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exceed 3 per cent. and no part of the guarantee was to be paid until the road was completed and properly equipped. The net profits were to be applied to the interest on the bonds and the creation of a sinking fund. The Company was to establish on the line of railway a plant for mining coal capable of producing an average of not less than 500 tons a day. All railway companies hereafter receiving subsidies from the Province were, the Premier declared, expected to bind themselves to use New Brunswick coal, if obtainable at reasonable prices. The Government were further authorized under this enactment to impose a tax on the Company and upon all other railway companies to an amount not exceeding 3 per cent. of their gross yearly earnings made within the Province, and less any Government royalty paid on the coal consumed by the Railway or industries established along its line. The guarantee was to be made. subject to the Government being satisfied that 150,000 tons per annum could be mined in this region; the Railway was to pay a royalty of 10 cents per ton on all coal mined on granted lands and 15 cents per ton on coal mined on Crown Lands; the contract was to be entered into before January 1, 1902. Mr. Douglas Hazen thought that the time was too short and drew attention to the desirability of making the proposed line serve general traffic purposes as well as coal development, by taking a certain route and helping people who were without transportation facilities. The measure passed in due

course.

Other legislation in this direction was the assistance given to three roads which were said to be much needed. One ran from Shediac to Cape Tormentine; another ran from Foreston on the Canadian Pacific Railway, in Carlton County, and was intended to reach the headquarters of the Miramichi, and thus give a stimulus to lumbering and milling operations; the third was from a point on the St. Francis branch of the Temiscouata Railway, running to the Quebec boundary and forming part of an ultimate through trunk line from western seaports to the Maritime Provinces. To this Quebec and New Brunswick Railway grant two important conditions were attached by the Government. In the first place they were to be assured by satisfactory evidence that the Company had completed its arrangements for building the line before any subsidy was paid and in the second place New Brunswick coal was to be used upon the entire system. A matter which came up on March 28th in the House was that of the New Brunswick Railway Company lands. On motion of Mr. Thomas Lawson it was unanimously resolved:

Whereas, by reason of the holding of the greater part of the available land suitable for settlement in the County of Victoria by the New Brunswick Railway Company, whereby the settling of the County is greatly impaired and the extension of growing and flourishing settlements is prevented: therefore, resolved, that in the opinion of this House it is desirable that such portions of said lands as are suitable for settlement should be re-acquired by the Province to be settled under the settlement laws of the Province, or that such steps be taken as will insure their being thrown open to settlement on terms not more onerous than those applying to Crown Lands.

The

Manitoba
Railway
Question

The interests of Manitoba have always been bound up in the transportation question; the politics of Manitoba have been affected for twenty years by the building of the Canadian Pacific Railway and the steadily developing desire for competition with that Line. In 1888 the Northern Pacific entered Manitoba, acquired the Red River Valley Line, connected Duluth with Winnipeg, via the Duluth and Manitoba Railway to the frontier and cost some $8,000,000 for a total construction of 354 miles of railway. It did not prove, in rates, a competitive line but simply divided the traffic with the Canadian Pacific Railway. The development toward the end of the century brought other projects into view and especially the progress in railway construction of Messrs. William Mackenzie and D. D. Mann in their supposed ambitious schemes for a second trans-continental road. By the beginning of 1901 they had made Port Arthur the eastern terminus of the Rainy River Railway, which had been pushed up through Northern Ontario under heavy subsidies from the Ontario and Dominion Governments and, after passing through the United States and around Lake Superior under another name it was now being pressed on to Winnipeg, as the Canadian Northern Railway. The new Roblin Government decided to carry out a bold railway policy and, in the middle of January, it was announced, after many and varied rumours, that they intended to acquire the Northern Pacific in Manitoba and connect or combine it with the Canadian Northern.

On February 14th, a banquet was given at Neepawa to the Hon. J. A. Davidson, Provincial Treasurer, and there the Premier of Manitoba definitely declared his position and announced the terms of the agreement for which the whole of Manitoba had been anxiously waiting. By a contract dated January 15, 1901, the Northern Pacific Railway Company agreed to lease to the Provincial Government all the lines of railway owned or operated by it in Manitoba-the Northern Pacific and Manitoba Railway, the Portage and North Western Railway, the Waskada and North Eastern Railway. The time of the lease was 999 years and the rental to be paid by the Government for the first ten years was $210,000 per annum; for the next ten years $225,000 per annum; for the third ten years $270,000 per annum and for the balance of the term $300,000 per annum. An option of purchase was given the Government at any time during this period for the sum of seven million dollars. Included in the 354 miles of railway thus leased were all the rolling stock, equipment, appurtenances and real and personal property of the roads described. Mr. Roblin went on to point out that, having obtained this contract, the Government had before them the two alternatives of directly operating the lines thus acquired and constructing a new line from Winnipeg to the head of Lake Superior or of handing over the management to either the Canadian Pacific or Canadian Northern Railway under such conditions as would give the Government control of the rates. Negotiations were opened and propositions received. A caucus of Government

supporters was then held at Winnipeg, the proposals submitted to the members and a decision in favour of the Canadian Northern arrived at. Under this agreement both the lease and options of purchase were transferred and assigned to the Canadian Northern Railway by the Government. That Company engaged to pay the annual rentals and to indemnify the Government for all loss, costs and expenses in connection therewith. In addition to this the Company gave the Government absolute control of freight rates.

The Lieut.-Governor-in-Council was to fix the rates, and the King's Bench of Manitoba was to have final jurisdiction over the terms of the agreement. In return for these concessions, the Government undertook to guarantee the bonds of the Rainy River branch of the Canadian Northern-running from Port Arthur to Rainy River through a rocky and difficult country-for $20,000 per mile at the rate of four per cent. per annum. These bonds were to be payable on June 30, 1930, and were not to be issued until the line was constructed and opened for public traffic. There was never to be outstanding at any time a greater amount of bonds than at this rate of $20,000 a mile. The Government were to receive for this guarantee a mortgage on all property and leases, and also upon the lease and option with the Northern Pacific Railway Company. This mortgage was to be further extended to the lines of the Canadian Northern already built in Manitoba. "Having the absolute power to fix rates, the Government have naturally had to agree to meet any differences, if the rate fixed yields no more than sufficient to meet operating expenses." In such case the Government would be responsible for rentals to the Northern Pacific and also for the interest on bonds. The deficiency, if any, was to be ascertained at the end of each period of two years. Provision was made as to the charging to the account with the Government of any matters not properly pertaining thereto, and in the event of dispute the Chief Justice of Manitoba was to have full power of decision. The Canadian Northern Company agreed also to forego its present exemption from taxation in Manitoba after the year 1905 and up to the maturity of the bonds and to pay a sum not exceeding two per cent. of the gross earnings on its Manitoba lines. No amalgamation with the Canadian Pacific was to be allowed, nor any pooling agreement with that road. Finally, in 1929, the Government were to have the option of purchasing the entire property of the line for its par value as a going concern.

Mr. Roblin then dealt with the matters of liability. The system, acquired under this arrangement, included the Ontario and Rainy River Line of 290 miles at $20,000 a mile, or $5,800,000, with a yearly interest charge of $232,000; the Gladstone and Saskatchewan Line of 389 miles, with a guarantee of $8,000 per mile, or $3,112,000; the Gilbert Plains Line, 27 miles, at $8,000 per mile, or $216,000; the Southwestern Line, 152 miles at $8,000 a mile, or $1,216,000-a total of $10,344,000 liability. With other liabilities the total would be about $15,000,000. This he declared to be the lowest bonded indebtedness of any road on the American continent-1,200 miles of

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railway at $12,500 a mile. On October 1st next, the Government would commence with their own railway tariff and thus live up to their promise in 1899 of Government control of railway rates. In the course of his speech, Mr. Roblin elaborated his idea of Government ownership. The object is to secure a transportation charge that is fair and reasonable, one that the people can stand, one that is fair and right having regard to all the interests." He stated that in the initiation of their arrangements the Government had found President Mellen of the Northern Pacific in the position of a man who would do absolutely nothing in lowering rates or building additional mileage. They even offered to purchase the road, but this also was declined.

As a result of further negotiations, however, the existing contract finally made. The exact and complete cost of the Northern Pacific Railway was $8,445,613, and while a similar road might be built to-day for less money, it could not be carried through the same country, which was, after all, the great point of the whole transportation problem. "We had to deal with independent gentlemen who were not British; they hardly believed in fair play, and we, therefore, had to make such a bargain as they were willing to make from their standpoint; and, after negotiations, we were able to secure the purchase option at $7,000,000." Mr. Roblin declared that the figures given by the Northern Pacific Railway to the Department at Ottawa as to its Provincial earnings and expenses and showing a loss of $77,000 in the year ending June 30, 1900, were entirely misleading and inaccurate. Taking the freight which confessedly originated in Manitoba and was shipped to and from Duluth by this road at its own figures of $959,951 and estimating the maintenance and operating expenses at the limit of 52 per cent. fixed by the Company, he made out a net profit for the year of $506,000. The arrangement was effected in spite of telegrams from rival railway corporations that whatever the Government gave for the road, they would give more; the further negotiations were entered upon, and the final result was the agreement with Messrs. Mackenzie and Mann and the contract with the Canadian Northern Railway. He concluded by expressing the belief that the railway problem in Manitoba was solved, and the day of exorbitant freight rates and unreasonable and unfair charges gone.

The day after this policy had been announced, Sir William Van Horne, of the Canadian Pacific Railway, was interviewed by the Toronto Star as he passed through that city and declared his opinion to be that "the bargain would bankrupt the Province." At the same time the offer made by the Canadian Pacific on January 20th, modified on February 8th, and finally refused, was made public. Under its terms the Company would have built a couple of branch lines which were much needed and would have paid for a 999 years lease of the Northern Pacific lines in Manitoba, a yearly rental of $220,000 for the first ten years, $245,000 for the second ten years and $300,000 thereafter. If the Government placed the Company in the same position with reference to taxation as the Northern Pacific

Railway now held and undertook that for a period of ten years they would not grant aid toward the construction of any railway within the Province south of a certain specified line, the Company would have granted the following reductions in rates upon grain and flour :

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This would involve a reduction of four cents per one hundred pounds from and to all points within the Province. Specified reductions would be made on salt and coal. When Mr. Roblin intimated that the party caucus would not accept this proposal President Shaughnessy offered to withdraw the restriction regarding assistance to other roads and to modify the suggestion concerning taxation to the point of paying such taxes as might be imposed up to one per cent.-instead of two per cent. as at present-of the Company's earnings in Manitoba.

Speaking to the Winnipeg Telegram a few days later, on February 16th, Mr. D. D. Mann described the route of the Ontario and Rainy River Railway, or Canadian Northern, as being through a country capable of immense development. Splendid agricultural lands in some places; the rich iron ranges of the Mattawan and Atikokan with millions of tons of ore in sight; the immense quantities of logs and lumber for transportation; all appealed to his hopes for the future. He stated that their object in going into this contract was to secure the Northern Pacific Railway system as a feeder to their line to Lake Superior; to prevent any possibility of the Canadian Pacific Railway acquiring it; and to put themselves in a position to compete for a fair share of the business of the Province. On February 21st, the Hon. Mr. Campbell was interviewed by the same paper and stated in reference to various criticisms of the contracts that many of the details, apparently omitted, would be safeguarded in the mortgage upon the property of the Canadian Northern. Men like Mr. J. H. Brock, who were opposing the whole plan were misled, he believed, by the Canadian Pacific Railway. The contracts were published for the purpose of obtaining fair criticism. On the same day a Manifesto was issued by a number of prominent residents of Winnipeg, including Mr. Brock, Mayor Arbuthnot, Messrs. William Robinson, E. D. Martin, A. J. Andrews, E. F. Hutchings, W. Redford Mulock, K.C., T. D. Robinson, A. McDonald, A. M. Nanton, G. A. Muttlebury, K. H. Fessenden, William Scott, A. M. Fraser, Alexander Reid, S. Walker and Henry Fry, denouncing the contracts for various specified reasons.

Immediately following this expression of opinion came a Resolution of the Winnipeg Labour party declaring that the contracts were "not in the interest of the Province and should not receive the endorsation

of the Legislature." Outside opinion, so far as expressed in the

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