON, General Manager. The Right Honorable Sir John A. Macdonld, K.C.B. Ottawa. Ottawa. 4th February, 1884. Dear Mr. Hickson, I have to acknowledge the receipt of your letter of the 2nd instant which reached me yesterday, {Sundi.y). I had no opportunity of laying it before my colleagues until this afternoon at a meeting of Council. I have explained to them generally the various topics that we discussed when I last had the pleasure of seeing you, but they would like to have before them, specifically, for their ma- ture consideration, your suggestions as to the way in which an arrangement might be brought about, so that if any injus- 3 tice has been done or will be done by the proposed relief to the Canadian Pacific Railway Company, to the investors in the Grand Trunk, it may be remedied. Immediately on receiving your suggestions I shall sub- mit them to Council for their earnest consideration. I remain, Dear Mr. Hickson, Yours very truly, JOHN A. MACDONALD Joseph Hickson, Esq., General Manager^ Grand Trunk Railway, Montreal. Montreal, 5th February, 1884. To the Right Honorable Sir John A. Macdojiald, Ottawa. I am instructed by cable message to '' inform the Pre- *'mierofthe Dominion that the Directors of the Grand " Trunk with every wish for the prosperity of the Domi- " iiioii niul the Canadian Paciiic Railway proper, strongly " protest against legislation embracing assistance to hues " acquired by the Syndicate outside of the objects of the " Canadian Pacific Charter, thus using public money for " competition against private enterprise." I have had no response to the suggestions which 1 made to you on Thursday last when I pointed out how all interests might be harmonized and their elforts united to build up and promote the vveliare of the country. J. HICKSON, General Manaser. \Telegrain) Montreal, 6th February, 1884. The Right Hon. Sir John A. Macdonald, Ottawa. Since telegraphing to you yesterday I have received your note of the 4th to which I will reply at the earliest possible moment. (Signed.) JOSEPH HICKSON. GRAND TRUNK RAILWAY OF CANADA, General Manager s Office, Montreal, 7th February. 1884- The Riirht Honorable Sir John A Macdonald, K.C.B. Ottawa. Dkar Sir John, Your letter of the 4th reached me late in the evenin-,^ of the 5th. I .advised you by telegraph yester- cay that I had received and would reply to it at the earliest possible moment. At the interviews which I had the pleasure to have with yourself and the Honorable Minister of Railways last week, I pointed out how seriously the interests of investors in Grand Trunk securities had been and were being crfifectcd by the large subsidies and advances made, and proposed to be made, to the Canadian Pacific Company ; and as I pro- pose to again communicate with you on that matter, I will in this letter simply endeavour to supply the information which you advise me is desired. If it be admitted that some arrangements between the two Companies which, whilst permitting the fullest utilization in the interest of the public of all the lines actually construc- ted and owned or controlled by both, would secure a reason- able amount of protection to invested capital, is desirable, I venture to submit that the ways and means of bringing about such an arrangement would, if the Government supported it, be found. Of course if it is considered that the public interests are promoted by fostering antagonism and rivalry and the con- struction of unnecessary lines— which are not only destructive of existing investments, made in good faith, and from which the country has admittedly derived the very greatest advan- tages, but, as is also admitted, destroy credit and frighten away capital from the country— then any arrangement between the two Companies must necessarily be considered by the Government as undesirable. I rc-pcctfully submit however , in that case, the one contestant should not have all the influence and aid of the Government of the country thrown on its side, and the other be burdened with onerous charj^es rendered necessary by the policy pursued towards its rival. It is no doubt within your recollection that an attempt to harmonize conflicting interests was made last year, and the basis of an agreement was signed of which at that time the President of the Canadian Pacific Company no doubt consi- dered reasonable and equitable. As you may not have any copy of the document I enclose one, and of the correspondence which then took place. (Appendix A.) I ventured to submit at our recent interview that in view of the large advances which the Government proposed to make to the Canadian Pacific Company, the repayment of which can only be secured by the sale of lands or bonds, and , stocks of the Company, any arrangement calculated to in- crease confidence and encourage investments in the country must be considered a matter of public importance, and there- fore of interest to the Government. Since the (subsequently abandoned) agreement of 1883 was made, changes have taken place which would in any aoreement made now have to be considered ; and it is hardly possible within the limits of a letter to define minutely what is now practicable — and more especially so in the absence of exact information as to the position of some of the lines in which the Canadian Pacific Company (or those controlling that Company) are interested. Assuming it to be an object of the Canadian Pacific Company to reach Quebec, and from the speech recently de- livered in the House of Commons by the Honorable Minister of Railways it is to be inferred the Government desire that Company should do so, I venture to suggest : That there might be an exchange of the North Shore line for lines owned by the Canadian Pacific Company (or those controlling that Company) in Ontario,* on terms to be agreed upon, or (under certain definite conditions determin- ed by arbitration. 6 Such exchange of interests to be accompanied by af^ree- ments which, whilst securing the freeest use by the pubh'c of the hues involved, would determine the interest of the two Comi)anies in the results of their operations, and the terms of which agreements, in case it should be necessary, might also be settled by arbitration. There are other plans upon which an arrangement might be brought about. I will mention one. The Ontario and North Shore Lines might be organised as independent Com- panies, owned and o])erated as such in the interest of the Canadian Pacific and Grand Trunk Companies, under agree- ments which would secure full facilities to the public and for the traffic proper of the main lines of both Companies. Un- der such an arrangement some independent authority to settle disputes would be necessary, and it would be requisite to make well defined traffic contracts. Under either of these plans the fullest facilities could be afforded for traffic to and from the Intercolonial road, an unbroken through route via that line and the Canadian Paci- fic from the Atlantic to the Pacific secured, and the making of Halifax the winter port of the Canadian Pacific, to which the Honorable Minister of Railways in hi^; recent speech attached importance, rendered possible of accomplishment. The Grand Trunk Company has been, and is, quite willing to afford all requisite facilities for the trafific of the Canadian Pacific line proper, over its lines East and South of Montreal in both directions, and to practically place such traffic on as favourable terms as its own businsss. I trust it may be convenient to you to let me know the views of the Government upon these suggestions at an e^.rly date. I submit them with a well assured confidence that, dispassionately considered, they will be deemed to be practi- cable and reasonable. I am, Dear Sir John, Yours very faithfully, J. HICK50N, General Manager^ 7 February 1884. The Right Honorable Sir .loHN A. Macdonald, K.C.B., Ottaiva. Sir, I sent you on the oth inst-mt a teleg-raphic message containing the substan.*e of a cabh? message received by me from the Directors of this Company in London ; and in order to guard against any mistake in transmission I deem it desirable to send you a copy ol it. The message was as follows: " Montreal, 5th February 1884. " To the Right Honorable " Sir John A. Macdonald, Ottawa. *' I am instructed by cable message to inform the Pre- *' mier of the Dominion that the Directors of the Grand " Trunk with every wish for the prosperity of the Domi- " nion and the Canadian Pacihc K'ailway proper, strongly '• protest auainst legislation embracing assistance to hues " acquired by the Syndicate outside of the obiects of the " Canadian Pacific charter, thus using public money for " competition against private enterprise." " I have had no response to the suggestions which I " made to you on Thursday last when I pointed out how " all mterests might be harmonized and their eliorts united " to build up and promote the w^elfare of the country. (Signed) J. HICKSON, General Manager." I would have sent you this copy yesterday, but I was prevented by the pressure of other important engagements from doing so. It cannot be a matter of surprise that the Directors of this Company should protest against the course being pursued in connection with the Canadian Pacific Company. 8 If that Company had been incorporated and its trans- actions conducted on the ordinary basis of a joint stock corporation, it is probal)le that the Directors of the Com- pany wouhi not have thonu'ht it necessary to address anv remonstrance to the Grovernmeut, as the usual conditions attaching- to the investment of private capital would have attbrded them all the protection necessary, or that tln^y could expect; but as prac- ticallv the money to build the railway is beiiii»* supplied out of the public revenues, largely increasing the burdens of this Company which is directly and indirectly at pre- sent the largest separate tax-payer within the Dominion, the operations of the Canadian Pacilic Comjxmy assume an entirely dilferent aspect. When in addition the fact is talven into consideration that the funds provided by the Canadian Government, more than sutlicient in themselves to complete the Pacihc line, and the resources of the Ca- nadian Pacific Company obtained through the assistance and credit of the Grovernment, have been and are being diverted to the promotion of lines in direct antagonism to this Company, — lines which are either not needed in the public interest, or where needed, should be supplied entirely by private enterprise, — it becomes a duty incum- bent upon those who have charge of this Company's afiairs to protest against the course bei)ig pursued. It is manifest from a perusal of the papers which have been presented to Parliament, that the money subsidy and the lands granted by the G-overnmei?t to the Canadian Pacific Company, on the basis of the Grovernment and Company's estimate of their value, were sufficient to pay for all the work which has been done up to this time upon the Pacific line pre per, and that no further demands upon the public purse would have been required had the Com- pany's operations been confined to the objects for which it was originally incorporated; and I respectfully submit that, but for the antagonisms which have been created by the course pursued, it would have been periectly practica- 9 h\e to have realized the i^rants made by the Croveniment, and thus to have provided, without any liirther recourse to thi^ public treasury, the amounts estimated to he needed to complete the through route which it has become part of the public policy oithe country to construct. It became my duty when the proposal to affiliate lines, forming no part of the transcontinental line and in noway necessary for the development of its traffic, to the Canadian Pacific, was brought forward, to address a remonstrance to the Government, and to point out the injustice of re- sources supplied by the country for a great national work being diverted to the building up of lines n^t supplying any public want, and in themselves unsound as commer- cial investments. I venture to aaain ref, New Broad Street, " London, EC, Mth April, 1883. " Geo. Stephen, Esq., " President, Canadian Pacific llailway Company. '• Bartholomew House. '• Dear Sir, " I beg tJ acknowledge the receipt of your letter of yesterday, •• which was received at the Grand Trunk Office at 3.10 and was ■' placel in my hands in the country at 5.40 p m. I regret to " find that you are not in a position to carry out the arrangements " which were, as I believed, practically concluded between us, and '• which fiu-med the subject of our joint oablegram of instructions " to tie General ^lanagers of the two Companies in Canada. '• I remain, " Yours truly, (Signed) " M. W. TYLER." 14 APPENDIX B. Grand Trunk Railway of Canada, General Manager e Office, Montreal, 24th April, 1883. To the Right Honorable Sir John A. Macdonald, K.C.B., &c., &c., Ottaiva. Sir, I observe that a petition has been submitted to Parliament on behalf of the Canadian Pacific Railway Company, asking for permission to petition for a private bill authorizing that Company to lease the Credit Valley, Ontario and Quebec, and part of the Atlantic and North- western Railway. It is my duty to lodge with the Government a protest, on behalf of the Grand Trunk Railway of Canada, against any such powers being conceded, for the following reasons : The act respecting the Canadian Pacific Railway Com- pany, assented to on the 15th February, 1881, recites that whereas by the terms and conditions of the admission of British Columbia into union with the Dominion of Canada, the Government of the Dominion had assumed the obligation of causing a railway to be constructed connecting the sea- board of British Columbia with the Canadian Railway system ; therefore, that in conformity with the expressed desire of Parliament a contract had been entered into for the construc- tion of the contemplated railway, and the Government was authorized to perform and carry out its conditions. To accomplish this national work, to which the Dominion was thus pledged. Parliament subsidised the Canadian Pacific Railway Company by granting a bonus of $25,000,000, and making a concession of 25,000,000 acres of land. The Gov- ernment was also authorized to permit the entry, free of duty, IS of all steel rails and other materials rccjuired in the construc- .tion of the railway, Railways on which large national expenditure had already been incurred, were transferred as a gift to the con- tracting Company. Tn further aid of the undertaking, it was provided by agreement that, for twenty years from the date thereof no line of railway should be authorized by the Dominion Parlia- ment to be constructed south of the Canadian Pacific Railway from any point at or near that railway, with certain exceptions, nor to within fifteen miles of latitude 49" ; and further sub stantial aid was given to the undertaking by the provision that the Canadian Pacific Railway, ^nd all its stations, station grounds, workshops, buildings, yards and other property, rolling stock, and capital stock, should be for ever free from taxation by the Dominion, or by any Province hereafter to be established, or by any municipal corporation : — and the lands of the Company in the Northwest Territories, until sold or occupied, were also to be free from taxation for twenty years after the grant thereof from the Crown. The foregoing, and other important concessions, were made in favor of the Canadian Pacific Railway Company, for the purpose of securing the construction of a great national undertaking. The main features of the arrangement made by the Government, and sanctioned by Parliament, were to preserve to the Dominion an important Province, and to provide for the interchange of traffic, both foreign and pro- vincial, by railways situated wholly within Dominion territory, and in the direction of a portion of Canada — the settlement of which had scarcely commenced — and which hitherto pos- sessed no railway accommodation. Parliament, on the ad- vice of the Government, thus brought into existence a Com- pany which has been very recently described by its President as "a purely commercial undertaking, having no ambitious " designs of any kind, and harboring no hostile feelings tc- " wards the Grand Trunk' or any other Canadian Company. *' It was created for the tiur^^osc of opcniiifj the hitherto un- " developed North-west Territories of tlie Dominion of Canada '• for carryin;^ traffic between these territories and tlie " Atlantic seaboard on thi one hand, and the Pacific Ocean " on the other, througli British territory." The (irand Trunk Railway Company recognized the important and national character of the proposed untlertaking^ and, so far back as 1881, volunteered friendly arrangements and facilities, which were, however, rejected, for reasons which were then suspected and which are now openly avowed. Those connected with the Canadian I'acfic, innnediately upon its formation, harbored the design of also constructing, or causing to be constructed, a parallel line to the Grand Trunk through tlie Provinces of Ontario and Ouebcc, a line which 1 am not mistaken in saj'ing you, personally, con- sidered unnecessary. ^ Concealment being no longer regarded necessary, the Company has presented its petition for powers to acquire railways in ciirect rivalry with this Company's system. As- suming the scheme to be matured, the (\anadian Pacific Rail- way Company, in addition to its route via Lake Superior to the Northwest, will also have, in connection with the Ameri- can railway system a complete chain of communication be- tween Montreal and the same north-western points via Chicago, St. Paul and Minneapolis, in connection with the Si. Paul, Minneapolis & Manitoba Railway, the chief share- holders in which Company are shareholders of the Canadian Pacific Railway Company. If the policy of the Company be to provide itself with a second means of communication with the North-west provinces of the Dominion, its obvious in- tention is to divert traffic for the accommodation of which the Dominion Government has laid the country under such onerous obligations. The national objects for which these obligations were incurred will thus not be realized. If it be denied that the object of the Company is to create a rival route to the (national) Canadian Pacific Railway 17 it must be admuicd tfiat the Ontario ^nd Quebec lines are simply promoted with a view of creating competition with the Grand Trunk Railway, and the credit of the national under- taking is being used to promote the private ventures of those who undertook its construction, but have not yet completed their task. The assumption that there is intended a deliberate and organized attack upon the Grand Trunk, in alliance with its American rivals, is obvious, for the reason that combinations have been formed by the Canadian Pacific Railway Company, which place that company in direct alliance with the most bitter opponents of the ^rand Trunk. 'J'hese alliances are intended by the scheme now before Parliament, with appa- rently tne approval of the Government, to be cemented and extended and made more effective in doing damage to the credit of the Grand Trunk Company. That a second competitive line parallelling the Grand Trunk is not required may be evidenced by the fact that the average charges made to the public by the Company have been for many years on a descending scale, until they have reached a point which barely admits of profit ; and it has to be borne in mind that the public are protected most effec- tually against unreasonable charge by the lake and river com- petition, supplemented by a magnificent canal system, through- out the whole length of the railway. The effect of the construction of this competitive system can only be to divide existing trafific with the Grand Trunk. It will not materially increase the business, and in the end the public will not receive any cheaper rates of transportation. Considering that the interests of the i\merican systems of railway lines converge at Buft'alo, and lie in the direction of traffic via the Niagara frontier, it is not conceivable that this system will divert through business over the Canadian Pacific Ontario route, from American channels. It therefore, unless forming part of a through line to the Northwest, com- petitive with the Canadian route, can only have been promo- 18 ted for the purposes of local antagoni ,m with the Grand Trunk, both systems being in dircr^ competition, of the severest character, with the lake and river and canal route. The Canadian Pacific Company was brought into exis- tence for a national object at the expense of the people of the Dominion of Canada, subsidised with $25,000,000 of public money, supplemented by an addition of 25,000,000 acres of productive land, exempted from taxation in perpetuity, and freed from competition tor twenty years. It is now to be made the vehicle, without any relevance or refen ice to the object of its Charter, for carrying on local competitive warfare with the other chief railway system of Canada, the largest tax payer and contributor to the revenue of the country, whence these liberal subsidies are derived : — subsidies so liberal that they have been just recently described by the President of the Company as sufficient to construct the Railway. The Canadian Pacific Company, therefore, created with one object* is to be employed for another, aided by all the strength which can be given it by a powerful Government. The Credit Valley. Ontario and Quebec, and Atlantic and North Western Companies, are not necessary in any sense, to the performance of the duties which have been imposed on the Canadian Pacific Railway Company by the Dominion, and the effect of their acquisition can only be to bring the Government into the position of a direct com- petitor with the investors of British capital in the existing Railway system of the country, at a time when large outlay in improvements is contemplated. The injustice of the course proposed, looking at the sacrifices which have been made by those w^ho found the means wherewith to construct the Grand Trunk system of Railways, which has so largely benefitted the country, must be apparent to every one who \till give the subject one moment's dispassionate consideration. It rests with your Government, supported as they are by an overwhelming majority in Parliament to determine whether 19 a course which is marked by injustice and cannot but prove injurious in the end to the best interests of the Dominion^ shall or shall not be pursued. I have the honor to be, Sir. Your obedient servant, J. HICKSON, General Manager Grand Trunk Railway of Canada, General Manager's Office^ Montreal, 26th April 1883. To The Right Honorable Sir John A. Macdonald. K.C.B. &c., &c.. &c. Ottawa, Sir, I feel it incumbent upon me to again address you upon the subject of my letter dated 24th instant, in consequence of the views expressed by the Honorable Minister of Rail- ways when the second reading of a bill respecting the Cana- dian Pacific Railway Company, was moved on the 24th instant. The Honorable Minister is reported in the press to have said that the Government approved the lease in perpetuity of the Credit Valley and Ontario & Quebec Railways to the Canadian Pacific Company ; that it was of the greatest importance that the North-wx\st should have the advantage of the fullest competition with the great commercial centres of Canada— Montreal, Toronto, Hamilton and other parts of Ontario— and that the Government believed the public interest would be promoted rather than injured by the adop- tion of the proposal contained in the Bill. 20 I ropcctfiilly suhiuil that tlic views expressed by the Honorable Minister are entirely at variance with the past ])olicy of the Government on this question ; and further that the effect of the proposed bill will be to perpetuate the mo- nopoly which has been conceded in the Xorth-west to the Canadian Pacific Company, and further enlari^e the area over which the exclusive privileges ^(ranteti to that Company will extend. By the terms of the comi)act made with the (\inadian Pacific syndic.ite, that Comp.ins' i-; to pc^ssess an absolute nionc^pols", and to hv freed from all comi)etition in the North-west. In significant contrast with that policy, the fullest competition is now rccommentled by the Honor- able Minister of Railways against the Grand Trunk. The Grand Trunk Company is to be excluded from the Xorth- West ; the ('anadian I'acific, — built with the public funds, — is to be encouraged and aided by the Government in coming into the district served by the Grand Trunk, on the osten- sible plea of giving competition to the people of the North- west I would ask how th ' Grand Trunk is to compete for North western business under the circumstances, seeing that the railway from Thunder Bay to Winnipeg, and that from the dividing line at St. Vincent, will be in the hands of the rival Company ; and no other railway access to the territory is to be permitted. This Company has already experienced the disadvan- tages of the existing monopoly, even at a period when no other route is in existence ; and they may w^ell entertain grave apprehension of ultimate exclusion, so far as that can be made possible, by insistence upon discriminating rates over the Canadian Pacific system. Before the requirements of the North-west are known otherwise than by the Grand Trunk experience, and before the Canadian Pacific has opened any communication with that territory, the traffic to be interchanged is, upon the hypothesis of the Honorable Minister, sufficiently large to 21 make it expedient that three competitive routes be provided in order that the fullest competition may be brought into existence ; but the argument cannot be seriously advanced that the object of the present policy is to accomplish any such result. On the contrary it is manifest the effect thereof will be the very opposite of that predicted by the Honorable Minister af Railways. It is well known that the railway from St. Paul to the boundary line is mainl>' owned by gentlemen who are also members of the Canadian Pacific Board. The railway from St. Paul to Chicago is controlled wholly, or to a very lar^e extent, by a great American capi- talist. TLie next link in the chain of communication (the Michigan Central) is presided over and controlled by the same gentleman, and the Michigan Central owns or controls the Canada Southern Railway, which — conne ;:!ng with the line proposed to be leased (the Credit Valley) — already places the American system in Toronto. Upon the completion of the Ontario & Quebec railway^ the effect will be, if the proposed leasing arrangments are permitted, that the whole route from Montreal to Winnipeg will be under the control of the gentlemen referred to, and the Canadian Pacific Railway Board. The two routes thus represented, closely united by the ties already known to exist, will undoubtedly be used to exclude from the North- west all competition byway of the Grand Trunk Railway system ; and I would respectfully ask what competition is likely to be permitted under the circumstances, between the Canadian Pacific Railway proper and the route through the States I have just referred to? The experience of this Company in its relations with American Railway Companies, where the right of indepen- dent action does not exist, is, that it has practically been driven out of competition by being held firmly to a certain scale of rates, whilst the competing and controlling interest has had the power of relaxing tariffs in favor of its own route. 22 The proposed arrangement, therefore, will not have the advantage of affording the fullest competition to the North-west with the great commercial centres of Canada, and I have not the slightest hesitation in stating, as above alleged, that it will, on the contrary tend to perpetuate the existing monopoly. I have already referred in my letter of the 24th instant, to the fact that the proposed leasing arrangements must have the effect of diverting trafific from the through Canadian route. I have now to suggest for your consideration that the proposed introduction of American influence tends to prevent the passage of east bound business through the Dominion at all. The American management, with which the Canadian Pacific has so intimately allied itself, practically controls a great railway system between Boston, New York and Phila- delphia, and Winnipeg ; and the most powerful railway com- bination in America will lose no opportunity or inducement to direct Northwestern traffic over its railways. I would further point out to you that, whatever may be the main object of the proposed leasing arrangements, their effect will certainly be to bring into existence a competitive route to the Grand Trunk throughout Canada, to Detroit, Chicago and the western portion of the American Continent ; and it surely is inconsistent with the policy recognized when the eastern section of this railway was purchased by the Go- vernment, and when it was conditioned that the purchase money should be applied for securing an extension to Chi- cago of this Company's system, that another — mainly foreign — and competing Chicago route, should be so soon aided b\'- Government influence and the public money to the most serious prejudice of this Company. It is more or less generally avowed that Government Railways do not expect commercial results, and though that may not be entirely the case with the Pacific Company, yet it is, according to the views recently expressed by its Presi- dent, so immensely endowed, subsidized, and favored by the 23 Dominion, as to make it an undertaking which, inferentially, need be subject to none of the prudential rules affecting pro- prietorial interests. I would submit on behalf of the proprietary of a Com- pany, the capital of which spent in Canada exceeds the total funded and unfunded debt of the whole Dominion, whether it is just that Government influence and the public revenues of the country should be thus pitted against a private corpo- ration of British capitalists. I further submit that a wrong is being done to this Com- pany, inasmuch as whilst its hands have been tied by the monopoly granted in the North-West, the funds lavished upon a rival will be made use of for the purpose of aggression, in alliance with the most bitter American competitors of the Grand Trunk Company. I have the honor to be, Sir, Your most obedient servant, J. HICKSON, General Manager.