HE Z757 ]rmM^ y^A.^.^^yrS THE CANADIAN EAILROAD QUEMiUi^ ARGUMENTS AND Fx\CTb IMITTEE OI NITED STATES SE, 2007 with funding fron^ icrpsoft Corppratic ^M()M^ )ETROIT, MICI ^91 )ETROri 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. tl^ THE CANADIAN EAILROAD QUESTION \> \ s^ K 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.