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THE CANADIAN EAILROAD QUEMiUi^
ARGUMENTS AND Fx\CTb
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THE CANADIAN RAILROAD QUESTION.
ARGUMENTS AND FACTS
SUBMITTED TO
A COMMITTEE OF THE UNITED STATES SENATE,
El WfMEDDAUGH, Esq.,
^ AND
A. C. RAYMOND, Esq.,
AT A HEARING IN DETROIT, MICHIGAN,
May I, 1891.
DETROIT:
John F. Eby & Co., Printers, 65 West Congress Street.
1891.
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THE CANADIAN EAILROAD QUESTION
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5^4 AKGUMENT OF E. W. MEDDAUGH.
The interests of Detroit and the State of Michigan in the
--, subject-matter of your committee's inquiry is very great.
Tiiis city and State are peculiarly situated. On the east we
have Canada and the intervening boundar}^ waters between
Canada and the United States. Our only way of ingress and
egress from and to the east by railway, save through Canada,
is via Toledo, around Lake Erie.
The distance between Detroit and Buffalo by this route,
is 361 miles.
The distance between Detroit and Buffalo by the Grand
Trunk Railway through Canada, is 259 miles.
This is a difference in favor of the Canadian route for
Detroit, and for all Michigan lying north of Detroit, of
over 100 miles.
The distance between Port Huron and Buffalo by the Cana-
dian route is 198 miles. This route can accommodate a large
section of the State lying north of Detroit. If this section
of the State were compelled to seek an outlet east by way of
Toledo, the mileage for it would be : Toledo to Buffalo, 296
V >\^ miles ; Detroit to Toledo, 64 miles ; Port Huron to Detroit,
' *• 63 miles; making a total of 423 miles, as against the route
>^ through Canada of 198 miles.
VL What any obstruction of these Canadian routes would
mean for Michigan, sufficiently appears in what I have
said.
The Upper Peninsula of the State has its route east across
the Sault river. Shall this be closed ? Must that section
and the entire northwest be sacrificed to accommodate
American trunk liiie routes south of Lake Erie ?
New England, too, is interested largely in this question.
Millions of money have been invested in American rail-
wa3^s in ^N'ew England and the. west, which have been con-
structed with express reference to connection with the Cana-
dian railways, as routes for through traffic between the
States. Are these, too, to be sacrificed for the benefit and
at the beck of the American trunk line roads ? The build-
ing of these connecting roads in the United States has been
induced, in part, by the established policy of the govern-
ment of the United States, as expressed in its laws and in
treaty with Great Britain, favorable to transportation
through Canada.
In addition to the shipping interests of the United States,
immediately on the line of of these roads connecting with
the Canadian roads, which would be seriously prejudiced by
any obstruction to the Canadian route, there is the interest
of the general public by all routes. There can be no doubt
in the minds of intelligent people of the value of the
Canadian roads as moderators of both freight and passenger
rates for traffic between the east and the west. It is idle to
say, as has been said by some of the American trunk line
gentlemen, that the closing of the Canadian routes would
not result in higher rates. Competition does its work in the
carrying business, as in all other business. We have only to
observe what the effect is, on railroad rates, of the opening
of navigation each year, to get an idea of the result that
would follow the shutting out of the Canadian routes from
competition with American roads. The nominal reason
urged for Congressional interference with this Canadian
railway transportation is the alleged necessity for more
thoroughly subjecting the Canadian roads to the Interstate
Commerce law. There are two distinct grounds of this
supposed necessity : 1st, that the Canadian companies have
an advantage over their American competitors in not heing
bound by the long and short haul clause of the act ; and 2d,
that being foreign corporations, the Canadian companies are
not amenable to process, etc., issued from our courts or from
the Commission.
As' to the first point : In respect of all United States traf-
fic through Canada, and all traffic between the United States
and Canada, and all ocean traffic to and from the United
States passing through Canadian Atlantic ports, the law is
regarded by the Canadian carriers as applying ; and it is
observed in every particular quite as fully as it is by the
American trunk line roads. Schedules of all rates, etc., on
this traffic are regularly tiled with the Commission, thus
recognizing the law's applicability and requirements. These
schedules speak for themselves. Not a pound of freight nor
a single passenger 'coming under either of these classes of
traffic, is carried by the Canadian carrier except in connec-
tion with an American carrier at the Canadian frontier
point. A through line of railway (composed of the Canadian
carrier and one or more connecting A.merican roads) exists
in connection with this traffic, as in the case of American
trunk lines. These lines are, in fact, really American trunk
lines with the others, only with the difference that they have
a Canadian corporation as one of the links in the chain.
It is evident that this traffic — any part of it in fact — could
not be successfull}^ carried by the Canadian railroads, under
the existing methods of railway transportation (with, per-
liaps, the exception of the comparatively small traffic between
the United States and Canada, embracing the trade simply
between the two countries), without this co-operation of the
connecting American roads. And we know, as a fact, that
the great mass of even this excepted traffic is carried over
American roads on through bills under arrangement for
continuous transportation.
Now it is evident to any one who is familiar with the
manner in which freight traflSc is shipped and carried, that
it is not possible for the Canadian carrier to indulge in any
practice in disregard of the requirements of the Interstate
Commerce Law without the co-operation of its American
connection, except in one particular to be hereafter noticed.
All traflSc between United States points that is carried
through Canada originates with an American road, and the
contract of carriage is made by it. If rates are not main-
tained up to the schedule standard, the American carrier is
guilty ; and this is equally true of all export traffic from the
United States via the Canadian seaports, and of traffic car-
ried through Canada to any of the Atlantic ports, as Boston
or Portland.
The possible method to which I have referred of the
Canadian carrier's violating the law, without the guilty
co-operation of its American connecting carrier, in the
transportation of traffic through Canada, is by the paying of
rebates to the shipper. It is, no doubt, possible for the Cana-
dian carrier, being one railway in a through line, to do
this to some extent. But it is equally possible for any
American railway company that is part of one of the through
trunk lines to do the same thing to an equal extent. The
opportunities and facilities are the same in both cases ; and
the chances of detection are equal.
To make the payment of rebates a success in procuring
traffic, while rates continue as low as they have been for the
last two years, and still are, all the carriers in a line would
have to share in it. No one of them alone could afford to
pay it.
The long and short haul clause of the act is strictly com-
plied with by the company I represent, as I presume it is
by the Canadian Pacific Company. The schedules of ratea
covering all of this traffic are regularly filed with the Inter-
state Commerce Commission. They remain there, open and
subject to inspection, not only of the Commissioners, but of
the public. No complaint is heard that these schedule rates
are not made in strict regard of the long and short haul pro-
vision of the law. And no specific charge is made against
the Canadian roads of making rates at variance with the
schedules filed. Is it unreasonable to ask, in these circum-
stances, that this ground of complaint be treated as frivolous ?
General cliarges of this character are easy to make against
the Canadian routes, and they have been poured into the
ears of members of Congress and of the public continually
for three years past, but no fact in support of them has been
stated. We have the right to demand that those who have
been so persistently making and publishing the charges now
produce some evidence in support of their truth, or hence-
forth refrain from this cheap method of warfare against
these railroad routes.
But it has been said, in connection with this charge, that
the Canadian roads are exempt from this clause of the act, in
respect to their local Canadian traffic — that is, traffic between
points in Canada — and that they have an advantage over the
American roads in this. The Interstate Commerce law, of
course, does not afifect the purely internal traffic of the
Canadian roads. Neither does it affect the internal State
traffic of the American trunk line roads. In this respect
the Canadian and American roads stand on equal footing.
For instance, the New York Central Eailroad, with its
several hundred miles of road within the State of New
York, and an exceptionally valuable local State traffic,
is, in respect of this traffic, entirely independent of the act
of Congress. Neither the long and short haul clause of
the law, nor any other provision of it, applies to this traffic :
and the Congress has no power to make it apply. The
State of New York alone can legislate concerning this traffic.
And this is true of the purely single State traffic of all
American railroads.
8
It would seem, therefore, that the privilege of the Cana-
dian roads of making rates on their local Canadian traffic
without regard to our law, ought not to cut much figure in
this matter.
Still another complaint has been made. It has been said
tliat the Canadian railways have an advantage over their
American competitors in being able to recoup their losses on
unreasonably low through rates for interstate traffic, b}^
charging the Canadian shipper correspondingly higher rates
on local Canadian traffic. The Interstate Commerce Com-
mission lends respectability to this notion by a reference to
it in one of its annual reports. (2d Annual Eeport, p. 69.)
Could anything be more absurd than the idea that our
Canadian neighbors would submit to be taxed in this way
for the benefit of American shippers, even if the Canadian
carriers were disposed to do it ? But, aside from this, I am
at a loss to see what motive can exist for the Canadian car-
riers adopting such a policy. Revenue is the object of its
being. If what it loses by reduced rates on through traffic
it simply makes good by higher local rates in Canada, it
gains nothing. The carrier would be quite as well off, to
say the least, if it charged higher rates on through business,
and did less of it, while maintaining the local rates up to the
maximum standard.
But the same conditions exist on the American trunk
lines. Each of them has a greater or less extent of road
exclusively within a single State, where it has a local traffic
not amenable to the act of Congress. The motive equally
exists with them to make a high local tariff of cliarges to
compensate them for losses on low through rates. And yet
I have never heard of their doing it.
But it is a little strange that in all the talk on this subject,
including the report of the Commission to which I have
referred, there has been no statement of how the local rates
of the Canadian roads compare with the local State rates of
the American roads. The information is accessible. The
tariff of rates on all these roads is public, and could be readily
obtained. Since the report of the Commission to which I
have referred was published, Mr. A. C. Eaymond has pro-
cured the local State tariffs on several roads of the United
States, and the local Canadian tariffs of the Canadian roads,
and has embodied the result in a printed argument, which,
I believe, has been furnished to the Interstate Commerce
Committee of the Senate. The result of a comparison of
his figures is to show that the local Canadian rates are not
higher than the local State rates of the American railroads.
This ought effectually to dispose of the charge that the
American railroads are under any disadvantage in respect
of this matter, in comparison with their Canadian competi-
tors.
What the outside clamorers for additional legislation
respecting the Canadian carriers would like, and hope for,
no doubt, is a law that will enforce upon these carriers, as a
condition of their engaging in the business of interstate
carrying, a strict observance of the long and short haul
clause in their local Canadian traffic. I will not discuss this.
It is too absurd for serious consideration. I think, however,
that I may say that the company I represent will voluntarily
yield to such terms, whenever they are imposed on the other
trunk line roads in respect of their single State traffic. To
require this of the Canadian roads, while leaving the Ameri
can roads free in respect of their single State business, would
be a cowardly method of weighting the Canadian carriers,
unworthy of our Congress. If it shall ever be deemed good
policy to cut off' these roads from competition with Ameri-
can railroads, let the purpose be openly avowed, and let the
method of its accomplishment be direct and manly, instead
of indirect and under false pretenses.
Now, as to the service of process on the Canadian roads,
so as to subject them to the jurisdiction of our tribunals in
case of violations of the law.
I
10
The question that naturally arises is whether the experi-
ence of the last four years — the period since the law was
enacted — has demonstrated any trouble in this regard?
There can be but one answer to this. The American rail-
way companies have not been more prompt to obey any
citation from the Commission, or to afford information when
called upon, than have the Canadian companies. In no
instance have these Canadian carriers failed to submit them-
selves to the jurisdiction of the Commission in plenary pro-
ceedings instituted against them ; and they have always
given the Commission full information and opportunity for
investigation of their methods, etc., when called upon. If
my memory is correct, it was the New York Central Kail road
Company — an American carrier, and not a Canadian — that
refused to disclose to the Commission the facts respecting
its issue of passes.
I deny that experience has developed necessity for addi-
tional legislation in connection with this point.
If, however, in spite of this experience as to the sufficiency
of the law as it stands. Congress, out of deference to this
theory, — or for any better reason, if one exists, — concludes
to amend the law so as to meet the several complaints res-
pecting the Canadian railroads, I suggest that the amend-
ments should he directed to the alleged evils, instead of try-
ing to cripple the Canadian roads.
The advocates for further legislation openly profess their
object to be the subjection of the Canadian railroads to the
Interstate Commerce law as completely as the American
railroads are subject to it — nothing more. Xo fair-minded
man can object to this. And while I protest that this is fully
realized under the law now, there is no reason why additional
legislation should not be had in the same direction, if any-
body wants it. But the pending bills which provide that
the Canadian carrier shall take out a license from the gov-
ernment of the United States to engage in Carrying interstate
11
and international traflic, and that this license shall be for-
feited as a penalty of any violation of the law, can have but
one purpose, and that is to get rid of the Canadian routes.
I hazard nothing in the statement that there is not a com-
mon carrier in the United States subject to the Interstate
Commerce Act, but lias violated the act repeatedly — some-
times intentionally — and often through ignorance. This
result is inevitable in a system of business as extensive as
this is, and which involves the employment of such a large
number of agents in its traffic department. Most of these
carriers have been before the Commission for this offense,
and some of them many times. What would any of them
say to a proposition to make forfeiture of their right to con-
tinue their business the penalty for a violation of the law ?
They would probably think it unduly severe, and in this I
agree with them. Even if such a penalty were left discre-
tionary with the Commission, it would be objectionable, as
vesting in that body a power too liable to abuse under the
pressure of great influence. No tribunal, whether judicial
or political, should be clothed with such power, except
where every other remedy has proved inadequate.
I have to say generally, in respect of these bills and of
any and all other legislation that may be proposed, that the
Grand Trunk Railway Company will cheerfully acquiesce
in and comply with any law that affects all these interstate
carriers alike. But why should the penalty of a violation
of the law be made different or more in its case than in the
case of the New York Central Railroad Company? If for-
feiture of the right to carry is necessary and proper as to
the one, it must be equally so as to the other. I defy any-
one to point out a difference between them, or the circum-
stances that will justify any discrimination in respect of this
matter.
Neithei the license nor the added penalty would remove
the alleged facility of the carrier in Canada for disregarding
12
the law, nor would either aid in detecting such violations
when they occur. This must ba apparent to anyone. And
yet the opportunity of the Canadian roads for fraud upon
the act, and the difficulty of detecting them in it, was
gravely urged by the gentleman who suggested this license
legislation, as the reason for it.
If it is simply desired to place the Canadian railway com-
panies in the same position as the carriers in the States, res-
pecting the service of process on them, obedience to final
orders, etc. — whether of the Commission or of the courts —
and all inquisitorial rights with which the Commission is
clothed, here is an opportunity for use of the forfeiture
power. Amend the act of Congress so as to impose a pen-
alty of forfeiture of the right to continue the interstate
business, upon all carriers that are subject to the act, for
failure to obey process served upon them, whether served
within the United States or in an adjacent foreign country,
or to subject themselves to the jurisdiction of the Commis-
sion or court from which it issues. And impose a like
penalty for refusal or neglect to obey final orders or decrees,
or to satisfy final judgment, saving always the right of
appeal ; and for refusal or neglect to yield to the Commis-
sion in the exercise of its inquisitorial powers.
If the American railroad gentlemen are honest in the
profession of what they want to accomplish, such an amend-
ment of the law will be satisfactory to them.
One of the bills now pending in Congress requires these
Canadian carriers to giv^e a bond to the United States gov-
ernment for obedience to the law. The legislation I sug-
gest would be much more effective than a bond, as the
remedy would be direct in each case of violation.
But, in fairness, the law should apply to all alike. There
is no excuse for making in this matter two rules — one for
the Canadian roads, and a different one, less stringent, for
the American roads.
13
If the only interests involved were tiiose of the trunk
line railway companies south of Lake Erie, as against the
Canadian roads, a narrow and illiberal national policy might
favor any legislation to crii)ple the Canadian roads. But
this is not the'case. There are, in the first place, large
systems of railway in the United States, representing in the
cost of construction a great many millions of dollars, the
prosperity — indeed, the very life of which — depends upon
the uninterrupted course of interstate traffic through
Canada ; and the Congress of the United States is bound
not to do anything, save from national necessity, to the
injury of these systems of railway ; and surely the desire
of these trunk line roads to get rid of Canadian railway
competition can hardly form the basis of such national action.
It will not do to sacrifice this great American interest for
the benefit of the American trunk line railways.
But tliese American railway interests, which are so inex-
tricably bound up with the Canadian roads, are not all, even
if they are the greater, American interests to be prejudi-
cially affected by a disturbance of the Canadian routes. As
I have already intimated in the opening of this discussion,
there is the shipping public of all New England, on the
east, and of a dozen great States in the west and northwest.
If the shippers in these States — the producer, the merchant
and the manufacturer, have no interest in this question, it
is pretty evident that they think they have. For they have
given utterance to most vigorous protests, within the last
two years, through boards of trade and other commercial
organizations, against any action by our government that
might have the effect to impair the efficiency of these Cana-
dian routes of transportation for United States traflSc. It
would not be a difficult task, I believe, to show that they
do not overestimate the value of these routes to the sections
of the United States for which they speak. But I will not
occupy time for this. There is a presumption that such
14
bodies of intelligent American citizens are the best judges
of their own interests in such a question. This aspect of
it can be safely left to them.
The Grand Trunk Kail way is one section only of a great
American trunk line route extending from*CIiicago to the
Atlantic seaboard points of New York, Boston and Portland.
Between Chicago and New York, a distance by its route of
942 miles, there is only 196 miles of the transportation on
Canadian territory. All the rest is in the United States
and over the railroads of American corporations. Between
Chicago and Boston, a distance b}^ this route of 1184 miles,
557 miles of the transportation is in Canada, and the
remainder is in the United States, and on railroads of
American corporations. Between Chicago and Portland,
a distance of 1136 miles, there is transportation in Canada
of 650 miles, and the remainder is in the United States, and
on American railroads.
These American railroads, profoundly interested in the
continuance of this route through Canada unembarrassed by
obstructive legislation, represent in the aggregate a capital
investment of $85,000,000.
No words of mine can add anything to the eloquent
appeal of this statement against the kind of legislation that
Congress has been asked for on this subject.
The Grand Trunk Railway Company has another Amer-
ican feature that entitles it to some consideration. It has
constructed and promoted the construction of, and has a
very large pecuniary interest in, more than 1,000 miles of
railroad in the United States. Its capital investment in
these railroads, every one of which is an American corpora-
tion, amounts to many millions of dollars.
It is generally well known that the established method
among railway companies forming a continuous line for car-
rying freight is by the creation of what is known as fast
freight lines. These lines are established by agreement of
15
the companies composing them, each contributing its quota
of cars, on an agreed basis, for use in the business of the
line. It shows something of the extent of tlie Grand
Trunk Railway Company's traffic arrangements with its
American railway connections, that it is a party in the fol-
lowing fast freight lines, under agreements with the Amer-
ican railway companies named :
The Michigan & Milwaukee Fast Freight Line, in con-
nection with the New York Central Railroad Co.
The Commercial Express Line, in connection with the
New York, Lake Erie & Western Railroad Co.
The Hoosac Tunnel Line, in connection with the West
Shore & Fitch burg Railroads.
The Great Eastern Fast Freight Line, in connection with
the Delaware, Lackawanna & Western Railroad Co. and
the Central Vermont Railroad Co.
The Wabash & Lehigh Valley Fast Freight Line, in con-
nection with the Lehigh Valley Railroad Co.
The Ontario Despatch Line, in connection with the New
York, Ontario & Western Railroad Co.
The National Despatch Line, in connection with the Cen-
tral Vermont R. R., and its connections at White River
Junction for New England points.
This company has also a through passenger service in
connection with the West Shore Railroad Co., of which the
New York Central Railroad Co. is lessee, and with the New
York, Lake Erie & Western R. R. Co. The Grand
Trunk road is, in fact, the recognized and established west-
tern connection of the West Shore road for both passengers
and freight.
No one familiar with the railways from New York City
centering at Buffalo, will fail to appreciate at once what the
effect would be upon them, if they were deprived of the
route through Canada by the Grand Trunk road as a feeder
to them of interstate traffic. The New York Central alone
would gain by it. The others would suffer great loss.
16
In addition to all its railroad investments in the United
States, the Grand Trunk Company has just completed the
construction of an international railroad tunnel between
Port Huron and Sarnia, under the River St. Clair, at a cost
of about $3,000,000. Possibly, however, some timid souls
in the United States may see lurking in all this a deep-laid
plan on the part of this corporation, in co-operation with the
Canadian government, to afford greater facilities to tlie
Canadian government for moving an army of conquest
against us from that country.
In the face of these facts, is it not apparent that any
action by the government of the United States by the
imposition of burdens on the G-rand Trunk Railway Com-
pany in connection with this interstate traffic, that are not
imposed upon the exclusively American trunk lines, would
result in a serious injury to other large American railway
interests, and to the interests of a large section of American
producers, merchants and manufacturers? These aggregate
interests are much too large and important to be sacrificed
for the benefit of any other interest, either railway or sec-
tional.
There are many other considerations which have a bear-
ing on this Canadian railway transportation question, that I
should like to discuss, and only refrain from discussing them
here for fear of consuming more time than justly belongs
to me, and possibly trespassing on the patience of the com-
mittee.
The demand of the American public everywhere is con-
tinually heard in all sections for cheap and still cheaper
rates of transportation. In this direction lies the hope for
greater prosperity in all departments of business. The dif-
ference of a few cents on a hundred in the transportation of
grain from the rich fields of its production in the west, to
the Atlantic seaboard, determines the possibility of its being
profitably marketed abroad. And this is true of all our
17
vast surplus of production of every kind. Tlie United *
States, therefore, cannot afford to close any route now open
to it that cheapens the rates of transportation between the
places of production and the market. These routes through
Canada unquestionably have this effect. This is the invari-
able testimony of every shipping centre tributarj'^ to these
routes. It may, with equal show of reason, be contended
that the waterways of the great lakes do not have a reduc-
ing effect on rates, during the season of navigation, as that
these Canadian railway routes are ineffective in this respect.
The foregoing is the substance of my remarks submitted
to the special committee of the United States Senate.
Messrs. Henry Russel and Ashley Pond, representing the
Michigan Central R. R. Co., followed me on the occasion.
Reference was made by them to the percentage of the east
bound traffic out of Chicago taken by the Canadian rail
routes, which was claimed to be excessive as against the
exclusively American routes; and the inference was indulged
in and urged that such a percentage of the business could
only be secured, for the Canadian routes by the payment of
rebates. And the alleged difficulty of investigating the
Canadian railway companies in respect of such rebate pay-
ments was urged as a reason for so amending the law as to
require these corporations to obtain a license for engaging
in interstate traffic and imposing a forfeiture of the license
as a penalty for violations of the law.
Now, if these gentlemen honestly believe that rebates are
being so paid, they owe it to the carrier they represent, if
not to the public, to call attention of the Interstate Com-
merce Commission to the fact, and ask an investigation.
Why do they not try this method of redress, instead of aii*-
ing their suspicions before a Committee of the Senate ?
Here is a good opportunity to demonstrate any defects in
the law and the alleged practical difficulties in the way oi
an official investigation of the practices of the Canadian
railways. But it was further said that this undue percent-
age of the Chicago traffic taken by the Canadian roads was
mostly confined to dressed beef shipments, and that this
enormous business is in the hands of less than half a dozen
of well-known shippers of beef — which is a fact ; and it was
assumed that rebates are being paid to these few shippers.
If there is any foundation in fact for this assumption, these
shippers are equally guilty, under the law, with the carrier
that pays the rebate ; and they should be punished. What
stands in the way of an investigation of this subject in
respect of them ? They are all American residents, and
have their places of business in the United States. Their
account books, papers, etc., can be examined. They are
amenable to process from the Interstate Commerce Com-
mission and from the United States courts. Why have not
these railway gentlemen, so burdened with suspicions of
fraud, promoted a judicial inquiry into the facts ? They
have not the poor excuse here, that they offer in connection
with the Canadian railroads, that the parties are in foreign
territory.
With American shippers as necessarily guilty parties to
any alleged system of rebate payments by the Canadian car-
riers, and with these carriers openly declaring their willing-
ness to submit themselves, and all books, accounts, papers,
etc., to the inspection of the Commission or court, in any
proceeding that may be instituted for an investigation of
the facts, the gentlemen who make these gratuitous charges,
based solely on their suspicions, in neglecting to take the
responsibility of moving, in the way plainly pointed out by
the law, for an investigation, lay themselves open to the
grave suspicion of not really believing what they profess to
believe in this matter.
There is an offensive assumption of superior virtue on the
19
part of these gentlemen, involved in their charges as made
against these carriers. They assume that the Canadian rail-
way oiScers and traffic agents are not above resorting to
devices for evading the law's requirements, which are equally
open to any one of the railways in the United States, but
which the officers and agents of the latter are morally above
having recourse to as a means of securing traffic. They
would experience some difficulty, I think, in establishing
this as a fact in the minds of American shippers wlio have
had many years of experience in shipping by the different
routes. " Comparisons are odious," but the officers and traf-
fic agents of the Canadian railways have no reason to shrink
from comparison in this connection. They are not unknown
to the commercial men in the United States ; and I do not
hesitate to make the assertion that, taken together, they
stand quite as high for manly integrity in all business rela-
tions as the officers and agents of any American railway cor-
poration. The American shipping public will be slow to
believe that these Canadian railway companies, in order to
get traffic, have resorted to methods of violating the law
that are equally open to the officers and agents of their
American competitors, but which the latter have proved too
honest to adopt.
If rebates have been paid for traffic by the Canadian rail-
ways, I neither know nor have heard of any instance of the
kind. The point I made, and wish here to empliasize, is
simply that it is no more liable to be done by the carriers on
these routes than by the carriers on any of the routes exclu-
sively within the United States ; that the facilities for
doing it are no greater by the one route than by the
other ; and that the opportunities for detection are the
same by all routes. Whatever may be done in evasion
of the law by the Grand Trunk Eailway Co., for instance,
in connection with any traffic it may carry — whether it be
the payment of rebates or anything else — may also be done.
20
•and with no greater risk, by any one of tlie trunk line rail-
way companies ; and furthermore, is quite as liable, to say
the least, to be done by one of the latter as by the former.
I do not feel justified in adding mucli to what I said to
the Committee in opening the discussion, on the subject of
requiring the Canadian railroads to take out a license for
engaging in the interstate traffic business. I then pointed
out that such a license would not in the slightest degree
remove the alleged difficulty of detecting violations of the
law by the Canadian carriers, and that the penalty of for-
feiture of the license for any violation was too severe, and
fraught with danger from its susceptibility to abuse. I
further urged that such license should not be required of
the Canadian carrier, unless required also of the American
-carrier ; that there is no good ground for such discrimina-
tion.
It was said by Messrs. Russel and Pond, in reply, that if
the license were required, and the penalty of forfeiture
•existed, it would have the effect of making the Canadian
carrier more careful in observing the Interstate Commerce
law. If this is true as to these carriers, would not the effect
of such a license system be equally wholesome for the
American carriers, and should it not, therefore, be extended
to them ? If the reasoning is worth anything, it goes to
this extent. As I have said, there is no basis in reason for
^ distinction in this matter between these railroads.
But no account is taken by the promoters of this license
scheme with forfeiture, of the consequences to the carrier
and the public of a temporary suspension of business on one
of these routes — a suspension, say, of ninety days. In the
first place, the carrier could not recover its business after
such a suspension, for many months. The loss would be
irreparable. Shippers by its route would have entered into
arrangements more or less permanent with other routes. It
would be extremely difficult, and take a long time, to recover
the amount of traffic thus lost.
^1
The embarrassing effect on the public, accustomed to relj
on the particular route, would also be very great. Even
that part of the public immediately tributary to it, and
which might be specially accommodated by it, would be forced
to seek another and more remote route of shipment, in vol v-
iug for them, not only much inconvenience, but a large addi-
tional expense.
This is only hinting at some of the consequences that
would follow the forfeiture of a license, for even a brief
period of time. There are many other and very serious
results that would inevitably ensue, which will readily occur
to any one who thinks the matter out. The penalty is too
severe, in addition to the fact that it would inflict punisli-
ment on the innocent. The idea, I submit, is not creditable
to its inventor. All the benefits combined of the Interstate
Commerce law are not worth this cost.
In correction of the statement made by Mr. Russel as to
the percentage of the aggregate of east-bound traffic out of
Chicago which has been taken by the Canadian routes, I
submit the following tables, showing :
1. The total shipments of live stock during the year 1890
and the first three months of 1891, and the percentage
carried by each route.
2. A similar statement in respect of the dressed beef.
3. A similar statement in respect of all other traffic.
These statements are taken from the official record of the
Centi-al Traffic Association, and are therefore reliable.
The last statement does not include the Wabash, the Chi-
cago & Erie, or the C. C. C. & St. L. lines, for the reason
that no reports have been made by them, and it is impos-
sible to give the figures.
22
Live Stock Shipments from Chicago.
ROADS.
Year 1890.
Jan, Feb., March,
1891.
Tons.
Per Cent.
Tons.
Per Cent.
C. & G. T
M.C
L. S. &M. S
233,274
114,823
196,519
186,796
16,848
84,232
198,753
7,112
1,815
22.4
11.0
18.9
18.0
1.6
8.1
19.1
0.7
0.2
57,097
23,851
84,067
48,888
4,266
25,735
52 660
7,087
412
18.8
7.8
27 6
P. F. W. & C
16 1
P. C. C. &St. L
1.4
B. & O
8 5
N, Y. C. & St. L..
17 3
C. & Erie
2.3
Wabash
2
C- C. C. & St.L
Total
1,040,172
100.0
304,063
100
Dressed Beef Shipments from Chicago.
ROADS.
Year 1890.
Jan , Feb
189
, March,
I.
Tons.
Per Cent.
Tons.
Per Cent.
C. & G. T
134.999
133,334
115,628
31,019
56,248
21,042
5,465
15,569
84,107
1,912
22 5
22.3
19.3
5.2
9.4
3.5
0.9
2.6
14.0
0.3
29,794
39,854
15,200
5,629
11.528
6.050
1,258
2.116
18,520
896
22.8
M. C
30 5
L.S.&M.S
P. F. W. &C
11.6
4 3
P.C.C.&St.L
B. &
N. Y. C.ifeSt.L
8.8
4.6
1.0
C.&Erie
1.6
Wabash
14 2
C. C. C. & St.L
0.6
Total. .
599,323
100.0
130,845
100
Dead Freight Tonnage from Chicago.
ROADS.
Year 1890.
Jan., Feb., March,
1891.
Tons.
Per Cent.
Tons.
Per Cent.
B. &
445,266
475,582
206,092
512,355
512,125
384,786
530,254
14.5
15.5
6.7
16.7
16.7
12.6
17.3
101,205
165,650
39,026
115,722
125,699
117,016
113,763
13 1
C. & G. T
P. C. C. &St.L
21.3
5.0
L. 8. & M. S
14 8
M. C
16 1
N. Y. C. & St. L
15 1
P. F, W. & C
14 6
Total
3,066,460
100.0
778,081
100
These official statements carry their own refutation of
the extravagant figures named by Mr. Russel as the per-
centage of the Chicago east-bound traffic which had been
taken by the Canadian routes. Comment is unnecessary.
But I desire in this connection to invite attention to the
23
percentages of this traffic shown by these statements to have
been carried by some of the other routes. For the year
1890 the Lake Shore road, in connection with the New
York Central, carried of the live stock 18 per cent and a
fraction ; and for the three first months of 1891 it carried
27 per cent and a fraction ; while the Michigan Central
R. R. carried, for the corresponding periods respectively,
11 per cent and 7.8 per cent. According to Mr. Pond's
logic the Lake Shore & Michigan Southern Company must
have been paying rebates to secure this undue percentage
over the Michigan Central Company. The route of the
latter from Chicago to Buffalo is quite equal to that of the
Lake Shore Company, and the shorter as a matter of fact ;
and from Buffalo east the route is the same for both.
During the same period the Michigan Central Railroad
carried 22 per cent and a fraction of the dressed beef in the
year, and 30 per cent and a fraction in the three months of
1891, as against 19 per cent and a fraction carried by the
Lake Shore & Michigan Southern road for the year, and 11
per cent and a fraction for the three months. Is it possible
that the Michigan Central Railroad Company was paying
rebates on this traffic ? The inference is not only legiti-
mate, but it is irresistible, according to Mr. Pond.
Now in respect of the percentages of this Chicago traffic
east-bound, I contend that the Michigan Central and Lake
Shore Railroads should not be treated fully as two separate
and equal factors as against the Chicago & Grand Trunk
Railway. The latter has not only its New England connec-
tions, but it has several railroads at Buffalo connecting with
New York, all of which want a share of this Chicago traffic,
and in fairness have a right to it equally with the New
York Central Railroad. The Michigan Central and Lake
Shore roads are simply feeders of the New York Central
road, as to the great bulk of this traffic carried by them.
The situation therefore, I submit, does not justify each of
24
these in the demand for an equal percentage of this traffic
with the Chicago & Grand Trunk Railway Company.
In conclusion, I deny that the Canadian routes have taken
an undue proportion of the Chicago east-bound traffic.
What they have got, tliey have, I believe, secured by
legitimate business methods, and without violating tlie law.
Courtesy and a spirit of accommodation are as potent in this
department of business as in any other. A good deal of
the popular favor which tlie Grand Trunk Railway Com-
pany enjoys and reaps benefit from with the shipping pub-
lic of the United States, is no doubt due to the civility of its
officers and agents. There is more virtue in this as an
agency for getting traffic than has yet been dreamed of by
some of our American railway friends.
THE CANADIAN RAILROAD QUESTION
AKGUMENT OF A. C. KAYMOND.
Mr. Chairman — It is now a little mor^ than two years
since the agitation of the Canadian railwaj^ question began
in the Congress of the United States. For more than fif-
teen years the competition between American and Canadian
railways has been continuons and bitter, and next to the
lake and canal route from the West to the sea-board, the
Canadian railways have exercised the most controlling regu-
lative influence upon rates of transportation. From this
competition American merchants, shippers, producers and
consumers have received inestimable benefits. Large areas
of American territory, notably IS'ew England and the West
and Northwest, have been put in communication with each
other at such advantageous rates for transportation as had
not been made and indeed could not be made over purely
American lines. Nearly all those portions of interior New
England lying north of the Boston & Albany Railroad, were
formerly compelled to pay by the addition of what is known
as " arbitraries," much higher rates than those current to
Boston. The advent of the Grand Trunk Railway of Can-
ada largely swept away these " arbitraries," and placed all
portions of New England upon substantially the Boston
basis. Many and relentless were the attacks upon the
Grand Trunk Railway by its American competitors, but
although sorely bruised and. beaten in the conflict it has
always steadily held every field of which it has once pos-
sessed itself. With the exception of occasional periods of
26
peace and compromise, this state of warfare was well n\cr\i
continuous up to the time of the passage of the Interstate
Commerce Act which took effect April 5th, 1887.
The novel sensation of national control, and the new
adjustments thereby rendered necessary, diverted the atten-
tion of the American railways from their old competitor for
nearly a year. The American lines discovering that the
Interstate Commerce Act had not bankrupted them, as the}^
had so confidently asserted pending its passage, but that
their traffic was enlarging and their revenues were increas-
ing, began to seek for new means of chastening their imper-
turbable Canadian rival. Tiie former rough and forceful
methods of ruinous competition were rendered obsolete by
the Interstate Commerce Act, but an ingenious and, if suc-
cessful, far more effective one, remained. It was to trans-
fer to the halls of Congress, the contest heretofore so
fiercely waged in the field, and to appeal to the patriotic
instincts of the American people to shield their infant (?) rail-
road industries from impending destruction at the hands of
menacing foreign corporations.
The preliminary skirmishing promptly began under the
leadership of that dashing cavalryman of the late civil war.
General J. H. Wilson, of Wilmington, Delaware, who
appeared at Washington before the Senate Committee of
Interstate Commerce February 10th, 1888, and made an elab-
orate attack upon Canadian railways. March 16th, 1888, he
repeated this attack by a long speech before the Committee
on Commerce of the House of Representatives, in which he
advocated the exclusion of Canadian railways from partici-
pation in American traffic, and the abolition of the " Transit
in Bond system " which had been in continuous operation
since it was authorized by Act of Congress in 1866.
Especial prominence was given to these speeches by a certain
leading American journal which published them in full,
and in vigorous leading articles at frequent intervals, pro-
27
moted and advocated Wilson's scheme. A set of resolu-
tions embodying it was promptly introduced into the House
of Representatives and referred to the Committee on Com-
merce. Thus was " the leaven hid in the measure of
meal."
Instant and overwhelming protests were made by the
various commercial organizations in Portland, Boston,
Detroit, Chicago, Milwaukee, Minneapolis, St. Paul, Duluth
and Peoria. The newspapers in these cities with one voice
denounced the proposed destruction of the competition of
the Canadian lines, and petitions, remonstrances and mem-
orials, came pouring into Congress in a flood, and the House
Committee on Commerce took no action on the resolutions.
The subject was revived in the 50th Congress by an
amendment to the Senate Tariff Bill, proposed by Senator
Morgan, of Alabama, to the effect of prohibiting the impor-
tation in bond througli American sea-ports, of merchandise
designed for Canadian markets. This was, however,
defeated. Meanwhile the American competing interests
had not been idle, but througli the columns of the press and
otherwise, continued industriously and unceasingly to com-
plain of the ravages of the foreign railway corporations,
which resulted in Congress authorizing the Senate Commit-
tee on Interstate Commerce, of which Senator Cullom is
chairman, to make a tour of the country and investigate the
relations of American and Canadian railways and waterways.
This Committee visited the cities of New York, Boston,
Detroit and Chicago, and were everywhere met by the rep-
resentatives of commercial interests with strong protests
against any interference with Canadian railways which
should cripple or destroy their most valuable and desirable
competition. The question was, however, invariabl}'^ asked
of every witness by the committee, ".Whether he thought
Canadian railways should be subjected to the same regula-
tions and restraints as were imposed upon American rail-
28
ways." Of course every witness invariably answered that
he did, even if at the same time he questioned the necessity
of a Senate committee making a tour of the country to ask
a question which could have but one answer.
This committee on '' The general relations of Canada and
the United States" continued the investigation of the rail-
road question at the cities of Minneapolis, St. Paul, Tacoma,
Portland (Oregon) and San Francisco, and met with the
same protests from commercial interests. The representa-
tives of the competing railway interests, who appeared
before the committees almost invariably urged some legis-
lation which should, as they diplomatically phrased it,
" impose upon the Canadian lines the same regulations and
restrictions as those placed by law upon American lines."
This fair seeming proposition was, as before mentioned,
cordially assented to by all classes of witnesses, and it only
remained to point out the particulars wherein the law dis-
criminated in the carrying of American traffic in favor of
the Canadian lines and against their American rivals. The
testimony, liowever, reveals no attempt by any American
railway representative to specifically point out such a dis-
crimination.
As there was no cross-examination of witnesses, and some
of the testimony consists of elaborately written statements
or briefs, some extremely ill-founded and inaccurate state-
ments of alleged facts, necessarily passed unchallenged.
The reasons alleged by their American competitors for
further legislative restriction or regulation of Canadian
railroads group themselves as follows :
Ist. The advantages of Canadian railroads by reason of
excessive governmental subsidies and foreign capital.
2d. The diversion to Canadian railroads of traffic which
naturally belongs to American railroads.
{a) Transcontinental traffic of American origin and des-
tination ; {b) transpacific traffic to the Canadian Pacific
railroad.
29
3d. The advantage of the Canadian railroads in their
local traffic, the Interstate Commerce Act enabling them to
recoup their losses on long-haul American traffic by high
local rates.
4th. The lower cost of operation of Canadian railroads.
5th. The differentials which American railroads are com-
pelled to grant to their Canadian competitors.
6th. The destruction of the revenues of American lines
by excessive competition.
7th. The national policy of protection should apply to
American railroads as well as to American merchants and
manufacturers.
Six of these reasons must stand or fall according to the
facts which either sustain or disprove them. The seventh
reason rests upon a theory which, to be consistently advo-
cated, must coincide with the general policy of those who
proclaim it. My purpose is, therefore, to confine myself
mainly to the facts which underlie this great question, in
full confidence that their unprejudiced consideration will
disprove each and every one of these alleged reasons.
First Reason — Excessive Subsidies and Foreign Capital.
These features of railway construction are as characteristic
of American as of Canadian lines. The vast sums con-
tributed to American railways by federal, State and muni-
cipal authorities are well known. Mr. Patterson, a member
of the Union Pacific Railroad Commission, states in his
report, that "governmental aid to that corporation will have
amounted in 1895, when the obligations mature, to four
hundred and forty -seven millions of dollars^''
Mr. C. P. Huntington, president of the Southern Pacific
Railroad said to the House Committee on Pacific Railroads,
in the Fiftieth Congress, that "the government made a
land grant to the JSTorthern Pacific Railroad of much greater
value than the lands and bonds together which were granted
to the Central and the Union Pacific companies."
30
The immensely valuable subventions to the Southern
Pacific and Atlantic and Pacific companies are matters of
history. Pennsylvania, Maryland, New York, Massachu-
setts and Illinois, and the cities of Pliiladelphia, Baltimore
and Cincinnati are notable examples of State and municipal
aid to railroads. Our friends across the border have been
but feeble imitators of ourselves in these matters. It is
absurd to claim that either country in thus seeking to
develop its transportation interests has been influenced by a
feeling of political or commercial hostility to the other.
The Grand Trunk railroad, as at present organized, has
not been the recipient of any considerable government aid.
One of the original companies now consolidated into the
main organization did, in 1852, receive a government loan
of $15,000,000, which has never been returned and on which
no interest is paid. The Canadian Pacific company has
received fairly liberal assistance from the Dominion Gov-
ernment, but small in comparison with American transcon-
tinental lines, and very much less than the amount claimed
by its American competitors.
The following table was submitted to the committee last
year by one witness, who claimed it to be a reliable state-
ment of the subventions granted to the Canadian Pacific
company. Notwithstanding repeated denials from official
sources, this table has been widely quoted as authoritative
and true by the press, and even on the floor of the United
States Senate.
In view of the fact that Mr. Van Home, the president of
the Canadian Pacific compan}^, at a hearing of the Senate
Committee on Interstate commerce held in New York in
May, 1889, showed the utter untruthfulness of the table, it
is difficult to understand the statement by its author to this
committee in April, 1890, that ^' the president of the Can-
adian Pacific railroad has conceded that this is a correct
statement of the direct aids which the company has received
ol
from the Dominion Government." The following is the
table as found on page 896 of the testimony already taken
by this committee :
Revised estimate of gifts from the Dominion Government to the Canadian Pacific
Railway Company, and securities which that company has been enabled to float
(stock and bonds) as the result of the Dominion guaranty and the land grant of
25,000,000 acres of land :
Cash subsidies as follows:
1. (a) Subsidy of $25,000,000 mentioned in section 3 of act of February 15,
1681 ; (6) 714 miles of railroad constructed by the Dominion Govern-
ment, costing $35,000,COO, which was presented to the Canadian
Pacific Company as a gift, with interest to June 30, 1887). (See Pub-
lic Accounts of Canada for 1887) $61,760,785
2. Capital stock originally Sl0O,C0O,0CO, but reduced to $55,000,000, with a
dividend of 3 per cent, guaranteed for ten years. (See Poor's
Manual) 66,000,000
3. During the session of Parliament of 1884 the Dominion Government
authorized a loan to the company of $29,880,916, to be paid as the
work of construction continued, and for the purpose of expediting
construction. Of this amount $9,880 912 is secured by lien on the
entire road and land grant, subject to the then outstanding land-
grant bocds; also government bonds to the amount of $20,000,000,
which were exchanged for a like amount of the company's loan of
$35,000,000, which bad been issued in the place of the $35,000,000 of
original stock which had been retired. (See pec. 4, act 20, July, 1885) 29,880,912
4. Balance of $35,000 000 loan, after deducting $20,000,000, placed in the
hands of the govtrnmeut, in order to secure the $20,000,000 bonds
above mentioned 15,000,000
5. Land-grant bonds issued by the company as a lien upon the lands
which it acquired by gift of the Dominion 25,000,000
6. Bonds, interest guaranteed by the Dominion for fifty years at 3^ per
cent., issued to the company for the purpose of remuneratirg it for
the loss of its relirquishment of the monopoly of railroad building in
Manitoba 15,000,000
7. Subsidy of $186,000 a year for twenty years to line through the State
of Maine 3,720,000
Total $215,361,697
'' Of this total sum about $105,000,000 may be classed as
cash and gifts available as cash, and $110,000,000 as guaran-
ties of securities.
The president of the Canadian Pacific Kailroad has con-
ceded that this is a correct statement of direct aids which
the company has received from the Dominion Government."
The joining by the northwestern British Provinces of the
Canadian Federation, in 1867, was made conditional upon the
building by the government of a trans-continental railroad
affordinfij direct communication between them and the middle
and maritime provinces. The government accordingly under-
took the construction of the Canadian Pacific Railroad.
Large sums of money were wastefully spent in surveying
several possible routes, and finally 714 miles were con-
structed in the extravagant and unbusinesslike manner
32
characteristic of most governmental enterprises. The line
consisted of three detached portions, one extending eastward
from the Pacific coast, one along a portion of the north
shore of Lake Superior, and one southward from Winnipeg
towards tlie United States boundary. Thirty-five millions
of dollars had thus been expended, a large proportion of
which had been wasted, and the government finding itself
unable to complete the enterprise short of bankruptcy, and
still bound by its solemn pledge to the northwestern pro-
vinces, offered to any private company which would complete
the work, to donate the 714 miles already built, $25,000,000
in cash, 25,000,000 of acres of land, exemption from taxa-
tion and certain monopoly privileges against the building
of other lines for a specified term of years. President Yan
Home stated under oath in New York in May, 1889, that
these widely separated lines composing the 714 miles above
mentioned, and which had cost the government $35,000,000
were worth practically nothing to his company. That he was
obliged to abandon the government surveys which had cost
several millions of dollars, and make new ones, that the cost
of the remainder of the line was largely increased by reason of
.being obliged to connect it with the unwisely located 714
miles, and that even as they stood he could have duplicated
them with $12,000,000. It is evident then that the first
item of the table should stand at $37,000,000.
The capital stock was finally fixed at $65,000,000, but
not a dollar of it was ever purchased or owned by the
Dominion Government and is not now. Every share of it
was purchased and paid for by private parties and the
proceeds were applied to the discharge of the Company's
obligations, or to the construction of its railroad. The
assertion then that the capital stock was a gift from the
government is simply an unblushing and reckless disregard
for the truth.
The government guarantee of a 3 per cent dividend for
33
ten years was not a gift, but an annuity purchased from the
government by the Company with an actual deposit of cash.
The second item of this table may therefore be safely set
down at nil.
The third item is so clumsily stated as not to convey a
very intelligible idea of the author's meaning. It is insinu-
ated rather than stated that the Dominion Government
issued its own obligations to the amount of $20,000,000,
and turned them over to the company. This is wholly
untrue. The facts which are supposed to be concealed
within the depths of this hazy item, are briefly these.
The stock panic in 1884 involving the financial failure of
Grant & Ward, Henry Yillard, and others, created such
distrust in monetary circles, that the Canadian Pacific Com-
pany found it difficult if not impossible to market its stock
and securities, and the construction of its railroad would have
ceased but for the temporary assistance furnished by the
government. Parliament authorized a loan to the com-
pany, on a blanket mortgage covering all its assets, at 4 per
cent which amounted finally to $35,000,000. It then author-
ized a reduction in the capital stock of the company from
$100,000,000 to $65,000,000. It then granted to the
company the power to issue in lieu of the $35,000,000 of
stock thus cancelled, $35,000,000 of its own bonds bearing
interest at 5 per cent. These bonds were sold to the public
in London, New York and elsewhere, and from their pro-
ceeds $25,000,000 in cash were paid into the Dominion
treasury towards the satisfaction of the temporary loan.
This left $10,000,000 still unpaid, which was liquidated by
the return to the government of enough of its land-grant
at $1.50 per acre (about 7,000,000 acres) to pay the balance.
The gift represented therefore in this item should stand
at $10,000,000.
The fourth item is a bungling repetition of a part of the
transactions covered by the third item, and should there-
fore be cut out, or stand at nil.
34
The fifth item is a true statement. The bonds were
issued by the company and secured by the lands given to it
by the government. These bonds have since that time
been redeemed by the company and the lands are now
pledged for other purposes, as will subsequently appear.
This item should therefore stand at $25,000,000.
The sixtli item states correctly the transaction involved,
but has no place in a schedule of gifts. Upon the organiza-
tion of the Canadian Pacific Company, the government
aojreed that no line of railroad leadinor southward from the
Canadian Pacific Railroad to the United States boundary,
should be built for a period of twenty years. This was to
insure traffic to the division of the railroad lying north of
Lake Superior, as the barren country through which it runs
could furnish it little or no local traffic. The Manitoba peo-
ple desired to build a railroad of their own to the interna-
tional boundary, and vigorously and even violently demanded
a rescission by the government of its contract with the Cana-
dian Pacific Company. This monopoly privilege was of
material value to the company in marketing its securities,
and its cancellation was likely to interfere with their sale.
To relieve the company from this embarrassment and at the
same time placate the people of Manitoba, the government
agreed that for the surrender of so much of the contract, it
would guarantee S^ per cent, interest on $15,000,000 of the
company's fifty year bonds. The government's guaranty is
secured by a lien on all the unsold lands of the company,
proceeds of all sales of which are to be received directly
into the Dominion treasury, until such a sinking fund shall
be accumulated as will reimburse the government for the
interest and principal of the bonds at maturity. The lien is
then to be cancelled, and the unsold lands are to revert to
the control of the company. This item should clearly,
therefore, be stricken from the list of "gifts."
The seventh item also rests on misstatement. Some years>
85
ago, before the Canadian Pacific Railroad was built, the Mari-
time Provinces complained of the long and round about
route via the Intercolonial Railroad, and demanded a shorter
line to Montreal. The Dominion government thereupon
offered a subsidy of $186,000 per annum for twenty years
to any company which would build a short line via the State
of Maine. The International Railroad Co. of Canada and
Maine was formed to build the line. It failed to do so, and
subsequently sold its franchise, including the subsidy, to the
Atlantic & Northwestern Railroad Co. This company,
unable to complete the line, transferred its franchise, and sub-
sidy to the Canadian Pacific company under a lease. This
subsidy was therefore acquired by the Canadian Paci-
fic company by purchase, and not by gift. This item must
also be stricken from the table. To recapitulate:
Corrected list of gifts received by the Canadian Pacific Railroad from
the Dominion Government.
In cash $25,000,000
In partly built railroad lines 12,000,000
In cash for lands surrendered 10,000,000
In lands on which bonds have been issued for . . 25,000,000
Total direct gifts $72,000,000
To stretch a point, it might be assumed that without the
land grant as security, the government would never have
guaranteed the interest on the $15,000,000 of 50-year bonds,
and adding this to the amount produced by the donated
lands, and it would only show a total of $87,000,000. Even
this amount as compared with the $215,361,697, given in
the table of the witness referred to, shows either a sad
degree of ignorance or a serious misstatement of facts.
The bete noir of the American railroads is the annual sub-
sidy granted the Canada Pacific Railway by the imperial
government for the carriage of the mails between Halifax
and Asiatic ports (not between Yancouver and Asiatic ports,
as is popularly stated), amounting to three hundred thou-
36
«and dollars, one-half of which goes to the land portion and
■one-half to the ocean portion of the route. Up to tliis time
none of this subsid}" has been paid, and none is due until
the completion of certain steamships now building under
the supervision of the British admiralty, and which are to
begin service some time in April, 1891. The following
figures are compiled from the Second Annual Report of
Eailwaj Statistics to the Interstate Commerce Commission
for the 3'ear ending June 30, 1889. For the purpose of
painting the advantages of the foreign line in the strongest
€/' se is deserving of hostile legislation,
some tax or restriction should at once be imposed upon the
English millions now represented in our great breweries,
flouring mills, elevators, tobacco factories and other enter-
prises.
Second Reason. — Diversion of Traffic from American
Railroads.
The first subdivision of this reason is the diversion of
traffic which has an American origin and destination, viz.,
between San Francisco via steamer to Vancouver (some 800
miles), thence via Canadian Pacific to American cities east
of the Missouri River. The subjoined table tells its own
story and destroys tliis scarecrow :
Tons. Earnings.
Total transcontinental traffic car-
ried by all the Transconti-
nental Association lines for
twelve months ending June 31,
1889 744,921 $17,146,641 24
Total " States to States " traffic
carried by the Canadian Pacific
Railway via Yancouver for
same period 12,852^ 214,811 90
Percentage carried by the Cana-
dian Pacific 1.72 1.25
The utter insignificance of this diversion renders it almost
unnecessary to make further reference to east-bound trans-
continental traffic, but the peculiar methods of dealing with
38
it displayed by Mr. A. M. Towne, general manager of the
Southern Pacific Kailway, in his " open letter " to this
Senate Committee, deserve a passing notice. Mr. Towne
makes a startling display of items of freight and the weight
of each, all nicely reduced to pounds. To the unaccus-
tomed eye the ravages of the Canadian competitor thus
present a liarrowing picture. Eeduce Mr. Towne's figures
to car-loads of fifteen tons each and the foUowinor is the
result :
Number of car-loads via Canadian Pacific, 12 months
of 1887. . . , 485
Number of car-loads via Canadian Pacific, 16 months
to April 30, 1889 333
Average number of cars per month, 29 ; per day, 1.
Average number of cars crossing Detroit river (Customs
Report) per day, 1,000 (about).
I make the comparison of " the diversion " with the daily
traffic at this city merely to give a clearer idea of its insig-
nificance. Tiie average on west-bound States to States
trafiic is slightly higher, but does not merit further atten-
tion.
The second subdivision of this reason is the diversion of
transpacific traffic, which, it is claimed, naturally belongs to,
and but for tlie Canadian Pacific Railway would be carried
by the American lines. The principal items composing this
traffic are tea, domestics, and silk. I subjoin a table of the
tea imports from Japan for fourteen years into the United
States and Canada and the routes by which they were car-
ried. The statistics are reliable, and were obtained from
Messrs. Smith, Baker & Co., one of the oldest and most
influential American firms in the tea trade, having houses
established in Yokohama and Kobe, Japan, and a house in
New York under the supervision of Mr. R. B. Smith, the
resident partner there :
39
Imports of Teas into United States and Canada from Japan, 1875 to 1889, Inclusive.
Season.
Via Sau
Francisco.
Via Van-
couver.
1875-'
1876-
1877-
1878-
1879-
1880-
1881-
1882-
1885-
1886-
6 13,323,946
7 11,110,057
8 1 14,448 229
9 1 12,209.728
80 17,222,299
1 i 18,317.027
2 19,718.806
'3 ' 12.33:3 987
'4 16,217,369
5 15,589,961
'6 19,048,0->2
7 21.972,555
'8 17.414,689
'9 11,903.314
14,242,700
10 322,368
10,063.765
9,576,580
5,175,557
Via Suez.
Sailer to
New York.
,906.235
5,337,
5,590,
12,028,
15.092,
20 167,
14,549,
21,668
18,017,
19,818;
16,730,
12,994
8.779,
8,848,
11,559
647
604
653
157
262
376
876
428
911
502
827
056
994
9,980.621
5,982,300
3.232.708
1.262 248
2,334 527
1,013,776
532,422
22,538
315 951
248,693
108,981
Via Taco-
ma.
Total.
2,998,517
6,840,971
9,243,404
6,862,537
,210,802
430,337
.271.584
500,580
649.479
497,960
268,068
534,785
257,783
408,389
093.401
,289,425
099,253
820,047
924,769
*(Up to November 23, 1889, from Yokohama.) New York, January 13, 1890.
This tea "season" extends from June 1 to May 31 in
each twelve months.
An inspection of the table makes it clear that *^ the diver-
sion" can neither be proved nor disproved by a comparison
of the quantities carried each season by any line (Mr.
Towne's method), but only by a comparison of the percent-
ages of each season's total carried by any line, as per follow-
ing table :
Table Showing Percentage of Total Imports of Tea from Japan into the United
states and Canada, Carried via Various Routes at Dates Named Below.
Season.
Ill
pi
>
1.
U
>
1
B
k
.2 2
>
1
>
1
>
"A
1
>
J
1875-'6
4014%
'6716%
5m%
48H^
7H%
^uR AND Wheat— In Car-Loads in Centa per IQQUia,
G. T. R.
_ cy.R^
N. Pac. S. Pac
Pa.R.R.
Hi.
Cen.
1
MUeage.
Special.
MUeage.
/ \
Special.
Xo«aL.
Looftl.
LooftL.
5
8
4
3
4
3
4
5
^
IP
4
4
4
4
4
6
6
m
5
4
5
4
i^
10
6
5
6
4
6
4
5
14
7
5
85
7
5
7
5
5^
17
7
S
1
5
6
8
8
5
5
6
6!^
21
24
8
8
5^
40
9
6
9
6
7
29
9
6
45
9
6
9
6
7«
32
9
6
50
10
6
10
6
8
36
9
?^.
75
Jf
7
12
7
10
54
11
IPO
7
14
!7
12 i 79
18
8
les
]5
' 7
15
l8
13 i 90
15
8^
150
16
10
16
14^ 109
16
1*3^
175
18
10
18
15^ no
17
800
19
11
19
13
17 110
18
250
20
13
20
15
19U ; 110
19
:300
23
14V^
23
15
22 110
21
350
24
161^
24
16^
24 110
23
400
25
23
0.73
26 110
24
16H
X^^
50
Iron—
[a Car-Loads ia Cents per 100 Lb
s.
ao
G. T. R.
C.P.E.
N. Pac.
S. Pac.
Pa.R.R.
111.
Oen.
1
Mileage.
Special.
Mileage.
Special.
Local.
Local.
Local.
Local.
5
4
5
6
4
5
6
5
4
6 ■
10
4
5
6
5
10
7
9
15
6
^
20
7
7
6
• 10
14
6
?'i
8
9
8
9
7
8
11
13
17
21
7
7
6*
30
•
6
3>
10
10
8
14
24
7
1
40
11
12
11
12
8
8
15
16
29
32
7
714
45
50
12
12
8
17
36
m
7*
75
15
18
15
18
8
8
22
27
54
72
10
12
7?4
100
15
9%
125
19
18
19
8
30
90
13
150
20
18
20
9
32
109
14
I'H
175
22
18
22
9
35
110
15
200
23
20
23
11
37
no
16Vl^
14J4
250
26
2 J
26
11
42
110
18
17
3on
30
25
39
11
47
110
20
20
.350
33
27
33
15
52
110
21
aa^
403
35
30
35
15
57
110
2?^
25
SrOAR— In Car-Loads in Cents per 100 Lbs.
1
i
G. T. R.
C. P
.R.
N. Pac.
S. Pac.
Pa:R.R
HI.
Cen.
Mileage.
Special.
Mileage.
Special.
Local.
Local.
Local.
Local.
5
4
5
6
4
5
6
5
7
9
4
6
10
5
6
6
4
10
15
6
6
iu
20
7
6
7
6
10
14
7
25
8
7
8
7
11
17
7
6
30
9
8
9
8
13
21
8
6J4
35
10
8
10
8
14
24
8
6^
40
11
8
11
8
15
29
9
QL^
45
12
8
12
8
16
32
9
69i
50
12
8
12
8
17
36
9
7
75
15
8
15
8
22
54
11
7
100
18
8
18
8
27
72
13
8
125
19
8 ,
19
8
29
90
15
m
150
20
9
20
9
32
110
16
11
175
22
9
2.2
9
34
110
17
12%
200
23
11
23
11
37
110
18
14
250
26
11
26
11
42
110
19
17
300
30
11
30
11
47
110
21
20
350
SS
12
33
15
52
110
23
22
400
35
15
35
15
57
110
24
25
51
Boots
AND ShOKS-
-la Less than Car-Loads in Cents per 100 Lbs.
G. T. R.
C. P. R.
N. Pac.
S. Pac.
Pa.R.R.
HI.
Cen.
Mileage.
Special.
Mileage.
Special.
Local.
Local.
Local.
Local.
5 '
8
10
8
10
10
14
4
7
6
6
14
10
14
15
12
12
12
13
17
11
9
15
an
14
12
14
12
20
15
10
16
25
16
14
16
14
22
18
13
17
30
18
15
18
15
25
22
14
17
At
20
16
20
16
27
25
14
18
40
22
16
22
16
30
30
16
18
45
24
16
24
16
32
35
18
19
50
24
16
24
16
34
37
20
20
75
80
20
30
20
44
55
26
22
100
36
23
36
22
54
75
29
24
«25
38
22
88
22
60
93
32
28
150
40
22
40
22
64
1J2
34
32
175
44
22
44
22
70
130
38
86
^00
46
24
46
24
74
150
42
40
1250
52
28
52
28
84
168
48
48 .
-300
60
28
60
28
94
187
5i
56
.350
66
30
66
80
104
200
58
58
400
70
40
70
34
114
200
61
61
AoaicuLTcaAL Implkmests— la Car-Loads in Cents per 100 Lbs.
G. T. R.
C. P. R.
N. Pac. 8. Pac.
Pa.R.R.
111.
Cen.
Mileage.
Special.
Mileage.
Special.
Local. ! Local.
Local.
Local.
5
4
5
6
4
5
6
4 d
4
5
6
5
10
6
7
6
10
6*
15
?0
6
7
7
8
9
14
17
6
25
6
6
•30
8
7
8
6
10
21
7
Si
9
7
9
7
11
24
7
6V6
40 1
10
7
10
7
12
29
7
6P
45
11
7
11
7
13
82
7^
SO
11
7
11
7
14
36
7^
7 *
75
14
9
14
9
18
5i
10
8
100
16
10
16
10
23
72
12
9
125
17
. 10
17
12
24 t 90
13
150
18
10
18
13
26 1 109
14
12>4
175
20
10
20
13
27 1 110
15
14J4
200
21
11
21
13
30 110
16V^
M
-250
24
13
24
18
34 110
18
300
30
18
30
13
38 110
20
:350
31
14
81
14
42 110
21
25
400
38
18
33
18
46 110
22^
27«
52
Salt— In Car-Loads in Cents per IjOO Lbs.
G. T. R.
C. P. R.
N. Pac.
S. Pac.
Pa.R.R.
111.
Cen.
1
Mileage.
Special.
Mileage.
Special.
Local.
Local.
Local.
Local.
5
3
3
3
B%4
d
3M
10
4
4
4
5 5
15
4
5
5
t
5
4
4
5
6 5
71^ 6
01/
90
3^
25
30
6
6
5
5
91^
6
4 *
35
6
6
5
6
10
6
4
40
7
7
6
6
11
6
414
45
7
7
l^
7
ti
50
7
7
8
7
75
10
8
10
7 i
11
9
5
100
11
9
11
8^
13
25
10^
5%
125
18
10
13
9
15
30
11
150
14
10
14
10
16
35
12
175
15
10
» 15
10 -,
18
40
13
200
16
11
16
11 t
19
45
14U
7%
250
18
12
18
12
21
50
151^
8M
300
20
13
20
12^
23
55
It'J^
11^
350
22*
14
22
14
22
60
17
400
24
15
24
15 '
27
65
18H
LUMBER-
-In Car-Loads in Cents per 100 Lbs.
G. T. R.
C. P. R.
N. Pac.
S. Pac.
Pa.R.R.
111.
Cen.
1
Mileage.
Special.
Mileage.
Special.
Local.
Local.
Local.
Local.
5
3
3
3
3
3
3
4
3^
10
4
3^
4
3«
3^
4
5
3^
15
4
4
4
4
4
5
5
3?i
20
5
4
5
4
4^
^
6
4
25
5
5
5
5
5
6
4J4
30
6
5
6
5
5^
8
6
4/4
35
40
6
7
SI
6
7
n
6
6
m
6
6
4H
45
7
6
7
6
6^
9H
7
4^
50
7
6
7
6
7
m
7
5
75
10
8
10
8
,?l|
11
9
100
11
9
11
9
15
10^
6J4
125
150
18
14
>?«
13
14
,?«
13
14
^
11
12
7^
175
15
10
15
10
15^
26
13
8
200
16
11
16
11
16M&
30
14^
8V^
250
18
\f
18
i2^
19
35
15J^
91^
300
20
20
14
21^
40
16^
10^
350
22
15J^
22
15^
24
45
17
11^
400
24
17
24
17
26V^
50
18>6
12^
53
Hardware (N. O. S.)— Less than Car-Loads in Cents per 100 Lbs,
CD
1
G. T
. R.
C. P. R.
N. Pac.
8. Pac.
PaR.R.
111.
Cen.
i
Mileage.
Special.
Mileage.
Special.
Local.
Local.
Local.
Local.
5
7
7
9
4
6
12
10
8
8
12
7
6
Jin
15
11
11
11
11
14
11
9
20
12
11
12
11
17
15
9
14'
25
14
12
14
12
19
18
10
i^
30
16
13
16
13
21
22
11
15^
35
18
14
18
14
23
25
12
15^
40
19
14
19
14
26
30
13
16
45
21
14
21
14
27
33
14
16J^
50
21
14
21
14
29
37
16
17
75
26
18
26
18
37
55
20
100
32
18
32
18
46
75
23
20i^
125
33
19
33
23
51
93
26
25^
150
35
19
85
25
64
112
29
175
39
19
39
25
60
130
32
200
40
21
40
25
63
150
36
30}^
250
46
25
48
25
71
168
41
35
300
53
25
53
25
80
170
46
40
350
58
26
58
26
88
170
50
42^
400
61
35
61
35
97
170
53
46^
I have compared each of the Grand Trunk local tariffs
with the tariff of each American railroad, making 314 com-
parisons, in 133 of which the average of both the Canadian
mileage and special tariffs are higher and in 181 compari-
sons lower than their American competitors, as per the fol-
lowing table :
Analysis of Comparisons of Qrand Trunk Local Tariffs, Mileage and Special, with
Those of Twenty American Railroads (Except on the Item of Salt, when the Com-
parison is with Seventeen).
Flour and j G. T. mileage higher than 15, lower than 5, total of 20
wheat. I " special " 6, " 14, •' 20
!_„ j " mileage " 13, " 7, " 20
"^°° I " special " 12, " 8. " 20
SuB-ar \ " "'ileage " 14. " 6, " 20
HUgar.... -j » special " 4, " 16. " 20
Boots and! " mileage " 10, " 10, " 20
shoes. I " special " 1, " 19, '* 20
^mentsi " «P«<^i^l " 1' " 19. " -20
SaU J " mileage " 10, " 7, " 17
^"^ { " special " 6, " 11, " 17
Lumber \ " m^eage " 13. •' 7, " 20
i^umoer.. -j .. gpe^ial " 9, " 11, " 20
Hardware 3 " mileage " 10, " 10, " 20
Hardware ^ .. ^p^^^.^j .. ^^ ,. 2^'^ .. 2^
Average " 133 " 181 " 314
Or, in other words, the average of both mileage and spe-
cial Grand Trunk tariffs is Id^per cent less than American
local tariffs.
54
A fairer comparison would be between tlie Grand Trunk
special and American local tariffs, in which the result would
be as follows : Grand Trunk higher than 39, lower than 118,
total of 157 ; or in other words, the Grand Trunk special
tariff is S4:per cent less than American local tariffs.
The relative cheapness of Grand Trunk local rates is not
the result of a new policy, but has prevailed for many years,
as proven by the following table, which shows a comparison
in 1875 of the local rates of the then five great trunk lines
of railway. The data for this table were furnished by J. L.
Ringwalt, Esq., editor of "The Railway World," published
at Philadelphia, Pa., and are found on page 254 of his book^
entitled "Development of Transportation Systems in the
United States : "
55
Miles from given point to station
nearest the distance taken.
For 50 miles :
Erie 50.
New York Central 55.
Pennsylvania 50.
Grand Trunk 55.
Baltimore «& Ohio 50.
For 75 miles :
Erie 75.
New York Central 74.
Pennsylvania 75 .
Grand Trunk 75.
Baltimore & Ohio 75.
For 100 miles :
Erie 100.
New York Central 101 .
Pennsylvania 100.
Grand Trunk 103.
Baltimore & Ohio 100.
For 150 miles :
Erie 153.
New York Central 156.
Pennsylvania 150.
Grand Trunk 150.
Baltimore & Ohio 152.
For 200 miles :
Erie 200.
New York Central 199.
Pennsylvania 200.
Grand Trunk 203.
Baltimore & Ohio 201.
For 250 miles :
Erie 248.
New York Central 253.
Pennsylvania 250.
Grand Trunk 250.
Baltimore & Ohio 253 .
For 303 miles :
Erie 300.
New York Central 300.
Pennsylvania 300.
Grand Trunk 300.
Baltimore & Ohio 300.
For 350 miles :
Erie 351.
New York Central , . . 349 .
Pennsylvania 350.
Grand Trunk 350.
Baltimore & Ohio 350.
Kind of Freight.
1st Class.
2d Class.
3d Class.
4th Class.
22
17
12
9
24
21
16
9
19
16
14
11
28
23
19
14
20
20
19
16
27
21
15
11
26
23
19
13
25
21
18
15
30
25
20
15
30
30
25
23
34
26
19
14
33
28
25
15
30
25
20
15
36
30
24
18
40
40
34
30
45
34
24
19
48
42
36
22
44
37
33
26
44
37
29
22
61
50
42
36
56
42
30
23
61
50
40
24
66
56
46
36
54
45
36
27
72
59
52
40
67
50
36
28
65
53
49
28
71
56
46
£6
60
50
40
30
95
73
60
40
78
59
43
33
70
55
51
31
71
56
46
36
60
50
40
30
95
80
60
40
86
65
47
38
76
60
50
3t
71
56
46
36
70
58
47
35
95
80
60
40
The following analysis of the above table is based on
fourth-class freight alone as a saving of time and space. A
comparison of the other three classes of freight would give
equally or even more favorable results. It will be noted
that the name of the Baltimore & Ohio Kailroad, like that
1,
same or
lower than
3.
or
total of
8,
t(
2,
3,
"
1.
1,
"
3,
2.
"
2,
2.
2,
0,
"
4,
3,
56
of Abou Ben Adem, " leads all the rest " in liigli rates in
1875, as that of the Southern Pacific Railroad does in 1890 :
Comparisons of Local Rates on Fourth-Class Freight of the Grand Trunk Railway
Company in 1875 with those of Four American Trunk Lines.
Distances.
50 miles. Grand Trunk higher than
75 "
100 " " «'
150 " " '♦
200 "
250 " "
300 "
350 " " " .
Grand result 12, " " 20, " 32
Or in other words the Grand Trunk locd tariff in 1875
was twenty per , cent, less than its trunk line competitors.
I have filed with the Senate Committee on Inter-State
Commerce local freight tariff No. 99 of the Canadian Pacific
Railway, put into effect February 1, 1888, and covering all
local traffic between Winnipeg and Vancouver. This ter-
titory is absolutely free from all competition by either rail
or water, and the traffic is wholly dependent upon the Can-
adian Pacific Railway ; 3^et for that long distance of 1,483
miles the rates are as carefully adjusted to the long-and-
short-haul clause of our interstate law as by any American
road. I select a f^w examples from this tariff :
Classes of Freight.
123456789 10
Winnipeg to Aikins, 505 miles 151 127 102 77 70 57 39 39 57 33
Winnipeg to Golden, 1,007 mUes 245 204 164 124 114 97 68 58 95]^ 56
Winnipeg to Vancouver, 1,483 miles 337 281 225 169 156 140 102 83 136 83
The schedule shows 111 stations between Winnipeg and
Aikins, but not one of them pays a higher rate than as
shown above. There are 168 stations between Winnipeg
and Golden, 219 stations between Winnipeg and Vancouver,
but no intermediate station pays more than the long-haul
rate. Many of these stations are, of course, only flag sta-
tions, but the principle of the long-and-short-haul clause of
our law is rigidly applied, while on the American transconti-
nental lines this principle is not applied, I select a single
example from the transcontinental tariff :
57
Coal oil from Pittsburgh or Buffalo to
Pacific coast terminals only $1.25 per 100 lbs.
Coal oil from Pittsburgh or Buffalo to in-
termediate points east of 97th me-
ridian $1.95 " " *'
These rates can be found on pages 37 and 10, respectively,
of tlie west bound transcontinental tariff now in force.
This tariff also discloses that substantially the lowest rate
on any American traffic from Minneapolis to Pacific coast
is 99 cents per 100 lbs., while the lowest class rate for simi-
lar Canadian traffic for practically the same distance, as per
Tariff No. 99, is only 83 cents per 100 lbs.
As confirmatory of the relatively lower gross earnings of
the Canadian railways, 1 submit the following table, com-
piled from the Second Annual Keport on the Statistics of
Railways in the United States to the Interstate Commerce
Commission for the year ending June 30, 1889, from page
274 to 306.
Total Traffic Earnings per Train Mile in Dollars and Fractions
of a Dollar.
Canadian Pacific $1,292
New York Central & Hudson Eiver Railroad 1.593
Northern Pacific 1.760
Pennsylvania Railroad 1.797
Southern Pacific 1. 813
Union Pacific 2.050
Chicago & Grand Trunk 1.15S
Michigan Central 1.352
Lake Shore & Michigan Southern 1.632
58
Fourth Eeason. — Lower Cost of Operation of Canadian
Railroads.
The following table compiled from the Second Annual
Report on the Statistics of Railways in the United States,
etc., referred to above, pages 354 to 384:, proves this
Percentage of Operating Expenses to Operating Income.
Canadian Pacific 65.52 per cent.
New York Central & Hudson River Rail-
road 64.50
Pennsylvania Railroad 68.11 "
Northern Pacific 60.37 "
Southern Pacific 67.44 "
Union Pacific 56.51 "
Chicago & Grand Trunk 72.27 "
Michigan Central 70.54 "
Lake Shore & Michigan Southern 63.02 "
Also the following table, compiled from the same source,
pages 398 to 448 :
Cost to the Following Railways of Carrying One Passenger One Mile and of Moving
One Ton of Freight One Mile.
Canadian Pacific ]
New York Central & Hudson River
Railroad
Pennsylvania Railroad
Northern Pacific
Southern Pacific (Pacific system)
Union Pacific
Chicago & Grand Trunk
Michigan Central
Lake Shore & Michigan Southern
The net earnings of the Canadian Pacific may, however,
be relatively greater than its leading competitors, owing to
its lower capitalization and fixed charges, as shown by the
following tables. Both its American and Canadian patrons
are surely entitled to the benefit of its honest and economi-
cal construction. These tables are compiled from the same
annual report of railway statistics previously cited, pages
212 to 265 and pages 398 to 448 :
Dger, 1.49 cents ; frei
ght, .639 cents.
1.28 "
.549 "
1.56 *'
.486 "
1.61 "
.910 "
1.64 **
.829 "
1.83 "
.618 "
1.41 "
.41 "
1.92 "
.49 "
1.70 "
.43 "
5^
Amount of railway capital per mile of line operated at the close c f the
year ending June 30, 1889.
Canadian Pacific 36,002 dollars
Korthern Pacific 81,986 "
Southern Pacific 48,550 "
Union Pacific 109,478 ^'
Percentage of total expenditures covered by fixed charges of the
Transcontinental lines.
Canadian Pacific 28.90 per cent
Northern Pacific 39.14 "
Union Pacific 35.86
Southern Pacific 34.91 "
Food for thought concerning the capitalization of Ameri-
can transcontinental lines is found in the following remarks
of Mr. C. P. Huntington before the house committee on
Pacific railroads, before referred to :
" I don't like to talk about it ; but, if obliged to, the Cen-
tral Pacific could build a line connecting with the Union
Pacific and replace the subsidized section at oneqiiarter the
cost of that section, and without Government aidP
FiFfH Reason — Differential Rates Granted Canadian
Railroads.
This reason has absolutely no force, from the fact that
differential rates are now and always have been freely
granted to numerous American railroads by the standard
lines, like the Vanderbilt and Pennsylvania sj^stems. It is
merely a device for equalizing the disadvantages of greater
length of line between same points, poorer equipment, less
convenient terminal facilities, lack of dining car or restau-
rant privileges, etc.
If all hotels had strictly first-class appointments, prices
would be uniform ; but, as many of them are of a lower
class, they attract patronage by lower prices.
60
Eailroads follow precisel}^ the same course, whether they
are American or Canadian, with the exception that the
lower prices are fixed by the consent and agreement of the
first-class lines.
Present standard rates from New Class.
York to Chicago. 1st 2d 3d 4th 5th 6th
Freight traffic 75 65 50 35 30 25c. per 100 lbs.
Differentials allowed the National
Dispatch 10 8 6 4 4 3
Kanawha Line 15 12 9 6 5 4 "
New York, Ontario & Western.. 8 6 4 3 2«^ 2 "
The West Shore, Erie, Delaware,
Lackawanna & Western, and
Lehigh Valley 5 4 3 2 1 1 "
Present standard rates from Chicago to
New York. 1st class. 2d class.
Passenger traffic 20 dollars. 17 dollars per ticket.
Differential allowed Wabash, Chicago
& Grand Trunk, Chicago & Atlantic,
Nickel-Plate, and Baltimore & Ohio. 2 dollars. 1 dollar per ticket.
The above differential is allowed only when route is made
in connection with the Erie, West Shore, Lackawanna,
Ontario & Western, and Lehigh Valley. All of these are
American railroads.
Between Boston and Chicago, the Boston & Albany
railroad rates are the standard ones, and differentials are
allowed other lines both on freight and passenger traffic.
The following item in the Kew York Herald of February
2, 1890, explains itself :
" The dispute over tlirough rates between the Boston &
Albany and Fitchburg roads has been settled by arbitra-
tion. Tlie Fitchburgh road has been awarded a differential
of two dollars on each first-class passenger by the West
Shore route, and three dollars by the Erie route."
The distance from Yaucouver to San Francisco is 800
miles, and the only means of communication for the Cana-
dian Pacific Railway is one steamer jper week.
This is a disadvantage in point of time of four or five
days, which, by consent and agreement of all the transcon-
tinental lines, is equalized to the Canadian Pacific route as
follows, as per transcontinental tariff, October 1, 1889 :
."The rates to San Francisco only from points named
61
below via the Canadian Pacific railway will be the follow-
ing differentials in cents per 100 lbs. less than the through
rates shown above : "
Classes of Freight.
From— 12345ABCDE
St. Paul and Minneapolis 15 12 10 10 10 8 8 7 5 5
Chicago, Milwaukee, and common
points 171^ 141^ 1^ 10 10 8 8 7 5 5
Cincinnati, Detroit, and common
points 21 17 14 11 11 9 9 7 5 5
Pittsburgh, Bufifalo, and common
points 22 18 15 12 12 10^ lOJ^ 8 7 5
New Yorlr, Boston, Philadelphia,
Baltimore, and common points.... 28 24 17 14 14 12 12 8 8 5
The differential on passenger traffic is, I think, five dol-
lars per ticket.
It will be noted that the differentials above given apply
to San Francisco only, the rates to all other Pacific coast
points being precisely the same via Canadian Pacific as via
other routes.
The Canadian Pacific Kailway did not make a rate on
American business south of the international boundary
until after it was discovered that contracts were being made
and rates quoted for British Columbia traffic via Puget's
Sound by its American rivals. This naturally and instantly
provoked retaliation and forced the Canadian Pacific to
attack its competitors by seeking American traffic at Puget's
Sound and San Francisco. The original purpose and policy
of the Canadian Pacific is clearly shown by the following
letter :
Canadian Pacific Railway Company,
Montreal, ^th December, 1885.
T. F. Oakes, Esq , Vice-President Northern Pacific Railroad, St. Paul,
Minn.:
" Dear Sir — Our line will be open for through traffic
between Eastern points and the Pacific coast in May next.
" We wish as soon as possible to consider the question of
through freight and passenger tariffs. We desire to make
the least possible disturbance in existing through rates and
to co-operate with the existing lines in the preservation of
62
paying tariffs. To this end I will b3glad if yon will have
sent ns the fullest possible information as to your present
rates, both regular and special, including rates on fish, fruit,
etc., carried on express trains or under special conditions as
to time, etc. So far as possible, we wish to adopt your
existing rates, and should there be any cases in which cir-
cumstances will prevent our doing this we will communicate
with you on the subject before taking any action.
Yours truly,
" (Signed) W. C. Van Horn,
Vice-President.
Sixth Reason — Destkfction of Eevenues of American
Lines.
If the Canadian railways are diverting a large volume of
traffic from their American rivals under the operation of
the Interstate Commerce Act as is persistently claimed, the
truth of the statement can certainly be proven by the course
of their respective earnings since April, 1887, when that
act took effect. I subjoin a table taken from the New York
Financial Review for 1891, showing the gross earnings for
the last four years inclusive, of the more prominent com-
petitive American lines:
Northern Pacific Co. Southern Pacific Co.
Gross Earnings for 1887.... $13,854,320 Gross Earnings for 1887.... $38,773,146
" " " 1888 ... 18,OC0404 " " " 1888 ... 46,699,614
" 1889 ... 21,741,891 " " " 1889.... 46,343,308
»• " " 1890.... 24,402.093 " " " 1890... . 48,243,300
Union Pacific Co. Pennsylvania (Lines East of Pittsburg.)
Gross Earnings for 1887. ...$28,557,766 o Gross Earnings for 1887.... $'.5,671,313
" 1888 ... 30,195,521 " " " 1888.... 58,172,077
31,070,182 '♦ " " 1889.... 61,514,445
41.871.813 " " " 1890... 66,391,34S
N. Y. Central & H. R. R. R. Co. Canadian Pacific Co.
Gross Earnings for 1887 .... $36,296,024 Gross Earnings for 1887 ...$11,606,413
" 1888.... 35,283,584 " " " 1888.... 13,195,536
•' 1889.... 36,056,598 " " " 1889.... 15.030,660
" 1890.... 36 258,641 " " " 1890.... 16,540,038
♦Increased mileage account'^ for a part of the large Earnings of 1890.
This table shows that with one exception the earnings of
the lines mentioned, and especially of the immediate rivals
63
of the Canadian Pacific Co., have been and are steadily
and rapidly increasing.
I beg leave to submit the following confirmatory article
from The Railway Agey the leading railroad journal of this
country under date of January 25, 1890, showing the effect
upon the Northern Pacific Railway :
. " The Northern Pacific Company at the commencement
of the present year had about 3,725 miles of completed
track owned and operated, and the addition of the Wis-
consin Central lines make up the grand total of a little over
4,450 miles, forming a vast and far-reaching system, now
extending from Lake Michigan to the Pacific Ocean, with
main line and branches lying in the States of Illinois, Wis-
consin, Minnesota, Dakota, Washington, and Oregon, and
the Territories of Montana and Idaho. The Northern
Pacific has, moreover, pushed northward into Manitoba,
where, under the title of the Northern Pacific & Manitoba
Railroad, it already has nearly 200 miles of lines in opera-
tion, with important extensions under way and contem-
plated. The company will also naturally contintie the work
of opening up new territory along its main lines by other
extensions, so that it is evidently the question of but a short
time when the mileage of the Northern Pacific system will
have passed the 5,000-mile point, with possibilities of
almost indefinite growth. Looking back only ten years,
when the road consisted of only 530 miles of bankrupt line,
ending at the Missouri River, and contrasting with that the
vast mileage and prosperous condition of the company
to-day, we have an impressive example of the changed con-
ditions of this company and of many other railway proper-
ties which have arisen within comparatively so short a time.
The Northern Pacific Company has fought its way from the
depths of depression to a commanding position among the
great railway systems of the land, and the remarkable
increase in its earnings during the last year, when they
64
reached the grand total of ^1^763 fiOO dollars, gives its
owners reason to hope for still better things."
The most bitter and determined rivals of the Grand
Trunk Co. are the Lake Shore & Michigan Southern Co.
and the Michigan Central Co. These two companies have,
in their imagination, been almost bankrupted by the com-
petition of the Grand Trunk Co. Poor's Manual for 1890,
however, tells quite a different story. It shows that while
the average annual gross earnings of the Lake Shore &
Michigan Southern Co. from 1883 to 1889 inclusive, were
$17,082,571; for 1890 they reached the sum of $20,874,200.
That the average annual gross earnings of the Michigan
Central Co. for the same period were $12,931,429, while for
1890 they reached $14,340,000. These figures do not seem
to require any comment.
It has been testified before this committee that the Can-
adian Pacific Company is "the alter ego of the Dominion,''
" the Canadian government on wheels," " that it is dependent
upon American traflftc, without which it could not be suc-
cessfully operated," and one very prominent witness, Mr.
Henry Y. Poor, declares '* that its end, like that of the
Intercolonial Railroad (which is owned and operated by the
government), will be to become a burden on the Dominion
treasury and create an annual deficit." The truth is that
every one of its obligations to the Dominion Government
has either been paid or absolutely provided for, so that the
government is no more financially interested in the Can-
adian Pacific system to-day than is the government of the
United States in the Pennsylvania system. The Canadian
Pacific Railway is as purely a commercial enterprise as is
the Pennsylvania Railway, and a marvelously successful
one, as shown by the balance sheet for the year ending
December 31st, 1889 :
65
The gross earnings for the year were $15,030,660 38
The working expenses were 9,024,601 04
The net earnings were $6,006,069 34
Deduct the fixed charges accruing during
the year 3,779,132 94
Tiie surplus was $2,226,926 40
Dividend of one per cent, paid February
17th, 1890 650,000 00
Leaving a surplus carried forward. . . $1,576,926 40
Surplus of previous year 326,423 92
Total surplus carried forward $1,903,350 32
Of the above gross earnings of $15,030,660.38, American
interstate traffic furnished $999,732.23, or 6.65 per cent,
of the whole. Deduct operating expenses, say 66 per cent.,
and the net earnings dependent upon American Interstate
traffic will be seen to cut a ridiculously small figure in the
company's revenue.
The significance of these figures is greatly enhanced
when we remember that the road was not completed to the
Pacific coast until 1886, and the short line across the State
of Maine was not completed until the mid-summer of 1889.
Another remarkable fact in view of this balance sheet is
shown by the statistics of railways for 1889, recently issued
by the Inter-State Commerce Commission. On page 21 of
this volume is a table showing revenue and density of traflSc
for all roads whose annual gross revenue exceeds $3,000,000,
in which it appears that the Canadian Pacific Railway, with
two exceptions, earns the lowest gross revenue per wAle of
line of any of the seventy-eight roads with which it is com-
pared. The comparison, with the exceptions, is as follows :
Canadian Pacific, $2,769 ; Missouri, Kansas & Texas, $2,704 ;
Chicago, Kansas & Nebraska, $1,926.
How can the Canadian Pacific pay dividends and accumu-
Q6
late a surplus from such a small revenue? Its operating
expenses in proportion to operating income is even greater
than those of the leading rivals, as shown by the same vol-
ume of statistics, as follows ; Canadian Pacific, 65, S2 per
cent.; Northern Pacific, 60.37 per cent.; Union Pacific,
56.51 per cent. How, then, can the Canadian Pacific pay divi-
dends and accumulate a surplus on such a small revenue?
Because it was honestly built and is economically managed.
Its stock has not been watered ; no construction companies
are gnawing its vitals, and the profits on every collateral
enterprise connected with it, such as express, telegraph, ele-
vators, hotels, restaurants, sleeping, dining and parlor cars^
all go into the treasury of the company for the henefit of
its shareholders. It presents in these respects a great object
lesson to American railway managers.
The existence of the Canadian Pacific Railroad is asserted
to be a military menace to the United States. On the con-
trary, it seems to me a military weakness so far as offensive
operations against this country are concerned. A line of
communication stretching along our border fifteen hundred
miles, from Winnipeg to Vancouver, and largely over open
prairies, could scarcely be defended by all the forces of the
British Empire. Gen. Miles has testified before this com-
mittee that the United States Government would be able to
take possession of this line within ten days from the outbreak
of hostilities.
Seventh Rea.son. — Protection To American Industry.
This reason was most plausibly stated to this Committee
by Mr. A. N. Towne, vice-pres. of the Southern Pacific
Railroad, who insists that the national policy is now settled,
and should apply to railroads as well as to other forms of
industry. I will not discuss the logical strength of the
position, but I strongly suspect that such an application of
the doctrine would detach so many Republican voters in the
67
northeast, west and northwest as to endanger the further
existence of the policy.
The utter inconsistency of Mr. Towne's practice with his
theory cannot be better iUustrated than to show the
measure of protection given the American merchant and
manufacturer by the Southern Pacific Railroad Co., as per
the following table, which is taken from tlie findings in the
opinion of the Interstate Commerce Commission recently
rendered in the case of the New York Board of Trade and
Transportation et al.vs. The Pennsylvania R. R. Co. et al.
or the Import Rate case as before referred to. I subjoin
also a portion of the opinion whicli holds that such rates are
a direct violation of the law.
"The following table, compiled from data in the office of
the Interstate Commerce Commission in regard to the tariff
rates in evidence, shows through rates and divisions of
through rates for the ocean and inland carriage on freights
destined to the Pacific coast and imported from Liverpool
through the Port of New Orleans ; and also freight rates on
domestic trafiic :
68
Freight Rates ia Cents per Hundred Pounds, to San Fran^iscj, Sacramento, Marys-
ville, Stockton, San Jose, Oakland (Sixteenth Street), and Los Angeles, Cal.
COMMODITIES.
Agricultural Implements
BJacking
Books
Boots and Shoes
Burlaps
Buttons
Candles
Canned Fish
Carpets
Cashmeres
Cement
Chinaware
Chocolate ,
Cigars
Clothing
Confectionery..
>^ Cordage X
\ Crayons and Chalks
^ Crockery
/Cutlery
Drug-J, Common -.-.
Pry Goods
Earthenware
Feathers
Glassware, Common
Gloves y:
Glycerine
Groceries, N. O. S
Hair Goods
Hardware
Hats and Caps
Hosiery
Lace
Leather
Linen •.
Linen Goods
Milk, Condensed
Nails
Optical Goods
Pins
Saddlers' Goods
Soap
Soda. Caustic, 2,480,162 lbs
Tallow
Woolen Goods
From Liverpool, |
Eng.
tJiaNewOr-
leans.
6 .
!i
a'
CiC
as
§S
n
5ft
eft
H
19
70
89
19
70
89
27
80
107
27
80
107
19
70
89
27
80
107
19
70
89
19
70
89
27
80
107
27
80
107
19
70
89
27
80
107
27
80
107
27
80
107
27
80
107
27
80
107
19
70
89
27
80
107
19
70
89
27
Ji-0
1Q7
19
70
89;
27
80
107
19
70
89
27
80
107
19—
^0
89
- 27
80
107
27
80
107
19 ^
^70
89
27
80
107
27
80
lor
27
80
107
27
80
107
27
80
107
27
80
107
27
80
107
27
80
107
19
70
89
19
70
89
27
80
107
27
80
107
27
80
107
19
70
89
19
70
89
19
70
89
27
80
107
114
106
264
370
180
374
125
106
a
130
120
300
420
200
420
150
120
330
106 I
163 j
125
370 ^
374
187
125
125
125
m
106
374
125
106
370
187
370
374
106
106
264
370
106
106
106
120
420
150
120
420
215
420
420
'376'
120
120
120
120
120
119
110
275
390
185
390
130
110
12J
110
190
170
150
130
420
390
420
390
215
195
215
130
150
\^
150
370
340
;=-i95_
390
110
130
110
195
390
890
340
110
110
275
390
110
110
110
" The road's import traffic is increasing and has about
doubled, comparing 1885 witli 1889. All this traffic
went by sailing vessels and steamship lines via Panama
until the Southern Pacific Company opened the New
Orleans line. The claim of the company now is that not
one-tenth of it is carried by its line, and that without the
reduced through rate and the through line the road would
get none of it."
69
" So far as Europe is concerned the Southern Pacific Com-
pany does not regard tlie Canada lines as being serious com-
petitors with it. The Nortliern Pacific Kaih'oad Company
carries little, if any, of this particular traflic. The nine-
tenths of the trafiic not carried by the Southern Pacific
Company, it is estimated, is carried by sailing vessels via
Cape Horn and steamships via Panama. "
'" These circumstances and conditions are indeed widely
different in many respects from the circumstances and con- ^
ditions surrounding the carriage of domestic interstate trafiftc \
between the States of the American Union by rail carriers ;
but as the regulation provided for by the Act to Regulate
Commerce does not undertake to regulate or govern them,
they cannot be held to constitute reasons in themselves why
imported freight brought to a port of entry of the United
States or a port of entry of an adjacent foreign country
destined to a place witliin the United States should be car-
ried at a lower rate than domestic traflic from such ports of
entry respectively to the places of destination in the United f kv
States over the same line and in the same direction. To
hold otherwise would b.e for the Commission to create excep-
tions to the operation of the statute not found in the stat-
ute ; and no other power but Congress can create such
exceptions in the exercise of legislative authority."
" One paramount purpose of the Act to Regulate Com-
merce, manifest in all its provisions, is to give to all dealers
and shippers the same rates for similar services rendered
by the carrier in transporting similar freight over its line.
Now, it is apparent from evidence in this case that many
American manufacturers, dealers and localities, in almost
every line of manufacture and business, are the competitors
of foreign manufacturers, dealers and localities, for supply-
ing the wants of the American consumers at interior places
in the United States, and that under domestic bills of lading
they seek to require from American carriers like service as
their foreign competitors in order to place their manufac-
tured goods, property and merchandise with interior con-
sumers. The Act to Regulate Commerce secures them this
right. To deprive them of it by any course of transporta-
tion business ur device is to violate the Statute. Such a
deprivation would be so obviously unjust as to shock the
general sense of justice of all the people of the country
except the few who would receive the immediate and
direct benefit of it." -« -^-^ y
An examination of the* Ion": list of articles in this table
70
shows the freight on all of them with a single exception to
be greater from IS'ew Orleans to San Francisco, than from
Liverpool to San Francisco via New Orleans. The excep-
tion is glycerine, which paj's 107 cents per 100 lbs. from Liv-
erpool to San Francisco, and 106 cents per 100 lbs, from New
Orleans to San Francisco. Upon the English shipment of
this article the Sonthern Pacific Railroad (the balance going
to the foreign steamship) receives 70 cents per 100 lbs.
while upon the American shipment, the service being pre-
cisely the same in both cases, it receives 106 cents per 100
lbs., in other words, this patriotic E-ailroad company charges
its American ^2iiYon^ fifty-one jper cent, more than it does its
English 'patrons. Upon all other articles the discrimination
is still greater, requiring in the shipment of groceries, N. O.
S. (not otherwise specified), 1^28 per cent, more freight
money from the American than from the English shippers.
This vociferous advocate of protection against the competi-
tion of foreign railways, thus favors English at the expense
of American interests.
I respectfully submit, therefore, that none of the seven
alleged reasons for further legislative control of the Cana-
dian railroads have any foundation in fact, and unless
some better ones can be adduced, that the Congress of the
United States ought not to be placed in the position of a
quasi-side partner with any set of railroad corporations, in
their purely business struggles with others for an increased
trafiic.
It should be borne in mind that no official of the Cana-
dian railroads has ever claimed exemption from the Inter-
State Commerce act of any traffic carried in connection with
an American railroad, but on the contrary the General Man-
ager of the Grand Trunk Company, Sir Joseph Hickson, and
the President of the Canadian Pacific Company, Mr. W. C.
Yan Ilorne, both swore at the hearing in New York, in
Mny, 1889, that they consider "that all traffic going over their
lines in which American raih'oads participated, is subject
to the Inter-State Commerce Act in all respects, and further
that their tariffs covering such traffic were all on file with
the Inter-State Commerce Commission as required by law,
and were accessible for examination by anyone."
The Interstate Commerce Commission have lield in the
only two cases before it, in which the question of jurisdic-
tion over Canadian railroads could be raised, that any traffic
moving over a single foot of American territory", even
tliough never out of the possession and control of the Cana-
dian carrier and non-competitive with any American carrier,
is nevertheless subject to the act. The Commission has thus
asserted its jurisdiction over the carriage of coal from
Buffalo to Canada, and over the carriage of Asiatic products
from Yokohama via Vancouver to tlie United States, and
to Canada, if touching American territory en route.
Thus far the Canadian railroads Iiave cheerfully and
promptly conformed to every suggestion and requirement
of the Commission and until they refuse on jurisdictional
grounds to be bound by the rules to which their American
rivals submit, there can be no necessity for legislative action
against them. The feeling in American commercial circles
adverse to congressional action which would unnecessarily
cripple the competition of Canadian with American railroads
cannot be better expressed than in the reply to an interroga-
tory propounded to the Chicago Board of Trade by the
Senate Committee on Interstate Commerce, in July, 1889.
The interrogatory was : **.Do you consider any additional
legislation expedient or desirable for the regulation of the
commerce carried on by railroad or water routes between
the United States and Canada ?" The reply was : " We do
not consider any additional legislation necessary. The
adoption of any legislative measures calculated to restrict
the transportation facilities now enjoyed by the farmers,
cotton growers and cattle raisers of the west and southwest,
72
would, in the opinion of this committee, hury in impenetra-
hle oblivion, the political party that accomplished it. The
west would act as one man, and be aided and abetted by the
independent voter of Kew England in the furtherance of
such desirable obsequies."
I desire to say in passing that no complaint under the
penal section of the act has ever been lodged against the
Canadian railroads.
If my statements of fact and conclusions therefrom are
well founded, there is no need to discuss at any length the
questions of international jurisdiction and comity which
must be involved in any attempt to control by Congressional
action the purely local interstation traffic of Canada lying
between points past which American bonded traffic is car-
ried. Even if the jurisdictional objection should be waived
by our Canadian neighbors, which is quite improbable, the
configuration of Canadian territory is such, that a general
application to its purely local traflac of tlie long and short
haul clause of our law would be fraught with marked injus-
tice. For example, the Canadian interstation traffic lying
between Sault Ste. Marie, Port Huron, and Detroit on the
west, and the St Lawrence and Niagara frontiers of the State
of New York on the east, could not be expected to submit
to restrictions from which the entire interstation traffic of
the great States of New York, Pennsylvania, Illinois, and
every other State is exempted by the very terms of the
Interstate Commerce Act, which reads as follows :
u Provided, however, That the provisions of this act
shall not apply to the transportation of passengers or prop-
erty toholly within one State and not shipped to or from a
foreign country from or to any State or Territory as afore-
said."
I will close these necessarily somawhat desultory remarks,
with the consideration of one more statement made to this
Committee by a prominent witness before referred to, which
73
also the Interstate Commerce Commission have hastily
indorsed. A very slight examination of the matter will
demonstrate, beyond all controversy, the error into which
both have fallen. I quote from page 897 of the testimony
already printed by this Committee :
"How the Dominion Government by Statutory Enactment Aids tJie Cana-
dian Railroads in Competing with the Railroads of the United States.
'' While the Interstate Commerce Act of the United States
operates as a restraint upon onr railroads in their attempt
to meet tlie competition of Canadian lines, the laws of
Canada by special statutory exemption aid tiie railroads of
that country in their persistent efforts to encroach upon
American railroads. This fact is clearly set forth by the
Interstate Commerce Commission in its recently published
third annual report. Referring to the Canadian railroads
the Commission says :
'^ They are practically under no restrictions imposed by
their own statutes in respect to long and short haul traffic,
but are at liberty to charge high rates on local business, to
idemnify for losses on through or international business.
Their managers deny with more or less emphasis that their
local traffic is subjected to higher rates, but when the
liberty to make such charges and the necessity for it
co-exists, the inducement at least is strong. The provisions
of the Canadian statute on this subject are as follows :
" Sec. 226. The company, in fixing or regulating the tolls
to be demanded and taken for the transportation of goods
shall, except in respect to through traflSc to or from the
United States, adopt and conform to any uniform classifi-
cation of freight which the governor in council, on the
report of the minister, from time to time prescribes.
"Sec. 232. I^o company, in fixing any toll or rate, shall,
under like conditions and circumstances, make any unjust
or partial discrimination between different localities ; but
no discrimination between localities, which by reason of
competition by water or railway, it is necessary to make to
secure traffic, shall be deemed to be unjust or partial."
"These enactments give all traffic carried in competition
with our carriers unlimited freedom." Sftnopft Libitr-
"Mr. Chairman, thes^ statutory provisions of tneJDomin-
ion Government are part and parcel of a general line of
political encroachment upon American interests."
The Railway-
Committee.
What matters
Railway Com-
mittee may
hear and deter-
Powers of in-
quiry, etc.
Compelling at-
tendance of
witnesses, etc.
74
I beg leave in this connection to submit the following
sections from the Canadian Eailway Act of 1888 :
Sec. 8. The Railway Committee of the Privy Council
shall consist of the Minister of Railways and Canals, who
shall be chairman thereof ; of the Minister of Justice, and
of two or more of the other members of the Queen's Privy
Council for Canada, to be from time to time appointed by
the Governor in Council, three of whom shall form a
quorum ; and such committee shall have the powers and
perform the duties assigned to it by this act.
Sec. 11. *' The Railway Committe shall have power to
inquire into, hear and determine any application, complaint
or dispute respecting (among other things) :
{a) Unjust preferences, disci'imination or extortion;
(5) Any matter, act or thing which, by this or the special
act is sanctioned, required to be done or prohibited.
Sec. 13. The Railway Committee, the Minister, inspect-
ing engineei', commissioner for inquiry into accident or
casualty, or person appointed to make inquiry or report,
may, among other things :
{a) Require the attendance of all such persons as it or he
thinks lit to call before it or him and examine and require
answers or returns to such inquiries as it or he thinks fit to
make.
{b) Require the production of all books, papers, plans,
specifications, drawings and documents relating to the mat-
ter before him.
Sec. 15. The Railway Committee, the Minister and every
such engineer, commissioner or person shall have the same
power to enforce the attendance of witnesses and to compel
them to give evidence and produce the books, papers or
things, which they are required to produce, as is vested in
any court in civil cases. •
Sec. 17. Any decision or order made by the Railway
committee under this act may be made an order of the
75
Exchequer court of Canada, or of any Superior court of any
province of Canada, and shall be enforced in like manner as
any rule of such court.
Sec. 214. The company may, subject to the provisions company may
and restrictions in this and in the special act contained, make for certain pur-
by-laws, rules or regulations for the following purposes,
* * * * (various matters).
Sec. 217. All such by-laws, rules and regulations shall be sanction of by-
submitted from time to time to the Governor in Council for
approval, and no such by-law% rule or regulation shall have
any force or effect until it is approved by the Governor in
Council. .
Sec. 223. Subject to the provisions and restrictions in Jj^^J ^®^
this and in the special act contained, the company may, by
by-laws, or the directors if thereunto authorized by the b}^-
laws may, from time to time fix and regulate the tolls to be
demanded and taken for all passengers and goods trans-
ported upon the railway or in steam vessels belonging to the
company.
Sec. 22-i. Such tolls may be fixed either for the whole or no discrimina-
•' tion to be
for any particular portions of the railway ; but all such tolls ™^^®-
shall always nnder the same circumstances, be charged
equally to all persons, and at the same rate, whether per ton,
per mile or otherwise, in respect of all passengers and goods
and railway carriages of the same description, and conveyed
or propelled by a like railway carriage or engine, passing
only over the same portion of the line of railway ; and no
reduction or advance in any such tolls shall be made either
directly or indirectly, iu favor of or against any particular
company or person traveling upon or using the railway.
Sec. 225. The tolls fixed for large quantities or long d is- special rates,
tances may be proportionately less than the tolls fixed for
small quantities or shoft distances, if such tolls are, under
the same circumstances charged equally to all persons ; but
in respect of quantity no special toll or rate shall be given
76
or fixed for any quantity less than one car load of at least
ten tons.
S?reffht'''° Sec. 226. The company in fixing or regulating the toll&
to be demanded and taken for tlie transportation of goods,
shall, except in respect to through traffic to or from the
United States, adopt and conform to any uniform classifi-
cation of freight which the Governor in Council on the
report of the minister from time to time, prescribes.
Tolls to be ap- ggc. 227. No tolls shall be levied or taken until the by-
proved by Gov- •/
eraorinCoun- j^^^ fixing such tolls lias been approved of by the Governor
in Council, nor until after two weekly publications in the
Canada Gazette of such by-law and of the order in council
approving thereof ; nor shall any company levy or collect
any money for services as a common carrier except subject
to the provisions of this act.
i^flSngtoiK. Sec- 22^- Every by-law fixing and regulating tolls shall
be subject to revision by the Governor in Council, from
time to time, after approval thereof.
posted up.^^ Sec. 230. The company shall from time to time cause to
be printed and posted up in its offices, and in every place
where the tolls are to be collected, in some conspicuous
position, a printed board or paper exhibiting all the rates
of tolls payable, and particularizing the price or sum of
money to be charged or taken for the carriage of any matter
or thing.
whe?SiSw-'°" Sec. 232. No company, in fixing any toll or rate, shall,
^^^^' under the conditions and circumstances, make any unjust or
partial discrimination between different localities ; but no
discrimination between localities which, by reason of com-
petition by water or railway, it is necessary to make to
secure traffic, shall be deemed unjust or partial.
S^ciafmtes ^Ec. 233. No company shall make or give any secret
to be given. special toll, rate, rebate, drawback or concession, to any
person ; and every company shall, on the demand of any
77
person, make known to him any special rate, rebate, draw-
back or concession, given to any one.
Sec. 240. Every company shall, according to its power, ^^S?in''r?
afford all reasonable facilities to any other railway company spect to traffic,
for the receiving and forwarding and delivery of traffic
upon and from the several railways belonging to or worked
by such companies respectively, and for the return of
carriages, trucks and other vehicles ; and no such company
» ' No undue ad-
shall make or give any undue or unreasonable preference or vantage.
Advantage to or in favor of any particular person or com-
pany, or any particular description of traffic in any respect
whatsoever, — nor shall any such company subject any par-
ticular person or company, or any particular description of
traffic to any undue or unreasonable prejudice or disadvan-
tage in any respect whatsoever ; and every company which
has or works a railway which forms part of a continuous
line of railway, or which intersects any other railway, or
which has any terminus, station or w^harf near to any ter-
minus, station or wharf of any other railway, shall afford
all due and reasonable facilities for receiving and forward-
ing by its railway all the traffic arriving by such other rail-
way, without any unreasonable delay, and without any such
preference or advantage or prejudice or disadvantage, as
aforesaid, and so that no obstruction is offered to the public
desirous of using such railway as a continuous lipe of com-
munication, and so that all reasonable accommodation, by
means of the railway's of the several companies, is ^-t all ^ j^^^^^.^
times afforded to the public in that behalf ; and any agree- violation to be
ment made between any two or more companies contrary
to this section shall be unlawful and null and void.
Sec. 241. Every officer, servant or agent of any company. Penalty for re-
XUSCll to TQCQW0
having the superintendence of the traffic at any station or go^^g*'"^®^
depot thereof, who refuses or neglects to receive, convey or
deliver at any station or depot of the company for which
they are destined, any passenger, goods or thing, brought,
78
Recovery and
application.
Equal facilities
toexpressco.'s,
etc.
Liability of
company, etc.
in cases speci-
fied.
Penalty.
Damages for
extortionate
tolls.
conveyed or delivered to him or such coinpan;^ for convey-
ance over or along its railway from that of any other com-
pany, intersecting or being near to such first mentioned rail-
way, or who in any way willfully violates the provisions of
the next preceding section, and the coinpany first mentioned,
are, for each refusal, neglect or offense severally liable in
summary conviction, to a penalty not exceeding fifty dol-
lars over and above the actual damages sustained ; which
penalty shall be recoverable with costs, by the railway com-
pany or by any such person aggrieved by such neglect or
refusal, and such penalty shall belong to the said railway
company, or other person so aggrieved.
Sec. 242. Every company which grants any facilities to
any incorporated express company or person shall grant
equal facilities on equal terms and conditions to any other
incorporated express company which demands the same.
Sec. 289. Every company, director or officer doing, caus-
ing or permitting to be done any matter, act or thing con-
trary to the provisions of this or the special act, or to the
orders or directions of the Governor in Council, or of the
railway committee, or minister made hereunder, or omitting
to do any matter, act or thing, required to be done on the
part of any such company, director or officer, is liable to
any person injured thereby for tiie full amount of damages
sustained by such act or omission ; and if no other penalty
is in this or the special act provided for any such act or
omission, is liable for each offense, to a penalty of not less
than twenty dollars, and not more than five thousand dol-
lars, in the discretion of the court before which the same
is recoverable.
Sec. 2. This section shall only apply to companies and
directors and officers of companies within the legislative
authority of the parliament of Canada.
Sec. 290. Every person from whom any company exacts
any unjust or extortionate toll, rate or charge shall, in addi-
79
tion to the amount so unjustly exacted, be entitled to
recover from tlie company as damages an amount equal- to
three times the amount so unjustly exacted.
A careful examination of these provisions of tlie Cana-
dian Kaih-oad Act, some of them, notably section 240, being
almost identical in terms with our own, discloses that Cana-
dian railroads are substantially as closely restricted by law
in their dealings with Canadian merchants and shippers as
are our own in dealing with American merchants and ship-
pers. In one respect at least their system is superior to our
own, in that the orders of their tribunal, the Railway Com-
mittee, are given the force of orders of court, while our tri-
bunal, the Interstate Commerce Commission, has no legal
power to enforce its decrees. It is therefore idle to suppose
that Canadian raih'oads, with such prompt and efficient
remedies in the hands of their patrons, can long subject them
to unjust charges as compared with those placed upon inter-
national traffic.
The charges imposed upon any article of freight carried
by any railroad, whether American or Canadian, depends
upon the class of articles to which it belongs. Freight gen-
erally, is divided on most American roads into ten classes.
This basis of division is not liowever, universally observed.
In some sections of our country a larger number of classes
are used, in others a smaller number. Even where the same
number of classes are used, it not un frequently happens that
an article rated as 5th class in one section of our country,
may for illustration, be rated in another section as 3d class
or Ttli class. This has given rise to various systems of
classification, known as the Trunk Line Classification, Mid-
dle States Classification, Western States Classification and
Southern Railway and Steamship Classification.
It will be noted that the Canadian roads are by law
obliged to submit their local classification to the Governor
in Council for approval, hence this classification which
80
differs in some respects from any used by American roads,
is known among railroad men as the Canadian Official Class-
ification." It is evident that if Canadian railroads partici-
pate in the carriage of American traffic they must also par-
ticipate in the classification under which that traffic is car-
ried. In order, therefore, to enable them to conform to the
classifications of their American connections, and at the
same time avoid a violation of Canadian law, section 226
provides that " through traffic to or from the Uniied States''
may be excepted from the official classification which the
Governor in Council from time to time prescribes. Instead
then of section 226 heing a menace to American traffic, or
American railroads, it is a voluntary concessio?i to hoth.
In section 232, the "localities" between which discrim-
ination may under certain circumstances be exercised, are
assuredly only those over which Canadian jurisdiction
extends, and therefore cannot be " localities " in tlie United
States, and the wildest stretch of imagination cannot torture
the clause into meaning a privilege of discrimination
between a " locality " in Canada and a " locality " in the
United Stated. The traffic affected by this section being
then local Canadian traffic which perforce cannot be carried
by American carriers, and therefore cannot be carried in
competition with them ; there can be no justification for the
statement above quoted, " these enactments give all traffic
carried in competition with our carriers unlimited freedom."
Besides it has been held by the Interstate Commerce Com-
mission that an American railroad " competing with
water or with a foreign railway for traffic important in
amount and controlling in effect, may be relieved from the
long and short haul clause of the act." The Commission
has further held that Interstate traffic between two points,
competitive with local State traffic between the same two
points, ma}'^ also be relieved from the long and short haul
clause of the act. This is a complete acknowledgment of
the soundness of the principle of the Canadian law, and
should forever stop any further denunciation of it, as a
menace to the United States.