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1 2 3

\CU<, }^(> / t Z> cy ^ j

THE R ULWAY QUESTION IN CANADA.

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rufr- ■-■ r'..p^^j^,««.Jr7*«<"W*(»^5rT'-/jr:

THE

RAILWAY QUESTION

IN CANADA

»: .

WITH AN EXAMINATION OP

THE RAILWAY LAW OF IOWA

I I

J. S. WILLISON.

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TORONTO :
WARWICK BRO'S & RUTTER,
Printbrs.

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INTRODUCTORY NOTE.

The pari of this pamphlet dealing with freight rates
in the west is reproduced from a letter written after a
visit to Manitoba, the Territories and British Columbia
a year and a half ago. There may have been recent
reductions in these rates, but the facts and figures I
have used will at least explain the strong feeling of
antagonism to the Canadian Pacific Railway which finds
voice in Western Canada. Then one doubts if the
discriminations have been remedied, and heavy local
charges remain. The section of the pamphlet dealing
with the railway laws of Iowa, and the practical work-
ing of these laws, is little more than a condensation
of Dr. Dixon's admirable work, *• State Railroad Con-
trol," one of the most useful, lucid and instructive of
the many books devoted to the railway question that
have appeared in the United States.

J. S. W.
Toronto, April, i8g'^.

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♦

THE RAILWAY QUESTION.

\¥7E, in Canada, have not yet recognized the magni-
▼ ▼ tude of the railway question and perhaps have
not quite conceded the failure of the Railway Committee
of the Privy Council as an instrument for the regulation
of railway charges. The truth is however, that the trans-
portation agency is one of the mostabsolute of commercial
forces in its effects upon the welfare of individuals and
communities, that the Canadian railways are under no
adequate measure of public control, and that the Railway
Committtee has acted as the mere register of the decrees
of the carrying corporations. In determining questions
touching right of way, terminal differences and junction
crossings the committee has shown some capacity for
usefulness ; but in regulating rates, in preventing discri-
minations, in protecting the individual shipper, or the
individual community against the calculated injustice or
the insiduous aggression of railway managers it is inert
and impotent, a farce and a failure. It is therefore of
the rirst importance that the government should make
the Railway Committee effective for the purposes for
which it was designed, or that parliament should devise
new machinery for the regulation of railway charges and
the control of the carrying corporations. It is not
necessary to argue for the right and authority of Parlia-
ment to regulate common carriers. The railway is not
so much a private enterprise as a creation of the state

)

■■I

i't

THE RAILWAY QUESTION.

holding public franchises, and the right to control and
regulate is properly and irrevocably established even in
the case of roads that have not received land grants or
money subsidies. The railway law of Canada declares
that under the same circumstances all tolls shall be
charged equally to all persons with no reduction or ad-
vance directly or indirectly in favor of or against any
particular company or person travelling upon or using
the railway ; the law prohibits any secret special rate,
rebate, drawback or concession, and any company, on
demand of any person, shall make known to him any
such arrangement with anyone ; the law prohibits
discrimination between localities except where competi-
tion by water or rail may afford a justification ; the law
provides that no tolls shall be levitd before being
approved by the Governor-in-Council, and that tolls are
subject to revision ; it provides that all rates are to
be printed and posted up in a conspicuous position in
every place where the tolls are to be collected ;
that a printed copy of so much of any by-law,
rule or regulation as affects any person other than the
company and its employes shall be posted in a con-
spicuous place in every station ; and finally, that
except as to traffic to or from the United States the
company shall conform to any uniform classification of
freight which the Gcvernor-in-Council prescribes. Over
the main line c^ the Canadian Pacific Railway the right
of public control is limited by the clause which prohibits
reduction of rates until the earnings net ten per cent, on
the capital invested but even here while we have not the
absolute right to reduce we have probably the right to

THE RAILWAY QUESTION.

prevent discriminations between individual shippers and
rival communities, and therefore in the main the ques-
tion we have to consider is the enforcement of the law
now on the statute hooks rather than the enactment of
new legislation or the further assertion of the authority
of Parliament over the carrying corporations.

i H

II.

...,

We have put over $260,000,000 into railways and
canals. The Intercolonial Railway, which cost nearly
$50,000,000, and the canals, which cost $65,000,000, are
owned by the Government. The public outlay on the
Canadian Pacific is put at over $6o,ooo,ooc. The
bonuses to the Grand Trunk sjstern amount to $25,-
000,000, and $100,000,000 of the private capital of
British investors is sunk in this enlierprise. But from all
the provinces, i:nd particularly from Western Canada,
there are still dci.iands for huge expenditures Ow railway
projects. The situation therefore requires careful and
patriotic handling. It may be that for some years to
come we must contrnue to aid strictly colonization roads,
but it is doubtfi 1 if in older Canada we have not built
railways in excess of the needs of the community. At
any rate, outside of the new districts we can leave the
construction of railways to private enterprise, and relieve
the lobby of parliament of the intrusive presence, and the
treasury of the exhausting drain of the army of railway
promoters who for some years have constituted a sort of
third chamber at Ottawa, and have been hardly less
active at most of the provincial capitals.

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THE RAILWAY QUESTION.
III.

There is a common impression in this country that
the United States has been far less generous or far more
thrifty in its dealing's with railway promoters. But
this notion wili not bear investigation. After 1830 the
policy of the United States tended to the view that under
a strict interpretation of the constitution the Federal
Government could not construct the highways and make
the canals for the people. The States, therefore, rushed
into a vigorous policy of internal improvements, and in
most cases the bankruptcy of the States resulted. Up
to 1840 public sentiment favored the ownership and
management of highways by Government. After 184 >,
we are told, **a sentiment adverse to public ownership
and control grew with great rapidity." " In the main this
change of sentiment is ascribed to the failure of the
policy of internal improvement by the States, and, it is
fairly argued, proves nothin is to the wisdom of public
operation of railways. Dr. Adams tells us that there is
no means of determining the aggregate of county and
municipal bonds which have been issued in favor of rail-
way corporations in the United States. " It is known,
however,' he says, '♦ that in 1870 there were outstanding,
$185,000,000 worth of such bonds. Nor is it possible to
determine the proceeds of land granted to railroads
directly or indirectly by the Federal Government ; but it
is known that two hundred and fifteen millions of acres
of land were so granted, of which one hundred and fifty-
three millions have been actuallv transferred to these

ii Dr. >dam», in introduction to State Kailfo»a Control,

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THE RAILWAY QUESTION.

corporations. The value of subscriptions in the form of
rights cf way, purchase of stock (when it was known
that the purchase was a g-ift), and the like, cannot of
course be accurately estimated. Taken all together,
however, the extent of such assistance rendered by the
public to corporations in the building of railroads has
been enormous." "

IV.

For example, Minnesota gave to her pioneer railway,
ten sections of land to each rnile of road, a loan of
$5,000,000 of State-issued bonds, immunity of its lands
frcm taxation, and free right of v/ay through the public
lands. Then Congress turned over the swamp lands to
the State, and the State turned over the lands to the rail-
ways. Individuals donated right of way through their
private lands. Free SLition grounds in the towns, and
grounds for shops were provided. Bonuses were voted
by the towns and counties. Accor ling to Mr. A. B.
Stickney many, and perhaps most, of the charters under
which the roads were built provided that "the beard of
directors should have the right to regulate their tolls,"
and that the company should have the right ** to demand
and receive such sum or sums of money, for freight of
persons ci property, as they should from time to time
think reasonable." He says :—" Construing these
charter provisions as a contract with the State, the
companies at first denied that they were common car-
riers, or subject to the duties and restrictions imposed
upon such carriers by the common law. Acting upon

a State Railroad Control, page 7.

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THE RAILWAY QUESTION.

these premises, and, as they supposed, in the interests
of their companies, the managers claimed the right to
charge such rates for transporting both persons and
property as they deemed for the best interests of their
respective companies, regardless of their reasonableness
or equality. They claimed and exercised the right to
grant monopolies in business to favored mdividuals and
firms, for example, one man or firm would be granted
the exclusive privilege of buying all the wheat or corn,
or selling all the fuel, wood and coal ; and by the
exercise of their power to discriminate in regard to rates
and accommodations they were enabled to enforce these
gran:s of exclusive privileges with a certainty never
before pertaining to such grants. They assumed the
right to dictate to the communities in what market town
they should sell their produce and buy tlieir supplies. Thus
a community located forty miles distant from St. Paul,
and four hundred miles distant from Chicago, was com-
pelled to trade in Chicago, so as to give the railway the
* long haul * ; and in order to enforce this dictation they
did not hesitate to make the rates for forty miles as
much as or more than for four hundred. They believed
they had the right so to make their schedule of rates as
to determine which of the villages on their line should
become centres of trade beyond their local territory.
They also varied their schedules in such a way that they
discriminated in regard to rates between individual mer-
chants, manufacturers, miners and o^^^her business men,
so as practically to determine which should become
prosperous and wealthy and which should not. This
class of discrimination was all the more pernicious

'^::

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THE RAILWAY QUESTION.

because done in secret. " " And again, "to secure the
erection of elevators, which at the time seemed so
important for the interests of both the companies and
the people, but which in a very short time proved other-
wise, the companies agreed to collect for the owner of
the elevator a certain toll upon every bushel of wheat
shipped at that station, even though it did not go
through the elevator at all ; and sometimes by agreeing
to pay a rebate on all his shipments, which would be
sufficient to protect him against all fluctuations in the
market, and also would prevent any other buyer doing
business at his station except at a loss. In order to pay
such rebates and still get a fair price for hauling, it is
evident that the companies had to make the open rates,
which were free to all, unrcaconably high"* Out of
these conditions grew the stringent elevator laws of
some of the wheat growing States, the drastic and too
often impracticable Granger legislation against the rail-
ways, and later the Advisory State Commission, the
State Commission with Power, and the Inter-state com-
merce law.

1 \

In Western Canada too many of the conditions
against which the Western States rose in revolt have
been reproduced. For example, residents at Ca'gary and
other points east of the Rocky mountains, who require
to ship to Eastern Canada or beyond, have found it
profitable to ship through to Vancouver, more than six

« A. B. Stickncy, The Railway Problem, pages 19, •«>.

* A. B. Stickney, The Railway Problem, page aa. '

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THE RAILWAY QUESTION.

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W. \

hundred miles further west, in order to g-et the compet-
ing- rate at that point, and thence ship the same
goods back over the mountains and on to the east.
Reveistoke is nearly four hundred miles east of Van-
couver, but it is not unusual to have goods shipped from
eastern markets sent on through to Vancouver and re-
shipped back to Reveistoke. In these cases the through
rate to Vancouver and the local rate back to Reveistoke
seem to total less than the rate direct to Reveistoke. So
the local rate to Vancouver and the through rate back
to the eastern markets seem to total less than the rate
from Calgary direct to the eastern centres. At least,
shippers resort to these extraordinary manoeuvres, and
the presumption is that they are moved by some other
motive than a philanthropic desire to feed the railway.
The rate on coal from Anthracite to Vancouver, in car lots
in 1895 was $5 a ton. The distance is 565 miles. Nova
Scotia coal, brought from the coal beds 600 miles distant,
then sold in Montreal for $5.50 net to householders.
Coal from the mines of Pennsylvania, freighted for more
than 400 miles, sold in Toronto at $4.50 to $5 a ton ;
that is, the charge for carriage over the mountain section
of the Canadian Pacific, equaled the cost of mining in
Pennsylvania, handling for shipment, freightage to
Toronto, and retailers' profits. At Calgary 80 miles
from the mines at Anthracite coal retails at $7.25 a ton.
In the fall of 1895 the rate on a carload of potatoes from
Ashcroft to Vancouver, 205 miles, was $85, or, for less
than a full car, 47 cents a hundred. Potatoes then sold
at railway points in western Ontario for 20 cents a bag
(90 pounds), and in Toronto at 35 cents a bag retail, or

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THE RAILWAY QUESTION.

»5

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40 cents a hundred. The rate on a certain machine,
manufactured at Montreal, was $10 from the place of
manufacture to Toronto ; $25 from Montreal to Aus-
tralia ; more than double this figure from Montreal to
Victoria, B. C. ; and the same charge that carried the
machine from Montreal to Victoria would carry a simi-
lar machine from New York to Victoria.

VI.

Mr. James Bannerman, President of the Calgary
Board of Travie, m a statement made to the Departmen-
tal Commission on Railway Rates, declared that he had
information that the rate on wool from Melbourne, Aus-
tralia, via Vancouver, to Montreal or Boston, was lower
than the rate on wool from Calgary to Montreal ; and
that the freight on a carload of self-binders from Toronto
was lower to Australia than to Alberta. Mr. Banner-
man estimated that the rates were equal to 40 per cent,
on sugar, 75 per cent, on oatmeal, 125 per cent, on
apples and 300 per cent, on salt, on the cost in Ontario.
He insisted that Alberta paid rates 60 per cent, higher
than Manitoba, 85 per cent, higher than Minnesota, and
190 per cent, higher than Ontario. He quoted a rate of
$1.35 from Calgary to Revelstoke, 263 miles, as con-
trasted with 46 cents between Belleville and Forest, 258
miles. He showed that the rate on butter from Montreal
to Calgary was $3.21 per 100 pounds, and from Mon-
treal to Vancouver $2. 89 per 100 pounds. Then, from Mont-
real to Nelson, B.C., the rate was $2.95, twenty-six cents
less to Nelson than to Calgary, notwithstanding that the
railway had to pay the local boats and roads that carried

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THE RAILWAY QUESTION.

the goods from Revelstoke to Nelson 76 cents per 100
pounds. The rate from Calgary to Vancouver was $1.75
a hundred, and from Winnipeg to Vancouver the same
rate prevailed ; that is, the charge for a haul of 1,482
miles was the same as for a haul of 642 miles. But
since this, rates on butter, cheese, grain, hay, cattle, and
many other articles have been reduced. Aiccording to
The Calgary Herald, an industry manufacturing mainly
for the eastern market was started at Calgary. It was
found that freight rates were too high to allow a fair
profit. The manufacturer made inquiry at Vancouver,
and found rates so much lower on what he would require
to import, as well as on his finished product, that he
moved his plant from Calgary to Vancouver. Discri-
mination robbed Calgary of an industry. It was de-
clarea to be cheaper to ship stock from Edmonton by the
Calgary and Edmonton branch road to Calgary and on
to Langdon, 21 miles east on the main line, and drive
the cattle back over the prairie to Calgary, than to ship
direct from Edmonton to Calgary. A resident of Cal-
gary, according to The Herald, wanted some fine build-
ing material that could be got only in Eastern Canada.
He found that the rate to Calgary would be four cents a
pound. But the rate to Vancouver was only two cents
a pound, and from Vancouver to Calgarry also two cents
a pound. Thus, the railway would carry this building
material from Montreal to Vancouver and back over the
heavy mountain haul for the same charge as over the
more level run from the east to Calgary. The freight
rates on fruit from British Columbia into the Northwest
and Manitoba have been a cause of serious cDmplaint.

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THE RAILWAY QUESTION.

There should be a good market for the fruit of th'* coast
in the other western Provinces. But trial shipments
resulted unsatisfactorily owing to the he«try transporta-
tion charges. One shipment of plums from New West-
minster netted three cents a basket. The fruit rate on
car lots from points in Washington in 1895 ^^^ $i.i2}4
per 100 pounds, and $1.25 from Portland, with an addi-
tional 19 cents from California. The rate for apples was
70 or 80 cents a hundred pounds. But now the Cana-
dian road claims to give as favorable rates and also fast
freight transport, like its American competitors, and the
responsibility for the comparative failure of experimen-
tal shipments is laid upon the shippers who used the
express service. It was charged, too, that the British
Columbia growers did not pick the fruit until it was too
ripe to stand transportation, and negU^cted other condi-
tions necessary to the satisfactory handling of decidious
fruits. In this case, however, we may conclude that,
whether or not the complaints of British Columbian fruit-
growers were well founded, the railway is now consider-
ing the needs of this industry and planning a service to
meet American competitors. There seems to be no
doubt that the railway can give the western Canadian
market to British Columbia, and with profit to the
growers, the road, and the consumers of Manitoba and
of the Territories.

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THE RAILWAY QUESTION.

VII.

California roads fixed the rates on ores according" to
their value as determin<;d by assay, and there are busi-
ness men in British Columbia and in the other western
Provinces who declare that their rates of freight are
graded according to che profits they are able to
make out of their enterprises, and that they work for the
railway rather than for themselves. One hears few
charges of discriminat'on between individuals, one of the
most fatal of railway powers when exercised as on the
American roads before the advent of the railway com-
missions. But, as will be seen, discrimination between
localities, only less mortal than discrimination between
individuals, seems to have been freely practised, the local
rate was raised to the point of confiscation, and a
thorough investigation would very probably show that
some heavy shippers had advantageous special arrange-
ments. It is true that the mountain section is a heavy
piece of road, but an examination of the figures will show
that this does not account for these remarkable discrim-
inations. In truth, if one compares rates from Winnipeg
to Vancouver with rates from Calgary to Vancouver, one
would have to conclude that in cases no charge at all
was made for the mountain section. In Manitoba one
finds some feeling against freight rates, but this feeling
is far more intense in the Territories and on the coast.
The charge commonly made in British Columbia is that
the Province has been farmed out to monopoly, as Cali-
fornia was handed over, bound hand and foot, to the
American Pacific roads. So the moment one sets foot in

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"•■■WIr'. (TO,

THE RAILWAY QUESTION.

«9

the Territories the question of freight rates is raised, and
your ears ring with the story until you reach Victoria.
It would be idle to deny that heavy local charges are
essential to the maintenance of the railway, but the best
pen that ever served monopoly cannot justify some
of the local rates that prevail in the Territories and
British Columbia. Even the passenger rates are a
serious hardship. In Manitoba the rate is four cents a
mile, in the Northwest ..ve cents, and there are no
reduced rates for return tickets. For example, the dis-
tance from Toronto to Hamilton is 39 miles, the single
fare $1.20, and the return fare $2; but under the rate
that prevails in the Territories the single fare would be
$1.95, and the return fare just double this amount.
These rates, although not higher than have prevailed
under similar conditions in the United States, are bound
to cr»jate a feeling of irritation and implant a sense of
injustice in the minds of the western people. They are
not too ready to recognize local conditions, the sparse-
ness of population, and the importance of the factor of
distance in western transportation. In Manitoba the
burden bears less hardly upon the people But here, too,
there is a tendency to agitation, and a sense of hardship,
doubly aggravated by the low prices for grain and other
western products.

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THB RAILWAY gUESTKON.

VIII.

The Manitoba Government laio a bill of grievances
before the Departmental Railway Rates Commission.
Here are some comparisons made in this document,
showing" proportionately higher rates on the Canadian
Pacific : — Through grain rate, all rail, from Winnipeg to
Toronto, per C. P. R., 1,288 miles, per 100 Bbs., in car
lots 45 cents, per bushel 27 cents ; from Sarnia to
Fredericton, N.B., per G.T.R., 1,217 miles, per 100 flbs.,
in car lots 26^ cents, per bushel 15 9-10 cents. By
C. P. R., from Pilot Mound to Montreal, 1,548 miles, 47
cents per lOO B)s. and 28 1-5 cents a bushel ; Brandon to
Montreal, 1,556 miles, and Minnedosa to Montreal, 1,557
miles, same rate ; Chicago to Fredericton, by G. T. R.,
Intercolonial and Canada Eastern, 1,548 miles, 35 cents
per 100 Bbs. and 21 cents a bushel. By C. P. R., from
Boissevain to Montreal, 1,605 miles, the rate was 48
cents per 100 fcs. and 28 4-5 cents per bushel. From
Melita to Montreal, 1,613 miles, 49 cents per 100 Dbs. and
29 2-5 cents per bushel. By the Sault line, C. P. R. and
New York Central, from Minneapolis to New York,
1,600 miles, 35 cents per 100 Bbs. and 21 cents per bushel.
From Winnipeg to Halifax, by C. P. R., 62^ cents per
100 lbs. and 37^ cents per bushel ; from St. Paul to
Halifax, via Chicago, 45 cents per 100 B)s. and 27 cents
a bushel. By C. P. R., from Calgary to Port Arthur,
1,264 miles, 29 cents per loo fi)s. and 17 2-5 cents per
bushel ; from Winnipeg to Toronto, 1,288 miles, 45
cents per 100 fts. and 27 cents per bushel. The low
grain rate from Calgary was attributed to the fact that

!■

WW.,

THE RAILWAY QUESTION.

little or no grain is shipped from that point. P'rom
Virden to Fort William, less than half the distance, the
charge was 21 cents per 100 lbs. Freight rates on
"through" merchandise, all rail, from Fort William to
Winnipeg, by C. P. R., 427 miles, on the five classes of
freight, were 92, 79, 65, 65 and 47 cents per 100 lbs. ;
from Chicago to Stratford, by Chicago & Grand Trunk,
416 miles, 42^/^, 37^, 275^., 20 and 17^ cents per 100
fl>s. From Fort William to Carmen or Portage la Prairie,
by C. P. R., 481 and 480 miles, the rates were $1.25, $1.05,
85, 69 and 59 cents per 100 lbs ; from Chicago to Hamil-
ton, by Chicago & Grand Trunk, 472 miles, 42^, 37)^,
27 j^, 20 and 1^% cents per loo fcs. From P'ort William
to Boissevain, Virden and Birtle, by C. P. R., 604 to 617
miles, the rates were $1.51, $1.27, $1.02, 81 and 69 cents
per 100 lbs ; from Chicago to Kingston, by Chicago &
Grand Trunk, 668 miles, 72, 62^, 48, 33^ and 29 cents
per 100 lbs. The rates from Fort William to Medicine
Hat by C. P. R., 1,084 «Tiiies, were $2.42, $2.01, $1.61,
$1.21 and $1.10; from Toronto to Halifax, by C. P. R.
(Ontario Division), and G. T. R., 1,094 iriiles, ^, 75, 65,
54 and 43 cents per 100 lbs. Freight rates on "through"
merchandise by lake and rail from Montreal to Fort
William, 466 miles, by C. P. R. to Owen Sound and 800
miles by lake, were 51, 44, 38, 31 and 25 cents per 100
lbs. ; from Fort William to Winnipeg, 427 miles, by rail,
92, 79, 65, 56 and 47 cents per 100 lbs. The rate between
New York and Fort William, by Brockville or Prescott,
758 miles by rail to Owen Sound and 800 by water, was
the same as that between Montreal and Fort William on
classes one and two, and lower on classes three, four and
five.

w^^mm

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THE RAILWAY QUESTION.

• »

IX.

i*'

The report of the Departmental Railway Rates Com-
mission is mainly devoted to an examination of throug'h
rates on staples, a comparison with rates on the Great
Northern and Northern Pacific Railways that shows to the
advantage of the Canadian road, and an argument, the
force of which cannot be resisted, that, in view of the
sparseness of population and small volume of local traffic,
high rates must be charged if the road is to exist and
give any return to its stockholders. But the report is a
railway rather than a public document, and does not
show any exhaustive consideration of the questions at
issue. Here are some comparisons made by the Rates
Commission, showing proportionately lower rates on the
Canadian Pacific than on its American competitors under
similar conditions : — The grain rate from Portage la
Prairie to Fort William by C. P. R., 482 miles, was 18
cents ; the same rate was charged on the G. N. R. from
Neche, N.D., to Duluth. 453 miles, and from Pembina to
Duluth, on the N. P. R.> 377 miles. A uniform rate of
19 cents was charged from Brandon to Fort William on
the C. P. R., 559 miles; from Jamestown, N.D., to
Duluth, on the N. P. R., 307 miles, and from Crystal,
N.D., to Duluth, on the G. N. R., 438 miles. On the
C. P. R. from Deloraine to Fort William, 628 miles, the
rate was 21 cents; the same rate was charged by the
G. N. R. from Bottineau, N.D., to Duluth, 462 miles,
while on the N, P. R., from Leeds, N.D., to Duluth, 415
miles, the rate was 22 cents. The C. P. R. rate f»om
Morden to Fort William, 507 miles, was 18 cents, the

THE RAILWAY QUESTION.

same as that from Dayton, N.D., to Duluth by the
N. P. R, 348 miles, and from Manvel, N.D., to Duluth,
39a miles. From Boissevain to Fort William, 608 miles,
and from Killarney to Fort William, 590 miles, the
C. P. R. rate was 20 cents ; and this rate was charged
on the G. N. R. from Milton, N.D., to Duluth, 464 miles,
from Michigan City, N.D., to Duluth, 432 miles, and on
the N. P. R. from Sykeston, N.D., to Duluth, 363 miles,
and from New Rockford, N.D., to Duluth, 366 miles.
The C. P. R. rate from Gler.boro' to Fort William, 531
miles, was the same as that on the G. N. R. from Edin-
burgh, N.D., to Duluth, 452 miles, and from Ccirrington,
N.D., to Duluth, 350 miles. From Regina to Fort
William, 782 miles, the rate by C. P. R. was 23 cents ;
from Minot to Duluth, 584 miles, the G. N. R. rate was
26 cents, and from Dickinson, N.D., to Duluth, 523
miles, the N. P. R. rate was 27 cents. The rates from
these North Dakota points to New York, when com-
pared with the C. P. R. rates from the Canadian points
to Montreal, showed the American rates higher in amount,
but a small fraction lower in proportion to distance. The
same was true of the live stock rates fro-n these points
to Montreal and New York. The rate per ton for coal
on the C. P. R. from Fort William to Winnipeg, 427
miles, was $3 ; to Portage la Prairie, 482 miles, $3.42,
and to Brandon, 559 miles, $3.94. This was substan-
tially lower than the $4 rate from Duluth to Pembina and
Neche, 447 and 459 miles respectively. It compared
quite as advantageously with the N. P. R. and G. N. R.
rates from Duluth to other North Dakota points. The
N. P. R. rate from Duluth to Billings, N. D., 892 miles,

«WS«S»M:5»r<<(ipff

^«

«H

THE RAILWAY QUESTION.

was $7.90 per ton, while the C. P. R. rate from Anthra-
cite to Winnipeg, 917 miles, was $5. The lumber rate
on the C. P. R. from Ra:; Portage to Winnipeg, 138
mrles, was 10 cents, it compared favorably with the
G. N. R. rate of 11 7, cents from Minneapolis to Sauk
Centre, 118 miles, and the N. P. R. rate of 12 cents from
Duluth to Hansen, Minn., 133 miles. The rate on agri-
cultural implements was lower per mile on the C. P. R.
than on the American lines named, but the proximity of
Chicago as a distributing centre gives American farmers
a greater proportionate advantage. In general mer-
chandise C. P. R. rates to Manitoba points compared
favorably with the rates on the G. N. R. and N. P. R. to
points in North Dakota. Upon the whole, as respects
through rates on staples, it was not establ:«?hed by this
report that the people of Manitoba were more disadvan-
tageously situated than the American communities across
the border, but Manitoba had less cause of complaint
than British Columbia and the Territories.

Now, we cannot afford to forget that the Canadian
Pacific Railway was a national rather than, a commercial
project. Under the impulse of party clamor we were
stampeded into an enterprise that was well nigh beyond
our strength, and upon terms that were hardly less than
ii criminal surrender of the future of the country to the
lordship of a corporation. For the moment we may heap
adjectives upon the " national highway," and rejoice in
the phenomenal enterprise and magnificent resource of its
management ; but we may depend upon it that the judg-

THE RAILWAY QUESTION.

ment of the next g-eneration will be that the agreement be-
tween Canada and the Pacific Railway Syndicate was the
most insane bargain ever entered into by a free people. Let
us look at the facts and conditions. From Vancouver to
Fort William the road runs through nearly 2,000 miles
of territory, with a total population of not more than
300,000 — hardly more than the population of Montreal,
and with but few important business centres. Beyond
Frrt William, again, there are five or six hundred miles
of waste on the north shore of Lake Superior. For
through traffic there is the keen competition of the Amer-
ican roads and of the Grand Trunk. Construction on
the Lake Superior and mountain sections wa& enormously
costly, a»id cost of operation in the mountains is very
heavy. An army of watchmen are employed, and no
expense is spared to guarantee safety. Local trains are
few and local traffic light, and local rates must be high
if the road is to earn a living revenue. There were
powerful reasons why the road should be extended
through older Canada, its American connections estab-
lished, and its trans-Pacific steamship service developed.
No doubt vast sums of money have been put into these
undertakings, but the fact to keep in mind is that the
road could not live upon its local traffic, and that these ex-
tensions and developments were nee ?ssary to its success,
even to its existence, as a commercial enterprise. It is
more than likely that in the calmer judgment of another
generation it will be conceded that the operation of this
road for the first ten years of its history was a much
greater achievement than its construction. But what
has been the cost to Canada ? First, we gave the cor-

(^ k

THE RAILWAY QUESTION.

poration $25,cxx),cxx) and seven hundred miles of com-
pleted road, equal to $30,000,000 or $35,000,000 if we
estimate orig-inal cost and interest. We gave $3,000,000
or $4,000,000 to the short line to the east, and thus
deliberately depreciated our investment of $50,000,000 in
the Intercolonial. We bonused the western Ontario
sections, creating an unnecessary parallel line to the
Grand Trunk, reducing the value of invested capital, and
making rompetition more costly and combination more
imminent. We give an annual subsidy of $120,000 to
the China and Japan steamships. Then look at a rail-
way map of the Northwest, and you will see that we have
alienated an empire of which Sir William Van Home
and his successors will be the ruling monarchs. Their
power will be limited or not according to whether the
railway shall govern Parliament or Parliament govern
the railway. Let us be honest, too, and confess that,
notwithstanding the millions we have voted ot municipal,
Provincial ^md national bonuses in order to secure com-
peting lines of railway, we have now only two great
railway systems in Canada ; that these give perhaps an
active competition in service, but a very limited competi-
tion in rates, and that this condition is largely a result
of the construction of the Canadian Pacific Railway
according to the plans and specification of the Canadian
Government,

THE RAILWAY QUESTION.

XI.

■^7

There is bound to be combination between these
great systems. It is established by a great mass of
evidence that where combination is possible permanent
competition is impossible. We have had the experience
of the United States before our eyes, but we have not
done any better than the Americans. We cannot inter-
fere with private enterprise, but in the Northwest at
least we ought to show that experience does not teach in
vain, and henceforth we should resolutely refuse to vote
a dollar of public money for unnecessary parallel roads,
and give our thought to the regulation of rates by
statute rather than by the construction of competing
roads that will not compete. Manitoba paid over $600,-
000 to get connection with the Northern Pacific, but the
bargain was hardly completed when the Northern Pacific
came to an understanding with the Canadian Pacific,
with the result that, while there may be competition in
service, there is very little competition in rates. In fact
the Canadian Pacific now justifies existing charges by
proving that they are not higher than the rates that
prevail oa the Northern Pacific. Many of us remember
that the northern municipalities of Ontario bent their
backs to hea^^y bonuses in aid of the Hamilton & North-
western road in order to secure a competition that was
sorely needed, and that even before trains were running
over the new road it was absorbed by the old Northern.
Developments of similar character are within local
knowledge all over Canada. It is doubtful if even one
dollar of the $120,000,000 or $i3o,c>oo,oco voted to rail-

1'^ i

^f5»f

THE RAILWAY QUESTION.

way corporations by the Canadian people to secure rail-
way competition has fulfilled its purpose. Of course
wide 'ocal accommodation, and in some cases competition
in service, have been secured, and no one charges that
these bonuses have been wholly wasted. Ely, who, by
the way, is an advocate of Government ownership of
railways, a solution at least far in advance of our day m
Can ida, and only to be resorted to in the last extremity,
has an interesting calculation on the wastes of competi-
tion. '*The moment," he says, "we begin reflecting upon
waste in the railway business, we are able to give concrete
instances running up into the hundreds of millions of
dollars. The railway lines paralleling the New York
Central and Hudson River Railway, and the Lake Shore
& Michigan Southern from New York City to Chicago,
afford one of the best known examples of waste in rail-
way construction. These lines were built to compete
with the older lines mentioned, but as is always the case
in such instances, the competing lines consolidated. The
purpose for which they were built was not accomplished,
and the expenditure involved in their construction was a
national loss. It has been estimated that these lines cost
two hundred millions of dollars, which would be a sum suf-
ficient to construct homes for one million people, if we allow
a thousand dollars to a dwelling for a family of five ; and
this is probably more than ihe average cost of the houses
of the people of the United States, taking city and country
together. We see, then, that one single item in our
count is a matter of nav'ional concern, but when we have
mentioned the waste in construction we have only made
a beginning in the total loss involved in the construction

*'1L*'^*^^

'^^iVHPI

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THE RAILWAY QUESTION.

of needless railway lines. The maintenance of the use-
less lines and their continued operation involve perpetual
loss. Every station on the parallel line involves waste.
Every station agent is a scource of expense, and every
needless train run adds to the waste. It is not denied
that the parallel railway lines offer some slight accom-
modation, and therefore service, to the public. The new
parallel line will, for example, generally run through a
different part of the city, and it is not improbable that
the time-table of the new parallel line will be different
from that of the older company, so that in this way a
va-iety of trains is offered. At the same time the expense
is mostly waste, because a relatively small additional
expenditure on the part of the old company would o^er
still better accommodations. What has taken place in
the case of the West Shore and the Nickel Plate between
New York and Chicago has occurred all over the United
States ; and the total loss must amount tc more than a
thousand millions of dollars if we consider only the first
cost. If we consider the subsequent expenditure involved
it becomes truly enormous — a loss like that brought upon
a nation by a great war. It is said by a railway manager
that even now it would involve an annual saving of two
hundred millions of dollars if the railways of the United
States were managed as a unit. If we divide the sum
by two in order that our estimate may be a conservative
one, and capitalize it at four per cent. , we have a capital
loss of twc thousand five hundred millions of dollars. It is
useless to attempt any precise estimate, but it may not be
an extravagant estimate if we claim that the loss due to
competition in the railway business in the United States

.1 ^

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■r.

THE RAILWAY QUESTION.

,1V

from the beg-inning of our railway history up to the pie-
sent has been sufficient to furnish all the people of the
United States with comfortable dwellings, provided that
all the houses now in the United States should be
destroyed." "

XII.

The Ontario & Quebec, with its extensions through-
out western Ontario now forming part of the through
line of the Canadian Pacific, and the Grand Trunk with
its branches of the old Great Western, furnish striking
eviden.e of waste of capital and waste of resources. It
would have been better for the Grand Trunk and better
for Canadian credit if we had recognized the Grand
Trunk as the main railway thoroughfare for Ontario, and
made it a main feature of public policy to feed rather
than starve our pioneer road. It is true this was not
possible with the railway experience of thirty or forty
years ago. It was not then demonstrated that compet-
ing railways would not compete, the need for public
regulation of common carriers was not so clearly
established, it was not so plain that with two roads
competing for the traffic that would barely support one
rates must be raised in order to provide the revenue
necessary to keep both concerns running, and popular
faith in the power of a railway to create a metropolis at
every cross roads was general and implicit. But it is
the fact that if we had set apart the Grand Trunk as our
main through line and then sent out local branches
throughout the various sections of the Province under a

a Richard T, Ely, Socialism and Social Reforna, Pages 117, tia

THE RAILWAY QUESTION.

well-devised plan that would have made these local
roads feeders of the main artery, we would now have a
vastly more symmetrical railway system, we would not
be burdened with the support of so many miles of unpro-
ductive road, and, providing there was efficient kegula-
tion of rates, the shippers, traders and farmers of
Ontario would have better railway accommodation
and lower railway tariffs. The time was not ripe
foi this : eform in Ontario ; but is there any reason that
we should repeat in the new western territories all the
follies and blunders of railway development in older
Canada ? Free land and lower freight charges are the
crying needs of the Canadian west. If there be few
people there must be little traffic, and if little traffic,
high rates and rigorous regulations. We must not
forget that freight rates are a form of taxation, and that
if the tax-bearers be few the burden must be heavy. If
we divide the traffic between competing roads the load
must be heavier still ; if we inrjrease and concentrate the
traffic and multiply the population we have a right to
reduction of charges and improvement in service. Rail-
way monopoly under efficient regulation will give lower
freight ciiarges than any system of unregulated competi-
tion or even a system of competition regulated by public
authority.

k i\

ll\i

I •

?r^

V<!

^ ^

THE RAILWAY QUESTION.

XIII.

The case is well illustrated by the argument of an
American writer or the question of Government mon-
opolies. He says :— "The carriage of the mails is the
most important monopoly carried on by the Govern-
ment, and we may find some facts of interest by enquir-
ing the reasons why it is for the public welfare that it
should be so conducted rather than by private enterprise.
In the first place, if it were left to private enterprise to
furnish us with postal facilities, the postal service would
be much more limited than now ; many places of small
importance being left without postal facilities or charged
a much higher rate for service than now. On the other
hand — and this is an important point — there would
perhaps be in and between the large cities competition
between different companies, in which case there would
be duplicate sets of postal facilities, including buildings,
mail boxes, furniture and employees of every grade. It
is plain that all this would be a waste. One set of
facilities is better for the public than two or three or
more, and is ample to carry all the mails. To put
another set of men at the work that others are already
nble to do is to waste just so much of the working force
of the world, as well as the capital necessary to furnish
tools and buildings for its use. The matter of rates too
would vary with the competition. One could never be
sure what his postage bill for the coming year was to be.
The receipts of the companies would be uncertain, and
they would be obliged to pay a high rate of interest on
the capital invested in their plant, thus making it neces-
sary for them to charge high rates for their service. The

THE RAILWAY QUESTION.

3.1

'he

intense competition between rival companies would lead

to the bankruptcy of the weaker, and the final result

would be the establishment of a single corporation in

the control of the whole system. Rates would then be

put up to the point where the greatest profit would

accrue to the corporation."* If we cannot have a

system of Government railways, and it is clear that we

cannot now undertake to buy up the railways of Canada,

t len we must have efficient public regulation, and the

fewer through roads we have to support the lower

freight charges can be made to the masses of the

community.

XIV.

At most but a few railway points benefit by competi-
tion. It has been estimated that "there are in the
United States about 37,000 railway stations where
freight and passengers are received for transportation.
From the nature of the case not more than ten per cent,
cf these are or can be at the junction of two or more
lines of railway. (By actual count, on Jan. i, 1887,
eight per cent, of existing stations were junction points.)
Therefore the shippers and buyers of goods at nine-
tenths of the shipping points of the country must
always be dependent on the facilities and rates offered
by a single railway. Such rates of transportation as
are fixed, be they high or low, must be paid, if business
is carried on at all. And when we consider the ten per
cent, of railway -stations which are or may be junction
points, we find that at least three-fourths of them are
merely the junction of two lines owned by the same com-

a C. W. Baher, C.E., Monopolies and the People, pages loo, loi.

^'1

lid

)^irw^

THE RAILWAY QUESTION'.

.1!

pany Assuming that the total number of railway

junction points in the United States is 3,000, we find, on

examination, that at about two-thirds only two lines

meet, and at more than half the remainder only three

lines meet. It is plain that in the vast majority of cases

where two roads intersect, and in many cases where

three or four come together, the lines meet perhaps at

right angles and diverge to entirely different localities.

The shipper bringing goods to the station, then, may

choose whether he will send his goods north or cast

perhaps; but only in a few cases where two lines run to

the same point does he really have the choice of two

rates for getting his produce to market. Practically,

then, there are not and never can be mere than a few

hundred places in the country where shippers will be

able to choose different routes for sending their goods

to market. We say there never can be, because the

building of a line of railway to parallel an existing line

able to carry all the traffic is an absolute loss to the

world of the capital spent in its construction, and a

constant drain after it is built in the cost of its operation.

This fact is now, fortunately, generally appreciated."
The same writer adds : — "The consolidation of railway
lines has gone on very rapidly within the past few years,
and is undoubtedly destined to go much further. Of the
158,000 miles of railway in the country about eighty per
cent, is included in systems 500 miles or more in extent,
and a dozen corporations control nearly half of the total
mileage. The benefits which the public receive from this
consolidation are so vast and so necessary that, no one
who is familiar with railway affairs would dream of
making the suggestion that further consolidations be
stopped, or that past ones be undone.""

a C. W. Baker. C.B., Monopolies and the People, pag^es 44-47.

THE RAILWAY QUESTION.

XV.

So in Canada if we had a Railway Commission we
would find that its effectiveness would be increased by the
fact that we have practically only two g-reat railway sys-
tems and that equality of rates would be easily established
all over the country according to density of population,
amount of traffic and character of products in the various
sections. Canada is a country of enormous distances,
of length rather than breadth, and trade between the
Provinces is difficult, and transportation charges very
burdensome. In these facts we have conclusive argu-
ments against the rash multiplication of through roads
and the consequent maintenance of needless transporta-
tion facilities. In truth, to construct another great through
road in Canada would be very like adopting a fiscal
tneasure imposing a tax of fifteen or twenty per cent, on all
interprovincial trade. In the United States jurisdiction
over the railways is divided between the State and Inter-
state Commissions. State Commissions have control
over not mo*'e than twenty or twenty-five per cent of the
traffic. The railways are so numerous and operate
under such widely differing conditions that regulation of
the great through lines is mor difficult than it need be
in Canada, and yet in the adjoining country regulation
of railways by the joint operation of the State and
Interstate Boards has been fairly successful at least in
the communities that have ^»ad strong State Commissions.

^ s.

-■V

T?-

i^l

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I 1 .

ill

THE RAILWAY QUBSTION.

XVI.

Just now western communities are calling for the con-
struction of the Crow's Nest Pass Railway by an inde-
pendent company in order to secure competition with the
Canadian Pacific. It is, however, as sure as that the
sun shines that the independent company W3uld be forced
to make a running- arrangement with the Canadian
Pacific or the Great Northern, that it could not know one
hour of real effective independence, and when one of the
great corporations had absorbed the independent link the
other great corporation would seek and assuredly eftect
a traffic arrangement with its powerful rival. On what
would we base the expectation that the Crow's Nest
Pass Railway would prove to be the one competing rail-
way on the American continent that would compete ? Of
what advantage even is a Government roadbed free to
competing railways who will not wage, or at least will
not prolong, unprofitable rate wars, if we do not provide
ourselves with the machinery necessary for an effective
regulation of charges and a firm control of the carrying
corporations ? Nothing is more unlikely than that any
one of the great through roads would combine with the
Government to handle the traffic of a Government road
through the Crow's Nest and wage a permanent war of
rates with its powerful through rivals. The roads would
not fight over three thousand miles in order to get a
monopoly of the traiSc of three hundred miles. There can
be hardly a doubt that the through systems would com-
bine and hold the Government branch road at their
mercy. It must be remembered, too, that if the Govern-

THE RAILWAY gUKSTION.

ment should construct the Crow's Nest road, and should
feed its traffic to one of the American through lines, and
thus divert business from the Canadian Pacific, that
this would mean, necessarily and inevitably, higher local
charges in the Territories and Manitoba, if not higher
through rates from Eastern Canada. It may be that
freight charges in the West are now excessive, but
we can demand reductions in ever increasing ratio
as population and traffic increase. Is it impossible
to make a business arrangement with the Canadian
Pacific Railway ? As has been mentioned, there is
a movement for the construction of a railway through
the Crow's Nest Pass into the mining fields of
British Columbia. There is no doubt that the Canadian
Pacific authorities desire to build this road and are look-
ing for a subsidy or a guarantee of bonds, or both, from
the central Government. It is open to Parliament to say
that if they are to build or operate this road, and to
receive running facilities, public aid or a guarantee of
securities, they must surrender the provision in their
charter which forbids public control of their tariffs until
their earnings reach ten per cent, on the amount invested
in the railway ; they must agree to fix maximum rates for
the carriage of coal and ore, reduce rates for grain, cattle
and other staple exports of Manitoba and the Territories,
and agree to an equitable, but not necessarily propor-
tionate, regulation of local and through tariffs.

r«

(ill.

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THE RAILWAY QUESTION.

XVII.

Then if it should be deemed in the nation 1 interest
to bargain for the repurchase of any part of the railway
lands as a feature of any policy of settlement and develop-
ment, we could again exact concessions in rates to the
settlers of the west and the shippers of the east. For
expenditure on development and settlement is in direct
aid of the railway, and if we repurchase railway lands we
relieve the road, at least in part, of the cost of its immi-
gration agencies and services. If it be argued that to
repurchase railway lands is equivalent to fresh subsidies
to a corporation that has absorbed too many millions of
public money, we may set up the defence that if we
believed that it was a national crime to alienate the lands
of the west, it is a prime public duty to seek to undo the
gigantic wrong that was perpetrated against the Cana-
dian people. It cannot be wise public policy to adhere
to a gigantic mistake, even though in finding a way out
we must deal with a corporation. It is fair to remember
that while the Canadian Pacific corporation received
extraordinary concessions it assumed extraordinary obli-
gations and responsibilities, and it is but just that we
should loyally abide by the terms of the agreement r'^c'de
in behalf of the people, or bargain fairly for a modifica-
tion of the more obnoxious provisions. It is fair to
remember that only men of rare courage and adventurous
spirit would have undertaken the construction of the
Canadian trans-continental railway over the north shore
route, even on the extraordinary terms sanctioned by the
Canadian Parliament, and one doubts if to-day we would

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THE RAILWAY QUESTION.

take over the railway, assume its obligations, and run it
as a communal enterprise. It is only with increase of
population and development in the west that the extra-
ordinary nature of our bargain with the railway will be-
come fully manifest ; and it is now, while the bargain is
onerous upon the road as well as upon the country, that
we should negotiate for better terms. In the meantime
the railway is serving a vast unsettled territory, and
while some of its discriminations are intolerable and some
of its charges extortionate, it may be that we are too
ready to approach the road in the spirit of Jap Miller,
one of Whitcomb Riley's heroes. Riley tells us that
Jap is

Fer the pore man every time ; ani in the last campaign

H<- stumped old Morgan County through the sunshine and the rain,

And helt the banner upwards from a-trailm" in the dust,

And cut loose en monopolies, and cuss'd, and cuss'd, and cuss'd.

It is not necessary that we should repurchase huge
blocks of these railway lands in advance of settlement,
but only that we should now agree upon a plan of repur-
chase and take over the corporation lands as required for
actual settlers. It is likely thi^.t we shall have to estab-
lish a system of grouped settlements in the west ; but
however that may be, if we are to support roads, schools
and municipal institutions with any degree of efficiency
we must break up the system of alternate blocks, get
exempted lands under taxation, and relieve the settlers of
the burden of paying double taxation, and giving value
to lands held out of use by corporations whose only re-
turn is to harrow the people by onerous freight charges.

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THE RAILWAY QUESTION.

XVIII.

Practically the western settler gives the first day of
the week to meet his taxes, the next to meet freight
charges, the third to give value to exempted corporation
lands, and is graciously permitted by beneficent land
regulations, an indulgent corporation and a paternal
Government to reserve the other three days for himself
and his family. One may judge whether this leaves him
in the mood for prayer or cursing on the day of rest.
We in older Canada ask why it is that we have
still to maintain the Northwest mounted police, a splendid
force which carries into every corner of those vast terri-
tories the moral authority of British institutions, and we
are told that population is so sparsely spread over r :.
vast spaces that the police are the constabulary, the
magistracy, the municipal Government of the territories,
and that until population can be increased and concen-
trated the cost of the preservation of order and of the
administration of local affairs must be largely borne by
older Canada. It is of the first importance for school
purposes and for municipal purposes that we should seek
to concentrate settlement, and we should seek rather to
concentrate in Manitoba and along tht existing branch
railways in the Territories than to push out new branch
roads in the much used and much abused name of devel-
opment. Unwise distribution of population and undue
multiplication of railway equipment in proportion to
population are contributory causes for the comparative
failure of our western experiments. It is time now to
profit by our accumulated experience in farming, ranch-

ri^m

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THE RAILWAY QUESTION. ^I

ing and dairying, our accumulated knowledge of soil and
climate, of the natural temper and capabilities of various
sections, and proceed up a lines of well-tried and well-
ordered policy. But for years to come relief for the
western population from oppressive freight charges will
not be found in duplication of railways or in railway
competition, but in effective public regulation of charges
over the Canadian Pacific. Nor need we approach the rail-
way 'n any hostile spirit. We cannot help Canada nor
Canadian credit by weakening our great transportation
enterprises. We should, until such time as we can con-
sider the final policy of public operation, seek rather to
effect a business partnership with the railways, make the
public interest and the railway interest synonymous, and
embody in our public policy the lesson of half a century
of costly experience, that where combination is possible
enduring competition is impossible, and that low rates
and efficient service cannot be secured by ill-advised
division of traffic and rash multiplication of the number
of public carriers.

XIX.

We must all admit that there is prestige in the
"national highv.-ay," to use the language of its pane-
gyrists, that the road was rapidly and substantially
constructed, and is splendidly equipped. There is first-
rate business capacity manifested in every detail of the
management. The roadbed is well maintained and the
rolling stock is adequate even for an exceptionally heavy
grain season. But in order to the proper maintenance
of this service high local rates and a heavy through

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THE RAILWAY QUESTION.

traffic are necessary, and there is n<3 doubt this ll. rough
traffic has been secured at the cost of direct discrimina-
tion against the Canadian people who were taxed for the
road's creation, and are taxed for its support. P'ond vs
we are of national heroics, everywhere that one goes in
the west one hears the admission, often in very unex-
pected quarters, that "Mackenzie was right." By
rushing the construction of the road in order to fulfil
the conditions of a prodigal political bargain, we ran a
thin line of settlement all across the west, ind set a new
population to the work of experimenting over far-reach-
ing and far-differing conditions of soil and climate. At
the same time we recklessly and enormously increased
the national obligations. What have we got for it all ?
Frankly, now, would not the national position to-day be
much better if we had adhered to the Mackenzie policy ;
if we had first devoted ourselves to the construction of
branch lines in Manitoba, encouraged compactness of
settlement, and confined the experimental work of the
agriculturist to a more limited territory ? We would
have heard less of failure, we would have had fev/er
pretentious ventures, and fewer damaging collapses
through ignorance of conditions ; the great boom of
1882 would not have been precipitated with such
tremendous impetus and such disastrous consequences.
If we nad carried settlement along with the road we
would have had lower freight rates, because we would
not have had to meet such enormous expenditures for
construction, and we would have had a less burdened, a
more compact and a more contented population. A
more contented population would have drawn a steadier

1 (

. ' THE RAILWAY QUESTION.

and healthier immigration, and the whole position from
the national standpoint would have been improved. In a
speech made fifteen years ago Mr. Blake said :— *' Com-
plete the railway to Red River ; go on with the prairie
section as fast as settlement demands. For that risk
something, since, as I have said, the die is cast. But
in order to succeed in that, in order that you may have
a chance later to do more, deal with that alone now.
Bend to that great effort your undivided energies, your
whole available resources. Postpone, meanwhile, the
western work, and do not by your present action, based
on airy dreams and vain imaginations, risk the ruin of
your country." In that speech there was real patriotism,
but neither Parliament nor the people were in the mood
to hear the truth.

XX. .
It was, perhaps, not unreasonable that British
Columbia should demand the fulfilment of terms that
were freely offered. But British Columbia would have
come into the Confederation on far less onerous con-
ditions than were so thought'essly and recklessly ac-
cepted, and we could have shown the Pacific Province
that a road constructed at such enormous cost through
an unpeopled territory would be bound to impose very
onerous charges upon its constituency. The route of
the through line was changed by the Government and
the syndicate, and here again time has justified the old
Liberal Minister, and the unanimous voice of the west is
that "Mackenzie was right." In fact, the demand of
the west to-day is for railway extension over the old
Mackenzie survey, and the Canadian Pacific management

;

THE RAILWAY QUESTION.

has taken the precaution of getting control of the Mac-
kenzie route over the mountains. His successors seem
just to have learned what Mr. Mackenzie mastered a
score of years ago, and nowhere can one get more
satisfactory evidence of the marvellous grasp and
phenomenal industry of Alexander Mackenzie than by a
study of conditions as they have developed in western
Canada. If I am not mistaken, even the Canadian
Pacific Railway management is now leaning toward the
old Mackenzie policy, and is convinced of the wisdom of
compact settlement and the development of Manitoba
rather than of the remoter sections of the country. It is
needless to emphasize the tremendous folly of yielding
up «uch an enormous land'^d estate in order to secure
rapid construction of the railway. Let no one doubt
that there is a magnificent future for western Canada.
A prosperous population will spread over these plains —
we seem now fc see the bow of promise more clearly
than ever before — and every settler who sets foot upon
this soil will enhance the value of the railway's posses-
sions, and force us, if our people are to compete with
the world on equal terms, to regain possession of the
magnificent estate we have thrown away.

XXI.

Legislation for the regulation of railways does not
mean that we should pauperize the roads or deprive them
of a living revenue. The experience of the American
States proves that the people have a sensitive reg'ard for
fair dealing, a wholesome respect tor obligations, and
will not do deliberate injustice to their carrying corpora-
tions. Even the Granger laws, passed during a season

THE RAILWAY QUESTION.

when the popular feeling- was well illustrated by the
utterance of the Governor of a western State, who
declared that his party would "shake the railways over
bell," while unwisely vexatious and arbitrary did not put
rates down as low as the average of the rates fixed by
the railway managers. But these laws did attack gross
discriminations between individuals and between locali-
ties, and effectually initiate the work of equalization that
has been since carried on by the State and Interstate
Commissions. In the iudgment of very many railway
reformers the Nationak Commission has been far too
partial to the roads, or at any rate is not quite equal to
the performance of its onerous functions. But it was
right that the Commissioft should be scrupulously just to
th"? railways, recognize inequality of routes, conditions of
competition and values of local traffic. A body like this
Commission called on to pass judgment on conditions in
Canada would surely decide that in the Northwest local
rates could not yet be proportioned to through rates.
Inequalities and discriminations in local rates could be
adjusted and remedied ; but, pending an increase of
population and a resulting development of local trade,
we would have to allow a generous margin in competi-
tion for through traffic. But this can be only a tempor-
ary concession to meet the exceptional conditions of the
west. Neither Canada nor any other democratic com-
munity can afford to be governed by its corporations,
and we should at once set ourselves to devising means
for regulating local rates, preventing discriminations
between individuals and localities, and abolishing favor-
itism to American ports and American communities by
Canadian railways at the expense of the Canadian people.

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XXII.

Cook, in his "Corporation Problem," dealing with
the experience of the United States, tells us that: — "The
early railroad Guilder, promoter and manipulator was as
crafty and many-sided in his methods as Ulysses himself.
He was skilled in the art of issuing watered stock and
bonds. By devices well known to the corporation lawyer,
he generally managed, if hi.s road actually cost $1,000,-
000, to issue $2,000,000 of stock and $2,000,000 of rail-
road bonds secured by a mortgage on the road itself.
He accordingly had $4,0^ ,000 of stock and bonds, and
of this $3,000,000 was pure 'water.' In the course of
time these bonds and stock were sold. They passed into
bona-fide hands. The result was that a railroad costing
$1,000,000, part of which was raised by municipal bonds
given to the railroad itself, had obligations outstanding
for $4,000,000, upon which it endeavored to pay interest
and dividends. Even though a foreclosure took place,
the new issue of stock and bonds was equal to or greater
than that existing before. Exorbitant rates for trans-
portation were necessary in order to pay the interest
alone, ^and generally for many years there was nothing
for dividends on the watered stock."" Hudson deals
with the same subject in his "Railways and the Repub-
lic." "The New York Central & Hudson River Rail-
road," he st^ys, "has a capital stock of $89,428,300 and
a debt of $56,497,223, making, with mortgages of
$109,320 upon its real estate, an aggregate capitalization
of $146,034,853. The fictitious securities included in

a W. Vr. Conk, The Corporation Problem, Pa^e r4,

THE RAILWAY QUESTION.

this total, as was shown by the New York legislative
investigating committee in 1880, amount to a large per-
centage of the whole, and there is no more conspicuous
example of capital inflated by stock dividends under the
pretence of consolidation. The stocks of the several
roads which were united to form the New York Central
were increased in the consolidation by $8,894,560, or
more than one-third their original capitalization, which
the legislative committee declares to have been ' so much
water or fictitious capital added to the road'; but this is
reduced to commonplace by contrast with the magni-
ficient creation of financial values by the printing press
when the consolidation of the New York Central and
Hudson River Railroads took place in 1869, and the
capitalization of $90,000,000 was effected, which, as the
Secretary of that corporation testified before the com-
mittee, was 'about twice the original capital of the two
companies.' The fictitious addition is stated by the
cotnmittee to reach $53,507,060, which, considering that
the $8,894,000 of fictitious capital in the New York
Central underwent the subsequent inflation of 27 [ r cent,
on the second consolidation, is about $2,000,000 within
the mark. Without inquiring into the legitimacy of an
increase of nearly $17,000,000, which has taken place in
the capitalization of this company since the investigation
by the legislative committe, it appears from the figures
of the committee that of the total capital of the New
York Central & Hudson River Railroad, including stock
and bonds, 36 per cent, is 'water,' while of the stock
whose profits are under discussion the fictitious addition
is 59 per cent, of its present total, or about 145 per cent.

i m il ifcfa » ^ '

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THE RAILWAY QUESTION.

; '

on the original investment. This remarkable manufac-
ture of capital is rivalled, if not surpassed, in the well-
known history of the Erie Railway. It is sufficient for
the present purpose to cite the conclusion of the New
York Legislative Committee from the testimony of
experts, that the property of the company, capitalized at
$155,000,000, could be replaced for $65,000,000, that the
most moderate estimate of the actual ' water ' in its
securities was $53,163,881, not including a loss of
$10,800,000 by discounts in the sale of $25,000,000 in
bonds. The capital stock of the company is $85,000,000,
representing, according to this most moderate view,
$22,000,000 of actual investment ; while others estimate
that the bonded securities of the company alone represent
the entire amount invested in the property and $10,000,-
000 more ; so that the entire share capital and part of
the bonds are a stupendous mixture of wind and water."
Hudson adds that : — "A still more notorious and flag-
rant example of stock inflation is that of the Pacific
railroads. The public are familiar with the record of
this creation of stupendous wealth out of a loan of a
Government subsidy and the gift of an empire in land.
The story of the Construction Company, the * Credit
Mobilier,' upon whose stock, the investment in which
was nominal, the greater portion of the shares and debt
of the Union Pacific Railway was distributed as dividends,
is part of the record of national politics. 1 1t is also well
known how the Central Pacific Railway was built. A
company of capitalists, whose resources at the begin Ang
of the enterprise were $195,000, with the aid of loans
from the City of Sacramento and Placer County to the

THE RAILWAY QUESTION.

extent of $550,000, built enough road to draw $848, ooc-.
from the United States Treasury as the subsidy for the
first section, and by repeating the process constructed
the entire road. The majority of the Pacific Railway
Commission estimate the cost of the Union Pacific at
$50,720,000, against a capitalization of $109,000,000, and
the cost of the Central Pacific at $58,000,000, against a
total capitalization of $124,000,000, showing in each case
that all the stock and a portion of the bonds are pure
water. The minority report makes the cost of the Union
Pacific $38,824,000, and of the Central Pacific $40,000,-
000, or less than one-third of the capitalization. It is
well known that of this capitalization the stock does not
represent a dollar of actual investment, that a large
portion of the debt was pocketed by the constructors of
the road in the shape of contracts which they made with
themselves to build the tracks at two or three times the
leg^itimate cost ; that the road was almost, if not wholly,
paid for by the Government subsidy ; and that of the
$256,000,000 of additional stock and bonds issued upon
the properties an estimate that one-third represents in-
vested cash will be too liberal."" In street railways the
figures are even more startling than in steam roads. It
is estimated that the capital stock and funded debt of
these railways amount to $95,000 per mile, against
$48,000 per mile of track for steam roads, which have to
do grading and bridging, and provide station build-
ings, signalling apparatus, air brakes, sleeping and
dining cars, freight equipment and costly locomotives.

a J. F. Hudson, The Railways and The Republic, Pages 269-970, 974-376.

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THE RAILWAY QUESTION.

XXIII.

i 1 1

This reckless inflation of railway capital by manipu-
lation of contracts, trafficking- in bonds, and introduction
of wind and water makes any general classification of
rates exceedingly difficult, and has immensely complicated
the work of the Interstate Commission. In one of its
decisions tiie commission points out that: — "The Chicago,
Santa Fe & California and the Chicago and Alton roads
run side by side between Chicago and Kansas City. The
Alton is capitalized at $46,000 per mile and the Santa
Fe at $92,000. Their rates must necessarily be the
same ; must they be such as to yield income on the basis
of the Alton's capital and obligations, or on the capital
and obligations of the Santa Fe, which are double as
much ? The bonded debt and capital of the Burlington
& Missouri River in Nebraska is $37,000 per mile, and
of the Tremont, Elkhorn & Missouri Valley 6,000.
They parallel on either side of the Union Pacifi pital-
ized at $105,000 per mile. The bonded debt of the
Union Pacific per mile is $7 1 ,840, and is nearly double both
bonded debt and capital stock of either of the other two
roads. The three must of necessity carry on the same
terms. The bonded debt, saying nothing of the capital
stock, of the Union Pacific is double its original cost, or
the cost of replacing it with its $17,000,000 terminals ....
The New York, Lake Erie & Western, with a bonded
debt of more than $132,000 per mile, could make rates
on the same basis with the Chicago & Northwestern," or
the Chicago, Burlington & Quincy, with funded debts
but slightly exceeding $20,000 per mile for one and

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THE RAILWAY yUESTION.

5»

$24,000 for the othe'-. The funded debt of the Illinois
Central but little exceeds $23,000 per mile, and the
Chicago, Rock Island & Pacific less than $16,000. That
of the New York Central is $85,000. Their reported
tonnage cost and capitalization are nearly in like propor-
tion. The reported cost of service was less on the
Illinois Central and more on the Rock Island than on the
New York Central." But the body of the grievance is
that the people, except under some arbitrary regulation
of rates, pay charges upon much of this wind and water,
and that by the laxity of our railway legislation we delib-
erately encourage reckless speculative financing and
criminal waste of capital. In this, as in every other
unwholesome development in the field of transportation,
we have followed very closely at the heels of the United
States. We are behind on'y in remedial measures. In
the history of Canadian ailways we have had resort to
every doubtful expedient and every species of railway
financing from the construction company to payment of
dividends out of capital. After the first Canadian Pacific
stock issue of $5,000,000 there was an issue of $20,000,-
000 at 25 per cent., which of course only realized
$5,000,000 cash. The five per cent, dividends paid on
this would be in reality 20 per cent, on actual invest-
ments. After this $40,000,000 stock was issued at ^2)4
percent., which consequently realized $2 1,000,000. The
dividend of 5 per cent, on this stock was equal to gj4.
per cent, on the money invested. Upon all this stock
the Canadian people will be expected to pay interest at
par value and these issues were made with the sanction
and authority of the Canadian Parliament.

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•Millilk

THE RAILWAY QUESTION.

XXIV.

I \

The Manitoba & Northwestern road, in the hands of
a receiver, is bonded for $22,000 a mile, but could have
been built for $12,000 or $15,000 a mile, even at the
higher prices for railway material which prevailed a few
years ago. It is likely that the road will soon earn a
satisfactory dividend even upon $22,000 a mile, but if
it were necessary to pay only upon the actual cost, the
road would be a splendid-revenue-earning property with
much lower freight charges than are possible under the
conditions that have been created. The Northwest
Central has a miserable history of political financing and
exhausting litigation. We all know the origin of this
project. We all know that it was bred in politics and
not in business. The road is now before the courts, and
it may be well to leave the facts until they can be reviewed
in the light of the final judgmenv. But the block con-
sequent upon the prolonged litigation has deprived this
section of the west of railway facilities that the people
had a right to expect, and caused serious inconvenience
and hardship to many settlers who were led to locate on
the line of the road on the expectation of its early exten-
sion and completion. There is a real touch of pathos in
one of the minor chapters in the story of this project.
Schiller, contractor under Charlebois, in easy circum-
stances before he adventured into this ill-fated enterprise,
is now foreman of the road gang on the railway he con-
structed, doing the work of a day laborer under, the
orders of the receiver, keeping his family in very humble
quarters at Brandon, and waiting with pathetic patience

imm^

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THE RAILWAY jJUESTION.

for the close of the interminable litigation and the settle-
ment of his claim for construction. If an end of the
litigation can be reached and over-stocking and over-
bonding guarded against, and the line extended on
business principles, the Northwest Central should yet
prove a good property. Now a tri-weekly service is pro-
vided under the management of the receiver, and it is
understood the revenue more than covers the expenditure.
The history of the Qu'Appelle, Long Lake & Saskatche-
wan Railway is faithful to the details of American railway
methods. More than $3,500,000 was received from the
sale of bonds. The road cost for construction and
commissions and disbursements in connection with the
sale of bonds probably $2,500,000. Rolling stock and
terminus were supplied by the Canadian Pacific. The
road received also a land grant of 1,400,000 acres and a
cash subsidy of $80,000 a year. It was leased for six
years to the Canauian Pacific, without rental, and this
lease has just been renewed. But the original promoters
got a million or two out of the speculation.

XXV.

The Calgary & Edmonton Railway Company was
incorporated in 1890. The length of the road as projected
is 340 miles, of which 295 miles has been constructed.
The promoters received the usual land grant of 6,400
acres per mile, and mail subsidy of $80,000. The subsidy
is to be paid direct to the London agents as trustees for
the bondholders. The bonding powers given to the
company were to the amount of $25,000 per mile. With
this the enterpr'se was launched. Almost immediately

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THE RAILWAY QUESTION.

the road passed under the operation of the Canadian
Pacific Railway C impany. Many of its promoters a,nd
contractors werv closely identified with that company.
At the session of Parliament of 1891 the Canadian
Pacific obtained permission to issue its own 4 per cent,
consolidated debenture stock to the amount of $20,000
per mile of the Calgary & Edmonton Railway. This was
stated to be for the purpose of "satisfying or acquiring
obligations entered into in respect of the acquisition,
construction, completion or equipment of the Calgary &
Edmonton Railway." The 295 miles of the road were
opened in October, 1892, the Canadian Pacific agreeing
to operate it for the first five years, furnish the rolling
stock and retain all income other than the subsidy. To
estimate correctly the resources which from various
channels have been provided for the construction and
operation of this 295 miles of prairie road is scarcely
possible upon the information available. But a more or
less close approximation may be calculated from the
above facts. Railways sometimes i'a'.culate their land
grant upon a basis of three dollars an acre. The Cal-
gary & Edmonton Company will not say that half that
figure is an excessive basis. That gives $2,832,000
under that head. To this amount must be added the
road's bonded indebtedness, consisting of $5,458,940
first mortgage 6 per cent. 20-ye'ir bonds. It may be
that these bonds v/ere subjected to a discount, but the
measure of guarantee which was given them by means
of the mail subsidy no doubt materially strengthened
them. Roughly speaking, therefore, and leaving out of
the addition the mail subsidies, the promoters raised

THE RAILWAY QUESTION.

upon the road in bonds and land the amount of $28,000
a mile. The cost of the road, according to the com-
pany's own figures, has been $3,717,882, or $13,000 a
mile. Actually, howeverj the construction probably did
not cost more than $7,000 a mile. The roadbed is now
in very poor condition. At this rate the total cost was
$2,065,000. Over against this is a bonded debt of five
and a half millions and the i ,888,000 acres of land grant.
In view of all these facts we should make it an inflexible
feature of our future railway policy, that we shall not
vote public money for the construction of parallel roads,
that we shall rigidly limit issues of stock and capital, and
force railway construction and railway operation down
to business principles. It is time we learned something
from a very instructive experience. The American
people have awakened to the importance of this prob-
lem, and it is time we, too, gave it very serious atten-
tion. All these carrying corporations are the offspring
of Parliament, the holders of public franchises, and their
right of taxation ought to be limited to a reasonable
profit on a reasonable investment, although we may not
violate solemn bargains nor unload even upon corpora-
tions that we have unwisely created, the consequences of
our own folly.

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THE RAILWAY QUESTION.

XXVI.

Perhaps the best of the American State Railway Com-
missions is that of Iowa, and an examination of its pro-
visions and the results of its operations will be instruct-
ive. Iowa was one of the first communities in the
United States to rise against railway aggression. It
was a nursery of the Granger movement, and mainly as
a result of the farmers' agitation the State Legislature in
1874 passed an Act to Establish Reasonable Maximum
Rates of Charges for the Transportation of Freight and
Passengers on the Different Railroads of the State.
This measure classified railroads according to their gross
earnings per mile within the State for the preceding year.
Class "A" included all railroads whose gross earnings
per mile were $4,000 or more; Class "B," $3,000 or
any sum less than $4,000 ; Class ** C," less than $3,000.
In passenger transportation, roads in Class *'A" were
allowed to charge three cents per mile, Class **B,"
three and one-half cents, and Class " C," four cents. A
carefully detailed schedule of rates was prepared for
transporting freights, goods, and merchandise for every
mile from one up to three hundred and seventy-six, fol-
lowed by a classification of goods. Railroads in Class
** A" could charge no more than ninety per cent, of the
scheduled rates ; railroads in Class **B" could charge
five per cent., and in Class "C" twenty per cent, in
addition to scheduled rates. To assist in the classifica-
tion of roads, each corporation was required under
penalty to return to the governor annually a statement of
its gross receipts upon the entire road within the State.

P<Mi

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THE RAILWAY QUESTION.

A copy of the rate was required to be kept posted for
public inspection, and there were rigid provisions against
discriminations. But there were exhausting contests
over questions of jurisdiction, and the authority of the
State to enact such legislation ; the railways fought per-
sistently and stubbornly to damage the law in public
estimation, the penalties imposed were not enforced and
at length th^ law was repealed.

XXVII.

The maximum Rate Law was followed by the Advisory
Commission. This law established a Board of Railway
Commissioners. Three commissioners were to be
appointed by the Governor with the advice of the Execu-
tive Council to hold office for three years and one of
whom should be a civil engineer. It was provided that
they should not be pecuniarily interested in any railway
and they were chosen from the eastern, central and
western portions of the State. They had the power to
investigate and report but they had no power to enforce
their decrees. Violations of the order of the commission
were to be reported to the legislature and the law relied
upon the element of publicity to make the recommenda-
tions of the commission effective. The operation of this
law gives astonishing evidence of the power of public
opinion in a democratic community. As a rule the rail-
ways dare not or at least did not resist the orders ot the
commission. In the main the Board guarded its powers
jealously, and asserted its authority fearlessly and as
a consequence a marked improvement was effected

■SWJ-

(I'

til

THE RAILWAY QUFSTION.

in the relations between the railways and the people, the
growth of local industries was powerfully promoted, and
a more satisfactory condition of business st» bility was
established. But it was arg-ued that the Board had not
the necessary power to prevent discriminations, that
many of its decisions were observed by the railways be-
cause they covered only minor complaints and that in
dealing with questions of the first importance the Board
could not be effective because it had not power to en-
force its decrees and therefore these greater questions
were not even submitted to the Board for judgment.
And so came the agitation for the Commission with
Power and this time the demand came from the manu-
facturers and iobbers, who argued that the industries of
Iowa were sc-iously discriminated against by the low
through rates granted to eastern jo'^bers and manufac-
turers. As a result the legislature •'/» 1888 adopted an
Act to regulate Railroad Corporations and other Com-
mon Carriers in the State and to increase the powers
and further define the duties of the Board of Railroad
Commissioners in relation to the same, and to pre-
vent and punish extortion and unjust discrimination in
the rates charged for the transportation of passengers
and freights on railroads in Iowa.

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THE RAILWAY QUESTION.

XXVIII.

The salient features of the law are thus presented by
Dr. Dixon in his admirable work on State Railroad Con-
trol. "The law applied to all common carriers engaged
in transportation by railroad within the State, the term
' railroad ' to include all bridges and ferries used in
connection, and also any road operated or owned under
contract, agreement or lease. All charges must be
reasonable and just, and unreasonable charges were
prohibited. Special rebates and drawbacks were pro-
hibited; but this did not prevent the charging of a less
rate per loo lbs. in car-loads than was charged for
freight in less than car-load lots. It was declared
unlawful to give any preference to any particular person
or locality. The companies were required to furnish
facilities for the exchange of freight and passengers
between their lines, and to switch and transfer cars for
loading or unloading at the direction of the Board. Ic
was declared unlawful to charge any greater compensa-
tion in the aggregate for the transportation of passengers
or property for a shorter than for a longer distance, all
or any portion of the shorter haul being included within
the longer. Pooling of all kinds was prohibited. Every
common carrier was required to keep posted schedules
of its charges, copies of which, together with all joint
agreements of other roads, were to be placed in the
hands of the Board, ten days' public notice to precede an
advance in rates. Failure to publish rates was an
offence cognizable in the District Court, and rendered
the company liable to a fine of $500 for each day's

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THE RAILWAY QUESTION.

failure to cnmply. The breaking of a continuous car-
riage of freight was unlawful, unless necessary. Any
person injured might complain to the Board, or bring
suit in court, but could not pursue both remedies in the
same case. The court might compel any officer of a
corporation to testify, or to produce books and papers,
the claim that the matter presented might tend to
incriminate him not being sufficient excuse for not
testifying ; but such evidence should not be used against
such person in any way on the trial of any criminal pro-
ceeding. Penalties were prescribed for violations of the
Act. The Board was empowered to enquire into the
management of the busiu-^ss of all common carriers,
with the power to require the papers and books of the
companies, and to compel testimony. Any person, firm,
corporation, or association might make complaint of
failure to perform duties by railroad companies, which
should be investigated ; and no complaint should at any
time be dismissed because of the absence of direct
damage to the complainant. The Board was directed to
make a schedule pnd classification of reasonable maxi-
mum rates, such schedule to be prima facie evidence in
court that the rates were reasonable. Hearing should
be given upon complaints as to the reasonableness of
rates, the lowest rates charged by any railroad company
for substantially the same kind of service being accepted
as prima facie evidence of a reasonable rate for the ser-
vices under investigation, the operations of the railroad
in question outside the State, or in interstate commerce,
and the charges therefor, being taken into account in
determining the reasonableness of the rate complained

.„:Ji_..J

THE RAILWAY QUESTION.

of. The Commissioners might add to the showing
any information they might then have, or could secure
from any source whatsoever. The rate per loo lbs.
should be the same for all classes of freight, for like
distances, to all persons shipping in less than car-load
lots, and the rate per loo lbs. for all shippers in car-load
lots should be the same for same distances with the
same class of freight. Penalties were prescribed for
extortion, unjust discrimination as to rates, classifica-
tions and the use of cars. Exceptions to the law were
made in the case of the United States or State govern-
ments, charitable institutions, State fair exhibits, em-
ployees and their families, ministers of religion, and
persons in charge of live stock. The issuance of mileage
and excursion tickets was permitted, as well as the
exchange of courtesies between roads. The Railroad
Commissioners and secretary, and other agents whose
services they might require, were given free transporta-
tion. The methods of procedure to be followed by the
Board in cases arising under the Act were three in
number. The first method was followed in case of
civil suit for damages sustained by an individual at the
hands of railroads. In such case persons injured might
make complaint to the Commissioners, or bring suit for
the recovery of damages in any court of competent
jurisdiction ; but both methods could not be resorted to.
A common carrier, violating the provisions of the Act,
was liable to the person injured for three times the
amount of damages sustained, with costs and reason-
able attorney's fees ; but written demand on the common
carrier for the damages should be made before suit was

^■1^1

THE RAILWAY QUESTION.

M r

brought. The court was empowered to summon wit-
nesses, and order the production of books and papers.
The second method of procedure related to proceedings
in equity. The first case under this method arose when
a carrier refused to publish its schedule of rates as
provided for in Sect. 7, in which case a writ of manda-
mus was issued by the District Court upon the petition,
without bond, of the Commissioners, failure to comply
with the writ being punishable as contempt. The sec-
ond case arose during an investigation by the Commis-
sion, upon refusal to obey a subpoena, or other proper
process, by a carrier. In such cr >e any court of the
State within the jurisdiction might issue an order requir-
ing attendance and the production of papers, refusal to
obey being punishable as contempt. The third case
under the method of equitable procedure is to be found
in Sects. 13, 14, 15 and 16 of the Act. Sect. 13 provides
that any person or association may enter complaint with
the Board of Commissioners. The Commissioners shall
forward the complaint to the carrier complained of. If
the carrier does not satisfy the complainant within a
reasonable time, an investigation is to be made by the
Board. Sect. 14 prcvides that the result of the inves-
tigation shall be drawn up in writing, and forwarded
to the complainant and the carrier complained of, the
report to be prima facie evidence in court of the facts
found. Sect. 15 provides that in case the Commission-
ers are satisfied that anything is being done in violation
of the law by the common carrier, a copy of their report
is to be furnished the carrier, with a notice to desist
from such violation. By the terms of Sect. 16, in case

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ates as
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THB RAILWAY QUESTION.

the carrier refusfs or neglects to obey the order, the
Commissioners are directed to apply in a summary way
by petition to the District or Superior Court of the
county ; and the Court may hear the complaint upon
short notice without the formal pleadings applicable to
ordinary suits in equity, and may direct such persons to
appear as are necessary to a full hearing of the case, the
report of the Commissioners to be prima facie evidence
of the matter stated by them. If the petition of the
Commissioners is sustained, the Court may issue a writ
of injunction, to be followed, if necessary, by writs of
attachment, a fine of one thousand dollars being levied
for each day that the carrier shall fail to obey the
injunction. The usual right of appeal to the Supreme
Court is retained, 'but no appeal to the Supreme Court
shall operate to stay or supersede the order of the
Court or the execution of any writ or process thereon ;
and such Court may in every such matter order the pay-
ment of such costs and attorney and counsel fee as shall
be deemed reasonable.' The third method of procedure
related to criminal proceedings in cases of direct viola-
tions of law by the carriers. Here the Board was
directed to institute suit on behalf of the State against
the carriers in any court of competent jurisdictiou for the
collection of the penalties imposed by the Act, the
Attorney-General conducting the suit, and the court
being empowered in its discretion to give such suits
preference over all business except criminal cases. Such
fines might be imposed in a criminal prosecution by
indictment, or in a civil action by ordinary proceeding
instituted in the name of the State of Iowa. In all cases

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64 THE RAILWAY QUESTION.

not otherwise particularly prescribed by law, the Board
might conduct its cases in such manner as would best
conduce to the proper despatch of business and to the
ends of justice. The Board was given power to amend
its order of proceedings and notices with the limitation
that they should conform as nearly as possible to those
in use in the courts of the State. Any party might
appear before the Board in person or by attorney, and
every Commissioner should have the right to administer
oaths and affirmations in any proceeding pending before
the Board. Chapter 29 changed the manner of choosing
railroad Commissioners from appointment by the Gover-
nor, with the advice and consent of the Executive Coun-
cil, to election by the citizens of the State. No person
in any way pecuniarily interested in a railroad company
was eligible. Vacancies were filled through appoint-
ment by the Governor. This last chapter was adopted
in face of the opposition of those who feared that the
election of Commissioners by the people would give the
railroads the opportunity long sought for, of entering
directly and effectively into politics. Later developments
have proved that these fears were not unfounded." "

a Frank H. Dixon, Stmte R < >ad Control, pages 140 to 146.

he Board
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THE RAII ,AY QUESTION.

XXIX.

Great and arbitrary powers have been exercised under
this law and to the great advantage of Iowa. The first
duty of the Board was to establish a schedule of maxi-
mum rates and arrange a classification, and the Commis-
sion accepted as the basis of the new schedule the rates
under which the railways had been running. The Board
reduced the through rates which gave the eastern jobber
and manufacturer an advantage over local jobbers and
manufacturers, and this led to a marked development of
the industries of Iowa. In Canada, notwithstanding
that we have put millions of public money into our rail-
ways, we tolerate discriminations in favor of American
shippers that operate very seriously against Canadian
industries. It is, perhaps, not too much to say that in
many cases the advantage of our tariff duties is fully
offset by the lower rates given to American shippers.
On the one hand we are building up home industries by
tariff taxation on our own people, and on the other hand
our own railways, built largely with public money, are
bringing in American goods at such low rates of freight
that the foreign manufacturer, notwithstanding our pro-
tective duties, is able to swamp the home manufacturer
in his own market. The question is one of tremendous
importance and should receive the early and thorough
consideration of the Parliament of Canada. We are
all glad to see the Canadian railways carrying Ameri-
can goods and admit that they must compete for through
traffic at through rates, but there is a limit beyond
which the position of the Canadian manufacturer and
5

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THE RAILWAY QUESTION.

shipper cannot be prejudiced, and it is doubtful if we can
afford to have the through rate for American goods
lower than the through all Canadian charge. For
example, if the Grand Trunk or the Canadian Pacific
gives a lower rate to a Detroit shipper than to a Windsor
shipper the tendency is to build up an industry Pt Detroit
rather than at Windsor, and if the Canadian railways
give a lower through rate to New Yorkj Portland or Bos-
ton than to Montreal, St. John or Halifax, the result must
be to build up American ports at the expense of Cana-
dian ports and that with the direct aid of Canadian sub-
sidized railways. Dr. Dixon says that : ' * The great benefit
to Iowa " from the operation of the Railway Commission
*' has been found in the development of home industry.
New -oal mines have been opened, new mills and manu-
facturing concerns erected, the jobbing business has
extensively increased. Products are now exchanged
much more largely between sections of the State than
before, and people no longer look outside the State to
find both a purchasing and a selling market."" And
the Commission in its report of 1891 said : "The farmer
gets his supplies cheaper, his lumber, coal, salt, and
other heavy commodities, at fair rates. He finds a mar-
ket for a portion of his surplus corn, oats, hay, wood,
timber, etc., at home, and saves transportation. He
markets many of his hogs in Iowa packing-houses, and
saves freight chaiges. Wood and logs, that lay in the
timber rotting, the Iowa rates are making a market for ;
and new mills are sawing the latter up for use in excel-
sior, fencing-pickets, handles, boxes, and other industries

a Framk H. CHxoa, State Raliniad Ooatrol, page 195.

MMVMtWIiWtllWin

i^-^Sth/f^

THE RAILWAY QUESTION.

unknown before. The railway policy of the long haul
has, in a measure, been supplanted by the new system,
and an exchange of products between different parts of
the State is one of the commendable results. Hay and
corn from northern Iowa are now sold at better prices in
the dairy counties of eastern and southern Iowa in large
quantities, a thing hitherto unknown. These formerly
paid tribute to Chicago." So we would probably find
that lower and fairer local rates in Canada would greatly
facilitate home trade, and give new life to many Cana-
dian industries that are now paralysed by American
competition and which competition is made effective by
discriminatory railway charges.

XXX.

The Iowa Board compels the railways to give ade-
quate service on branch lines. It is held that lateral lines
are profitable as feeders even if operated at a loss in
themselves. They are mostly built with local aid, they
occupy territory and shut out competition and therefore
must be operated. For example there was a recent out-
cry on the Wellington, Grey and Bruce branches of the
Grand Trunk against a serious reduction of service by
the new management. These branches received large
municipal aid, they were built as independent lines and
later absorbed by the Grand Trunk and it would be intol-
erable if these communities shr^ild now be denied a
reasonable service. A Board t Railway Commissioners
could compel this reasonable service and could also take
cognizance of a complaint like that made the other day

Mmmt

THE RAILWAY QUESTION.

F
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by The Prince Albert Advocate. The paper says: " The
management of the Prince Albert branch of the Canadian
Pacific Railroad seem to conduct their business on the
penny wise and pound foolish plan. While they charge
us the highest rates charged on any road in Canada they
give us the worst possible service. During the last two
or three years they have done away with section men on
this road and as a result the train is delayed by the ex-
cessive growth of weeds on the road bed in the summer
time and by the drifting snow in the winter. This win-
ter the snow fall has been heavier than usual, and the
train has been making about as good time as the ox
teams of the freighters. Passengers have been kept
four or five days on the trip from Prince Albert to Regina
which should not take more than ten hours, though the
schedule time is fourteen hours, and have been subjected
to great hardships through cold and the want of proper
food. It is disgraceful that such a state of things exists on
a railroad which is receiving a subsidy of $80,000 a year
from the government, especially when at a very small
expenditure a few fences could be erected along the road
in the open prairie where the wind fills the cuttings with
snow, and by the employment of the usual section men
who could easily keep the remainder of the track clear."

XXXI.

In many cases the Iowa Board has compelled the
erection of new stations. It has taken jurisdiction over
farm crossings and in many cases ordered the railways to
put in under-track crossings. We may say that this
work is done by our Railway Committee but the com-

i -7^,TJV»^'J ' Mf

•""i^^iS^;^;^** ..

"WH«!UJi

THE RAILWAY QUESTION.

missioner can go to the crossing while the farmer can go
to the Railway Committee much less easily and much less
cheaply. The Iowa Board ordered a railway to allow
the Farmer's Alliance to erect a coalhouse on its station
grounds notwithstanding the railway's plea that the Al-
liance intended to sell coal at cost and so would drive
other dealers out of the business. The Board held that
" the refusal to grant to the Farmers' Alliance a site on
its side-track for a coal-house, after granting similar
facilities to other parties, was contrary to the decisions
of the court, a violation of the statute, an unjust discri-
mination against complainants and against public policy."
The Board held again that " a railroad company dealing
in coal cannot exclude private dealers, but must furnish
them with storage facilities and shipping privileges. It
cannot neglect its dutiy as a common carrier because it
has engaged ii: private business." Dealing with a com-
plaint that a railway had entered into an agreement to
give special rates to grain buyers who had elevator facilities
the Advisory Commission recommended "that like charges
be made when not less than full car-load lots are offered
at the same station, and if any concessions or drawbacks
be given, they should be open to all shippers offering
freigh of the same kind, in the same class, in the same
line of busine^ ;." In condemning a discriminatory
agreement for supply of cars to a particular coal com-
pany he Commission made this deliverance: '* Whenever
able ti do so, every railroad company should have cars
sufficie^ for the transaction of the ordinary business of
the road. If at certain seasons of the year there is, as
in the coal-trade, a great demand for cars of a certain

mimm

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THE RAILWAY QUESTION.

1 H

character, it is the duty of the railroad company to have
a sufficient number of cars to supply the ordinary
demand. . . An extraordinary demand at stations
and by shippers resulting from a periodical influx of
business should be met by a pro rata distribution of cars,
and this should be made both as to stations and ship-
pers."

XXXII.

The Commission ordered the operation of a piece of
road that had been abandoned. The Board held that a
railway company could not be required to furnish cars for
the transportation of freight off from its own line as the
result would be to scatter the cars of any one road along
connecting roads and so place the company at the mercy
of competing lines. The Board settled many claims
for damages and in the main its judgments were
accepted. In one case the complainants charged
that an amount of butter which was hauled to the
railway station, and by reason of the non-arrival of
the refrigerator car at the advertised time, was exposed
to the heat, had melted, and consequently deteriorated in
value, and the Board awarded damages on the ground
that the railroad, having encouraged the growth of dairy
interests through the offer of special privileges, was
bound to make the service reliable. The publication of
time tables is of great public advantage for in secrecy
of rates is the very stronghold of favoritism, discrimina-
tions, and all manner of injustice. The importance of
stability of rates is well emphasized in this extract from
one of the Board's annual reports : "There have been no

■

THE RAILWAY QUESTION.

rate wars and consequent disturbance of business in
Iowa the past two years. The stable character of Iowa
rates which have been in force, with only such slight
changes as have been made in classification from time to
time, is approved on every hand. While rate cutting
has been in vogue in the States around us and the
troubled waves have surged up against our very borders,
wasting the energies of the great corporations and the
revenues of the stockholders, Iowa has been largely free
from the devastating and demoralizing influences ; and
with the curtailing of rebates, secret rates, free passes,
and other special privileges which the few formerly en-
joyed at the expense of the many, there has followed
steady rates and increased revenues, more than sufficient
to make up for any deficiency caused by reductions of
local rates. The evil effects of rate wars on business are
also unknown here, and instead we have steady rates
and uniform charges shared alike by all." And the
Iowa Commission has taken authority over baggage,
ticket and shipping regulations, violation of contract,
cases of trespass, lack of transfer facilities, and causes
of accidents. No doubt the main feature of the existing
law, the Commission with Power, is that which gives
the Board of Commissioners authority to fix maximum
rates, and if this is feasible in Iowa, with its great net-
work of railways, it should be feasible in Canada, where
we have practically only the two through roads, each
operating in older Canada under very similar conditions
and substantially under a joint tariff which would form
the basis of the schedules that would be made by the
Commissioners.

~:iammmm

=B!P5

THE RAILWAY QUESTION.

XXXIII.

'i 1

We can have no satisfactory regulation of railways
by means of the Railway Committee. The members
of this Committee have other onerous duties and it
is impossible for the ordinary shipper to carry his
grievance to the Capital. The Commissioner must
go to the shipper, and the cost of investigation must
be taken off the shipper's shoulders. It should be
possible to approach even a monopoly on the side
of its self interest, and if in the west the Canadian
Pacific Railway will recognize that only by putting rates
to the very bottom can it hope to escape the construction
of competing lines and the consequent division and diver-
sion of its business, and will make it a deliberate policy
to deserve monopoly of the traffic, then in a few years
western Canada should have lower freight charges than
any other part of the American continent, and this would
be an enormous advantage to the western producer. By
regulated monopoly we can get lower charges than by
wasteful competition, but of course monopoly that will
not submit to regulation must meet competition. So in
older Canada revision and control of local and through
charges would remove some cr)ing evils, and it may be
we can so order it that for the future the Canadian rail-
ways shall be the agents of Canadian rather than of
American industries and of Canadian rather than Ameri-
can ports. In the language of a Justice of the Supreme
Court of the United States : "The highways in a State
are the highways of the State. Convenient ways and
means of inter-communication are the first evidence of

■'

THE RAILWAY gUBSTION.

the civilization of a people. The highways of a country
are not of private but of public institution and regulation.
In modern times, it is true, government is in the habit
in some countries of letting out the construction of im-
portant highways requirmg a large expenditure of capital
to agents, generally corporate bodies cheated for the
purpose, and giving to them the right of taxing those
who travel or transport goods thereon as a means of
obtaining compensation for their outlay. But a super-
intending power over the highways, and the charges
imposed upon the public for their use, always remains in
the government. This is not only its indefeasible right,
but it is necessary for the protection of the people against
extortion and abuse. These propositions we deem to be
incontrovertible. "

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