A History of Canadian Wealth/Chapter XIV

From Independence of Québec
Jump to: navigation, search


Chapter XIV. Progress of the Railway Lords




Preface | Chapter I | Chapter II | Chapter III | Chapter IV | Chapter V | Chapter VI | Chapter VI | Chapter VII | Chapter IX | Chapter X | Chapter XI | Chapter XII | Chapter XIII | Chapter XIV | Chapter XV | Chapter XVI | Chapter XVII


Flushed with their success in acquiring the St. Paul and Pacific Railway, five of the men concerned or interested in that transaction soon reached out to get, and did get, an even immensely richer prize. This was the contract for constructing the Canadian Pacific Railway and the proprietorship of that railroad.

These five men were George Stephen, James J. Hill, John S. Kennedy, Richard B. Angus, together with Donald A. Smith, who, although his name did not appear in the contract, was an active directing figure in the group. Compacted with them in the contract were Donald McIntyre of Montreal and two banking firms, that of Morton, Rose and Company of New York and London and the house of Kohn, Reinach and Company of Paris, France.

Macdonald Returns to Power

Out of power had gone the Government headed by Mackenzie, and back to Premiership had come Sir John A. Macdonald, in October, 1878. Only a few years previously the great Canadian Railway charter scandal had dislodged Macdonald from his high power, and made his administration a by-word. It had not seemed possible that he could ever resume the office of Prime Minister. The forces that put him back were, to a large extent, economic forces.

True, Macdonald was an astute politician who was credited with sagaciously knowing how to ally himself with the Roman Catholic hierarchy, on the one hand, and, on the other, with the Orangemen. But Sir Richard Cartwright points out the real forces chiefly exerting themselves to get Macdonald back in office. The manufacturers wanted high tariff duties ; and as Macdonald was willing to give them all that they wanted, they raised a large campaign fund for him and his party, and having very considerable influence with the newspaper press they also swayed the opinions of the electorate. There was also, Cartwright asserted, an influential body of contractors who “ resented being held fast to their engagements and longed exceedingly for a renewal of the regime under which comfortable repayment in the shape of liberal extras could always be reckoned on in return for a subscription to party funds at the right moment.”1

Too much of a monotone of partisan bias colors Cartwright’s positiveness ; without doubt, his asseverations contain truth, yet not the whole truth ; with equal accuracy Macdonald’s supporters could have retorted and could have produced the proofs that under Mackenzie’s administration certain contractors had grown rich.

Somber and cynical is the picture drawn by Sir Richard Cartwright of the state of public mind at that period. The general public, according to him, had “ given up expecting anything like honor or honesty in politics from public men.”2

Politics was, in fact, a business ; the Canadian Parliament was crowded with men who were there to initiate, extend or conserve class or personal interests ; of the 206 members of the Dominion House of Commons, in 1878, there were 56 merchants, 55 lawyers, 12 gentlemen of leisure, and an assortment of manufacturers, insurance company presidents, shipbuilding and lumber capitalists, contractors, and a few journalists, physicians and farmers.3 The same ratio held true of successive Parliaments. Cartwright’s error, however, consisted in regarding the exposures in 1873 as the first and original evidence of “official corruption and degradation.” Those exposures were doubtless striking, but, as we have seen, they had been preceded by a series of different scandals each of which had, in its day, been impressive.

Canadian Pacific Railway Contract

Apparently the Canadian Pacific Railway project was removed from being made an instrument of profit to contractors, for in 1880 the Dominion House of Commons had approved a resolution to construct that railway as a Government work. Suddenly, a few months later, the Macdonald Administration announced its intention of giving the contract for the entire scheme to a syndicate composed of George Stephen and Company. Donald A. Smith’s name was absent in this contract. But his partners or close business associates were its principal beneficiaries. Mr. Smith at this juncture kept most diffidently in the background.

When the provisions of this contract were made public, the expressions of general astonishment were loud and great. When had any Company, excepting the Hudson’s Bay Company, been invested with such extraordinary privileges and powers, immunities and rights ? What group of men had ever received such vast subsidies in both money and land as were proposed in this all-empowering charter ? Every reservation, qualification and limitation of powers contained in the original Act of 1874 were set aside by the provisions of this charter, and privileges and powers never originally contemplated were lavishly conferred upon a mere handful of alert promoters.

A Gift of $62,000,000 and 25,000,000 Acres

By the terms of this munificent contract the Government obligated itself to complete certain unfinished parts of the railway, and to transfer to Stephen and partners for their own benefit more than 700 miles of railway the construction of which ultimately cost the Government $37,785,000. In these 700 odd miles was included the important and much-coveted Pembina branch, forming the connecting link of the St. Paul and Pacific Railway to Winnipeg. The contract apparently made a gift to the contractors of $25,000,000 but it actually involved a total contribution by the Canadian Government of more than $62,000,000 which sum was further augmented by necessary expenditures to extinguish the Indian title to lands granted to Stephen and associates. These additional outlays were equal, if capitalized, to $30,000,000 more.

And what was the entirety of this land grant ? A huge domain of 25,000,000 acres of choice lands, valued even in that day before the great inrush of settlers began, at $79,500,000 at the very least estimate.

Extraordinary Powers Given

These were far from being the only donations made in the contract. It was distinctly provided that in making the land grant only land fairly suitable for settlement was to be allotted the contractors. In other words, they were to have the pick of the finest lands, for the contract further specified that they were to have large powers of selection of the land.4 They were also to control the land sales.

Then came other vast and expansive powers given in the contract. All property and the capital stock were to be exempted from taxation by the Dominion and Provincial governments and by the municipalities. This exemption was not a limited but a perpetual one. Likewise the land grant was to be exempted from taxation, until sold or occupied, for 20 years from the date of the grant. This was a privilege of itself worth great sums of money.

Further, the contract exempted from import duties a large part of the materials required to construct the railway. In certain directions it guaranteed the Company a monopoly of railroad construction and traffic for a period of 20 years. An other clause productive of great complaint was inserted. By this clause the Government bound itself not to reduce — or in other language, regulate — the Company’s railway rates unless the Company made a net revenue exceeding 10 per cent. on the capital invested in the construction of the railway. This was a provision especially arousing distrust and apprehension ; it was pointed out that by stock-juggling devices, the profits could always be nominally made to appear lower than 10 per cent., and thus perpetually furnish a legal justification for extorting high railway rates. This, it may be parenthetically said, is precisely what did happen.

The contract also provided for the payment of the money subsidies and land grants in amounts entirely disproportionate to the prairie section of the railway, the construction of which section was the easiest and most profitable, and which was intended by the contractors to be the earliest completed. Finally, the contract gave the fullest power forever to the company to build branch lines in various parts of the Dominion, and it incorporated various other important comprehensive powers and privileges.

Futile opposition to the Charter

A competing company of Canadian capitalists offered terms much more favorable to the Government, and sought to get a contract for the Canadian Pacific Railway. But the allegation was made that its offer was not genuine. Its efforts were in vain. Amendment after amendment to the Stephen-Hill contract was introduced in the Dominion House of Commons by opponents. Specifying the immense powers and rights donated in the contract to a handful of men, they emphasized the fact that none of these powers had been contained in the original Act of 1874. They insisted that the direct gift of $25,000,000 and of 25,000,000 acres of land was not in the public interest and should not be legalized. The exemption of all of the Company’s property and capital stock from taxation was condemned by them. They called attention to the fact that the clause in the original Act by which the Government had power to acquire the railway whenever it was considered advisable by the public interest, was stricken out in the contract.

Amendments offered by Sir Albert Smith, Sir Richard Cartwright, Wilfrid Laurier, David Mills and 19 other members of the House of Commons were all voted down.5 The chief argument used by Macdonald and his majority was that to facilitate the colonization and settlement of the West, a transcontinental railway was necessary, and that no capitalists would construct it unless they were given the fullest aid and encouragement. A resolution in favor of the contract being given to George Stephen and associates was then carried, and on February 17, 1881, a Bill incorporating the Canadian Pacific Railway Company was passed. Subsequently, it may here be said, that Company received a gift of 1,702,458 acres of more land grant for its Souris branches.

Now the way was wide open for George Stephen and partners to gather in fortunes of hundreds of millions of dollars, all within a few years. That they quickly availed themselves of the opportunities thus presented was soon evident.

Chinese Coolie Labor Imported

First, the contractors organized a construction company composed of themselves or dummies, thus ensuring themselves from the outset an enormous profit on construction and, greatly increasing the cost.

At the same time they or the subcontractors imported gangs of Chinese coolies to do much of the work of construction in the West at the cheapest possible outlay. Robert Ward, a commission merchant, shipping agent and agent for railroad contractors, testified before the Royal Commission on Chinese Labor that “ in 1882 my firm had between 5,000 and 6,000 Chinese consigned to them from Hong Kong. These men were under engagement to the contractors of the Canadian Pacific Railway, and arrived in ten different vessels . . .”6 Andrew Onderdonk, a civil engineer and Canadian Pacific Railroad subcontractor, testified that he had employed as many as 6,000 Chinese at one time.7 The Chinese, testified another witness, were slaves to all intents and purposes ; they were exploited by the Chinese Companies who sold them in semi-servitude to the white contractors. The Chinese, he said, “ were welcomed by the same class of individuals that now desire to perpetuate their stay — men that have no object beyond their own aggrandizement and greed, and who would worship Confucius rather than Christ if they were going to make money out of it.”8

The habitations of the Chinese laborers were generally wretched hovels ; they lived amid filth and neglect.9 “ I have never yet known an English or French gentleman from the old countries,” testified David William Gordon, a contractor and builder and M.P., for Vancouver, “ who would feed their dogs upon the food consumed by the ordinary Chinese laborer.”10

Construction and Land Companies

Profits from construction work thus yielded great revenues. But the Canadian Pacific magnates or their associates organized other interconnected agencies from which they extracted additional great wealth.

One of these was the Canadian North West Land Company formed in 1882 to acquire 5,000,000 acres of the Canadian Pacific Railway land grant. The controlling spirits in this Company were Lord Elphinstone in England, and Donald A. Smith in Canada. One of the managing directors was Edmund B. Osler, the distinguished Canadian millionaire and knight of present times. By 1883, fully 1,500,000 acres had been conveyed by the Canadian Pacific Railway Company to the Canada North West Land Company, and of that amount 65,621 acres had already been sold at an average price of nearly $6 an acre. At the Company’s annual meeting, in 1883, Osler spoke glowingly of the Company’s prospects. He described the beginning of the overflow of the population of the United States, and asserted that the Canada North West Company had among the best, if not the best, lands in the North West. Mr. Osler’s enthusiastic speech, as officially reported, continued :

“ The interests which this Company has in town and village sites along the road [the C.P.R.] is one which must come in time to be enormously valuable. . . . Every man who goes into that country as a farmer builds up a little village near his point of residence, and as the increase of population goes on, the interest we have in town and village sites will be of enormous value (Hear! hear!) . . . I believe that when you have half your land sold the value of the remaining half will be very much greater than the value of the whole estate today, no matter how valuable it may be. (Cheers.) . . .”11

This, however, was not all of the business justifying exuberant optimism

The Canadian Pacific Railway Company had, as we have noted, agreed to sell 5,000,000 acres of land to the Canada North West Land Company. Later, the quantity purchased was reduced to 2,200,000 acres. The land company claimed exemption from municipal and school taxation on all lands that had not actually been selected by it and conveyed.

Of this asserted exemption the Manitoba Legislature, in 1888, complained, saying that although evading taxation the Canada North West Land Company was “ exercising rights of ownership and control over said lands, in many instances leasing and selling the same and taking the profits thereof.” The legislative resolution went on to say that, the Company had refused to pay taxes on its lands, although those lands had increased in value, and although improvements had been paid for by the taxes collected on the adjoining lands of settlers and private owners. It was because of such evasion of taxation and claim of exemption, the resolution further said, that many municipalities throughout Manitoba had been obliged “to impose heavy burdens on the resident and individual landowners, and the settlement of the country has been greatly retarded.” The Government was called upon by the resolution to assist in a test case brought by one of the municipalities in Manitoba against the Canada North West Land Company.12

They Gather in More Millions

Accompanying these transactions were a series of other transactions by which members of the Canadian Pacific Railway Syndicate pocketed large profits. It was charged that by the initial manipulation of stocks which they sold to themselves at 25 cents on the dollar, they made a collective profit of $9,000,000 at the very start. Another method was by selling to themselves as heads of the Canadian Pacific various small railways which they either individually owned or effectively controlled.

The Grand Trunk Railway Company had extended its possessions by amalgamating in its system various lines such as the Great Western Railway, and later it absorbed the Northern Railway and the Hamilton and North Western Railway with which it had previously — in 1879 — arranged a pooling agreement. The Midland Railway of Canada passed into its possession ; this line was an amalgamation of the Toronto and Nipissing Railway, the Whitby, Port Perry and Lindsay Railway, the Toronto and Ottawa Railway and two other railways with the Midland Railway. After a series of financial difficulties and strikes, in which its workers demanded long-due arrears of pay, the Midland Railway Company settled with its creditors for 22 cents on the dollar,13 and passed into the control of George A. Cox, an insurance agent, who had been quietly buying its stock. Following the amalgamation with the five other railways, Cox, in 1881, became president of the Midland Railway of Canada, the 455 miles and $11,600,000 stock and bonds of which soon were acquired by the Grand Trunk.14 It was greatly by reason of this transaction that Cox became a millionaire, enabling him to expand later into so notable a capitalist with a variety of large financial and industrial interests. The Grand Trunk Railway had fused other railways — the Grey and Bruce, the St. Lawrence and Ottawa, the Vermont Central and others. The great competitor of the Grand Trunk — the Canadian Pacific — now began the same process of amalgamation of small lines.

George Stephen, Edmund B. Osler and various associates had early begun to get control of different railways. In 1881 Osler was president of the Ontario and Quebec Railway, and George Stephen was one of the directors. George Stephen and Donald A. Smith were also directors of the Atlantic and North Western Railway Company, and Osler was vice president of the Toronto, Grey and Bruce Railway. In turn, these railways often absorbed other railways. The Atlantic and Western Railway, after becoming a branch of the Canadian Pacific, absorbed the Waterloo and Magog Railway the directors of which did not care to have the threat made by the Atlantic and Northeastern Railway of building a parallel line carried out.15 Methods such as these were invariably effective.

To the forefront now came Donald A. Smith. Hill, Kennedy and McIntyre withdrew from the Canadian Pacific’s board of directors in 1883, and Smith became a director. From thence for decades he was the most powerful figure in the executive committee of that railway company. George Stephen long remained president of the company, and subsequently Edmund B. Osler was elected a director.

Ask for $45,000,000 More Public Aid

Only three years after they had obtained the money subsidy of $25,000,000 and the land grant of 25,000,000 acres for the main line, George Stephen and his Canadian Pacific Railway Syndicate had a Bill introduced in Parliament, in 1884, to give them sums, in the form of loans, totaling nearly $45,000,000 more. These amounts they asked on the ground that they were essential to the completion of the railway.

Lively scenes in the House of Commons followed the pushing of this Bill. The fight really developed into a contest between the Canadian Pacific Railway forces and those of the Grand Trunk Railway. M.M. Fleming accused the directors composing the Canadian Pacific Syndicate of buying up, in their private capacity, the shares and bonds of the Credit Valley Railway (running from Toronto to St. Thomas) at 30 and 35 cents on the dollar, and then arranging with their own company to value them at 100 cents on the dollar.16 Yet, he said, the Credit Valley Railway had received $1,000,000 in bonuses from Ontario municipalities for the specific purpose of providing competition. Mr. Fleming went on to say that the members of the Canadian Pacific Syndicate were absorbing for their private interests all of the feeders of the Grand Trunk that they could possibly secure.

Mr. Fleming further stated that of the $65,000,000 of stock issued by the Canadian Pacific Railway, $25,000,000 of it went into the hands of the original members of the syndicate, part of which sum they took as payment for construction work done by a construction company composed of themselves. Of that $25,000,000 of stock, $20,000,000 of it, said Fleming, was taken by these same men at 25 cents on the dollar, with the resulting profit of at least $9,000,000. At the time that they got the contract, Fleming asserted, they subscribed only $4,000,000 ; now they claimed to have spent $23,563,564 on construction work, although the Minister of Railways placed the sum thus spent at $16,053,364.

“ People will ask,” continued Fleming, “ where are the enormous sums the original contractors made ? Where have these gentlemen put these enormous profits which they have made out of this transaction ? And after they have made such great profits on the construction of the railway, why do they not advance out of their enormous fortunes sufficient to carry on the contract as rapidly as possible ? ” 17

$10,000,000 Profit From Construction

Mr. Lister declared that he believed that the Government was “ in the palm of the hand of the managers of that Company.” Mr. Orton and others speaking in favor of the Bill, asserted that because of the intrigues and influence of the Grand Trunk Railway Company in England, the Canadian Pacific had been unable to float a loan ; therefore the Government should come to its aid.18 Mr. Cameron said he believed that the Canadian Pacific Syndicate made $10,000,000 from their North American Construction Company, by means of which Company they had been able to contract with themselves, yet other sections of the railway were still to be completed.19 Mr. Rykert denounced the opponents of the Bill, and declared that many of those members of the House that he named were beneficiaries of large colonization land-grant companies in the North West.20 Among others that Rykert attacked was Mr. Jaffray of the Toronto Globe, which attack, as we shall see in a later chapter, was to cost Rykert dear.

Mr. Charlton asserted that the Canadian Pacific Syndicate had received $54,247,000 cash receipts from various sources ; he declared that George Stephen and partners had watered the Company’s stock and had organized a construction company to build the road ; their manipulations, he said, were not honest. He then traced Stephen’s antecedents, and described the St. Paul and Pacific Railway and the Bank of Montreal transactions, and said there were “ rings within rings.”

An Endless Chain of Profits

“ We know,” Charlton went on, “ that a construction company was formed for the purpose of vastly increasing the cost of the road, and putting the increased cost into the pockets of a ring of speculators. We know that the stock of the Company has been watered most scandalously, and that the result is that the people of this country will be called upon to pay 10 per cent. in perpetuity upon all of the water injected into that stock.”21 Mr. Gillmor drew attention to the fact that Canada’s population was only 4,000,000 ; the working men, said he, would have to pay the bill. Mr. Blake declared that it was well known that the Canadian Pacific Railway “ have thus far engaged in the construction of the least costly and most remunerative portions of their line ; that the more costly and difficult and less profitable portions remain to be constructed ; and that it is to enable them to construct the latter that they are now making application to Parliament for aid.”22

Free Railroad Passes

A seething, truculent debate that was, each side taunting the other, and neither seriously denying the charges that each made. It could not be denied that members of both political parties were interested as promoters or stockholders in various railway charters and subsidies, and in colonization land companies, timber limits, coal lands, and contracts of different kinds all of which they had obtained, or were now securing, by means of their Parliamentary power and of Government concession. As to these ramifications of personal interests on the part of a considerable number of members of Parliament, pertinent details are set forth in the chapter following this.

Members of Parliament all, or nearly all, accepted free railroad passes. In a debate in the House of Commons subsequently, Lister asserted that, “ As a matter of fact a very large number of the members of this House hold passes from the railway companies,” and Mr. Amyot held that “ free passes should be granted to all [members] so as not to be the means of corruption when Bills concerning certain railways come before the House. It is no use trying to deceive the public, for all the members are glad to have free passes. We do not go into politics in this Country because we are rich. We know very well that some members have given votes with reluctance — I do not say this year — because of the free passes which they had received or which were offered to them.”23

An Alleged $100,000 Fund

It was almost at the very time that the Canadian Pacific Loan Aid Bill was before the House of Commons that certain allegations were forthcoming as to how the votes of certain members were secured in advance.

We have already traced the inception of the North Shore Railway, and narrated how it was alleged that the Grand Trunk Railway Company had, by ruining its credit in England, prevented the sale of its bonds. The Government of Quebec then came to the assistance of the North Shore Railway Company to which was given subsidies aggregating $13,000,000. Financial troubles caused its sale in 1882 for $8,000,000 to a syndicate headed by M.L.N. Senecal, who, at an enormous profit, sold it to the Grand Trunk. It was charged that Senecal gave to Sir Hector Langevin $100,000 together with other sums which were alleged to have been expended in favor of Conservative candidates for election to the House of Commons, in 1882. The circumstances of the sale of the North Shore Railway caused such a scandal that the Government of the Province of Quebec appointed judge Routhier to investigate ; he, however, announced that he would not inquire into the matter of the alleged $100,000 fund, as that inquiry would be beyond his jurisdiction.24

Stephen and Partners Get Nearly $45,000,000 Loan

The Bill to give the Canadian Pacific Railway Company an additional loan became a law ; under this Bill, passed by the Dominion Parliament in 1884, that Company received a total of $44,880,912. So much money was the Company gathering in, that within two years it was able to pay back $29,880,912 of this loan.

As we have noted, the foremost argument used in granting the Canadian Pacific Railway contract and charter was that subsidies and a guarantee of monopoly were necessary to induce capitalists to invest money in “ so vast and hazardous an enterprise,” and “ thus promote colonization and settlement.” A resolution introduced in the Manitoba Legislature, in 1888, was full of wrath. It denounced the Canadian Pacific’s monopoly. That monopoly and the ensuing extortions, it said, were the cause of the prevailing stagnation in business, and the despondency and discontent among the people. The monopoly, the resolution read further, “ prevents many coming in the country which they know to be at the mercy of one corporation, and is causing many good citizens to leave it.”25

Agitation was now carried on to get the Canadian Pacific to relinquish its monopoly — an agitation that was no doubt partly stimulated and accelerated by promoters of other projected railway lines.

An incident developed at this juncture when Premier Greenway and Attorney-General Martin of Manitoba went to Ottawa. Sir George Stephen voluntarily informed Greenway personally that no proposition having any reference to their errand had been made by the Canadian Government or by the Canadian Pacific Railway Company. Greenway wrote that he (Greenway) “was at a loss to understand such a statement, especially when being informed by the Right Hon. the Premier, immediately subsequent to the statement made by Sir George Stephen, that the Government of Canada had met the President of the Canadian Pacific Railway Company [Stephen] and that the matter was progressing favorably.”26

A Gift of $15,000,000 More

As a “ solatium ” for its supposed relinquishment of a monopoly, which, according to Premier Greenway, never had any foundation so far as the old Province of Manitoba was concerned, the Canadian Pacific Railway Company received a guarantee from the Dominion Government of $15,000,000 in bonds. But the very next year a motion in the Manitoba Legislature complained that despite this settlement, the Canadian Pacific was continuing resistance to the construction of competing railways in Manitoba27 and nine years later another motion denounced the Canadian Pacific’s elevator monopoly by which the grain product was controlled. This resolution was, however, amended so as to omit all reference to the Canadian Pacific Railway.28

By this time the Canadian Pacific Railway Company had received in Government assistance $18,720,000 more, so that, not counting the enormous value of its land grant estimated at hundreds of millions of dollars, it had obtained more than $206,000,000 in Government aid. This $206,000,000 included $65,000,000 of its capital stock guaranteed. Of its land grant, it relinquished 6,793,014 acres in consideration of the payment of $10,189,521. This direct aid of more than $206,000,000 in the form of Government cash subsidies, guarantees, loans and bonds, was, however, only a part of what the Canadian Pacific, or lines which it acquired, eventually received. More subsidies, land grants and hugely valuable coal mines all rapidly came into its proprietary possession.

Notes

1. See Cartwright’s Reminiscences, pp. 189-191.

2. Ibid., p. 256.

3. Monetary Times, May 3, 1878, p. 1285.

4. The extraordinary powers and property conferred by these provisions may be better understood by comparing this land grant with the railway land grants in the United States. The grants in the United States consisted invariably of arbitrary alternate sections, which is to say that the railway companies had to take their chances on the quality of land that they were allotted. It might be good agricultural or timber land or poor, barren land. The Canadian Pacific Railway Company received alternate sections, also, but it had powers of selection such as railway companies in the United States did not have.

5. Debates, House of Commons, Dom. Parl., Session 1880-1881, Vol. I, pp. 702-764.

6. Report of the Royal Commission on Chinese Labor, 1885, Sess. Paper No. 54 A, p. 84, Sess. Papers, Dom. House of Commons, Vol. XVIII, No. 11, 1885.

7. Ibid., p. 148.

8. Ibid., p. 132.

9. Ibid., p. 87.

10. Ibid., p. 134.

11. Official advertised report of the annual meeting in the Monetary Times, July 20, 1883, pp. 69-72.

12. Journals of the Legislative Assembly of Manitoba, 1888, Vol. XIX, pp. 61-62. The present effects of that clause in the C.P.R. contract with the Government relieving the railway company from taxation for 20 years were recently set forth in an editorial in the Grain Growers’ Guide, published at Winnipeg. The editorial (issue of September 24, 1913), said in part : “ What we want to call special attention to just now, however, is the heavy burden which is placed upon the people of the West by the clause in the C.P.R. contract which exempts the lands granted to the C.P.R. from taxation. This exemption was supposed to extend for 20 years, but, through the carelessness of the people’s representatives and the cleverness of C.P.R. lawyers, it is still effective though the contract was made 32 years ago. The result is that in many rural municipalities and school districts there is very little land which can be assessed for taxes. The lack of schools and roads in such districts can easily be understood. In such districts either the few farmers whose land is assessable must be excessively taxed, or schools and roads must be done without. This condition is seen at its worst in the C.P.R. irrigation district, in Alberta, where the railway company secured both odd and even numbered sections. Lands owned by the C.P.R. or held by others under agreement of sale are not liable for taxes. Those which have been patented to purchasers are liable, but there is such a small area taxable that in the school districts of Irricana, Crowfoot and Goderich it has been found impossible to support the schools. Goderich and Crowfoot schools have consequently been closed, while at Irricana the school is being maintained by private subscriptions. The C.P.R. in the year ending on June 30 last, made a profit of over $46,000,000. Nevertheless, the children of farmers living on the prairies of Saskatchewan and Alberta are deprived of even a common school education because the C.P.R. through a legal quibble has escaped the obligation of paying taxes. . . .”

13. Monetary Times, February 22, 1878, pp. 995-996.

14. Ibid., 1881. Robert Jaffray, another noted capitalist and a close partner of Cox in subsequent transactions, was associated with Cox in this amalgamation.

15. Monetary Times, July 23, 1886, p. 90. The Atlantic and Western Railway ran from Smith’s Falls to Lachine.

16. Debates, House of Commons, Dom. of Canada, Session 1884, Vol. I, p. 318.

17. Ibid., p. 320.

18. Ibid., p. 344, etc. This was by no means a new charge. In 1877 the Grand Trunk Railway Company was accused of having ruined the credit of the North Shore Railway Company in England and thus preventing it from selling bonds. It was also charged with having brought about the rejection by the rate payers of Toronto of a bylaw granting $300,000 aid to the Toronto and Ottawa Railway which formed the western continuation of the North Shore Railway.—See Monetary Times, December 28, 1877, p. 755.

19. Debates, House of Commons, etc., 1884, Vol. I, p. 359.

20. Ibid., p. 369.

21. Ibid., p. 391, That these strictures were not idle talk is evidenced by the agrarian complaints and grievances now being made in western Canada. A recent editorial in the Grain Growers’ Guide presented this view : “ Certain Eastern newspapers and politicians are very fond of talking about the debt which the West owes to the East for its self-sacrifice in bearing the whole cost of building the C.P.R. into this country. As a matter of fact, however, anyone who knows anything about Western conditions knows that the West is every day paying very dearly for the C.P.R. and for the bad bargain which Eastern politicians made to secure the construction of that road. The 25,000,000 acres of land which the C.P.R. got in the original contract were all Western lands, and many a Western farmer will have to hand over half the proceeds of his crop this fall as an instalment on the purchase of some of the land that was thus given away by the Government. Everybody knows, of course, that the Government has always allowed the C.P.R. to charge the people of the West from 66 to l00 per cent. higher rates for the carriage of freight and express parcels than it charges in the East for the same service.”

22. Debates, House of Commons, etc., 1884, Vol. I, p. 378.

23. Debates, House of Commons, Dom. of Can., Session 1888, Vol. II, p. 1422.

24. Monetary Times, Oct. 2, 1885, p. 376.

25. Journals, Legislative Assembly of Manitoba, and Sess. Papers I to 32, Vol. XVIII, 1887.

26. Ibid., 1888, Vol., XIX, Sess. Paper No. 4.

27. Ibid., 1889, Vol. XXI, p. 18 of Journals.

28. Ibid., 1898, Vol. XXX, p. 30.



Preface | Chapter I | Chapter II | Chapter III | Chapter IV | Chapter V | Chapter VI | Chapter VI | Chapter VII | Chapter IX | Chapter X | Chapter XI | Chapter XII | Chapter XIII | Chapter XIV | Chapter XV | Chapter XVI | Chapter XVII


PD-icon.png This text is in the public domain in countries where the copyright term is the author's life plus 60 years (or less). Translations published later may still be copyrighted.