■s% 
 
 .J^.% 
 
 '^^s^. 
 
 .0.;%^ 
 
 a^ 
 
 si""' 
 
 SMAGE EVALUATION 
 TEST TARGET (MT-3) 
 
 
 
 
 # 
 
 L^ 
 
 :/. 
 
 
 6 
 
 !.0 
 
 I.I 
 
 | 50 "^" 
 
 us 
 
 M 
 
 2.2 
 
 1.25 
 
 R 11.6 
 
 
 ^^: 
 
 ^%^ 
 
 '^J" 
 
 ^> 
 
 ^ 
 
 
 ^ 
 
 07* 
 
 Photogmphic 
 
 SdencGS 
 Corporation 
 
 23 WEST MAIN STREET 
 
 WEBSTER, NY. 14580 
 
 (716) B73-4S03 
 
 40^ 
 
 iV 
 
 iV 
 
 \\ 
 
 
 "% 
 
 V 
 
 
 G^^. ^^' 
 
CiHM/ICMH 
 
 Microfiche 
 
 Series. 
 
 CIHM/ICMH 
 Collection de 
 microfiches. 
 
 Canadian Institute for Historical Microreproductions / Institut Canadian da microreproductions historiques 
 
 
Technical and Bibliographic Notes/Notes techniques et bibliographiquea 
 
 The Institute has attempted *o obtain the best 
 original copy available for filming. Fsaturus of this 
 copy whi;;h may be bibliogrrphically unique, 
 which may alter any of the images in the 
 reproduction, or which may significantly change 
 the usual method of filming, are checked below. 
 
 □ Coloured covers/ 
 Couvertuie de couleur 
 
 Covers damaged/ 
 Couverture endommag6e 
 
 Covers restored and/or lai 
 Couverture restaurie et/ou pellicul6e 
 
 Cover tiile mis&ing/ 
 
 Le titre de couverture manque 
 
 Coloured maps/ 
 
 Cartes giographiques en couleur 
 
 Coloured ink (i.e. other than blue 
 
 Encre de couleur (i.e. autre que biaue ou noire) 
 
 I I Covers damaged/ 
 
 I I Covers restored and/or laminated/ 
 
 I I Cover tiile mis&ing/ 
 
 I ] Coloured maps/ 
 
 I I Coloured ink (i.e. other than blue or black)/ 
 
 I I Coloured plates and/or illustrations/ 
 
 □ 
 
 D 
 
 D 
 
 Planches et/ou illustrations en couleur 
 
 Bound with other material/ 
 Relii avec d'autres documents 
 
 Tight binding may cause shadows or distortion 
 along iniericr margin/ 
 
 La reliure serrie peut causer de I'ombre ou de la 
 distortion le long de la marge intArieure- 
 
 Blank leaves added during restoration may 
 appear w:thin the text. Whenever possible, these 
 have been omitted from filming/ 
 a se peut que certeines psges blanches ajoutdes 
 rors d'une rastauration npparaissent dans le texte, 
 mais, lorsque cela dtait possible, ces pages n'ont 
 pas itA film6es. 
 
 Additional comments:/ 
 Commentaires suppl6nentaires: 
 
 L'Institut a microfilm6 ie meilleur exempiaire 
 qu'il lui a 6t6 possible de se procurer. Les details 
 de cet exempiaire qu! sont peut-Atre uniques du 
 point de vue bibliographique, qui peuvent modifier 
 une image reproduite, ou qui peuvent exiger une 
 modificetion dans la methods normals de fiimage 
 sont indiqu6a ci-dessous. 
 
 I I Coloured pages/ 
 
 Pages de couleur 
 
 Pages damaged/ 
 Pages endommagies 
 
 Pages restored and/oi 
 
 Pages restaurdes et/ou pelliculdes 
 
 Pages discoloured, stainod or fcxei 
 Pages ddcoior^es, tachet^es ou piquies 
 
 Pages detached/ 
 Pages ddtach^es 
 
 Showthrough> 
 Transparence 
 
 Quality of prir 
 
 Qualiti indgalo de I'impression 
 
 Includes supplementary materii 
 Comprend du materiel supplimentaire 
 
 Only edition available/ 
 Seule Edition disponible 
 
 I I Pages damaged/ 
 
 I I Pages restored and/or laminated/ 
 
 I I Pages discoloured, stainod or foxed/ 
 
 r n Pages detached/ 
 
 I 1 Showthrough/ 
 
 I I Quality of print varies/ 
 
 I I Includes supplementary material/ 
 
 I I Only edition available/ 
 
 n 
 
 Pages wholly or partially obscured by errata 
 slips, tissues, etc., have been ref limed to 
 ensure the best possible image/ 
 Les pages totalement ou partiellement 
 obscurcies par un feuiliet d'errata, une pelure, 
 etc., ont 6tik filmAes A nouveau de 'fa9on A 
 obtenir la meilleure image possible. 
 
 This item is filmed at the reduction ratio checked below/ 
 
 Ce document est film6 au taux de reduction indiquA ci-dassous. 
 
 10X MX 18X 22X 
 
 / 
 
 26X 
 
 aox 
 
 12X 
 
 16X 
 
 20X 
 
 24X 
 
 28X 
 
 32X 
 
The copy filmed here has been reproduced thanks 
 to the generosity of: 
 
 Library of the Public 
 Archives of Canada 
 
 Trie images appearing (-.are are the best quality 
 possible considering the condition and legibility 
 of the original copy and in Iceeping with the 
 filming contract specifications. 
 
 Original copies in printed paper covers are filmed 
 beginning with the front cover and ending on 
 the last page with a printed or illustrated impres- 
 sion, or the back cover when appropriate. All 
 other original copies are filmed beginning on the 
 first page with a printed or illustrated impres- 
 sion, and ending on the last page with a printed 
 or illustrated impression. 
 
 The last recorded frame on each microfiche 
 shall contain the synnbol — »-tmeaning "CON- 
 TINUED"), or the symbol V (meaning '^ND"), 
 whichever applies. 
 
 IVIaps, plates, charts, etc., may be filmed at 
 different reduction ratios. Those too large to be 
 entirely iucluded in one exposure are filmed 
 beginning in the upper left hand corner, left to 
 right and top to bottom, cs many frames as 
 required. The following diagrams illustrate the 
 method: 
 
 L'exemplaire film6 fut reproduit grice d la 
 g6n6rosit6 de: 
 
 La bibiiothdque des Archives 
 publiques du Canada 
 
 Les images suivantes ont 6t6 reproduites even le 
 plus grand suin, compte tenu de la condition (it 
 de la n«ttet6 de I'exemplaire filmd, et en 
 conformity avec les conditions du contrat de 
 filmage. 
 
 Les exempiaires originaux dont la couverture en 
 papier est imprim6e sort f'lmds en commen^ant 
 par le premier plat et en terminani: soit par la 
 dernidre page qui comporta une empreinte 
 d'impression ou d'illustration, soit par le second 
 plat, selon ie cas. Tous les autres exempiaires 
 originaux sont filmds en commenpant par la 
 premiere page qui comporta une empreinte 
 d'impression ou d'illustration et en terminant par 
 la dernidre page qui comporte une telle 
 empreinte. 
 
 Un des symboles suivants apparaitra sur la 
 dernidre image de cheque microfiche, selon 'e 
 cas: le symbols -h»- ii,ignifie "A SUIVRE", le 
 symbols V signifie "FIN". 
 
 Les cartes, planches, tableaMx, etc., peuvent dtre 
 film6s d des icaux de r6ductron diffdrents. 
 Lorsque le document est trop grand pour dtre 
 reproduit en un seul clich6, il est film6 d partir 
 de Tangle sup^rieur gauche, do gauchfi d droite, 
 et de haut en bas, en prenant le nombre 
 d'images n6cessaire. Les diagrammes suivants 
 illustrent la mdthode. 
 
 1 2 3 
 
 
 1 
 
 2 
 
 3 
 
 
 4 
 
 5 
 
 6 
 
4S 
 
\CU<, }^(> / t Z> cy ^ j 
 
 I 
 
 I 
 
 S 
 
 THE R ULWAY QUESTION IN CANADA. 
 
 i 
 
 
 i 
 
Tfr 
 
 1 
 
 rufr- ■-■ r'..p^^j^,««.Jr7*«<"W*(»^5rT'-/jr: 
 
 
 I* 
 
 '\ 
 
u 
 
 THE 
 
 RAILWAY QUESTION 
 
 IN CANADA 
 
 »: . 
 
 
 WITH AN EXAMINATION OP 
 
 THE RAILWAY LAW OF IOWA 
 
 k^ 
 
 t 
 
 I I 
 
 BY 
 
 J. S. WILLISON. 
 
 i^» 
 
mmm 
 
 ■A 
 
 I 
 
 k 
 
 TORONTO : 
 WARWICK BRO'S & RUTTER, 
 Printbrs. 
 
 
^mm 
 
 mmmmm 
 
 m 
 
 ..../' 
 
 I 
 
 INTRODUCTORY NOTE. 
 
 The pari of this pamphlet dealing with freight rates 
 in the west is reproduced from a letter written after a 
 visit to Manitoba, the Territories and British Columbia 
 a year and a half ago. There may have been recent 
 reductions in these rates, but the facts and figures I 
 have used will at least explain the strong feeling of 
 antagonism to the Canadian Pacific Railway which finds 
 voice in Western Canada. Then one doubts if the 
 discriminations have been remedied, and heavy local 
 charges remain. The section of the pamphlet dealing 
 with the railway laws of Iowa, and the practical work- 
 ing of these laws, is little more than a condensation 
 of Dr. Dixon's admirable work, *• State Railroad Con- 
 trol," one of the most useful, lucid and instructive of 
 the many books devoted to the railway question that 
 have appeared in the United States. 
 
 J. S. W. 
 Toronto, April, i8g'^. 
 
 . I 
 
 i. 
 
 ■'>', 
 
 i 
 
 'I 
 
 fi 
 
s. ,> 
 
 % 
 
 i«/ 
 
 W i 
 
 i 
 
^mmm 
 
 mmmmfm 
 
 S. .1 
 
 ♦ 
 
 THE RAILWAY QUESTION. 
 
 I. 
 
 \¥7E, in Canada, have not yet recognized the magni- 
 ▼ ▼ tude of the railway question and perhaps have 
 not quite conceded the failure of the Railway Committee 
 of the Privy Council as an instrument for the regulation 
 of railway charges. The truth is however, that the trans- 
 portation agency is one of the mostabsolute of commercial 
 forces in its effects upon the welfare of individuals and 
 communities, that the Canadian railways are under no 
 adequate measure of public control, and that the Railway 
 Committtee has acted as the mere register of the decrees 
 of the carrying corporations. In determining questions 
 touching right of way, terminal differences and junction 
 crossings the committee has shown some capacity for 
 usefulness ; but in regulating rates, in preventing discri- 
 minations, in protecting the individual shipper, or the 
 individual community against the calculated injustice or 
 the insiduous aggression of railway managers it is inert 
 and impotent, a farce and a failure. It is therefore of 
 the rirst importance that the government should make 
 the Railway Committee effective for the purposes for 
 which it was designed, or that parliament should devise 
 new machinery for the regulation of railway charges and 
 the control of the carrying corporations. It is not 
 necessary to argue for the right and authority of Parlia- 
 ment to regulate common carriers. The railway is not 
 so much a private enterprise as a creation of the state 
 
 ) 
 
 f 
 
 ■■I 
 
 J, 
 
 \ 
 
 i't 
 
8 
 
 THE RAILWAY QUESTION. 
 
 holding public franchises, and the right to control and 
 regulate is properly and irrevocably established even in 
 the case of roads that have not received land grants or 
 money subsidies. The railway law of Canada declares 
 that under the same circumstances all tolls shall be 
 charged equally to all persons with no reduction or ad- 
 vance directly or indirectly in favor of or against any 
 particular company or person travelling upon or using 
 the railway ; the law prohibits any secret special rate, 
 rebate, drawback or concession, and any company, on 
 demand of any person, shall make known to him any 
 such arrangement with anyone ; the law prohibits 
 discrimination between localities except where competi- 
 tion by water or rail may afford a justification ; the law 
 provides that no tolls shall be levitd before being 
 approved by the Governor-in-Council, and that tolls are 
 subject to revision ; it provides that all rates are to 
 be printed and posted up in a conspicuous position in 
 every place where the tolls are to be collected ; 
 that a printed copy of so much of any by-law, 
 rule or regulation as affects any person other than the 
 company and its employes shall be posted in a con- 
 spicuous place in every station ; and finally, that 
 except as to traffic to or from the United States the 
 company shall conform to any uniform classification of 
 freight which the Gcvernor-in-Council prescribes. Over 
 the main line c^ the Canadian Pacific Railway the right 
 of public control is limited by the clause which prohibits 
 reduction of rates until the earnings net ten per cent, on 
 the capital invested but even here while we have not the 
 absolute right to reduce we have probably the right to 
 
 i 
 
 I 
 
THE RAILWAY QUESTION. 
 
 prevent discriminations between individual shippers and 
 rival communities, and therefore in the main the ques- 
 tion we have to consider is the enforcement of the law 
 now on the statute hooks rather than the enactment of 
 new legislation or the further assertion of the authority 
 of Parliament over the carrying corporations. 
 
 i H 
 
 Id 
 
 II. 
 
 ..., 
 
 
 We have put over $260,000,000 into railways and 
 canals. The Intercolonial Railway, which cost nearly 
 $50,000,000, and the canals, which cost $65,000,000, are 
 owned by the Government. The public outlay on the 
 Canadian Pacific is put at over $6o,ooo,ooc. The 
 bonuses to the Grand Trunk sjstern amount to $25,- 
 000,000, and $100,000,000 of the private capital of 
 British investors is sunk in this enlierprise. But from all 
 the provinces, i:nd particularly from Western Canada, 
 there are still dci.iands for huge expenditures Ow railway 
 projects. The situation therefore requires careful and 
 patriotic handling. It may be that for some years to 
 come we must contrnue to aid strictly colonization roads, 
 but it is doubtfi 1 if in older Canada we have not built 
 railways in excess of the needs of the community. At 
 any rate, outside of the new districts we can leave the 
 construction of railways to private enterprise, and relieve 
 the lobby of parliament of the intrusive presence, and the 
 treasury of the exhausting drain of the army of railway 
 promoters who for some years have constituted a sort of 
 third chamber at Ottawa, and have been hardly less 
 active at most of the provincial capitals. 
 
 I ^} 
 
 1 H 
 
 4 I 
 
 I I 
 
wm 
 
 lO 
 
 i\ 
 
 
 THE RAILWAY QUESTION. 
 III. 
 
 There is a common impression in this country that 
 the United States has been far less generous or far more 
 thrifty in its dealing's with railway promoters. But 
 this notion wili not bear investigation. After 1830 the 
 policy of the United States tended to the view that under 
 a strict interpretation of the constitution the Federal 
 Government could not construct the highways and make 
 the canals for the people. The States, therefore, rushed 
 into a vigorous policy of internal improvements, and in 
 most cases the bankruptcy of the States resulted. Up 
 to 1840 public sentiment favored the ownership and 
 management of highways by Government. After 184 >, 
 we are told, **a sentiment adverse to public ownership 
 and control grew with great rapidity." " In the main this 
 change of sentiment is ascribed to the failure of the 
 policy of internal improvement by the States, and, it is 
 fairly argued, proves nothin is to the wisdom of public 
 operation of railways. Dr. Adams tells us that there is 
 no means of determining the aggregate of county and 
 municipal bonds which have been issued in favor of rail- 
 way corporations in the United States. " It is known, 
 however,' he says, '♦ that in 1870 there were outstanding, 
 $185,000,000 worth of such bonds. Nor is it possible to 
 determine the proceeds of land granted to railroads 
 directly or indirectly by the Federal Government ; but it 
 is known that two hundred and fifteen millions of acres 
 of land were so granted, of which one hundred and fifty- 
 three millions have been actuallv transferred to these 
 
 ii Dr. >dam», in introduction to State Kailfo»a Control, 
 
 4 
 
^m 
 
 mmm 
 
 ^r 
 
 wmm 
 
 THE RAILWAY QUESTION. 
 
 II 
 
 4 
 
 corporations. The value of subscriptions in the form of 
 rights cf way, purchase of stock (when it was known 
 that the purchase was a g-ift), and the like, cannot of 
 course be accurately estimated. Taken all together, 
 however, the extent of such assistance rendered by the 
 public to corporations in the building of railroads has 
 been enormous." " 
 
 IV. 
 
 For example, Minnesota gave to her pioneer railway, 
 ten sections of land to each rnile of road, a loan of 
 $5,000,000 of State-issued bonds, immunity of its lands 
 frcm taxation, and free right of v/ay through the public 
 lands. Then Congress turned over the swamp lands to 
 the State, and the State turned over the lands to the rail- 
 ways. Individuals donated right of way through their 
 private lands. Free SLition grounds in the towns, and 
 grounds for shops were provided. Bonuses were voted 
 by the towns and counties. Accor ling to Mr. A. B. 
 Stickney many, and perhaps most, of the charters under 
 which the roads were built provided that "the beard of 
 directors should have the right to regulate their tolls," 
 and that the company should have the right ** to demand 
 and receive such sum or sums of money, for freight of 
 persons ci property, as they should from time to time 
 think reasonable." He says :—" Construing these 
 charter provisions as a contract with the State, the 
 companies at first denied that they were common car- 
 riers, or subject to the duties and restrictions imposed 
 upon such carriers by the common law. Acting upon 
 
 a State Railroad Control, page 7. 
 
 I "ml 
 
 i(i 
 
 f if 
 
 5 ) 
 
 
 r ,■ ' 
 
T 
 
 12 
 
 THE RAILWAY QUESTION. 
 
 these premises, and, as they supposed, in the interests 
 of their companies, the managers claimed the right to 
 charge such rates for transporting both persons and 
 property as they deemed for the best interests of their 
 respective companies, regardless of their reasonableness 
 or equality. They claimed and exercised the right to 
 grant monopolies in business to favored mdividuals and 
 firms, for example, one man or firm would be granted 
 the exclusive privilege of buying all the wheat or corn, 
 or selling all the fuel, wood and coal ; and by the 
 exercise of their power to discriminate in regard to rates 
 and accommodations they were enabled to enforce these 
 gran:s of exclusive privileges with a certainty never 
 before pertaining to such grants. They assumed the 
 right to dictate to the communities in what market town 
 they should sell their produce and buy tlieir supplies. Thus 
 a community located forty miles distant from St. Paul, 
 and four hundred miles distant from Chicago, was com- 
 pelled to trade in Chicago, so as to give the railway the 
 * long haul * ; and in order to enforce this dictation they 
 did not hesitate to make the rates for forty miles as 
 much as or more than for four hundred. They believed 
 they had the right so to make their schedule of rates as 
 to determine which of the villages on their line should 
 become centres of trade beyond their local territory. 
 They also varied their schedules in such a way that they 
 discriminated in regard to rates between individual mer- 
 chants, manufacturers, miners and o^^^her business men, 
 so as practically to determine which should become 
 prosperous and wealthy and which should not. This 
 class of discrimination was all the more pernicious 
 
 I' 
 
 
 '^:: 
 
 h 
 
^m^ 
 
 f^imr 
 
 THE RAILWAY QUESTION. 
 
 13 
 
 because done in secret. " " And again, "to secure the 
 erection of elevators, which at the time seemed so 
 important for the interests of both the companies and 
 the people, but which in a very short time proved other- 
 wise, the companies agreed to collect for the owner of 
 the elevator a certain toll upon every bushel of wheat 
 shipped at that station, even though it did not go 
 through the elevator at all ; and sometimes by agreeing 
 to pay a rebate on all his shipments, which would be 
 sufficient to protect him against all fluctuations in the 
 market, and also would prevent any other buyer doing 
 business at his station except at a loss. In order to pay 
 such rebates and still get a fair price for hauling, it is 
 evident that the companies had to make the open rates, 
 which were free to all, unrcaconably high"* Out of 
 these conditions grew the stringent elevator laws of 
 some of the wheat growing States, the drastic and too 
 often impracticable Granger legislation against the rail- 
 ways, and later the Advisory State Commission, the 
 State Commission with Power, and the Inter-state com- 
 merce law. 
 
 V 
 
 1 \ 
 
 w 
 
 V. 
 
 
 In Western Canada too many of the conditions 
 against which the Western States rose in revolt have 
 been reproduced. For example, residents at Ca'gary and 
 other points east of the Rocky mountains, who require 
 to ship to Eastern Canada or beyond, have found it 
 profitable to ship through to Vancouver, more than six 
 
 « A. B. Stickncy, The Railway Problem, pages 19, •«>. 
 
 * A. B. Stickney, The Railway Problem, page aa. ' 
 
 i. 
 
 / 
 
 ,0^ 
 
mm 
 
 im 
 
 14 
 
 THE RAILWAY QUESTION. 
 
 1^ 
 
 < I 
 
 W. \ 
 
 hundred miles further west, in order to g-et the compet- 
 ing- rate at that point, and thence ship the same 
 goods back over the mountains and on to the east. 
 Reveistoke is nearly four hundred miles east of Van- 
 couver, but it is not unusual to have goods shipped from 
 eastern markets sent on through to Vancouver and re- 
 shipped back to Reveistoke. In these cases the through 
 rate to Vancouver and the local rate back to Reveistoke 
 seem to total less than the rate direct to Reveistoke. So 
 the local rate to Vancouver and the through rate back 
 to the eastern markets seem to total less than the rate 
 from Calgary direct to the eastern centres. At least, 
 shippers resort to these extraordinary manoeuvres, and 
 the presumption is that they are moved by some other 
 motive than a philanthropic desire to feed the railway. 
 The rate on coal from Anthracite to Vancouver, in car lots 
 in 1895 was $5 a ton. The distance is 565 miles. Nova 
 Scotia coal, brought from the coal beds 600 miles distant, 
 then sold in Montreal for $5.50 net to householders. 
 Coal from the mines of Pennsylvania, freighted for more 
 than 400 miles, sold in Toronto at $4.50 to $5 a ton ; 
 that is, the charge for carriage over the mountain section 
 of the Canadian Pacific, equaled the cost of mining in 
 Pennsylvania, handling for shipment, freightage to 
 Toronto, and retailers' profits. At Calgary 80 miles 
 from the mines at Anthracite coal retails at $7.25 a ton. 
 In the fall of 1895 the rate on a carload of potatoes from 
 Ashcroft to Vancouver, 205 miles, was $85, or, for less 
 than a full car, 47 cents a hundred. Potatoes then sold 
 at railway points in western Ontario for 20 cents a bag 
 (90 pounds), and in Toronto at 35 cents a bag retail, or 
 
mmm 
 
 THE RAILWAY QUESTION. 
 
 »5 
 
 r 
 t 
 
 40 cents a hundred. The rate on a certain machine, 
 manufactured at Montreal, was $10 from the place of 
 manufacture to Toronto ; $25 from Montreal to Aus- 
 tralia ; more than double this figure from Montreal to 
 Victoria, B. C. ; and the same charge that carried the 
 machine from Montreal to Victoria would carry a simi- 
 lar machine from New York to Victoria. 
 
 VI. 
 
 Mr. James Bannerman, President of the Calgary 
 Board of Travie, m a statement made to the Departmen- 
 tal Commission on Railway Rates, declared that he had 
 information that the rate on wool from Melbourne, Aus- 
 tralia, via Vancouver, to Montreal or Boston, was lower 
 than the rate on wool from Calgary to Montreal ; and 
 that the freight on a carload of self-binders from Toronto 
 was lower to Australia than to Alberta. Mr. Banner- 
 man estimated that the rates were equal to 40 per cent, 
 on sugar, 75 per cent, on oatmeal, 125 per cent, on 
 apples and 300 per cent, on salt, on the cost in Ontario. 
 He insisted that Alberta paid rates 60 per cent, higher 
 than Manitoba, 85 per cent, higher than Minnesota, and 
 190 per cent, higher than Ontario. He quoted a rate of 
 $1.35 from Calgary to Revelstoke, 263 miles, as con- 
 trasted with 46 cents between Belleville and Forest, 258 
 miles. He showed that the rate on butter from Montreal 
 to Calgary was $3.21 per 100 pounds, and from Mon- 
 treal to Vancouver $2. 89 per 100 pounds. Then, from Mont- 
 real to Nelson, B.C., the rate was $2.95, twenty-six cents 
 less to Nelson than to Calgary, notwithstanding that the 
 railway had to pay the local boats and roads that carried 
 
 - .f. 
 
 m 
 
 'i 
 
 
 I 
 
 IP" 
 w 
 
 i 
 
 
 1^ 
 
5l», 
 
 i6 
 
 ( 1 
 
 THE RAILWAY QUESTION. 
 
 the goods from Revelstoke to Nelson 76 cents per 100 
 pounds. The rate from Calgary to Vancouver was $1.75 
 a hundred, and from Winnipeg to Vancouver the same 
 rate prevailed ; that is, the charge for a haul of 1,482 
 miles was the same as for a haul of 642 miles. But 
 since this, rates on butter, cheese, grain, hay, cattle, and 
 many other articles have been reduced. Aiccording to 
 The Calgary Herald, an industry manufacturing mainly 
 for the eastern market was started at Calgary. It was 
 found that freight rates were too high to allow a fair 
 profit. The manufacturer made inquiry at Vancouver, 
 and found rates so much lower on what he would require 
 to import, as well as on his finished product, that he 
 moved his plant from Calgary to Vancouver. Discri- 
 mination robbed Calgary of an industry. It was de- 
 clarea to be cheaper to ship stock from Edmonton by the 
 Calgary and Edmonton branch road to Calgary and on 
 to Langdon, 21 miles east on the main line, and drive 
 the cattle back over the prairie to Calgary, than to ship 
 direct from Edmonton to Calgary. A resident of Cal- 
 gary, according to The Herald, wanted some fine build- 
 ing material that could be got only in Eastern Canada. 
 He found that the rate to Calgary would be four cents a 
 pound. But the rate to Vancouver was only two cents 
 a pound, and from Vancouver to Calgarry also two cents 
 a pound. Thus, the railway would carry this building 
 material from Montreal to Vancouver and back over the 
 heavy mountain haul for the same charge as over the 
 more level run from the east to Calgary. The freight 
 rates on fruit from British Columbia into the Northwest 
 and Manitoba have been a cause of serious cDmplaint. 
 
• m 
 
 .'SWJUW'V.^';^?'^.: 
 
 THE RAILWAY QUESTION. 
 
 17 
 
 There should be a good market for the fruit of th'* coast 
 in the other western Provinces. But trial shipments 
 resulted unsatisfactorily owing to the he«try transporta- 
 tion charges. One shipment of plums from New West- 
 minster netted three cents a basket. The fruit rate on 
 car lots from points in Washington in 1895 ^^^ $i.i2}4 
 per 100 pounds, and $1.25 from Portland, with an addi- 
 tional 19 cents from California. The rate for apples was 
 70 or 80 cents a hundred pounds. But now the Cana- 
 dian road claims to give as favorable rates and also fast 
 freight transport, like its American competitors, and the 
 responsibility for the comparative failure of experimen- 
 tal shipments is laid upon the shippers who used the 
 express service. It was charged, too, that the British 
 Columbia growers did not pick the fruit until it was too 
 ripe to stand transportation, and negU^cted other condi- 
 tions necessary to the satisfactory handling of decidious 
 fruits. In this case, however, we may conclude that, 
 whether or not the complaints of British Columbian fruit- 
 growers were well founded, the railway is now consider- 
 ing the needs of this industry and planning a service to 
 meet American competitors. There seems to be no 
 doubt that the railway can give the western Canadian 
 market to British Columbia, and with profit to the 
 growers, the road, and the consumers of Manitoba and 
 of the Territories. 
 
 m 
 
 n! 
 
 n 
 
 1. 
 
 ^.1 
 
 . %v 
 
 ES^j^vj 
 
mm 
 
 «P 
 
 i8 
 
 THE RAILWAY QUESTION. 
 
 VII. 
 
 California roads fixed the rates on ores according" to 
 their value as determin<;d by assay, and there are busi- 
 ness men in British Columbia and in the other western 
 Provinces who declare that their rates of freight are 
 graded according to che profits they are able to 
 make out of their enterprises, and that they work for the 
 railway rather than for themselves. One hears few 
 charges of discriminat'on between individuals, one of the 
 most fatal of railway powers when exercised as on the 
 American roads before the advent of the railway com- 
 missions. But, as will be seen, discrimination between 
 localities, only less mortal than discrimination between 
 individuals, seems to have been freely practised, the local 
 rate was raised to the point of confiscation, and a 
 thorough investigation would very probably show that 
 some heavy shippers had advantageous special arrange- 
 ments. It is true that the mountain section is a heavy 
 piece of road, but an examination of the figures will show 
 that this does not account for these remarkable discrim- 
 inations. In truth, if one compares rates from Winnipeg 
 to Vancouver with rates from Calgary to Vancouver, one 
 would have to conclude that in cases no charge at all 
 was made for the mountain section. In Manitoba one 
 finds some feeling against freight rates, but this feeling 
 is far more intense in the Territories and on the coast. 
 The charge commonly made in British Columbia is that 
 the Province has been farmed out to monopoly, as Cali- 
 fornia was handed over, bound hand and foot, to the 
 American Pacific roads. So the moment one sets foot in 
 
^•&mm 
 
 ^r 
 
 "•■■WIr'. (TO, 
 
 THE RAILWAY QUESTION. 
 
 «9 
 
 the Territories the question of freight rates is raised, and 
 your ears ring with the story until you reach Victoria. 
 It would be idle to deny that heavy local charges are 
 essential to the maintenance of the railway, but the best 
 pen that ever served monopoly cannot justify some 
 of the local rates that prevail in the Territories and 
 British Columbia. Even the passenger rates are a 
 serious hardship. In Manitoba the rate is four cents a 
 mile, in the Northwest ..ve cents, and there are no 
 reduced rates for return tickets. For example, the dis- 
 tance from Toronto to Hamilton is 39 miles, the single 
 fare $1.20, and the return fare $2; but under the rate 
 that prevails in the Territories the single fare would be 
 $1.95, and the return fare just double this amount. 
 These rates, although not higher than have prevailed 
 under similar conditions in the United States, are bound 
 to cr»jate a feeling of irritation and implant a sense of 
 injustice in the minds of the western people. They are 
 not too ready to recognize local conditions, the sparse- 
 ness of population, and the importance of the factor of 
 distance in western transportation. In Manitoba the 
 burden bears less hardly upon the people But here, too, 
 there is a tendency to agitation, and a sense of hardship, 
 doubly aggravated by the low prices for grain and other 
 western products. 
 
 i I 
 
 '1 
 
 k 
 
 i 
 
 ■I 
 
 \ 
 
 >.( 
 
 M4 
 
wmiK- 
 
 Wfm 
 
 wm 
 
 mm 
 
 '•'^ 
 
 ' (3 
 
 A 
 
 ao 
 
 THB RAILWAY gUESTKON. 
 
 VIII. 
 
 Ml 
 
 The Manitoba Government laio a bill of grievances 
 before the Departmental Railway Rates Commission. 
 Here are some comparisons made in this document, 
 showing" proportionately higher rates on the Canadian 
 Pacific : — Through grain rate, all rail, from Winnipeg to 
 Toronto, per C. P. R., 1,288 miles, per 100 Bbs., in car 
 lots 45 cents, per bushel 27 cents ; from Sarnia to 
 Fredericton, N.B., per G.T.R., 1,217 miles, per 100 flbs., 
 in car lots 26^ cents, per bushel 15 9-10 cents. By 
 C. P. R., from Pilot Mound to Montreal, 1,548 miles, 47 
 cents per lOO B)s. and 28 1-5 cents a bushel ; Brandon to 
 Montreal, 1,556 miles, and Minnedosa to Montreal, 1,557 
 miles, same rate ; Chicago to Fredericton, by G. T. R., 
 Intercolonial and Canada Eastern, 1,548 miles, 35 cents 
 per 100 Bbs. and 21 cents a bushel. By C. P. R., from 
 Boissevain to Montreal, 1,605 miles, the rate was 48 
 cents per 100 fcs. and 28 4-5 cents per bushel. From 
 Melita to Montreal, 1,613 miles, 49 cents per 100 Dbs. and 
 29 2-5 cents per bushel. By the Sault line, C. P. R. and 
 New York Central, from Minneapolis to New York, 
 1,600 miles, 35 cents per 100 Bbs. and 21 cents per bushel. 
 From Winnipeg to Halifax, by C. P. R., 62^ cents per 
 100 lbs. and 37^ cents per bushel ; from St. Paul to 
 Halifax, via Chicago, 45 cents per 100 B)s. and 27 cents 
 a bushel. By C. P. R., from Calgary to Port Arthur, 
 1,264 miles, 29 cents per loo fi)s. and 17 2-5 cents per 
 bushel ; from Winnipeg to Toronto, 1,288 miles, 45 
 cents per 100 fts. and 27 cents per bushel. The low 
 grain rate from Calgary was attributed to the fact that 
 
 f 
 
 !■ 
 
 i 
 
WW., 
 
 THE RAILWAY QUESTION. 
 
 ai 
 
 little or no grain is shipped from that point. P'rom 
 Virden to Fort William, less than half the distance, the 
 charge was 21 cents per 100 lbs. Freight rates on 
 "through" merchandise, all rail, from Fort William to 
 Winnipeg, by C. P. R., 427 miles, on the five classes of 
 freight, were 92, 79, 65, 65 and 47 cents per 100 lbs. ; 
 from Chicago to Stratford, by Chicago & Grand Trunk, 
 416 miles, 42^/^, 37^, 275^., 20 and 17^ cents per 100 
 fl>s. From Fort William to Carmen or Portage la Prairie, 
 by C. P. R., 481 and 480 miles, the rates were $1.25, $1.05, 
 85, 69 and 59 cents per 100 lbs ; from Chicago to Hamil- 
 ton, by Chicago & Grand Trunk, 472 miles, 42^, 37)^, 
 27 j^, 20 and 1^% cents per loo fcs. From P'ort William 
 to Boissevain, Virden and Birtle, by C. P. R., 604 to 617 
 miles, the rates were $1.51, $1.27, $1.02, 81 and 69 cents 
 per 100 lbs ; from Chicago to Kingston, by Chicago & 
 Grand Trunk, 668 miles, 72, 62^, 48, 33^ and 29 cents 
 per 100 lbs. The rates from Fort William to Medicine 
 Hat by C. P. R., 1,084 «Tiiies, were $2.42, $2.01, $1.61, 
 $1.21 and $1.10; from Toronto to Halifax, by C. P. R. 
 (Ontario Division), and G. T. R., 1,094 iriiles, ^, 75, 65, 
 54 and 43 cents per 100 lbs. Freight rates on "through" 
 merchandise by lake and rail from Montreal to Fort 
 William, 466 miles, by C. P. R. to Owen Sound and 800 
 miles by lake, were 51, 44, 38, 31 and 25 cents per 100 
 lbs. ; from Fort William to Winnipeg, 427 miles, by rail, 
 92, 79, 65, 56 and 47 cents per 100 lbs. The rate between 
 New York and Fort William, by Brockville or Prescott, 
 758 miles by rail to Owen Sound and 800 by water, was 
 the same as that between Montreal and Fort William on 
 classes one and two, and lower on classes three, four and 
 five. 
 
 il 
 
 m 
 
 
 
 P 
 
w^^mm 
 
 ^«nH 
 
 I 
 
 22 
 
 THE RAILWAY QUESTION. 
 
 • » 
 
 IX. 
 
 i*' 
 
 I 
 
 The report of the Departmental Railway Rates Com- 
 mission is mainly devoted to an examination of throug'h 
 rates on staples, a comparison with rates on the Great 
 Northern and Northern Pacific Railways that shows to the 
 advantage of the Canadian road, and an argument, the 
 force of which cannot be resisted, that, in view of the 
 sparseness of population and small volume of local traffic, 
 high rates must be charged if the road is to exist and 
 give any return to its stockholders. But the report is a 
 railway rather than a public document, and does not 
 show any exhaustive consideration of the questions at 
 issue. Here are some comparisons made by the Rates 
 Commission, showing proportionately lower rates on the 
 Canadian Pacific than on its American competitors under 
 similar conditions : — The grain rate from Portage la 
 Prairie to Fort William by C. P. R., 482 miles, was 18 
 cents ; the same rate was charged on the G. N. R. from 
 Neche, N.D., to Duluth. 453 miles, and from Pembina to 
 Duluth, on the N. P. R.> 377 miles. A uniform rate of 
 19 cents was charged from Brandon to Fort William on 
 the C. P. R., 559 miles; from Jamestown, N.D., to 
 Duluth, on the N. P. R., 307 miles, and from Crystal, 
 N.D., to Duluth, on the G. N. R., 438 miles. On the 
 C. P. R. from Deloraine to Fort William, 628 miles, the 
 rate was 21 cents; the same rate was charged by the 
 G. N. R. from Bottineau, N.D., to Duluth, 462 miles, 
 while on the N, P. R., from Leeds, N.D., to Duluth, 415 
 miles, the rate was 22 cents. The C. P. R. rate f»om 
 Morden to Fort William, 507 miles, was 18 cents, the 
 
THE RAILWAY QUESTION. 
 
 23 
 
 same as that from Dayton, N.D., to Duluth by the 
 N. P. R, 348 miles, and from Manvel, N.D., to Duluth, 
 39a miles. From Boissevain to Fort William, 608 miles, 
 and from Killarney to Fort William, 590 miles, the 
 C. P. R. rate was 20 cents ; and this rate was charged 
 on the G. N. R. from Milton, N.D., to Duluth, 464 miles, 
 from Michigan City, N.D., to Duluth, 432 miles, and on 
 the N. P. R. from Sykeston, N.D., to Duluth, 363 miles, 
 and from New Rockford, N.D., to Duluth, 366 miles. 
 The C. P. R. rate from Gler.boro' to Fort William, 531 
 miles, was the same as that on the G. N. R. from Edin- 
 burgh, N.D., to Duluth, 452 miles, and from Ccirrington, 
 N.D., to Duluth, 350 miles. From Regina to Fort 
 William, 782 miles, the rate by C. P. R. was 23 cents ; 
 from Minot to Duluth, 584 miles, the G. N. R. rate was 
 26 cents, and from Dickinson, N.D., to Duluth, 523 
 miles, the N. P. R. rate was 27 cents. The rates from 
 these North Dakota points to New York, when com- 
 pared with the C. P. R. rates from the Canadian points 
 to Montreal, showed the American rates higher in amount, 
 but a small fraction lower in proportion to distance. The 
 same was true of the live stock rates fro-n these points 
 to Montreal and New York. The rate per ton for coal 
 on the C. P. R. from Fort William to Winnipeg, 427 
 miles, was $3 ; to Portage la Prairie, 482 miles, $3.42, 
 and to Brandon, 559 miles, $3.94. This was substan- 
 tially lower than the $4 rate from Duluth to Pembina and 
 Neche, 447 and 459 miles respectively. It compared 
 quite as advantageously with the N. P. R. and G. N. R. 
 rates from Duluth to other North Dakota points. The 
 N. P. R. rate from Duluth to Billings, N. D., 892 miles, 
 
 It 
 
 
 
 «WS«S»M:5»r<<(ipff 
 
^« 
 
 «H 
 
 I 
 
 24 
 
 THE RAILWAY QUESTION. 
 
 was $7.90 per ton, while the C. P. R. rate from Anthra- 
 cite to Winnipeg, 917 miles, was $5. The lumber rate 
 on the C. P. R. from Ra:; Portage to Winnipeg, 138 
 mrles, was 10 cents, it compared favorably with the 
 G. N. R. rate of 11 7, cents from Minneapolis to Sauk 
 Centre, 118 miles, and the N. P. R. rate of 12 cents from 
 Duluth to Hansen, Minn., 133 miles. The rate on agri- 
 cultural implements was lower per mile on the C. P. R. 
 than on the American lines named, but the proximity of 
 Chicago as a distributing centre gives American farmers 
 a greater proportionate advantage. In general mer- 
 chandise C. P. R. rates to Manitoba points compared 
 favorably with the rates on the G. N. R. and N. P. R. to 
 points in North Dakota. Upon the whole, as respects 
 through rates on staples, it was not establ:«?hed by this 
 report that the people of Manitoba were more disadvan- 
 tageously situated than the American communities across 
 the border, but Manitoba had less cause of complaint 
 than British Columbia and the Territories. 
 
 X. 
 
 Now, we cannot afford to forget that the Canadian 
 Pacific Railway was a national rather than, a commercial 
 project. Under the impulse of party clamor we were 
 stampeded into an enterprise that was well nigh beyond 
 our strength, and upon terms that were hardly less than 
 ii criminal surrender of the future of the country to the 
 lordship of a corporation. For the moment we may heap 
 adjectives upon the " national highway," and rejoice in 
 the phenomenal enterprise and magnificent resource of its 
 management ; but we may depend upon it that the judg- 
 
w 
 
 THE RAILWAY QUESTION. 
 
 25 
 
 ment of the next g-eneration will be that the agreement be- 
 tween Canada and the Pacific Railway Syndicate was the 
 most insane bargain ever entered into by a free people. Let 
 us look at the facts and conditions. From Vancouver to 
 Fort William the road runs through nearly 2,000 miles 
 of territory, with a total population of not more than 
 300,000 — hardly more than the population of Montreal, 
 and with but few important business centres. Beyond 
 Frrt William, again, there are five or six hundred miles 
 of waste on the north shore of Lake Superior. For 
 through traffic there is the keen competition of the Amer- 
 ican roads and of the Grand Trunk. Construction on 
 the Lake Superior and mountain sections wa& enormously 
 costly, a»id cost of operation in the mountains is very 
 heavy. An army of watchmen are employed, and no 
 expense is spared to guarantee safety. Local trains are 
 few and local traffic light, and local rates must be high 
 if the road is to earn a living revenue. There were 
 powerful reasons why the road should be extended 
 through older Canada, its American connections estab- 
 lished, and its trans-Pacific steamship service developed. 
 No doubt vast sums of money have been put into these 
 undertakings, but the fact to keep in mind is that the 
 road could not live upon its local traffic, and that these ex- 
 tensions and developments were nee ?ssary to its success, 
 even to its existence, as a commercial enterprise. It is 
 more than likely that in the calmer judgment of another 
 generation it will be conceded that the operation of this 
 road for the first ten years of its history was a much 
 greater achievement than its construction. But what 
 has been the cost to Canada ? First, we gave the cor- 
 
 ii 
 
 (^ k 
 
 It 
 
 
n 
 
 i 
 
 36 
 
 THE RAILWAY QUESTION. 
 
 poration $25,cxx),cxx) and seven hundred miles of com- 
 pleted road, equal to $30,000,000 or $35,000,000 if we 
 estimate orig-inal cost and interest. We gave $3,000,000 
 or $4,000,000 to the short line to the east, and thus 
 deliberately depreciated our investment of $50,000,000 in 
 the Intercolonial. We bonused the western Ontario 
 sections, creating an unnecessary parallel line to the 
 Grand Trunk, reducing the value of invested capital, and 
 making rompetition more costly and combination more 
 imminent. We give an annual subsidy of $120,000 to 
 the China and Japan steamships. Then look at a rail- 
 way map of the Northwest, and you will see that we have 
 alienated an empire of which Sir William Van Home 
 and his successors will be the ruling monarchs. Their 
 power will be limited or not according to whether the 
 railway shall govern Parliament or Parliament govern 
 the railway. Let us be honest, too, and confess that, 
 notwithstanding the millions we have voted ot municipal, 
 Provincial ^md national bonuses in order to secure com- 
 peting lines of railway, we have now only two great 
 railway systems in Canada ; that these give perhaps an 
 active competition in service, but a very limited competi- 
 tion in rates, and that this condition is largely a result 
 of the construction of the Canadian Pacific Railway 
 according to the plans and specification of the Canadian 
 Government, 
 
 I 
 

 
 THE RAILWAY QUESTION. 
 
 XI. 
 
 ■^7 
 
 There is bound to be combination between these 
 great systems. It is established by a great mass of 
 evidence that where combination is possible permanent 
 competition is impossible. We have had the experience 
 of the United States before our eyes, but we have not 
 done any better than the Americans. We cannot inter- 
 fere with private enterprise, but in the Northwest at 
 least we ought to show that experience does not teach in 
 vain, and henceforth we should resolutely refuse to vote 
 a dollar of public money for unnecessary parallel roads, 
 and give our thought to the regulation of rates by 
 statute rather than by the construction of competing 
 roads that will not compete. Manitoba paid over $600,- 
 000 to get connection with the Northern Pacific, but the 
 bargain was hardly completed when the Northern Pacific 
 came to an understanding with the Canadian Pacific, 
 with the result that, while there may be competition in 
 service, there is very little competition in rates. In fact 
 the Canadian Pacific now justifies existing charges by 
 proving that they are not higher than the rates that 
 prevail oa the Northern Pacific. Many of us remember 
 that the northern municipalities of Ontario bent their 
 backs to hea^^y bonuses in aid of the Hamilton & North- 
 western road in order to secure a competition that was 
 sorely needed, and that even before trains were running 
 over the new road it was absorbed by the old Northern. 
 Developments of similar character are within local 
 knowledge all over Canada. It is doubtful if even one 
 dollar of the $120,000,000 or $i3o,c>oo,oco voted to rail- 
 
 n 
 
 It 
 
 I' 
 
 1'^ i 
 
 r' 
 
 II 
 
^f5»f 
 
 
 1\ 
 
 n 
 
 \, 
 
 I 
 
 28 
 
 THE RAILWAY QUESTION. 
 
 way corporations by the Canadian people to secure rail- 
 way competition has fulfilled its purpose. Of course 
 wide 'ocal accommodation, and in some cases competition 
 in service, have been secured, and no one charges that 
 these bonuses have been wholly wasted. Ely, who, by 
 the way, is an advocate of Government ownership of 
 railways, a solution at least far in advance of our day m 
 Can ida, and only to be resorted to in the last extremity, 
 has an interesting calculation on the wastes of competi- 
 tion. '*The moment," he says, "we begin reflecting upon 
 waste in the railway business, we are able to give concrete 
 instances running up into the hundreds of millions of 
 dollars. The railway lines paralleling the New York 
 Central and Hudson River Railway, and the Lake Shore 
 & Michigan Southern from New York City to Chicago, 
 afford one of the best known examples of waste in rail- 
 way construction. These lines were built to compete 
 with the older lines mentioned, but as is always the case 
 in such instances, the competing lines consolidated. The 
 purpose for which they were built was not accomplished, 
 and the expenditure involved in their construction was a 
 national loss. It has been estimated that these lines cost 
 two hundred millions of dollars, which would be a sum suf- 
 ficient to construct homes for one million people, if we allow 
 a thousand dollars to a dwelling for a family of five ; and 
 this is probably more than ihe average cost of the houses 
 of the people of the United States, taking city and country 
 together. We see, then, that one single item in our 
 count is a matter of nav'ional concern, but when we have 
 mentioned the waste in construction we have only made 
 a beginning in the total loss involved in the construction 
 
 
z 
 
 *'1L*'^*^^ 
 
 '^^iVHPI 
 
 '\l 
 
 THE RAILWAY QUESTION. 
 
 29 
 
 of needless railway lines. The maintenance of the use- 
 less lines and their continued operation involve perpetual 
 loss. Every station on the parallel line involves waste. 
 Every station agent is a scource of expense, and every 
 needless train run adds to the waste. It is not denied 
 that the parallel railway lines offer some slight accom- 
 modation, and therefore service, to the public. The new 
 parallel line will, for example, generally run through a 
 different part of the city, and it is not improbable that 
 the time-table of the new parallel line will be different 
 from that of the older company, so that in this way a 
 va-iety of trains is offered. At the same time the expense 
 is mostly waste, because a relatively small additional 
 expenditure on the part of the old company would o^er 
 still better accommodations. What has taken place in 
 the case of the West Shore and the Nickel Plate between 
 New York and Chicago has occurred all over the United 
 States ; and the total loss must amount tc more than a 
 thousand millions of dollars if we consider only the first 
 cost. If we consider the subsequent expenditure involved 
 it becomes truly enormous — a loss like that brought upon 
 a nation by a great war. It is said by a railway manager 
 that even now it would involve an annual saving of two 
 hundred millions of dollars if the railways of the United 
 States were managed as a unit. If we divide the sum 
 by two in order that our estimate may be a conservative 
 one, and capitalize it at four per cent. , we have a capital 
 loss of twc thousand five hundred millions of dollars. It is 
 useless to attempt any precise estimate, but it may not be 
 an extravagant estimate if we claim that the loss due to 
 competition in the railway business in the United States 
 
 .1 ^ 
 
 Ml 
 
,r9^ 
 
 ■r. 
 
 30 
 
 THE RAILWAY QUESTION. 
 
 V 
 
 ,1V 
 
 from the beg-inning of our railway history up to the pie- 
 sent has been sufficient to furnish all the people of the 
 United States with comfortable dwellings, provided that 
 all the houses now in the United States should be 
 destroyed." " 
 
 XII. 
 
 The Ontario & Quebec, with its extensions through- 
 out western Ontario now forming part of the through 
 line of the Canadian Pacific, and the Grand Trunk with 
 its branches of the old Great Western, furnish striking 
 eviden.e of waste of capital and waste of resources. It 
 would have been better for the Grand Trunk and better 
 for Canadian credit if we had recognized the Grand 
 Trunk as the main railway thoroughfare for Ontario, and 
 made it a main feature of public policy to feed rather 
 than starve our pioneer road. It is true this was not 
 possible with the railway experience of thirty or forty 
 years ago. It was not then demonstrated that compet- 
 ing railways would not compete, the need for public 
 regulation of common carriers was not so clearly 
 established, it was not so plain that with two roads 
 competing for the traffic that would barely support one 
 rates must be raised in order to provide the revenue 
 necessary to keep both concerns running, and popular 
 faith in the power of a railway to create a metropolis at 
 every cross roads was general and implicit. But it is 
 the fact that if we had set apart the Grand Trunk as our 
 main through line and then sent out local branches 
 throughout the various sections of the Province under a 
 
 a Richard T, Ely, Socialism and Social Reforna, Pages 117, tia 
 
THE RAILWAY QUESTION. 
 
 31 
 
 H 
 
 well-devised plan that would have made these local 
 roads feeders of the main artery, we would now have a 
 vastly more symmetrical railway system, we would not 
 be burdened with the support of so many miles of unpro- 
 ductive road, and, providing there was efficient kegula- 
 tion of rates, the shippers, traders and farmers of 
 Ontario would have better railway accommodation 
 and lower railway tariffs. The time was not ripe 
 foi this : eform in Ontario ; but is there any reason that 
 we should repeat in the new western territories all the 
 follies and blunders of railway development in older 
 Canada ? Free land and lower freight charges are the 
 crying needs of the Canadian west. If there be few 
 people there must be little traffic, and if little traffic, 
 high rates and rigorous regulations. We must not 
 forget that freight rates are a form of taxation, and that 
 if the tax-bearers be few the burden must be heavy. If 
 we divide the traffic between competing roads the load 
 must be heavier still ; if we inrjrease and concentrate the 
 traffic and multiply the population we have a right to 
 reduction of charges and improvement in service. Rail- 
 way monopoly under efficient regulation will give lower 
 freight ciiarges than any system of unregulated competi- 
 tion or even a system of competition regulated by public 
 authority. 
 
 k i\ 
 
 
 u 
 
 I 
 
 ll\i 
 
 I • 
 
:V 
 
 ?r^ 
 
 
 ii 
 
 : 
 
 V<! 
 
 ,1 
 
 ^ ^ 
 
 I! 
 
 32 
 
 THE RAILWAY QUESTION. 
 
 XIII. 
 
 The case is well illustrated by the argument of an 
 American writer or the question of Government mon- 
 opolies. He says :— "The carriage of the mails is the 
 most important monopoly carried on by the Govern- 
 ment, and we may find some facts of interest by enquir- 
 ing the reasons why it is for the public welfare that it 
 should be so conducted rather than by private enterprise. 
 In the first place, if it were left to private enterprise to 
 furnish us with postal facilities, the postal service would 
 be much more limited than now ; many places of small 
 importance being left without postal facilities or charged 
 a much higher rate for service than now. On the other 
 hand — and this is an important point — there would 
 perhaps be in and between the large cities competition 
 between different companies, in which case there would 
 be duplicate sets of postal facilities, including buildings, 
 mail boxes, furniture and employees of every grade. It 
 is plain that all this would be a waste. One set of 
 facilities is better for the public than two or three or 
 more, and is ample to carry all the mails. To put 
 another set of men at the work that others are already 
 nble to do is to waste just so much of the working force 
 of the world, as well as the capital necessary to furnish 
 tools and buildings for its use. The matter of rates too 
 would vary with the competition. One could never be 
 sure what his postage bill for the coming year was to be. 
 The receipts of the companies would be uncertain, and 
 they would be obliged to pay a high rate of interest on 
 the capital invested in their plant, thus making it neces- 
 sary for them to charge high rates for their service. The 
 
THE RAILWAY QUESTION. 
 
 3.1 
 
 an 
 
 'he 
 
 intense competition between rival companies would lead 
 
 to the bankruptcy of the weaker, and the final result 
 
 would be the establishment of a single corporation in 
 
 the control of the whole system. Rates would then be 
 
 put up to the point where the greatest profit would 
 
 accrue to the corporation."* If we cannot have a 
 
 system of Government railways, and it is clear that we 
 
 cannot now undertake to buy up the railways of Canada, 
 
 t len we must have efficient public regulation, and the 
 
 fewer through roads we have to support the lower 
 
 freight charges can be made to the masses of the 
 
 community. 
 
 XIV. 
 
 At most but a few railway points benefit by competi- 
 tion. It has been estimated that "there are in the 
 United States about 37,000 railway stations where 
 freight and passengers are received for transportation. 
 From the nature of the case not more than ten per cent, 
 cf these are or can be at the junction of two or more 
 lines of railway. (By actual count, on Jan. i, 1887, 
 eight per cent, of existing stations were junction points.) 
 Therefore the shippers and buyers of goods at nine- 
 tenths of the shipping points of the country must 
 always be dependent on the facilities and rates offered 
 by a single railway. Such rates of transportation as 
 are fixed, be they high or low, must be paid, if business 
 is carried on at all. And when we consider the ten per 
 cent, of railway -stations which are or may be junction 
 points, we find that at least three-fourths of them are 
 merely the junction of two lines owned by the same com- 
 
 a C. W. Baher, C.E., Monopolies and the People, pages loo, loi. 
 
 ^'1 
 
 lid 
 
 n 
 
 
 m 
 
 \ 
 
)^irw^ 
 
 34 
 
 THE RAILWAY QUESTION'. 
 
 f 
 
 .1! 
 
 hv 
 
 (I 
 
 pany Assuming that the total number of railway 
 
 junction points in the United States is 3,000, we find, on 
 
 examination, that at about two-thirds only two lines 
 
 meet, and at more than half the remainder only three 
 
 lines meet. It is plain that in the vast majority of cases 
 
 where two roads intersect, and in many cases where 
 
 three or four come together, the lines meet perhaps at 
 
 right angles and diverge to entirely different localities. 
 
 The shipper bringing goods to the station, then, may 
 
 choose whether he will send his goods north or cast 
 
 perhaps; but only in a few cases where two lines run to 
 
 the same point does he really have the choice of two 
 
 rates for getting his produce to market. Practically, 
 
 then, there are not and never can be mere than a few 
 
 hundred places in the country where shippers will be 
 
 able to choose different routes for sending their goods 
 
 to market. We say there never can be, because the 
 
 building of a line of railway to parallel an existing line 
 
 able to carry all the traffic is an absolute loss to the 
 
 world of the capital spent in its construction, and a 
 
 constant drain after it is built in the cost of its operation. 
 
 This fact is now, fortunately, generally appreciated." 
 The same writer adds : — "The consolidation of railway 
 lines has gone on very rapidly within the past few years, 
 and is undoubtedly destined to go much further. Of the 
 158,000 miles of railway in the country about eighty per 
 cent, is included in systems 500 miles or more in extent, 
 and a dozen corporations control nearly half of the total 
 mileage. The benefits which the public receive from this 
 consolidation are so vast and so necessary that, no one 
 who is familiar with railway affairs would dream of 
 making the suggestion that further consolidations be 
 stopped, or that past ones be undone."" 
 
 a C. W. Baker. C.B., Monopolies and the People, pag^es 44-47. 
 
THE RAILWAY QUESTION. 
 
 XV. 
 
 35 
 
 So in Canada if we had a Railway Commission we 
 would find that its effectiveness would be increased by the 
 fact that we have practically only two g-reat railway sys- 
 tems and that equality of rates would be easily established 
 all over the country according to density of population, 
 amount of traffic and character of products in the various 
 sections. Canada is a country of enormous distances, 
 of length rather than breadth, and trade between the 
 Provinces is difficult, and transportation charges very 
 burdensome. In these facts we have conclusive argu- 
 ments against the rash multiplication of through roads 
 and the consequent maintenance of needless transporta- 
 tion facilities. In truth, to construct another great through 
 road in Canada would be very like adopting a fiscal 
 tneasure imposing a tax of fifteen or twenty per cent, on all 
 interprovincial trade. In the United States jurisdiction 
 over the railways is divided between the State and Inter- 
 state Commissions. State Commissions have control 
 over not mo*'e than twenty or twenty-five per cent of the 
 traffic. The railways are so numerous and operate 
 under such widely differing conditions that regulation of 
 the great through lines is mor difficult than it need be 
 in Canada, and yet in the adjoining country regulation 
 of railways by the joint operation of the State and 
 Interstate Boards has been fairly successful at least in 
 the communities that have ^»ad strong State Commissions. 
 
 f 
 
 ¥ 
 
 ^ s. 
 
 -■V 
 
I 
 
 T?- 
 
 i^l 
 
 
 ^ 
 
 vt 
 
 % 
 
 ; ': i' 
 
 I 1 . 
 
 ill 
 
 if 
 
 36 
 
 THE RAILWAY QUBSTION. 
 
 XVI. 
 
 Just now western communities are calling for the con- 
 struction of the Crow's Nest Pass Railway by an inde- 
 pendent company in order to secure competition with the 
 Canadian Pacific. It is, however, as sure as that the 
 sun shines that the independent company W3uld be forced 
 to make a running- arrangement with the Canadian 
 Pacific or the Great Northern, that it could not know one 
 hour of real effective independence, and when one of the 
 great corporations had absorbed the independent link the 
 other great corporation would seek and assuredly eftect 
 a traffic arrangement with its powerful rival. On what 
 would we base the expectation that the Crow's Nest 
 Pass Railway would prove to be the one competing rail- 
 way on the American continent that would compete ? Of 
 what advantage even is a Government roadbed free to 
 competing railways who will not wage, or at least will 
 not prolong, unprofitable rate wars, if we do not provide 
 ourselves with the machinery necessary for an effective 
 regulation of charges and a firm control of the carrying 
 corporations ? Nothing is more unlikely than that any 
 one of the great through roads would combine with the 
 Government to handle the traffic of a Government road 
 through the Crow's Nest and wage a permanent war of 
 rates with its powerful through rivals. The roads would 
 not fight over three thousand miles in order to get a 
 monopoly of the traiSc of three hundred miles. There can 
 be hardly a doubt that the through systems would com- 
 bine and hold the Government branch road at their 
 mercy. It must be remembered, too, that if the Govern- 
 
 
THE RAILWAY gUKSTION. 
 
 ^7 
 
 ment should construct the Crow's Nest road, and should 
 feed its traffic to one of the American through lines, and 
 thus divert business from the Canadian Pacific, that 
 this would mean, necessarily and inevitably, higher local 
 charges in the Territories and Manitoba, if not higher 
 through rates from Eastern Canada. It may be that 
 freight charges in the West are now excessive, but 
 we can demand reductions in ever increasing ratio 
 as population and traffic increase. Is it impossible 
 to make a business arrangement with the Canadian 
 Pacific Railway ? As has been mentioned, there is 
 a movement for the construction of a railway through 
 the Crow's Nest Pass into the mining fields of 
 British Columbia. There is no doubt that the Canadian 
 Pacific authorities desire to build this road and are look- 
 ing for a subsidy or a guarantee of bonds, or both, from 
 the central Government. It is open to Parliament to say 
 that if they are to build or operate this road, and to 
 receive running facilities, public aid or a guarantee of 
 securities, they must surrender the provision in their 
 charter which forbids public control of their tariffs until 
 their earnings reach ten per cent, on the amount invested 
 in the railway ; they must agree to fix maximum rates for 
 the carriage of coal and ore, reduce rates for grain, cattle 
 and other staple exports of Manitoba and the Territories, 
 and agree to an equitable, but not necessarily propor- 
 tionate, regulation of local and through tariffs. 
 
 r« 
 
 (ill. 
 
 i 
 
 H 
 
 .) 
 
 I 
 
 ! 
 
 i« 
 
 3 
 
 I 
 
 I 
 
 $1 
 
 1, 
 
m 
 
 sr 
 
 I 
 
 ^^ 
 
 \ 
 
 ^ 
 
 38 
 
 
 ^ 
 
 iV 
 
 ii 
 
 i\ 
 
 THE RAILWAY QUESTION. 
 
 XVII. 
 
 Then if it should be deemed in the nation 1 interest 
 to bargain for the repurchase of any part of the railway 
 lands as a feature of any policy of settlement and develop- 
 ment, we could again exact concessions in rates to the 
 settlers of the west and the shippers of the east. For 
 expenditure on development and settlement is in direct 
 aid of the railway, and if we repurchase railway lands we 
 relieve the road, at least in part, of the cost of its immi- 
 gration agencies and services. If it be argued that to 
 repurchase railway lands is equivalent to fresh subsidies 
 to a corporation that has absorbed too many millions of 
 public money, we may set up the defence that if we 
 believed that it was a national crime to alienate the lands 
 of the west, it is a prime public duty to seek to undo the 
 gigantic wrong that was perpetrated against the Cana- 
 dian people. It cannot be wise public policy to adhere 
 to a gigantic mistake, even though in finding a way out 
 we must deal with a corporation. It is fair to remember 
 that while the Canadian Pacific corporation received 
 extraordinary concessions it assumed extraordinary obli- 
 gations and responsibilities, and it is but just that we 
 should loyally abide by the terms of the agreement r'^c'de 
 in behalf of the people, or bargain fairly for a modifica- 
 tion of the more obnoxious provisions. It is fair to 
 remember that only men of rare courage and adventurous 
 spirit would have undertaken the construction of the 
 Canadian trans-continental railway over the north shore 
 route, even on the extraordinary terms sanctioned by the 
 Canadian Parliament, and one doubts if to-day we would 
 
 11 i 
 
 i 
 
■sanq 
 
 l9PVf*lP 
 
 •jmn 
 
 THE RAILWAY QUESTION. 
 
 39 
 
 to 
 
 take over the railway, assume its obligations, and run it 
 as a communal enterprise. It is only with increase of 
 population and development in the west that the extra- 
 ordinary nature of our bargain with the railway will be- 
 come fully manifest ; and it is now, while the bargain is 
 onerous upon the road as well as upon the country, that 
 we should negotiate for better terms. In the meantime 
 the railway is serving a vast unsettled territory, and 
 while some of its discriminations are intolerable and some 
 of its charges extortionate, it may be that we are too 
 ready to approach the road in the spirit of Jap Miller, 
 one of Whitcomb Riley's heroes. Riley tells us that 
 Jap is 
 
 Fer the pore man every time ; ani in the last campaign 
 
 H<- stumped old Morgan County through the sunshine and the rain, 
 
 And helt the banner upwards from a-trailm" in the dust, 
 
 And cut loose en monopolies, and cuss'd, and cuss'd, and cuss'd. 
 
 It is not necessary that we should repurchase huge 
 blocks of these railway lands in advance of settlement, 
 but only that we should now agree upon a plan of repur- 
 chase and take over the corporation lands as required for 
 actual settlers. It is likely thi^.t we shall have to estab- 
 lish a system of grouped settlements in the west ; but 
 however that may be, if we are to support roads, schools 
 and municipal institutions with any degree of efficiency 
 we must break up the system of alternate blocks, get 
 exempted lands under taxation, and relieve the settlers of 
 the burden of paying double taxation, and giving value 
 to lands held out of use by corporations whose only re- 
 turn is to harrow the people by onerous freight charges. 
 
 I 
 

 TT- 
 
 I 
 
 v.. 
 
 (1 
 v 
 
 I 
 
 w 
 
 40 
 
 THE RAILWAY QUESTION. 
 
 XVIII. 
 
 Practically the western settler gives the first day of 
 the week to meet his taxes, the next to meet freight 
 charges, the third to give value to exempted corporation 
 lands, and is graciously permitted by beneficent land 
 regulations, an indulgent corporation and a paternal 
 Government to reserve the other three days for himself 
 and his family. One may judge whether this leaves him 
 in the mood for prayer or cursing on the day of rest. 
 We in older Canada ask why it is that we have 
 still to maintain the Northwest mounted police, a splendid 
 force which carries into every corner of those vast terri- 
 tories the moral authority of British institutions, and we 
 are told that population is so sparsely spread over r :. 
 vast spaces that the police are the constabulary, the 
 magistracy, the municipal Government of the territories, 
 and that until population can be increased and concen- 
 trated the cost of the preservation of order and of the 
 administration of local affairs must be largely borne by 
 older Canada. It is of the first importance for school 
 purposes and for municipal purposes that we should seek 
 to concentrate settlement, and we should seek rather to 
 concentrate in Manitoba and along tht existing branch 
 railways in the Territories than to push out new branch 
 roads in the much used and much abused name of devel- 
 opment. Unwise distribution of population and undue 
 multiplication of railway equipment in proportion to 
 population are contributory causes for the comparative 
 failure of our western experiments. It is time now to 
 profit by our accumulated experience in farming, ranch- 
 
 f 
 
ri^m 
 
 ^^ 
 
 ■»?^^P 
 
 1 
 
 I 
 
 THE RAILWAY QUESTION. ^I 
 
 ing and dairying, our accumulated knowledge of soil and 
 climate, of the natural temper and capabilities of various 
 sections, and proceed up a lines of well-tried and well- 
 ordered policy. But for years to come relief for the 
 western population from oppressive freight charges will 
 not be found in duplication of railways or in railway 
 competition, but in effective public regulation of charges 
 over the Canadian Pacific. Nor need we approach the rail- 
 way 'n any hostile spirit. We cannot help Canada nor 
 Canadian credit by weakening our great transportation 
 enterprises. We should, until such time as we can con- 
 sider the final policy of public operation, seek rather to 
 effect a business partnership with the railways, make the 
 public interest and the railway interest synonymous, and 
 embody in our public policy the lesson of half a century 
 of costly experience, that where combination is possible 
 enduring competition is impossible, and that low rates 
 and efficient service cannot be secured by ill-advised 
 division of traffic and rash multiplication of the number 
 of public carriers. 
 
 XIX. 
 
 We must all admit that there is prestige in the 
 "national highv.-ay," to use the language of its pane- 
 gyrists, that the road was rapidly and substantially 
 constructed, and is splendidly equipped. There is first- 
 rate business capacity manifested in every detail of the 
 management. The roadbed is well maintained and the 
 rolling stock is adequate even for an exceptionally heavy 
 grain season. But in order to the proper maintenance 
 of this service high local rates and a heavy through 
 
 H 
 
 I ( 
 
 j ■ 
 
 im 
 
 i- 
 
w 
 
 T7" 
 
 
 I 1! 
 
 a I 
 
 \ I 
 
 
 H 
 
 Ip 
 
 ■y 
 
 « 
 
 42 
 
 THE RAILWAY QUESTION. 
 
 traffic are necessary, and there is n<3 doubt this ll. rough 
 traffic has been secured at the cost of direct discrimina- 
 tion against the Canadian people who were taxed for the 
 road's creation, and are taxed for its support. P'ond vs 
 we are of national heroics, everywhere that one goes in 
 the west one hears the admission, often in very unex- 
 pected quarters, that "Mackenzie was right." By 
 rushing the construction of the road in order to fulfil 
 the conditions of a prodigal political bargain, we ran a 
 thin line of settlement all across the west, ind set a new 
 population to the work of experimenting over far-reach- 
 ing and far-differing conditions of soil and climate. At 
 the same time we recklessly and enormously increased 
 the national obligations. What have we got for it all ? 
 Frankly, now, would not the national position to-day be 
 much better if we had adhered to the Mackenzie policy ; 
 if we had first devoted ourselves to the construction of 
 branch lines in Manitoba, encouraged compactness of 
 settlement, and confined the experimental work of the 
 agriculturist to a more limited territory ? We would 
 have heard less of failure, we would have had fev/er 
 pretentious ventures, and fewer damaging collapses 
 through ignorance of conditions ; the great boom of 
 1882 would not have been precipitated with such 
 tremendous impetus and such disastrous consequences. 
 If we nad carried settlement along with the road we 
 would have had lower freight rates, because we would 
 not have had to meet such enormous expenditures for 
 construction, and we would have had a less burdened, a 
 more compact and a more contented population. A 
 more contented population would have drawn a steadier 
 
1 ( 
 
 . ' THE RAILWAY QUESTION. 
 
 and healthier immigration, and the whole position from 
 the national standpoint would have been improved. In a 
 speech made fifteen years ago Mr. Blake said :— *' Com- 
 plete the railway to Red River ; go on with the prairie 
 section as fast as settlement demands. For that risk 
 something, since, as I have said, the die is cast. But 
 in order to succeed in that, in order that you may have 
 a chance later to do more, deal with that alone now. 
 Bend to that great effort your undivided energies, your 
 whole available resources. Postpone, meanwhile, the 
 western work, and do not by your present action, based 
 on airy dreams and vain imaginations, risk the ruin of 
 your country." In that speech there was real patriotism, 
 but neither Parliament nor the people were in the mood 
 to hear the truth. 
 
 XX. . 
 It was, perhaps, not unreasonable that British 
 Columbia should demand the fulfilment of terms that 
 were freely offered. But British Columbia would have 
 come into the Confederation on far less onerous con- 
 ditions than were so thought'essly and recklessly ac- 
 cepted, and we could have shown the Pacific Province 
 that a road constructed at such enormous cost through 
 an unpeopled territory would be bound to impose very 
 onerous charges upon its constituency. The route of 
 the through line was changed by the Government and 
 the syndicate, and here again time has justified the old 
 Liberal Minister, and the unanimous voice of the west is 
 that "Mackenzie was right." In fact, the demand of 
 the west to-day is for railway extension over the old 
 Mackenzie survey, and the Canadian Pacific management 
 
 ,? 
 
 I 
 
 I 
 
 m 
 

 
 ; 
 
 Pi 
 
 44 
 
 THE RAILWAY QUESTION. 
 
 has taken the precaution of getting control of the Mac- 
 kenzie route over the mountains. His successors seem 
 just to have learned what Mr. Mackenzie mastered a 
 score of years ago, and nowhere can one get more 
 satisfactory evidence of the marvellous grasp and 
 phenomenal industry of Alexander Mackenzie than by a 
 study of conditions as they have developed in western 
 Canada. If I am not mistaken, even the Canadian 
 Pacific Railway management is now leaning toward the 
 old Mackenzie policy, and is convinced of the wisdom of 
 compact settlement and the development of Manitoba 
 rather than of the remoter sections of the country. It is 
 needless to emphasize the tremendous folly of yielding 
 up «uch an enormous land'^d estate in order to secure 
 rapid construction of the railway. Let no one doubt 
 that there is a magnificent future for western Canada. 
 A prosperous population will spread over these plains — 
 we seem now fc see the bow of promise more clearly 
 than ever before — and every settler who sets foot upon 
 this soil will enhance the value of the railway's posses- 
 sions, and force us, if our people are to compete with 
 the world on equal terms, to regain possession of the 
 magnificent estate we have thrown away. 
 
 
 U 
 
 XXI. 
 
 Legislation for the regulation of railways does not 
 mean that we should pauperize the roads or deprive them 
 of a living revenue. The experience of the American 
 States proves that the people have a sensitive reg'ard for 
 fair dealing, a wholesome respect tor obligations, and 
 will not do deliberate injustice to their carrying corpora- 
 tions. Even the Granger laws, passed during a season 
 
THE RAILWAY QUESTION. 
 
 4S 
 
 when the popular feeling- was well illustrated by the 
 utterance of the Governor of a western State, who 
 declared that his party would "shake the railways over 
 bell," while unwisely vexatious and arbitrary did not put 
 rates down as low as the average of the rates fixed by 
 the railway managers. But these laws did attack gross 
 discriminations between individuals and between locali- 
 ties, and effectually initiate the work of equalization that 
 has been since carried on by the State and Interstate 
 Commissions. In the iudgment of very many railway 
 reformers the Nationak Commission has been far too 
 partial to the roads, or at any rate is not quite equal to 
 the performance of its onerous functions. But it was 
 right that the Commissioft should be scrupulously just to 
 th"? railways, recognize inequality of routes, conditions of 
 competition and values of local traffic. A body like this 
 Commission called on to pass judgment on conditions in 
 Canada would surely decide that in the Northwest local 
 rates could not yet be proportioned to through rates. 
 Inequalities and discriminations in local rates could be 
 adjusted and remedied ; but, pending an increase of 
 population and a resulting development of local trade, 
 we would have to allow a generous margin in competi- 
 tion for through traffic. But this can be only a tempor- 
 ary concession to meet the exceptional conditions of the 
 west. Neither Canada nor any other democratic com- 
 munity can afford to be governed by its corporations, 
 and we should at once set ourselves to devising means 
 for regulating local rates, preventing discriminations 
 between individuals and localities, and abolishing favor- 
 itism to American ports and American communities by 
 Canadian railways at the expense of the Canadian people. 
 
 If 
 
 M 
 
 '? 
 
I 
 
 i 
 
 
 I'l 
 
 ll ■.. 
 
 m I 
 
 f 
 
 
 J 
 
 t 
 
 I 
 
 « 
 
 \ w 
 
 \ 
 
 46 
 
 THE RAILWAY QUESTION. 
 
 XXII. 
 
 Cook, in his "Corporation Problem," dealing with 
 the experience of the United States, tells us that: — "The 
 early railroad Guilder, promoter and manipulator was as 
 crafty and many-sided in his methods as Ulysses himself. 
 He was skilled in the art of issuing watered stock and 
 bonds. By devices well known to the corporation lawyer, 
 he generally managed, if hi.s road actually cost $1,000,- 
 000, to issue $2,000,000 of stock and $2,000,000 of rail- 
 road bonds secured by a mortgage on the road itself. 
 He accordingly had $4,0^ ,000 of stock and bonds, and 
 of this $3,000,000 was pure 'water.' In the course of 
 time these bonds and stock were sold. They passed into 
 bona-fide hands. The result was that a railroad costing 
 $1,000,000, part of which was raised by municipal bonds 
 given to the railroad itself, had obligations outstanding 
 for $4,000,000, upon which it endeavored to pay interest 
 and dividends. Even though a foreclosure took place, 
 the new issue of stock and bonds was equal to or greater 
 than that existing before. Exorbitant rates for trans- 
 portation were necessary in order to pay the interest 
 alone, ^and generally for many years there was nothing 
 for dividends on the watered stock."" Hudson deals 
 with the same subject in his "Railways and the Repub- 
 lic." "The New York Central & Hudson River Rail- 
 road," he st^ys, "has a capital stock of $89,428,300 and 
 a debt of $56,497,223, making, with mortgages of 
 $109,320 upon its real estate, an aggregate capitalization 
 of $146,034,853. The fictitious securities included in 
 
 a W. Vr. Conk, The Corporation Problem, Pa^e r4, 
 
 T 
 
THE RAILWAY QUESTION. 
 
 #7 
 
 this total, as was shown by the New York legislative 
 investigating committee in 1880, amount to a large per- 
 centage of the whole, and there is no more conspicuous 
 example of capital inflated by stock dividends under the 
 pretence of consolidation. The stocks of the several 
 roads which were united to form the New York Central 
 were increased in the consolidation by $8,894,560, or 
 more than one-third their original capitalization, which 
 the legislative committee declares to have been ' so much 
 water or fictitious capital added to the road'; but this is 
 reduced to commonplace by contrast with the magni- 
 ficient creation of financial values by the printing press 
 when the consolidation of the New York Central and 
 Hudson River Railroads took place in 1869, and the 
 capitalization of $90,000,000 was effected, which, as the 
 Secretary of that corporation testified before the com- 
 mittee, was 'about twice the original capital of the two 
 companies.' The fictitious addition is stated by the 
 cotnmittee to reach $53,507,060, which, considering that 
 the $8,894,000 of fictitious capital in the New York 
 Central underwent the subsequent inflation of 27 [ r cent, 
 on the second consolidation, is about $2,000,000 within 
 the mark. Without inquiring into the legitimacy of an 
 increase of nearly $17,000,000, which has taken place in 
 the capitalization of this company since the investigation 
 by the legislative committe, it appears from the figures 
 of the committee that of the total capital of the New 
 York Central & Hudson River Railroad, including stock 
 and bonds, 36 per cent, is 'water,' while of the stock 
 whose profits are under discussion the fictitious addition 
 is 59 per cent, of its present total, or about 145 per cent. 
 
 I 
 
 1 
 
 I 
 
 !l 
 
 M^ 
 
 i m il ifcfa » ^ ' 
 
I 
 
 m 
 
 I' 
 
 .J 
 
 n 
 
 ( I 
 
 \ \\ 
 
 i 
 
 48 
 
 THE RAILWAY QUESTION. 
 
 ; ' 
 
 on the original investment. This remarkable manufac- 
 ture of capital is rivalled, if not surpassed, in the well- 
 known history of the Erie Railway. It is sufficient for 
 the present purpose to cite the conclusion of the New 
 York Legislative Committee from the testimony of 
 experts, that the property of the company, capitalized at 
 $155,000,000, could be replaced for $65,000,000, that the 
 most moderate estimate of the actual ' water ' in its 
 securities was $53,163,881, not including a loss of 
 $10,800,000 by discounts in the sale of $25,000,000 in 
 bonds. The capital stock of the company is $85,000,000, 
 representing, according to this most moderate view, 
 $22,000,000 of actual investment ; while others estimate 
 that the bonded securities of the company alone represent 
 the entire amount invested in the property and $10,000,- 
 000 more ; so that the entire share capital and part of 
 the bonds are a stupendous mixture of wind and water." 
 Hudson adds that : — "A still more notorious and flag- 
 rant example of stock inflation is that of the Pacific 
 railroads. The public are familiar with the record of 
 this creation of stupendous wealth out of a loan of a 
 Government subsidy and the gift of an empire in land. 
 The story of the Construction Company, the * Credit 
 Mobilier,' upon whose stock, the investment in which 
 was nominal, the greater portion of the shares and debt 
 of the Union Pacific Railway was distributed as dividends, 
 is part of the record of national politics. 1 1t is also well 
 known how the Central Pacific Railway was built. A 
 company of capitalists, whose resources at the begin Ang 
 of the enterprise were $195,000, with the aid of loans 
 from the City of Sacramento and Placer County to the 
 
THE RAILWAY QUESTION. 
 
 49 
 
 extent of $550,000, built enough road to draw $848, ooc-. 
 from the United States Treasury as the subsidy for the 
 first section, and by repeating the process constructed 
 the entire road. The majority of the Pacific Railway 
 Commission estimate the cost of the Union Pacific at 
 $50,720,000, against a capitalization of $109,000,000, and 
 the cost of the Central Pacific at $58,000,000, against a 
 total capitalization of $124,000,000, showing in each case 
 that all the stock and a portion of the bonds are pure 
 water. The minority report makes the cost of the Union 
 Pacific $38,824,000, and of the Central Pacific $40,000,- 
 000, or less than one-third of the capitalization. It is 
 well known that of this capitalization the stock does not 
 represent a dollar of actual investment, that a large 
 portion of the debt was pocketed by the constructors of 
 the road in the shape of contracts which they made with 
 themselves to build the tracks at two or three times the 
 leg^itimate cost ; that the road was almost, if not wholly, 
 paid for by the Government subsidy ; and that of the 
 $256,000,000 of additional stock and bonds issued upon 
 the properties an estimate that one-third represents in- 
 vested cash will be too liberal."" In street railways the 
 figures are even more startling than in steam roads. It 
 is estimated that the capital stock and funded debt of 
 these railways amount to $95,000 per mile, against 
 $48,000 per mile of track for steam roads, which have to 
 do grading and bridging, and provide station build- 
 ings, signalling apparatus, air brakes, sleeping and 
 dining cars, freight equipment and costly locomotives. 
 
 a J. F. Hudson, The Railways and The Republic, Pages 269-970, 974-376. 
 
 ('■ 
 
 'fi 
 
THE RAILWAY QUESTION. 
 
 XXIII. 
 
 I 
 
 m 
 
 i 1 1 
 
 Vf 
 
 This reckless inflation of railway capital by manipu- 
 lation of contracts, trafficking- in bonds, and introduction 
 of wind and water makes any general classification of 
 rates exceedingly difficult, and has immensely complicated 
 the work of the Interstate Commission. In one of its 
 decisions tiie commission points out that: — "The Chicago, 
 Santa Fe & California and the Chicago and Alton roads 
 run side by side between Chicago and Kansas City. The 
 Alton is capitalized at $46,000 per mile and the Santa 
 Fe at $92,000. Their rates must necessarily be the 
 same ; must they be such as to yield income on the basis 
 of the Alton's capital and obligations, or on the capital 
 and obligations of the Santa Fe, which are double as 
 much ? The bonded debt and capital of the Burlington 
 & Missouri River in Nebraska is $37,000 per mile, and 
 of the Tremont, Elkhorn & Missouri Valley 6,000. 
 They parallel on either side of the Union Pacifi pital- 
 ized at $105,000 per mile. The bonded debt of the 
 Union Pacific per mile is $7 1 ,840, and is nearly double both 
 bonded debt and capital stock of either of the other two 
 roads. The three must of necessity carry on the same 
 terms. The bonded debt, saying nothing of the capital 
 stock, of the Union Pacific is double its original cost, or 
 the cost of replacing it with its $17,000,000 terminals .... 
 The New York, Lake Erie & Western, with a bonded 
 debt of more than $132,000 per mile, could make rates 
 on the same basis with the Chicago & Northwestern," or 
 the Chicago, Burlington & Quincy, with funded debts 
 but slightly exceeding $20,000 per mile for one and 
 
 lin' .flu 
 
W^mF 
 
 THE RAILWAY yUESTION. 
 
 5» 
 
 $24,000 for the othe'-. The funded debt of the Illinois 
 Central but little exceeds $23,000 per mile, and the 
 Chicago, Rock Island & Pacific less than $16,000. That 
 of the New York Central is $85,000. Their reported 
 tonnage cost and capitalization are nearly in like propor- 
 tion. The reported cost of service was less on the 
 Illinois Central and more on the Rock Island than on the 
 New York Central." But the body of the grievance is 
 that the people, except under some arbitrary regulation 
 of rates, pay charges upon much of this wind and water, 
 and that by the laxity of our railway legislation we delib- 
 erately encourage reckless speculative financing and 
 criminal waste of capital. In this, as in every other 
 unwholesome development in the field of transportation, 
 we have followed very closely at the heels of the United 
 States. We are behind on'y in remedial measures. In 
 the history of Canadian ailways we have had resort to 
 every doubtful expedient and every species of railway 
 financing from the construction company to payment of 
 dividends out of capital. After the first Canadian Pacific 
 stock issue of $5,000,000 there was an issue of $20,000,- 
 000 at 25 per cent., which of course only realized 
 $5,000,000 cash. The five per cent, dividends paid on 
 this would be in reality 20 per cent, on actual invest- 
 ments. After this $40,000,000 stock was issued at ^2)4 
 percent., which consequently realized $2 1,000,000. The 
 dividend of 5 per cent, on this stock was equal to gj4. 
 per cent, on the money invested. Upon all this stock 
 the Canadian people will be expected to pay interest at 
 par value and these issues were made with the sanction 
 and authority of the Canadian Parliament. 
 
 •1 I' 
 
 7\ 
 
 :^ 
 
 SUni 
 
 •Millilk 
 
52 
 
 THE RAILWAY QUESTION. 
 
 V 
 
 XXIV. 
 
 f 
 
 tr 
 
 I \ 
 
 The Manitoba & Northwestern road, in the hands of 
 a receiver, is bonded for $22,000 a mile, but could have 
 been built for $12,000 or $15,000 a mile, even at the 
 higher prices for railway material which prevailed a few 
 years ago. It is likely that the road will soon earn a 
 satisfactory dividend even upon $22,000 a mile, but if 
 it were necessary to pay only upon the actual cost, the 
 road would be a splendid-revenue-earning property with 
 much lower freight charges than are possible under the 
 conditions that have been created. The Northwest 
 Central has a miserable history of political financing and 
 exhausting litigation. We all know the origin of this 
 project. We all know that it was bred in politics and 
 not in business. The road is now before the courts, and 
 it may be well to leave the facts until they can be reviewed 
 in the light of the final judgmenv. But the block con- 
 sequent upon the prolonged litigation has deprived this 
 section of the west of railway facilities that the people 
 had a right to expect, and caused serious inconvenience 
 and hardship to many settlers who were led to locate on 
 the line of the road on the expectation of its early exten- 
 sion and completion. There is a real touch of pathos in 
 one of the minor chapters in the story of this project. 
 Schiller, contractor under Charlebois, in easy circum- 
 stances before he adventured into this ill-fated enterprise, 
 is now foreman of the road gang on the railway he con- 
 structed, doing the work of a day laborer under, the 
 orders of the receiver, keeping his family in very humble 
 quarters at Brandon, and waiting with pathetic patience 
 
 
imm^ 
 
 \ ! 
 
 THE RAILWAY jJUESTION. 
 
 53 
 
 for the close of the interminable litigation and the settle- 
 ment of his claim for construction. If an end of the 
 litigation can be reached and over-stocking and over- 
 bonding guarded against, and the line extended on 
 business principles, the Northwest Central should yet 
 prove a good property. Now a tri-weekly service is pro- 
 vided under the management of the receiver, and it is 
 understood the revenue more than covers the expenditure. 
 The history of the Qu'Appelle, Long Lake & Saskatche- 
 wan Railway is faithful to the details of American railway 
 methods. More than $3,500,000 was received from the 
 sale of bonds. The road cost for construction and 
 commissions and disbursements in connection with the 
 sale of bonds probably $2,500,000. Rolling stock and 
 terminus were supplied by the Canadian Pacific. The 
 road received also a land grant of 1,400,000 acres and a 
 cash subsidy of $80,000 a year. It was leased for six 
 years to the Canauian Pacific, without rental, and this 
 lease has just been renewed. But the original promoters 
 got a million or two out of the speculation. 
 
 XXV. 
 
 The Calgary & Edmonton Railway Company was 
 incorporated in 1890. The length of the road as projected 
 is 340 miles, of which 295 miles has been constructed. 
 The promoters received the usual land grant of 6,400 
 acres per mile, and mail subsidy of $80,000. The subsidy 
 is to be paid direct to the London agents as trustees for 
 the bondholders. The bonding powers given to the 
 company were to the amount of $25,000 per mile. With 
 this the enterpr'se was launched. Almost immediately 
 
 f^i 
 
 ri 
 
 11- 
 
 1 1 ilBI»i* i [| i .iS«H < fi^ ^ » i, wfifii:ifiafl»^ 
 
 ""WmiiSSSm 
 
d 
 
 54 
 
 THE RAILWAY QUESTION. 
 
 the road passed under the operation of the Canadian 
 Pacific Railway C impany. Many of its promoters a,nd 
 contractors werv closely identified with that company. 
 At the session of Parliament of 1891 the Canadian 
 Pacific obtained permission to issue its own 4 per cent, 
 consolidated debenture stock to the amount of $20,000 
 per mile of the Calgary & Edmonton Railway. This was 
 stated to be for the purpose of "satisfying or acquiring 
 obligations entered into in respect of the acquisition, 
 construction, completion or equipment of the Calgary & 
 Edmonton Railway." The 295 miles of the road were 
 opened in October, 1892, the Canadian Pacific agreeing 
 to operate it for the first five years, furnish the rolling 
 stock and retain all income other than the subsidy. To 
 estimate correctly the resources which from various 
 channels have been provided for the construction and 
 operation of this 295 miles of prairie road is scarcely 
 possible upon the information available. But a more or 
 less close approximation may be calculated from the 
 above facts. Railways sometimes i'a'.culate their land 
 grant upon a basis of three dollars an acre. The Cal- 
 gary & Edmonton Company will not say that half that 
 figure is an excessive basis. That gives $2,832,000 
 under that head. To this amount must be added the 
 road's bonded indebtedness, consisting of $5,458,940 
 first mortgage 6 per cent. 20-ye'ir bonds. It may be 
 that these bonds v/ere subjected to a discount, but the 
 measure of guarantee which was given them by means 
 of the mail subsidy no doubt materially strengthened 
 them. Roughly speaking, therefore, and leaving out of 
 the addition the mail subsidies, the promoters raised 
 
THE RAILWAY QUESTION. 
 
 55 
 
 upon the road in bonds and land the amount of $28,000 
 a mile. The cost of the road, according to the com- 
 pany's own figures, has been $3,717,882, or $13,000 a 
 mile. Actually, howeverj the construction probably did 
 not cost more than $7,000 a mile. The roadbed is now 
 in very poor condition. At this rate the total cost was 
 $2,065,000. Over against this is a bonded debt of five 
 and a half millions and the i ,888,000 acres of land grant. 
 In view of all these facts we should make it an inflexible 
 feature of our future railway policy, that we shall not 
 vote public money for the construction of parallel roads, 
 that we shall rigidly limit issues of stock and capital, and 
 force railway construction and railway operation down 
 to business principles. It is time we learned something 
 from a very instructive experience. The American 
 people have awakened to the importance of this prob- 
 lem, and it is time we, too, gave it very serious atten- 
 tion. All these carrying corporations are the offspring 
 of Parliament, the holders of public franchises, and their 
 right of taxation ought to be limited to a reasonable 
 profit on a reasonable investment, although we may not 
 violate solemn bargains nor unload even upon corpora- 
 tions that we have unwisely created, the consequences of 
 our own folly. 
 
 u 
 
 ■Mta 
 
 »ll »i. ii.iiii i i u l i w i llili fa. 
 
T7^ 
 
 ■ 
 
 I 
 
 f^ 
 
 1 } 
 
 56 
 
 THE RAILWAY QUESTION. 
 
 XXVI. 
 
 Perhaps the best of the American State Railway Com- 
 missions is that of Iowa, and an examination of its pro- 
 visions and the results of its operations will be instruct- 
 ive. Iowa was one of the first communities in the 
 United States to rise against railway aggression. It 
 was a nursery of the Granger movement, and mainly as 
 a result of the farmers' agitation the State Legislature in 
 1874 passed an Act to Establish Reasonable Maximum 
 Rates of Charges for the Transportation of Freight and 
 Passengers on the Different Railroads of the State. 
 This measure classified railroads according to their gross 
 earnings per mile within the State for the preceding year. 
 Class "A" included all railroads whose gross earnings 
 per mile were $4,000 or more; Class "B," $3,000 or 
 any sum less than $4,000 ; Class ** C," less than $3,000. 
 In passenger transportation, roads in Class *'A" were 
 allowed to charge three cents per mile, Class **B," 
 three and one-half cents, and Class " C," four cents. A 
 carefully detailed schedule of rates was prepared for 
 transporting freights, goods, and merchandise for every 
 mile from one up to three hundred and seventy-six, fol- 
 lowed by a classification of goods. Railroads in Class 
 ** A" could charge no more than ninety per cent, of the 
 scheduled rates ; railroads in Class **B" could charge 
 five per cent., and in Class "C" twenty per cent, in 
 addition to scheduled rates. To assist in the classifica- 
 tion of roads, each corporation was required under 
 penalty to return to the governor annually a statement of 
 its gross receipts upon the entire road within the State. 
 
P<Mi 
 
 ■ 
 
 ^•^ 
 
 fi^^^^m mj i-w. I , 
 
 ...ai._. I — ijwi 
 
 THE RAILWAY QUESTION. 
 
 57 
 
 A copy of the rate was required to be kept posted for 
 public inspection, and there were rigid provisions against 
 discriminations. But there were exhausting contests 
 over questions of jurisdiction, and the authority of the 
 State to enact such legislation ; the railways fought per- 
 sistently and stubbornly to damage the law in public 
 estimation, the penalties imposed were not enforced and 
 at length th^ law was repealed. 
 
 XXVII. 
 
 The maximum Rate Law was followed by the Advisory 
 Commission. This law established a Board of Railway 
 Commissioners. Three commissioners were to be 
 appointed by the Governor with the advice of the Execu- 
 tive Council to hold office for three years and one of 
 whom should be a civil engineer. It was provided that 
 they should not be pecuniarily interested in any railway 
 and they were chosen from the eastern, central and 
 western portions of the State. They had the power to 
 investigate and report but they had no power to enforce 
 their decrees. Violations of the order of the commission 
 were to be reported to the legislature and the law relied 
 upon the element of publicity to make the recommenda- 
 tions of the commission effective. The operation of this 
 law gives astonishing evidence of the power of public 
 opinion in a democratic community. As a rule the rail- 
 ways dare not or at least did not resist the orders ot the 
 commission. In the main the Board guarded its powers 
 jealously, and asserted its authority fearlessly and as 
 a consequence a marked improvement was effected 
 
 i 
 
 
 fl 
 
 ■SWJ- 
 
i 
 
 (I' 
 
 til 
 
 i 
 
 1 
 
 
 \i 
 
 58 
 
 THE RAILWAY QUFSTION. 
 
 in the relations between the railways and the people, the 
 growth of local industries was powerfully promoted, and 
 a more satisfactory condition of business st» bility was 
 established. But it was arg-ued that the Board had not 
 the necessary power to prevent discriminations, that 
 many of its decisions were observed by the railways be- 
 cause they covered only minor complaints and that in 
 dealing with questions of the first importance the Board 
 could not be effective because it had not power to en- 
 force its decrees and therefore these greater questions 
 were not even submitted to the Board for judgment. 
 And so came the agitation for the Commission with 
 Power and this time the demand came from the manu- 
 facturers and iobbers, who argued that the industries of 
 Iowa were sc-iously discriminated against by the low 
 through rates granted to eastern jo'^bers and manufac- 
 turers. As a result the legislature •'/» 1888 adopted an 
 Act to regulate Railroad Corporations and other Com- 
 mon Carriers in the State and to increase the powers 
 and further define the duties of the Board of Railroad 
 Commissioners in relation to the same, and to pre- 
 vent and punish extortion and unjust discrimination in 
 the rates charged for the transportation of passengers 
 and freights on railroads in Iowa. 
 
 
 
 
 gers 
 
 
 ^^'; 
 
 '- ^ ■ ' ■ . - ; 
 
 
 
 ^.. -.1. '"r ■ 
 
 
 
 "■- . ■ 'V ■ , _ ■ . 
 
 
 
 
 i 
 < 
 
 
^fm 
 
 the 
 and 
 was 
 
 not 
 that 
 
 be- 
 lt in 
 >ard 
 
 en- 
 
 ons 
 
 2nt. 
 
 vith 
 
 inu- 
 
 s of 
 
 low 
 
 fac- 
 
 I an 
 
 3m- 
 
 'ers 
 
 oad 
 
 jre- 
 
 1 in 
 
 ers 
 
 THE RAILWAY QUESTION. 
 
 XXVIII. 
 
 59 
 
 The salient features of the law are thus presented by 
 Dr. Dixon in his admirable work on State Railroad Con- 
 trol. "The law applied to all common carriers engaged 
 in transportation by railroad within the State, the term 
 ' railroad ' to include all bridges and ferries used in 
 connection, and also any road operated or owned under 
 contract, agreement or lease. All charges must be 
 reasonable and just, and unreasonable charges were 
 prohibited. Special rebates and drawbacks were pro- 
 hibited; but this did not prevent the charging of a less 
 rate per loo lbs. in car-loads than was charged for 
 freight in less than car-load lots. It was declared 
 unlawful to give any preference to any particular person 
 or locality. The companies were required to furnish 
 facilities for the exchange of freight and passengers 
 between their lines, and to switch and transfer cars for 
 loading or unloading at the direction of the Board. Ic 
 was declared unlawful to charge any greater compensa- 
 tion in the aggregate for the transportation of passengers 
 or property for a shorter than for a longer distance, all 
 or any portion of the shorter haul being included within 
 the longer. Pooling of all kinds was prohibited. Every 
 common carrier was required to keep posted schedules 
 of its charges, copies of which, together with all joint 
 agreements of other roads, were to be placed in the 
 hands of the Board, ten days' public notice to precede an 
 advance in rates. Failure to publish rates was an 
 offence cognizable in the District Court, and rendered 
 the company liable to a fine of $500 for each day's 
 
 
 I 
 
 MOM 
 
 iK&ftimmltm 
 
1 m 
 
 1 
 
 U B 
 
 
 r 1 
 
 
 ^B 
 
 1 
 
 ^Bi 
 
 \ 
 
 ■ 
 
 ( 
 
 i|' i 
 
 
 i\ 
 
 1 'i' 
 
 6o 
 
 THE RAILWAY QUESTION. 
 
 failure to cnmply. The breaking of a continuous car- 
 riage of freight was unlawful, unless necessary. Any 
 person injured might complain to the Board, or bring 
 suit in court, but could not pursue both remedies in the 
 same case. The court might compel any officer of a 
 corporation to testify, or to produce books and papers, 
 the claim that the matter presented might tend to 
 incriminate him not being sufficient excuse for not 
 testifying ; but such evidence should not be used against 
 such person in any way on the trial of any criminal pro- 
 ceeding. Penalties were prescribed for violations of the 
 Act. The Board was empowered to enquire into the 
 management of the busiu-^ss of all common carriers, 
 with the power to require the papers and books of the 
 companies, and to compel testimony. Any person, firm, 
 corporation, or association might make complaint of 
 failure to perform duties by railroad companies, which 
 should be investigated ; and no complaint should at any 
 time be dismissed because of the absence of direct 
 damage to the complainant. The Board was directed to 
 make a schedule pnd classification of reasonable maxi- 
 mum rates, such schedule to be prima facie evidence in 
 court that the rates were reasonable. Hearing should 
 be given upon complaints as to the reasonableness of 
 rates, the lowest rates charged by any railroad company 
 for substantially the same kind of service being accepted 
 as prima facie evidence of a reasonable rate for the ser- 
 vices under investigation, the operations of the railroad 
 in question outside the State, or in interstate commerce, 
 and the charges therefor, being taken into account in 
 determining the reasonableness of the rate complained 
 
 .„:Ji_..J 
 
THE RAILWAY QUESTION. 
 
 6l 
 
 of. The Commissioners might add to the showing 
 any information they might then have, or could secure 
 from any source whatsoever. The rate per loo lbs. 
 should be the same for all classes of freight, for like 
 distances, to all persons shipping in less than car-load 
 lots, and the rate per loo lbs. for all shippers in car-load 
 lots should be the same for same distances with the 
 same class of freight. Penalties were prescribed for 
 extortion, unjust discrimination as to rates, classifica- 
 tions and the use of cars. Exceptions to the law were 
 made in the case of the United States or State govern- 
 ments, charitable institutions, State fair exhibits, em- 
 ployees and their families, ministers of religion, and 
 persons in charge of live stock. The issuance of mileage 
 and excursion tickets was permitted, as well as the 
 exchange of courtesies between roads. The Railroad 
 Commissioners and secretary, and other agents whose 
 services they might require, were given free transporta- 
 tion. The methods of procedure to be followed by the 
 Board in cases arising under the Act were three in 
 number. The first method was followed in case of 
 civil suit for damages sustained by an individual at the 
 hands of railroads. In such case persons injured might 
 make complaint to the Commissioners, or bring suit for 
 the recovery of damages in any court of competent 
 jurisdiction ; but both methods could not be resorted to. 
 A common carrier, violating the provisions of the Act, 
 was liable to the person injured for three times the 
 amount of damages sustained, with costs and reason- 
 able attorney's fees ; but written demand on the common 
 carrier for the damages should be made before suit was 
 
 ii 
 
 I 
 
 
 n 
 
^■1^1 
 
 69 
 
 THE RAILWAY QUESTION. 
 
 M r 
 
 brought. The court was empowered to summon wit- 
 nesses, and order the production of books and papers. 
 The second method of procedure related to proceedings 
 in equity. The first case under this method arose when 
 a carrier refused to publish its schedule of rates as 
 provided for in Sect. 7, in which case a writ of manda- 
 mus was issued by the District Court upon the petition, 
 without bond, of the Commissioners, failure to comply 
 with the writ being punishable as contempt. The sec- 
 ond case arose during an investigation by the Commis- 
 sion, upon refusal to obey a subpoena, or other proper 
 process, by a carrier. In such cr >e any court of the 
 State within the jurisdiction might issue an order requir- 
 ing attendance and the production of papers, refusal to 
 obey being punishable as contempt. The third case 
 under the method of equitable procedure is to be found 
 in Sects. 13, 14, 15 and 16 of the Act. Sect. 13 provides 
 that any person or association may enter complaint with 
 the Board of Commissioners. The Commissioners shall 
 forward the complaint to the carrier complained of. If 
 the carrier does not satisfy the complainant within a 
 reasonable time, an investigation is to be made by the 
 Board. Sect. 14 prcvides that the result of the inves- 
 tigation shall be drawn up in writing, and forwarded 
 to the complainant and the carrier complained of, the 
 report to be prima facie evidence in court of the facts 
 found. Sect. 15 provides that in case the Commission- 
 ers are satisfied that anything is being done in violation 
 of the law by the common carrier, a copy of their report 
 is to be furnished the carrier, with a notice to desist 
 from such violation. By the terms of Sect. 16, in case 
 
 .' — :__....^A 
 
on wit- 
 papers, 
 eedings 
 je when 
 ates as 
 manda- 
 )etition, 
 comply 
 rhe sec- 
 !ommis- 
 r proper 
 t of the 
 • requir- 
 fusal to 
 rd case 
 (6 found 
 jrovides 
 int with 
 ;rs shall 
 i of. If 
 vithin a 
 ; by the 
 e inves- 
 rwarded 
 of, the 
 he facts 
 mission- 
 aolation 
 ir report 
 o desist 
 , in case 
 
 THB RAILWAY QUESTION. 
 
 63 
 
 the carrier refusfs or neglects to obey the order, the 
 Commissioners are directed to apply in a summary way 
 by petition to the District or Superior Court of the 
 county ; and the Court may hear the complaint upon 
 short notice without the formal pleadings applicable to 
 ordinary suits in equity, and may direct such persons to 
 appear as are necessary to a full hearing of the case, the 
 report of the Commissioners to be prima facie evidence 
 of the matter stated by them. If the petition of the 
 Commissioners is sustained, the Court may issue a writ 
 of injunction, to be followed, if necessary, by writs of 
 attachment, a fine of one thousand dollars being levied 
 for each day that the carrier shall fail to obey the 
 injunction. The usual right of appeal to the Supreme 
 Court is retained, 'but no appeal to the Supreme Court 
 shall operate to stay or supersede the order of the 
 Court or the execution of any writ or process thereon ; 
 and such Court may in every such matter order the pay- 
 ment of such costs and attorney and counsel fee as shall 
 be deemed reasonable.' The third method of procedure 
 related to criminal proceedings in cases of direct viola- 
 tions of law by the carriers. Here the Board was 
 directed to institute suit on behalf of the State against 
 the carriers in any court of competent jurisdictiou for the 
 collection of the penalties imposed by the Act, the 
 Attorney-General conducting the suit, and the court 
 being empowered in its discretion to give such suits 
 preference over all business except criminal cases. Such 
 fines might be imposed in a criminal prosecution by 
 indictment, or in a civil action by ordinary proceeding 
 instituted in the name of the State of Iowa. In all cases 
 
 
 
 i^\ 
 
 mimlm 
 
^^^m 
 
 i 
 
 64 THE RAILWAY QUESTION. 
 
 not otherwise particularly prescribed by law, the Board 
 might conduct its cases in such manner as would best 
 conduce to the proper despatch of business and to the 
 ends of justice. The Board was given power to amend 
 its order of proceedings and notices with the limitation 
 that they should conform as nearly as possible to those 
 in use in the courts of the State. Any party might 
 appear before the Board in person or by attorney, and 
 every Commissioner should have the right to administer 
 oaths and affirmations in any proceeding pending before 
 the Board. Chapter 29 changed the manner of choosing 
 railroad Commissioners from appointment by the Gover- 
 nor, with the advice and consent of the Executive Coun- 
 cil, to election by the citizens of the State. No person 
 in any way pecuniarily interested in a railroad company 
 was eligible. Vacancies were filled through appoint- 
 ment by the Governor. This last chapter was adopted 
 in face of the opposition of those who feared that the 
 election of Commissioners by the people would give the 
 railroads the opportunity long sought for, of entering 
 directly and effectively into politics. Later developments 
 have proved that these fears were not unfounded." " 
 
 
 a Frank H. Dixon, Stmte R < >ad Control, pages 140 to 146. 
 
 
 Mi 
 
'i 
 
 he Board 
 ould bast 
 nd to the 
 to amend 
 
 limitation 
 to those 
 tv might 
 rney, and 
 
 idminister 
 
 ing before 
 choosing 
 
 he Gover- 
 ive Coun- 
 
 No person 
 
 company 
 
 appoint- 
 
 ,s adopted 
 that the 
 
 id give the 
 
 f entering 
 
 elopments 
 
 ed."" 
 
 THE RAII ,AY QUESTION. 
 
 XXIX. 
 
 65 
 
 Great and arbitrary powers have been exercised under 
 this law and to the great advantage of Iowa. The first 
 duty of the Board was to establish a schedule of maxi- 
 mum rates and arrange a classification, and the Commis- 
 sion accepted as the basis of the new schedule the rates 
 under which the railways had been running. The Board 
 reduced the through rates which gave the eastern jobber 
 and manufacturer an advantage over local jobbers and 
 manufacturers, and this led to a marked development of 
 the industries of Iowa. In Canada, notwithstanding 
 that we have put millions of public money into our rail- 
 ways, we tolerate discriminations in favor of American 
 shippers that operate very seriously against Canadian 
 industries. It is, perhaps, not too much to say that in 
 many cases the advantage of our tariff duties is fully 
 offset by the lower rates given to American shippers. 
 On the one hand we are building up home industries by 
 tariff taxation on our own people, and on the other hand 
 our own railways, built largely with public money, are 
 bringing in American goods at such low rates of freight 
 that the foreign manufacturer, notwithstanding our pro- 
 tective duties, is able to swamp the home manufacturer 
 in his own market. The question is one of tremendous 
 importance and should receive the early and thorough 
 consideration of the Parliament of Canada. We are 
 all glad to see the Canadian railways carrying Ameri- 
 can goods and admit that they must compete for through 
 traffic at through rates, but there is a limit beyond 
 which the position of the Canadian manufacturer and 
 5 
 
 i i 
 
 ■f 
 
 ..«j»*-i 
 
*>■ 
 
 ■. ■»';" ! ■ afe i ^t ^^- 
 
 rH 
 
 66 
 
 THE RAILWAY QUESTION. 
 
 shipper cannot be prejudiced, and it is doubtful if we can 
 afford to have the through rate for American goods 
 lower than the through all Canadian charge. For 
 example, if the Grand Trunk or the Canadian Pacific 
 gives a lower rate to a Detroit shipper than to a Windsor 
 shipper the tendency is to build up an industry Pt Detroit 
 rather than at Windsor, and if the Canadian railways 
 give a lower through rate to New Yorkj Portland or Bos- 
 ton than to Montreal, St. John or Halifax, the result must 
 be to build up American ports at the expense of Cana- 
 dian ports and that with the direct aid of Canadian sub- 
 sidized railways. Dr. Dixon says that : ' * The great benefit 
 to Iowa " from the operation of the Railway Commission 
 *' has been found in the development of home industry. 
 New -oal mines have been opened, new mills and manu- 
 facturing concerns erected, the jobbing business has 
 extensively increased. Products are now exchanged 
 much more largely between sections of the State than 
 before, and people no longer look outside the State to 
 find both a purchasing and a selling market."" And 
 the Commission in its report of 1891 said : "The farmer 
 gets his supplies cheaper, his lumber, coal, salt, and 
 other heavy commodities, at fair rates. He finds a mar- 
 ket for a portion of his surplus corn, oats, hay, wood, 
 timber, etc., at home, and saves transportation. He 
 markets many of his hogs in Iowa packing-houses, and 
 saves freight chaiges. Wood and logs, that lay in the 
 timber rotting, the Iowa rates are making a market for ; 
 and new mills are sawing the latter up for use in excel- 
 sior, fencing-pickets, handles, boxes, and other industries 
 
 a Framk H. CHxoa, State Raliniad Ooatrol, page 195. 
 
 MMVMtWIiWtllWin 
 
 i^-^Sth/f^ 
 
THE RAILWAY QUESTION. 
 
 Wf 
 
 unknown before. The railway policy of the long haul 
 has, in a measure, been supplanted by the new system, 
 and an exchange of products between different parts of 
 the State is one of the commendable results. Hay and 
 corn from northern Iowa are now sold at better prices in 
 the dairy counties of eastern and southern Iowa in large 
 quantities, a thing hitherto unknown. These formerly 
 paid tribute to Chicago." So we would probably find 
 that lower and fairer local rates in Canada would greatly 
 facilitate home trade, and give new life to many Cana- 
 dian industries that are now paralysed by American 
 competition and which competition is made effective by 
 discriminatory railway charges. 
 
 XXX. 
 
 The Iowa Board compels the railways to give ade- 
 quate service on branch lines. It is held that lateral lines 
 are profitable as feeders even if operated at a loss in 
 themselves. They are mostly built with local aid, they 
 occupy territory and shut out competition and therefore 
 must be operated. For example there was a recent out- 
 cry on the Wellington, Grey and Bruce branches of the 
 Grand Trunk against a serious reduction of service by 
 the new management. These branches received large 
 municipal aid, they were built as independent lines and 
 later absorbed by the Grand Trunk and it would be intol- 
 erable if these communities shr^ild now be denied a 
 reasonable service. A Board t Railway Commissioners 
 could compel this reasonable service and could also take 
 cognizance of a complaint like that made the other day 
 
MP 
 
 Mmmt 
 
 68 
 
 THE RAILWAY QUESTION. 
 
 v: 
 
 F 
 M 
 
 > M 
 
 by The Prince Albert Advocate. The paper says: " The 
 management of the Prince Albert branch of the Canadian 
 Pacific Railroad seem to conduct their business on the 
 penny wise and pound foolish plan. While they charge 
 us the highest rates charged on any road in Canada they 
 give us the worst possible service. During the last two 
 or three years they have done away with section men on 
 this road and as a result the train is delayed by the ex- 
 cessive growth of weeds on the road bed in the summer 
 time and by the drifting snow in the winter. This win- 
 ter the snow fall has been heavier than usual, and the 
 train has been making about as good time as the ox 
 teams of the freighters. Passengers have been kept 
 four or five days on the trip from Prince Albert to Regina 
 which should not take more than ten hours, though the 
 schedule time is fourteen hours, and have been subjected 
 to great hardships through cold and the want of proper 
 food. It is disgraceful that such a state of things exists on 
 a railroad which is receiving a subsidy of $80,000 a year 
 from the government, especially when at a very small 
 expenditure a few fences could be erected along the road 
 in the open prairie where the wind fills the cuttings with 
 snow, and by the employment of the usual section men 
 who could easily keep the remainder of the track clear." 
 
 XXXI. 
 
 In many cases the Iowa Board has compelled the 
 erection of new stations. It has taken jurisdiction over 
 farm crossings and in many cases ordered the railways to 
 put in under-track crossings. We may say that this 
 work is done by our Railway Committee but the com- 
 
i -7^,TJV»^'J ' Mf 
 
 •""i^^iS^;^;^** .. 
 
 "WH«!UJi 
 
 THE RAILWAY QUESTION. 
 
 69 
 
 missioner can go to the crossing while the farmer can go 
 to the Railway Committee much less easily and much less 
 cheaply. The Iowa Board ordered a railway to allow 
 the Farmer's Alliance to erect a coalhouse on its station 
 grounds notwithstanding the railway's plea that the Al- 
 liance intended to sell coal at cost and so would drive 
 other dealers out of the business. The Board held that 
 " the refusal to grant to the Farmers' Alliance a site on 
 its side-track for a coal-house, after granting similar 
 facilities to other parties, was contrary to the decisions 
 of the court, a violation of the statute, an unjust discri- 
 mination against complainants and against public policy." 
 The Board held again that " a railroad company dealing 
 in coal cannot exclude private dealers, but must furnish 
 them with storage facilities and shipping privileges. It 
 cannot neglect its dutiy as a common carrier because it 
 has engaged ii: private business." Dealing with a com- 
 plaint that a railway had entered into an agreement to 
 give special rates to grain buyers who had elevator facilities 
 the Advisory Commission recommended "that like charges 
 be made when not less than full car-load lots are offered 
 at the same station, and if any concessions or drawbacks 
 be given, they should be open to all shippers offering 
 freigh of the same kind, in the same class, in the same 
 line of busine^ ;." In condemning a discriminatory 
 agreement for supply of cars to a particular coal com- 
 pany he Commission made this deliverance: '* Whenever 
 able ti do so, every railroad company should have cars 
 sufficie^ for the transaction of the ordinary business of 
 the road. If at certain seasons of the year there is, as 
 in the coal-trade, a great demand for cars of a certain 
 
 mimm 
 
'^;^^ 
 
 Bm 
 
 I Mm 
 
 70 
 
 THE RAILWAY QUESTION. 
 
 
 1 H 
 
 character, it is the duty of the railroad company to have 
 a sufficient number of cars to supply the ordinary 
 demand. . . An extraordinary demand at stations 
 and by shippers resulting from a periodical influx of 
 business should be met by a pro rata distribution of cars, 
 and this should be made both as to stations and ship- 
 pers." 
 
 XXXII. 
 
 The Commission ordered the operation of a piece of 
 road that had been abandoned. The Board held that a 
 railway company could not be required to furnish cars for 
 the transportation of freight off from its own line as the 
 result would be to scatter the cars of any one road along 
 connecting roads and so place the company at the mercy 
 of competing lines. The Board settled many claims 
 for damages and in the main its judgments were 
 accepted. In one case the complainants charged 
 that an amount of butter which was hauled to the 
 railway station, and by reason of the non-arrival of 
 the refrigerator car at the advertised time, was exposed 
 to the heat, had melted, and consequently deteriorated in 
 value, and the Board awarded damages on the ground 
 that the railroad, having encouraged the growth of dairy 
 interests through the offer of special privileges, was 
 bound to make the service reliable. The publication of 
 time tables is of great public advantage for in secrecy 
 of rates is the very stronghold of favoritism, discrimina- 
 tions, and all manner of injustice. The importance of 
 stability of rates is well emphasized in this extract from 
 one of the Board's annual reports : "There have been no 
 
 ■ 
 
THE RAILWAY QUESTION. 
 
 71 
 
 rate wars and consequent disturbance of business in 
 Iowa the past two years. The stable character of Iowa 
 rates which have been in force, with only such slight 
 changes as have been made in classification from time to 
 time, is approved on every hand. While rate cutting 
 has been in vogue in the States around us and the 
 troubled waves have surged up against our very borders, 
 wasting the energies of the great corporations and the 
 revenues of the stockholders, Iowa has been largely free 
 from the devastating and demoralizing influences ; and 
 with the curtailing of rebates, secret rates, free passes, 
 and other special privileges which the few formerly en- 
 joyed at the expense of the many, there has followed 
 steady rates and increased revenues, more than sufficient 
 to make up for any deficiency caused by reductions of 
 local rates. The evil effects of rate wars on business are 
 also unknown here, and instead we have steady rates 
 and uniform charges shared alike by all." And the 
 Iowa Commission has taken authority over baggage, 
 ticket and shipping regulations, violation of contract, 
 cases of trespass, lack of transfer facilities, and causes 
 of accidents. No doubt the main feature of the existing 
 law, the Commission with Power, is that which gives 
 the Board of Commissioners authority to fix maximum 
 rates, and if this is feasible in Iowa, with its great net- 
 work of railways, it should be feasible in Canada, where 
 we have practically only the two through roads, each 
 operating in older Canada under very similar conditions 
 and substantially under a joint tariff which would form 
 the basis of the schedules that would be made by the 
 Commissioners. 
 
~:iammmm 
 
 =B!P5 
 
 VY 
 
 ff 
 
 THE RAILWAY QUESTION. 
 
 XXXIII. 
 
 I 
 
 ml 
 
 'i 1 
 
 We can have no satisfactory regulation of railways 
 by means of the Railway Committee. The members 
 of this Committee have other onerous duties and it 
 is impossible for the ordinary shipper to carry his 
 grievance to the Capital. The Commissioner must 
 go to the shipper, and the cost of investigation must 
 be taken off the shipper's shoulders. It should be 
 possible to approach even a monopoly on the side 
 of its self interest, and if in the west the Canadian 
 Pacific Railway will recognize that only by putting rates 
 to the very bottom can it hope to escape the construction 
 of competing lines and the consequent division and diver- 
 sion of its business, and will make it a deliberate policy 
 to deserve monopoly of the traffic, then in a few years 
 western Canada should have lower freight charges than 
 any other part of the American continent, and this would 
 be an enormous advantage to the western producer. By 
 regulated monopoly we can get lower charges than by 
 wasteful competition, but of course monopoly that will 
 not submit to regulation must meet competition. So in 
 older Canada revision and control of local and through 
 charges would remove some cr)ing evils, and it may be 
 we can so order it that for the future the Canadian rail- 
 ways shall be the agents of Canadian rather than of 
 American industries and of Canadian rather than Ameri- 
 can ports. In the language of a Justice of the Supreme 
 Court of the United States : "The highways in a State 
 are the highways of the State. Convenient ways and 
 means of inter-communication are the first evidence of 
 
 ■' 
 
THE RAILWAY gUBSTION. 
 
 73 
 
 the civilization of a people. The highways of a country 
 are not of private but of public institution and regulation. 
 In modern times, it is true, government is in the habit 
 in some countries of letting out the construction of im- 
 portant highways requirmg a large expenditure of capital 
 to agents, generally corporate bodies cheated for the 
 purpose, and giving to them the right of taxing those 
 who travel or transport goods thereon as a means of 
 obtaining compensation for their outlay. But a super- 
 intending power over the highways, and the charges 
 imposed upon the public for their use, always remains in 
 the government. This is not only its indefeasible right, 
 but it is necessary for the protection of the people against 
 extortion and abuse. These propositions we deem to be 
 incontrovertible. " 
 
 wmmm