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ENDING 31st DECEMBER, 1867, WITH STATEMENTS OF ACCOUNTS, &c., &c. LONDON: PRINTED BY K, COUCIIJMAN & CO., 10, TIIUOUMORTON STUEET. 1808. ■tttMMiilM f : LIST OF DIEECTOES, 31st DECEMBEE, 1867. EDWARD IIESELTINE, Esq., London. Utffctors. PHILIP RAWSON, Esq., London. CHARLES LANGTON, Esq., Liverpool. ALFRED COX, Esq., London. Solifttors. Messrs. ASIIURST, MORRIS, k Co., London. Messrs. E. B. WOOD & Co., Brantford C.W. Sccrctars. THOMAS SHORT, Great Winchester Street Buildings. 4, .1 BlJFFAl/) AND LAKE HURON RAILWAY. ]| E P R T FOR THE HALF-YEAR ENDING '31st DEC, 18G7. The Directors now hand to the Proprietors copy of the last Grand Trunk Report, and appended with this a letter from Mr. Heseltino, together with copi(}s of most of the corres- pondence that has tidcen place between the two Companies during the past twelve months. These documents will put the Shareholders in possession of the fullest information as regards the affairs of the Company. In the Grand Trunk Report, pages 3 and 4, the revenue for the past half-year is shown as follows : — Gross Revenue ... . £ 70-1,379 Working Expenses . £ 417,306 Fire at Sarnia . . 6,164 453,470 £ 250,900 Renewals . . . £85,819 American Currency . 39,385 Montreal & Champlain 6,777 131,981 Leaving a divisible balance of £ 118,928 15^ per cent, of which is . £ 18,429 due to the B. and L. H. Co., Not . £ 12,284 as in the printed statement. 1 1 6 A Mannso'ipt llcvenue Account has been liandod to this Company, of which the following is a copy : — Manuscript Account sent in by Grand Trunk Compamj. Buffalo and Lake Huron Railavay. Proportion of Joint Revenue ivith Orand Trunk Railway. Half-year ended d\st Dec, 18G7. Grand Trunk Railway Net Revenue . . £ 250,908 8 7 Less Renewals charged . 85,810 8 10 In abeyance .... 31,382 911 Loss on American Currency 39,384 9 2 Payments to Montreal and Champlain Railway . G,777 14 1 163,304 2 £87,544 6 7 I I I \{ : i. \\ \h\ per cent, of this amount under Agreement is equal to £ 13,569 7 4 Deduct per cent. Interest on Capital raised in excess of £ 250,000 (mentioned in agreement) as per statement herewith, viz. ByG. T. R... £10,418 5 II B.&L.II.R. 393 7 2 10,811 12 2 (15| o/„)==l,675 15 11 Less pnid out by Buffalo and Lake Huron Railway 393 7 2 1,282 8 9 £12,280 18 7 In consequence of the Trunk Company adopting two methods of making out their accounts, one for themselves in print showing a net divisible revenue account of £118,928, ^ and another for this Company as thou£>h showing a divisible revenue of only £87,544, your Directors addressed the follow- ing letter to that Company : — April 17 th, 1808. Dear Sir, I am directed Ly the Board of this Company to cull your attention to an error in the account of the proportion of net revenue due to this Company. At the commencement of your Company's report the gross revenue for the half-year ending December last is stated as £704,379 The deductions are — Working Expenses ... £ 447,306 Renewals 85,819 Fires 0,164 Loss on Exchange . . . 39,385 M. & C. Railway . . . 0,777 585,451 8 9 Showing a net profit of £118,928 15^ per cent, of this amount is £18,429, not as stated in your account £ 12,284 17s. 7d. In the manuscript account of revenue you have rendered to this Company, you have deducted from the joint net revenue £31,382 as being "in abeyance," which is not deducted in your printed statement ; but as this sum appears as a debit in your general balance sheet under the head of suspense, the entry one way or the other must be wrong. You cannot deduct the amount from revenue which discharges it, and then make it appear again as a debit in suspense not discharged ; — it is competent to put the sum in suspense to be charged at 8 some future time to either capital or revenue, but if tliis course is adopted the error should be rectified by your crediting this Company their per centage of net revenue, in accordance with the statement of profit printed and published in the accounts of your Company. I will thank you, therefore, to forward an amended account. I am, dear Sir, Yours very truly, Thomas Shout, Secretary. J. M. Grant, Esq. I n \ \ The gross revenue is £ 704,379. The net revenue divisible between the two Companies in the ratio of 844 and 15^ per cent, is only £118,928, being under 17 per cent, of the receipts. As compared with the corresponding half-year in 18GG— The gross revenue has fallen off = . £14,991 Working expenses have increased . 38,098 Extra renewal outlay increased . . 13,427 Eires at Toronto and Sarnia . . 6,1 64 68,280 Loss on American Currency decreased 22,444 Diminution of profit . £45,836 making a difference to this Company of upwards of £ 7,000. Since the commencement of the lease on the 1st August, 1864, the Buffalo and Lake Huron Company has contributed to the extra renewal fund £ 77,549, and the proportion of loss paid on American currency has been £44,111 — together 9 £121,000, or at the rate of t:5t,700 per annum. From the acc'omi)anyiny table it will he seen Ihat the ovdiniiry workinjj;' charj^os have inercasecl from t ll>5 per mile per annum in 1863, the year previous to the lease bL'in 14 i ! to me to have no bases whatever in the agreement under which the two lines are worked. My appeal to the Board was by forwarding to each member (^n the 0th December, 18G7, a memorandum, of which a copy is set forth in the Appendix marked A. Mr. Watkin having dehberately put forward, as I under- stand him, a claim that his Company were entitled to hold in their own hands without interest; and without security, for an indefinite period, the £ 75,000 which our Company undertook to provide towards a bridge and toivards a third rail from Buffalo to Sarnia, and urging such claim as a reason for not paying us money on account of revenue, I prepared and distributed to the Directors of the Grand Trunk Board copies of the whole correspondence on the subject which took place last summer. (Sec Statement in Appendix marked B.) Besides the claim of £75,000, Mr. Watkin has built upon it the additional claims of which copy is in the Appendix marked C To these claims I immediately sent a reply, forwarding copy of my letter to each member of the Board. (See Appen- dix D.) To sum up briefly the counter claims raised by Mr. Watkin, they are — 1st. A claim by the Grand Trunk Company to hold, without interest and without security, a sum of £ 75,000, which our Company is to raise toivards two specific objects only, viz., the bridge and third rail. The essence of my reply is, that if we raise the money before it is wanted for these ol>jects, it must be in our ov/n keeping, that any interest from the fund will be our own, and L^at when we part with it we are to receive property in a third Rail and Bridge Stock or Bridge Bonds in exchange for the amount. The Grand Trunk Company have no more right to the custody of this money than the Chancellor of the Ex- chequer. In fact the claim seems to me utterly untenable. 2nd. A claim of 1 1 7,000 for interest and £ 20,000 damages for non-payment of the t 75,()0<>. ^ awssam Ji^ 15 nt mider I member :h a copy I under- hold in y, for an ndertook ■ail from 1 for not i*ed and rd copies ok place ked B.) upon it -ppendix warding- Appen- ised by without lieh our nz., the money ur own vn, and ty in a nj^e for e right he Ex- ble. imag-cs The interest, of course, stands or falls with the principal. As to damages, if the Grand Trunk Company suifer by the non-expenditure of our small fraction of the total third rail and bridge capital, of course our Company suffers also in proportion from the non-provision and non-expenditure of the much larger fraction of that total, without which it w^ould be absurd for us to contribute om- small share. The double claim of interest on this fund as unexpended, and damages because it is not expended is so incongruous as to need no answer. ord. A claim of £3,907, as interest on stores. I cannot find any basis for this charge either in the letter or spirit of the agreement. The only joint capital for the interest of which we are proportionately liable under the agreement is, " for the purchase of rolling stock, and for new works in connection with the through trafiic of the two lines.^^ The money to be raised and expended under the sanction of the Joint Committee. 4th. A claim of £ 5,381 for interest at 7 per cent, of £150,000, borrowed from Bankers, from 1st August, 180 i, to 31st December, 1867. As this debt to the bankers existed on the 1st August, 180-1-, which was the first day of the federation of the two lines, it cannot conceivably be such capital as the agreement contem- plates to be raised and expended by the Joint Committee. It must be a debt pure and simple, due by the Grand Trunk Company, and this view is the only one consistent with the fact that nearly seven half years of the federation have passed and six half-yearly accounts been rendered by the Grand Trunk Company imtliout any notice of this item. It certaiiJy would be a very extraordinary proceeding that £ 150,000 should be borrowed on joint account on the 1st August, 1801, the first day of the joint working Avithout notice to this Company in any shape, not even by claiming interest, until the 22nd January, 18G8. These remarks dispose of ;il! tlio claims made by Mr. Watkin. J mfijf 16 ™l I ' f 'Mi-H On the other hand we claim, under the liead of London and Canadian Administration expenses, a considerable sum, as will be seen on reference to paper marked A. The question was referred, and the arbitrator gave an opinion setting forth the principle that, in ascertaining net receipts, only " direct " working charges ought to be deducted from the gross traffic. Following out this principle we have claimed that the Grand Trunk Company shall not deduct their Board, Office, and Genera^ Administration Expenses from the joint receipts, but from their own share of net receipts. I contend that these charges should be included or excluded on both sides. This poii."t and several others were referred to ]Mr, Swift and myself, but we have failed and finally abandoned the attem^)t to arrive at any agreement. On this particular dispute of Administration Expenses, the effort at agreement seems to have been closed by my insisting that, any reference as to the Grand Trunk Company's right to deduct their Administration charges must be made with special regard to the principle on which the opinion was given, that we ought not to be allowed the same class of charges, else we might arrive at the anomaly of two references on one identical subject, producing awards exactly opposite in their principles, one given to our detriment and the other to the Grand Trunk Company's advantage. The fact is that both claims should have been disposed of under the first reference. No answer has yet been given to our old claim for resti- tution of the charges deducted from our revenue for in- creased weight of rails, amounting to £ 5 393, up to June, 1867, made not only without the sanction of the Joint Committee, Imt in contravention of their express resolu- tion of 11th July, 1866, which is as follows : — Capital Outlay. — It was resolved, that the capital payments on behalf of the Buffalo and Lake Huron be taken, for the present, out of the Bufialo and Lake Huron Railway Com- JliL 17 an ' resti- Ror in- June, Joint resolu- ])Ully^s fcihure of net revenue ; and when power to raise joint capital be obtained, be recouped to the Buffalo and Lake Huron out of such joint capital, tt beiiiy understood that, for the future, no further outlay of Joint Capital under the Agree- inent he made without the authority of the Joint Committee jirst obtuinsd. in short our claims are ;— 1st. Administration Expenses. i^nd. Payments on Account. ord. llepayment of sums deducted from our revenue for extra weight of rails. 4th. llepayment of interest on assumed extra capital, no such capital having been raised as provided by the Ag-reement and Act of Parliament. On the other hand, the Grand Trunk Company claim, as \vc believe, but no such claims have been put forward under any Board minute : — 'i 75,000 for contributions toward a third rail not laid do^^ n or likely to be laid down, and a bridge at Bullalo not coia- mouced or likely to be commenced for years. e 18,000, for interest. £ 20,000, Damages for non-payment. Ai 3,007, Stores Interest Account. i, 5,381, Interest on Capital borrowed of the Bankers at 7 per cent., from the 1st August, 186 !•, to 31st December, 1807, no intimation having been given us of this loan until the 22nd January, 1808. Such was the state of things up to the 4tli March, when Mr. Swift, at the Board JNIeeting, suggested that all matters in dispute should be left to a single arbitrator to be named by the President of the Board of Trade, and handed In the following paper as containing the points on >N'hich arbitration was required. ii n^ 18 i • Mi M }i •IM March, 1«G8. The f[iiostion« betwoou tho Grand Trunk Company and tlie Biifralo and Lake Tliivon Cmnpany appear to be as follows : — Ist Whether and from wliat date the Grand Trunk have wrong-ly charged any, and what amounts against the joint account under the head of working expenses ? 2nd. AVhether tlie Buffalo Company are entitled to pay- ments on account of any year, either monthly or otherwise? Mrd. How the question of additional weight of rails, as from i^iOth .Tune, 18GG, is to he dealt with, that question up to that, time having been finally settled ? 4th. How the question of interest on new capital is to bo dealt with, regard being had to the minutes of the .Toint Committee of October, 18G6, and March and May, 18G7, the C 2,000 a year in respect of expenditure up to the end of 1 8G('» being considered as finally settled ? 5th. The Grand Trunk claim in respect of .€ 75,000. Gth. The Grand Trunk claim in respect of interest on working Capital and Stores. 7th. The Grand Trunk claim in respect of tho cost of remittances to England. All the questions the Grand Trunk are willing to refer lo any gentlemen appointed by the President of the Board of Trade. I immediately called a Board Meeting which resulted in our accepting arbitration, and the following Resolution was passed, and sent to the Grand Trunk Board : — Resolved — That the questions at issue between the Grand Trunk and this Company, viz : — " 1st. Administrative Expenses. "2nd. Payments on Account. " 3rd. Rail Account. " Ith. Interest on New Capital. " nth. Grand Trunk claim of i 75,000. m 808. r and tlie Hows : — Link have he joint to pay- pwise ? , as from 1 to that is to 1)0 le Joint 807, the ofl8G(; ?rest on cost of refer lo loard of ilted in ion was ^ Grand "('»th. Grand 'rniiik chiini in respect f>f interest on workinff Capital and Stores. " 7th. Grand Trunk claim in respect of cost of remit- tances to England ; ho left to arbitration, the arbitrator being appointed by the President of the 13oard of Trade." r wish to call your attention to the diltercnce between Air. Swift^s Paper and our Resolution. jNIr. Swift in stating- our claims uses very precise laugua{]je, and the wording is such ns we feared would prevent our laying all the documents before the arbitrator we desired. In stathig the Trunk claims the language used is general and vague, such as wo npproved, and so in our resolution we adopted the same course, i'xpressing each subject in the fewest possible words. This Resolution came before the Trunk Board on the 18tli ]\Iarch, when the only notice it received was a suggestion from jNIr. Watkin, that Mr. Sinff's Pajjer be sealed by each Company. To this I objected and stated my difficulties arising from the wording chiefly of the first clause. I claimed the right of having the same general and vague language used in stating our claims that they used in making theirs, and offered to explain precisely to Captain Tyler my objections and abide by any form of words he might suggest that would remove the difficulties. A meeting was then appointed for the 19th March. I attended ; ]Mr. Swift was present, Captain Tyler, and part of the time, Mr. Potter. I began by saying that I understood the object of our meeting was to ask the good offices of Captain Tyler, so to shape Mr. Swift^s paper that it would bo acceptable to each of us, and that we might recommend it to 1)0 sealed. To this jNIr. Swift assented. I explained my difficulties to Captain Tyler in respect of clause 1, who very shortly wrote out a form of words I approved. Mr. Swift rather objected, but after some little time we came to an agreement and the clause was settled. B 2 1 '(I ! 1 Tiiu uiily oilier (lillicully was in clause I, ami my inipiefesiuii is tiiut wc had agreed on the form of words to be used, when Captain Tyler sngoested that it might be possible to settle all the disputes without any reference at all. On this I fully explained to him my views, and the meeting- broke up on the understanding that, Captain Tyler was to see some other members of the Board and the Secretary, and ascertain if a reference could be avoided. I heard nothing more until Thursday 2nd April, when, on going to the Trunk Otliec, I found on the previous day the following Resolution had been passed, and was entered on the minutes : — "As regards the BuH'alo and Lake Huron Company it was resolved, there not appearing to be any other means of settling the pending (questions, that a submission of reference be drawn up by the Company^s solicitor, to be submitted by him to the solicitor of the Bulfalo and Jjakc Huron Company, and that so soon as the same be settled, this Board will seal such instrument and proceed to arbitrate." The object of this llesolution was eviitioii "as owners of a yrcat trunk line, available lor the trailic ol' the " L'nited States as well as of Canada." If n 1 [< ( • pl 1 Our Company and its Bondholders have cause for grave disappointment at the results of the joint working. We were certainly not prepared to exi)ect that the working charges, including renewals, would for any half-year have amounted to y5 per cent, of the revenue. I am glad to find from his report that Captain Tyler has directed his attention to several points of economy, and among them to the loss and ^v•aste (in which we are now partici- pating) arising from had rails on the Trunk system. I gather I'rom Captain Tyler that no such fault but rather the reverse is to be attributed to the rails on our line. He has stated that on the line bewcen Stratford and Buffalo there are T rails weighing only 50 lbs. to the yard, which have been ah'eady 1 -3 years in use. Two samples of these rails were on the table at the last half-yearly meeting of the Grand Trunk Company. 1 will only add that ] shall continue to press these ilisputed accounts to a linal settlement, whether by arbitration or otherwise ; and much regret that my continual ellbrts during the past twelve months to obtain a settlement have been so unsuccessful. I am, Geutiemcn; Your obedient servant, li:i3AVAllD llESELTliNJ:. Ajtri/ VjUi, 180^. 23 Ai>PKNDIX A. Ci'jiij i)f this Paper was fonvurded to each MtmlHi' of (ho iirand Trunk Hoard, \)th December, 18»»7. Mkmouanijum, Joint IJonimittee—'Menibard. Mil. Cox. Mu. IlEsETaiNi;. II Aug'. ■So Oct. 20 ^ov. }y }) Mi;. Watmn. Mil. SwiiT. Tlio Cumniiitc'O was sunimuiicd f'ui* — 1 1 April, 18<»7 — No Inisiness — Mr. Wtitkiii not iiticiuliny. I May ;, Do. Do. ,, practically do., as Mr. Watkin had to leave. „ No business. Do. Mr, Watkin not attending". At Grand Trunk Board Meeting- :Mr. Ileseltino named :> days, none of which would suit Mr, AVatkin. Summoned — No meeting— ]Mr. Watkin not attending. Mr. Cox and Mr. Heseltine are of opinion there is no course open to them now, but to consider the Committee^ for any business purpose, defunct; they decline, at least for the present, to call any more meetings. The action of the Committee being suspended, the j^vfi'alo and Lake Huron Directors ask the Directors of the Urand Trunk Company, to assist them in putting all matters in ilispute between the two Companies, in a train for settlement, and the first subject they would bring under the notice of the Board is The London and Canadian Adudnislrative Expenses. This is the claim made by the Bufl'alo and Lake Huron Company for £ 7,113 8s. 6d., amount of expenses in London and Canada from the 1st August, 1804, to 30th June, 1867. As such charges on the part of the Grand Trunk Company arc debited under the head of ordinary working expenses, ■(ff^ m ! . n iho Dirpciuvs oonsiilovod ilio simihu* diaro-cs paid hy iho IJiiftalo and Lake Huron Company should be placed to ilio same account. The question was referred to Mr. Bircham, whose opinion seems to loan to a recommendation that these items on both sides should, under the strict interpretation of t^e Agreement, be omitted from ordinary working charges. A settlement on this principle would bo rather in ftivor of the Buflalo and Lake Huron Company. For the 3 years ending OOth June, 18G7, the ordinary working expenses have been debited with the following sum by the Grand Trunk Company — Direction £ 10,208 IH 7 Expenses of London Office 13,108 11 1 Stationery and \dvertizing 4,01 G 7 Travelling and incidental expenses . . 11,175 14 Posting and miscellaneous charges . . 1,210 2 8 Law and notarial charges 26,007 13 :'. Total £()5,045 15 2 of which the Buflalo and Lnko Huron Company have pai, 2,-jOO per annum, as their proportion of interest in an ex- penditure on joint account, alleged to be over £ 300,000. As no extra capital has Leen raised under the authority of the Joint Committee, as provided in the agreement, this Account should be a matter of compromise between the two Companies. According to Mr. Swift's opinion, this can be better done after the Act, now being applied for, has passed. The Buffalo and Lake Huron Directors, however, are willing at once to go into this question in a friendly spirit, or leave it to arbitration, or postpone the matter entirely luitil the Bill has passed, whichever course may be most agreeable to the Grand Trunk Board. 1 i ■It*' ill 'II ' Paijiiitiiits on Accuuul, Assuming the gruss revenue of the Company at .1 100,000 per month (or 125,000 per week) and that 80 per cent, is expended, the balance of i 20,000 would give to the Buflalu and Lake Hm'on Company as their proportion, at 15 per cent. (it is now 15^ i)er cent.) k o,000. The Directors ask to have this amount paid on account monthly — Mr. Watkin objects. Any argument that would prove the smaller partner could only draw upon profits at stated times would be equally applicable to the senior partner in their large expenditure; it is, liowever, a fair subject for arbitration, as provided by the Agreement, but the Directors ask now to have a payment made of £ 5,000 on account, live months of the half-year having passed, as the withholding of any payment is anticipating a decision, before the question is brought to arbitration. Mr. AVatkin says all disputed Accounts were settled between himself and Mr. Rawson, except the claim referred to Mr. Birchani, although no minute of such settlement is re- corded iji the Joint Committee book. The Buffalo and Lake Huron Directors rq.ly that the k 5,090, extra weight of rail cliiiii]; uiily iirosc out of the accounts presented this year, and therefore cannot have any reference to any settlement come to between Mr. "VVatkin and Mr. Rawson in the summer of 18<^^'J. My. Watkin offered at the Board Meeting on Wednesday, 1th December, to let the Buffalo and Lake Huron Company liave £ 5,000 on account, if the Directors agreed to " cry quits," Ijy which the Board understand their claims were to be given up, and ^Ir. Watkin woidd give up a claim he made some time i^ince for £ 75,000, which the Buffalo and Lake Hiu'on Company arc bound to find, as a contribution towards building a bridge at Buffalo, and laying a third rail when these works are initiated. The difticulties of this course are manifest ; it would settle nothing for the future as to the London expenses of the two Companies ; it would leave open the question as to the right of the Grand Trunk Company to deduct £ 5,000 per annum,* or any other sum, from the Buffalo and Lake Huron Company's ])roportion of income, in addition to ordinary working expenses and extra renewals, or the interest chargeable on joint capital expended. Moreover when it is thought desirable to build the bridge at BufMo, the capital must be eventually raised, and the Company, for their subscription, would have the Bridge Stock, which, it may be assumed, would be worth the jmr value. Ahead}- the Buffalo and Lake Huron Company have paid about £ 1:2,000 towards the preliminary expenses of a Bridge Company, the particulars of which Compuiiy \v^ere to have been laid before the Grand Trunk proprietors, at a meeting advertized for the liOth November, 1865. At this meeting, the plans not being ready, the subject was very properly postponed, and the Buffalo and Lake Huron Directors arc now trying to get back some portion of this £ J 2,000. *■ Tor extra weight ol' Kaila. .y^ 28 Tlie Directors of the Buffalo and Lake Huron Company now ask the Grand Trunk Board— 1st. — To pay the London and Canadian expenses of Buffalo and Lake Huron Company from 1st August, 1864, to 30th Juno, 1867, amounting to .€7,113 8s. Od., or refer the point raised by Mr. Bu-cham to arbitration, respecting the £ 9,332 paid by the Buffalo Company, as their proportion of the Grand Trunk expenses. 2nd. — To give effect to the resolution of the Joint Committee of the 11th July, 1866, by paying £5,393, amount deducted from Buffalo and Lake Huron revenue, for re-rolled and extra weight of rails, for the year ending 30th June, 1867. 3rd.— To pay £5,000 on account of the revenue account during the past five months, and name an arbitrator on their side, to settle the principle on which future payments are to be made. m THOMAS SHORT, Seo^etary, Buffalo and Lake Huron Hallway Company. December 9fh, 1867. A HI 11 29 APPENDIX B. BUPFALO AND LAKE IIUKON KAILWAY. Agreement with the Grand Trunk Company to raise £75,000, and Correspondence thereon. IC.vtruct front Agreement 0/ 1864. " The Buffalo and Lake Huron Railway Company sliull forthwith raise £ 75,000 to he apphed under the direction of the Joint Committee hereinafter mentioned towards the laying tlown of a third rail on the Railway hetween Buffalo and Stratford, and the erection of a bridge over the Niagara River near Buffalo." Extract from Board Minutes, UO/A May, 1865. " The £ 75,000 to be raised by the B. & L. H. under the Agreement. — Mr. Brydges having explained that the formation of a Bridge Company was under negociation which would find the requisite capital, and that in his present opinion it would not likely be needful to lay down a third rail, none of the above sum would be required for either of the purposes, at ai. y ivilo at present." Extract from Letter {Mr. Grunt to Mr. Ueseltine) of VothMay, 1867. " I am desired to inform you that the Board of this Com- pany have remarked that the report of your Company, just issued, contains nothing with reference to yoiu" obligation to find your proportion of the new capital the necessities of the traliic now demand, and Avhich is needful to bring about the results \\hich Mv. Brydgeti leads us to hope for, and which % OU results you quote and adopt ; nor is there any mention of the C 75,000 your Company is pledged to raise, and for which we were assured you had made provision. Neither is there any reference to any scheme by which you purpose to raise this or any other amount of capital." Extract of Letter from Mr. Short to Mr. Grant. I8tti May, 1867. " I am directed by Mr. Heseltine to acknowledjye iho receipt of your letter of the 15th inst. " In reply I am to state that in consequence of what passed at the Grand Trunk Meeting relative to fresh capital, Mr. Heseltine has been expecting a summons to meet your Board and the Joint-Committee on the subject. " With regard to the £ 75,000, the amoimt to be contributed by the Buffalo and Lake Huron Company towards the con- struction of Buffalo Bridge and laying down a third rail ])etween Buffalo and Sarnia, I am to inform you that as these works are not begun or likely to be commenced immediately, it would be premature in the opinion of our Chairman to raise money for these purposes at present. I annex copy of a Memorandum made at a Board Meeting held 30th May, 1865, at which Mr. Brydges was present." Letter from Mr. Grant to Mr. Short. " Ct. T. R., 24th May, 1867. " My dear Sir, " I beg to acknowledge the receipt of your letter of the 18th, enclosing Minute of your Board of the 30th May, 1865, but of which this Company can have no cognizance whatever — it is simply your own decision in your own case. The accidental presence of Mr. Brydges (as one of your Board, it is presumed) only makes the matter more clear. Your Company engage to find £ 75,000 ;— you said you had the -n i money ready, but it now appears that you not only hfive not g-ot it, but that you have not even taken any means to raise it. You will remember that a condition precedent to the Ao-ree- ment was, that you should find this m(jnGy ; the first clause of the Agreement says that you shall do so forthwith; this Com- pany, therefore, beg to inquire what your Company propose to do in the matter. " You cannot omit to see that you are having interest on this money, and at the same time claiming the enlarged share of traffic accorded to you as a consequence of the outlay itself. " I am, &o. &c., fSi(/ned} "J. M. riiMNT."' hotter frnni Mr. ^hort to Mr. Grmit. ''V>.kl^. n., June 1st, 1807. " Dear Sir, " I am in receipt of your letter of the 21th ultimo, in which you again allude to the liability of this Company to raise £ 75,000, but omit to add ' for the purpose of laying down a third rail and towards the erection of the bridge at Buffalo.' It would be convenient in future if these words were always added, as they tend to simplify the case. " In drawing your attention to the Minute of the 25tli May, 1865, the object of my Board was not to use it as an argument against raising the money, but solely to remind yon that, in the opinion of your Managing Director and this Board, the money was not required at present, there being no intention to proceed with the works immediately; and as this view was agreed to by your President at a meeting held on the 2nd August, 1865, I have yet to learn that your Directors are of a different opinion. " My Directors are aware that the Board ]Minute can have 32 110 ibrcu, if ill coiitravontiou of the Agreement ; but the Aj^rec- mcnt binds tliis Company to raise £ 75,000 for certain specific purposes. Until wanted for these purposes, there can be no actual grievance to the Grand Trunk Company in its not being raised ; for, if every penny of it were in hand, it would liave to be retained and invested by my Directors, awaiting its strictly legitimate application. It could not be handed over to your Company, as it certainly could not be applied in any other way to joint purposes, however desirable the object may appear. The only objects towards which the money could l)c applied are, a third rail between Buflalo and Sarnia and the erection of a bridge over the Niagara Eiver. " Why, therefore, should this Company be urged to raise money at this inopportune period for works which, for the present at least, do not appear likely to be can-ied out, and how would it benefit the Grand Trunk Company if the money Avcre oven now at our Baukerts. '• 1 am, &c., ikc.j (S'/ynedJ "Thomas Shuim, •Sec.''' Lei Icr from Mr. Grant to Mr. Short. '' G. T. 11., July nth, 1807. " My dear Sir, " 1 bog to ackiiuwiedgt^ the receipt of your letter of the Gth inst., which I yesterday had the pleasure of laying before the Board of this Company ; and I now beg to hand you on the other side copy of a Eesolution which was passed in reference thereto. " I am, &c., &C.J (SignedJ "J. -M. Gkant/' )3 (Resolution.) " Reference havino^ been made to the £ 75,000 to be found by the Buffalo Company under their aj^reement, it was resolved that it was highly desirable to lay down the third rail between Sarnia and Paris and Paris and Buffalo, in order to preserve the through traffic now competed (or over the third rail of the Great Western Railway. That the Buffalo Company be called upon to provide the sum of £ 75,000, now three years overdue; and that the question of the loss to this Com- pany by the delay be again pressed upon that Company. Mr. Heseltine desired to be understood as dissentin*'* to this resolution, and it was agreed again to discuss the matter at the next Board meeting." Letter from Mr. Short to Mr. Grunt. (( " B. & L. H., July 22nd, 1867. My dear Sir, "I am in receipt of your letter of the 11th inst. handing me a copy of a resolution passed at a Board Meeting of the Directors of the Grand Trunk Company on the 10th inst. " I am directed to call your attention to the discrepancy between the resolution and the clause in the Agreement relating to the £ 75,000. The resolution leaves out the word " Bridge," from which it might be inferred that this Company was liable to contribute £ 75,000 for the purpose of laying down a third rail between the Detroit and Niagara Rivers. " The Agreement recites that this Company ' shall raise forthwith £ 75,000 to be applied under the direction of the Joint-Committee towards laying down a third rail between Buffalo and Stratford, and the erection of a bridge over the Niagara River.' " The two schemes are in the opinion of my Board in- II 34 separable, as the third rail without the bridge would be of little use ; and my Board await the determination of the Grand Trunk proprietors in relation to the bridge, towards which this Company did forthwith, in the literal terms of the Agreement, contribute the sum of £11,932 3s, lOd. on account of the £ 75,000. " My Board submit that the meeting of the Grand Trunk proprietors, called on the 30th November, 18G5, 'for the purpose of approving an agreement between the International Bridge Company, the Atlantic and Great Western Company, and the Grand Trunk Company ' have not yet dealt with that part of the subject, as the Chairman then stated ' that it was not in his power to submit it to the meeting until the plans had received the approval of the Company's Engineer/ " Until therefore the Grand Trunk Board, and the Grand Trunk proprietors, have decided to go on with or abandon the present bridge scheme, towards which this Company has contributed so largely, it would be in the opinion of my Directors very unwise to initiate any other plans. " I am, &c., &c., (Signed) " Thomas Short, See." Letter from Mr. Grant to Mr. Short. G. T. R., August 1st, 1867. " Dear Sir, " I beg to acknowledge the receipt of your letter of the 22nd ultimo, already acknowledged by Mr. Green. The only observation which I would at present make upon it is, that the £11,932 were expended by your Company, not in pursuance of but before the making of their agreement with this Company. " I am, &c., &c., 'Signed) " J. M. Geant." 35 Letter from Mr. Short to Mr. Grant. " B. & L. II., August Sth, 18G7. « Dear Sir, " I am desired to acknowledge the receipt of your letter of the 1st inst., in which you state 'that the £11,932 were expended by your Company, not in pursuance of but before the making of this Agreement with this Company.' In this statement you are in error, as the traffic agreement in which the bridge at Buffalo was first mentioned, was signed the 4th December, 18G3, and the Memorandum upon which the existing lease was framed bears the date of April 9th, 18G4. A Bill was drawn upon this Company for £ 5,184 Gs. 8d. on the 12th May, 18G1, and ^^ 33,090 was also paid as a sub- scription for shares by this Company, and ^5,000 by Mr. Brydges for the Grand Trunk Company about the same date. {< I am, &c., &c., (Signed) " Thomas Short, Sec." c 2 J!: 30 APPENDIX C. (Handed to Mr. Ilcseltine by Mr. Grant, January 22, 1808.) Account without prejudice. Buffalo and Lake Huron Railway Company Dr8. to Grand Trunk Railway Company of Canada. 1. To damnye to this date to Grand Trunk Company by non-provision by Buffalo Company of the sum of £ 75,000 (free of interest) to be hud out for the development of traffic : viz., — 1. For interest saved to Buffalo Com- pany by non-fulfilment of the agreement ; say, 7 per cent, on £ 75,000 from Ist August, 18G4, to 31st December, 18C7...£ 17,937 10 2. For loss to Grand Trunk Company by this non-fulfilment of agreement (say) 20,000 £37,037 10 2. To cost of remittances of net profit already paid (on account) to Buffalo Company without prejudice to claims of Grand Trunk Company; say, on £72,756 19 2 / jjjug hnnded less... 7,500 On to Buffalo [ Company. £65,256 19 2 Total Bills discounted from January, 1866, to December, 1867— £ 247,300. Discount and Stamps, on which was £ 1,172 7 6 Proportion due by Buffalo Co. on above £ 65,256 10 2 To interest at 7 per cent, on excess quantity and value of stores to 30th June, 1867, contributed by the Grand Trunk Company to the general working capacity of the joint concern, and the interest on which is part of working expenditure To interest on working capital borrowed from Bankers; say, £150,000 at 7 per cent, from 1st Augrust, 1864, to 3l8t December, 1867 5,381 15 309 4. 3,907 16 3 £ 47,536 6 3 Note. — Interest will have to be added to date or dates of payment. E. & 0. E., and without prejudice, (Signed) J. M. GRANT, Secretary. Z\st. Deccmhet\ 18G7. ;?7 AIM»ENDIX D. [Copy.] G, Austin Friars, Old Broad Street, London, 2'lnd January, 18(58. To the Directors, Grand Trunk Railway Company. Gentlemen, The non-attendance of Mr. Watkin at the Joint Committee Meetings having, for the moment, paralyzed the functions of this Committee, I have again to trouhle you on the subject of the £ 75,000 so continually claimed from the B. & L. H. Co. by your Chairman. On the 1 2th ultimo I circulated a correspondence between the two Companies relative to this claim, which I had hoped showed the groundless nature of it. Now, however, as I understand Mr. Watkin, he not only claims the £ 75,000, but £ 17,937 10s. for interest, and £20,000 for damages for non- payment of the money, making it absolutely necessary to settle whether this claim is more than a fiction. I would observe, before proceeding, that no other Director has even supported this claim, but it is always used by Mr. Watkin as his answer to my request for money on account of the B. & L. H. Co. Clause 1 of the Agreement is as follows : — " The B. & L. H. Railway Co. shall forthwith raise £ 75,000, to be applied, under the direction of the Joint Committee to be hereinafter mentioned, towards the laying down of a third rail on the railway between Buffalo and Stratford, and the erection of a bridge over the Niagara lliver near Buffalo." The meaning of this clause appears to be self-evident, viz., that when the works are commenced for building a bridge and laying down a third rail, the B. & L. H. Railway Co. have to contribute towards these works £ 75,000. No one, I imagine, but Mr. Watkin, would maintain that the money was payable 38 before the works were entered upon, and yet the object of this letter is to controvert such an unreasonable proposition. On the 10th July last, Mr. Watkin claimed this money, eolely for the purpose of laymg down the third rail,, and at tho Board Meeting on that day very hastily penned a resolution that it was very desirable to lay down the third rail, and that the Buffalo Co. be requescea to find £75,000 towards it, thus claiming the whole of the £ 75,000 as a contribution towards laying down the third rail. When this resolution was sent to our Board, we in reply drew the attention of INIr. Watkin to the fact that the money was payable for two objects, viz., the third rail and a bridge, and that in our opinion it waj an inopportune moment to lay down a third rail. Nothing more was heard of the cjaim in this shape. Then came Captain Tyler's Report, giving a very decided opinion against the third rail scheme. So this ques- tion, at least for the present, may be considered as settled. But now Mr. Watkin turns round and claims the whole of the £ 75,000 for the bridge. This cannot be correct. If £ 75,000 is the amount to be contributed for two objects, and one of them is abandoned, a proportionate reduction miist be made from the sum. This amount we estimate at about £ 35,000, leaving £40,000 for the bridge. Towards this £40,000 the B. & L. H. Co. did unhappily, in their eagerness literally to fulfil the agreement forthwith, subscribe about £12,000 towards a Bridge Company, of which, I believe, Mr. Brydges was a trustee, and Mr. Hickson the secretary, and which Company was, by advertisement, to have been submitted for approval to the Grand Trunk Proprietors on the 30th November, 1865. At this date the clouds began to gather over the money market, and the Grand Trunk Co. very properly withdrew this Bridge scheme from the notice of their shareholders. The Buffalo Co. are now endeavouring to get an account of the expenditure of this £ 12,000, and a return of any money not spent. 30 Deducting this £12,000 from the £40,000 would leave a liability as against the Buffalo Co. of £28,000, as their share to be contributed when the Bridge works are really com- menced. The question now arises as to the probability at present of any Bridge being built. Captain Tyler is much in favour of the scheme. The Directors of the B. & L. H. Co. are of the same opinion, and they trust that before many years are past a Bridge Co. will be formed, with a sufficient guarantee from the Railway Companies interested to enable the capital to be raised. But that the work is not likely to be done by the G. Trunk Co. alone is self-evident from the facts, 1st. They have no capital to subscribe towards such an object ; and, 2ndly, they would scarcely be so unwise as to lay out money on a bridge which, in about 17 years' time, when the B. & L. H. lease expires, would be 114 miles from their own line. That INIr. Watkin has been using this claim as a "fighting one" is very evident, as on the 4th December last, in reply to some claims that I made, and my desire to draw £ 5,000 on account of revenue, he replied that I might have the £5,000 on account if I would agree to "cry (piits.^^ As the utmost I had claimed of the G. Trunk Co. was about £ 20j000, for part of which I acknowledged a liability, Mr. Watkin could not have had much confidence in his own claim for £ 75,000 when he ofiered to " cry quits.'' Three several times was thi^ offer tc "cry quits" made, and then withdrawn. Such a hasty mode of doing business may conduce to great dispatch, but in iny opinion I should have ill discharged my duty to the B. & L. H, proprietors, if I had adopted such a free and easy style in dealing with grave and important matters. I wish to protest strongly against the incorrect way in which Mr. Watkin quotes the Agreement. He sends in an account to-day as under. "To damages to this date to the C. Trunk Co. by non- provision by the Bufiulo Co. of the sum of £ 75,000, free of interest, to be laid out for the development of traffic." r' 40 n On this I would remark, there is nothing in the Agreement about £ 75,000, to be laid out " for the development of traffic," neither is there anything said about the amount being "free of interest." We were to find £ 75,000 for a third rail and a bridge, and have no power to subscribe the money for any other purpose. As regards being free of interest, at least a portion of the amount (that subscribed towards the bridge) would be entitled to the revenue arising from the bridge tolls, and the balance would form part of the ordinary share capital of the Co., and be entitled to interest when the revenue paid over was sufficient. We have now arrived at this position. A claim made by Mr. Watkin for £ 75,000, and which he offered to forego on the 4th December, if I gave up my claims on tho G. Trunk Co., amounting to about £20,000, he again puts forward, with the addition of nearly £18,000 for interest, and £20,000 for damages, say a total of £113,000. If there is any substance in this claim, it certainly was unwise in me not to liquidate it with my counter-claim of £20,000, and "cry quits." But believing that these and other items in an account sent in by Mr. Watkin are perfectly visionary, I ask the Board to interfere and prevent my Company being harassed by Mr. Watkin in this way. I believe the Board ha»'e never seen this account, and I do not append it, trust" g it may be withdrawn. Any serious claims the Trunk Co. may have upon the Buffalo Co., if sent in the usual way through the Secretary, with a letter demanding payment, shall receive the immediate atten- tion of my Board. 1 le present account has been sent without any letter, and no demand made for payment. In the event of any disagreement of opinion between the two Companies, the Agreement binds us both to consent to an arbitration. I would call your attention to the fact that the follow* ig explanatory remarks contained in our Secetary's letter to your Secretary, under date 1st June, 1867, remain entirely unanswered : — 41 " The Agreement binds the Company to raise £ 75,000 for certain specific purposes ; until wanted for these purposes there can be no actual grievance to the Grand Trunk Company in its not being raised, for if every penny of it were in hand, it would have to be retained and invested by my Directors, awaiting its strictly legitimate application. It could T>ot be handed over to your Company, as it certainly could not be applied in any other way to joint purposes, however desirable the object may appear. The only objects towards which the money could be applied are u, third rail between Buffalo and Sarnia, and the erection of a bridge over the Niagara lliver. "^'Vhy, therefore, should this Company be urged to raise money at this inopportune period for works which, for the present at least, do not appear likely to be carried out, and how would it benefit the Grand Trunk Co., if the money were even now at our bankers ? " I am. Gentlemen, (Signed) Yours truly, EDWARD HESELTINE, Chairman, B. & L. IL By. 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T) «S 00 -" I-H o--^ cj 11 - s « 3 O 1 1 I Q «: s ?, ->i < -< o o o o TjT f^ I— I o o o O o 47 Agreement between Grand Trunk Company and Buffalo and Lake Huron Company, dated 1th July, 18G4, confirmed by Act of the Legislature. This Agreement, made this seventh day of July, one thou- sand eight hundred and sixty-four, between the Grand Trunk Railway Company of Canada, of the one part, and the Buffalo and Lake Huron Railway Company, of the other part, — Witnesseth, that the said Companies do for themselves re- spectively and their respective successors, covenant, each with the other of them and its successors in manner following, that is to say : 1. The Buffalo and Lake Huron Railway Company shall forthwith raise seventy-five thousand pounds, to be applied under the direction of the Joint Committee hereinafter men- tioned, towards the laying down of a third rail on the Railway between Buffalo and Stratford, and the erection of a bridge over the Niagara River near Buffalo, 2. As from the first day of July, one thousand eight hundred .and sixty-four, or the day on which the working of the Buffalo and Lake Huron Railway shall be undertaken by the Grand Trunk Company, the net receipts of the two undertakings shall be divided between the two Companies, after deduction of amounts expended for renewal of rails, &c., in the following proportions, namely : Gr.^nd Trunk. Buffalo and Lake Huron. 1st year 87 13. .1st Aug. 1864. 2nd „ 86 14.. „ i^u5. 3rd „ 85 15.. „ 1866. 4th „ 84i Vo\. „ 1867. 5th „ 84 16.. „ 1868. 6th & thereafter .83^ 16^ „ 1860. the amount of loss of the two undertakiiigs on American currency being divided in each year in the same proportions. "'WBwiwwim]ii.i|isia 48 3. As between the Buffalo and Lake Huron Company on the one hand, and the holders of the securities specified in the Schedule hereto on the other hand, the interest payable on the mortj^age debentures and the deferred debentures specified therein, according to their respective rights and priorities among themselves, shall be the first charges on the proportion of net receipts from time to time payable to the Buflfalo and Lake Huron Company; and so long as that proportion is duly paid to that. Company, none of those holders, nor the mortgagees for any of them, shall exorcise any of their powers or rights against the undertaking. Railway property, or effects of that Company, except their proportion of net receipts, but those powers and rights shall bo suspended. 4. Any additional capital required for the purchase of stock, or for new works in connection with the through traffic of the two lines, shall be raised and applied by and under the said Joint Committee, and be a first charge on the joint net receipts of the two undertakings at six per cent, per annum, it being understood that the two hundred and fifty thousand pounds, now being raised by the Grand Trunk Company, is not to be considered as raised for joint purposes. 5. The Grand Trunk Company to have the option, at any time within six years, on assuming all the obligations and liabilities, whether fixed or guaranteed, of the Buffalo and Lake Huron Company, an approximate statement of which as at present existing is set out in the Schedule hereto, and which said liabilities shall not be increased without the con- currence of the Joint Committee, to purchase for six hundred and sixty thousand pounds the whole of the Ordinary Share Capital of the latter Company, at present amounting to one million two hundred and thirty thousand pounds, the purchase- money being payable either in cash or in Grand Trunk stock, calculated at its then market value, at the option of the holders individually of the Buffalo and Lake Huron capital, and the Buffalo and Lake Huron Company shall not, until 40 •v.1 ital, ntil t aftei' the expiration of the six years provided by this clause* pay any dividend on its share capital, without first ex- tinguishing its floating debt. G. The control and working of the Buffalo and Lake Huron undv^rtaking shall, from the time of its being handed over as aforesaid to the Grand Trunk Company, be placed in the hands of the Grand Trunk Company, under a joint committee, consisting of two nominees from the Board of each Company, all matters on which they differ being referred to arbitration ; and the Buffalo and Lake Huron Board shall, from time to time, nominate one of their own body, who shall ex-officioy have a seat at the Grand Trunk Board as one of that bodv. 7. This agreement to subsist for twenty-one years, and to be without prejudice to the provisions from time to time re- maining in force or to be fulfilled of the existing agreement between the two Companies dated the fourth day of December, one thousand eight hundred and sixty-three, or so many of such provisions as the Companies may hereafter agree on, or as are not inconsistent with this agreement. 8. During the said term the said Buffalo and Lake Huron Railway and its appurtenances shall be maintained and kept in a good and efficient state as to repairs, renewals, the supply of rolling stock, and generally, and shall be delivered up in such state at the end or other sooner determination of the said term of twenty-one years. 9. All differences between the two Companies relating to this agreement, and all questions as to the carrying into effect of any of its provisions, or anything to be done by either of the parties hereto, to be determined from time to time by arbitration as nearly as may be in the manner pre- scribed by the " Railway Companies Arbitration Act, 1859," or in any event by a single arbitrator to be (if not agreed on) nominated by the Board of Trade of the United Kingdom, or by the Chancellor for the time being of Upper Canada, or D f! 50 the Chief Justice lor the time being of the Court of Queen's Bench, in Lower Cunada, with ample powers. 10. A more formal agreement for carrying these heads into cfFect, to be settled on behalf of the two Companies by counsel, to be (if not agreed on) nominated by the Board of Trade of the United Kingdom, or by the said Chancellor or Chief Justice, with such details and incidental provisions as such counsel may think fit, and with such modification, if any, as the Companies mutually agreed to, and to be executed under seal, and to be binding on them respectively. 1 1 . Application shall be made to Parliament in the year one thousand eight hundred and sixty-four to sarction the fore- going agreement in so far, if at all, as the same may not be within the existing powers of the Companies, and such appli- cation shall be renewed from time to time, if necessary, and may be so made or renewed by either party at the joint expense of the parties hereto (the other party hereby agreeing not in any way to oppose, but in all ways to assist and assent to the same), in any session or sessions during the said term of twenty- one years subject to the suspensions provided for by clause three. 12. This agreement, and the formal agreement, and any Act of Parliament so applied for, to be in all respects subject and without prejudice to the mortgages, bonds, securities, powers, rights and interest of the bond-creditors of the Buffalo and Lake Huron Company for the aggregate sum of five hundred thousand pounds, or thereabouts, as specified in the Schedule hereto, and the interest and arrears of interest thereon, and of the mortgages, in trust for them, and due provision for them respectively to be mude accordingly by the formal agreement and the Act of Parliament respectively. But except under clause five, if the option thereby given be exercised, those mortgages, bonds, securities, powers, rights and interests respectively, not to be extended so as to com- 61 priov. or relate to any undertaking, railway or property, revenues, tolls, rents or profits other than the present under- taking, railway and property of the BuflPalo and Lake Huron Company, and the revenues, tolls, rents and profits arising from the same. In witness whereof, the said Grand Trunk Railway Com- pany of Canada, and the Bufialo and Lake Huron Railway Company, have hereunto aflfixed their respective common seals the day and year first above written. [L. S.] (Signed,) J. M. GRANT, Secretary. (Signed,) E. W. WATKIN, President of the Grand Trunk Railway Company of Canada. [L. S.] (Signed,) THOS. SHORT, Secretary. (Signed,) PHILIP RAWSON, Chairman of the Bufialo and Lake Huron Railway Company. 7th July, 1864. .A BUFFALO AND LAKE HURON RAILWAY COMPANY, CANADA WEST. 1^ t ' *, ' TyrOTICE is hereby given, that the HALF-YEARLY MEETING of the Proprietors in thii Company is appointed to be held at the Cm Terminus Hotel, Cannon Street, London, on Wednesday, May ISth, at Twelve o'clock, noon ; for the purpo ?e of submitting a Report and Statement of Accounts foi the Half- Year ending 31st December last, and for other business. By order of the Board, THOMAS SHORT, Acting Secretary. Great Winchester Street Buildings, London, E. C, 17th April, 1868. •'».'•• Printed by E. Coueliinan & Co., 10,ThrogniartOK Sti-ee'. Lonion. ..'*. '*; * k -.,1 i.._-> k lY ILY ly is nnon ELVE sport dmg If'