UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

Agreed charges Nolet, J. Gilles 1968

You don't seem to have a PDF reader installed, try download the pdf

Item Metadata

Download

Media
UBC_1968_A4_5 N64.pdf [ 6.93MB ]
Metadata
JSON: 1.0093565.json
JSON-LD: 1.0093565+ld.json
RDF/XML (Pretty): 1.0093565.xml
RDF/JSON: 1.0093565+rdf.json
Turtle: 1.0093565+rdf-turtle.txt
N-Triples: 1.0093565+rdf-ntriples.txt
Original Record: 1.0093565 +original-record.json
Full Text
1.0093565.txt
Citation
1.0093565.ris

Full Text

A G R E:E D C H A R G E S by J . GILLES NOLET B. Sc. A'., U n i v e r s i t e L a v a l , 1966 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER IN BUSINESS ADMINISTRATION i n the Department of COMMERCE AND BUSINESS ADMINISTRATION We accept t h i s t h e s i s as conforming to the r e q u i r e d standard THE UNIVERSITY OF BRITISH COLUMBIA May, 1968 In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f the r e q u i r e m e n t s f o r an advanced deg ree a t the U n i v e r s i t y o f B r i t i s h C o l u m b i a , I ag r ee t h a t t he L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and S t u d y . I f u r t h e r ag ree t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by the Head o f my Depar tment o r by h.ils r e p r e s e n t a t i v e s . It i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l no t be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . Depar tment o f The U n i v e r s i t y o f B r i t i s h Co l umb i a Vancouve r 8, Canada I ABSTRACT The p r o p o s i t i o n presented i n t h i s t h e s i s i s t h a t the use of the "Agreed Charges" by the Canadian r a i l r o a d s was designed merely as an instrument to improve t h e i r p l a c e i n the growing intermodal competi t i o n i n Canadian t r a n s p o r t . However, the t h e s i s has r e v e a l e d p o t e n t i a l e f f e c t s f o r the Canadian economy extending beyond t h i s purpose. These e f f e c t s grow out of the i n f l u e n c e t h a t Agreed Charges have had on the marketing "reach" of Canadian manufacturers, and the c o n s e q u e n t i a l l o c a t i o n of i n d u s t r y . The c o m p e t i t i v e purpose of Agreed Charges i s reviewed by a study of t h e i r o r i g i n and e f f e c t s i n t r a n s p o r t a t i o n i n England preceding any experience w i t h them In Canada. T h i s i s f o l l o w e d by reference t o Canadian l e g i s l a t i o n of 1938 which presented the d e t a i l e d l e g i s l a t i o n a u t h o r i t y f o r Agreed Charges as they developed i n Canada. The b a s i c c o m p e t i t i v e purpose of the new r a t e device i s evaluated by a study of i t s e f f e c t s on i i i the r a i l r o a d s and t h e i r c o m petitors. The e f f e c t s of Agreed Charges on the Canadian economy going beyond t h i s c o m p e t i t i v e purpose i s then s t u d i e d through d e s c r i b i n g and a p p r a i s i n g the i n f l u e n c e which they had on the i n t e r - r e g i o n a l marketing of a number of. products. Through t h i s , study the i n  f l u e n c e shows i t s e l f i n p e r m i t t i n g enlarged p r o d u c t i o n i n c e r t a i n regions i n Canada by extending the mar k e t i n g areas beyond those t h a t c o u l d be reached w i t h  out Agreed Charges; and i t shows i t s e l f i n the p r e f  erences i t gave to Canadian manufactured products over c o m p e t i t i v e products from abroad. TABLE OF CONTENTS ABSTRACT LIST OF TABLES vxx- Chapter I . HISTORY OF AGREED CHARGES Page 1 A . The E n g l i s h S i t u a t i o n . 1 . Environment of the t r a n s p o r t a t i o n i n d u s t r y i n England i n the l a t e t w e n t i e s . 2. F i n a n c i a l d i f f i c u l t i e s o f the r a i l w a y s . 3 . Roya l Commission on Transpor t 1929• 4. Road and T r a f f i c Act 1933 • B . The Canadian S i t u a t i o n . 1 . Environment o f the t r a n s p o r t a t i o n i n d u s t r y i n Canada i n the t h i r t i e s . 2 . Roya l Commission on Ra i lways and T r a n s p o r t a t i o n 1932. 3» I n f l u e n c e o f the B r i t i s h Road and R a i l T r a f f i c A c t . 4 . E n a c t i n g of agreed charges i n the Transpor t A c t . I I . TRANSPORT ACT 1938: PART V ; AGREED A . D e s c r i p t i o n o f the Agreed Charges by the A c t . 1. Purpose of agreed chax^ges. 2. P a r t i e s who can en te r i n t o agreement. 3 . S a n c t i o n s by the Board of Transpor t Commissioners f o r Canada. 4. F i x e d Charges . CHARGES 23 V B. Amendments w i t h Respect to Agreed Charges. 1. Recommendations, of the Royal Commis s i o n on T r a n s p o r t a t i o n 1951• 2. Royal Commission on Agreed Charges 1955- L e g i s l a t i o n (1955) r e g a r d i n g agreed charges. (A) S e c t i o n 32 of the Revised Act (28th J u l y 1955) . (B) S e c t i o n 33 of the Revised Act (29th J u l y 1955). 3. Royal Commission on T r a n s p o r t a t i o n 1959- I I I . EFFECTS OH TRANSPORTATION INDUSTRY 46 A. R e l a t i v e Importance of Goods Transported Under Agreed Charges by Railways. 1. General. 2. I n t e r - r e g i o n a l movements of merchan d i s e . B. E f f e c t s on the F i n a n c i a l S i t u a t i o n of Railways. C. E f f e c t s of Agreed Charges on the Truck i n g I n d u s t r y . D. Water T r a n s p o r t a t i o n and Agreed Charges. IV. ANALYSIS.'OF SOME CASES'. OF AGREED CHARGES 71 A,. The S k e l p , P i p e , Tube, I r o n and S t e e l Cases. 1. The Pipe and Tube Case. 2. The I r o n and S t e e l Case.• 3. A l b e r t a Phoenix Tube and Pipe Case. 4 . The Stewarts & L l o y d s of Canada L t d . Case. : 5. E f f e c t s on m a r k e t i n g of these :produc-ts. - 6. E f f e c t s on f o r e i g n competitors. v i B. The Canada Steamship .bines .Ltd. Cases. 1. Canada Steamship L i n e s v. Railways. 2 . Canada Steamship L i n e s v. Canadian F r e i g h t A s s o c i a t i o n et a l . i n Agreed Charge No. 153- 3 . E f f e c t s on water and highway t r a n s  p o r t a t i o n . C. The Petroleum Cases. 1. C.N.R. et a l . v. Good R i c h R e f i n i n g Co. L t d . et a l . 2 . C.N.R., C.P.R. & McColl-Frontenac O i l Co. L t d . 3 . E f f e c t s on petroleum c o m p e t i t i o n and on t r a n s p o r t a t i o n . D. Other Cases. 1. Canned Goods Case. 2. The Automobile Case. 3« E f f e c t s on comp e t i t i v e t r a n s p o r t modes. V. FINDINGS AND CONCLUSIONS 127 A. R e s u l t i n g E f f e c t s on the T r a n s p o r t a t i o n I n d u s t r y . 1. Railways. 2 . T r u c k i n g i n d u s t r y . 3• Water t r a n s p o r t . B. R e s u l t i n g E f f e c t s of Agreed Charges f o r the Shippers. 1. I n t e r - r e g i o n a l marketing e f f e c t s . 2 . I m p l i c a t i o n s f o r f o r e i g n competitors. BIBLIOGRAPHY 137 v i i LIST OF TABLES Table Page 1. T r a f f i c and Revenue (Railways) 7 2 . Gross Earnings and Net Revenues of Steam Railways 1923-1937 15 3 . T r a n s p o r t a t i o n by Modes (1928, 1936) . . . . 17 I n t e r c i t y F r e i g h t Ton-Miles Performed by Type of C a r r i e r (1938 t o 1959) +7 5 . Agreed Charges Between 1950 and 1966 . . . . 49 6. R a i l T r a f f i c Charges by Rate C l a s s 1951, 1958, 1965 51 7. I n t e r c i t y Ton-Miles Performed i n Canada by Type of C a r r i e r 57 8 . Per cent of Sample Ton-Miles 59 9 . Per cent of Sample Revenue . 60 10 . Average Revenue Per F r e i g h t Ton-Mile . . . . 61 11. Average Revenue from Agreed Charge Per F r e i g h t Ton-Mile Compared t o Average Revenue Per Ton-Mile f o r T o t a l F r e i g h t . . 63 CHAPTER I HISTORY OP AGREED CHARGES A. THE ENGLISH SITUATION 1. Environment of the t r a n s p o r t a t i o n i n d u s t r y i n England i n the l a t e t w e n t i e s . This p e r i o d of time, when the w o r l d s u f f e r e d the Great Depression, brought tremen dous s t r a i n s on the economic l i f e of the B r i t i s h i n d u s t r y and the pressure of t h i s c r i s i s was f e l t p a r t i c u l a r l y by the t r a n s p o r t a t i o n i n d u s t r y . Up t o the mid-twenties the r a i l w a y s enjoyed the ad vantages of a monopoly i n d u s t r y . They had become i n d i s  pensable and represented the backbone of i n l a n d t r a n s p o r t . The r a i l w a y system as a whole occupied a p o s i t i o n of 1 s p l e n d i d and, ap p a r e n t l y , u n a s s a i l a b l e s e c u r i t y . With the exception of a few which s t i l l c a r r i e d on a u s e f u l b u s i n e s s , canals had been r e l e g a t e d t o a p o s i t i o n of r e l a t i v e o b s c u r i t y . They had c o l l a p s e d under the f i e r c e p c o m p e t i t i o n of the r a i l r o a d . Great s t r i d e s had been made i n the way of improvement of roads and i n t h e i r c o n s t r u c  t i o n , but t h e i r maintenance was i n the s o l e charge of the 1 Great B r i t a i n ; Royal Commission on Transport, P i n a l  Report, (Chairman, A r t h u r G r i f f i t h - B o s c a w e n ) , H.M. S t a t i o n e r y , 1930, p. 11. 2 I b i d . 2 l o c a l a u t h o r i t i e s and i t took a l o n g time b e f o r e the network of roads c o u l d be r e g a r d e d as a n a t i o n a l system. With the outbreak o f the War the a c t i v i t i e s f o r the c o n s t r u c t i o n and improvements of roads ceased and i t was not u n t i l 1919 t h a t the M i n i s t r y o f T r a n s p o r t made s e r i o u s attempts t o develop the highway system on n a t i o n a l l i n e s . The c o a s t a l l i n e r s e r v i c e s were handicapped by the l a c k o f f a c i l i t i e s f o r d i s t r i b u t i o n and c o l l e c t i o n of t h e i r merchandise and d i d not o f f e r a keen c o m p e t i t i o n t o the r a i l w a y s . With the development of b e t t e r roads and the r a p i d p r o g r e s s i n t e c h n o l o g y f o r motor v e h i c l e s a new form of c o m p e t i t i o n f o r the r a i l r o a d s a r o s e . The road t r a n s p o r t from the p o i n t of view of the s h i p p e r s had d e f i n i t e advantages f o r l o c a l d e l i v e r i e s and c o l l e c t i o n and f o r t r a n s i t up t o a c e r t a i n d i s t a n c e which v a r i e d w i t h the n a t u r e of the t r a f f i c ; speed, convenience, low r a t e s . . . T h i s new i n d u s t r y enjoyed o t h e r advantages because i t was not bound by l e g i s l a t i o n as t o c l a s s i f i c a t i o n r a t e s and c o u l d charge at w i l l w h i l e h a v i n g the advantages of f r e e highways.^ A l s o the " u n f a i r n e s s " l a y i n the f a c t t h a t ^ I b i d . , p. 12. ^ H.M. H a l l w o r t h , "The F u t u r e of R a i l T r a n s p o r t " , The  Economic J o u r n a l , XLIV (Dec. 193+), p. 54-6. 5 I b i d . , p. 550. ^ C S . Lock, " B r i t i s h Railways show f i g h t " , Railway Age, ( J u l y 4, 1932), p. 955- (As mentioned i n the Royal Commis s i o n on T r a n s p o r t , the r a i l w a y companies complained t h a t a l l the r a i l w a y companies were t r e a t e d as one o r g a n i z  a t i o n and "must accept any t r a f f i c o f f e r e d t o them and 7 c a r r y i t t o any s t a t i o n o r s i d i n g i n Great B r i t a i n " ' w h i l e the r o a d h a u l e r , even i f he was a common c a r r i e r , need o n l y accept t r a f f i c going h i s way and such t r a f f i c as he c o u l d c a r r y c o n v e n i e n t l y . The t r u c k i n g i n d u s t r y o p e r a t e d r e g u l a r l y o n l y between the b i g towns and busy areas where i t was l u c r a t i v e and where t h e i r equipment 8 c o u l d r e t u r n w i t h f u l l l o a d s . The e f f e c t s o f r o a d t r a n s p o r t gave a new impulse t o t he c o a s t a l s e r v i c e s which used t h i s mode f o r t h e i r c o l l e c t i o n s and d e l i v e r i e s and i n t h i s way were a b l e t o g i v e d i r e c t d o o r - t o - d o o r s e r v i c e s f o r which through r a t e s were charged. The r a i l w a y s had l o s t some of t h e i r t r a f f i c t o the c o a s t a l t r a d e . A f t e r the war, the r a i l w a y i n d u s t r y v/as i n a bad s i t u a t i o n f o r d i f f e r e n t r e a s o n s . F i r s t , the war, which gave an advantage t o r a i l w a y s over c a n a l s and c o a s t a l s h i p p i n g , was r e s p o n s i b l e f o r a setback t o r a i l  way e f f i c i e n c y and gave roa d t r a n s p o r t ;.an. o p p o r t u n i t y the economic c o s t of r a i l t r a n s p o r t i s borne e n t i r e l y by r a i l u s e r s , o n l y a p a r t of the c o r r e s p o n d i n g c o s t o f road t r a n s p o r t i s borne by road u s e r s . The r a i l w a y s c l a i m e d t h a t the m a i n t a i n i n g , p o l i c i n g and s i g n a l i n g o f the roads and the whole c a p i t a l e x p e n d i t u r e i n c u r r e d i n b u i l d i n g or improving roads t o meet the requirements of motor t r a f f i c s h o u l d f a l l upon the u s e r s i n p r o p o r t i o n t o t h e i r use i n  s t e a d o f t w o - t h i r d s b e i n g p a i d by the ta x p a y e r s o f Great B r i t a i n . 7 ' G. Walker, "The Economies of Road and R a i l C o m p e t i t i o n " The Economic J o u r n a l , (June 1933) , p. 255. tec--develop i n i t s " ; i n i t i a l stages. As-mentioned i n the Royal Commission on Transport, the: r a i l w a y s , d u r i n g the days of t h e i r monopoly, i n s u f f i c i e n t l y s t u d i e d the needs of the p u b l i c and t h e i r p o l i c y had" become too con s e r v a  tive:.- "The t r u t h of the d o c t r i n e t h a t f a c i l i t i e s c r e a t e Q t r a f f i c appears t o have, been f o r g o t t e n " J and " I t i s remarkable t h a t there has been p r a c t i c a l l y no improve ment i n locomotive speed i n t h i s country d u r i n g the l a s t 80 y e a r s . " 1 0 Railway s t r i k e s i n 1919 and 1926 r e s u l t e d i n the lo s s " of much t r a f f i c t o the roads and 11 i t i s i c e r t a i n t h a t much of t h i s was never re g a i n e d . The r a i l w a y s d i d not r e a l i z e the extent t o which road t r a n s p o r t was l i k e l y t o develop o r , at l e a s t , were slow t o take steps t o meet the c o m p e t i t i o n . Second, the d e c l i n e i n r a i l w a y t r a f f i c which had taken p l a c e d u r i n g the post-war years had been due t o a great extent to the economic d e p r e s s i o n , the s h r i n k  age i n world t r a d e . The i n t r o d u c t i o n of customs t a r i f f s at the end of 1931 had the e f f e c t of r e s t r i c t i n g imports and a l s o exports as a r e s u l t of r e s t r i c t i o n s imposed on B r i t i s h c o a l and goods by f o r e i g n c o u n t r i e s . F o r e i g n q ' Royal Commission on Transport, l o c . c i t . , p. 151 1 0 I b i d . , p. 152 11 H a l l w o r t h , l o c . c i t . 5 travel v/as also considerably curtailed and a number of cross channel passenger boat and train services 12 withdrawn. In summary, the decline i n railway/traffic which occurred during this period of time was due to a variety of causes, the principal ones being the economic depression with the decrease i n world trade and the competition from other modes of trans port, mostly the road competition, also the i n e f f i c i  ency of the railways to satisfy the customers' needs with better service and equipment. 2. Financial d i f f i c u l t i e s of the railways. This decline in t r a f f i c mentioned above had c r i t i c a l consequences on the total revenues of the railways. Under the provisions of the Rail\tfay Act 1929, a new clas s i f i c a t i o n of merchandise was made containing tv/enty-one classes instead' of eight classes contained in the old cl a s s i f i c a t i o n . New charges known as "standard charges"' were approved by the Railway Rates 13 Tribunal ^ and railways were placed under an obliga tion to charge these rates without variation "unless by way of an exceptional rate or an exceptional fare C S . Lock, "British Railways Forge Ahead", Railway Age, (Sept. 16, 1933) , p. 408. 13 ^ Under the provisions of this Act, a court known as the Railways Rates Tribunal had been established which had wide powers i n a l l the matters relating to railways charges. 5" c o n t i n u e d , g r a n t e d o r f i x e d under the p r o v i s i o n of t h i s p a r t of the A c t , or i n r e s p e c t of c o m p e t i t i v e 14 t r a f f i c i n accordance t h e r e w i t h " . A company c o u l d quote e x c e p t i o n a l r a t e s f o r c a r r i a g e of merchandise p r o v i d i n g t h ose r a t e d were not l e s s than f i v e p e r ce n t , n o r more than f o r t y p e r cent below the s t a n d a r d r a t e , without r e c e i v i n g the consent of the Railway Rates T r i b u n a l . O u t s i d e t h e s e margins, t h e consent of the T r i b u n a l had f i r s t t o be o b t a i n e d . The law of "undue p r e f e r e n c e " r e q u i r e d t h a t the r a i l w a y s had t o charge a l l t r a d e r s the same r a t e f o r the same or s i m i l a r merchandise. T h i s put the r a i l  ways i n a dilemma; e i t h e r they had t o l e t the t r a d e r ' s t r a f f i c go by roa d and make ho e f f o r t t o g a i n i t or i n o r d e r t o meet the r o a d c o m p e t i t i o n t h e y c o u l d grant e x c e p t i o n a l r a t e s t o a t r a d e r and a l l o t h e r t r a d e r s ' t r a f f i c had t o be c a r r i e d a t e q u a l l y f a v o r a b l e r a t e s . I f the companies a c c e p t e d the f i r s t a l t e r n a t i v e , t h e y had t o l o s e the p r o f i t of c a r r y i n g the t r a d e r ' s t r a f f i c , w h i l e by a c c e p t i n g the second t h e y l o s t the p r o f i t o f the h i g h e r r a t e s where a c o m p e t i t i v e r o a d s e r v i c e was 15 not a v a i l a b l e . 14 Royal Commission on T r a n s p o r t , l o c . c i t . , p. 25. 15 ' Walker, l o c . c i t . , p. 2 2 3 -7 The road h a u l e r was c a r r y i n g the r e g u l a r t r a f f i c i n l a r g e consignments p a s s i n g along the main r o u t e s , l e a v i n g t o the r a i l w a y s the comparatively expensive business of c a r r y i n g the i r r e g u l a r t r a f f i c , the sm a l l consignments and the t r a f f i c of the r e l a t i v e l y o ut-of- 1 6 the-way p l a c e s . Table I shows the d e c l i n i n g t r a f f i c and revenues of the r a i l w a y s d u r i n g the p e r i o d from 1 9 2 3 t o 1 9 3 2 . TABLE I . TRAFFIC AND REVENUE (RAILWAYS) ( F i g u r e s t o the nearest m i l l i o n ) Year Gross Net Revenue F r e i g h t Tonnage (Long tons) 1 9 2 3 £ 2 2 4 £-42 3 4 3 1 9 3 0 £ 2 0 8 £ 3 8 3 0 4 1 9 3 1 £ 1 8 9 £ . 3 4 2 6 8 1 9 3 2 £ 1 5 6 127 250 Source: c i t . , p. Lock, " B r i t i s h Railways 9 5 3 . show f i g h t " , l o c . For the year 1930 i t was estimated t h a t the r a i l w a y s , a f t e r allowance f o r bad t r a d e , had l o s t £ 1 6 , 0 0 0 , 0 0 0 i n net revenue t o road c o m p e t i t i o n , a l a r g e p r o p o r t i o n of 17 which was a t t r i b u t a b l e to f r e i g h t t r a f f i c . ' As a r e s u l t of t h i s downward t r e n d i n revenues the stocks 1 6 I D i d . , p. 2 2 6 . 17 ' Lock, " B r i t i s h Railways show f i g h t " , op. c i t . , p. 955• were b a d l y a f f e c t e d . Many companies were not a b l e to pay any d i v i d e n d . In 1932 o n l y one company, w i t h the a i d of r e s e r v e s , p a i d the r e q u i r e d 3# on i t s o r d i n a r y 18 s t o c k . The companies e n f o r c e d compulsory r e t i r e m e n t at 60 and men of 55 and upwards were b e i n g a l l o w e d t o go whenever p o s s i b l e . No new e n t r a n t s t o the s e r v i c e were t a k e n . A wage agreement was reached i n 1931 a f f e c t i n g a l l employees f o r a r e d u c t i o n of f i v e p e r cent y and a t the end of the y e a r 1932 f a l l i n g revenues f o r c e d the companies t o approach the u n i o n w i t h p r o p o s a l s f o r an a l l round 10$ c u t i n wages and s a l a r i e s . 3• Royal Commission on T r a n s p o r t 1929» T h i s R o y a l Commission on T r a n s p o r t had as i t s purpose, as mentioned by the Commissioners themselves, "to take i n t o c o n s i d e r a t i o n the problems a r i s i n g out of the growth of r o a d t r a f f i c and, w i t h a view t o s e c u r i n g the employment of the a v a i l a b l e means of t r a n s p o r t i n Great B r i t a i n t o g r e a t e s t p u b l i c advantage, t o c o n s i d e r and r e p o r t what measures, i f any, s h o u l d be adopted i n t h e p u b l i c i n t e r e s t , t o promote t h e i r c o - o r d i n a t e d working and development...." In 1928 the r a i l w a y s o b t a i n e d the r i g h t t o engage 1 " B r i t i s h Railways f o r g e ahead", p. 4-09. 1 9 J " B r i t i s h Railways show f i g h t " , p. 9 5 3 ' i n highway transport. The Commission agreed with this pol icy in so far as this would make for the better co ordination of r a i l and road services with the road services feeding and supplementing the r a i l services with through bookings and other f a c i l i t i e s , but not i n an "attempt on the part of the railway companies to starve road services for the purpose of putting an end 20 to reasonable competition." The Commission noted that the d i f f i c u l t i e s of the railways -were mainly due to the long-continued depression and that a return to prosperity would greatly increase 21 t r a f f i c and the road competition; for the la t ter i t was mainly the fault of the railways i f they could not meet i t , when they wrote "the question arises whether the railway companies have done or are doing everything 22 possible to meet i t " . They suggested however that i t would not be in the national interest to encourage a further diversion of heavy-goods t r a f f i c from the railways to the roads as "such further diversion would add greatly to the expenditure on highways without conferring any commensurate advantage."2^ They then added 20 Royal Commission on Transport, op. c i t . p. 41, 2 1 I b i d . , p. 36. 2 2 Ib id . 2 5 I b i d . , p. 75-i o "Road c o m p e t i t i o n must, of course, c o n t i n u e t o a f f e c t the r a i l w a y s a d v e r s e l y . The advantages o f cheap and c o m f o r t a b l e road t r a n s p o r t are so g r e a t t h a t the p u b l i c . . . i s not l i k e l y t o g i v e them u p — n o r i s t h e r e any Oil r e a s o n why i t s h o u l d . " F o r the r a i l w a y s t h e Commission recommended t h a t , where t h e r e are two companies s e r v i n g the same p o i n t s , the t r a f f i c — g o o d s and p a s s e n g e r s — s h o u l d be p o o l e d . ^ They a l s o recommended the c l o s i n g of unremunerative 2 6 branch l i n e s , but t h e y d i d not recommend a n y t h i n g i n r e g a r d t o r a t e s : "On the whole the p r e s e n t system appears t o us t o be working s a t i s f a c t o r i l y arid i n t h e s e c i r c u m s t a n c e s , we are not p r e p a r e d t o make any recommend a t i o n . . . and the r a i l w a y s i n t h e i r s u b m i s s i o n to the Commission d i d " n o t a t p r e s e n t propose any improved 2 7 procedure i n t h i s r e s p e c t . " 1 F o r the r o a d t r a n s p o r t the Commission recommended t h a t o n e - t h i r d of the c o s t s of highways s h o u l d f a l l on the r a t e p a y e r s and t w o - t h i r d s s h o u l d be borne by the 2 4 I b i d . , p. 36. 2 5 I b i d . , p. 28. 2 6 I b i d . , p. H-il. 2 7 I £ M - > P- 45. 28 m o t o r i s t ( f o r m e r l y the p r o p o r t i o n s were r e v e r s e d ) , t h a t the use o f motor v e h i c l e s o f 4 t o n s o r l e s s be encouraged w h i l e the'use o f those i n excess o f 4 tons be d i s c o u r a g e d , and t h a t the duty payable by the l a t t e r 29 be i n c r e a s e d , t h a t the maximum l i m i t of' motor c a r be 1 0 tons unladen, t h i s l a s t recommendation b e i n g t o a v o i d f u r t h e r d i v e r s i o n from the r a i l w a y s t o the r o a d . The Commission wrote t h a t because of the h i g h l e v e l of o r g a n i z a t i o n of the r a i l w a y s , waterways and s h i p p i n g on one hand and the u n o r g a n i z e d r o a d t r a n s p o r t i n d u s t r y on the o t h e r hand i t would be to the advantage o f the l a t t e r t o be p l a c e d on an o r g a n i z e d b a s i s , i . e . "the ro a d h a u l e r s be p l a c e d under a system o f l i c e n s i n g t o be a d m i n i s t e r e d by the Area T r a f f i c Commissioners"^ 0 t o operate l a w f u l l y , e x c e p t i o n t o be made f o r a h a u l e r c o n t r a c t i n g f o r one employer o n l y or when a company i s o p e r a t i n g i t s own t r a n s p o r t . Recommendations were made i n r e g a r d t o the f i t n e s s of the v e h i c l e s and wages and c o n d i t i o n s o f s e r v i c e o f persons employed i n t h i s i n d u s t r y . There was, i n the r e p o r t , no s u g g e s t i o n made i n r e g a r d t o agreed r a t e s between t r a d e r and r a i l w a y . 2 8 I b i d . , p . 7 0 . 2 9 I b i d . , p.:. 7 4 . 5 ° I b i d . , p. 9 2 . 12 4. Road and R a i l T r a f f i c Act 1955. As mentioned above the r a i l w a y s were i n a dilemma as t o the r a t e s t o be charged t o t r a d e r s because of the "law of undue preference" a p p l i c a b l e when e x c e p t i o n a l r a t e s were granted. During the year 1931, t o obvi a t e t h i s s i t u a t i o n , the r a i l w a y s developed cartage arrangements v/ith shops, manufacturers and i n d u s t r i a l concerns t o c a r r y the whole •51 of t h e i r t r a f f i c . These new experimental schemes of charging the whole of t h e i r t r a f f i c upon the b a s i s of a f l a t o r a t e or u n i t per t o n over a given area were an attempt to r e g a i n t r a f f i c from competing forms of t r a n s p o r t as w e l l as t o r e t a i n t h a t p o r t i o n of the f i r m ' s business a l r e a d y handled by r a i l as the same k i n d of quotations were o f f e r e d by road h a u l e r s . These f l a t r a t e s were given i n preference' t o the a p p l i c a t i o n of numerous i n d i v  i d u a l r a t e s , a c c o r d i n g t o the s e v e r a l d e s t i n a t i o n s . The f i r s t Agreed Charge-appears t o date p r i o r t o 1931• At t h a t time J . Roberson & Co. was s h i p p i n g animal feed and corn cake by r a i l at a f l a t r a t e per ton t o some two hundred s t a t i o n s i n Great B r i t a i n . This v/as h e l d t o be i l l e g a l . I n the same year F.W. Woolworth Co. i n B r i t a i n made a c o n t r a c t w i t h the Railways i n Great B r i t a i n whereby t h e i r t r a f f i c would be handled at a ^ 1 " B r i t i s h Railways show f i g h t " , p. 956. 13 s p e c i f i c percentage of i t s v a l u e , r e g a r d l e s s of l e n g t h of h a u l . ^ 2 B e i n g more than 4-0$ below the s t a n d a r d r a t e s , t h e s e r a t e s had t o be r e p o r t e d to the Rates T r i b u n a l which a t f i r s t s a n c t i o n e d them, but l a t e r r e f u s e d consent. T h i s was the s t a r t of the agreed charges i n c l u d e d i n the p r o v i s i o n of the Road and R a i l T r a f f i c Act 1933, which made these charges l e g a l . The Railway Rates T r i b u n a l , i n 1 9 3 2 , had g i v e n an adverse judgment i n the c e l e b r a t e d "Robinson Case", when an agreed charge i n the form of s p e c i a l e x c e p t i o n a l r a t e s proposed by the Great Western Railway was r e f u s e d on the grounds t h a t such q u o t a t i o n s were not v / i t h i n the companies' s t a t u t o r y powers of c h a r g i n g a f l a t r a t e w i t h i n the meaning of the Railways Act 1921. P a r t I I of the Act gave the r a i l w a y s the r i g h t t o charge agreed " f l a t " r a t e s w i t h the s h i p p e r , p r o v i d e d such r a t e s had the a p p r o v a l of the. Railway Rates T r i b u n a l and t h a t t h e s h i p p e r on h i s p a r t agreed t o employ the r a i l w a y f o r a l l h i s t r a n s p o r t work on the b a s i s of an agreed r a t e . The T r i b u n a l r e q u i r e d a showing t h a t accommodation sought by the s h i p p e r c o u l d not be p r o  v i d e d by e x c e p t i o n a l r a t e s , and c o n s i d e r e d among o t h e r t h i n g s "whether the making of the agreed charges v/as n e c e s s a r y t o enable the company t o secure or r e t a i n J Great B r i t a i n , S t a t u t e at ITarge, 2 3 and 24 Geo. 7, c. 5 3 ( 1 9 3 3 ) , "Road" and R a i l T r a f f i c A c t . " 14 the t r a f f i c t o which the agreement r e l a t e d . I f another s h i p p e r proved p r e j u d i c e t o h i s b u s i n e s s , he had a r i g h t t o an agreed charge i f the 34 T r i b u n a l so o r d e r e d . ^ The Act a l s o r e l i e v e d the r a i l  ways of the law of undue p r e f e r e n c e i n the p a r t i c u l a r c ases of agreed charges, and enabled r a i l w a y companies at l a s t t o compete on equal terms w i t h r o a d o p e r a t o r s , because t h e y were a l l o w e d to charge the same r a t e s f o r the same t r a f f i c . T h i s Act was c e r t a i n l y a m i l e s t o n e f o r the r a i l w a y s , as put by C.E.E. S h e r r i n g t o n i n 1934. "There i s l i t t l e q u e s t i o n but t h a t t h i s s e c t i o n of the a c t w i l l be of c o n s i d e r a b l e importance i n a s s i s t i n g the 35 r a i l w a y s t o r e g a i n some o f t h e i r l o s t t r a f f i c . " - ^ J J Great B r i t a i n , S t a t u t e a t L a r g e , 23 and 24 Geo.V c. 53 (1933), "Road and R a i l T r a f f i c A c t . " 34 C S . Lock, "Railways of Great B r i t a i n r e a p i n g rewards of e n t e r p r i s e " , Railway Age ( S e p t . 15, 1934) p.314. 35 C.E.E. S h e r r i n g t o n , "1933, a Year of I n n o v a t i o n s f o r the B r i t i s h R ailways", Railway Age, ( A p r i l 21, 1934), p. 580. 15 B. THE CANADIAN SITUATION 1 . Environment o f the t r a n s p o r t a t i o n i n d u s t r y i n  Canada i n the t h i r t i e s . S i m i l a r . . ' t o England, the r a i l  ways i n Canada were b a d l y a f f e c t e d by the d e p r e s s i o n o f 1 9 2 9 and even a t the end of the next decade t h e y never came c l o s e t o moving the amount of t r a f f i c t h e y used t o . Up t o t h i s time t h e y enjoyed the advantages o f a monopoly i n l a n d t r a n s p o r t a t i o n . The f o l l o w i n g t a b l e g i v e s t h e i r g r o s s e a r n i n g s and net revenues f o r the p e r i o d 1 9 2 3 - 5 7 • TABLE I I Gross E a r n i n g s and Net Revenues of Steam Railways, 1 9 2 3 - 1 9 3 7 Year Gross E a r n i n g s ($ M i l l i o n s ) Net Revenues ($ M i l l i o n s ) 1 9 2 3 1 9 2 8 1 9 2 9 1 9 3 0 1931 1932 1 9 3 3 4-78 564- 534- 4-54- 358 293 2 7 0 6 5 1 2 1 101 74- 37 37 37 16 1 9 3 4 1935 1936 1937 3 0 1 3 1 0 3 3 5 3 5 5 4 9 4 - 7 5 1 5 3 Source: The Canada Year Book 1942, p.585. During t h i s time two other modes of t r a n s p o r t a t i o n experienced a r a p i d growth. F i r s t , the most important of the two, the i n l a n d - w a t e r n a v i g a t i o n , which d u r i n g e i g h t months of the year d u p l i c a t e d approximately one- t h i r d of the l e n g t h of the r a i l w a y system, was a major c o m p e t i t i o n t o the r a i l w a y s by p r o v i d i n g shippers of l o n g h a u l b u l k commodities w i t h a s e r v i c e at r a t e s w i t h which the r a i l w a y s were unable t o compete. I t was estimated t h a t by 1 9 3 7 thes.e boats were f o u r times the tonnage needed f o r the business between the Foot of the Lakes and Montreal and they cut r a t e s t o o b t a i n the p business f o r m e r l y done e x c l u s i v e l y by the r a i l w a y s . The second mode was the t r u c k i n g i n d u s t r y , which was e x p e r i e n c i n g the f a s t e s t growth i n f r e i g h t t r a n s  p o r t a t i o n although the percentage of t r a f f i c moved represented a s m a l l p r o p o r t i o n of the t o t a l t o n-mile t r a f f i c , as shoim i n the t a b l e below. 1 Canada:: Royal Commission of Railways and Trans p o r t a t i o n , Report, p. 5 7 , (Chairman, L.P. D u f f ) , Ottaxva.; King's P r i n t e r 1932. 2 Railway Age, (Feb. 27 , 1937) , P- 375-1 7 TABLE I I I Year R a i l Water Highway- T o t a l 1 9 2 8 1 9 3 6 8 3 . 8 ^ 7 7 - 5 # 16.1$ 21 .4# 0.1# 1.1# 100# 1 0 0 $ Source: T r a n s p o r t a t i o n Study f o r the Royal Commission o f Canada's Economic P r o s p e c t s by J.C. L e s s a r d 1 9 5 6 . The t r u c k i n g i n d u s t r y had major advantages over r a i l  ways as mentioned b e f o r e i n r e g a r d t o speed, convenience and lower r a t e s . The l a t t e r were p o s s i b l e because the commercial motor v e h i c l e was "bonused" by the p l e a s u r e automobile w i t h the e x i s t i n g t a x l e v e l s and both of them were bonused by the f u t u r e t a x p a y e r s as r e g a r d s t o the •A highway c o s t s . A l s o no form o f r e g u l a t i o n of motor t r u c k t r a n s p o r t was e x i s t i n g so t h a t the t r u c k i n g i n d u s t r y was r e l i e v e d o f the r e s p o n s i b i l i t y o f m a i n t a i n i n g unprod- u c t i v e s e r v i c e s . The low i n i t i a l c o s t o f new or second hand v e h i c l e s , the l a c k o f s u i t a b l e a l t e r n a t i v e employment f o r many o p e r a t o r s and the absence o f l e g i s l a t i v e r e s t r i c  t i o n s i n admission brought a g r e a t many people to t h i s i n d u s t r y . J S.W. Fair-weather, " I s Truck R e g u l a t i o n a F a i l u r e ? " , Railway Age, ( J a n . 9 , 1 9 3 7 ) , p. 1 2 3 - J As.W. C u r r i e , Economics o f Canadian T r a n s p o r t a t i o n , ( U n i v e r s i t y o f Toronto P r e s s 1 9 5 9 ) , p. 1 1 . I b i d p. 124. 18 Another important advantage enjoyed by the motor t r a n s p o r t v/as the r i g h t of .separate c o n t r a c t which v/as d e n i e d t o the r a i l w a y s . These s e p a r a t e c o n t r a c t s meant t h a t the motor t r a n s p o r t c a r r i e r c o u l d e n t e r i n t o an agreement w i t h any s h i p p e r t o c a r r y h i s goods f o r a p r i c e f i x e d between them w i t h no o b l i g a t i o n , such as f o r the r a i l w a y s , t o p u b l i s h t h i s r a t e and t o give, i t 6 t o anyone who a p p l i e d f o r i t . When the r a i l w a y s had a m o n o p o l i s t i c c o n t r o l over t r a n s p o r t a t i o n , t h e i r l a b o r f o r c e v/as i n a s t r o n g b a r  g a i n i n g p o s i t i o n , e s p e c i a l l y s i n c e the r a i l r o a d s ' e a r n  i n g s were h i g h , and t h e y c o u l d a f f o r d t o share the un u s u a l g a i n s of t h a t p o s i t i o n w i t h t h e i r employees. At the time, i n many i n s t a n c e s , they p a i d more than t w i c e the wages g i v e n t o the t r u c k d r i v e r s who v/ere not 7 u n i o n i z e d . ' The Panama Canal o f f e r e d an a l t e r n a t i v e r o u t e betv/een the two e x t r e m i t i e s of Canada. Ex p o r t and import t r a f f i c o r i g i n a t i n g from the E a s t o r West Coast g o i n g West or E a s t r e s p e c t i v e l y c o u l d move e i t h e r b y r a i l o r t hrough the c a n a l . 6 John Buchanan R o l l i t , "Aspects of the r a i l w a y "Droblem" , Canadian J o u r n a l of Economics and P o l i t i c a l  S c i e n c e s , (1939), p. 48. ? J . L . McDougall, "Aspect of the R ailway Problem", Motor C o m p e t i t i o n and Railways Labor C o s t s , Canadian  J o u r n a l of Economics and P o l i t i c a l S c i e n c e s , (1939), P. 52. . 1 9 A g r e a t many i n d u s t r i e s s h i p p e d one hundred per cent by t r u c k i n the summer months, or by boat, and came back t o the r a i l w a y o n l y f o r the w i n t e r h a u l . T h i s l e f t the r a i l w a y as a "standby", as put by C D . Howe, the 8 then M i n i s t e r of T r a n s p o r t . The r a i l w a y s f o r y e a r s had been f i g h t i n g a l o s i n g b a t t l e a g a i n s t t h e s e new modes of t r a n s p o r t a t i o n ; e i t h e r t h e y m a i n t a i n e d r a t e s but l o s t b u s i n e s s or cut the r a t e s t o o b t a i n or r e t a i n b u s i n e s s , 9 which meant l e s s r e v e n u e s . i n both c a s e s . I t was e s t i m  a t e d t h a t the r a i l w a y s ' g r o s s revenues have been reduced by 38 m i l l i o n d o l l a r s p e r annum e i t h e r through t r a f f i c l o s t t o the t r u c k s o r through r a t e r e d u c t i o n s n e c e s s a r y 10 t o h o l d t r a f f i c t o the r a i l s . 2 . R o y a l Commission on Railways and T r a n s p o r t a t i o n  1952. The Royal Commission on Railways and T r a n s p o r t a t i o n (1932) acknowledged the d i v e r s i o n of t r a f f i c from the r a i l w a y s t o the highways "due t o the f a c t t h a t conveyance by r o a d was i n t r i n s i c a l l y a more s u i t a b l e form of t r a n s  p o r t , e i t h e r because the convenience a f f o r d e d by the road o Railway Age, (Feb. 2 0 , 1937), P. 3+4. q y "Agreed Charges on Railways", A . C Wakeman, Railway  Age, (June 18, 1938), p. 2 5 . 10 P a i r w e a t h e r , op. c i t . , p. 1 2 3 -2-0 v e h i c l e outweighs o t h e r c o n s i d e r a t i o n s or because i t i s 11 d e f i n i t e l y cheaper". The commissioners r e c o g n i z e d the need f o r r e g u l a t i n g r o a d motor s e r v i c e s and e q u a l  i z i n g the c o n d i t i o n s under which the r o a d and r a i l s e r v i c e s were p r o v i d e d . Otherwise,as t h e y s a i d , " I f the r a i l w a y s l o s e a l a r g e p a r t of t h e i r p r o f i t a b l e s h o r t d i s t a n c e t r a f f i c t o the roads a readjustment of the whole f r e i g h t s t r u c t u r e may be n e c e s s a r y w i t h a p o s s i b l e i n c r e a s e i n the r a t e s charged f o r the l o n g - 12 d i s t a n c e and heavy f r e i g h t t r a f f i c . " I n t h e i r recommendations th e y f e l t i t was t h e i r duty "to express the view t h a t even under more f a v o r a b l e c i r c u m s t a n c e s , the f i n a n c i a l p o s i t i o n of the r a i l w a y may be such as t o demand t h a t the whole q u e s t i o n of t a r i f f s and t o l l s i n i t s widest sense s h o u l d be the s u b j e c t of a s p e c i a l 13 i n v e s t i g a t i o n . " y The b i g problem was t h a t an e x c l u s i v e t r a n s p o r t a t i o n system i n the "Dominion f i e l d e s t a b l i s h e d by e x p e n d i t u r e s almost a s t r o n o m i c a l was e f f e c t i v e l y c h a l l e n g e d by a newer method of t r a n s p o r t a t i o n f a l l i n g e x c l u s i v e l y — o r almost s o — w i t h i n the j u r i s d i c t i o n o f the p r o v i n c e s w i t h con sequent p o s s i b i l i t y of g r e a t and i n c r e a s i n g damage t o 11 Canada: Royal Commission on Railways and T r a n s  p o r t a t i o n , Report, (L.P. D u f f , Chairman), Ottawa: King's P r i n t e r 1932, p. 55. 1 2 I b i d . . 1 5 I b i d . , p. 60. 21! the e a r l i e r system." There was then i n the r e p o r t of the Commission no recommendations f o r agreed r a t e s s p e c i f  i c a l l y but a need f o r t r u c k i n d u s t r y r e g u l a t i o n and a s p e c i a l i n v e s t i g a t i o n f o r r a t e s and t a r i f f s . 3 . I n f l u e n c e of the B r i t i s h Road and R a i l T r a f f i c  A c t . I n the s p r i n g o f 1937, a T r a n s p o r t B i l l was p r e s e n t e d by the M i n i s t e r o f T r a n s p o r t C D . Howe t o the Commons f o r a d o p t i o n . I t had as i t s purpose the Dominion R e g u l a t i o n of a l l forms of t r a n s p o r t . P a r t VI of the B i l l i n t r o  duced a new f e a t u r e , one t h a t had been adopted, i n England and had met w i t h a g r e a t d e a l o f sucess t h e r e , as mentioned by C D . Howe to the Dominion Senate Committee on Railways, 15 T e l e g r a p h s and Harbours. y I t gave p e r m i s s i o n f o r a c a r r i e r t o c o n t r a c t w i t h a customer f o r the e x c l u s i v e c a r r i a g e o f i t s goods a t a r a t e which was a d e p a r t u r e from the t a r i f f r a t e and the c o n t r a c t c o u l d o n l y be made v/ith the a p p r o v a l of the Board of T r a n s p o r t Commissioners. When the B i l l r eached the Senate i t was k i l l e d , c h i e f l y because i t sought t o r e g u l a t e i n t e r p r o v i n c i a l highway t r a f f i c and r e g u l a t e as w e l l f r e i g h t t r a f f i c on the Great Lakes. 14 Canada: Royal Commission on D o m i n i o n - P r o v i n c i a l R e l a t i o n s , Report, Book I I , Recommendations, ( J . S . S i r o i s , Chairman), 19.40, p. 200. 15 y Canada: Royal Commission on Agreed Charges, Report, (W..F.A. Turgeon, Chairman), Ottav/a; Queen's Printer"^ 1955, 2 2 4-. E n a c t i n g of agreed charges i n the T r a n s p o r t A c t . The next y e a r the M i n i s t e r of T r a n s p o r t came back w i t h a m o d i f i e d T r a n s p o r t B i l l which met c o n s i d e r a b l e o p p o s i t i o n , p a r t i c u l a r l y from the highway t r a n s p o r t o p e r a t o r s and c e r t a i n s h i p p e r s and s h i p p i n g o r g a n i z a t i o n s , t o t h e "some what s i m i l a r p r o p o s a l i n c l u d e d i n the B i l l " of the 16 p r e v i o u s y e a r . E r i m a r i l y t o enable the Canadian r a i l w a y companies t o meet t h e i r ( u n r e g u l a t e d ) highway c o m p e t i t i o n , "Agreed Charges" became law as P a r t V of the T r a n s p o r t Act 1 9 3 8 , 2 George VI, Chapter 5 3 , a s s e n t e d t o 1 s t J u l y , 1 9 3 8 . p. 2 2 . E x c e r p t from the M i n i s t e r ' s speech: "Great B r i t a i n had t h i s t r o u b l e perhaps t o a g r e a t e r e x t e n t than Canada, because t h e i r d i s t a n c e s are s h o r t e r and a l a r g e r p r o p o r t i o n of r a i l w a y b u s i n e s s t h e r e i s v u l n e r  a b l e t o t r u c k c o m p e t i t i o n than would be the case i n Canada. In the. o l d c o u n t r y the p r i n c i p l e of agreed charges has been adopted and a p p l i e d and I am t o l d t h a t a f t e r a thorough t r i a l the B r i t i s h people are w e l l s a t i s f i e d w i t h agreed charges as a means of s t r a i g h t  e ning ''out t h e i r t r a n s p o r t a t i o n d i f f i c u l t i e s . My deputy m i n i s t e r spent seven months i n England w i t h i n the l a s t y e a r s t u d y i n g the q u e s t i o n a n d I am c o n v i n c e d t h a t agreed charges are working out t o the b e n e f i t of the p u b l i c as w e l l as of the t r a n s p o r t a t i o n i n d u s t r y i t s e l f . 16 T r a f f i c S t u d i e s , P u b l i s h e d by the Canadian M a n u f a c t u r e r s ' A s s o c i a t i o n , Toronto, p. 1 0 3 (no d a t e ) . 2 3 " CHAPTER I I TRANSPORT ACT 1 9 3 8 : PART V;, AGREED CHARGES A. DESCRIPTION OF THE AGREED CHARGES BY THE ACT 1 . Purpose of agreed charges. We have seen pre v i o u s l y t h a t p r i o r t o 1 9 3 8 when r a i l w a y s reduced r a t e s , i n order t o meet co m p e t i t i o n from other c a r r i e r s , they found t h a t lower t o l l s added to t h e i r t r a f f i c and revenue but o f t e n i t d i d not l a s t l ong because shippers used steamships or t r u c k s d u r i n g the summer, and i n bad weather or when the r a t e s of steamships or t r u c k s were h i g h they sent t h e i r f r e i g h t by r a i l . As put by the M i n i s t e r of Transport, C D . Howe, "Railways were used as a standby." Railways f e l t they c o u l d g i v e lower t o l l s i f they were assured of a l l or most of the business of c e r t a i n s hippers throughout the year i n s t e a d of being l e f t , because of c o m p e t i t i o n , w i t h the u n p r o f i t a b l e p o r t i o n not handled by t r u c k s . As mentioned by A.W. C u r r i e , b a s i c a l l y an agreed charge i s a q u a n t i t y d i s c o u n t which r a i l w a y s can a f f o r d t o g i v e because they get most of the t r a n s p o r t a t i o n -1 business of shippers who come under the agreement. A-..W. C u r r i e , Economics of Canadian T r a n s p o r t a t i o n , Toronto U n i v e r s i t y P ress (Toronto 1 9 5 9 ) p. 226. The purpose o f agreed charge was t o c r e a t e an e x c e p t i o n t o the g e n e r a l r u l e t h a t a r a i l w a y had t o charge equal t o l l s f o r l i k e s e r v i c e s by e n a b l i n g the r a i l w a y s t o meet the u n r e g u l a t e d c o m p e t i t i o n of t r u c k s . A c c o r d i n g t o the Commissioners i n 1 9 5 1 " I t appears obvious t h a t P a r l i a m e n t d i d not i n t e n d the agreed charges t o be a weapon to d e s t r o y or e l i m i n a t e c o m p e t i t i o n but r a t h e r p to enable the r a i l w a y s to meet c o m p e t i t i o n . 2 . P a r t i e s who can e n t e r i n t o agreement. The T r a n s p o r t Act 1 9 3 8 d e f i n e d an agreed charge, as a "charge agreed upon between a c a r r i e r and a s h i p p e r as i n t h i s Act p r o v i d e d and i n c l u d e s the c o n d i t i o n s a t t a c h e d t h e r e t o j " ^ and c a r r i e r i s d e f i n e d as "any person engaged i n the t r a n s p o r t of goods or passengers and s h a l l i n c l u d e any company which i s s u b j e c t t o the Railway A c t . " The Railway Act does not cover p r o v i n - c i a l l y owned r a i l w a y s but does cover any r a i l w a y which forms p a r t of c o n t i n u o u s system of r a i l w a y s o p e r a t e d o Royal Commission on T r a n s p o r t a t i o n , Report, (W.P.A. Turgeon, Chairman), Ottawa; King's P r i n t e r 1 9 5 1 , P« 9 5 - ^ S t a t u t e s of Canada, 2 George VI, Chapt. 5 3 ( 1 9 3 8 ) " T r a n s p o r t A c t " , S. 2 . ( 1 ) ( a ) . 4 I b i d . , 2 . ( 1 ) ( d ) . 2 5 t o g e t h e r and c o n n e c t i n g one p r o v i n c e w i t h another. T h i s i n c l u d e s a l l Canadian Railways s u b j e c t t o the j u r i s d i c t i o n o f P a r l i a m e n t , and a l s o water c a r r i e r s t o t he ext e n t t h a t they may be s u b j e c t t o the Tr.ans- 5 p o r t A c t . Highway t r a n s p o r t i s not covered. The s h i p p e r "means a person sending o r r e c e i v i n g o r d e s i r i n g t o send or s e r v i c e goods by means of any 6 c a r r i e r t o whom t h i s Act a p p l i e s . " S e c t i o n 3 5 O ) of the Act reads as f o l l o w s : N o t w i t h s t a n d i n g a n y t h i n g i n the Railway Act or i n t h i s A c t , a c a r r i e r may make such charge o r charges f o r the t r a n s p o r t o f the goods o f any s h i p p e r o r f o r the t r a n s p o r t o f any p a r t o f h i s goods as may be agreed between the c a r r i e r and the s h i p p e r : P r o v i d e d t h a t any such agreed charge r e q u i r e the a p p r o v a l o f the Board, and the Board s h a l l not approve such charge i f , i n i t s o p i n i o n , the o b j e c t t o be s e c u r e d by the making of the agreement can, h a v i n g r e g a r d t o a l l the c i r c u m s t a n c e s , adequately be se c  u r e d by means of a s p e c i a l o r compet i t i v e t a r i f f of t o l l s under the R a i l  way A ct or t h i s A c t ; and p r o v i d e d f u r  t h e r t h a t when the t r a n s p o r t i s by r a i l from or t o a c o m p e t i t i v e p o i n t o r between c o m p e t i t i v e p o i n t s on the l i n e s of two or more c a r r i e r s by r a i l t he Board s h a l l not approve an agreed charge u n l e s s the competing c a r r i e r s by r a i l j o i n i n making the agreed charge." y R e v i s e d S t a t u t e s o f Canada 1 9 2 7 , V o l . I l l , Ghapt. 1 7 0 , S. 5 . 6. ( c ) . 6 I b i d . , S.. 2 . ( 1 ) . 26 A s p e c i a l t a r i f f was one t h a t could "be charged by the company f o r any p a r t i c u l a r commodity or commod i t i e s , or f o r each or any c l a s s or c l a s s e s of the f r e i g h t c l a s s i f i c a t i o n , or to or from a c e r t a i n p o i n t or p o i n t s on the r a i l w a y s " ^ and a co m p e t i t i v e t a r i f f was one "to be charged by the company f o r any c l a s s or c l a s s e s of the f r e i g h t c l a s s i f i c a t i o n , or f o r any commodity or commodities, to or from any s p e c i f i e d p o i n t or p o i n t s which the Board may deem or have d e c l a r e d t o be co m p e t i t i v e p o i n t s . . . " 3 . Sanctions by the Board of Transport Commis  s i o n e r s f o r Canada. The Board of Railway Commissioners f o r Canada as d e f i n e d i n the Railway A ct, Chapt. 1 7 0 (Revised S t a t u t e s of Canada, 1 9 2 7 ) was s u b s t i t u t e d i n the Transport Act for* "the Board of Transport Commis s i o n e r s f o r Canada" which had a duty "to perform the f u n c t i o n s vested i n the Board by t h i s Act and by the Railway Act w i t h the object of c o o r d i n a t i n g and har monizing the op e r a t i o n s of a l l c a r r i e r s engaged i n 7 I b i d . , S. 3 2 9 ( . 3 ) . 8 I b i d . , S. 3 2 9 ( 4 ) . » 27 t r a n s p o r t by r a i l w a y s , s h i p s and a i r c r a f t . . . " ^ In c o n s i d e r i n g the a p p l i c a t i o n f o r the a p p r o v a l of an agreed charge the Board has t o take i n t o c o n s i d  e r a t i o n any s h i p p e r , any r e p r e s e n t a t i v e body of s h i p p e r s and/or any c a r r i e r who c o n s i d e r s " t h a t h i s b u s i n e s s w i l l be u n j u s t l y d i s c r i m i n a t e d a g a i n s t i f the agreed charge i s approved and i s made by the c a r r i e r , o r t h a t h i s b u s i n e s s has been u n j u s t l y d i s c r i m i n a t e d a g a i n s t as a r e s u l t of the making of the charge by v i r t u e o f a p r e - 10 v i o u s agreement." A l s o on any a p p l i c a t i o n (agreed charge o r f i x e d charge) the Board must have r e g a r d t o a l l c o n s i d e r a t i o n s r e l e v a n t t o the e f f e c t on "the net revenue of the c a r r i e r " and "on the b u s i n e s s of any s h i p p e r by whom, or i n whose i n t e r e s t s , o b j e c t i o n i s made t o a p p r o v a l b e i n g g i v e n t o an agreed charge, or 11 a p p l i c a t i o n i s made f o r a p p r o v a l t o be withdrawn." 4 . F i x e d charges. Any s h i p p e r who c o n s i d e r s t h a t h i s b u s i n e s s has been or w i l l be d i s c r i m i n a t e d a g a i n s t as a r e s u l t o f an agreed charge "may at any time a p p l y t o the Board f o r a charge t o be f i x e d f o r 9 T r a n s p o r t A c t ( 1 9 3 8 ) , op. c i t . , S. 3 ( 1 ) , ( 2 ) . 1 0 I D i d . , S e c t i o n 3 5 , ( 5 ) . 1 1 I b i d . , S e c t i o n 3 5 , ( 1 3 ) -the t r a n s p o r t o f h i s goods ( b e i n g the same goods as o r s i m i l a r goods t o and b e i n g o f f e r e d f o r c a r r i a g e under s u b s t a n t i a l l y s i m i l a r c i r c u m s t a n c e s and c o n d i  t i o n s as the goods t o which the agreed charge r e l a t e s ) by the same c a r r i e r . . . " and i f the Board i s s a t i s f i e d t h a t t h e r e has been or w i l l be u n j u s t d i s c r i m i n a t i o n , i t w i l l f i x a.charge. I n f i x i n g a charge the Board may put a r e s t r i c t i o n o f time but no charge s h a l l be f i x e d f o r a p e r i o d beyond the p e r i o d o f the agreed 1 2 charge. When the Board has f i x e d a charge f o r a s h i p p e r c o m p l a i n i n g of an agreed charge, such a s h i p p e r i s not e n t i t l e d t o make an a p p l i c a t i o n f o r 13 an agreed charge f o r the same goods. ' Any charge f i x e d i n f a v o u r of a s h i p p e r c o m p l a i n i n g of an agreed charge i s s u b j e c t t o c o r r e s p o n d i n g m o d i f i c a - 14- txons when the l a t t e r has been m o d i f i e d . 1 2 I b i d . , S e c t i o n 3 5 (6), ( 7 ) . 1 3 I b i d . , S e c t i o n 3 5 ( 9 ) ( c ) . 1 4 I b i d . , S e c t i o n 3 5 ( 1 1 ) , 3 6 ( 2 ) . 29 B. AMENDMENTS WITH RESPECT TO AGREED CHARGES 1. Recommendations of the Royal Commission on  T r a n s p o r t a t i o n 1951. Complaints were made ag a i n s t the p r i n c i p l e and a d m i n i s t r a t i o n of agreed charges to the Commission. The Pr o v i n c e s of A l b e r t a and Manitoba asked f o r the r e p e a l of P a r t V of the Transport Act i . e . the s e c t i o n on agreed charges f o r s i m i l a r reasons. Manitoba claimed t h a t "the Agreed Charge method of r a t e making,might e l i m i n a t e t r u c k c o m p e t i t i o n r a t h e r than meet i t " , t h a t i t "favours the l a r g e s h i p p e r " and t h a t the r a i l w a y s have s u f f i  c i e n t power w i t h the co m p e t i t i v e t a r i f f s . A l b e r t a complained t h a t " a l l s h i p p e r s should be t r e a t e d a l i k e , r e g a r d l e s s of size", and t h a t the agreed charges, favour p the l a r g e r ones. The Canadian Manufacturers A s s o c i a t i o n mentioned t h a t the agreed charge system enables the l a r g e shippers t o "make a d e a l w i t h the r a i l w a y s which the s m a l l e r shippers may not be .able t o make because of h i s i n a b i l - i t y t o agree on the same terms." 1 Royal Commission on T r a n s p o r t a t i o n , Report, (W.F.A. Turgeon, Chairman), Ottawa: King's P r i n t e r , ("1951 )• 2 I b i d . , p. 88. I b i d . , p. 89-3 0 The Canada Steamship L i n e s L i m i t e d expressed the view t h a t i t was an e x c e p t i o n a l method of r a t e making and t h a t t h i s p r i v a t e c o n t r a c t gave terms more f a v o r  able t o the i n d i v i d u a l s h i p p e r than those o f f e r e d by the c a r r i e r t o the general p u b l i c , t h a t d u r i n g the time the agreed charge remains i n f o r c e i t denies the other c a r r i e r s the o p p o r t u n i t y to compete f o r t h i s business and t h a t the safeguards contained i n the Act were "a very minimum" and t h a t the u n r e s t r i c t e d use of the agreed charge by r a i l w a y s "would f o r c e motor LL c a r r i e r s t o the w a l l . " The p o s i t i o n s taken by the r a i l w a y s were, on one hand, f o r the Canadian P a c i f i c Railway Company, t h a t the agreed charges were s a t i s f a c t o r y and t h a t they would not o b j e c t t o " g r e a t e r f l e x i b i l i t y " without suggesting any amendment. On theother hand the approach of the Canadian N a t i o n a l ^Railway Company v/as q u i t e d i f f e r e n t . The company maintained " t h a t P a r t V of the Act v/as u n s a t i s f a c t o r y i n i t s present form" , the Act having f a i l e d t o enable the r a i l w a y s to meet c o m p e t i t i o n , p a r t i c u l a r l y of motor t r u c k s , t h a t t h e r e were too many delays by the Board i n s e c u r i n g approval and t h a t the water c a r r i e r c o u l d object t o the approval even though only a p o r t i o n of i t s r a t e s were r e g u l a t e d 4 I b i d . by the A c t . The Canadian N a t i o n a l then proposed amendments t h a t would have the e f f e c t s of doing away w i t h the n e c e s s i t y of p r i o r approval by the Board; e l i m i n a t i n g the c o n d i t i o n of the agreement t o i n c l u d e the r i v a l r a i l c a r r i e r ; e s t a b l i s h i n g the agreed charge on the b a s i s of r a t e making; e l i m i n a t i n g the c o n d i t i o n of a d i f f e r e n t r a t e depending on the number of c a r s and e l i m i n a t i n g the d i s a p p r o v a l by the Board of the agreed charge i f the object c o u l d have been secured by a s p e c i a l or co m p e t i t i v e t a r i f f ; p r e v e n t i n g o b j e c t i o n t o agreed charges by water c a r r i e r s and f i n a l l y p e r m i t t i n g the shippers who would be u n j u s t l y d i s c r i m i n a t e d a g a i n s t t o apply f o r a f i x e d charge but not t o ob j e c t t o the agreed charge i t s e l f . The two r a i l w a y companies were asked t o c o n s u l t together i n order to agree on amendments t o be pro posed as a r e s u l t of t h e i r divergence of views, but were unable t o do so even though the Canadian N a t i o n a l agreed t h a t i t s proposed amendments may have gone too f a r . I n i t s c o n c l u s i o n s , the commission argued t h a t the agreed charge p r o v i s i o n s of the Act had "not yet had a f a i r t r i a l " and t h a t i t would be unwise t o I b i d . , pp. 8 9 - 9 0 . 32 accept the proposed amendment by the Canadian N a t i o n a l and t h a t "none of the amendments to the Act proposed by the P r o v i n c e s or by the r a i l w a y s can.be recommended." 7 2. Royal Commission on Agreed Charges 1955 and  L e g i s l a t i o n . The Royal Commission on T r a n s p o r t a t i o n 1 9 5 1 had recommended to the Government t h a t r a t e s to ( o r from) i n t e r m e d i a t e p o i n t s should not exceed the " t r a n s c o n t i n e n t a l " r a t e by more than o n e - t h i r d . This p r o p o s a l was accepted and the Railway Act amended a c c o r d i n g l y ( S e c t i o n 337) •> but t h i s one and o n e - t h i r d r u l e a p p l i e d t o t r a f f i c moving under the Railway Act i . e . not under the Transport Act. Paced w i t h a r e d u c t i o n i n t h e i r earnings on t r a f f i c moving t o i n t e r m e d i a t e p o i n t s the r a i l w a y s were f o r c e d t o examine t h e i r b a s i c t r a n s c o n t i n e n t a l " c o m p e t i t i v e " r a t e s ( p u b l i s h e d under the Railway Act) f o r an "Agreed Charge" (under the Transport A c t ) . I t was done f o r c a s t i r o n pipe and f i t t i n g s moving from Toronto and T r o i s - R i v i e r e s to p o i n t s i n B . C . The approval of t h i s Agreed Charge by the Board v/as pro t e s t e d . The p r o t e s t f a i l e d and the Province of 6 - i b i d . , pp. 9 5 - 6 . 7 ' This r e f e r s to the Royal Commission on Agreed Charges, Report, (W.F.A. Turgeon, Chairman) Ottawa: Queen's P r i n t e r , 1 9 5 5 * 33 A l b e r t a requested the F e d e r a l Government t o amend the l e g i s l a t i o n so t h a t the one and o n e - t h i r d r u l e would apply on t r a f f i c moving under the Transport A c t . Hence the appointment of t h i s Royal Commission on Agreed Charges i n May 1954. In r e v i e w i n g the a p p l i c a t i o n of Agreed Charges of the Transport Act the commissioner mentioned th a t he was s a t i s f i e d t h a t no i n j u s t i c e c o u l d be a s s e r t e d and was impressed w i t h the b e l i e f t h a t the motor i n d u s t r y had become a f a c t o r of permanent value i n Canada's economic l i f e and t h a t no l e g i s l a t i o n should -be contemplated to cause i t v i t a l damage. On the other hand the great d e t e r i o r a t i o n of the f i n a n c i a l p o s i t i o n of the r a i l w a y s i n the recent years d e s p i t e the improvement of t h e i r p r o p e r t y and s e r v i c e s v/as acco r d i n g t o the commissioner opposed t o the n a t i o n a l i n t e r e s t . ^ Many submissions v/ere made to the commission as k i n g f o r the r e p e a l of t h i s p a r t of the Transport Act on the grounds of d e s t r u c t i o n of highway t r a n s p o r t , d i s c r i m i n a t i o n f o r one form of t r a n s p o r t a t i o n and f o r shippers engaged i n the same i n d u s t r y . Other sub missions proposed p r a c t i c a l l y an almost p e r f e c t degree of free.dom f o r the r a i l w a y s i n regard to agreed I b i d . , p. 26 c h a r g e s . J With r e s p e c t t o the s p e c i a l case p r e s e n t e d by A l b e r t a and l a t e r j o i n e d by Saskachewan, the Royal Commission o u t l i n e d the arguments pro and con as p r e s e n t e d t o i t by i n t e r e s t e d p a r t i e s and d e c i d e d t h a t i t would not recommend the a p p l i c a t i o n of the one and o n e - t h i r d r u l e t o agreed charges, due t o the d i f f i c u l t i e s i n v o l v e d i n i t s p r a c t i c a l a p p l i c a t i o n . And even i f i t were found p o s s i b l e t o a p p l y i t to c e r t a i n cases " i t would on the whole be u n p r o d u c t i v e of s u b s t a n t i a l b e n e f i t t o i n t e r m e d i a t e t e r r i t o r y " . F u r t h e r , the f i n a n c i a l p o s i t i o n of the r a i l w a y s b e i n g u n f a v o r a b l e , i t would be unwise t o r a i s e new c o m p l i c a  t i o n s which might hamper them c o n s i d e r a b l y . F i n a l l y , the p o s i t i o n of i n t e r m e d i a t e t e r r i t o r y was a l t e r e d b e n e f i c i a l l y and s u b s t a n t i a l l y w i t h the new competi t i v e c o n d i t i o n s of t r a n s p o r t , i . e . highway t r a n s p o r t . The commission took "the view t h a t the o b j e c t t o be a t t a i n e d , as n e a r l y as p o s s i b l e , was t o s e t the ' r a i l w a y s f r e e , but w i t h the s a f e g u a r d o f c e r t a i n p r e  c a u t i o n s i n t e n d e d t o p r e s e r v e the r i g h t s of o t h e r i n t e r e s t e d p a r t i e s , " and w i t h t h i s i n mind i t o u t  l i n e d the substance of the l e g i s l a t i o n t h a t s h o u l d q J See pp. 27 -36 f o r s u b m i s s i o n s . 1 0 I b i d . , p. 4-5. 1 1 I b i d . , p. 3 6 . 3 5 " 12 govern the p r a c t i c e of agreed charges. 1. That the procedure f o r b r i n g i n g an agreed charge i n t o e f f e c t should be s i m p l i f i e d and shortened i . e . no p r i o r approval by the Board. I t would a l l o w the agreed charge to become e f f e c t i v e 2 0 days a f t e r i t s f i l i n g . 2 . That the e x i s t i n g p r o v i s i o n s of the S t a t u t e , w i t h regard t o the shipper who f e e l s t h a t he i s i n j u r e d i n h i s business i n t e r e s t s by an "unjust d i s c r i m i n a t i o n " , and t h a t the Board being an " i m p a r t i a l t r i b u n a l which has u n r e s t r i c t e d power to give him the remedy which h i s case warrants,"'not be changed. 3 . That p r o v i s i o n be made to a l l o w water c a r r i e r s t o become p a r t i e s t o any agreed charges upon c e r t a i n c o n d i t i o n s , i . e . "any c a r r i e r by water which has e s t a b l i s h e d through routes and interchange arrangements v/ith a c a r r i e r by r a i l . " 4 - . That U.S. r a i l w a y s having l i n e s i n Canada be allowed not t o i n i t i a t e agreed charges but t o become a p a r t y i f they so d e s i r e . 5 . "That an agreed charge may be terminated i n respect t o any p a r t y by withdrawal by t h a t p a r t y upon 9 0 days' n o t i c e i n cases where the agreement has been i n e f f e c t f o r at l e a s t one year." 1 2 I b i . d - •» PP* 36-38. 36 6. That "once the agreement has become e f f e c t i v e and the remedy of a f i x e d charge has been made r e a d i l y a v a i l a b l e t o every s h i p p e r u n j u s t l y a f f e c t e d by i t , the charge should be allowed t o stand f o r a reasonable time (3 months) before being made sub j e c t t o a t t a c k by others ( o t h e r s being any c a r r i e r , or a s s o c i a t i o n of c a r r i e r s , by water or r a i l or any a s s o c i a t i o n or other body r e p r e s e n t a t i v e of the shippers of any l o c a l i t y ) not so immediately concerned w i t h i t s o p e r a t i o n . " These complaints should at l e a s t t o some extent be based upon the " i n t e r e s t s of the p u b l i c " i n order t o be allowed to come before the Board. I t i s t o be noted t h a t these complaints should be made to t h e M i n i s t e r of Transport. L e g i s l a t i o n (1955) r e g a r d i n g agreed charges a (3-4 E l i z a b e t h I I , Chapter 5 9 ) . (a) S e c t i o n 32 of the Revised Act (28th J u l y , 1955)- 1. Subsection (1) provides t h a t "Notwithstanding anything i n the Railway Act or i n t h i s (Transport) A c t , a c a r r i e r may make any such charges f o r the t r a n s p o r t from one p o i n t i n Canada to another p o i n t i n Canada of goods of a shipper as are agreed between the c a r r i e r and the s h i p p e r " . The movements from a p o i n t to another p o i n t i n Canada were not s p e c i f i c a l l y s t a t e d p r e v i o u s l y , and i t excluded previous r e f e r e n c e as t o whether the 37 o b j e c t of an Agreed Charge c o u l d be achieved by means of a "c o m p e t i t i v e " t a r i f f . 2. Sub-section (2) provides t h a t an Agreed Charge cannot be made unl e s s r a i l c a r r i e r s (1) j o i n t h e r e i n , or .('2) give n o t i c e of consent i n w r i t i n g . P r e v i o u s l y a l l c o m p e t i t i v e r a i l c a r r i e r s had t o be a p a r t y t o the Agreed Charge before i t c o u l d be e f f e c t i v e . 3. Sub-section (3) provides t h a t the f o r e g o i n g s h a l l not apply on a U n i t e d S t a t e s c a r r i e r ' s Canadian l i n e s except as between p o i n t s on i t s l i n e s i n Canada which i t serves e x c l u s i v e l y . 4 . Hov/ever, Sub-section (4) allows a U.S. c a r r i e r t o be p a r t y t o an Agreed Charge (a) When i t operates as a p o i n t of o r i g i n or a p o i n t of d e s t i n a t i o n , or between such p o i n t s , and — (b) Where i t forms part of a continuous route by r a i l , e i t h e r e n t i r e l y i n Canada, or p a r t l y i n the U.S., pro v i d e d a l l r a i l w a y s over whose l i n e s the con t i n u o u s route i s e s t a b l i s h e d concur. The U.S. l i n e must f i l e w i t h the Board a n o t i c e of i n t e n t i o n t o become a p a r t y t o the agreement. No s p e c i f i c mention was made of U.S. c a r r i e r s p r e v i o u s l y , as i t i s i n the l a s t two Sub-sections and they c o u l d enter i n t o an Agreed Charge on through t r a f f i c between Canadian p o i n t s . 5. Sub-section (5) provides t h a t where an Agreed 38 Charge i s made by a c a r r i e r by r a i l a water c a r r i e r i s e n t i t l e d t o become a p a r t y t h e r e t o , at agreed d i f f e r e n t i a l s , p rovided t h a t the water c a r r i e r has e s t a b l i s h e d through r o u t e s andinterchange arrange ments w i t h the r a i l c a r r i e r and p u b l i s h e s t a r i f f s . There v/as no r e f e r e n c e to water c a r r i e r s i n the o r i g i n a l Transport Act of 1938 and any v/ater l i n e s u b j e c t t o t h i s Act of 1938 c o u l d e n ter i n t o Agreed Charges on i t s l o c a l t r a f f i c . The a l t e r a t i o n merely prov i d e d t h a t i t c o u l d p a r t i c i p a t e i n any Agreed Charge made by the Railways i n through t r a f f i c . 6. Sub-section ( 6 ) f o r the u n i t of weight and the c a r l o a d r a t e v/as not changed. 7. Sub-section (7) p r o v i d e s t h a t — (a) Agreement f o r an agreed charge s h a l l be executed i n t a r i f f form, (b) A . d u p l i c a t e o r i g i n a l s h a l l be f i l e d w i t h the Board w i t h i n seven days, and (c) The agreed charge s h a l l be e f f e c t i v e twenty days a f t e r such f i l i n g w i t h the Board. The p r e v i o u s method was t h a t the Board approved an Agreed Charge and i t s e f f e c t i v e date. The t h i r t y day p e r i o d was changed to twenty days, v/hich was a compromise betv/een the f i f t e e n day p e r i o d requested by the Railways and the t h i r t y days requested by other '39 13 p a r t i e s . The Board had to give consideration to whether the r e s u l t could be obtained by a normal "competitive" t a r i f f , to the e f f e c t on the net revenue of the c a r r i e r and to other conditions which appear to i t to be relevant. The present system obviates any delay that might otherwise occur. 8. Sub-section (8), with regard to the p u b l i  cation of an Agreed Charge as other t a r i f f s as pro vided by Sub-section (1) of Section 333 of the Railway Act, was not changed. 9« By f i l i n g "notice of intent with the Board, any Other shipper may, v/ith the consent of c a r r i e r , become a party to an Agreed Charge, to be e f f e c t i v e on an agreed date. This was not s p e c i f i c a l l y covered i n the previous Act. 10. Sub-section (10) provides that the Board may " f i x " a charge upon a p p l i c a t i o n of any shipper who considers that h i s business i s or w i l l be un j u s t l y discriminated against by an Agreed Charge. The circumstances and conditions must be the same. Ib i d . , p. 36, Item 1, and also p. 13. 40 The e f f e c t i s the same as under the previous act and the " f i x e d " charge arrangement might be used i f the c a r r i e r s were not i n agreement w i t h the a p p l i c a n t s h i p p e r . The l a t t e r then would apply t o the Board f o r a "•fixed" charge. 11. Sub-section (11) provides t h a t once the agreement f o r an Agreed Charge has been f i l e d p r o p e r l y w i t h the Board and n o t i c e as o u t l i n e d i s g i v e n , the r a t e s p e c i f i e d s h a l l be the l a w f u l charge w i t h r e s p e c t t o such goods a f t e r the date the agreement takes e f f e c t u n t i l the agreement e x p i r e s or i s terminated. P r e v i o u s l y the e f f e c t i v e date c o u l d have been d e t e r  mined by the Board. 12. Sub-section (12) provides t h a t any p a r t y to an Agreed Charge may withdraw therefrom by g i v i n g n i n e t y days' n o t i c e p r o v i d e d the Agreed Charge has 14 been i n e f f e c t f o r at l e a s t one year. (b) S e c t i o n 3 3 , Revised Act (28th J u l y , 1 9 5 5 ) . This s e c t i o n d e a l s w i t h complaints. I t should be noted t h a t any agreed charge covered by S e c t i o n 32 must have been i n e f f e c t f o r t h r e e months i n so 15 f a r as appeals t o the M i n i s t e r are concerned. I b i d . , pv. 48, Sub-section 10, and a l s o Item 5 , p. 36. 15 I b i d . , p. 48, S e c t i o n 33 (1) and p. 38, second paragraph. 1. Sub-section (1) of S e c t i o n 33 p r o v i d e s t h a t , where an Agreed Charge has been i n e f f e c t at l e a s t t h r e e months, (a) any c a r r i e r , or a s s o c i a t i o n of c a r r i e r s , by water or by r a i l , or (b) any a s s o c i a t i o n or other body r e p r e s e n t a  t i v e of any s h i p p e r s of any l o c a l i t y , may complain t o the M i n i s t e r as t o u n j u s t d i s c r i m i n  a t i o n or u n f a i r advantage. The M i n i s t e r may, i f he i s s a t i s f i e d t h a t i t i s i n the p u b l i c i n t e r e s t t h a t the complaint should be i n v e s t i g a t e d , r e f e r the com p l a i n t t o the Board. 2. The G o v e r n o r - i n - C o u n c i l may r e f e r the Agreed Charge to the Board f o r i n v e s t i g a t i o n i f he has reason t o b e l i e v e t h a t an Agreed Charge may be und.esirable to the p u b l i c i n t e r e s t . P r e v i o u s l y complaints c o u l d be made to the Board before approval of an Agreed Charge by (a) any s h i p p e r p l e a d i n g u n j u s t d i s c r i m i n a t i o n (b) any r e p r e s e n t a t i v e body of s h i p p e r s , and (c) any c a r r i e r . I n t h i s Sub-section (2) the t r u c k e r s may appeal t o the Governor-in-Council because of: "Any a s s o c i a t i o n or other body r e p r e s e n t a t i v e of the shippers of any l o c a l i t y . " The term "public" i n t e r e s t i s used instead of "national" i n t e r e s t i n order to cover a s i t u a t i o n which might only a f f e c t a l o c a l i t y : "A c i t y , a town, and p o s s i b l y an adjacent area or any other undefined 16 t e r r i t o r y . " J. Sub-section ( 3 ) o u t lines the points to be considered by the Board on matters r e f e r r e d to i t by the Mi n i s t e r or Governor-in-Council. a) The e f f e c t on the net revenue of the c a r r i e r s . b) Whether the Agreed Charge i s undesirable i n the public i n t e r e s t . c) Whether i t places any other form of trans portation service at an u n f a i r disadvantage. 4-. Sub-section (4) provides that the Board, a f t e r a hearing, may make an order varying or can c e l l i n g the Agreed Charge or any other such order as i n the circumstances i t considers proper. 5. Sub-section (5) provides that any charge "f i x e d " i n favor of a complaining shipper ceases to operate or i s subject to corresponding modifications as may be determined by the Board when the l a t t e r v a r i e s or cancels the o r i g i n a l Agreed Charge. I b i d . , p. 3 8 , f i r s t paragraph. 45 3 . Royal Commission on T r a n s p o r t a t i o n 1959- This Royal Commission came only a few years a f t e r the one on Agreed Charges and d i d not t r e a t s p e c i f i  c a l l y the case of Agreed Charges even though there itfere submissions to t h i s e f f e c t . The Canadian Trucking A s s o c i a t i o n s I n c . mentioned t h a t i n the l a s t years the ease of entry and e x i t i n t h i s i n d u s t r y was more d i f f i c u l t and t h a t the i n d u s t r y was moving at an a c c e l e r a t i n g pace towards heavy c a p i t a l i z a t i o n and l a r g e f i r m s . I n order t o perform i t s economic func t i o n s e f f i c i e n t l y the t r u c k i n g i n d u s t r y needed a c e r t a i n degree of s t a b i l i t y and a c e r t a i n l e v e l of p r o f i t a b i l i t y t o a t t r a c t new c a p i t a l and to provide sources of " i n t e r n a l c a p i t a l f o r f u r t h e r reinvestment". They made the f o l l o w i n g p o i n t : "The t r u c k i n g i n d u s t r y i s no l o n g e r one l a r g e group of one-man operators who 18 can enter and leave the i n d u s t r y at w i l l . " They mentioned t h a t the adverse e f f e c t s of agreed charges have been obscured by the f a s t economic d e v e l  opment of the country but that i t might not be always 17 ' Canada: Royal Commission on T r a n s p o r t a t i o n , Report, (M.A. MacPherson, S r . , Chairman). Ottawa: Queen's P r i n t e r , 3 v o l s . , 1961-62. 18 Submission of the Canadian Trucking A s s o c i a t i o n s I n c . t o the MacPherson Commission on T r a n s p o r t a t i o n i n May 1 9 6 0 , p. 6 5 . so and then t h i s i n d u s t r y w i l l s u f f e r . They submitted t h a t the present safeguard against the abuse of the Agreed Charges should s a t i s f y two c o n d i t i o n s : ; a) The appeal procedure should be made more e f f e c t i v e . b) The p o t e n t i a l l y m o n o p o l i s t i c element of agreed charges should be c i r c u m s c r i b e d so t h a t no c o n t r a c t should r e q u i r e t h a t more than 50 per cent of the s h i p p e r ' s t r a f f i c be moved by the r a i l w a y . I n a study made to the Commission D.W,.. Carr 19 and A s s o c i a t e s mentioned th a t the r a i l w a y s are r e  q u i r e d to f i l l the major t r a n s p o r t r o l e i n Canadian economy and t h a t i t seemed "necessary to permit them to use extreme measures to h o l d t r a f f i c ; r a t h e r than a l i o * ; them to d e c l i n e as r a p i d l y as they otherwise would haye." : And the study added: " I t seems e v i d e n t , however, t h a t the growth of t r u c k i n g r e l a t i v e t o r a i l t r a n s p o r t w i l l continue i n s p i t e of agreed' charges." Ass mentioned b e f o r e , the Commission d i d not t r e a t agreed charges s p e c i f i c a l l y but s t a t e d t h a t the broad aim of p u b l i c t r a n s p o r t a t i o n p o l i c y was to ensure t h a t a l l the v a r i o u s modes of t r a n s p o r t be given a f a i r chance to f i n d t h e i r proper place w i t h i n a c o m p e t i t i v e system. Royal Commission...1959} op. c i t . , Vo. I l l , p. 45> . The Commission maintained t h a t the p r i n c i p l e ; r e s u l t i n g i n o b l i g a t i o n s imposed upon the r a i l w a y s by " t r a d i t i o n , law and p u b l i c p o l i c y , be l i f t e d " i n order to meet t h e i r c o mpetition w i t h p r i c e and s e r v i c e . When these n a t i o n a l o b l i g a t i o n s c o u l d be removed, remuneration should be found f o r the s e r v i c e s performed to prevent d i s t o r t i o n s i n resource a l l o c a t i o n s and 20 d i s t o r t i o n s xn p r i c i n g of r a i l s e r v i c e s . But by l i f t i n g these o b l i g a t i o n s the r a i l w a y s would no more have any advantages over the other modes of c o m p e t i t i o n and would be allowed to shed unremunera- t i v e p l a n t s and s e r v i c e s and by f r e e r ratemaking to enter markets and p r i c e s e r v i c e s i n accordance v/ith the economic r e a l i t i e s of r a i l w a y o p e r a t i o n . With t h i s N a t i o n a l T r a n s p o r t a t i o n P o l i c y of e s s e n t i a l n e u t r a l i t y , wherever c o m p e t i t i o n p r e v a i l s , "there i s no apparent reason why each mode of t r a n s p o r t cannot compete on the b a s i s of t e c h n o l o g i c a l adapt a b i l i t y and managerial s k i l l . So long as p o l i c y n e u t r a l i t y i s preserved, new methods and modes of t r a n s p o r t w i l l be encouraged on the b a s i s of t h e i r c o m p e t i t i v e a b i l i t y and o l d modes w i l l pass from the scene on the b a s i s of c o m p e t i t i v e d i s a b i l i t y . ""~ 2 0 I b i d . , p. 5 3 . 2 1 I b i d . , p. 276. 4 6 CHAPTER I I I EFFECTS ON THE TRANSPORTATION INDUSTRY A. RELATIVE IMPORTANCE OF GOODS TRANSPORTED UNDER AGREED CHARGES BY RAILWAYS 1. G e n e r a l . As m e n t i o n e d b e f o r e t h e p r i n c i p l e o f a g r e e d c h a r g e s came about i n 1938 because t h e r a i l w a y s were i n a bad s i t u a t i o n f i n a n c i a l l y as t h e i r r evenue had been d e c l i n i n g , and because t h e y had e x h a u s t e d t h e p o s s i b i l i t i e s o f b e t t e r i n g t h e i r p o s i  t i o n by g e n e r a l f r e i g h t r a t e i n c r e a s e s . They were l e f t w i t h t h e n e c e s s i t y t o f i n d p r a c t i c a l ways t o s e c u r e a l a r g e r s h a r e o f t r a f f i c o f f e r e d f o r t r a n s  p o r t a t i o n . The a g r e e d c h a r g e l e g i s l a t i o n had t h e e x p r e s s purpose o f h e l p i n g t h e r a i l w a y s t o cope more e f f e c t i v e l y w i t h t r a n s p o r t c o m p e t i t i o n s p e c i a l l y t r u c k c o m p e t i t i o n w h i c h was making s e r i o u s i n r o a d s upon t h e i r b u s i n e s s by methods w h i c h t h e y t h e m s e l v e s were p r e v e n t e d from u s i n g because o f t h e r e s t r i c t i o n s o f t h e R a i l w a y A c t . The r e c o r d shows t h a t i n p r a c t i c e t h e r a i l w a y s d i d n o t a t t a i n t h e o b j e c t sought by t h e T r a n s p o r t A c t i n t h e f i r s t decade o f a g r e e d c h a r g e s . The B o a r d o f T r a n s p o r t C o m m i s s i o n e r s r e p o r t e d t o t h e R o y a l Commis-47 s i o n on T r a n s p o r t a t i o n o f 1951 t h a t a t t h e end o f t h e y e a r 1950 o n l y 4-5 a g r e e d c h a r g e s h a d been a p p r o v e d , 38 o f w h i c h were t o meet h i g h w a y c o m p e t i  t i o n and 7 t o meet w a t e r c o m p e t i t i o n . Of t h i s number 23 were i n f o r c e a t t h e end o f 1950 i n v o l v i n g 73 s h i p p e r s . The g r o s s r e v e n u e p r o d u c e d by a g r e e d c h a r g e s f o r t h e two m a j o r r a i l w a y s i n 1950 was e s t i m a t e d a t a p p r o x i m a t e l y $10 m i l l i o n w h i c h r e p r e s e n t e d a s m a l l p e r c e n t a g e (2.4$) o f t h e i r t o t a l r e v e n u e f o r t h e same 1 y e a r . D u r i n g t h i s p e r i o d t h e t r u c k i n g i n d u s t r y was e x p a n d i n g r a p i d l y e v e n t h o u g h i t was r e t a r d e d b y w a r t i m e r e s t r i c t i o n s and p o s t w a r s h o r t a g e s . ^ The f o l l o w i n g t a b l e shows t h e i n t e r c i t y f r e i g h t t o n m i l e s moved by t y p e o f c a r r i e r , 1938 t o 1959* TA-BLE I INTERCITY FREIGHT TON-MILES PERFORMED BY TYPE OF CARRIER, 1938 TO 1959 ( B i l l i o n s o f t o n - m i l e s ) Y e a r T o t a l R a i l Road Wa te r O i l p i p e l i n e 1959 133-6 67-9 14.4 33-7 17.4- 1958 126.9 66.4 14.1 29.4 16.9 1957 132.2 71.4 10.7 31-2 19.2 1956 141.2 78.8 10.6 33-6 18.1 1955 118.7 66.2 10.2 29-3 13-0 1954- 102.1 57-4- 10.0 25-2 9.2 1953 110.1 65-3 9.8 28.0 7-0 1952 108.4 68.4 8.9 26.3 4.8 1 R o y a l C o m m i s s i o n 1951, o p . c i t . , p . 88. 2 A..W. C u r r i e , C a n a d i a n T r a n s p o r t a t i o n E c o n o m i c s , U n i v e r s i t y o f T o r o n t o P r e s s , 1967, P . 479. 48 1 9 5 1 100.7 64.5 8.2 24.6 3-5 1 9 5 0 87-7 55.5 7.6 2 3 . 0 1.5 1949 82.7 56.5 5.9 20.4 — 1948 84.1 59-1 5.2 19.8 -1947 82.5 60.1 4.3 18.1 - 1946 74.5 55-5 5-5 1 5 . 7 -1945 85-1 65-5 3-0 18.8 - 1944 85-9 65-9 2.7 1 7 - 3 -1945 84.4 65.9 2.4 18.0 -1942 76.1 56.1 2.4 1 7 - 5 -1941 71-9 5 0 . 0 2.2 1 9 . 7 -1940 58.9 57-9 1.8 1 9 - 2 -1959 5 2 . 8 31.4 1-7 1 9 - 6 -1958 49.0 26.8 1.5 20.7 - Source: H i s t o r i c a l S t a t i s t i c s of Canada, Toronto: The MacMillan Company of Canada L t d . , p. 5 5 4 . As can be seen from the t a b l e between 1 9 3 8 and 1 9 5 0 the i n t e r c i t y t r a f f i c i n c r e a s e d by a l i t t l e more than a f a c t o r 2 f o r the r a i l w a y s w h i l e the road t r a n s p o r t i n c r e a s e d by a f a c t o r 5 « Because of these d i s a p p o i n t i n g r e s u l t s the Canadian N a t i o n a l , v/ith some support from the Canadian P a c i f i c , asked the Royal Commission of 1 9 5 1 to recommend g r e a t e r f l e x i b i l i t y i n p u b l i s h i n g agreedl charges as ^they were e s s e n t i a l l y a s p e c i a l form of c o m p e t i t i v e r a t e and t h a t the c u r r e n t p r a c t i c e of approval by the Board v/as cumbersome and slow. I t was not u n t i l 1955 t h a t the q u e s t i o n was re-examined by Mr. W.F.A. Turgeon. He recommended the changes e x p l a i n e d p r e v i o u s l y i n Chapter I I . These s t a t u t o r y changes l e f t the railways' r e l a t i v e l y f r e e t o i n t r o d u c e agreed charges whenever they decided i t was necessary and p r o f i t a b l e t o do so. TABLE II Agreed Charges between 1950 and 1966 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 New Agreements 2 1 3 7 24 17 79 150 204 320 248 254 210 210 200 196 n.a. Amendments to 5 2 16 20 21 44 244 397 544 684 7779 :. 1010 1038 1055 1397 1406 n.a. Agreements Agreed Charges in E f f e c t atvthe end 23 22 25 31 52 95 157 547 748 1004 1027 1165 1290 1447 1546 1610 1504 of the year Number of D i f f e r e n t Shippers Parties to 73 71 77 105 219 352 612 n.a. n.a. n.a. n.a. 1845 2011 2145 2384 2595 2457 such agreed Charges Source: Canada; Railway Commissioners' Reports 1950-1966. n.a./- not available 50. Since then the uses of agreed charges have been i n c r e a s i n g tremendously t o cover a major share of the r a i l w a y f r e i g h t t r a f f i c and t o provide an even- g r e a t e r p a r t of t h e i r t o t a l revenue. At the same time the share of the r a i l w a y s , w i t h respect to the t o t a l i n t e r c i t y f r e i g h t , has been de c r e a s i n g r e g u l a r l y w i t h the y e a r s , as w i l l be shown l a t e r . Table I I shows the importance i n agreed charges t h a t the amendments of the Transport Act had on t h e i r uses s i n c e 1950 and the numbers of shippers i n v o l v e d i n these agreements. 2. I n t e r - r e g i o n a l movement of merchandise. The Board of Transport Commissioners' annual w a y b i l l analyses i n d i c a t e the general p a t t e r n o f r a i l w a y f r e i g h t movements and the changing trends of t r a f f i c under the d i f f e r e n t c a t e g o r i e s of f r e i g h t r a t e s . Table I I I g i v e s the r a i l t r a f f i c charges by Rate Glass-; f o r s e l e c t e d years by r e g i o n s of o r i g i n and d e s t i n a t i o n . The three regions used i n the w a y b i l l analyses are d e f i n e d as f o l l o w s : ; The Maritime r e g i o n c o n s i s t s of the p r o v i n c e s of Nova S c o t i a , New Brunswick, P r i n c e Edward I s l a n d , Newfoundland and t h a t p o r t i o n of Quebec l y i n g east of L e v i s and Diamond, Quebec. The E a s t e r n r e g i o n extends westward from L e v i s , Diamond and Boundary, Quebec, to P o r t A r t h u r and Armstrong, O n t a r i o . TABLE III R a i l T r a f f i c Charges by Rate Class, 1951, 1958, 1965 (excluding statutory rates) Region 1951 1958 1965 Canada ton-miles class rates commodity, non-competitive commodity, competitive agreed charges. Total (000,000) 294,030 100 12.8 73.3 12.6 1.3 Cents/ ton-mile 1.71 3.16 1.56 2.03 4.10 Total (000,000) 227,320 % 100 5.1 52.8 28.1 14.0 Cents/ ton-mile 1.55 4.05 1.78 2.07 2.47 Total (000,000) 349,000 % 100 2.5 43.4 24.8 29.3 Cents/ ton-mile 1.91 3.95 1.44 2.61 1.84 Maritime to Maritime ton-miles class rates commodity, non-competitive commodity, competitive agreed charges 10,590 100 4.9 85.1 9.6 0.4 1.71 3.16 1.56 2.03 4.10 9 ,840 100 • 2.8 63,4 33.0 •j-o:8 2.05 4.76 1.87 2.07 3.60 13.210 100 5.3 36.7 35.8 22.2 2.09 3.84 2.00 1.93 2.07 Maritme to Eastern tone-miles 25,080 100 0.99 13.180 100 1.28 24,920 100 1.03 class rates 9.1 1.99 4.9 3.43 2.7 1.95 commodity, non-competitive 81.9 0.86 80.0 1.06 50.8 0.85 vn commodity, competitive 8.9 0.95 13.6 1.57 7.6 2.04 • agreed charges 0.1 4.24 1.5 3.60 38.9 1.00 (cont'd next page) Region  •Eastern to Maritimes 1951 T o t a l % (000,000) Gents / ton-mile ton;-rmiles 25,460 100 1.35 c lass rates 21.6 3.40 commodity, non-competitive 77.5 0.88 commodity, competit ive 0.5 1.94 agreed charges 0.4 3.98 Eastern to Eastern ton-miles 84,000 100 1.87 c lass rates 6.7 3.77 commodity, non-competitive .. 75.8 1.58 commodity, competit ive 13.6 1.85 agreed charges 3.9 3.38 Eastern to Western ton-miles 34,140 100 2.31 c lass rates 45.8 3.49 commodity, non-competitive 13.0 1.88 commodity, competit ive 41.2 1.24 agreed charges N.R. N.R. 1958 1965 T o t a l % C e n t s / (000,000) ton-mile 18,380 . 100 1.69 17.5 2.92 70.0 1.22 10.3 2.83 2.2 ' 1190 T o t a l % C e n t s / (000,000) ton-mile 41.430 100 1.51 8.7- 3.00 64.5 0.99 .10.0 2.48 16.8 2.21 61,270 100 2.6 44.4 38.3 14.7 2.51 5.63 2.15 2.73 2.49 85,990 100 1.0 27.8 32.9 38.3 2.26 7.00 1.89 2.83 1.91 28,930 100 16.5 25.9 19.1 38.5 2.75 4.06 2.42 2.54 2.51 44,080 100 4.6 28.0 21.2 46.2 2.76 4.47 2.79 3.13 2.41 (cont 'd next page) vn ro Region 1951 T o t a l % C e n t s / Western to Eastern (000,000) ton-mile ton-miles 35,700 100 1.08 c la s s rates ' 2.9 2.98 commodity, non-competitive 87.9 1.02 commodity, competit ive 9.2 1.10 agreed charges N.R. N.R. Western to Western ton-miles 64,940 100 1.70 c lass rates 7.1 3.79 commodity, non-competitive 88.8 1.49 commodity, competit ive 3.2 2.06 agreed charges 0.9 4.25 Source: Taken from the Waybi l l Analys i s by D r . H. Purdy. 1958 1965 T o t a l % C e n t s / ' T o t a l % C e n t s / (000,000) ton-mile (000,000) ton-mile 35,170 100 1.51 47,450 100 1.57 1.4 3.44 0.5 4.27 42.3 1.63 42.3 1.34 55.5 1.37 32.0 2.11 0.8 1.86 25.2 1.23 100 2.52 100 1.75 1.4 4.54 0.6 6.34 42.2 1.87 56.2 1.24 55.5 2.96 25.4 2.74 0.9 2.93 17.8 1.78 The Western r e g i o n c o n s i s t s of a l l l i n e s v/est of P o r t A r t h u r and Armstrong (except the Yukon). In 1958, the agreed charges were not used exten s i v e l y except f o r the movement of goods from E a s t e r n r e g i o n t o Western r e g i o n where they represented 38.5$ of the volume t r a n s p o r t e d westbound between these two r e g i o n s . W i t h i n the E a s t e r n r e g i o n they accounted f o r 14.7$ of the t r a f f i c moved. A few years l a t e r , i n 1965, they had i n c r e a s e d tremendously and were the second r a t e c l a s s most u t i l i z e d a f t e r 'commodity, non-competitive f o r Canada and they became the most used f o r the move ment of merchandise westbound between E a s t e r n and Western r e g i o n s and w i t h i n the E a s t e r n r e g i o n . 3• Kinds of goods shipped under agreed charges. I n the begi n n i n g agreed charges were made f o r the t r a n s  c o n t i n e n t a l movement of the f o l l o w i n g commodities: Cast i r o n pipe and f i t t i n g s , Canned F i s h , Canned Goods or P r e s e r v e s , Wrought I r o n or S t e e l P i p e and Tubing, Hardboard, I r o n or S t e e l Wire Rods, and I r o n or S t e e l A r t i c l e s . There i s no agreed r a t e f o r the movement of g r a i n s which come under the low s t a t u t o r y g r a i n r a t e s but agreements were concluded f o r transformed products l i k e f l o u r . . . e t c . 55 The T r a n s p o r t Act does not c o n t a i n r e s t r i c t i o n s as t o the k i n d s of commodities t h a t can be h a u l e d under the s e agreements. In p r a c t i c e t h e r e must be a s u f f i c i e n t volume t o be moved as r e s t r i c t i o n s e x i s t i n the agreement as f o r example minimum weight p e r c a r l o a d . Because of a s p e c i f i e d minimum percentage o f the volume t o be h a u l e d by r a i l w a y s , the commodi t i e s i n v o l v e d must be such as t o not c r e a t e g r e a t i n c o n v e n i e n c e i n s e r v i c e t o c u s t o m e r s • l i k e r a p i d i t y of d e l i v e r y or s t o r a g e f a c i l i t i e s . . . e t c . 56 B. EFFECTS ON THE FINANCIAL SITUATION OF THE RAILWAYS In the 1 9 3 0 's the t r u c k i n g i n d u s t r y emerged as a new made of co m p e t i t i o n f o r the r a i l w a y s . They f o r c e d the r a i l w a y s to cut many of t h e i r t o l l s . The expansion of t h i s new i n d u s t r y had been r e t a r d e d by the war r e s t r i c t i o n s and postwar shortages and i t v/as not u n t i l 1950 t h a t the highway c a r r i e r s began to s t i f f e n c o m p e t i t i o n . The co m p e t i t i o n was not only coming from the t r u c k i n g i n d u s t r y but a l s o from the i n c r e a s e of passenger c a r s , buses and a i r p l a n e s . The growing use of e l e c t r i c i t y , f u e l o i l and n a t u r a l gas r u i n e d much of the c a r r i a g e of c o a l by r a i l . The S t . Lawrence S.eaway and the use of t r u c k s f o r pickup and d e l i v e r y extended the s e r v i c e s of i n l a n d waterways. P i p e l i n e s at t h i s time were s t a r t i n g t o make b i g i n r o a d s . There was a l s o the f a c t t h a t the t o t a l b i l l f o r t r a n s p o r t by v a r i o u s modes d i d not r i s e as f a s t as the t o t a l spending on good's and s e r v i c e s of a l l k i n d s , such as entertainment, r e s t  aurants, dry c l e a n i n g . . . e t c . This was due t o a reduc t i o n of waste i n pr o d u c t i o n w i t h a cut i n t r a n s p o r t a  t i o n of raw m a t e r i a l s by l o c a t i n g the f a c t o r i e s and assembly p l a n t s so as t o minimize the t o t a l t r a n s  p o r t a t i o n c o s t s on incoming raw m a t e r i a l s and out going f i n i s h e d products. "In s h o r t , the r a i l w a y problem i s a complex-of c o m p e t i t i o n from other media of t r a n s p o r t , the d i s c o v e r y of new re s o u r c e s , i n techniques of p r o d u c t i o n i n a l l i n d u s t r i e s and i n methods of o p e r a t i n g r a i l w a y s , new spending habits: and so on."'^ The i n t e r c i t y f r e i g h t c a r r i e d by v a r i o u s modes i s shown i n Table IV f o r s p e c i f i c years between 1938 and 1965. I t i s to be noted t h a t a major competitor of the r a i l w a y s i s the o i l p i p e l i n e which i n a few years took a good share of the t o t a l f r e i g h t moved. TABLE IV INTER-CITY TON-MILES PERFORMED IN CANADA BY TYPE OF CARRIER O i l Gas Year T o t a l R a i l Road Water A i r P i p e l i n e P i p e l i n e ( b i l l i o n s ) % % %' % % % 1938 53 51 3 46 * + + 1946 77 72 5 24 * + 1951 105 61 8 JO * 1 + 1956 145 54 7 27 * 11 + 1961 152 43 11 26 *• 14 6 1965 201 42 9 27 14 8 Source: A. W.» C u r r i e , Canad-ian.. .op. c i t . , p. 478. * Less than one-tenth of one per .cent. + N e g l i g e a b l e or n o n - e x i s t e n t . Ai.W. C u r r i e , Canadian.. .op. c i t . , ..p. 477« -58 The above d a t a do not i n c l u d e r u r a l , i n t r a - u r b a n , o r suburban c a r r i a g e such as l o c a l d e l i v e r y of farm produce, f u e l o i l , b r e a d and merchandise of a l l s o r t s . A l s o the d a t a take no account of the o c c u r  ence of s t r i k e s which may have a f f e c t e d the p e r c e n t  ages s l i g h t l y . Even though p i p e l i n e s f o r n a t u r a l gas never compete w i t h the r a i l w a y s , they have, however, reduced the c a r r i a g e of c o a l by t h i s mode of t r a n s p o r t . T a b l e s V, VI and VII are d e r i v e d from the W a y b i l l A n a l y s i s p u b l i s h e d every y e a r s i n c e 19+9, w i t h the e x c e p t i o n o f 1950, by the Board of T r a n s p o r t Commis s i o n e r s f o r Canada, and show the importance of the agreed charges i n r e g a r d t o the types of t r a f f i c c a r r i e d by the r a i l w a y s and a l s o the revenues d e r i v e d from the t r a n s p o r t a t i o n o f f r e i g h t under these agree ments. The samples c o n s i s t of so many c a r l o a d s (20,134 i n 1961, 19,822 i n 1958) o f a l l - r a i l t r a f f i c between Canadian s t a t i o n s . Under t h i s arrangement the r a i l w a y s p a r t i c i p a t i n g i n the w a y b i l l a n a l y s i s forwarded photo s t a t e d c o p i e s of a l l l i n e - h a u l c a r l o a d w a y b i l l s of l o c a l and i n t e r - l i n e Canadian shipments t e r m i n a t i n g at t h e i r s t a t i o n s i n Canada b e a r i n g s e r i a l number "1" and s e r i a l numbers ending i n "01" . w a y b i l l s i n v o l v i n g TABLE V PERCENT OF SAMPLE TON MILES Type of T r a f f i c 1951 1952 % % C l a s s Rated 8.4 6.7 Commodity Non-Competitive 49.1 41.8 Statutory 27.1 40.6 Competit ive 8.7 5.8 Agreed Charge 1.0 1.3 M u l t i p l e Rates 4.4 3.2 Mixed Shipments 1.3 Jo T o t a l 100.0 100.0 1953 1954 1955 1956 1957 1958 1959 % % % % % % % 5.4 4.3 4.3 3.4 3.6 3.1 3.1 34.6 43.4 43.5 35.8 35.8 32.4 31.8 47.0 30.1 25.6 33.8 31.7 32.7 30.9 7.0 12.5 15.8 17.2 16.7 17.3 17.4 1.8 3.2 4.9 5.1 7.2 8.7 12.2 2.4 3.9 3.1 2.1 2.7 3.3 2.2 1.8 2.6 2.8 2.6 2.3 2.5 2.4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Category of Rate 1960 196'1 1962 1963 1964 1965 1966 % % % % % % % NORMAL RATED TRAFFIC 2.4 2.1 1.8 1.6 1.7 1.6 30.7 30.2 29.2 30.1 27.6 30.2 27.5 COMPETITIVE RATED TRAFFIC 16.3 15.7 17.1 15.1 15.3 17.2 17.2 13.5 13.7 16.8 18.7 18.8 20.4 20.2 36.7 38.0 34.8 34.3 36.7 30.5 33.5 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Waybi l l Analys i s Bperd of Transport Commissioners for Canada. TABLE VI PERCENT OF SAMPLE REVENUE Type of T ra f f i c 119 b l 1952 1953 1954 1955 1956 1957 1958 1959 % % % % % % % % % 19. 0 14.5 10.8 10.2 9.3 9.4 8.2 7.9 . . . 50.8 49.4 45.1 49.4 45.0 41.3 41.4 37.3 34.7 . . . 11.1 15.4 17.1 10.4. 8.9 11.5 9.9 10.5 8.6 9.7 9. 1 12.8 15.8 19.3 21.0 20.5 23.1 27.0 2.5 Ji 4. • -5. 4.4 . 5.9 9.4 10.0 12.3 13.8 16.1 2.8 2. 8 1.7 2.0 1.7 1.2 1.5 1.9 1.2 2. 1 4.4 5.7 5.5 5.7 5.0 5.2 4.5 Total 1.00.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Category of Rate 1960 1961 1962 1963 1964 1965 1966 % % % % % % % NORMAL RATED TRAFFIC 7.6 6.7 6.0 4.9 4.7 4.6 4.6 34.6 32.9 32.3 29.6 29.3 28.7 COMPETITIVE RATED TRAFFIC 27.8 26.3 27.3 26.3 27.3 30.4 30.1 19.1 20.1 22.9 24.7 25.2 25.3 24.8 STATUTORY GRAIN RATES 12.3 10.9 11.8 13.2 10.4 11.8 100.0 100.0 100.0 10000 100.0 100.0 100.0 Source: Same as Table TV TABLE VII AVERAGE REVENUE PER FREIGHT TON MILE Type of T r a f f i c 1951 11952 1953 1954 1955 1956 1957 1958 1959 c t s . c t s . ,. c t s . c t s . c t s . c t s . c t s . c t s . c t s . 3.25 3.64 3.77 3.89 3.65 3.89 4.05 4.05 4.59 1.34 1.51 1.81 1.75 1.58 1.66* 1.81 1.78 1.95 0.53 0.49 0.51 0.53 0.53 0.49 0.49 0.50 0.50 . . . 1.45 2:01 2.52 1.94 1.87 1.77 1.94 2.07 2.77 , , 3.38 3.51 3.40 2.87 2.93 2.85 2.65 2.47 2.37 0.81 0.86 0.97 0.78 0.80 0.84 0.87 0.86 0.99 . . . 2.05 3.23 3.25 3.34 2.98 3.22 3.40 3.22 3.37 , . . 1.29 1.28 1.39 1.54 1.52 1.45 1.57 1.55 1.79 Category of Rate 1960 1961 1962 1963 1964 1965 1966 c t s . c t s . c t s . c t s . c t s . c t s . c t s . NORMAL RATED TRAFFIC 4.44 4.28 4.34 3.95 4.03 3.95 4.05 1.73 1.75 1.57 1.50 1.44 1.49 COMPETITIVE RATED TRAFFIC 2.82 2.51 2.48 2.55 2.50 2.61 2.50 2.34 2.21 2.12 1.93 1.87 1.84 1.75 STATUTORY GRAIN RATES 0.49 0.49 0.49 0.50 0.50 0.50 0.50 1.65 1.51 1.55 1.46 1.40 1.48 1.43 Source: Same as Table V 62 L . T . C . , s w i t c h i n g t r a f f i c , t r a f f i c o r i g i n a t i n g at r a i l p o i n t s o u t s i d e Canada, r a i l - l a k e - r a i l , wa te r - 4. r a i l and o c e a n - r a i l w a y b i l l s were e x c l u d e d . Table V. shows the c o n s t a n t l y i n c r e a s i n g volume o f the use of agreed charges by the r a i l w a y s , e s p e c i a l l y s t a r t i n g from the m i d - f i f t i e s , and the re i s no doubt t h a t the l e g i s l a t i v e changes brought i n the Transpor t Ac t i n 1955 were a major f a c t o r i n t h i s g r e a t e r u t i l  i z a t i o n , as the app rova l by the Board was f a s t e r , the requirement tha t the ob j ec t o f an agreed charge c o u l d be ach ieved by a c o m p e t i t i v e t a r i f f was exc luded from the A c t , and the competing r a i l c a r r i e r s d i d not have to j o i n i n the agreement. Table VI shows the percentage o f sample revenue d e r i v e d by each type o f r a t e . The r a i l w a y s c l a i m " tha t average revenue per t o n - m i l e from agreed charges exceeds average t o n - m i l e revenue on a l l t r a f f i c , e x c l u d i n g the abnormal ly low s t a t u t o r y r a t e s on 5 g r a i n . u y Even though the r a i l w a y s . d i d _ n o t p r o v i d e a breakdown of expenses f o r the h a n d l i n g of f r e i g h t covered by agreed charges compared w i t h the h a n d l i n g of f r e i g h t not under these agreements, i t seems tha t agreed charges made a b e t t e r than average c o n t r i b u t i o n W a y b i l l A n a l y s i s . y A..W. C u r r i e , Canadian T r a n s p o r t a t i o n Economics , op . c i t . , p . 508. 6 3 t o t h e i r revenues up to 1963, but a f t e r t h i s i t was the r e v e r s e , as the average revenue per ton-mile was lower f o r agreed charges than f o r the t o t a l f r e i g h t t r a f f i c , e x c l u d i n g the s t a t u t o r y g r a i n r a t e s (see Table V I I I ) . TABLE V I I I AVERAGE REVENUE PROM.AGREED CHARGE PER FREIGHT TON-MILE COMPARED TO AVERAGE REVENUE PER TON-MILE FOR TOTAL FREIGHT (EXCLUDING STATUTORY RATES) 1955 1957 1959 1961 1962. 1963 1965 1966 c t s c t s c t s c t s c t s c t s c t s c t s Agreed charges 2.93 2.65 2.37 2.21 2.12 1.93 1.84 1.75 T o t a l f r e i g h t 1.95* 2.06* 2.37* 2.08* 2.11* 1.96 1.91 1.89 Source: W a y b i l l A n a l y s i s ( R e p o r t s ) . * Excludes m u l t i p l e r a t e s , mixed shipments, U.S. t r a f f i c and s t a t u t o r y g r a i n r a t e s . As shown i n Table V I I t h e r e has been a constant decrease i n the average ton-mile f r e i g h t revenue f o r the agreed • charge t r a f f i c w h i l e other r a t e s have been much more s t a b l e , even though they i n c r e a s e or decrease s l i g h t l y . The s h i p p e r i s bound by a c o n t r a c t , and t h i s avoided the seasonal u t i l i z a t i o n of personnel and equip ment i . e . when the steamships or t r u c k s c o u l d not operate d u r i n g the w i n t e r season or i n bad weather c o n d i t i o n s . I n t h i s way agreed charges a f f e c t e d the 64 6 f i n a n c i a l s i t u a t i o n o f the r a i l w a y s f a v o r a b l y . Even though the primary o b j e c t of agreed charges v/as to enable r a i l c a r r i e r s t o meet com p e t i t i o n from motor t r u c k s t h e r e were some cases where agreed charges p e r m i t t e d the r a i l w a y s t o b u i l d up a paying volume of domestic t r a f f i c without t a k i n g i t away from competing c a r r i e r s by reducing the r e l a t i v e importance of imported" commodities. On imports from overseas or from the U n i t e d S t a t e s the r a i l w a y s have only a r e l a t i v e l y short h a u l from the seaports or the p l a n t s to the consumers. When the same goodsi; are produced i n Canada the r a i l w a y s , might have a longer h a u l at b e t t e r r a t e s on f i n i s h e d - 7 goods, p l u s the revenue on movements of raw m a t e r i a l . ' A..W:. C u r r i e wrote t h a t t h i s p r o d u c t i o n of goods' i n Canada had the e f f e c t of reducing unemployment and per m i t t i n g these working people t o buy more goods, t h e r e - Q f o r e i n c r e a s i n g the t r a f f i c f o r the r a i l w a y s . The next chapter w i l l show evidence of agreed r a t e s which reduced imports from overseas. 6 I b i d . , p. 502. 7 ' Import r a t e s are normally lower than domestic r a t e s over the same h a u l . T h i s i s done i n order to keep Canadian p o r t s on a p a r i t y w i t h the American p o r t s w i t h which they compete. 8 I b i d . , p. 503. 65 Even though these r a t e s are lower than the average f r e i g h t t on-mile revenue, the revenue d e r i v e d from the agreed charges covers more than t h e i r v a r i  able c o s t s and t h e r e f o r e i s making a c o n t r i b u t i o n t o the f i x e d c o s t s as the Board looked upon the e f f e c t on the net revenue of the c a r r i e r when the a p p l i c a  t i o n s were submitted. F i n a l l y many shi p p e r s do not f i n d i t worthwhile to have t h e i r own t r u c k f l e e t on the road i f they can o b t a i n s a t i s f a c t o r y r a t e s and s e r v i c e s from r a i l  ways and commercial t r u c k s and agreed charges s u r e l y decreased the r a t e s enough t o give more t r a f f i c to the r a i l w a y s . 66' C . E F F E C T S O F A G R E E D C H A R G E S ' O N T H E T R U C K I N G I N D U S T R Y A s m e n t i o n e d e a r l i e r t h e i n t e n t o f t h e s e c t i o n o n a g r e e d c h a r g e s i n t h e T r a n s p o r t A c t w a s s p e c i a l l y d e s i g n e d t o m e e t m o t o r t r u c k c o m p e t i t i o n . T h e t r u c k i n g ; i n d u s t r y h a s m a n y a d v a n t a g e s o n t h e r a i l w a y s a n d t h i s c o n t r i b u t e d t o t h e i r f a s t g r o w t h . T h e p r i m a r y c a u s e o f t h e i r g r o w t h i s t e c h n o l o g i c a l . T h e r a i l w a y s : h a v e b e e n h a n d i c a p p e d b e c a u s e a i l t h e i r c a r s m u s t b e i n t e r c h a n g e a b l e w i t h o t h e r r a i l w a y s ' i n r e g a r d ! t o c o u p l i n g , c l e a r a n c e s . . . e t c . , a n d e a c h r a i l w a y h a s i t s o w n m i n o r p e c u l i a r i t i e s - B e ' c a u s e o f t h e s h o r t w o r k i n g l i f e o f h i g h w a y e q u i p m e n t i t i s r e l a t i v e l y e a s y t o s c r a p o b s o l e t e m o d e l s a n d r e p l a c e t h e m w i t h 9 t h e n e w e s t a n d t h e b e s t . '' T h e d o o r - t o - d o o r s e r v i c e , a m o r e p e r s o n a l a n d f a s t e r s e r v i c e , a s h o r t e r t i m e t o c l a i m b r e a k a g e s a r e a m o n g t h e n u m e r o u s a d v a n  t a g e s t h a t t h e h i g h w a y t r a n s p o r t h a s o v e r t h e r a i l w a y s . S t a r t i n g f r o m t h e m i d - f i f t i e s a g r e e d c h a r g e s h a d t h e e f f e c t o f r e t a r d i n g t h e g r o v ; t h o f t h e t r u c k i n g i n d u s t r y , even t h o u g h i t w a s e x p a n d i n g s t e a d i l y . E t A ' . W , C u r r i e , C a n a d i a n . . . o p . c i t . , p . 479 . 6? i s o n l y s p e c u l a t i o n to imagine a d i f f e r e n t course, had there been no agreed charges, but i t i s f a i r t o say t h a t these agreements were d e t r i m e n t a l to the highway t r a n s p o r t as f o r i n s t a n c e the petroleum agreement i n 1 9 5 2 , f o r the movement of o i l . p r o d u c t s from the Uakehead to the f o u r Western P.rovinces, had. the e f f e c t , a c c o r d i n g t o the t r u c k e r s , of d r i v i n g a. 10 thousand of them out of b u s i n e s s . Another case was the automobile case i n 1 9 5 2 , where the agreed charge reduced the t r a n s p o r t a t i o n c o s t s of moving automobiles from O n t a r i o p l a n t s to Western c i t i e s by the f o l l o w i n g amounts:: Vancouver $ 5 0 , Edmonton $4-5, Saskatoon $ 3 4 , Regina, $32 and Winnipeg $ 2 0 . As men t i o n e d i n the F i n a n c i a l P o s t , " L i k e l y to be hardest h i t are t r a n s c o n t i n e n t a l t r u c k f i r m s t h a t have mushroomed from n o t h i n g i n t o b i g business concerns 11 over the past two years." In the same a r t i c l e , i t i s mentioned t h a t d u r i n g the month of J u l y of t h a t year between 30$ and 35$ of a l l western shipments from General Motors' Oshawa p l a n t moved by t r u c k s and the remaining x/as e i t h e r moved by r a i l or d r i v e n away. "Major r a i l t r u c k b a t t l e opens i n the West", E i n a n c i a l P o s t , May 10, 1954, p. 1. 11 "Railways open new phase i n war aga i n s t t r u c k s " , F i n a n c i a l P o s t , A-.F. H a i l e y , Sept. 6 , 1954, p. 1, 3 . 68 In 1954, shippers between Montreal and Toronto were offered by C.N.R. and C.P.R. rate cuts that ranged from 11$ to 55 1/3$, which r e s u l t e d i n many trucking firms being driven out of business and . . 12 slowing down the a c t i v i t y of the remaining ones. Even though these kinds of rates had negative consequences f o r the trucking industry, i t was not f a t a l , as t h i s mode of transportation has been growing at a rap i d pace. Agreed charges were not e f f e c t i v e i n keeping t r a f f i c from truckers when the shipper considered that the q u a l i t y of services rendered by truckers was worth the dif f e r e n c e i n rates between r a i l and road. In many agreements there was a percentage of movement l e f t out of the agreement and the truckers could compete to move t h i s remainder. Moreover, agreed charges t i e d a l l or most of a shipper's t r a f f i c to the r a i l s f o r one year and i t enabled the truckers to compete f o r the following year i f they could give a better rate or i f the shipper was not s a t i s f i e d with the service of the past year. As stated by A.M. Currie: "There i s no question that agreed charges have proved to be a potent competitive wea pon i n the hands of the railways. Yet the trucking industry's arguments against them 12 "Truck cut rates to meet r a i l ' s b i d f o r business", F i n a n c i a l Post, Sept. 25, 1954, p. 1, 3 . 69 are o f t e n exaggerated. This i s evidenced by.' the r a p i d growth i n highway t r a n s p o r t n o t w i t h s t a n d i n g agreed charges by r a i l . Moreover, c o n t r a c t c a r r i e r s do business under what amounts to an agreed charge..." A.W.. C u r r i e , Canadian...op. c i t . , p. 508. 70 D. WATER TRANSPORTATION AND AGREED CHARGES Water c a r r i e r s s u b j e c t t o the j u r i s d i c t i o n of the Board have a r i g h t t o enter i n t o an agreement w i t h s h i p p e r s f o r a s p e c i f i e d amount of t h e i r tonnage at reduced r a t e s . However, due to the i n a b i l i t y to provide a 12 month s e r v i c e such agreements are imprac t i c a b l e . Under the same l e g i s l a t i o n , such water c a r r i e r s have the r i g h t t o p a r t i c i p a t e i n any agreed charges made by the r a i l w a y s at recognized d i f f e r e n - 14 t i a l s . The movement of goods can then be e i t h e r by a l l - r a i l , w a t e r - r a i l and v i c e - v e r s a or by r a i l - w a t e r - r a i l between two areas. There i s no data a v a i l  able from the water c a r r i e r s which g i v e s a breakdown, as f o r the r a i l w a y s , of the uses of agreed charges as a percentage of t h e i r t r a f f i c or revenues,. but i t seems t h a t these agreements do not represent a b i g 15 share of the t r a f f i c of Canada Steamship L i n e s . A.W. C u r r i e s t a t e s t h a t without the t r a n s c o n t i n e n t a l r a t e s and the agreed r a t e s i t i s most probable that there would have been c o m p e t i t i o n from water c a r r i e r s between the West Coast and E a s t e r n Canada through the Panama.Canal, and t h a t these r a t e s kept the r a i l w a y s from a p o t e n t i a l c o m p e t i t i o n . 14 Canadian i n s t i t u t e of T r a f f i c and T r a n s p o r t a t i o n (1964), Chapt. 20, p. 8. 15 ^ Conversation w i t h an o f f i c i a l of Canada Steamship L i n e s . 71 CHAPTER IV ANALYSIS OP SOME CASES OF AGREED CHARGES A. THE SKELP, PIPE, TUBE, IRON AND STEEL CASES 1. The Pipe and Tube Case. Canadian manufac t u r e r s l o c a t e d at T r o i s - R i v i e r e s and Toronto had i n the past shipped l a r g e q u a n t i t i e s of cast i r o n pipe and f i t t i n g s by r a i l t o Western Canada. They were i n c o m p e t i t i o n at the P a c i f i c Coast w i t h pipe imported from abroad by sea, but the r a i l w a y s had been able t o meet t h i s c o m p e t i t i o n by e s t a b l i s h i n g low t r a n s c o n t i n  e n t a l c o m p e t i t i v e r a t e s . In 1952 the " o n e - t h i r d r u l e " was i n t r o d u c e d by S. 337 of the Railway Act, under which r a t e s t o or from i n t e r i o r p o i n t s were not per m i t t e d t o exceed t r a n s c o n t i n e n t a l c o m p e t i t i v e r a t e s by more than o n e - t h i r d . The r a i l w a y s were o b l i g e d to c a n c e l t h e i r l o w ' t r a n s c o n t i n e n t a l competitive. :rates i n order t o a v o i d l o s s e s of revenue by f o r c i n g a r e d u c t i o n i n r a t e s upon a heavy volume of pipe moving to the p r a i r i e s . The Canadian manufacturers l o s t the e n t i r e West Coast market t o overseas producers. I n " 71 C.R.T.C. 28, p. 28. 7 2 ' order to r e g a i n t h i s business the Canadian.Freight A s s o c i a t i o n made an a p p l i c a t i o n f o r the ap p r o v a l , by the Board under P a r t IV of the Transport A c t , R.S'.C. 1 9 5 2 , c. 2 7 1 , of an agreed charge between Canadian I r o n Foundries L t d . and the N a t i o n a l I r o n C o r p o r a t i o n l t d . and C.N.H.., C..P.R.,;. et a l . , f o r the c a r r i a g e of p i p e , c a s t i r o n and f i t t i n g s , except v a l v e s , from Toronto a n d l T r d i s - R i v i e r e s to P r i n c e Rupert, Vancouver and Watson I s l a n d i n the Province of B r i t i s h Columbia. The terms of the agreement were t h a t the shippers s h i p a l l of t h e i r t r a f f i c p r e s c r i b e d t h e r e i n by r a i l and not s h i p by any other means of t r a n s p o r t a t i o n whatsoever. There was also, an a p p l i c a t i o n by Warden Kin g L t d . , M o n t r e a l , t h a t a charge be f i x e d , f o r the t r a n s p o r t of the same good's t o the same d e s t i n a t i o n s at the r a t e s contained i n the agreed charges and w i t h the same terms and c o n d i - p t i o n s attached to the agreed charges. There was at the time a com p e t i t i v e r a t e i n e f f e c t from Toronto t o the Coast of f 2 . 3 9 per 1 0 0 l b s . , but t h i s r a t e d i d not move any t r a f f i c because the shippers c o u l d not meet the co m p e t i t i o n at the Coast from i r o n 2 I b i d . , p. 3 0 . <0 pipe Imported from overseas d i r e c t l y by s h i p . Up t o May 1 9 5 2 the co m p e t i t i v e r a t e s from Toronto and T r o i s - R i v i e r e s t o the West Coast were $1.17 and $ 1 . 2 5 r e s p e c  t i v e l y . The r a t e s proposed i n the agreed charge were $1.10 from Toronto and &1.18 from T r o i s r - R i v i e r e s v The a p p l i c a t i o n was opposed by counsel on be h a l f of the Pr o v i n c e of A l b e r t a , the C i t y of Edmonton and the Edmonton Chamber of Commerce. The counsel of the P r o v i n c e of B r i t i s h Columbia supported the a p p l i c a  t i o n . The p o i n t s made were t h a t the c o m p e t i t i v e r a t e ( $ 2 . 3 9 per l b . ) would not move the t r a f f i c to the Coast and a lower c o m p e t i t i v e r a t e such as an agreed charge would and i t was "Immaterial" f o r the shippers i f t h i s r a t e was an agreed charge or a co m p e t i t i v e t a r i f f . The c a r r i e r s were " u n w i l l i n g to p u b l i s h t h i s lower c o m p e t i t i v e r a t e because of the immediate impact of the one-third! r u l e " of the Railway Act w i t h the e f f e c t of o f f s e t t i n g i n t h e i r o v e r - a l l revenues the gain made by the co m p e t i t i v e r a t e to the Coast. A'ccording t o the Board, the agreed", charges were not subje c t e d t o the " o n e - t h i r d r u l e " as was i n d i c a t e d i n c l e a r language i n P a r t IV of the Transport A c t . I t was argued a l s o t h a t without the agreed charge the carriers::, would not move the t r a f f i c and t h a t i n no 74 way the Pro v i n c e o:f A l b e r t a would be b e t t e r o f f and the e f f e c t would be b e n e f i c i a l o n l y to the f o r e i g n producer who would have p r a c t i c a l l y a monopoly on the consuming market. The Board approved then, f o r the above reasons, the agreed charge and a l s o f i x e d the same charge f o r the t r a f f i c of Warden King L t d . In June 1954, A s s o c i a t e d Foundry L t d . of Vancouver, a competitor of Warden King L t d . of Mon t r e a l , a p p l i e d f o r c a n c e l l a t i o n of the f i x e d charge of the l a t t e r on cast i r o n pipe from M o n t r e a l , Quebec, to P r i n c e Rupert, Vancouver, and Watson I s l a n d , B r i t i s h Columbia. This, a p p l i c a t i o n d i d not concern the agreed charge mentioned e a r l i e r but only the f i x e d charge on the c o n t e n t i o n t h a t the type of pipe contemplated by the agreed charge was f o r water-main purposes. Such pipe, was made of c a s t i r o n , and even though the d e s c r i p t i o n of the commodity In the agreed charge was s u f f i c i e n t l y broad" t o i n c l u d e a l l types of cas t i r o n pipe and f i t t i n g s . f o r same and the a p p l i c a t i o n of Warden King L t d . v/as made under the presumption of u n j u s t d i s c r i m i n a t i o n , i t was demon s t r a t e d to the Board t h a t the commodity manufactured and shipped by Warden K i n g L t d . v/as c a s t i r o n s o i l pipe which was manufactured by a d i f f e r e n t process and v/as shipped i n d i f f e r e n t s i z e s and l e n g t h s . So the product was made of s u b s t a n t i a l l y the same m a t e r i a l s , 75 a l t h o u g h i t d i f f e r e d i n i t s purpose. The a p p l i c a n t , A s s o c i a t e d Foundry L t d . , c l a i m e d t h a t he v/as u n j u s t l y d i s c r i m i n a t e d a g a i n s t because Warden K i n g L t d . had p r i n c i p a l l y t h e same market i n B r i t i s h Columbia. I t was s t a t e d a l s o t h a t the imports of the y e a r 1953 d i d not exceed 10$ of the p r o d u c t i o n of A s s o c i a t e d Foundry L t d . and t h a t i t c o u l d not be c l a i m e d as reason f o r g r a n t i n g the f i x e d charge as i n the case of agreed charge t o v/hich i t was r e l a t e d . These c o n s i d e r a t i o n s were r e l e v a n t t o S.-s. (15) of S. 0 2 ) a f f e c t i n g the net revenue of the c a r r i e r and the b u s i n e s s of any s h i p p e r o b j e c t i n g . The Board, c o n s i d e r i n g t h a t the p r o d u c t of Warden K i n g L t d . v/as d i f f e r e n t from the one o f Canada I r o n F o u n d r i e s L t d . and N a t i o n a l I r o n Corp. L t d . , t h a t f o r e i g n imports of c a s t i r o n p i p e i n t o the B r i t i s h Columbia market were r e l a t i v e l y s m a l l , t h a t t h e r e was no u n j u s t d i s c r i m i n  a t i o n t o Warden K i n g L t d . from the tv/o manufacturers concerned by the agreed charge, revoked the f i x e d charge f o r Warden K i n g L t d . i n June 15, 195^.^ 2. The I r o n and S t e e l Case. T h i s case i s s i m i l a r t o the p r e v i o u s one. I t i n v o l v e d the Board's a p p r o v a l of f o u r agreements f o r agreed charges on i r o n and s t e e l p l a t e s , s h e e t s , b a r s and o t h e r p r o d u c t s from p o i n t s i n E a s t e r n Canada t o the P a c i f i c Coast. 5 71 C P . T . C , pp. 221 - 5-76 During the s i t t i n g s , the Board "v/as compelled to r u l e upon the s t a t u s of the Pr o v i n c e of A l b e r t a " which appeared at the he a r i n g and t o which c e r t a i n s h i p p e r s o b j e c t e d on the grounds t h a t the Province d i d not f a l l w i t h i n any of the three c a t e g o r i e s contained i n S e c t i o n 32 ( 7 ) d e f i n i n g those who were e n t i t l e d t o be heard i n o p p o s i t i o n t o an a p p l i c a t i o n of an agreed charge. The Board r u l e d t h a t the s a i d P r o v i n c e was e n t i t l e d under the p r o v i s i o n 32 ( 7 ) (a) of the Act as a shipper who considered h i s business u n j u s t l y d i s c r i m i n a t e d a g a i n s t i f the Agreed Charge . 4 v/as approved. The counsel f o r these o b j e c t i n g shippers d i d not make r e p r e s e n t a t i o n f o r u n j u s t d i s c r i m i n a t i o n because of the proposed agreements but f o r the n o n - a p p l i c a t i o n of the " o n e - t h i r d r u l e " t o these agreed charges. As no change had been made i n the l e g i s l a t i o n the outcome v/as the same as i n the previous case ( 7 1 C.E.T.C. 28). Other shippers o b j e c t e d t o the proposed agreed charges f o r s t e e l moving t o the P a c i f i c Coast "being converted or f a b r i c a t e d i n t o storage tanks and other a r t i c l e s and shipped i n t o A l b e r t a i n com p e t i t i o n 4 71 C.R.T.C., p. 327-v / i t h f a b r i c a t o r s i n A l b e r t a . " ^ 'This would create u n j u s t d i s c r i m i n a t i o n . Each shipper member of the proposed agreements s t a t e d t h a t the proposed r a t e s would g i v e them only " p a r t i a l a s s i s t a n c e " i n meeting f o r e i g n competition and t h a t E a s t e r n i n d u s t r i e s v/ould have to make f u r  t h e r p r i c e r e d u c t i o n s t o meet such c o m p e t i t i o n i n the A l b e r t a market; a l s o t h a t i f the agreed charge was not granted they v/ould be f o r c e d t o v/ithdraw from the Coast market. I t appeared " q u i t e c l e a r " t o the Board t h a t the A l b e r t a i n d u s t r y v/ould not be p l a c e d at a disadvantage or d i s c r i m i n a t e d a g a i n s t , but t h a t the agreed charge v/ould merely place i n "a more fav o u r a b l e c o m p e t i t i v e p o s i t i o n " the E a s t e r n manu- 6 f a c t u r e r s . The advice r e c e i v e d by the Board from t h e i r s t a f f was t h a t the object of these agreements c o u l d not be obtained by a c o m p e t i t i v e t a r i f f because of the i n c i d e n c e of the o n e - t h i r d r u l e which would cause severe d r a i n upon the c a r r i e r s ' revenue. The agreed charges v/ere approved by the Board. 3 . A l b e r t a Phoenix Tube and Pipe Case. T h i s case shov/s a d i f f e r e n t aspect of the a p p l i c a t i o n of 5 I b i d . 6 I b i d . , p. 3 2 8 . 78 agreed charges. I n December 1 9 5 7 the counsel on b e h a l f of A l b e r t a Phoenix Tube and Pipe L t d . presented an a p p l i c a t i o n "seeking the e l i m i n a t i o n of the u n j u s t d i s c r i m i n a t i o n and undue preference t h a t now e x i s t s i n c e r t a i n of the r a t e s on s t e e l and pipe f o r s e v e r a l eastern d e s t i n a t i o n s to 7 Edmonton and Vancouver."' The a p p l i c a n t had s t e e l s k e l p brought from Hamilton or S a u l t S t e . Marie, Ont., t o manufacture s t e e l pipe at Edmonton, A l t a . , and the pipe v/as g e n e r a l l y shipped t o the P r a i r i e P r o v i n c e s and some to B r i t i s h Columbia.. Agreed Charges C.T.C. (AC) No. 6 3 was at the time c o v e r i n g the moving of pipe from Welland to Vancouver at a r a t e of $ 1 . 2 0 per 1 0 0 l b s . and Agreed Charges C.T.C. (AC) No. 8 9 was f o r the s h i p p i n g of s k e l p from E a s t e r n Canada to P o r t Moody at a r a t e of $ 1 . 2 0 per 1 0 0 l b s . I n the case of A l b e r t a Phoenixc Tube and Pipe the r a t e f o r moving the skelp-- to the p l a n t was a commodity r a t e w h i l e the pipe shipped from Edmonton to Vancouver was at a normal r a t e . 7 7 C.E...T.C. 40, p. 41 and J..0..R. & R. pp. 83-89. 9 79 The f o l l o w i n g e x h i b i t helps t o c l a r i f y the s i t u a t i o n . EXHIBIT I Welland, O n t a r i o , p l a n t : Average inbound r a t e on skelp... .$0.11 Loss f a c t o r — 10$ 0.01 Pipe r a t e Welland t o Vancouver (AC No. 63) . . 1.20 T o t a l t r a n s p o r t a t i o n cost s t e e l m i l l v i a Welland to Vancouver.. .$1.32 per 100 l b s . P o r t Moody, B r i t i s h Columbia, p l a n t : Average inbound r a t e on s k e l p (AC No. 89) $0.95 Loss f a c t o r — 10$ 0.09# Pipe r a t e F o r t Moody t o Vancouver . 0 . 2 5 T o t a l t r a n s p o r t a t i o n cost s t e e l m i l l v i a P o r t Moody t o Vane $1.29# per 100 l b s . Edmonton, A l b e r t a , p l a n t : Average inbound r a t e on s k e l p . . . .$1.701/£ Loss f a c t o r — 10$ 0.17 Pipe r a t e Edmonton t o Vancouver.. 1.29 T o t a l t r a n s p o r t a t i o n cost s t e e l m i l l v i a Edmonton t o Vancouver. .$3• 16}£ per 100 l b s . Source: 71 C.R.T.C., p. -4-3-The a p p l i c a n t asked f o r an order t h a t a s p e c i f i e d t o l l or t o l l s be charged not exceeding i n the aggregate $1.32 per 100 l b s . , f o r the t r a n s p o r t of s t e e l s k e l p from Hamilton, O n t a r i o , t o Edmonton, A l b e r t a , and s t e e l pipe from Edmonton t o Vancouver B.C., or a l t e r n a t i v e l y f o r a charge f i x e d f o r the o t r a n s p o r t by the r a i l w a y s concerned- of the goods of the s h i p p e r A l b e r t a Phoenix Tube & Pipe L t d . as set out i n Agreed Charges (AC) No. 63 and (AC) No. 89. The Board s t a t e d the question of u n j u s t d i s  c r i m i n a t i o n was a matter of f a c t , under the p r o v i  s i o n s of S.-s. (10) of S. 32 of the Transport A c t , as s k e l p i s a product made by s t e e l m i l l s and i s used onl y f o r the manufacture of pipe and as the a p p l i c a n t ' s method of conversion was s i m i l a r to the process used by i t s competitors. There was evidence given t h a t because of d i s c r i m i n a t i o n , the B.C. E l e c t r i c Railway Company, L t d . , C.N.R., C.P.R. Co., The Esquimalt & Nanaimo Railway Co., The New York C e n t r a l R a i l r o a d Co., O n t a r i o North land Railway, The Toronto, Hamilton Co. (C.P.R. Co L e s s e e ) , Wabash R a i l r o a d Co. 81: a p p l i c a n t was unable t o s e l l i n the Vancouver market because of the c o m p e t i t i o n of f i n i s h e d pipe from 'Welland, and the com p e t i t i o n of sk e l p from Hamilton or S a u l t S t e . Marie converted i n t o f i n i s h e d pipe at P o r t Moody, B.C., although the inbound s k e l p and the outbound pipe of the a p p l i c a n t and i t s competitors were shipped i n the same k i n d of c a r s , over g e n e r a l l y the same routes and under s u b s t a n t i a l l y s i m i l a r t r a n s  p o r t a t i o n circumstances and c o n d i t i o n s . The a p p l i  cant requested the Board f o r a r a t e or f i x e d charge, f o r the s k e l p from Hamilton to Edmonton, of 7 8 $ per 100 l b s . , and a r a t e or f i x e d charge on f i n i s h e d pipe from Edmonton t o Vancouver of 4 - 8 $ per 100 l b s . , t o t a l l i n g $1.26 per 100 l b s . ^ The p o s i t i o n of the r a i l w a y s , although they v/ere sympathetic w i t h the case of the a p p l i c a n t , was t h a t they v/ere "unable t o comply w i t h the remedy suggested" by the a p p l i c a n t f o r s e v e r a l reasons: That they r e f u s e d r e p e a t e d l y t o c o n s i d e r f a b r i c a t i n g i n - t r a n s i t or manufacturing i n - t r a n s i t arrangements f o r i r o n and s t e e l products and many other commodities; t h a t i t would cause great l o s s i n revenue t o the r a i l w a y s ; t h a t such arrangements would be d i f f i c u l t to p o l i c e 7 7 C.R.T.C. 40, p. 46. 82 as t o whether the p i p e , a f t e r being b i l l e d t o Van couver, c o u l d be d i v e r t e d i n - t r a n s i t t o other d e s t i n  a t i o n s . I n c o n c l u s i o n t o t h i s case, the Board, a f t e r being s a t i s f i e d t h a t u n j u s t d i s c r i m i n a t i o n e x i s t e d a g a i n s t the a p p l i c a n t , f i x e d a charge f o r the moving of s k e l p , i r o n or s t e e l , t o be made by the same c a r r i e r s p a r t y t o Agreed Charge C.T.C. (AC) No. 89, of 90,0 per 100 l b s . i n minimum c a r l o a d weight of 120,000 l b s . from Hamilton and S a u l t S t e . Marie t o Edmonton, w i t h the f u r t h e r c o n d i t i o n t h a t the s a i d s k e l p be converted i n t o pipe and shipped from Edmonton t o the s t a t i o n s and p l a c e s a p p l i c a b l e t o the Agreed Charge C.T.C. (AC) No. 63, the l a t t e r movement being a f i x e d charge of 440 per 100 l b s . on p i p e , wrought i r o n or s t e e l of the same d e s c r i p t i o n and under the 10 c o n d i t i o n s attached to Agreed Charge No. 63. These charges were t o be e f f e c t i v e on May 17, 1958. Before the date t h a t t h e f i x e d charges were r e q u i r e d to be e f f e c t i v e , Counsel f o r Canadian N a t i o n a l and f o r the Canadian P a c i f i c a p p l i e d t o the Board f o r a suspension of the Board's Order No. 94129 I b i d . , pp. 47-9. d e a l i n g v/ith the previous f i x e d charges and f o r a review of the Judgment and Order. The respondents (C.N.R. and C.P.R.) submitted 21 statements to the Board f o r review. As i t would be too l o n g i n the scope of t h i s study t o analyse them p o i n t by p o i n t I w i l l g i v e o n l y a b r i e f summary. Many of these p o i n t s d e a l w i t h the a p p l i c a t i o n t o the Board by A l b e r t a Phoenix f o r the e l i m i n a t i o n of unj u s t d i s  c r i m i n a t i o n and undue preference i n December 1957 and are of minor i n t e r e s t f o r the purpose of t h i s study. They d e a l w i t h the time the a p p l i c a t i o n was made; the p a r t i e s concerned which d i d not r e c e i v e n o t i c e ; the powers of the Board i n t h i s case; the routes i n c l u d e d i n Agreed Charge (AC) No. 63 and (AC) No. 89; some f a l s e data used by the Board i n order t o determine the f i x e d charges f o r A l b e r t a Phoenix; the adverse e f f e c t s on the revenues of the c a r r i e r s under Agreed Charges i n f u t u r e , as w e l l as adverse e f f e c t s on the shippers 11 i n Canada. ' A l l these p o i n t s were r e f u t e d by the Board. An important p o i n t i n t h i s case i s the f i n a l ' Transport Commissioners' J.O.R.& R. V o l . 48, pp. 359-62. argu.rn.ent of the r a i l w a y s saying the complainant's p l a n t at Edmonton had been " b u i l t i n the wrong p l a c e " i f i t expected t o do business i n Vancouver. The Board found i t i m p o s s i b l e t o r e c o n c i l e t h i s argument w i t h the f a c t t h a t s e v e r a l other p l a n t s , l o c a t e d about 3,000 m i l e s from Vancouver, were able t o o b t a i n t h i s market because of low f r e i g h t r a t e s . The Board maintained t h a t i t "was not a case of" c a r r i e r c o m p e t i t i o n "between two or more p o i n t s i n Canada which would compel "the r a i l w a y s to meet t h a t c o m p e t i t i o n , but a matter of the r a i l w a y s e n a b l i n g one set of manufacturers i n Ontario- t o get i n t o a common market i n the Vancouver area t o meet "market co m p e t i t i o n " w h i l e denying another manufacturer, l o c a t e d 2,000 m i l e s nearer, t o enter the same market. Th i s v/ould r e s u l t i n h e l p i n g a manufacturer who i s 3,000 m i l e s away from t h i s market or who i s i n the v i c i n i t y of t h a t common market t o enter i t w i t h low agreed charges wh i l e denying any manufacturer, anywhere i n between, t h i s o p p o r t u n i t y because of o r d i n a r y t a r i f f r a t e s . This v/ould be an unju s t d i s c r i m i n a t i o n based on l o c a t i o n of an i n d u s t r y . The second p o i n t contended by the r a i l w a y s v/as 1 2 I b i d . , p. 368. 85 t h a t the/provision of the Order t o f i x tv/o charges " i n combination as an arrangement f o r f a b r i c a t i o n i n - t r a n s i t " v/as an attempt by the Board t o permit i n d i r e c t l y v/hat i t v/as not empov/ered to do d i r e c t l y e i t h e r by the Railway Act or the Transport Act. The Board r e f u t e d t h i s argument by saying t h a t the pur pose of these f i x e d charges v/as not an arrangement f o r f a b r i c a t i o n i n - t r a n s i t but merely a device t o p r o t e c t the r a i l w a y s ' revenues and t o ensure t h a t the a p p l i c a n t "cannot o b t a i n a refund of p a r t of the l o c a l r a t e which her,.has p a i d on s k e l p from Hamilton or S a u l t S t e . Marie t o Edmonton i . e . by ap p l y i n g the 90 cents f i x e d charge, u n l e s s and u n t i l he produces a p a i d f r e i g h t r e c e i p t showing t h a t the p a r t i c u l a r s k e l p has been shipped as pipe t o the Vancouver area." ^ The r a i l w a y s a l s o i n t r o d u c e d the argument t h a t the Board had never d e f i n e d s t o p - o f f i n t r a n s i t and had no power to " p r e s c r i b e a t r a n s i t arrangement of i t s own motion." The r e p l y by the Board v/as t h a t i t has d e f i n e d m i l l i n g - i n - t r a n s i t i n the case of Winnipeg 8c Montreal Boards of Trade et a l . v. C.P.R., G.T.R. & C.N.R. ( M i l l i n g - i n - T r a n s i t T o l l Case No. 2 (1921), 27 C.R.C. 138 at p. 141) as f o l l o w s : 1 5 I b i d . 86 "This n a t u r a l l y b r i n g s us. t o the question of what i s a reasonable r a t e f o r the s e r v i c e s t o be performed by the r a i l w a y company, always c o n s i d e r i n g t h a t the r a i l w a y company r e c e i v e s the l e g a l r a t e f o r t r a n s p o r t i n g the g r a i n from the s t a r t i n g p o i n t t o d e s t i n a t i o n , and t h a t the stop-over p r i v i l e g e simply means t h a t , i f the same amount i n weight i s r e t u r n e d t o the company f o r t r a n s p o r t a t i o n t o d e s t i n a  t i o n w i t h i n s i x months, the completion of the c o n t r a c t of c a r r i a g e w i l l be made by the r a i l  way company at the l e g a l through r a t e , what ever i t may happen to be." 14 The Board maintained t h a t i n the case of movement of s k e l p t o Edmonton and pipe out of Edmonton i t was not a m i l l i n g - i n - t r a n s i t because the f i x e d charges c o n s t i t u t e d a r a t e i n t o Edmonton f o r raw m a t e r i a l s i m i l a r t o the Agreed Charge to P o r t Moody and another r a t e on f i n i s h e d product of pipe out of Edmonton s i m i  l a r to Agreed Charge from WeHand to B.C. p o i n t s . 4. The Stewarts & L l o y d s of Canada L t d . Case. In March i960 an a p p l i c a t i o n was made by Stewarts and L l o y d s of Canada, L t d . , known as the a p p l i c a n t , to the Board f o r a charge t o be f i x e d f o r the movement by r a i l of i t s o i l w e l l c a s i n g and t u b i n g from Vancouver, B.C., t o d e s t i n a t i o n s i n the P r o v i n c e s of A l b e r t a , B.C., Manitoba and Saskatchewan the same as Agreed Charge C.T.C. (AC) No. 204, then i n e f f e c t f o r the movement of s i m i l a r goods shipped from P o r t 7 7 C.R.T.C. 160, p. 1 7 7 . 87/ Moody, B.C., by Canadian Western Pipe M i l l s , L t d . The a p p l i c a n t v/as i n c o r p o r a t e d as a p r i v a t e company under the Companies Act of Canada and v/as a u t h o r i z e d "to s e l l , buy, i n s t a l l , manufacture and. d e a l i n s t e e l p i p i n g and t u b i n g and metals of a l l k i n d s and to render t e c h n i c a l s e r v i c e s i n connection v/ith the s a i d b u s i n e s s . The operations of the company may be c a r r i e d on throughout Canada and 15 elsewhere." The p r e s i d e n t s t a t e d t h a t the company was a wholly-owned s u b s i d i a r y of Stewarts & L l o y d s L t d . of England w i t h head o f f i c e i n the C i t y of Toronto. The company imported o i l - w e l l t u b i n g and c a s i n g from the U n i t e d Kingdom. These goods were purchased from the parent company f.o.b. the U n i t e d Kingdom port and were taken from the s h i p to a storage y a r d , at Vancouver, leased" by the a p p l i c a n t from Evans, Coleman and Evans, L t d . The parent company s o l d such goods i n Canada e x c l u s i v e l y to the a p p l i c a n t , s i n c e 1 9 5 8 . The a p p l i c a n t v/as charged f r e i g h t r a t e s f o r the movement of c a s i n g and t u b i n g by r a i l from Vancouver to the o i l f i e l d s of the P r a i r i e P r o v i n c e s and B.C. v/hich v/ere c o n s i d e r a b l y higher than f r e i g h t r a t e s 8 3 C.R.T.C. 1 5 3 , P. 1 5 5 -88 charged as "agreed charges". Agreed Charge No. 204- was e f f e c t i v e s i n c e December 1956 and was made between Canadian Western Pipe M i l l s L t d . and C.P.R. to d e s t i n a t i o n s reached o n l y by t h a t l i n e or the Northern A l b e r t a Railways. I n February 1957, C.N.R. f o r p o i n t s s i t u a t e d on i t s l i n e and i n November 1959 P a c i f i c Great E a s t e r n Railway became p a r t i e s of the agreement. E f f e c t i v e October 16, 1957, the d e s c r i p t i o n of the goods to be c a r r i e d read as f o l l o w s : " S t e e l O i l Well Tubing and/or Casing, Welded, Manufactured i n Canada." The words "welded" and "manufactured i n Canada" were 16 added i n February and October 1957 r e s p e c t i v e l y . Although the a p p l i c a n t ' s product was seamless i t was argued t h a t both products v/ere accepted, .in the i n d u s t r y on an equal b a s i s . I n a l e t t e r dated October 9, 1959 the Canadian F r e i g h t A s s o c i a t i o n d e c l i n e d a previous a p p l i c a t i o n by the a p p l i c a n t t o become p a r t y t o the s a i d agreed charge on the grounds t h a t i t a p p l i e d o n l y t o pipe manufactured i n Canada. I n summary the evidence of the a p p l i c a n t maintained t h a t i t shipped i t s s i m i l a r goods v i a the same r a i l  ways t o the same d e s t i n a t i o n s as the p a r t i e s of the Agreed Charge. I b i d . , p. 158 89 O p p o s i t i o n t o the a p p l i c a t i o n came from three manufacturers, the Algoma S t e e l C o r p o r a t i o n , the S t e e l Company of Canada and the r a i l w a y s . One of the manufacturers, Canadian Western Pipe M i l l s L t d . , j o i n e d A l b e r t a Phoenix Tube & Pipe L t d . of Edmonton i n opposing the a p p l i c a t i o n on the grounds t h a t the a p p l i c a n t ' s product v/as not manufactured i n Canada, t h a t Western c o u l d buy i t s s k e l p from Europe but d i d not do so and t h a t imports from the U.K. and Japan had i n c r e a s e d d u r i n g 1958 and 1959 causing more pressure on Canadian Manufacturers. Another manu f a c t u r e r , Canadian Mannex C o r p o r a t i o n , which i s the s a l e s o r g a n i z a t i o n f o r Mannesmann Tube Co. L t d . , mentioned t h a t i t was i n d i r e c t l y c o n t r o l l e d by a German company, t h a t i t purchased i t s requirements of s t e e l from Algoma S t e e l C o r p o r a t i o n at S a u l t S t e . Marie, which i t i s located, c l o s e t o , t h a t i t would be economically advantageous t o buy i t s s t e e l from Germany but does not do so i n order t o s h i p i t s products t o Western Canada under Agreed Charge No. 244, which superseded AC No. 107• Mannesmann s t a t e d t h a t i t "had required, the i n i t i a l AC No. 107 i n . order t o e s t a b l i s h t h i s m i l l and v/ould not have b u i l t i t v/ithout the Agreed Charge; t h a t an i n v e s t  ment of some $30,00.0,000 had been made t h e r e i n ; t h a t f o r e i g n producers c o u l d manufacture the same product 9 0 at a lower cost than Canadian; and that granting the app l i ca t ion . . . . cou ld put theGanadian manufacturer out 17 of business." ' The other manufacturer, Page-Hersey Tubes, L t d . , stated that i t entered the manufacture of this type of product during the U.S. steel strike i n 1952 but discontinued u n t i l AC No. 122 was made by the railv/ays in 1955 because of the impossibi l i ty of meeting competition. C.P.R. corroborated the statement of Mannesmann Tube Co. L t d . and stated that the railv/ays attempted to foster manufacturing in Canada i n order to obtain hauls for raw materials and the finished products and when the AC No. 1 0 7 was in effect the estimated increased revenue of the railways was more than $3, 000,000 per annum. The same reasoning occured for AC No. 122. C.N.R. expressed the opinion that the ' words "manufactured in Canada" were added to AC No. 204- to remove any doubts and that the granting of the application would decrease i t s revenue between $4-0,000 and $160,000 and that i t v/ould consider withdrawing from this agreed charge. Algoma Steel Corporation submitted that i t could supply a substantial percentage of the steel I b i d . , pp. l 6 > - 7 . 9n f o r pipe requirements; t h a t more i m p o r t a t i o n would reduce employment and t a x revenue; t h a t the r a i l w a y s obtained more revenue w i t h raw m a t e r i a l and f i n i s h e d pipe than w i t h imported products; t h a t i t had r e c e n t l y a u t h o r i z e d a $30,.600;,.000 expenditure t o e s t a b l i s h a m i l l w i t h c a p a c i t y to produce " s e v e r a l hundred thousand tons" of product per year, i n c l u d i n g s k e l p . S t e e l Company of Canada L i m i t e d p o i n t e d out t h a t there was more at stake than merely c a s i n g and t u b i n g and t h a t i f the a p p l i c a t i o n was granted i t would apply t o a l l domestic g o o d s . ^ The Board, i n i t s f i n d i n g s , s t a t e d t h a t w i t h i n the meaning of S.-s. (10) of S. 3 2 of the Transport A c t , (a) the a p p l i c a n t i s a sh i p p e r ; (b) the c a r r i e r s were the same; (c) the goods f o r c a r r i a g e were the same as or s i m i l a r t o the goods of AC No. 204 but the a p p l i c a n t ' s goods d i d not s a t i s f y the meaning of the S. 32 (10) of the Transport A c t . 1 ^ The Board mentioned the d e c i s i o n of the U n i t e d S t a t e s Supreme Court i n the case of Texas & P a c i f i c Ry. Co. v. I.C.C, 162 U.S. 197, where the court h e l d t h a t : F o r e i g n t r a f f i c when c a r r i e d from the port of e n t r y t o f i n a l d e s t i n a t i o n and domestic t r a f f i c c a r r i e d from the same po r t t o the same d e s t i n a t i o n are not t r a f f i c of ' l i k e k i n d s ' and t h a t the s e r v i c e i n the one case 1 8 i b i d . , p. 169- ^ "Goods o f f e r e d f o r c a r r i a g e under s u b s t a n t i a l l y s i m i l a r circumstances and c o n d i t i o n s as the goods t o which the agreed charge r e l a t e s . " 92 i s not performed under circumstances and cond i t i o n s s u b s t a n t i a l l y s i m i l a r to those under which the s e r v i c e rendered i n the other case i s performed, and t h a t t h e r e f o r e the r a t e s on the 0two kinds of t r a f f i c need not be the The Board mentioned t h a t the making of these agreed. charges was intended t o cover onl y domestic products and the common o b j e c t i v e was designed t o meet market co m p e t i t i o n of import t r a f f i c . A l s o t h a t the a p p l i  cant, before and a f t e r being i n c o r p o r a t e d , intended t h a t the r e a l d e s t i n a t i o n s of the goods: s o l d would be the o i l country audi t h a t the s t o p - i n - t r a n s i t was onl y temporary and t h a t c o n s t i t u t e d the " t r a f f i c t o be import t r a f f i c . " The c h i e f commissioner K e r r d i s m i s s e d the a p p l i c a t i o n and the commissioner Knowles concurred. The a s s i s t a n t c h i e f commissioner G r i f f i n d i s s e n t e d and would have granted a f i x e d charge f o r the a p p l i c a n t f o r the f o l l o w i n g reasons:. 1) The good's of the a p p l i c a n t were s i m i l a r t o those of Agreed Charge No. 204; 2)' The Board7:.had to give weight to t r a f f i c c o n d i t i o n s i . e . the question whether the goods were o f f e r e d f o r c a r r i a g e under s u b s t a n t i a l l y s i m i l a r c o n d i t i o n s "from a t r a n s p o r t a t i o n p o i n t of ?1 view," and t h a t the Board's f u n c t i o n was not t o same. 11 •• 20 I b i d p. 187. 21 I b i d p. 207. 93 act as an a r b i t e r of i n d u s t r i a l p o l i c y ; 3) t h a t there 22 was u n j u s t d i s c r i m i n a t i o n t o the a p p l i c a n t . 5* E f f e c t s on marketing of these products. I n these p r e v i o u s cases v/e saw t h a t the uses of the con cept of agreef charges had c o n s i d e r a b l e e f f e c t s on the marketing of these products. I n the f i r s t case s t u d i e d , e astern manufacturers (Canadian I r o n Foundries L t d . and N a t i o n a l I r o n Corp. Ltd.) of cast i r o n pipe and f i t t i n g s were denied the western market when the r a i l w a y s c a n c e l l e d the low t r a n s c o n t i n e n t a l competi t i v e r a t e s because of the i n t r o d u c t i o n of the one and o n e - t h i r d r u l e i n the Railway Act i n 1 9 5 2 . Agreed charges then r e - e s t a b l i s h e d low r a t e s enough to a l l o w these manufacturers t o meet the c o m p e t i t i o n . The case of I r o n and S t e e l shipped from E a s t e r n Canada t o the West Coast i s s i m i l a r as i t allowed t h i s m a t e r i a l t o be t r a n s p o r t e d under agreed r a t e s and then be converted on the P a c i f i c Coast t o be s o l d on the A l b e r t a market i n c o m p e t i t i o n w i t h l o c a l manu f a c t u r e r s . I n the case of A l b e r t a Phoenix Tube & P i p e , the approval by the Board to have two f i x e d charges, one I b i d . , pp. 211 and 216. 94. f o r the movement of raw m a t e r i a l from Ontario t o Edmonton and the other one f o r the s h i p p i n g of f i n i s h e d products from the p l a n t t o the B r i t i s h Columbia market, allowed t h i s manufacturer to extend i t s market and c r e a t e d g r e a t e r market comp e t i t i o n i n B";G. areas. Stewarts & L l o y d s of Canada L t d . , because of i t s purchases of m a t e r i a l s from the parent company i n the U n i t e d Kingdom, was denied by the Board the r i g h t t o use agreed charges t o s e l l i t s products i n the p r a i r i e market. This d e c i s i o n of the Board had the opposite e f f e c t to the previous cases where the agreed charge concept p a r t i c i p a t e d i n i n c r e a s e d market c o m p e t i t i o n . F i n a l l y i t was s t a t e d c l e a r l y by Page-Hersey Tubes L t d . t h a t i t manufactured o i l w e l l c a s i n g and t u b i n g d u r i n g the U.S. s t e e l s t r i k e i n 1952 but d i s c o n t i n u e d u n t i l an agreed charge v/as made by the r a i l w a y s i n 1955 t o enable t h i s company to meet the c o m p e t i t i o n i n Western Canada. The c o n c l u s i o n from these few cases i s t h a t the agreed charge concept had the general e f f e c t of i n c r e a s i n g c o m p e t i t i o n i n the Western market by e n a b l i n g more manufacturers e i t h e r from E a s t e r n or 95 Western Canada to s e l l t h e i r products because of reduced transportation costs. 6. E f f e c t s f o r foreign competitors. I t has been seen that the Canadian company, Stewarts & Lloyds, wholly owned by a B r i t i s h parent company, v/as denied the r i g h t to use agreed charges by the Board, because i t imported i t s o i l - w e l l tubing and casing from the parent company. I t i s hard to j u s t i f y the conclusion a r r i v e d at by the Board i n d i f f e r e n t i a t i n g the services rendered by those two s i m i l a r products (Canadian and English) due to the fact that one v/as imported from abroad and the other one fabricated i n Canada. Never theless, the r e s u l t i n g e f f e c t was to place the foreign competitors i n a competitively disadvantageous market s i t u a t i o n i n Canada, where t h i s market was located f a r from the port of entry. In the c a n c e l l a t i o n of the f i x e d charge f o r Warden King L t d . i n June 1954, i t appears that the Board, among other things, gave a good amount of consider ation to the argument of Associated Foundry Ltd. that the imports d i d not exceed 10$ of i t s production and t h i s could not be claimed by Warden King Ltd. as an argument to meet competition from foreign producers. From the case i t seems that, had there 96' been an a p p r e c i a b l e q u a n t i t y of imports by t h i s company the Board would have been i n c l i n e d t o not revoke the f i x e d charge i n order to a l l o w Canadian manufacturers to meet t h i s c o m p e t i t i o n from f o r e i g n producers. Mannesmann Tube Co. L t d . e x p l a i n e d In one h e a r i n g t h a t although i t was i n d i r e c t l y owned by a German company and t h a t i t c o u l d purchase i t s requirements from Germany more economically, i t bought i t s s t e e l from Algoma S t e e l C o r p o r a t i o n at S a u l t S t e . Marie i n order to s h i p i t s products to Western Canada under the agreed charge. F i n a l l y the f a c t t h a t agreed charges p e r m i t t e d E a s t e r n manufacturers t o s e l l c o m p e t i t i v e l y i n the Western market c r e a t e d c e r t a i n l y a tougher s i t u a t i o n f o r the f o r e i g n competitor who enjoyed a g r e a t e r monopoly market before these r a t e s were i n t r o d u c e d . 7- E f f e c t s on l o c a t i o n of manufacturing p l a n t s . There i s at l e a s t one case where i t was c l e a r t h a t the agreed charge concept had the e f f e c t of i n f l u e n c i n g the l o c a t i o n of a manufacturing p l a n t i n Eastern- Canada by Mannesmann, as they mentioned t h a t they "had r e q u i r e d the i n i t i a l Agreed.Charge No. 107 i n order t o e s t a b l i s h the m i l l and would not have b u i l t 97. i t without the Agreed Charge; t h a t an investment of some $30 ,1000,.00.0 had been made t h e r e i n . " The g r a n t i n g of two f i x e d charges to A l b e r t a Phoenix Tube & Pipe L t d . f o r the movement of i t s raw m a t e r i a l and f i n i s h e d products c o r r e c t e d the disadvantages of p l a n t s l o c a t e d i n between the two geo g r a p h i c a l s i t u a t i o n s of other c o m p e t i t o r s . P l a n t l o c a t i o n was c e r t a i n l y i n f l u e n c e d a f t e r t h i s g r a n t i n g of f i x e d charges by the Board as there are no market disadvantages f o r a p r a i r i e manufacturer t o compete i n the B.C. market w h i l e being i n the p r o x i m i t y of i t s l o c a l p r a i r i e market. 98 B. THE CANADA STEAMSHIP LINES LTD. CASES 1. Canada Steamship L i n e s v s . Railways. I n A p r i l 1940, an a p p l i c a t i o n was made f o r approval of an agreed charge between r a i l c a r r i e r s and Johnson & Johnson L t d . , Chicopee Mfg. Corp. and P e r s o n a l Products L t d . of Montreal and another agreed charge between r a i l c a r r i e r s and Canadian C e l l u c o t t o n Prod u c t s Co. of Niagara P a l l s , O n t a r i o , c o v e r i n g s h i p p i n g of s u r g i c a l s u p p l i e s from Montreal, and from Niagara F a l l s , t o s p e c i f i e d p o i n t s i n Onta r i o and Quebec. The purpose of the agreement v/as t o enable r a i l c a r r i e r s t o meet c o m p e t i t i o n of highway t r a n s p o r t . Both Agreed Charges covered at l e a s t 85$ of the aggregate volume t r a n s p o r t e d . The ra i l w a y s , a s s e r t e d t h a t without these agreed charges they v/ere to l o s e p r a c t i c a l l y the e n t i r e business i n v o l v e d . The remaining 15$ was to move by boat a c c o r d i n g t o the s h i p p e r s . Canada Steamship L i n e s L t d . gave n o t i c e of objec t i o n , to the Board, t o the approval of these agreed charges on the grounds t h a t the agreement would be d i s c r i m i n a t o r y t o d i v e r t or l i m i t such a s u b s t a n t i a l volume of t r a f f i c from one r e g u l a t e d c a r r i e r t o another type of r e g u l a t e d c a r r i e r as the purpose of Pa r t 1 of the Transport Act 1938 was t o enable c a r r i e r s 9 9 s u b j e c t -to the Act t o compete w i t h unregulated forms SI of t r a n s p o r t ; t h a t Canada Steamship L i n e s (C.S.L.) v/as a r e g u l a t e d competing c a r r i e r and was not p a r t y p t o the agreement. The a p p l i c a n t s mentioned t h a t under the e x i s t i n g c o m p e t i t i o n i t was e s s e n t i a l t h a t quick d e l i v e r y be made and t h a t by r a i l i t took one day to s h i p merchandise from Montreal t o Toronto w h i l e i t took three days by C.S.L. The Board con tended t h a t C.S.L. would not be a f f e c t e d a d v e r s e l y as t h e r e ;was no t r a f f i c c a r r i e d by them i n 1939 aud only 34-0 pounds i n 1 9 3 8 ; t h a t a c c o r d i n g t o the Act " u n r e s t r i c t e d c o m p e t i t i o n i s pe r m i t t e d t o any c a r r i e r a g a i n s t any or a l l the other p a r t i e s , w i t h the sole"; e x c eption t h a t v/hen t r a n s p o r t i s by r a i l , competing •7. r a i l c a r r i e r s must j o i n i n making the agreed charge."-^ The Board approved both Agreed Charges No. 5 and No. 6 f o r a one year p e r i o d as i n i t s o p i n i o n "the o b j e c t to be secured by the making of the agreement i n question c o u l d not, having regard t o a l l the circum s t a n c e s , adequately be secured by means of a s p e c i a l or c o m p e t i t i v e t a r i f f of t o l l s under the Railway Act LL or under the Transport Act." 51 G.R.T.C. 1 8 5 , pp. 187 -8 . I b i d . , p. 1 8 9 . I b i d . , p. 1 9 6 . I b i d . , p. 1 9 0 . 100; Other a p p l i c a t i o n s were made i n January 1942 f o r approval of agreements (1) between C.N.R. and C.P.R. and Johnson & Johnson L t d . , Chicopee Mfg. Corp. and P e r s o n a l Products L t d . f o r agreed charges f o r t r a n s p o r t a t i o n of goods from M o n t r e a l , t o s p e c i f i e d p o i n t s i n A l b e r t a , Saskatchewan, and Manitoba; and (2) between C.N.R., C.P.R., N.Y. C e n t r a l Ry. Co., T.H. & B.R. Co., and Wabash Ry. Co.—and Canadian C e l l u c o t t o n Products Co. L t d . , f o r agreed charges f o r c a r r i a g e of goods from Niagara P a l l s , Ont., t o s p e c i f i e d p o i n t s i n the same pro v i n c e s mentioned above. Both a p p l i c a t i o n s were opposed by C.S.L. and by Northwest Steamships L t d . The grounds of o b j e c t i o n were s i m i l a r i n both cases. No s h i p p e r or r e p r e s e n t a t i v e body of shippers had obj e c t e d or had a p p l i e d f o r a f i x e d charge. The o b j e c t of these agreed charges was to .allow the r a i l w a y s t o c a r r y 100$ of the t r a f f i c of the s h i p  pers and by doing so t o i n c r e a s e the car l o a d i n g s , reduce the number of ca r s necessary t o c a r r y the t r a f f i c , and the o v e r a l l e f f e c t being t o i n c r e a s e the revenue of the c a r r i e r s by having a l l - r a i l t r a f f i c and t o e l i m i n a t e the water h a u l . 0 C.S.L. and Northern N a v i g a t i o n Co. L t d . , o b j e c t e d t o the approval f o r the f o l l o v / i n g reasons: 5 54 C.R.T.C. 1, p. J . 6 I b i d . , p. 7» 1 ( H 1) The purpose of the Transport Act was t o permit r e g u l a t e d c a r r i e r s t o meet c o m p e t i t i o n of unregulated c a r r i e r s . 2) The approval of these agreed charges v/ould have adverse e f f e c t s on the water c a r r i e r s ' revenue. 3) Withdrawal of t r a f f i c from r e g u l a t e d c a r r i e r s ' c o m p e t i t i v e f i e l d "would not be i n the n a t i o n a l i n t e r e s t . " 4) .The ob j e c t of the agreed charges c o u l d be secured by p u b l i s h e d t a r i f f s . The Board r e f u t e d the f i r s t o b j e c t i o n by sayi n g t h a t the f a c t t h a t there was no unregulated c a r r i e r d i d not prevent a c a r r i e r from making agreed charges although "the presence or absence of unregulated c o m p e t i t i o n may, n e v e r t h e l e s s , be a r e l e v a n t c o n s i d e r  a t i o n . . . ; " the Board agreed t h a t the approval of the agreements would l i k e l y be p r e j u d i c i a l t o the o b j e c t  i n g water c a r r i e r s and p l a c e t h e i r business at an "undue a n d . u n f a i r disadvantage", as they would l o s e as much as 100$ of the t r a f f i c they f o r m e r l y enjoyed. The Board reminded C . S . L . t h a t "a r e p r e s e n t a t i v e body of c a r r i e r s " and not any c a r r i e r had the r i g h t t o complain t o the M i n i s t e r and s a t i s f y him t h a t i t was a g a i n s t the n a t i o n a l i n t e r e s t and t h a t i t co u l d not d e a l w i t h t h i s q u e s t i o n at the present moment. 102 I t a l s o mentioned t h a t the purpose of these agreed charges c o u l d be obtained by a c o m p e t i t i v e t a r i f f of t o l l s . The Board then dismissed both a p p l i c a t i o n s . Deputy C h i e f Commissioner Garceau v/as d i s s i d e n t on the grounds t h a t i t was the duty of the Board to give the r a i l w a y s every o p p o r t u n i t y t o enter i n t o such agreements as s t a t e d i n the Transport Act (1938) i n P a r t V; t h a t the Board v/as c o n t r a d i c t o r y by s t a t i n g t h a t : "There would be, undoubtedly, advantages to the r a i l c a r r i e r s i n the economies r e s u l t i n g from i n c r e a s e d c a r l o a d i n g s , l o n g e r average haul and reduced 7 s t a t i o n h a n d l i n g expense.'" Also he mentioned t h a t the Board, i n i t s c o s t study, d i d not take i n t o c o n s i d e r  a t i o n a l l the f a c t s r e l e v a n t to the t o t a l . c o s t s i n v o l v e d , and concluded t h a t he would approve the s a i d Agreed Charges. Because of t h i s judgment by the Board, without unanimity, d i s m i s s i n g the a p p l i c a t i o n s on the grounds t h a t the o b j e c t of the agreements i n q u e s t i o n c o u l d be secured by c o m p e t i t i v e t a r i f f and t h a t there wotild be p r e j u d i c e a g a i n s t the water c a r r i e r s , the r a i l w a y companies a p p l i e d to the Board f o r a review of the I b i d . , pp. 27 and 3 1 . 10-3, the orders d i s m i s s i n g the a p p l i c a t i o n s and f o r a r e h e a r i n g contending theBoard's judgment was wrong i n t a k i n g account of the o b j e c t i n g water c a r r i e r s . As the q u e s t i o n i n v o l v e d a p o i n t of law and there was d i s s e n s i o n among i t s members, the Board sub m i t t e d the q u e s t i o n t o the Supreme Court of Canada i n these terms: "On an a p p l i c a t i o n to theBoard under S. 35 of the Transport A c t , 1938, f o r the approval of an agreed charge between a s h i p p e r and competing c a r r i e r s by r a i l , i s the Board precluded from r e g a r d i n g as r e l e v a n t c o n s i d e r  a t i o n s the e f f e c t s which the making of the agreed charge i s l i k e l y to have on the b u s i - ness and revenues of other c a r r i e r s . " The Supreme Court i n a three t o two s p l i t answered the q u e s t i o n i n the n e g a t i v e and h e l d t h a t the. Board was not precluded from r e g a r d i n g as r e l e  vant the e f f e c t which the making of the agreed charges was l i k e l y to have on the business and reve- g nues of the other c a r r i e r s . In A p r i l 194-5, the r a i l w a y s appealed t o H i s Majesty i n C o u n c i l t o c o n s i d e r the same q u e s t i o n . The judgment of the J u d i c i a l Committee of the E r i v y C o u n c i l d e l i v e r e d by L o r d MacMillan s t a t e d t h a t i t would be d i f f i c u l t t o conceive a wider d i s c r e t i o n 55 C R . T . C . 162, 3 D . L . R . 336, S . C . R . 333-104 than i s c o n f e r r e d t o the Board i n order t o dispose of an a p p l i c a t i o n made to him f o r the approval of an agreed charge as i t i s mentioned i n the Act t h a t " a l l c o n s i d e r a t i o n s which appear t o i t (the Board) to be r e l e v a n t . " F u r t h e r , the judgment mentioned t h a t i t would be strange t h a t i n attempting t o co o r d i n a t e and harmonize the operations of a l l c a r r i e r s by r a i l , water and a i r , the Board was precluded, when performing i t s duty, from c o n s i d e r i n g the e f f e c t on the business of a l l c a r r i e r s concerned. The judgment 9 of the Supreme Court of Canada v/as r e a f f i r m e d . I t i s to be noted t h a t , i n the amendments of the Transport A c t , S e c t i o n 32 of the Revised Act (28th J u l y , 1955), p r o v i s i o n v/as made t o e n t i t l e the v/ater c a r r i e r s t o become a p a r t y of the agreements, as i t was mentioned e a r l i e r i n t h i s t h e s i s i n Chapter I I . 2. Canada Steamship L i n e s . v . Canadian F r e i g h t  A s s o c i a t i o n et a l . i n Agreed Charge Wo. 155• An agreement v/as reached, i n June 1956, between the f o l l o w i n g shippers — T h e Canada S t a r c h Company, L i m i t e d , and S t . Lawrence S t a r c h Company, L i m i t e d — a n d the r a i l w a y s f o r the t r a n s p o r t of v a r i o u s goods—Corn O i l , Corn S t a r c h , e t c . — f r o m C a r d i n a l and P o r t C r e d i t , O n t a r i o , to s p e c i  f i e d p o i n t s i n B r i t i s h Columbia. C.S.L. a p p l i e d t o 9 58 C.R.T.C. 113, AC 204. 105 the Board f o r an Order t o make them p a r t y t o the agreed charge on the grounds t h a t they s a t i s f i e d the p r o v i s i o n s of S. 32 (5) of the Transport Act (re-enacted 1955, C 59, S. 1) as: 1) I t was a c a r r i e r by water having through rout e s and interchange arrangements w i t h a c a r r i e r by r a i l . 2) They serve the co m p e t i t i v e p o i n t s C a r d i n a l and Po r t C r e d i t . 3) They f i l e t a r i f f of t o l l s a p p l i c a b l e t o the c a r r i a g e of goods as a c a r r i e r by water as r e q u i r e d by the Board. I n the e x i s t i n g c a r r i a g e , the t r a f f i c under t h i s t a r i f f moved from C a r d i n a l t o the po r t of Cornwa l l by highway t r a n s p o r t , hence by C.S.L.'s sh i p s t o the Lakehead and by r a i l beyond t h i s p o i n t . The same took p l a c e from P o r t C r e d i t t o Toronto. I n the C a r d i n a l case the a p p l i c a n t (C.S.L.) had e s t a b l i s h e d a j o i n t r a t e from t h i s p o i n t to d e s t i n  a t i o n and i t defrayed the cost of t r a n s p o r t by h i g h  way from C a r d i n a l t o C o r n w a l l . For Po r t C r e d i t the t a r i f f a u t h o r i z e d the same r a t e as from Toronto and the a p p l i c a n t defrayed a l s o the cos t of highway move ment. I n both cases the highway c a r r i e r was not a p a r t y t o the t a r i f f but performed the s e r v i c e a t the 106 expense of the a p p l i c a n t . The r a i l w a y s argued t h a t t h i s c o n s t i t u t e d an interchange of t r a f f i c w i t h an unregulated c a r r i e r and t h a t the a p p l i c a n t d i d not serve these p o i n t s . The Board s t a t e d t h a t the A p p l i c a n t f u l f i l l e d a l l the requirments of the Act and t h a t the highway t r a n s p o r t s e r v i c e was performed at the expense of the a p p l i c a n t as an a l t e r n a t i v e t o s e r v i n g the p o i n t s by d i r e c t water t r a n s p o r t , which p o i n t s the a p p l i c a n t was a u t h o r i z e d t o serve because of i t s l i c e n c e , but t h a t i t found more convenient t o use Cornwall and Toronto as p o r t s and u t i l i z e the highway t r a n s p o r t f o r the remaining d i s t a n c e s . The a p p l i c a n t became a p a r t y t o the agreement f o r the Agreed Charge C.T.C. (AC) No. 1 5 3 . 1 0 3 • E f f e c t s on water and highway t r a n s p o r t a t i o n . From the cases reviewed above, i t v/as i n no way demon s t r a t e d t h a t the b a t t l e between the r a i l w a y s and the Canadian F r e i g h t A s s o c i a t i o n on one hand and Canada Steamship L i n e s r e s u l t e d i n any change i n the market i n g of the goods i n v o l v e d f o r t r a n s p o r t a t i o n . I t 74 C.R.T.C. 69-107 seems t h a t t h i s merchandise had t o be hauled anyway and t h a t i t v/as o n l y a matter of v/hich mode of t r a n s  p o r t the sh i p p e r v/ould' use. I n the f i r s t case the' f i g h t betv/een C.S.L. and the r a i l w a y s , f o r the moving of the merchandise of the shippers i n v o l v e d , ended by the approval of the agreed charges, and as i t was mentioned by the Board i n one of the reasons f o r appr o v a l , C.S.L. d i d s h i p a n e g l i g e a b l e q u a n t i t y of products i n the tv/o previous years. The r e a l l o s e r i n t h i s case v/as the highway i n d u s t r y v/hich e v e n t u a l l y , because of t h e i r r a t e s and s e r v i c e , was to o b t a i n the e n t i r e business of the s h i p p e r s as the r a i l w a y s mentioned i n t h e i r argument. The r a i l  ways obtained the business of the s h i p p e r s . The C.S.L. v. C.F.A. d e a l t v/ith, i n t h i s s e c t i o n , e s t a b l i s h e d the precedent t h a t water c a r r i e r s c o u l d not be i g n o r e d by the Board i n the matter of agreed r a t e s where they were i n co m p e t i t i o n w i t h the r a i l w a y s . The judgment of the Board l e f t the t r a n s p o r t a t i o n i n d u s t r y unchanged. The p r i n c i p a l i s s u e , i n the C.S.L. v. C.F.A. case i n 1956, concerned the r i g h t of the water c a r r i e r s t o use highway t r a n s p o r t t o move goods p a r t of the journey when i t was more economical or convenient than v/ater movement when t h e i r (water c a r r i e r s ' ) t a r i f f s v/ere f i l e d from the p o i n t of o r i g i n t o the p o i n t of d e s t i n a t i o n . The answer by the Board, v/as p o s i t i v e and t h i s represented a draw back f o r the r a i l w a y s as the water c a r r i e r s c o u l d use highway t r a n s p o r t when more convenient i n order to g i v e f a s t e r s e r v i c e to the shippers and g r e a t e r c o m p e t i t i o n t o the r a i l w a y s . In summary the highway i n d u s t r y s u f f e r e d a l o s s i n l o n g h a u l to the r a i l w a y s when agreed charges were approved, w h i l e the share of business done by the water c a r r i e r v/ould remain about the same or v/ould i n c r e a s e as i t c o u l d b e n e f i t from the agreed charge made by the r a i l w a y s , by becoming p a r t y t o the agreement when i t has e s t a b l i s h e d through routes and interchange arrangements w i t h the c a r r i e r by r a i l and because of the d i f f e r e n t i a l s between a l l - r a i l and r a i l - l a k e - r a i l or l a k e - r a i l r a t e s they would have c e r t a i n economic advantages over r a i l . 409 C. THE PETROLEUM CASES. 1. C.N.R. et a l . v. Good R i c h R e f i n i n g Co. L t d . et a l . I n August 1939? there was an a p p l i c a t i o n made t o the Board f o r the approval of an agreed charge between o i l companies and r a i l w a y s companies, cover i n g t r a n s p o r t a t i o n of petroleum products i n tank cars from r e f i n e r i e s and marine t e r m i n a l s i n Ontario t o p o i n t s i n the Prov i n c e of O n t a r i o . The terms of the agreements i n c l u d e d t h a t the o i l companies would be at l i b e r t y t o sh i p from marine tanks, tank s t a t i o n s on r a i l w a y s and r e f i n e r i e s i n t r u c k s of a tank capa c i t y not exceeding 1200 g a l l o n s f o r any d i s t a n c e and/or from marine tanks and r e f i n e r i e s I n t r u c k s exceeding a tank c a p a c i t y of-1200 g a l l o n s , f o r d i s  tances not exceeding 25 m i l e s by highway. Good R i c h O i l Co., L t d . , whose p r i n c i p a l p l a c e of business was at P o r t C r e d i t , O n t a r i o , opposed the a p p l i c a t i o n on the grounds t h a t the proposed agreed charge would be The a p p l i c a n t s were C.N.R., C.P.R., the Essex Terminal Railway Co., the Grand R i v e r Railway Co., the H u l l E l e c t r i c Co., the Lake E r i e & Northern Railway Co., the London & Po r t S t a n l e y Railway Co., the Michigan C e n t r a l R a i l r o a d Co., the N.Y. C e n t r a l R a i l r o a d Co., the Pere Marquette Railway Co., the Thousand I s l a n d Railway Co., the Toronto, Hamilton & B u f f a l o Railway Co. and the Wabash Railway Co. f o r the r a i l w a y s , and the o i l companies were B.A. O i l L t d . , Canadian O i l Co., L t d . , the C i t i e s S e r v i c e 110 d i s c r i m i n a t o r y t o Good R i c h O i l ; t h a t the agreed charge v/ould not accomplish " i t s expressed purpose"; t h a t the o b j e c t s of the a p p l i c a n t s c o u l d be secured by s p e c i a l and c o m p e t i t i v e t a r i f f s ; and f i n a l l y t h a t i t v/as a g a i n s t the p u b l i c i n t e r e s t . The a p p l i c a n t s contended t h a t the object sought i n t h i s agreement c o u l d not be secured by a s p e c i a l or c o m p e t i t i v e t a r i f f as t h i s v/ould permit other persons t o enjoy the b e n e f i t s without any o b l i g a t i o n s t o s h i p t h e i r products by r a i l . The opponent mentioned t h a t he had as yet estab l i s h e d few tank s t a t i o n s at the v a r i o u s r a i l w a y p o i n t s i n O ntario and t h a t he was prepared t o e s t a b l i s h such tanks when " f i n a n c i a l and other c o n d i t i o n s appear t o warrant i t " but t h a t i n the meantime he would be d i s  c r i m i n a t e d a g a i n s t by o l d e r o i l companies who a l r e a d y e s t a b l i s h e d many t e r m i n a l s . The Board (without g i v i n g reasons i n the case) s t a t e d t h a t the o b j e c t sought by t h i s agreed, charge c o u l d not be secured by a s p e c i a l or com p e t i t i v e t a r i f f and t h a t the s a i d agreement v/ould not be un j u s t l y d i s c r i m i n a t o r y to the opponent, and approved 2 the a p p l i c a t i o n . O i l Co., L t d . , I m p e r i a l O i l Co., the McColl-Frontenac O i l Co., L t d . , and the S h e l l O i l Co. of Canada, L t d . 2 50 C.R.T.C. 161, pp. 161-6. 11 :1l Good R i c h R e f i n i n g Co. L t d . ( h e r e i n a f t e r c a l l e d the a p p l i c a n t ) came back to the charge a l l e g i n g , i n December 1941, t h a t h i s business was u n j u s t l y d i s  c r i m i n a t e d a g a i n s t by the previous agreed charge on the grounds t h a t every r e f i n e r i n Onta r i o was enjoy i n g cheaper f r e i g h t r a t e s than the a p p l i c a n t ; that at the time of agreement he d i d not have s u f f i c i e n t number of r a i l and marine t e r m i n a l s and t h a t the O i l C o n t r o l l e r ^ prevented him from e s t a b l i s h i n g any; t h a t he s e r v i c e d p l a n t s f o r manufacture of munitions and war m a t e r i a l s which had no r a i l l i n e f a c i l i t i e s and by s i g n i n g the agreed charge the a p p l i c a n t would l o s e t h i s b u s i n e s s ; t h a t i f he were granted the same r a t e "or even 5$ h i g h e r " , the revenue t o the c a r r i e r s would be t e n times t h a t p a i d i n 1940 by the a p p l i c a n t . The r a i l w a y s opposed the a p p l i c a t i o n of Good R i c h by sa y i n g i t "must be prepared to accept the c o n d i t i o n s of the agreed charge before i t can com p l a i n of u n j u s t d i s c r i m i n a t i o n " and t h a t the a p p l i  cant had s e t t l e d i t s own p o l i c y of t r u c k d i s t r i b u t i o n and c o u l d not enjoy "the advantage of each system of J Because of World War, the Canadian Parliament p r o h i b i t e d , through i t s O i l C o n t r o l l e r , the e r e c t i o n of any new marine or r a i l t e r m i n a l s . 4 54 C.R.T.C. 140, pp. 140-3. 112 d i s t r i b u t i o n without the burden of e i t h e r . " y The Board maintained t h a t the a p p l i c a n t ' s business had not been d i s c r i m i n a t e d a g a i n s t as i t s p r o d u c t i o n of petroleum products i n c r e a s e d from 12 m i l l i o n g a l l o n s i n 1938 t o over 39 m i l l i o n g a l l o n s i n 194-1; t h a t the f i x i n g of a charge, as wanted by the a p p l i c a n t - n o t a p p l y i n g t o c e r t a i n l o c a t i o n s , would r e s u l t i n shipment by r a i l w a y tank c a r s of about 60$ of i t s products; and t h a t the f i x i n g of a charge under the c o n d i t i o n s of the agreed charge would r e s u l t i n h i g h e r cost d e l i v e r i e s by t r u c k s , because of the l i m i t s imposed on d i s t a n c e f o r t r u c k c a p a c i t y exceed i n g 1200 g a l l o n s and r e s t r i c t i o n s on t r u c k c a p a c i t y on d i s t a n c e s over 25 m i l e s although these two r e s t r i c  t i o n s would apply t o o n l y 10$ of the a p p l i c a n t ' s b u s i  ness, as was shown i n evidence. The Board dismissed the a p p l i c a t i o n . I n October 19395 a s i m i l a r case t o Good R i c h R e f i n i n g occurredwhen L i o n s O i l s L t d . opposed the a p p l i c a t i o n f o r approval of an agreed charge between C.N.R. & C.P.R. and I m p e r i a l O i l L t d . and M c C o l l - Prontenac O i l Co., L t d . The grounds of o p p o s i t i o n were the same i . e . t h a t L i o n s O i l s L t d . d i d not have tank s t a t i o n s at the v a r i o u s p o i n t s of the r a i l w a y s and c o u l d not become a p a r t y to the agreement. The 115 o b j e c t of the agreed charge f o r r a i l w a y s v/as t o regain- c a r r i a g e of products t o p o i n t s w i t h i n a r a d i u s of 2 7 0 m i l e s from Calgary l o s t t o t r u c k i n g o p e r ations and meet t h i s c o m p e t i t i o n . The Board granted the a p p l i  c a t i o n as i t d i d i n the previous c a s e . 0 2 . C.N.R., C.P.R. & McColl-Frontenac O i l Co. L t d . v s . I m p e r i a l O i l L t d . et a l . An agreed charge v/as submitted f o r approval by the Board i n March 1947 between C.N.R., C.P.R., and McColl-Frontenac O i l Co. L t d . f o r the movement of Petroleum Products from the 7 Lakehead' t o twenty-eight r a i l w a y s t a t i o n s i n the Pro v i n c e of Saskatchewan. The shipper agreed t o move i t s t o t a l requirements of r e f i n e d o i l products f o r Saskatchewan by r a i l and not use any highway t r a n s p o r t whatsoever. McColl had served f o r many years i n the past Western Canada by o b t a i n i n g i t s products from three d i f f e r e n t p o i n t s ; o i l products processed i n Regina or Moose Jaw, purchases i n the Un i t e d S t a t e s , or t h e i r own r e f i n e r i e s i n Montreal and Toronto. The obj e c t of the agreement v/as t o 5 0 C.R.T.C. 166, pp. 166-8. ' The Lakehead r e f e r s to F o r t W i l l i a m , P o r t A r t h u r and West F o r t W i l l i a m , O n t a r i o , i n t h i s case. i # i n c r e a s e the net revenue of the a p p l i c a n t s i . e . r a i l  ways and M c C o l l . O b j e c t i o n s were f i l e d t o the Board by I m p e r i a l O i l L t d . and North S t a r O i l Co. I n i t s judgment the Board d i v i d e d the case as f o l l o w s : a) Consequence of the agreement. The agreement, as a l r e a d y s t a t e d , secured McColl f o r the t r a n s p o r t of a l l i t s requirements from the Lakehead and prevented him from being s u p p l i e d over any other r o u t e s . The consequence was t h a t d u r i n g the l i f e of the agreement the s h i p p e r c o u l d not con s t r u c t or operate a r e f i n e r y to supply i t s Saskatchewan market or buy any r e f i n e d products from the U n i t e d S t a t e s or from d i s t r i b u t o r s i n Western Canada, and i t a l s o prevented the c a r r i a g e of i t s o i l products by highway t r a n s p o r t . The Board answered the c r i t i c i s m of p r e v e n t i o n of o p e r a t i o n of a r e f i n e r y i n Western Canada by s a y i n g t h a t the agreement c o u l d be c a n c e l l e d by e i t h e r p a r t y on t h r e e months' n o t i c e i f the shipper d e s i r e d t o e r e c t a r e f i n e r y . The Board mentioned a l s o t h a t the o b j e c t of the agreement c o u l d not be secured by a s p e c i a l or c o m p e t i t i v e t a r i f f as i t would not o b l i g e the s h i p p e r to use the r a i l w a y s f o r i t s s h i p  ments . b) E f f e c t upon the net revenue of the c a r r i e r . As was demonstrated d u r i n g the h e a r i n g by v a r i o u s 115< e x h i b i t s i t appeared c l e a r t o the Board t h a t the agreement would r e s u l t i n a s u b s t a n t i a l improvement i n the net revenue of the r a i l w a y s compared to the former methods of d i s t r i b u t i o n which i n c l u d e d the haulage of crude o i l and r e f i n e d products by both r a i l and t r u c k . c) E f f e c t upon business of o b j e c t i n g s h i p p e r s . The main argument of I m p e r i a l O i l L t d . was t h a t i t v/ould be su b j e c t t o u n j u s t d i s c r i m i n a t i o n as i t operated a r e f i n e r y i n Regina and c o u l d not be p a r t y t o the agreement as i t d i d not secure i t s t o t a l requirements from the Lakehead, and f u r t h e r , becoming p a r t y t o the agreement would f o r c e '.it t o c l o s e down i t s Regina r e f i n e r y . The Board came t o the c o n c l u s i o n t h a t the agree ment v/as not d e t r i m e n t a l t o the business of I m p e r i a l O i l L t d . as the shipper would continue t o do i t s marketing i n Saskatchewan and s i n c e the i n c r e a s e d demand f o r t h i s market was g r e a t e r than the Regina r e f i n e r y . The m a j o r i t y of the Board then approved the agreement upon c o n s i d e r a t i o n of a l l the evidence w i t h Commissioner MacPherson d i s s e n t i n g . H i s reasons were t h a t under the " s t r i c t l e g a l i n t e r p r e t a t i o n " of the act the c a r r i e r was e n t i t l e d t o make such an agreement but t h a t the purpose of the act v/as to 1 1 6 a l l o w the r a i l w a y s to meet t r u c k and water c o m p e t i t i o n and t h a t i n t h i s p a r t i c u l a r case there was no competi t i o n i n t h i s movement of t r a f f i c from the Lakehead t o Saskatchewan. The r a i l w a y s c o u l d then secure a l l the t r a f f i c under a s p e c i a l or c o m p e t i t i v e t a r i f f . He mentioned t h a t the Board i s r e q u i r e d t o have regard f o r a l l c o n s i d e r a t i o n s which appear r e l e v a n t . One of them was the e f f e c t t h a t the agreement co u l d have on the e s t a b l i s h i n g of i n d u s t r y i n the West as i t was s t a t e d t h a t one of the purposes of the agreement was to prevent the e r e c t i o n of a r e f i n e r y by M c C o l l - Frontenac. MacPherson d i d not d i s p u t e the p o s s i b l e d i r e c t b e n e f i t t o the r a i l w a y s but thought i t was s h o r t - s i g h t e d t o discourage the growth of an i n d u s t r y o f o r the b e n e f i t of growth t o the r a i l w a y s . 3 • E f f e c t s on petroleum c o m p e t i t i o n and on  t r a n s p o r t a t i o n . I n the f i r s t two cases s t u d i e d the major e f f e c t was on t r a n s p o r t a t i o n when the r a i l w a y s by means of agreed charges c o u l d move a h i g h percent age of the merchandise of the s h i p p e r s p a r t y to the agreement, l e a v i n g f o r the motor t r u c k i n d u s t r y short d e l i v e r i e s w i t h r e s t r i c t i o n s w i t h respect to 6 3 C . E . T . C . 3 0 0 , pp. 3 0 0 - 3 1 0 . 117 d i s t a n c e and tank c a p a c i t y . I t i s hard t o understand the reasoning of the Board i n i t s judgment f o r the Good R i c h O i l Co. case when i t mentioned t h a t there was no d i s c r i m i n a t i o n by the agreed charge as i t s p r o d u c t i o n had more than t r i p l e d f o r the p e r i o d i n v o l v e d . For the agreement between the r a i l w a y s and M c C o l l - Frontenac the e f f e c t s were much broader than a change i n the t r a n s p o r t a t i o n mode used by the petroleum com pany. The c l a u s e s of the agreement i n c r e a s e d the t r a f f i c of the r a i l w a y s by f o r c i n g the shipper t o o b t a i n i t s requirements e n t i r e l y from the Lakehead i n s t e a d of the former p o i n t s of supply which i n c l u d e d the U.S. and Western r e f i n e r i e s . The agreement was c l e a r l y d e t r i m e n t a l t o the f o r e i g n s u p p l i e r as i n 19^7 almost h a l f of the sh i p p e r ' s requirements were pur chased from the U n i t e d S t a t e s . The Western r e f i n e r i e s c o u l d no more supply products t o McColl-Frontenac w i t h i n the d u r a t i o n of the agreement. These cl a u s e s caused an i n c r e a s e i n the volume of petroleum products moved by the r a i l w a y s and favored E a s t e r n r e f i n e r i e s at the expense of Western ones, as the shipper was not p e r m i t t e d t o c o n s t r u c t or operate a r e f i n e r y t o supply i t s Saskatchewan market. Although the agreement c o u l d be c a n c e l l e d upon three months' n o t i c e , i t had d e t r i m e n t a l r e p e r c u s s i o n s on highway t r a n s p o r t , Western and American s u p p l i e r s and on the e s t a b l i s h i n g of i n d u s t r y i n the West. The t r u c k e r s claimed t h a t the petroleum agreements caused a thousand of them t o be d r i v e n out of b u s i  ness. 119 D. OTHER CASES. 1. Canned goods c a s e . An a p p l i c a t i o n was made to the Board i n September 1 9 5 3 by the Canadian F r e i g h t A s s o c i a t i o n on b e h a l f of the c a r r i e r s (which i n c l u d e d both r a i l w a y companies and Great Lakes steamship c a r r i e r s ) f o r the a p p r o v a l o f an agreed charge on canned goods, p i c k l e s and t a b l e sauces from s h i p p i n g p o i n t s i n the f o u r M a r i t i m e P r o v i n c e s , Quebec and O n t a r i o moving t o d e s t i n a t i o n s i n the P r o v i n c e s o f A l b e r t a and B r i t i s h Columbia. The agreed charge was t o a p p l y t o a l l - r a i l r o u t e s e n t i r e l y w i t h i n Canada, and a l s o t o r a i l - l a k e - r a i l and w a t e r - r a i l r o u t e s . A r a t e o f $ 2 . 0 7 per 1 0 0 l b s . was agreed upon between the c a r r i e r s and s h i p p e r s f o r movement o r i g i n  a t i n g i n O n t a r i o and Quebec to Vancouver (and $ 2 . 2 0 t o Nanaimo) and r e l a t i v e l y h i g h e r r a t e s from o t h e r prov i n c e s i . e . the M a r i t i m e s . To s p e c i f i c d e s t i n a t i o n s i n A l b e r t a and B r i t i s h Columbia i n t e r m e d i a t e t o the P a c i f i c Coast p o i n t s , r a t e s were t o equal the one and o n e - t h i r d r a t e o f the agreed charge, and the agreement p r o v i d e d t h a t at l e a s t 8 5 $ of the aggregate shipment had t o be made by the c a r r i e r s p a r t y t o i t w i t h c a r l o a d minimum of 6 0 , 0 0 0 l b s . This agreement c a n c e l l e d the e x i s t i n g c o m p e t i t i v e t a r i f f r a t e of $ 2 . 2 1 . The Province of A l b e r t a , Canada Packers L t d . , and Canadian Canners obje c t e d to the approval of the agreement. The.object of t h i s agreement was t o guarantee t h a t a s u b s t a n t i a l volume of the shippers would move by the c a r r i e r s i n  v o l v e d and th a t i t c o u l d not be secured by means of a co m p e t i t i v e t a r i f f and a l s o t o r e g a i n t r a f f i c shipped v i a the Panama Canal route to the P a c i f i c Coast. A witness f o r one of the a p p l i c a n t s (Campbell Soup Co. L t d . ) s t a t e d t h a t h i s company had shipped i t s e n t i r e d i s t r i b u t i o n f o r Vancouver and v i c i n i t y by the Panama route between J u l y 1 , 1 9 5 2 , and June JO, 1 9 5 3 5 which meant t h a t the r a i l w a y s had l o s t $ 2 5 0 , 0 0 0 i n revenue i n 1 9 5 2 and had the n e g o t i a t i o n s not taken p l a c e t h i s l o s s of revenue to the c a r r i e r s would have been $ 5 0 0 , 0 0 0 . 1 The o b j e c t i n g s h i p p e r s opposed the technique of agreed charges on the grounds that the h i g h l y compet i t i v e nature of the commodities made i t im p o s s i b l e f o r them t o become p a r t y t o a " c o n t r a c t u a l o b l i g a t i o n " and t h a t they had t o "remain i n p o s i t i o n t o meet 1 7 1 C.R.T.C. 3 9 , P. 4 3 . 121: c o m p e t i t i o n on i m p o r t a t i o n s from f o r e i g n producers." A d d i t i o n a l l y they s t r e s s e d t h a t some of the s i g n a t o r i e s to the agreements c o u l d o b t a i n s u p p l i e s from t h e i r p l a n t s i n the U n i t e d S t a t e s without v i o l a t i n g the terms of the agreed charges. Canadian Canners L t d . mentioned t h a t the m a j o r i t y of i t s s a l e s were f.o.b. f a c t o r y and consequently d i d not have c o n t r o l over t h i s t r a f f i c . T h i s argument was defeated by Campbell Soup Co. which s o l d i t s products on an f.o.b. f a c t o r y b a s i s a l s o . A l b e r t a Counsel condemned the agreed charge as p r o v i d i n g r a t e s t h a t would j e o p a r d i z e the d i s t r i b u t i o n of canned goods from A l b e r t a producers (although no such producers or r e c e i v e r s i n A l b e r t a made any r e p r e s e n t a t i o n s ) . The Board, i n i t s judgment, s a i d t h a t the o b j e c t i v e of the agreement co u l d not be achieved by c o m p e t i t i v e t a r i f f r a t e s as these r a t e s v/ould s t i l l be h i g h e r than those charged v i a the Panama Canal r o u t e ; t h a t the agreed charge d i d not apply t o goods shipped from U.S. p l a n t s but t h a t i t would be o p e r a t i v e f o r shipments from Canadian t e r r i t o r y ; t h a t as shown by e x h i b i t s i n the c a s e ) t h e net revenue of the c a r r i e r s would improve. By withdrawing the e x i s t i n g t a r i f f r a t e of $ 2 . 2 1 , there v/as l e f t f o r n o n - p a r t i e s t o the agreement the non co m p e t i t i v e r a t e of $3«56. The Board s a i d t h a t t h i s d i d not c o n s t i t u t e u n j u s t d i s c r i m i n a t i o n as the o b j e c t -122' i n g c a r r i e r s choosing not t o enter the agreement had a v a i l a b l e c o m p e t i t i v e means of t r a n s p o r t i n highway and water. The agreed charge was sanctioned by the 2 Board. 2 . The automobile case.^ I n May 1954 an a p p l i c  a t i o n was f i l e d t o the Board by the Canadian F r e i g h t A s s o c i a t i o n on b e h a l f of c e r t a i n r a i l w a y s f o r an agreed charge w i t h General Motors of Canada L t d . f o r the movement of automobiles and c h a s s i s . T h i s agreed charge was t o be a p p l i c a b l e from the f o l l o w i n g l o c a  t i o n s i n O n t a r i o , Oshawa, W a l k e r v i l l e and Windsor t o numerous d e s t i n a t i o n s i n the P r o v i n c e s of A l b e r t a , B r i t i s h Columbia, Manitoba, Ontario and Saskatchewan. Studebaker Corp. of Canada L t d . a p p l i e d t o be p a r t y t o the agreement. The r a t e s proposed under these agreements were t h i r t y cents per hundred pounds lower than the e x i s t i n g t a r i f f r a t e s v/hich a p p l i e d f o r s i m i l a r t r a f f i c . The a p p l i c a t i o n contained examples of ton-mile revenue t o show t h a t the r a t e s v/ere compensatory. Not l e s s than 75 % of the volume forwarded by the shipper were to be by r a i l . 2 I b i d . , pp. 43 -9 - 5 72 C.R.T.C. 99 , PP. 99-112 . 12,3 O b j e c t i o n s t o the approval were f i l e d by the Erov i n c e of A l b e r t a , C h r y s l e r C o r p o r a t i o n of Canada, the Canadian Trucking A s s o c i a t i o n , and the Saskatchewan Motor Dealers A s s o c i a t i o n . The o b j e c t i o n s of A l b e r t a (on b e h a l f of Freeman Wilson L t d . , an a u t h o r i z e d Dodge and DeSoto d e a l e r , and M a c l i n Motors L t d . of Calgary, a Ford and Monarch d e a l e r ) and C h r y s l e r Corporation were t h a t the ob j e c t of the agreement c o u l d be secured by a s p e c i a l or c o m p e t i t i v e t a r i f f , t h a t a l l the r a i l  ways had not j o i n e d i n the agreement and t h a t i t was not compensatory and consequently i t v/ould have ad verse e f f e c t s on the net revenue of the r a i l w a y s and f i n a l l y t h a t C h r y s l e r and some other manufacturers of automobiles and c h a s s i s c o u l d not j o i n i n the agreement because of t h e i r marketing p r a c t i c e s which allowed the de a l e r s t o choose t h e i r method of t r a n s p o r t a t i o n from the f a c t o r y . A l b e r t a added th a t t h i s agreement would de s t r o y completely the highway t r a n s p o r t between Ontario and A l b e r t a . The Canadian T r u c k i n g A s s o c i a t i o n objected on the grounds t h a t the highway f r e i g h t c a r r i e r s v/ould be pl a c e d at an undue and u n f a i r disadvantage because of t h e i r p a r t i c i p a t i o n i n the movement of the t r a f f i c i n the past and t h a t t h i s v/ould prevent the growth of t h i s i n d u s t r y as t h i s agreement would .eliminate many t r u c k i n g companies from p a r t i c i p a t i o n and a l s o t h a t a s p e c i a l or co m p e t i t i v e t a r i f f c o u l d a t t a i n the same 124- o b j e c t . The a p p l i c a n t s f o r the agreed charge maintained t h a t c o m p e t i t i v e t a r i f f s had f a i l e d t o r e t a i n the t r a f f i c as these r e d u c t i o n s of r a i l w a y r a t e s had been met by competitors. T h i s was demonstrated by s t a t i s t i c s from the D.B.S. f o r the years 1951, 1952 and 1955 where r a i l movement of automobiles had been d e c l i n i n g s t e a d i l y w h i l e the s a l e s i n c r e a s e d each year. The r a i l movement i n 1951 was estimated to be 74-.3$ of the s a l e s where i t v/as 54-.4-$ i n 1953* M a c l i n Motor's i n f o r m a t i o n showed "no marked v a r i a t i o n " over the past two and one-half years p e r i o d f o r t r a n s p o r t by r a i l and highway, v/hile Freeman Wilson L t d . showed t h a t i n 1951 73$ of passenger v e h i c l e s and 99$ of t r u c k s moved by r a i l v/hile f o r the f i r s t s i x months of 1954- the movement of passenger v e h i c l e s -was;- e n t i r e l y by highway t r a n s p o r t and 57$ of the t r u c k s s t i l l moved by r a i l w a y s . The r a i l w a y s r e f u s e d to d e t a i l the cost s t u d i e s t o the opposing p a r t i e s as i t v/as ag a i n s t t h e i r c o m p e t i t i v e p o s i t i o n but these e x h i b i t s were a v a i l a b l e t o the Board. C h r y s l e r ' s main o b j e c t i o n was t h a t i t had s o l d i t s products f.o.b. f a c t o r y f o r the past 25 years and t h a t I t was "i m p o s s i b l e to comply w i t h the terms of the agreement" and t h e r e f o r e i t would be put at a disadvantage. Saskatchewan Motor Dealers A s s o c i a t i o n claimed t h a t the d e a l e r s were asked t o change t h e i r methods of doing b u s i n e s s t o s u i t the r a i l w a y s and t h a t 125 the a s s o c i a t i o n would r a t h e r see c o m p e t i t i v e t r a n s p o r t . The Board approved the agreed charge on the grounds t h a t the share of the r a i l w a y s has been decreasing s t e a d i l y f o r t r a n s p o r t a t i o n of motor v e h i c l e s and t h a t i t was the only way f o r the r a i l w a y s to maintain the t r a f f i c of General Motors. The r e l u c t a n c e of C h r y s l e r C o r p o r a t i o n to change i t s marketing method was under standable but not a reason t h a t c o u l d j u s t i f y the Board to r e f u s e i t s a p p r o v a l . 3 . E f f e c t s on competitive; t r a n s p o r t modes. As mentioned i n the canned goods case by Campbell Soup Cp. l i t d . the agreed charge enabled the r a i l w a y s to meet water c a r r i e r s 1 ' c o m p e t i t i o n through the Panama Canal f o r the movement of goods between eastern prov inces' and B r i t i s h Columbia. The t r a f f i c of r a i l w a y s was undoubtedly i n c r e a s e d by t h i s agreement wh i l e no c o n c l u s i o n s can be drawn f o r highway t r a n s p o r t . The automobile case represented a severe l o s s f o r highway t r a n s p o r t , as i t was shown i n the case by the percentage of t r a f f i c c o n s t a n t l y i n c r e a s i n g f o r t h i s mode of haulage d u r i n g the years previous to the agreement. 4-. E f f e c t s on marketing f o r these products. I n the canned goods agreement i t i s most probable t h a t 126 the merchandise moved to B.C. by r a i l w a y i n s t e a d of water t r a n s p o r t d i d not a f f e c t much the marketing of these products. There i s nothing i n the case which can give us i n f o r m a t i o n about the p r a i r i e market, although A l b e r t a claimed t h a t the agreement would j e o p a r d i z e the d i s t r i b u t i o n of canned goods f o r the producers of t h i s p r o v i n c e . The agreement between General Motors and the r a i l w a y s c e r t a i n l y put some pressure on the d i s t r i b u  t i o n method of competitors which s o l d f.o.b. f a c t o r y , l e a v i n g t o the d e a l e r s t o choose t h e i r methods of haulage. I suppose t h a t C h r y s l e r changed i t s way of d e l i v e r i n g i t s products as i t j o i n e d l a t e r i n the agreement. 127 CHAPTER. V FINDINGS' AND CONCLUSIONS A.. RESULTING EFFECT'S ON THE! TRANSPORTATION INDUSTRY 1 • Railways. Agreed", charges were l e g i s l a t e d , s p e c i a l l y to h e l p r e - e s t a b l i s h the f i n a n c i a l s i t u a  t i o n of the railways; which were s t e a d i l y l o s i n g ground; i n the t r a n s p o r t a t i o n i n d u s t r y . Apart from a g r e a t e r e f f i c i e n c y i n t h e i r o p e r a t i o n and admini s t r a t i o n there were at l e a s t two a l t e r n a t i v e s ; o f f e r e d t o them t o meet t h i s problem.. The f i r s t a l t e r n a t i v e , which r e q u i r e d ! a m o d i f i c a t i o n i n the concept of p u b l i c r e s p o n s i b i l i t y f o r the r a i l c a r r i e r s , was to a l l o w them to operate only f i n a n c i a l l y v i a b l e r a i l l i n e s and drop the non-economic ones. The other a l t e r n a t i v e was to grant the r a i l w a y s the freedom enjoyed by the highway t r a n s p o r t t o make p r i v a t e c o n t r a c t w i t h a shipper without the o b l i g a t i o n to gi v e the same r a t e s to other s h i p p e r s . The Canadian l e g i s l a t o r emphasized the l a s t a l t e r  n a t i v e which r e s u l t e d i n agreed charges. There i s no doubt t h a t t h i s concept of agreed r a t e s helped the r a i l w a y s to r e t a i n at l e a s t a c e r t a i n amount of t h e i r 128 business which most probably v/ould have t r a n s f e r r e d very r a p i d l y t o highway competitors. These agreements, i n many cases, enabled the r a i l w a y s t o r e g a i n business a l r e a d y l o s t to competitors by o f f e r i n g t o the shipper advantages comparable t o road h a u l e r s . As we saw i n the few cases analysed, there v/ere i n s t a n c e s v/here the r a i l w a y s c r e a t e d t r a n s p o r t b u s i  ness by a l l o w i n g Canadian manufacturers t o enlarge t h e i r marketing t e r r i t o r i e s because of decreased t r a n s p o r t a t i o n c o s t s and because of the t a r i f f e f f e c t s agreed charges had on the f o r e i g n competitors and the r e s t r i c t i v e c l a u s e s f o r the purchases of m a t e r i a l s o u t s i d e Canada. T h i s business was not taken av/ay from other modes of t r a n s p o r t but was cr e a t e d . Agreed charges, because of t h e i r nature, p a r t i c i  pated i n having the r a i l w a y s operate w i t h more even ness by a v o i d i n g seasonal peaks due t o sh i p p e r s ' business moving back and f o r t h from road and water t o r a i l because of the weather c o n d i t i o n s , p r o v i n c i a l highv/ay r e s t r i c t i o n s d u r i n g c e r t a i n p e r i o d s of the year and the f l u c t u a t i o n s i n the t r a n s p o r t market. T r a n s p o r t a t i o n being dependent on economic c o n j e c t u r e s and m o d i f i c a t i o n s of marketing and manu f a c t u r i n g methods by i n d u s t r i e s t o f i t the permanent 129 v a r i a t i o n s i n consumers' t a s t e s and d e s i r e s , i t i s not an easy t a s k to i d e n t i f y the e f f e c t s ' of one rate-making form on r a i l t r a n s p o r t , s t a r t i n g from t h e aggregate s t a t i s t i c s of volume c a r r i e d under t h i s r a t e and the revenue d e r i v e d from t h i s t r a f f i c . Often v/hat was gained by t h i s r a t e c l a s s i f i c a t i o n n was l o s t by another r a t e . I t v/as the case when many agreed charges r e p l a c e d a good amount of t r a n s c o n t i n  e n t a l c o m p e t i t i v e r a t e s which v/ere s u b j e c t e d to the o n e - t h i r d r u l e . F o r a long p e r i o d , agreed charges brought up the average ton-mile revenue assuming t h a t h a n d l i n g c o s t s were not h i g h e r than the average c o s t s of h a n d l i n g other t r a f f i c . And even a f t e r 1 9 6 3 , they made a con t r i b u t i o n to the f i x e d costs? even though they were lower than the average ton-mile revenue. 2. T r u c k i n g i n d u s t r y . The growth of t h i s i n d u s t r y v/as p a r t of the reason f o r the l e g i s l a t i o n of agreed charges as i t represented a permanently i n c r e a s i n g t h r e a t on i n l a n d t r a n s p o r t . The inher e n t advantages of highway t r a n s p o r t f o r c e d the r a i l w a y s to i n c r e a s e t h e i r e f f i c i e n c y and t h e i r methods of doing business i n order to compete v/ith t h i s new 130 c o m p e t i t i o n . Where r a t e s were the c r i t i c a l c r i t e r i a compared to the r a p i d i t y , f l e x i b i l i t y , s e r v i c e . . . e t c . , the motor t r u c k i n d u s t r y l o s t business to the r a i l w i t h agreed charges. And, even w i t h comparable r a t e s between road and r a i l , agreed charges f o r c e d the shipper t o d e l i v e r a l l or most of h i s t r a f f i c through r a i l w a y s . I f a shipper d i d not become p a r t y i n an agreed charge because he used highway t r a n s p o r t n o r m a l l y , he then had t o pay hig h e r r a t e s on r a i l w a y s when u s i n g them, (because of bad weather c o n d i t i o n s f o r highway, p r o v i n c i a l weight r e s t r i c t i o n s f o r t r u c k s . . . ) . T h is f o r c e d the shipper to enter the agreed charge to enjoy low r a t e s a l l year around. When r a t e d i f f e r e n t i a l s between road and r a i l d i d not represent a major f a c t o r , agreed charges were not e f f e c t i v e i n keeping t r a f f i c from t r u c k e r s when shippers c o n s i d e r e d t h a t the q u a l i t y of the s e r v i c e rendered by t r u c k e r s v/as v/orth the d i f f e r e n c e i n r a t e s . Truckers complained of the u n f a i r n e s s of these agree ments as they v/ere p o s s i b l e o n l y p r o v i d i n g t h a t the shi p p e r sent a high percentage of h i s t r a f f i c by r a i l and t h a t these r a t e s v/ere r e t a r d i n g the sound economic grov/th of highway t r a n s p o r t . But the " a l l e g e d monopoly" was o n l y f o r a year and c o u l d be broken on r e l a t i v e l y s h o r t n o t i c e . 131 Agreed charges c e r t a i n l y d i d have negative e f f e c t s on highway t r a n s p o r t , as was demonstrated on many occ a s i o n s , but i t was not c a t a s t r o p h i c as i t s growth has progressed r a p i d l y and s t e a d i l y . A l s o , s i n c e the l e g i s l a t i o n of 1967, t r u c k e r s can take a c t i o n before the Canadian Transport Commission when they c o n s i d e r t h a t any c o m p e t i t i v e r a t e i s below the v a r i a b l e c o s t s of the r a i l w a y of h a n d l i n g the t r a f f i c i n question i . e . when railx-zay r a t e i s below the compensatory l e v e l . 3. Water t r a n s p o r t . The e f f e c t s of agreed charges on i n l a n d t r a n s p o r t were much d i f f e r e n t . The water c a r r i e r has the s t a t u s of c a r r i e r w i t h i n the meaning of the Transport A c t , and can object t o the agreement. Canada Steamship L i n e s o b j e c t e d t o agreed charges when i t s t r a f f i c v/as ad v e r s e l y a f f e c t e d even t o a s m a l l extent and the Board turned down approvals. T h i s prevented the r a i l w a y s from making agreements on a huge q u a n t i t y of f r e i g h t moving i n the most populated p a r t s of Canada. Even though i n l a n d c a r r i e r s p u b l i s h e d s e v e r a l agreed charges, i t seems t h a t i t never represented a, share of t h e i r t r a f f i c comparable t o the r a i l w a y s ' C u r r i e , Canadian T r a n s p o r t a t i o n . . . op. c i t . , p. 509« 1 3 2 agreed charges revenues. The disadvantage f o r them i n making agreed charges i s the l a c k of year-round s e r v i c e s a v a i l a b l e t o the s h i p p e r . However, they have a great advantage over road t r a n s p o r t as they can become p a r t i e s t o the r a i l agreements when they have interchangeable arrangements w i t h the r a i l w a y s and r a i l - l a k e - r a i l or l a k e - r a i l r a t e s are lower t h a n a l l - r a i l r a t e s , g i v i n g them economic t r a n s p o r t advantages over r a i l w a y s . Although no data are a v a i l a b l e , i t appears t h a t ocean t r a n s p o r t , between E a s t e r n Canada and the west coast through the Panama Canal, s u f f e r e d l o s s e s because of agreed charges, as was shown i n the few cases analysed i n Chapter IV. 133 B. RESULTING EFFECTS: OF AGREED: CHARGES! ON THE SHIPPERS 1. I n t e r - r e g i o n a l marketing e f f e c t s . The i n t e n t of the l e g i s l a t o r , when he i n t r o d u c e d the agreed charge concept, was p r i m a r i l y to enable the r a i l w a y s to be c o m p e t i t i v e w i t h other modes of t r a n s p o r t . I n the m a j o r i t y of cases merchandise had to be moved between v a r i o i i s points" i n Canada and i t d i d not matter very much which mode of t r a n s p o r t was used to do' so, but there v/ere i n s t a n c e s where i t v/as c r i t i c a l because of the importance of t r a n s p o r t a t i o n c o s t s f o r c e r t a i n products t o meet c o m p e t i t i o n . Agreed charges then played a major r o l e i n changing the marketing e n v i r o n  ment . Zt seems t h a t t h i s was e s p e c i a l l y t r u e f o r the movement of low-value products f o r a lo n g d i s t a n c e , as the c o s t s of t r a n s p o r t a t i o n represented an import- and percentage of t h e i r market v a l u e . I t i s to be noted t h a t i n these cases the haulage v/as not taken away from competing t r a n s p o r t modes but v/as created by the p o s s i b i l i t y of the shipper to extend h i s market i n meeting c o m p e t i t i o n because of b e t t e r r a t e s provided by the r a i l w a y s . Agreed r a t e s acted as import t a r i f f s : - i n some cases when 134 the Board denied f o r e i g n competitors the use of t h i s r a t e system f o r the movement of t h e i r t r a f f i c i n Canada. T h i s i n c r e a s e d the manufacturing and marketing a c t i v i t i e s f o r these products at home.- The same a p p l i e d f o r r e s t r i c t i v e c l a u s e s f o r agree ments which s p e c i f i e d the buying l o c a t i o n s of mater i a l s . These c l a u s e s i n f l u e n c e d the p a t t e r n of econo mic a c t i v i t i e s by f a v o r i n g s p e c i f i c buying p o i n t s , p l a c i n g at a disadvantage l o c a t i o n s where the shipper was prevented from a c q u i r i n g h i s requirements. The S k e l p , EIpe, Tube, I r o n and S t e e l cases s t u d i e d i n Chapter TVi are evidence of the expansion 2 of the s h i p p e r s ' market. When there v/as only a t r a n s f e r of business from one mode of t r a n s p o r t t o another at approximately the same r a t e s , the market i n g c o n d i t i o n s v/ere c e r t a i n l y not a f f e c t e d a p p r e c i a b l y ; I n the petroleum agreement between the r a i l w a y s and McColl-Prontenac the c l a u s e s l i m i t i n g the sources of supply and the routes to be used c r e a t e d c e r t a i n l y a d i f f e r e n t p a t t e r n of growth f o r t h i s p e c u l i a r i n d u s - 7^1 C.R.T.C. 28, 71 C.R.T.C. 21, 71 C.R.T.C., 326, 77 C.R.T.C. 40, 77 C.R.T.C. 160, 83 C.R.T.C. 153, 85 C.R.T.C. 167. 551 C.R.T.C. 185, 54 C.R.T.C. 1, 55 C.R.T.C. 162, 58 C.R.T.C. 113, 74 C.R.T.C. 69. 135 t r y . I n the automobile case, C h r y s l e r C o r p o r a t i o n was f o r c e d i n a way t o change i t s s h i p p i n g method t o be e l i g i b l e f o r the agreed charge c o v e r i n g the t r a n s p o r t of automobiles. Mannesman Tube Co. L t d . l o c a t e d i t s p l a n t i n Easte r n Canada p a r t l y because of an agreed charge f o r the movement of i t s products t o Western Canada. The g r a n t i n g of two f i x e d charges f o r A l b e r t a Phoenix Tube & Pipe L t d . allowed t h i s manufacturer t o be l o c a t e d between the raw m a t e r i a l source and i t s s e l l i n g markets and s t i l l enjoy the agreed r a t e s of i t s competitors i n B.C., wh i l e being l o c a t e d i n the p r o x i m i t y of i t s p r a i r i e market. In summary, agreed charges i n most of the cases d i d not a l t e r the shippe r ' s market as they r e s p r e s e n t e d o n l y the use of another mode of t r a n s  port and o f t e n the use of the same mode i . e . the r a i l w a y s , w h i l e i n a few cases they changed the i n t e n  s i t y of co m p e t i t i o n by a l l o w i n g or p r e v e n t i n g competi t o r s from r e a c h i n g a market. O c c a s i o n a l l y they i n f l u  enced the l o c a t i o n of manufacturing p l a n t s . 2 . I m p l i c a t i o n s f o r f o r e i g n competitors. On occasion r a i l w a y s have a l s o p u b l i s h e d agreed charges 136 t o meet c o m p e t i t i o n from f o r e i g n manufacturers and t h i s was an argument used by the Board, whether or not the imports were a b i g p r o p o r t i o n of a competitor's s a l e s i n Canada. Mannesman mentioned t h a t i t c o u l d o b t a i n b e t t e r p r i c e s on imports but d i d not purchase f o r e i g n products i n order t o use the agreed charge concept. Stewarts & L l o y d s was denied an agreed charge on imported products and was p l a c e d at a disadvantage w i t h r e s p e c t t o i t s Canadian c o m p e t i t o r s . M c C o l l - 5 Prontenac, i n i t s agreement w i t h the r a i l w a y s , was not allowed t o buy i t s petroleum requirements from the U n i t e d S t a t e s as i t d i d p r e v i o u s l y . Not o n l y was t h i s f o r e i g n s e l l e r , i n t h i s case, at a disadvan tage i n marketing h i s products i n Canada, but a l s o he was prevented from s e l l i n g to t h i s Canadian company. The sample of cases s t u d i e d i s f a r too s m a l l to a r r i v e at a c l e a r c o n c l u s i o n as to whether the agreed charges always p l a c e d f o r e i g n competitors at a disadvantage. These precedents being e s t a b l i s h e d by the Board t o not permit f o r e i g n competitors to use these k i n d s of r a t e s , one can suppose t h a t many of them d i d not venture t o ask the Board f o r agreed or f i x e d r a t e s on the movement of t h e i r products. 4 83 C.R.T.C.. 153- 5 63 C.R.T.C. 3 0 0 . 157 BIBLIOGRAPHY PUBLIC DOCUMENTS Board of Railway Commissioners. Ottawa. Annual Rep o r t s, Board of Transport Commissioners. Canadian R a i l   ways and Transport Cases. ( 5 0 C.R.T.C. 161; 5 0 C.R.T.C. 166; 51 C.R.T.C. 185; 54 C.R.T.C. 140; 54 C.R.T.C. 1; 55 C.R.T.C. 162; 58 C.R.T.C. 1 1 5 ; 65 C.R.T.C. 3 0 0 ; 69 C.R.T.C. 160; 71 C.R.T.C. 28; 7 1 C.R.T.C. 39; 7 1 C.R.T.C. 221; 71 C.R.T.C. 326; 7 2 C.R.T.C. 99; 73 C.R.T.C. 121; 74 C.R.T.C. 69; 77 C.R.T.C. 40; 83 C.R.T.C. 1 5 5 ; 85 C.R.T.C. 167). Toronto, Canada. Law Book Company. Board of Transport Commissioners. Judgments, Orders and R e g u l a t i o n s . Ottawa, Queen's P r i n t e r . Board of Transport Commissioners. Queen's P r i n t e r , Ottawa. W a y b i l l Analyses. Canada. Royal Commission on Railways and Trans p o r t a t i o n . Report (L.P. Duff, Chairman). Ottawa. King's P r i n t e r , 1 9 5 2 . Canada. Royal Commission on D o m i n i o n - P r o v i n c i a l R e l a t i o n s . Report, Book I I , Recommenda t i o n s ( J . S . S i r o i s , Chairman). Ottawa. King's P r i n t e r , 1 9 4 0 . Canada. Royal Commission on T r a n s p o r t a t i o n . (W.F.A. Turgeon, Chairman). Ottawa. P r i n t e r , 1 9 5 1 • Canada. Royal Commission on Agreed Charges. (W.F.A. Turgeon, Chairman). Ottawa. P r i n t e r , 1 9 5 5 - Report, King's Report, Queen's 138 Canada. T r a n s p o r t a t i o n Study f o r the Royal Commis s i o n of Canada's Economic P r o s p e c t s . Report, (J.C. Eessard, Chairman). Ottawa -. Queen's P r i n t e r , 1956. Canada. Royal Commission on T r a n s p o r t a t i o n , Report, (M.A. MacPherson, S r . , Chairman). Ottawa. Queen's P r i n t e r , 1961-62. Canada. Submission t o Royal Transport Commission by the Canadian Trucking A s s o c i a t i o n . Canada. Railway A c t , Revised S t a t u t e s of Canada. 1952, Chapt. 234, V o l . IV. Canada. Transport A c t , S t a t u t e s of Canada. 2 George VI, Chapt. 53 (1938). Canada. Transport Act, Revised S t a t u t e s of Canada. 1952, Chapt. 271, V o l . IV. Great B r i t a i n . Royal Commission on Transport. P i n a l Report ( A r t h u r G r i f f i t h - B o s c a w e n , ChairmanJ. H.M. S t a t i o n e r y , 1950. Great B r i t a i n . Road and R a i l T r a f f i c A c t . S t a t u t e s  at Large. 23 and 24- George V, C. 53 (1933)- BOOKS Bonavia, M.R. The Economics of Transport. Cambridge U n i v e r s i t y , 1936. C u r r i e , A.W. Economics of Canadian T r a n s p o r t a t i o n . 2nd ed. Toronto, U n i v e r s i t y of Toronto P r e s s , 1959. C u r r i e , A-..V/. Canadian T r a n s p o r t a t i o n Economics... Toronto, U n i v e r s i t y of Toronto P r e s s , 1967. Mance, H.O. The Road and R a i l Transport Problem. London: S i r Isaac Pitman and Sons, 1940. walker, G i l b e r t J . Road and R a i l . 1st ed. London: A l l e n and Unwin, 1942. 1 3 9 ARTICLES AND PERIODICALS Canada Year Books. Canadian I n s t i t u t e of T r a f f i c and T r a n s p o r t a t i o n . ( J u l y , 1964), Toronto, C e r t i f i c a t e Course. F a i r w e a t h e r , S.W. " I s Truck R e g u l a t i o n a F a i l u r e " . Railway Age, (January 9, 1937)• F i n a n c i a l P ost. "Truckers f i g h t r a i l t h r e a t " . Page 49, March 3 0 , 1 9 5 7 - F i n a n c i a l P o s t . "Threat to i n d u s t r y ? Could d i s  l o c a t e l o c a l economics argues Canada Packers". Page 17, December 25, 1954. F i n a n c i a l P o s t . "Another i n q u i r y scheduled f o r agreed r a i l charges". Page 1, 3, May 29, 1954. F i n a n c i a l P o s t . "C.P.R. urges removal of agreed charges c h a i n s " . Page 3<1, October 9, 1954. F i n a n c i a l P o s t . "Ford enters agreed c h a r g e s — t r u c k - r a i l b a t t l e s t i f f e n s " . Page 7, January 1 5 , 1 9 5 5 . F i n a n c i a l P o s t . "Here's what t r u c k e r s have t o say on r a i l w a y s agreed charge probe". Page 19, August 14, 1954. F i n a n c i a l P o s t . "Major r a i l t r u c k b a t t l e opens i n the West". May 10, 1952. F i n a n c i a l P o s t . "Railways set a f a i r break? Econo mist urges e q u a l i t y of o p p o r t u n i t y v/ith t r u c k e r s " . W.G. S c o t t . Page 21, February 26, 1955. F i n a n c i a l P o s t . "Railways open new phase i n v/ar ag a i n s t t r u c k s " . A.F. H a i l e y . Page 1, 3« Sept. 6, 1952. F i n a n c i a l P o s t . "Railways v/in f i r s t round i n West's r a i l - t r u c k f i g h t " . Page 8, August 9, 1952. 140 F i n a n c i a l P.ost. "Truck indus t ry may face keener r a i l compet i t ion" . Page 11, A p r i l 2, 1955. F i n a n c i a l Post . "Truck cut rates to meet r a i l ' s b i d fo r business". Page 1, 3, September 25, 1954- F i n a n c i a l Pos t . " U . S . to t e s t r a i l f r e igh t agreed charge". Page 3 6 , December 1 3 , 1958. Hal l swor th , H.M. "The Future of R a i l Transport" . Economic Jou rna l . V o l . XLIV, No. 4, December, 1934-. H i s t o r i c a l S t a t i s t i c s of Canada. Toronto; The MacMil lan Company of Canada L t d . (1965). Lock, C S . " B r i t i s h Railways show f i g h t " . Railway Age. ( Ju ly 4, 1932). Lock, C S . " B r i t i s h Railways forge ahead". Railway • Age. (September 16, 1933). Lock, C S . "Railways of Great B r i t a i n Reaping Rewards of En t r ep r i s e " . Railway Age. (September 15, 1934). McDougall. "Aspect of the Railway Problem". Motor Competition and Railxirays Labor Costs . Canadian Journal of Economics and P o l i t i c a l  Sciences, (1959). R o l l i t , J . B . "Competitive Aspects of Road and R a i l F re igh t and Passenger Rates". Canadian• Journal of Economics and P o l i t i c a l Sciences. Paper read at meeting of Canadian P o l i t i c a l Science Assoc ia t ion at Ottawa, May 24, 1938, V o l . 5, 1959. Saturday Nigh t . "Agreed Charges on Rai lways" , by A . C Wakeman. Pages 21, 25. J u l y 18, 1938. Saturday Nigh t . "Senate and Rai lways", by B . K . Sandwell . Page 3 ( Ju ly 3, 1939). 14-1 Saturday N i g h t . "Case a g a i n s t f i x e d f r e i g h t r a t e " , by R. Jamieson. Pages 20, 21, 64-. A p r i l 11, 1 9 5 9 - S h e r r i n g t o n , C.E.R. " 1 9 3 5 a Year of Innovations f o r the B r i t i s h Railways". Railway Age. ( A p r i l 21, 1934-). T r a f f i c S t u d i e s . Canadian Manufacturers' A s s o c i a t i o n , Toronto, O n t a r i o , (no d a t e ) . Wakeman, A.C. "Agreed Charges on Railways". Railway  Age. (June 18, 1938). Walker, G i l b e r t . "The Economics of Road and R a i l Competition". Economic J o u r n a l . Y o l . X L I I I , Pages 2 1 7 - 2 3 7 - (June 1933)'. 

Cite

Citation Scheme:

    

Usage Statistics

Country Views Downloads
China 10 51
United States 6 1
Japan 3 0
Canada 2 0
City Views Downloads
Beijing 9 0
Ashburn 5 1
Tokyo 3 0
Truro 2 0
Shenzhen 1 50
Wilmington 1 0

{[{ mDataHeader[type] }]} {[{ month[type] }]} {[{ tData[type] }]}
Download Stats

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
http://iiif.library.ubc.ca/presentation/dsp.831.1-0093565/manifest

Comment

Related Items