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UBC Theses and Dissertations

British Columbia Electric Railway Company, 1897-1928 : a British company in British Columbia Roy, Patricia 1970

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THE BRITISH COLUMBIA ELECTRIC RAILWAY COMPANY, 1897-1928; A BRITISH COMPANY IN BRITISH COLUMBIA by PATRICIA E„ ROY B 0A„, U n i v e r s i t y o f B r i t i s h Columbia, 1960 M.A., U n i v e r s i t y of T o r o n t o , 1963 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF Doctor of P h i l o s o p h y i n t h e Department . of H i s t o r y We accept t h i s t h e s i s as conforming t o the r e q u i r e d sjbaryaayd THE UNIVERSITY OF BRITISH COLUMBIA March, 197 0 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of Brit ish Columbia, I agree that the Library shall make it freely available for reference and study. I further agree tha permission for extensive copying of this thesis for scholarly purposes may be granted by the Head of my Department or by his representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. The University of British Columbia Vancouver 8, Canada Date 3 IjJH^UUUf 2- 5 , If ft The B r i t i s h Columbia E l e c t r i c R a i l w a y Company, 1897-1928; A B r i t i s h Company i n B r i t i s h Columbia In t h e two decades p r i o r t o World War I , London was t h e c e n t r e o f t h e most e x t e n s i v e f i n a n c i a l empire i n t h e w o r l d . Canada v/as p a r t i c u l a r l y p o p u l a r among B r i t i s h i n v e s t o r s . I n 1897, a group of B r i t i s h c a p i t a l i s t s l e d by R.M. Horne-Payne, a s u c c e s s f u l f i n a n c i e r , a c q u i r e d t h e e l e c t r i c s t r e e t r a i l w a y s and e l e c t r i c power f a c i l i t i e s which l o c a l e n t r e p r e n e u r s had i n i t i a t e d i n Vancouver, New Westminster and V i c t o r i a . The B r i t i s h c a p i t a l i s t s then o r g a n i z e d t h e B r i t i s h Columbia E l e c t r i c R a i l w a y Company, The c r e a t i o n o f t h e B.C.E 0R. i n a u g u r a t e d a t h i r t y - o n e year l o n g s y m b i o t i c r e l a t i o n s h i p between B r i t i s h c a p i t a l i s t s and t h e B r i t i s h Columbia p u b l i c , U n l i k e t h e i r l o c a l p r e -d e c e s s o r s , B r i t i s h c a p i t a l i s t s had access t o the l a r g e amounts of c a p i t a l n e c e s s a r y t o r e s c u e an i n f a n t e n t e r p r i s e from t h e embarrassment o f depressed times and t o expand i t s o p e r a t i o n s as southwestern B r i t i s h Columbia grew r a p i d l y d u r i n g t h e prosperous years of t h e K l o n d i k e g e l d r u s h and t h e p r a i r i e wheat boom. D u r i n g t h e s e y e a r s , the B.C.E.R. completed an urban s t r e e t r a i l w a y network, b u i l t major i n t e r u r b a n r a i l -ways i n t h e F r a s e r V a l l e y and on t h e S a a n i c h P e n i n s u l a and i n t r o d u c e d h y d r o - e l e c t r i c power t o sou t h w e s t e r n B r i t i s h Columbia. Thus, t h e B.CE.R. p r o v i d e d i t s customers with, modern and e f f i c i e n t c o n v e n i e n c e s . ' The B.CE.R. was unique among Canadian t r a n s p o r t a t i o n and u t i l i t y companies o f i t s t i m e . Many o f t h e s e f i r m s a l s o r a i s e d c a p i t a l i n B r i t a i n b u t none seems t o have been as c l o s e l y c o n t r o l l e d by a B r i t i s h Board o f D i r e c t o r s , The company's g e n e r a l manager i n Vancouver, f o r example, was o n l an agent who c o u l d make no s i g n i f i c a n t d e c i s i o n w i t h o u t t h e consent o f t h e Board i n England. A s u p e r f i c i a l s u r v e y o f o t h e r Canadian u t i l i t y companies suggests t h a t B r i t i s h Columbians were b e t t e r o f f w i t h a B r i t i s h company than t h e y would have been w i t h a Canadian one. In good t i m e s , t h e B.C.E.R. took lower p r o f i t s out o f i t s o p e r a t i o n t h a n d i d comparable Canadian f i r m s ? i n bad t i m e s , i t had g r e a t e r f i n a n c i a l s t a b i l i t y t han many of i t s Canadian c o u n t e r p a r t s , A c o n c l u s i v e answer t o t h i s hypothes i s , however, must a w a i t d e t a i l e d s t u d i e s of o t h e r Canadian IV u t i l i t y companieso The b a s i c c o n c e r n of the d i r e c t o r s of t h e B.C.E.R. was t h e s e c u r i t y of t h e i n v e s t m e n t . They would not undertake new e x p e n d i t u r e s w i t h o u t b e i n g c e r t a i n of t h e a v a i l a b i l i t y of t h e n e c e s s a r y c a p i t a l ; t h e y set. a s i d e generous sums f o r d e p r e c i a -t i o n , renewals and r e s e r v e s ; t h e y avoided s p e c u l a t i v e v e n t u r e s such as r e a l e s t a t e developments; t h e y b u i l t few r a i l w a y o r power f a c i l i t i e s i n advance c f a c t u a l demand and t h e y a c t i v e l y worked t o t h w a r t r e a l and imagined c o m p e t i t i o n from o t h e r p r i -v a t e companies o r from m u n i c i p a l or p r o v i n c i a l governments. These c o n s e r v a t i v e p o l i c i e s succeeded. I n s p i t e of oc-c a s i o n a l anxious t i m e s , p a r t i c u l a r l y d u r i n g , W o r l d War 1, t h e B.C.E.R. always met i t s f i n a n c i a l o b l i g a t i o n s . By t h e 1920's t h e company c o u l d f i n a n c e most of i t s expansion i t s e l f . U s u a l l y , i t a l s o earned a r e s p e c t a b l e — but not e x p l o i t i v e — d i v i d e n d f o r i t s s h a r e h o l d e r s . U l t i m a t e l y , i n 1928, t h e s h a r e -h o l d e r s were a b l e t o s e l l t h e i r h o l d i n g s t o the Canadian-con-t r o l l e d Power C o r p o r a t i o n o f Canada f o r a handsome p r o f i t . Because i t was a p u b l i c u t i l i t y , t h e B.C.E.R. was never a b l e t o a c t w i t h o u t c o n s i d e r i n g p o s s i b l e consequences of p u b l i c antagonism and subsequent government a c t i o n . Thus, i t a s s i d u -V ously cultivated goodwill generally and lobbied governments with s p e c i f i c requests. Good relations with governments were es s e n t i a l to the success of the company. The municipalities regulated fares and controlled the franchises without which the company could not operate. Through t h e i r control of such matters as water rights and regulating agencies, the p r o v i n c i a l and federal governments could also affect the company. The B.C.E.R. was beholden to the voters who were also i t s customers. In sum, the company, though p r o f i t t i n g from B r i t i s h Columbia, could not impose i t s w i l l on B r i t i s h Columbians. Errata p. 92, footnote no. 14. R. K. Sperling died i n 1908 not 1909. p. 101, paragraph 2, line 8. For "July 28" read "July 25." p. 144. There should be a footnote no. 83» "Sperling to Kidd, December 9, 1910, Box 549." p. 150, footnote no. 93. For "Sserling" read "Sperling." p. 276, line 16. For "stopped work" read "voted to stop •work." pp. 282-3. There i s a numbering error in the footnotes. Footnote no. 21 does not exist. p. 327» line 2. For "five years" read "three years." T h e B r i t i s h C o l u m b i a E l e c t r i c R a i l w a y Company, A . B r i t i s h Company i n B r i t i s h C olumbia 1897-1928; T a b l e o f C o n t e n t s I . The P r e d e c e s s o r s ..... o o . o * . 1 L o c a l Companies. 1 V i c t o r i a . 6 Vancouver. 15 The C o n s o l i d a t e d Company. 34 I I . A S o l i d F o u n d a t i o n , 1897-1905 44 Br i t i s h Cap i t a 1. 44 t/' The London and Vancouver O f f i c e s . 52 V The Board v e r s u s B u n t z e n . 58 i / ' S t r e e t R a i l w a y Developments. 68,,.-F r a n c h i s e s and t h e " P r o t e c t i v e C l a u s e " . • 7 8'^ " I I I . The E r a of E x p a n s i o n , 1905-1913.. 86 The F i n a n c i a l Scene. 86 S t r e e t R a i l w a y s i n Vancouver and • Suburbs. 92 \ New Westminster''and t h e I n t e r - ! u r b a n s . 116 V i c t o r i a ' s E l e c t r i c R a i l w a y s . 137 IV. H y d r o - E l e c t r i c Power Development,1897-1913 154 Lake Buntzen P r o j e c t . 154 Stav e Lake Power Company. 164 Expan d i n g M a i n l a n d F a c i l i t i e s . 17 5 Vancouver I s l a n d o 186 V. Jmxious Times, 1913-1919 „ „ „ . .... 191 Comb a t t i n g t h e D e p r e s s i o n . . 191^ The J i t n e y s . 204 v-Government R e g u l a t i o n . 215 ^ i v i i " P r o t e c t i v e C l a u s e " . 222_J The. Company, "For S a l e " . 23 0 S h o r t t ' s R e p o r t . 239 I mplementing S h o r t t ' s R e p o r t . 24 9 A Summary. 2 63 V I . Labour R e l a t i o n s , 1897-1928. . «, „ .....«,..«, 266 P r e l u d e t o t h e 1917 S t r i k e . 266 The 1918 and 1919 S t r i k e s . 278 V I I . C a n a d i a n i z i n g t h e Company, 1920-1928 ...294 A d a p t i n g t o Changed C o n d i t i o n s . 294 H y d r o - E l e c t r i c Developments. 303 P u b l i c R e g u l a t i o n s . 314-• P u b l i c Ownership. 330 k. C a p i t a l and Good W i l l . 334 '<' T r a n s f e r t o Canada. ' 342. V I I I . C o n c l u s i o n 352 B i b l i o g r a p h y „ 376 Append i x e s 3 86 1. P o p u l a t i o n o f A r e a s Served by t h e B.C.E.R. 386 2. Net A n n u a l P r o f i t s and T o t a l R e s e r v e s , 1900-1927. 387 3. P e r c e n t a g e P r o f i t on C a p i t a l Employed Showing D i s c r e p a n c i e s i n C a l c u l a t i o n s . 388 4. T o t a l C a p i t a l I s s u e s and A n n u a l I n t e r e s t and D i v i d e n d Payments, 1900-1927. 389 5. P a s s e n g e r s C a r r i e d and K i l o w a t t s o f Power Produced, 1901-1928. 390 6 . G e n e r a l Managers and P r e s i d e n t s ^ 3 91 7. D i r e c t o r s o f t h e B.C.E.R.,1897-1928. 392 8. B.C.E.R.—Share and Debenture C a p i t a l I s s u e d , 1897-1913. 394 9. The B.C. Power C o r p o r a t i o n , 1 9 2 8 - 1 9 6 1 . 396 vxxx L i s t of C h a r t s 1, The V i c t o r i a P r e d e c e s s o r s . 2. The M a i n l a n d P r e d e c e s s o r s . 3„ The BoC.E.R. and S u b s i d i a r i e s . 1„ V i c t o r i a S t r e e t R a i l w a y L i n e s , c i r c a 1914 2. Vancouver S t r e e t R a i l w a y L i n e s , 1890-1928. 3. The M a i n l a n d I n t e r u r b a n L i n e s . 4. The H y d r o - E l e c t r i c D i s t r i b u t i o n System, 1926 401 402 4 03 404 405 406 407 i x Acknowledgments To a l l t h e i n d i v i d u a l s and i n s t i t u t i o n s w h i c h have a s s i s t e d me i n t n e p r e p a r a t i o n o f t h i s t h e s i s , I am d e e p l y i n d e b t e d and w i s h t o e x p r e s s ray g r a t i t u d e „ A number of p e o p l e have been p a r t i c u l a r l y generous w i t h t h e i r a s s i s t a n c e . Mrs„ Anno Y a n d l e , M i s s F r a n c e s Woodward and t h e i r a s s i s t a n t s i n t h e S p e c i a l C o l l e c t i o n s d i v i s i o n o f t h e L i b r a r y o f t h e U n i v e r s i t y o f B r i t i s h C olumbia have ext e n d e d g r a c i o u s h o s p i -t a l i t y w h i l e I used t h e B.CoE.R. papers w h i c h a r e i n t h e i r c a r e . The a r c h i v i s t s and l i b r a r i a n s of t h e P r o v i n c i a l A r c h i v e s and L i b r a r y have p r o v i d e d c o u r t e o u s h e l p on many occasions„ My c o l l e a g u e s a t t h e U n i v e r s i t y o f V i c t o r i a have g i v e n f r i e n d l y encouragement and a r r a n g e d s e c r e t a r i a l a s s i s t -ance t h r o u g h t h e Department of H i s t o r y and t h e S o c i a l S c i e n c e R e s e a r c h C e n t r e . Two members of my committee, Dr„ John N o r r i s and Dr.. R o b e r t K u b i c e k , r e a d d r a f t v e r s i o n s of t h e t h e s i s and o f f e r e d many h e l p f u l s u g g e s t i o n s <, My s u p e r v i s o r , Dr. M a r g a r e t Ormsby, has p a t i e n t l y r e a d t h r o u g h many d r a f t s . A t a l l s t a g e s she has g i v e n c a r e f u l c r i t i c i s m s and k i n d encouragement. F or h e r h e l p , I am s i n c e r e l y g r a t e f u l . My g r e a t e s t debt i s t o my p a r e n t s . They have p r o v i d e d t h e m o r a l s u p p o r t w i t h o u t w h i c h I'might n e v e r have embarked on t h e p r o j e c t . P.E.R. J a n u a r y 26, 1970. CHAPTER I THE PREDECESSORS OF THE B.C.E.R. In t h e e i g h t e e n e i g h t i e s and n i n e t i e s , when t h e e l e c t r i c l i g h t and t h e e l e c t r i c s t r e e t r a i l w a y were v e r y new, V i c t o r i a and Vancouver, s m a l l towns w i t h a s p i r a t i o n s , were d i s t a n t from t h e c e n t r e s of t e c h n o l o g i c a l development,, Y e t , i n 1887, V i c t o r i a had t h e f i r s t , and Vancouver the second, i n c a n d e s c e n t e l e c t r i c l i g h t s t a t i o n i n Canada. Furthermore, by 1891 Vancouver and New Westminster s h a r e d the l o n g e s t e l e c t r i c i n t e r u r b a n r a i l w a y ystem i n Canada. A l l t h r e e c i t i e s had e l e c t r i c s t r e e t r a i l -ways two years b e f o r e o l d e r Canadian c i t i e s such as T o r o n t o . P a r t of the reason f o r the a b i l i t y of B r i t i s h Columbia c i t i e s t o c l a i m " f i r s t s " was, of c o u r s e , t h e i r l a c k of commitment t o o l d e r methods of i l l u m i n a t i o n and l o c a l t r a n s p o r t a t i o n . The• major reason f o r t h e i r m o d e r n i t y was t h e f a i t h o f l o c a l p r o -moters t h a t the c i t i e s would d e v e l o p r a p i d l y a f t e r t h e com-p l e t i o n of t h e Canadian P a c i f i c R a i l w a y . T h i s optimism was f e l t m a i n l y w i t h i n t h e c i t i e s t h e m s e l v e s , 1 s w 2 The c h i e f b e l i e v e r s were the promoters o f the v a r i o u s com-p a n i e s and r e a l e s t a t e a g e n t s . Sometimes t h e promoters and t h e agents were one and t h e same men. R e a l e s t a t e s p e c u l a t i o n e x p l a i n s t h e c o n s t r u c t i o n o f some s c r e e t r a i l w a y l i n e s such as the Oak Bay l i n e i n V i c t o r i a , t h e F a i r v i e w l i n e i n Vancouver and t h e Westminster and Vancouver Tramway. The l i g h t i n g system and t h e i n i t i a l s t r e e t r a i l w a y s i n b o t h c i t i e s , however, cannot be e x p l a i n e d as s i m p l e r e a l e s t a t e p r o m o t i o n s ; t h e y were con-s t r u c t e d i n a n t i c i p a t i o n of the growth of t h e c i t i e s as a whole. The s o u r c e s o f c a p i t a l r a i s e d by the e a r l y companies r e -v e a l s t h a t V i c t o r i a as an o l d e r c i t y and as t h e e s t a b l i s h e d t r a d i n g c e n t r e f o r B r i t i s h Columbia had c o n s i d e r a b l e l o c a l c a p i -t a l . Vancouver u t i l i t y companies, on the o t h e r hand, had t o de-pend on c r e d i t o b t a i n e d from American s u p p l i e r s of equipment, l o a n s from the London-based Bank o f B r i t i s h Columbia, and the s a l e of bonds or debentures i n e a s t e r n Canada and i n England. Vancouver " c a p i t a l i s t s " , w i t h t h e p o s s i b l e e x c e p t i o n of D a v i d Oppenheimer, who was a c t i v e i n s e v e r a l companies, seem t o have 1 The f i n a n c i n g of e l e c t r i c companies by s u p p l i e r s was a common American p r a c t i c e . H.C. P a s s e r , The E l e c t r i c a l Manu-f a c t u r e r s , 187 5-1900, Cambridge, H a r v a r d U n i v e r s i t y P r e s s , 1953, p.29; J.W0 Hammond, Men and V o l t s : The S t o r y of G e n e r a l E l e c t r i c , P h i l a d e l p h i a , L i p p i n c o t t , 1941, p.89. 2 The Vancouver E l e c t r i c I l l u m i n a t i n g Company, t h e Vancouver E l e c t r i c R a i l w a y and L i g h t i n g Company and the Westminster and Vancouver Tramway. 3 put l i t t l e of what money t h e y had i n t o l o c a l u t i l i t i e s . Be-cause V i c t o r i a u t i l i t y companies were f i n a n c e d m a i n l y by t h e s a l e of s t o c k s l o c a l l y , t h e y were i n i t i a l l y s pared many of the f i n a n c i a l agonies which b e s e t the M a i n l a n d f i r m s as soon as the immediate p o s t - r a i l w a y boom waned. The d e p r e s s i o n which f o l l o w e d s e v e r a l y e a r s o f r a p i d ex-p a n s i o n was e s p e c i a l l y h a r d on the s t r e e t r a i l w a y companies. I t was no l o n g e r p o s s i b l e f o r them t o r a i s e c a p i t a l l o c a l l y ; i t was a l s o d i f f i c u l t t o f i n d o u t s i d e a s s i s t a n c e . The urban r a t e of p o p u l a t i o n growth a l s o l e v e l l e d o f f . The s t r e e t r a i l -ways, u n f o r t u n a t e l y , had i n v e s t e d a s u b s t a n t i a l p o r t i o n o f t h e i r l i m i t e d c a p i t a l and c r e d i t on e x t e n s i o n s i n t o s p a r s e l y s e t t l e d suburban areas such as F a i r v i e w and Oak Bay i n a n t i c i -p a t i o n o f c o n t i n u e d p o p u l a t i o n growth. When p r o s p e r i t y r e -t u r n e d t h e s e l i n e s p e r m i t t e d the easy d i s p e r s a l of s e t t l e m e n t ; i n t h e i n t e r i m , t h e y were a severe d r a i n on t h e l i m i t e d c a p i t a l r e s o u r c e s of t h e i r b u i l d e r s . I n an e f f o r t t o s t r e n g t h e n t h e i r f i n a n c i a l p o s i t i o n s t h e e a r l y e l e c t r i c l i g h t i n g and s t r e e t r a i l w a y companies went th r o u g h a s e r i e s of amalgamations and re-organizations«, Such changes were common a t t h i s time among s i m i l a r e n t e r p r i s e s e l s e -3 where i n No r t h A m e r i c a , In b o t h V x c t o r i a and Vancouver t h e 3 C h a r l e s M. Coleman, P_i53-i_jar^ _S_tory of P a c i f i c Gas and Elect r j g _ J^gmp_an^^ N e w York, M c G r a w - H i l l , 1952, p.36. 4 e l e c t r i c l i g h t and s t r e e t r a i l w a y cornpanj.es began as s e p a r a t e e n t i t i e s , emerged as • l i g h t and ra.ilway companies, and u l t i m a t e -l y became p a r t o f t h e C o n s o l i d a t e d R a i l w a y and L i g h t i n g Company, 4 the immediate p r e d e c e s s o r of t h e B^C.E.R. I t i s p r o b a b l e t h a t i f the e l e c t r i c l i g h t i n g o p e r a t i o n s had remained independent of the s t r e e t r a i l w a y s , t h e y might have s u r v i v e d as l o c a l l y - o w n e d companies. U n f o r t u n a t e l y , the e a r l y companies d i d not p r a c t i c e c o s t a c c o u n t i n g . A l t h o u g h t h e y were a b l e t o determine t h a t l i g h t i n g s a l e s brought i n s l i g h t l y more revenue than s t r e e t r a i l w a y s , t h e y d i d not have an a c c u r a t e breakdown of o o s t s between the two branches of t h e i r b u s i n e s s e s 3 The same coal-powered steam g e n e r a t o r s s e r v e d b o t h p a r t s of the e n t e r p r i s e s . Once t h i s c a p i t a l c o s t was co v e r e d , the l i g h t i n g d i v i s i o n had o n l y t o i n s t a l l p o l e s and w Tires b e f o r e i t c o u l d s e r v e customers. The s t r e e t r a i l w a y s , on t h e o t h e r hand, had t o make heavy in v e s t m e n t s i n t r a c k s and r o l l i n g s t o c k and had t o h i r e motormen and co n d u c t o r s b e f o r e t h e y c o u l d earn any revenue. Even i n the depths of the d e p r e s s i o n , t h e r e was never a s h o r t a g e of l i g h t i n g customers. The s t r e e t r a i l w a y s , hov/ever, s u f f e r e d from "unused c a p a c i t y " p a r t i c u l a r l y on t h e i r suburban l i n e s . The companies c o u l d not suspend any s e r v i c e s w i t h o u t r i s k i n g t h e l o s s of t h e i r f r a n c h i s e s . Another handicap of s t r e e t r a i l w a y s was the l i m i t a t i o n imposed on t h e i r 4 See Charts 1 and 2. 5 f a r e s by f r a n c h i s e agreements. The d e t e r m i n a t i o n of a reason-a b l e charge f o r e l e c t r i c l i g h t i n g was such a complex m a t t e r t h a t no p u b l i c a u t h o r i t y — a t l e a s t i n the e a r l y y e a r s — attempted t o r e g u l a t e l i g h t i n g r a t e s . Concern f o r p u b l i c r e g u l a t i o n of the a c t i v i t i e s o f p u b l i c u t i l i t y companies i n B r i t i s h Columbia can be t r a c e d back t o t h e o p p o s i t i o n of Amor De Cosmos i n 1859 t o the monopoly of the V i c t o r i a Gas Company. P u b l i c r e g u l a t i o n -- or t h e p o s s i b i l i t y o f i t — remained a f a c t o f p u b l i c u t i l i t y l i f e i n B r i t i s h Columbia. The c i t i e s imposed r e g u l a t i o n s such as maximum s t r e e t r a i l w a y f a r e s and speed l i m i t s as c o n d i t i o n s of s t r e e t r a i l w a y f r a n c h i s e s . Some f r a n c h i s e agreements a l s o i n c l u d e d c l a u s e s g i v i n g the c i t y t he o p p o r t u n i t y t o purchase the e n t e r p r i s e a f t e r a c e r t a i n number of y e a r s . There was, however, no c o n s i s t e n t o p p o s i t i o n t o p r i v a t e ownership of p u b l i c u t i l i t i e s . The c i t i e s had a l r e a d y under-t a k e n heavy o b l i g a t i o n s f o r the c o n s t r u c t i o n of o t h e r p u b l i c s e r v i c e s such as r o a d s . I n New Westminster, however, t h e c i t y -e s t a b l i s h e d i t s own e l e c t r i c a l d i s t r i b u t i o n system b e f o r e any p r i v a t e e n t e r p r i s e came i n t o b e i n g . Only i n V i c t o r i a d i d the c i t y t a k e over the s t r e e t l i g h t i n g system. I n Vancouver, s e v e r a l companies which were i n f i n a r l c i a l d i f f i c u l t i e s t r i e d t o s e l l out t o t h e c i t y but the r a t e p a y e r s r e f u s e d t o rescue t h e companies by approving such p u r c h a s e s . Because b o t h V i c t o r i a and Vancouver were s m a l l towns and because the e a r l y u t i l i t i e s v/ere l o c a l l y promoted, i t i s not s u r p r i s i n g t o d i s c o v e r mayors and aldermen, Members of the L e g i s l a t i v e Assembly and Members of P a r l i a m e n t among t h o s e l i s t e d as d i r e c t o r s of t h e v a r i o u s companies. T h i s p a r t i c i p a -t i o n by p o l i t i c i a n s i n t h e c o n t r o l o f p u b l i c u t i l i t i e s caused o n l y minor c r i t i c i s m ; i t seems t o have been a c c e p t e d as a p a r t o f s m a l l town l i f e . P o l i t i c a l i n f l u e n c e , p a r t i c u l a r l y a t t h e m u n i c i p a l l e v e l , was o f t e n u s e f u l t o t h e companies when t h e y n e g o t i a t e d f r a n c h i s e s . On t h e o t h e r hand, when t h e Vancouver E l e c t r i c R a i l w a y and L i g h t i n g Company asked f o r c i v i c f i n a n c i a l a s s i s t a n c e , t h e v o t e r s r e j e c t e d such a i d . " F r i e n d s " on C o u n c i l were u s e f u l ; b u t t h e r a t e p a y e r s had t h e f i n a l say. The u t i l i t y companies from t h e i r e a r l i e s t days i n B r i t i s h Columbia v/ere more dependent on t h e good w i l l of the p u b l i c t h a n t h e p u b l i c was de-pendent on them. As e a r l y as 1862 gas l i t the main s t r e e t s , many commercial b u i l d i n g s and some homes i n V i c t o r i a . The V i c t o r i a Gas Company, a l o c a l l y - o w n e d f i r m , earned handsome d i v i d e n d s of t w e l v e t o f i f t e e n p e r c e n t . Customers, however, f r e q u e n t l y complained o f h i g h rates„ D u r i n g a p r o l o n g e d d i s p u t e w i t h the c i t y over s t r e e t l i g h t i n g r a t e s , t h e company t e m p o r a r i l y c u t o f f the s t r e e t lamps. A l t h o u g h the e l e c t r i c a r c l i g h t had been p e r f e c t e d 7 o n l y two years e a r l i e r , t h e V i c t o r i a C i t y C o u n c i l i n 1881 ad-v e r t i s e d f o r t e n d e r s " f o r t h e e x c l u s i v e p r i v i l e g e o f l i g h t i n g t h e C i t y o f V i c t o r i a w i t h t h e E l e c t r i c L i g h t . T w o l o c a l groups s u b m i t t e d o f f e r s t o b u i l d s t r e e t , l i g h t i n g t o w e r s ; the r a t e p a y e r s agreed t o borrow t h e n e c e s s a r y f u n d s . When the c i t y a s c e r t a i n e d t h a t the c o s t would be g r e a t e r than a n t i c i p a t e d i t abandoned the i d e a of e l e c t r i c s t r e e t l i g h t s . Two ye a r s l a t e r , i n 1883, R.B. McMieking i n d e p e n d e n t l y i n s t a l l e d t h r e e l i g h t i n g t o wers. When t h e C i t y C o u n c i l was s a t i s f i e d w i t h the degree of i l l u m i n a t i o n p r o v i d e d by t h e t o w e r s , i t t e r m i n a t e d i t s c o n t r a c t w i t h t h e Gas Company and r a t i f i e d a c o n t r a c t w i t h McMicking« W i t h i n the y e a r , t h e C o u n c i l , r e a l i z i n g t h a t McMieking was making a $3,000. annu a l 6 p r o f i t , e x e r c i s e d i t s o p t i o n t o purchase t h e l i g h t i n g system. The C i t y t r i e d t o improve t h e s t r e e t l i g h t i n g by i n s t a l l i n g t h r e e a d d i t i o n a l towers based on t h e S p e r r y system. Because th e S p e r r y l i g h t s b l i n k e d , were e x p e n s i v e t o op e r a t e and were f r e q u e n t l y out o f o r d e r , t h e C i t y C o u n c i l , on the a d v i c e of i t s e l e c t r i c i a n , R.B. McMicking, i n s t a l l e d t h e B a l l system of l i g h t i n g i n 1889. I t i s more than c o i n c i d e n t a l t h a t McMicking - was a l s o a r e p r e s e n t a t i v e o f the B a l l E l e c t r i c L i g h t Company 5 V i c t o r i a C o l o n i s t , May 14, 1881, p. 2. ' & C o l ^ i s t , J u n e 2 6< 1 8 8 4 ' p'3' S e e a l S ° ' ^ S M l i ! E ° l L ^ Chas E- Rcld f e r n , Mayor of V i c t o r i a , Ic^S 3^ V i c t o r i a , 1883, p. 10. o f C a n a d a ? . T e c h n i c a l l y , the B a l l , system combined w i t h t h e e x i s t i n g l i g h t s gave V i c t o r i a " i n p r o p o r t i o n t o i t s p o p u l a t i o n t h e most complete and f i n e s t " e l e c t r i c l i g h t system on the P a c i f i c C o a s t . The l i g h t s , however, r e a l l y l e f t much t o be d e s i r e d . R a p i d l y expanding suburbs were i l l - s e r v e d , new h i g h b u i l d i n g s i n t h e downtown a r e a obscured much o f the l i g h t and t h e l i g h t i n g e n g i n e e r c o n s u l t e d t h e almanac r a t h e r t h a n t h e s k i e s when de-c i d i n g whether or not t o t u r n on the l i g h t s . The C o u n c i l wanted t o improve t h e system b u t t h e r a t e p a y e r s were u n w i l l i n g t o approve t h e n e c e s s a r y e x p e n d i t u r e s . V i c t o r i a had t h e s a t i s -f a c t i o n of e n j o y i n g e l e c t r i c s t r e e t l i g h t i n g a t a remarkably-e a r l y date but she had t o pay a p e n a l t y i n t h e form of o b s o l e t e equipment.^ The S p e r r y Company which i n s t a l l e d t h e "improved" s t r e e t l i g h t i n g system i n 1886 a l s o demonstrated i n c a n d e s c e n t l i g h t i n g f o r i n d o o r use. The S p e r r y r e p r e s e n t a t i v e s then canvassed V i c t o r i a - f o r customers. A p p a r e n t l y t h e y were r e s p o n s i b l e f o r th e o r g a n i z a t i o n o f t h e V i c t o r i a E l e c t r i c I l l u m i n a t i n g Company. T h i s u n i n c o r p o r a t e d p r i v a t e company l a c k e d e x c l u s i v e or monopoly p r i v i l e g e s . The d e t a i l s o f i t s f o r m a t i o n a r e obscure but i t can be surmised t h a t McMullen, an agent f o r t h e S p e r r y Company, and 7 See McMicking t o t h e B a l l Company,February 16, 1889,McMicking Correspondence, Outward, 1888-1890, p„100 (PABC). 8 C o l o n i s t , J u l y 7, 1889, p.4; Report o f t h e E l e c t r i c L i g h t Committee i n C i t y o f V i c t o r i a , Annual R e p o r t , 1890, p. 53. 9 S.Z. M i t c h e l l , a S e a t t l e e l e c t r i c i a n , promoted the scheme, b u i l t a p l a n t and then t u r n e d i t over t o l o c a l c a p i t a l i s t s l e d by R.P. R i t h e t , a l e a d i n g merchant, and McMicking. I n t h e f a l l o f 1886 t h e S p e r r y e l e c t r i c i a n s began t o work on the i n c a n d e s c e n t - i n s t a l l a t i o n . On J a n u a r y 29, 1887, t h e y t u r n e d t h e l i g h t s on a t t h e f i r s t i n c a n d e s c e n t e l e c t r i c l i g h t 9 s t a t i o n i n Canada. The p l a n t had c a p a c i t y f o r 400 s i x t e e n c a n d l e power lamps; t h e company c l a i m e d t o have customers f o r a l l t h e lamps. The V i c t o r i a E l e c t r i c I l l u m i n a t i n g Company, however, remained a s m a l l f i r m s e r v i n g o n l y t h e c e n t r a l b u s i -ness a r e a . L i g h t i n g was not the o n l y use o f e l e c t r i c i t y which i n -t e r e s t e d V i c t o r i a n s . E l e c t r i c s t r e e t r a i l w a y t e c h n o l o g y was advancing r a p i d l y i n t h e l a t e 1 8 8 0 ! s . 1 0 In September 1888, two V i c t o r i a n s , Capt. J.D.Warren, a steamboat owner a c t i v e i n t h e s e a l i n g i n d u s t r y who c l a i m e d t o r e p r e s e n t e a s t e r n and l o c a l i n t e r e s t s and $100,000 c a p i t a l , and H.F. Heisterman, an i n s u r -ance and"land agent, s u b m i t t e d s e p a r a t e a p p l i c a t i o n s t o t h e C i t y C o u n c i l f o r p e r m i s s i o n t o c o n s t r u c t and o p e r a t e an e l e c t r i c s t r e e t r a i l w a y t h r o u g h t h e s t r e e t s o f V i c t o r i a . A m a j o r i t y of 9 A J Lawson, " G e n e r a t i o n , D i s t r i b u t i o n and Measurement of E l e c t r i c i t y f o r L i g h t and Power....;." ^^S^^B^Sl--!^. Canadian S o c i e t j i _ o f _ j C i ^ ^ v o l . IV (1890), p. 184. 10 See P a s s e r , E l e c t r i c a l j t e r i ^ c h . XV-XVII. 10 . t h e s t r e e t and e l e c t r i c l i g h t committee o f the C o u n c i l f a v o u r e d Warren's scheme because he had n o t asked f o r a monopoly. The C o u n c i l t h e n g r a n t e d t h e s t r e e t r a i l w a y f r a n c h i s e t o Warren and h i s a s s o c i a t e s who i n t u r n a s s i g n e d i t t o the N a t i o n a l E l e c t r i c Tramway and L i g h t i n g Company (N 0E„T 0 & L.) wh i c h t h e y and t h r e e 11 o t h e r V i c t o r i a n s had i n c o r p o r a t e d . Under i t s p r o v i n c i a l c h a r t e r , the N.E.T. & L. had an a u t h o r i z e d c a p i t a l of $250,000. The shares were s o l d i n t e n d o l l a r u n i t s and w i d e l y d i s t r i b u t e d l o c a l l y , p r o b a b l y as a means of c o u r t i n g s u p p o r t . W i t h i n a s h o r t t ime t h e N,EaT.& L. a p p l i e d t o the c i t y f o r f i n a n c i a l a i d i n t h e form of a guarantee of 5% i n t e r e s t f o r twenty y e a r s on a $40,000 l o a n 0 I n r e t u r n f o r t h i s g u a r a n t e e , t h e company proposed t h a t the c i t y have a r e p r e s e n t a t i v e on t h e Board o f D i r e c t o r s . The s o c i a l and economic advantages o f t h e e l e c t r i c s t r e e t r a i l w a y appealed t o Victorians„ A c c o r d i n g t o t h e C o l o n i s t , t h e s t r e e t c a r would p e r m i t workingmen and mechanics t o " b u i l d them-s e l v e s p l e a s a n t homes i n l o c a l i t i e s where l a n d i s p l e n t i f u l and l o w - p r i c e d , and where t h e y may grow t h e i r own v e g e t a b l e s and r a i s e t h e i r own p o u l t r y and d r i n k i n t h e pure and h e a l t h -I.12 g i v i n g ozone„ 1 1 Colonist,November 1, 1888, p„4; B r i t i s h Columbia, S t a t u t e s , 52 V i c , c, 39. . 12 C o l o n i s t ,May 2, 1889, p. 2-. 11 Once the c i v i c v o t e r s approved t h e scheme, the company l e t t h e c o n s t r u c t i o n c o n t r a c t and o r d e r e d f o u r c a r s . A f t e r an o f f i c i a l opening o f t h e s t r e e t r a i l w a y system w i t h champagne t o a s t s , the c a r s began r e g u l a r s e r v i c e on F e b r u a r y 22, 1890. Four c a r s o f f e r e d a f i f t e e n minute s e r v i c e on F o r t S t r e e t almost t o t h e J u b i l e e H o s p i t a l , on Douglas S t r e e t , t o the f o u n d r y and t h r o u g h James Bay t o t h e Outer Wharf. From t h e f i r s t day's r e c e i p t s t h e c a r s seemed an i n s t a n t success„ A l t h o u g h th e f a r e was o n l y f i v e c e n t s , the c a r s c o l l e c t e d $350. The s h a r e -h o l d e r s unanimously r e - e l e c t e d the Board of D i r e c t o r s , i s s u e d another $15,000 worth of s t o c k and began c o n s t r u c t i o n of t h e Beacon H i l l Park l i n e , , The p u b l i c soon demanded more f r e q u e n t s e r v i c e and more l i n e s . The company com p l i e d by o r d e r i n g more c a r s and by announcing p l a n s t o b u i l d up Pandora S t r e e t t o Fernwood Bead, an a r e a which was s p a r s e l y s e t t l e d , and t o the n a v a l base at E s q u i m a l t . The company a l s o i n d i c a t e d t h a t i t was contem-p l a t i n g the c o n s t r u c t i o n of l i n e s t o Cadboro Bay and t o t h e end of t h e Saanich. P e n i n s u l a . Both areas were s p a r s e l y s e t t l e d b u t had a g r i c u l t u r a l and r e c r e a t i o n a l p o t e n t i a l . These l i n e s were not b u i l t b u t , a f t e r the E s q u i m a l t l i n e v/as completed, th e company announced p l a n s t o double t r a c k e x i s t i n g l i n e s and t o extend t h e F o r t S t r e e t l i n e one and a h a l f m i l e s t o Oak Bay beach and t o the D r i v i n g Park and A g r i c u l t u r a l H a l l , and t o 12 e x t e n d t h e D o u g l a s S t r e e t l i n e h a l f a m i l e . V i c t o r i a l a n d owners w e r e q u i c k t o a p p r e c i a t e t h e e f f e c t o f s t r e e t r a i l w a y s on l a n d v a l u e s . When t h e company f i r s t a n n o u n c e d t h e c o n s t r u c t i o n o f t h e E s q u i m a l t l i n e , t h e news 13 " a t once t o o k e v e r y s a l e a b l e l o t on t h e r o u t e o f f t h e m a r k e t . " The Oak B a y L a n d and Improvement Company, a r e a l e s t a t e f i r m w h i c h i n c l u d e d C.T. D u pont o f t h e t r a m company among i t s mem-b e r s , p r o m o t e d t h e i d e a o f t h e Oak Bay l i n e a l t h o u g h t h e r e w e r e no more t h a n t h r e e h o u s e h o l d s i n Oak Bay a t t h e t i m e . - ^ R e s i -d e n t s o f O a k l a n d s and o f C e d a r H i l l i n S a a n i c h s u b s c r i b e d , $11,000 i n t e n m i n u t e s t o a s s i s t i n t h e c o n s t r u c t i o n o f a I i n k: b e t w e e n t h e i r a r e a s and t h e e x i s t i n g c a r l i n e s . Mount T o l m i e r e s i d e n t s s u b s c r i b e d $15,000 t o w a r d s e x t e n s i o n o f t h e l i n e f r o m D o u g l a s S t r e e t0 B u t none o f t h e O a k l a n d s , C e d a r H i l l o r Mount T o l m i e l i n e s was b u i l t a t t h e t i m e . As i t s name s u g g e s t s , t h e N0E0T.& L . d i d n o t c o n f i n e i t s e l f t o s t r e e t r a i l w a y o p e r a t i o n s „ A l t h o u g h t h e p r e a m b l e o f i t s A c t o f I n c o r p o r a t i o n o n l y m e n t i o n s o b j e c t s r e l a t i n g t o t r a n s p o r t a t i o n , 1 3 C o l o n i s t , A p r i l 8, 1890, p . l 14 RoM. H o r n e - P a y n e , C h a i r m a n ' s R e p o r t / t o t h e S h a r e h o l d e r s o f t h e B.C.E.RoJZ F e b r u a r y 1902, p.8 * See map, p. 404 13 a c l a u s e i n t h e a c t empowered the N.E„T. & L. t o s e l l e l e c t r i -c i t y f o r l i g h t i n g and power purposes,, There were, however, t h r e e l i g h t i n g systems a l r e a d y o p e r a t i n g i n V i c t o r i a ; the Gas Company, the c i t y - o w n e d s t r e e t l i g h t s , and the V i c t o r i a E l e c t r i c I l l u m i n -a t i n g Company. E l e c t r i c i t y had now shown i t s s u p e r i o r i t y t o gas; t h e s t r e e t l i g h t i n g system d i d not compete i n commercial and r e s i d e n t i a l l i g h t i n g ; and t h e V.E.I, which had reached i t s c a p a c i t y d i d not e n j o y monopoly p r o t e c t i o n . S i n c e t h e r e s i d e n -t i a l and commercial f i e l d s were s t i l l open, the N 0 E 0 T. & L., i n t h e f a l l of 1890, announced t h a t i t had s i g n e d a c o n t r a c t w i t h F.H. Osgood o f t h e Thompson-Houston Company of Lynn, M a s s a c h u s e t t s t o c o n s t r u c t an i n c a n d e s c e n t l i g h t i n g p l a n t t o 15 produce the cheapest l l l u m x n a n t r n t h e c i t y . In t h e e a r l y 1890's, when V i c t o r i a was growing s t e a d i l y , th e M.E. T. & L. soon found customers f o r i t s 1300 l i g h t s c By the f a l l of 1891 the company had t o i n s t a l l a d d i t i o n a l e q u i p -ment and add a new wing t o the power house i n o r d e r t o cope w i t h i n c r e a s e d demand. I n 1893 t h e company purchased a $50,000 l i g h t -i n g p l a n t which i t promised, would treble,, w i t h t h e a i d of t h e proposed C o l d s t r e a m waterpower p l a n t , i t s l i g h t i n g capacity,, The g e n e r a l d e p r e s s i o n which began i n 1893 d i d not im-15 C o l o n i s t , October 12, 1890, p. 5. The evidence i s not c l e a r but the l i g h t i n g o p e r a t i o n s may have been conducted by a s e p a r -ate s y n d i c a t e which used t h e N.E.T. & L . a s power house. 14 m e d i a t e l y a f f e c t the N.E.T„ & L. At the annual g e n e r a l meeting e a r l y i n 1894 t h e chairman d e s c r i b e d a s a t i s f a c t o r y s t a t e o f a f f a i r s . A few days l a t e r , he r e p o r t e d t h a t a l l £.100,000 worth of f i v e p e r c e n t debenture bonds had been ta k e n by Messrs. S p e r l i n g & Co., E n g l i s h s t o c k b r o k e r s . D W i t h the proceeds of t h e s e bonds the company proposed t o redeem i t s c u r r e n t debt, add t o i t s r o l l i n g s t o c k and t r a c k a g e and expand i t s power p l a n t . A year l a t e r , i n F e b r u a r y 1895, the company, which had changed i t s name 1 7 t o t h e V i c t o r i a E l e c t r i c R a i l w a y and L i g h t i n g Company r e p o r t e d a s u r p l u s of $16,791.92 '-'despite the g e n e r a l c o m p l a i n t of h a r d t i m e s and t h e d i s p o s i t i o n of everyone toward r i g i d economy." The s u r p l u s , however, was not p r o f i t ; i n t e r e s t had not been i n -c l u d e d i n o p e r a t i n g e x p e n s e s . 1 8 Three and a h a l f months l a t e r , Robt. Dunsmuir and Sons and t h e Union C o l l i e r y s e c u r e d judgments a g g r e g a t i n g some $9,000 a g a i n s t t h e V.E.R. & L. w h i l e the Sayward Lumber Company and ot h e r s ' a t t a c h e d amounts owing t o the l i g h t -i n g department o f the company. A county c o u r t judge i m m e d i a t e l y p l a c e d the V.E.R. & L. i n r e c e i v e r s h i p . In A p r i l 1896 t h e " p r o p e r t y , b u s i n e s s and f r a n c h i s e " o f the V.E.R. & L. Company were a u c t i o n e d on b e h a l f of the E n g l i s h b o n d h o l d e r s . A l t h o u g h t h e company's a s s e t s -- t h i r t e e n m i l e s 16 F„S„Barnard, " E a r l y H i s t o r y of t h e B r i t i s h Columbia E l e c t r i c R a i l w a y Company L t d . " T y p e s c r i p t , J u l y 1921, Box 65. 17 B r i t i s h Columbia, S t a t u t e s , 57 V i c , c. 63. 18 C o l o n i s t , F e b r u a r y 13, 1895, p. 5. o f t r a c k , seventeen c a r s , two t r a i l e r s and f a c i l i t i e s f o r o p e r a t i n g 4650 s i x t e e n c a n d l e power lamps and s m a l l power s a l e s -were va l u e d a t $497,000, t h e y y i e l d e d o n l y $340,000 which was 19 about $35,000 l e s s t h a n t h e t o t a l debentures o u t s t a n d i n g . Tne p u r c h a s e r was F.S. B a r n a r d M.P. o f V i c t o r i a , a member of an E n g l i s h f i r m , t h e C o n s o l i d a t e d R a i l w a y Company which was a c t i v e on t h e m a i n l a n d . i i i U n t i l the Canadian P a c i f i c R a i l w a y d e c i d e d i n 1884 t o extend i t s t r a n s c o n t i n e n t a l l i n e t w e l v e m i l e s westward from P o r t Moody t o t h e G r a n v i l l e t o w n s i t e , o n l y a few hundred p e o p l e l i v e d i n t h e t h r e e lumbering communities a l o n g the shores o f B u r r a r d I n l e t . A f t e r t h e r a i l w a y d e c i d e d t o extend i t s l i n e , the C i t y of Vancouver was i n c o r p o r a t e d i n 1886. I t s f u t u r e seemed a s s u r e d . The c i t y , however, d i d not grow a t a u n i f o r m l y r a p i d r a t e t h rough i t s f i r s t decade. For f i v e y e ars i t grew v e r y q u i c k l y ; then i t almost s t a g n a t e d . The 1891 census r e c o r d e d a p o p u l a t i o n of 13,685; by 1896, t h e p o p u l a t i o n v/as o n l y 19,000. A l t h o u g h Vancouver had i m m e d i a t e l y developed t r a d i n g c o n n e c t i o n s w i t h A u s t r a l a s i a and t h e " O r i e n t , h e r mer-chants were f r u s t r a t e d i n t h e i r attempts t o w r e s t t h e t r a d e o f t h e i r more immediate h i n t e r l a n d away from o l d e r c e n t r e s such as V i c t o r i a and Spokane. The c i t y a l s o f a i l e d t o a t t r a c t many new 1 9 C o l o n i s t , A p r i l 12, 1896, p. 5. <-> ^ nli „£ „ ^ , ^ , ,T T^ ^ - Z S n r . n a 1 Por-«-i>-t- . 197.9. I D . 9 9 . 16 i n d u s t r i e s . A s u b s t a n t i a l p a r t o f Vancouver's growth was based on f a i t h i n i t s f u t u r e , p a r t i c u l a r l y f a i t h i n the a p p r e c i a t i o n of r e a l e s t a t e v a l u e s . The c i t y was a mecca f o r r e a l e s t a t e and f i n a n c i a l agents who promoted a wide v a r i e t y o f e n t e r p r i s e s , e s p e c i a l l y r a i l w a y s and mines. The boom growth o f Vancouver's f i r s t f i v e y e ars f o l l o w e d by f i v e y e a r s of d e p r e s s i o n and a l a c k o f l o c a l c a p i t a l r e s o u r c e s e x p l a i n s i n l a r g e measure why Vancouver had f u n c t i o n i n g e l e c t r i c u t i l i t i e s so e a r l y i n h e r h i s t o r y and why those companies f a i l e d . One of t h e u t i l i t i e s w h ich d i d not f a i l — p o s s i b l y because i t s c a p i t a l needs were r e l a t i v e l y s m a l l and i t s p r o f i t s h i g h — was t h e Vancouver Gas Company which had been 21 c h a r t e r e d by s e v e r a l V i c t o r i a r e s i d e n t s even b e f o r e the c i t y was i n c o r p o r a t e d . 2 2 Delays i n t h e c o m p l e t i o n of t h e gas works opened t h e way f o r t h e i n t r o d u c t i o n o f e l e c t r i c l i g h t i n g i n Vancouver and f o r a r e p e t i t i o n of the debate which had t a k e n p l a c e i n V i c t o r i a over the r e l a t i v e m e r i t s o f gas and e l e c t r i -c i t y . As i n V i c t o r i a , the s t r e e t l i g h t s were t h e c e n t r e of a t t e n t i o n . E a r l y i n November 1886 t h e Vancouver C i t y C o u n c i l c a l l e d f o r t e n d e r s f o r t w e l v e s t r e e t l i g h t s but was unable t o choose between the two methods of i l l u m i n a t i o n . 21 A.A. Green, C.D. Rand and Dr. G»L. M i l n e . 22 B r i t i s h Columbia, .SJtjatutejs, 3 9 V i c . , c.27; Vancouver Gas Company, Minute Book, p. 5; Vancouver News, November 27, 1887. W h i l e the Gas Company made c o n s t r u c t i o n p l a n s and sought customers, an e l e c t r i c company promoted by R.R. G i l t n e r of Tacoma proceeded w i t h b a s i c o r g a n i z a t i o n a l work. G i l t n e r se-c u r e d th e c i t y ' s p e r m i s s i o n t o e r e c t p o l e s and s t r i n g w i r e s , t r a n s f e r r e d t h i s f r a n c h i s e t o the- Vancouver E l e c t r i c I l l u m i n a t -i n g Company and s o l d t h i r t y - s i x p e r c e n t of t h e s h a r e s i n t h i s company i n s m a l l l o t s t o f o r t y - t h r e e d i f f e r e n t Vancouver b u s i -nessmen. G i l t n e r then o b t a i n e d t h e c o n t r a c t t o c o n s t r u c t t h e 23 works. On August 5, 1887, p a r t of t h e c i r c u i t was t u r n e d on and "the l i g h t s burned b r i g h t and s t e a d y and e x p r e s s i o n s of s u r ~ p r i s e and g r a t i f i c a t i o n were h e a r d on a l l s i d e s . The f a v o u r -a b l e comment on the e l e c t r i c . l i g h t s , t h e growing d i s s a t i s f a c t i o n w i t h m a k e s h i f t o i l lamps, and the s l o w c o n s t r u c t i o n o f t h e gas system c o n v i n c e d th e C i t y C o u n c i l o f t h e d e s i r a b i l i t y of ac-c e p t i n g t h e I l l u m i n a t i n g Company's proposed one y e a r c o n t r a c t f o r s t r e e t l i g h t i n g . On New Year's Day, 1888 the News-A d v e r t i s e r b o a s t e d t h a t "Vancouver i s b e t t e r l i g h t e d t h a n any o t h e r c i t y of her s i z e i n t h e w o r l d . " A v i s i t o r noted t h a t "no one would t h i n k o f p u t t i n g up a house w i t h o u t a t e l e p h o n e and 2 5 e l e c t r i c l i g h t . " When a c i v i c by-law r e q u i r e d h o t e l and s a l o o n keepers t o p r o v i d e a minimum s t a n d a r d of l i g h t i n g , many of them, however, i n s t a l l e d c o a l o i l lamps which were cheaper 23 Once the l i g h t s were f u n c t i o n i n g , G i l t n e r withdrew from the company. He had p r o b a b l y i n t e n d e d t o make h i s p r o f i t as a promoter and c o n t r a c t o r . 24 Vancouver D a i l y N e w s - A d v e r t i s e r , August 6, 1887, 2 5 Douglas S l a d e n , On t h e Cars and O f f , London, Ward, Lock 18 t h a n e l e c t r i c i t y o D i s s a t i s f a c t i o n w i t h t h e q u a l i t y o f t h e s t r e e t l i g h t s a l s o d e v e l o p e d . The c o n t r o v e r s y o v e r t h e s t r e e t l i g h t s r e -v e a l s t h e r o l e o f e a r l y c i v i c p o l i t i c i a n s i n p u b l i c u t i l i -t i e s and i l l u s t r a t e s a t t i t u d e s t o w a r d s m u n i c i p a l o w n e r s h i p . D u r i n g h i s i n a u g u r a l a d d r e s s i n J a n u a r y 1888, Mayor D a v i d Oppenheimer, a w h o l e s a l e g r o c e r , n o t i n g g e n e r a l d i s p l e a s u r e w i t h t h e d e g r e e o f i l l u m i n a t i o n p r o v i d e d b y t h e s t r e e t l i g h t s u r g e d t h e B o a r d o f Works t o i n v e s t i g a t e t h e c a u s e and e i t h e r i n c r e a s e t h e c a n d l e power o f t h e lamps o r s u b s t i t u t e gas.^6 D u r i n g c o u n c i l d i s c u s s i o n s o f t h e s t r e e t l i g h t i n g c o n t r a c t , Oppenheimer r e a d i l y a d m i t t e d t h a t he v/as a s h a r e h o l d e r i n t h e V a n c o u v e r E l e c t r i c I l l u m i n a t i n g Company, as d i d A l d erman R.H. A lexander„ A l e x a n d e r , however, c l a i m e d he would be p l e a s e d t o s e l l h i s t h i r t y s h a r e s — i f he c o u l d f i n d a b u y e r Then, i n November, 1888, Mayor Oppenheimer s u g g e s t e d t h a t t h e c i t y s h o u l d t a k e o v e r t h e e l e c t r i c l i g h t i n g system,, T h i s seems t o be t h e f i r s t s u g g e s t i o n o f m u n i c i p a l o w n e r s h i p o f p u b l i c u t i l i t i e s i n V a n c o u v e r . The c o u n c i l h i r e d an e x p e r t , A 0 J o Lawson o f M o n t r e a l , t o i n v e s t i g a t e t h e p o s s i b i l i t y o f g e n e r a t i n g h y d r o - e l e c t r i c power 26 N e w s - A d v e r t i s e r , J a n u a r y 5, 1888 0 27 N e w s - A d v e r t i s e r , A u g u s t 28, 1888; November 5, 1888; V a n c o u v e r W o r l d , O c t o b e r 1, 1888; O c t o b e r 3, 1888. 19 28 from C a p i l a n c Creek. ( The whole idea, of m u n i c i p a l ownership o f t h e l i g h t i n g system was p u r e l y p r a g m a t i c ; i t was not based on any p h i l o s o p h i c f o u n d a t i o n s of s o c i a l i s m . D a v i d Oppenhoinaer s u g g e s t e d t h a t t h e c i t y t a k e over the system s i m p l y because the company was i n f i n a n c i a l d i f f i c u l t i e s ; a m u n i c i p a l t a k e o v e r would f r e e him and h i s a s s o c i a t e s from a f i n a n c i a l burden. The i d e a of t h e company i t s e l f s u g g e s t i n g p u b l i c ownership of u t i l i t i e s r e c u r s i n the h i s t o r y of the s u c c e s s o r s of the Vancouver E l e c t r i c I l l u m i n a t i n g Company but o n l y when t h e y are i n f i n a n c i a l l y em-b a r r a s s i n g p o s i t i o n s . The Vancouver E l e c t r i c I l l u m i n a t i n g Company was i n d i f f i -c u l t y . I t c o u l d not borrow money e a s i l y , e x p e n d i t u r e s were r i s i n g , p r o f i t s were f a l l i n g and consumers were c o m p l a i n i n g about t h e i n e f f e c t i v e n e s s of the l i g h t . N e v e r t h e l e s s , t h rough th e i n f l u e n c e o f Alderman I s a a c Oppenheimer, the b r o t h e r of D a v i d Oppenheimer, the Vancouver E l e c t r i c I l l u m i n a t i n g Company, b y p r o m i s i n g t o i n s t a l l the e f f i c i e n t and e f f e c t i v e Thompson-Houston l i g h t i n g system, won the s t r e e t l i g h t i n g c o n t r a c t over two o t h e r tenderers„ The d e c i s i o n t o i n s t a l l t h e Thomp-son-Houston system was of u l t i m a t e s i g n i f i c a n c e f o r t h e Vancouver E l e c t r i c I l l u m i n a t i n g Company; th e f i n a n c i a l nego-2 8 World, November 5, 1888; N e w s ^ A d v e ^ i s e ^ , November 29, 3 888 August 22, 1889. Lawson's r e p o r t was u n f a v o u r a b l e be-cause of t h e c o s t and the r i g h t s of t h e Water Works Company. 20 t i a t i o n s n e c e s s a r y t o i n t r o d u c e t h e s y s t e m l e d t o t h e f o r m a -t i o n o f t h e V a n c o u v e r E l e c t r i c R a i l w a y and L i g h t i n g Company b y t h e a m a l g a m a t i o n o f t h e V a n c o u v e r E l e c t r i c I l l u m i n a t i n g Company and t h e V a n c o u v e r S t r e e t R a i l w a y Company. The i d e a o f c o n s t r u c t i n g a s t r e e t r a i l w a y i n V a n c o u v e r was as o l d as t h e c i t y i t s e l f . The o r i g i n a l V a n c o u v e r S t r e e t R a i l w a y Company, i n c o r p o r a t e d i n 1886, was u n a b l e t o r a i s e s u f f i c i e n t c a p i t a l b e f o r e i t s c h a r t e r e x p i r e d i n t h e s p r i n g o f 1888. The e x p i r a t i o n o f t h i s c h a r t e r opened t h e way f o r o t h e r l o c a l b u s i n e s s m e n 2 9 t o o r g a n i z e a n o t h e r V a n c o u v e r S t r e e t R a i l w a y Company. The a p p e a r a n c e o f s t r e e t r a i l w a y p r o j e c t s s o e a r l y i n t h e d e v e l o p m e n t o f s t r e e t r a i l w a y t e c h n o l o g y i n a c i t y w i t h a p o p u l a t i o n o f l e s s t h a n 13,000 i s i n d i c a t i v e o f t h e o p t i m i s m p r e s e n t i n t h e young c i t y . I n i t s p r o v i n c i a l c h a r t e r ' , t h e s e c o n d V a n c o u v e r S t r e e t R a i l w a y Company r e c e i v e d p e r m i s s i o n t o c o n s t r u c t a r a i l w a y w i t h i n t h e c i t y o f V a n c o u v e r and t o c a r r y p a s s e n g e r s on i t "by i t h e f o r c e o r power o f a n i m a l s - o r s u c h o t h e r m o t i v e power as t h e ...Company may deem e x p e d i e n t In November 1888 t h e V a n c o u v e r C i t y C o u n c i l g r a n t e d a t h i r t y y e a r f r a n c h i s e . T h i s • 29 A.G. F e r g u s o n , "a c a p i t a l i s t " and H. A b b o t t o f t h e C & P #R o 21 p e r m i t t e d t h e company t o use c e r t a i n s t r e e t s b u t o u t l i n e d a c o n s t r u c t i o n s c h e d u l e and s p e c i f i e d o p e r a t i n g r u l e s i n c l u d i n g a s p e e d l i m i t o f s i x m i l e s p e r h o u r and a maximum f a r e o f f i v e c e n t s . The c i t y a l s o r e t a i n e d t h e o p t i o n t o p u r c h a s e t h e s y s -tem a t t h e end o f t h e t h i r t y y e a r s o r t o renew t h e c o n t r a c t 30 f o r a d d i t i o n a l f i v e y e a r p e r i o d s . toother f e a t u r e o f t h e agreement was a r e q u i r e m e n t t h a t l o c a l i n v e s t m e n t be e n c o u r a g e d . The p e o p l e o f V a n c o u v e r , however, were e i t h e r u n w i l l i n g o r u n a b l e t o s u b s c r i b e ; o n l y t h i r t e e n t o o k a d v a n t a g e o f t h e i n v e s t m e n t o p p o r t u n i t y . O r i g i n a l l y , t h e V a n c o u v e r S t r e e t R a i l w a y p l a n n e d t o use h o r s e s r a t h e r t h a n e l e c t r i c i t y as m o t i v e power. In c h o o s i n g t h e i r m o t i v e power, t h e d i r e c t o r s o f t h e S t r e e t R a i l w a y were c o n c e r n e d w i t h f i n a n c i n g as w e l l as w i t h t e c h n o l o g y . D u r i n g t h e e a r l y f a l l o f 1889 t h e y w r o t e t o s e v e n d i f f e r e n t e l e c t r i c a l f i r m s i n t h e U n i t e d S t a t e s and t o A . J . Lawson o f M o n t r e a l r e -q u e s t i n g e s t i m a t e s o f equipment c o s t s . A f t e r o u t l i n i n g t h e p r o s p e c t s o f t h e V a n c o u v e r Street- R a i l w a y , t h e y a s k e d p o t e n t i a l s u p p l i e r s t o " p l e a s e s t a t e t e r m s , and how much s t o c k a t p a r you would t a k e i n payment." F i n a l l y , i n December, 1889, t h e company d e c i d e d t o i n s t a l l t h e Thompson-Houston e l e c t r i c a l s y s t e m i n t h e f o u r c a r s w h i c h were a l r e a d y on o r d e r . T h r o u g h 30 B r i t i s h C o l u m b i a , S t a t u t e s , 49 V i c , c . 31; News-Ad v e i r t i j y a r , November 6, 1888. i t s a g e n t , F . H , Osgood o f S e a t t l e , t h e Thompson-Houston Com-pany was p r e p a r e d t o t a k e $5,000 w o r t h o f s t o c k i n p a r t p a y -ment. T h i s p o l i c y o f s e l l i n g e l e c t r i c a l equipment f o r p a r t c a s h and p a r t s e c u r i t i e s had been d e v i s e d b y t h e Thompson-H o u s t o n Company as a means o f o b t a i n i n g c u s t o m e r s . The d e c i s i o n o f b o t h t h e V a n c o u v e r S t r e e t R a i l w a y and t h e V a n c o u v e r E l e c t r i c I l l u m i n a t i n g Company t o a d o p t t h e Thompson-H o u s t o n s y s t e m p r o v i d e d t h e m o t i v e f o r t h e i r a m a l g a m a t i o n . The merger o f t h e f i r m s was a l o g i c a l move. B o t h would be g e n e r a t -i n g e l e c t r i c i t y and c o u l d b e n e f i t b y c o - o r d i n a t i n g t h e i r a c t i v i t i e s . S p e c i f i c a l l y , t h e y c o u l d use t h e same power house t o p r o v i d e e l e c t r i c i t y f o r t h e l i g h t i n g s y s t e m and t h e s t r e e t r a i l w a y . B o t h companies were f i n a n c i a l l y weak; economies i n o p e r a t i o n m i g h t e a s e t h e i r s i t u a t i o n , A The new company, t h e t h i r d e l e c t r i c u t i l i t y company t o o p e r a t e i n V a n c o u v e r , was t h e V a n c o u v e r E l e c t r i c R a i l w a y and L i g h t Company. I t s d i r e c t o r s r e - o r g a n i z e d t h e o l d companies f i n a n c i a l l y and i m p r o v e d t h e s y s t e m p h y s i c a l l y . T h e y b u i l t a new power s t a t i o n , t h e y i n t r o d u c e d new a r c l i g h t s . f o r s t r e e t l i g h t i n g and t h e y i n s t a l l e d a new a l t e r n a t i n g i n c a n d e s c e n t s y s t e m . By t h e end o f 1890 t h e y were l i g h t i n g most o f t h e p r i n c i p a l b u i l d i n g s i n V a n c o u v e r , were a c t i v e l y s o l i c i t i n g 31 The Thompson-Houston Company p r o b a b l y e n c o u r a g e d t h e merger. new customer?, and were c o n t e m p l a t i n g e x t e n s i o n s t o the power p l a n t . A l t h o u g h the l i g h t i n g p l a n t was expanded, by 1892 t h e V.E.R. & L. Company was h a v i n g t o r e f u s e r e q u e s t s f o r a d d i t i o r a l i n c a n d e s c e n t l i g h t s . The l i g h t i n g b u s i n e s s was the most, re w a r d i n g of the Company's o p e r a t i o n s . In 1891, f o r example, f i f t y - t h r e e per c e n t of the t o t a l r e c e i p t s came from th e l i g h t i n g d i v i s i o n . On June 26, 1890, t h e V.E.R. & L. Company a l s o began o p e r a t i n g Vancouver's f i r s t s t r e e t r a i l w a y . T h i s t h r e e and a h a l f m i l e l o n g l i n e r a n from the power house, through the commercial d i s t r i c t s o f t h e c i t y t o t h e n o r t h end o f t h e G r a n v i l l e S t r e e t b r i d g e . W i t h i n a few weeks t h e company be-gan b u i l d i n g a b e l t l i n e t h r o u g h F a i r v i e w on the s o u t h s i d e o f F a l s e Creek. By t h e time th e F a i r v i e w l i n e was f o r m a l l y opened on November 13, 1891, t h e Company was a l s o u n d e r t a k i n g p r e l i m i n a r y n e g o t i a t i o n s t o b u i l d a l o n g H a s t i n g s S t r e e t E a s t and i n the West End a l o n g Robson S t r e e t t o E n g l i s h Bay and S t a n l e y Park. The s t r e e t r a i l w a y , u n l i k e the l i g h t i n g b u s i n e s s , v/as h a r d h i t by the problem of "unused c a p a c i t y * " ' Though the c o m p l e t i o n o f the F a i r v i e w l i n e doubled th e Company's m i l e -age, t h e r e v/ere o n l y 186 households i n F a i r v i e w and the 32 a d j a c e n t Mount P l e a s a n t d i s t r i c t . I t i s obvious t h a t such 32 W i l l i a m s " B r i t i s h Columbia D i r e c t o r y , 1891,pp.126-166. 24 a s m a l l group c o u l d not. support an e l e c t r i c r a i l w a y . Y e t , th e Company hoped i t would share i n the e x p e r i e n c e of o t h e r s t r e e t r a i l w a y companies i n No r t h America; s e t t l e r s would f o l l o w t h e railway„ The V.E.R.& L 0 Company hoped t o pay f o r the F a i r v i e w l i n e by t h e s a l e of s i x t y - e i g h t l o t s i t would r e -c e i v e from the C.P.R., the c h i e f landowner i n Vancouver, i n r e t u r n f o r a promise t o run a r e g u l a r twenty minute s e r v i c e over the r o u t e a The C.P.R., which had "a v e r y c a s t i r o n agree-ment," r e f u s e d t o s u r r e n d e r the l o t s u n t i l t he V.E.R. & L. Company p o s t e d a bond to' i n s u r e c o n t i n u a t i o n of t h e s e r v i c e . The V.E.R. & L. Company's f i n a n c i a l s i t u a t i o n was so poor, i t c o u l d n o t o b t a i n a bond. The a p p r o x i m a t e l y $150,000 c o s t of the F a i r v i e w l i n e -— f i v e times the o r i g i n a l e s t i m a t e — had put t h e V.E.R. & L. Company d e e p l y i n t o d e b t . The F a i r v i e w l i n e was completed j u s t about t h e time t h a t the e f f e c t s of economic depx~ession were f i r s t b e i n g f e l t i n Vancouver; s e t t l e r s d i d not f o l l o w the s t r e e t c a r t r a c k s . The d i r e c t o r s blamed the F a i r v i e w l i n e , w i t h i t s average monthly o p e r a t i n g l o s s e s of $1,000 f o r the $9,000 l o s s on r a i l w a y o p e r a t i o n s d u r i n g 1S92. T h i s l o s s c a n c e l l e d t w o - t h i r d s of the p r o f i t s earned by the l i g h t i n g p a r t of the b u s i n e s s which even a t t h i s e a r l y date was much more p r o f i t a b l e than the s t r e e t r a i l w a y . 25 The c h i e f concern of the V . E . R . & L. Company was t o ease i t s shaky f i n a n c i a l p o s i t i o n . I t r e s o r t e d t o a v a r i e t y of means t o r a i s e f unds. Through the Bank o f B r i t i s h Columbia i t o b t a i n e d money from o r d i n a r y bank l o a n s , o v e r d r a f t s and bonds. I t t r i e d t o p l a c e bonds w i t h f i n a n c i a l houses i n London, Boston and M o n t r e a l but the poor money markets i n t h e f a l l and w i n t e r of 1890-1891 p r e v e n t e d t h e Company from p l a c i n g a $250,000 bond i s s u e . F i n a l l y , t he d i r e c t o r s a c c e p t e d an o f f e r o f the Y o r k s h i r e Guarantee and Loan C o r p o r a t i o n t o t a k e t h e bonds a t a s i x per cent d i s c o u n t on the c o n d i t i o n t h a t t h e Y o r k s h i r e C o r p o r a t i o n would nominate a d i r e c t o r . 3 3 The • V c E . R . & L. Company a l s o agreed t o i s s u e an a d d i t i o n a l $138,000 worth o f t r e a s u r y s t o c k b u t , i n s p i t e o f assurances t h a t "the p o s i t i o n and p r o s p e c t s of the Company /are/ i n e v e r y way s a t i s f a c t o r y and j u s t i f y t h e s h a r e h o l d e r s i n s u b s c r i b i n g " none of t h e s h a r e h o l d e r s a p p l i e d f o r a d d i t i o n a l s t o c k . 3 ^ One of th e means proposed t o e x t r i c a t e t he V . E . R . & L. Company from i t s f i n a n c i a l d i f f i c u l t i e s was t h e s a l e o f i t s a s s e t s t o the c i t y . D u r i n g the 1890 c i v i c e l e c t i o n campaign, D a v i d Oppenheimer, a c a n d i d a t e f o r mayor and a minor s h a r e -33 The Y o r k s h i r e C o r p o r a t i o n was a B r i t i s h f i r m o r g a n i z e d i n 1889 t o d e a l i n mortgages p a r t i c u l a r l y i n B r i t i s h Columbia. 34 H.T. C e p e r l e y t o s h a r e h o l d e r s , November 11, 1890, V . E . R . & L . Company, Minutes of Board of D i r e c t o r s , 1891-1894, p.11. 2 6 h o l d e r i n t h e Company a g a i n s u g g e s t e d t h a t t h e s t r e e t r a i l w a y and o t h e r p u b l i c u t i l i t i e s s h o u l d be m u n i c i p a l l y owned. T h i s i d e a o f m u n i c i p a l o w n e r s h i p was s c a r c e l y d i s c u s s e d d u r i n g t h e campaign. I n h i s i n a u g u r a l a d d r e s s , however, Oppenheimer r e -v i v e d t h e i d e a . I n t h e summer o f 1891 t h e C i t y C o u n c i l w r o t e t o t h e V.E.R. & L 0 Company " r e p u r c h a s e o f r a i l w a y p l a n t and f r a n c h i s e . " The Company, whose c r e d i t o r s were p r e s s i n g , was i n t e r e s t e d i n s e l l i n g — a t a p r i c e . N e g o t i a t i o n s between t h e .Company and t h e c i t y on t h e p r i c e and methods o f payment f o l l o w e d b u t were d e l a y e d b y a c i v i c e l e c t i o n i n w h i c h t h e s t r e e t r a i l -ways were a l i v e i s s u e . When F r e d Cope, who was s u p p o r t e d b y Oppenheimer, was e l e c t e d mayor, t h e V.E.R. & L. Company was so c o n f i d e n t o f s e l l i n g o u t t o t h e c i t y , i t r a i s e d i t s p r i c e t o $555,000. The new C o u n c i l c o u l d n o t make up i t s mind. The i d e a o f t h e c i t y p u r c h a s i n g t h e Company a p p a r e n t l y f a d e d 35 away. Then, m December 1892, t h e V.E.R. & L . Company s u g g e s t e d t h a t t h e C i t y C o u n c i l g u a r a n t e e t h e i n t e r e s t on an i s s u e o f V.E.R. & L. bonds. In r e t u r n , t h e Company would g i v e t h e c i t y an o p t i o n t o p u r c h a s e t h e s t r e e t r a i l w a y and l i g h t -i n g s y s t e m . The C o u n c i l w h i c h i n c l u d e d s e v e r a l V.E.R. & L . s h a r e h o l d e r s s u b m i t t e d t h e p r o p o s a l t o t h e e l e c t o r s . The r a t e -35 V a n c o u v e r D a i l y N e w s - A d v e r t i s e r , J a n u a r y 8, 1891, September 18, 1891. V.E.R.& L . Company, M i n u t e s o f B o a r d o f D i r e c t o r s , . 1889, 1891, p.161 (August 29,1891). p a y e r s , however, r e j e c t e d t he i d e a by a s u b s t a n t i a l m a j o r i t y . J W D u r i n g the d i s c u s s i o n s w i t h t h e c i t y , t h e company's f i n a n -c i a l s i t u a t i o n had worsened. In A p r i l 1893 the Bank of B r i t i s h Columbia r e f u s e d t o extend f u r t h e r c r e d i t w i t h o u t t h e s e c u r i t y of t h e p e r s o n a l endorsement of t h e d i r e c t o r s . S u p p l i e r s were a l s o p r e s s i n g f o r payment. The Company c o u l d o n l y o f f e r notes at seven per c e n t or s t o c k i n whole o r p a r t payment. On June 1, 1893, t h e V.E.R.fk I.. Company i n f o r m e d i t s s h a r e h o l d e r s t h a t the t r u s t e e s f o r t h e debenture h o l d e r s had t a k e n over t h e Company. A t t h i s t i m e , t h e Company's a s s e t s were w o r t h 37 $383,167.06; i t s l i a b i l i t i e s were $531,859,44, The C i t y C o u n c i l a g a i n debated t a k i n g over t h e Company. As the C i t y seemed t o be the o n l y p o s s i b l e buyer, the York-s h i r e C o r p o r a t i o n o f f e r e d t o r e - n e g o t i a t e the terms of the bonds a t a more f a v o u r a b l e r a t e i f the C i t y took o v e r . The C o u n c i l , however, c o u l d not agree on an o f f e r . Thus, t h e m o r i -bund Company remained i n t h e hands of i t s c r e d i t o r s who con-t i n u e d t o op e r a t e i t , double t r a c k e d p a r t of the o r i g i n a l l i n e t hrough the downtown area and extended i n c a n d e s c e n t l i g h t i n g t o a d d i t i o n a l areas of t h e c i t y , 36 Vancouver D a i l y News-Advertiser..,January 5, 1892, March 7, 1893, March 28, 1893, May 7, 1893." 37 V.E.R.& L. Co. t o S h a r e h o l d e r s , June 1,1893. Copy i n V.E.R.& L. Co. S h a r e h o l d e r s ' M i n u t e s , 1892-1894. 28 D u r i n g the C i t y C o u n c i l ' s d i s c u s s i o n s of t h e V.E.R. & L., D a v i d Oppenheimer suggested t h a t h i s Westminster and Vancouver Tramway Company would be w i l l i n g t o r e n t the f a c i l i t i e s o f t h e V.E.R, & L. Company at a r a t e which would cover bond i n t e r e s t . The Tramway o p e r a t e d an e l e c t r i c i n t e r u r b a n between New West-m i n s t e r and Vancouvero I t s o r i g i n a l promoters were t h r e e New 3 8 Westminster men, and Da v i d Oppenheimer. The i n t e r u r b a n p r o -v i d e d a s h o r t d i r e c t r o u t e between the c i t i e s i n comparison w i t h the c i r c u i t o u s t w e n t y - f i v e m i l e r a i l r o u t e v i a P o r t Moody and the C.P.R. The promoters of the W. & V.T. had been more i n t e r e s t e d i n t h e r e a l e s t a t e p o t e n t i a l of t h e d i s t r i c t between the c i t i e s t han i n t h e c o n s t r u c t i o n and o p e r a t i o n o f an e l e c t r i c r a i l w a y . B e f o r e u n d e r t a k i n g c o n s t r u c t i o n of t h e l i n e t h e y s o l i c i t e d l a n d g r a n t s from p r i v a t e owners and t h e p r o v i n c i a l government. The p r o v i n c e g r a n t e d a f r e e r i g h t of way but would o n l y p r o v i d e an a d d i t i o n a l g r a n t e q u a l t o the l a n d donated by 3 9 p r i v a t e owners. T h i s r e q u e s t f o r a l a n d g r a n t appears t o be the o n l y r e q u e s t f o r d i r e c t f i n a n c i a l a s s i s t a n c e by any of the e a r l y e l e c t r i c u t i l i t y companies. 38 H.V.Edmonds and S.T.MacKintosh, r e a l e s t a t e and i n s u r a n c e agents, and Benjamin Douglas, "a c a p i t a l i s t . " 39 B r i t i s h Columbia, S e s s i o r ^ P a ^ s , 1894, p . 1384 and p.1583. 29 A l t h o u g h the W. & V.T. e a s i l y o b t a i n e d a r i g h t of way t h r o u g h p r o v i n c i a l government l a n d s , i t encountered con-s i d e r a b l e h o s t i l i t y when i t sought a f r a n c h i s e t o b u i l d t h r e e m i l e s of t r a c k from t h e c i t y l i m i t s t o t h e c e n t r e of downtown Vancouver. The e d i t o r of the N e w s - A d v e r t i s e r , f o r example, o b j e c t e d t o p r i v a t e ownership of a v a l u a b l e f r a n c h i s e and c o n t r o l of the s t r e e t s by Mayor Oppenheimer. W i t h i t s good f r i e n d s on C i t y C o u n c i l , the Tramway, however, was a b l e t o work out an arrangement w i t h the V.E.R. & L. Company and the C i t y . The C i t y r e c e i v e d t h e r i g h t t o buy t h e Tramway l i n e w i t h i n t h e C i t y on two months' n o t i c e a t a p r i c e t o 'be f i x e d by a r b i t r a t i o n . L i k e the V.E.R. & L. Company, the W. & V.T. sought t o f i n a n c e i t s e l f w i t h l o a n s o b t a i n e d from the Bank of B r i t i s h Columbia on t h e p e r s o n a l notes o f the d i r e c t o r s and by d i r e c t c a l l s on the s h a r e h o l d e r s . The l a t t e r method, however, p r o -v i d e d o n l y a s m a l l p a r t of t h e Company's c a p i t a l . The W.&V.T a l s o depended on c r e d i t from i t s s u p p l i e r s c h i e f l y the E d i s o n E l e c t r i c Company. When t h e t w e l v e m i l e l o n g W. & V.T. was opened e a r l y i n October 1891, the i n t e r c i t y e l e c t r i c r a i l w a y m i l e a g e o f 40 Canada was d o u b l e d 0 The event, however, was n o t i c e d o n l y 40 John F. Due, T b e ^ I j i ^ c j ^ t ^ ^ Canada, Tor o n t o , U n i v e r s i t y of Toronto P r e s s , 1966, p.6. 30 by r e a l e s t a t e agents who a d v e r t i s e d s m a l l h o l d i n g s of a h a l f a c r e or more on or near t h e t r a m l i n e . S e t t l e m e n t of the a r e a was sloWo Most of the t r a c k r a n th r o u g h f o r e s t . The i n i t i a l t r a f f i c came almost e x c l u s i v e l y from t h e two c i t i e s a t e i t h e r end of the l i n e and t o a l i m i t e d e x t e n t from arrangements made w i t h t h e Great N o r t h e r n R a i l w a y t o c a r r y passengers and express from New Westminster t o Vancouver. O p e r a t i n g revenue came i n s l o w l y . On t h e f i r s t e i g h t months of o p e r a t i o n , t h e b a l a n c e sheet showed a d e f i c i t o f $8,500. P.N. Smith, the S e c r e t a r y - T r e a s u r e r o f t h e Company o p t i m i s t i c a l l y b e l i e v e d t h a t a f t e r making adjustments i n t h e ac c o u n t s , t h e r e c e i p t s would "more than c o v e r t h e c o s t o f o p e r a t i n g and i n t e r e s t on o v e r d r a f t and n o t e s . Finances,however, were a major problem; i n t e r e s t accumu-l a t e d on i n t e r e s t . By t h e summer of 1892 the E d i s o n Company asked f o r payment or b e t t e r s e c u r i t y and the Bank of B r i t i s h Columbia began t o remind the Company o f i t s overdrawn account. The s h a r e h o l d e r s , though eager t o a p p l y f o r a d d i t i o n a l s h a r e s , were r e l u c t a n t t o pay assessments. The Company managed t o get the M o n t r e a l Safe D e p o s i t Company t o a c t as t r u s t e e f o r a $500,000 i s s u e of F i r s t Mortgage bonds. These bonds, however, d i d not produce any immediate income. Throughout 1893, notes 41 P.N. Smith t o D. Oppenheimer, June 24, 1892, W. & V.T. L e t t e r Book. continued to f a l l due, the Bank and suppliers continued to press for payment. In 1893 the Tramway reduced wages and l a i d off men as an economy measure. Heavy interest payments made i t impossible for the Company to break even. The situation worsened. In June 1894, the Bank of B r i t i s h Columbia which had secured a judgment against the W. & V.T. advised i t would not pay the interest on the Tramway bonds when they f e l l due in July. It seemed l i k e l y that the bondholders would have to take over. The Yorkshire Corporation began to negotiate with the City as a pot e n t i a l purchaser of the Tramway. In the meantime, P.N. Smith t r i e d desperately to prevent the bondholders from taking over. He wrote to Montreal c a p i t a l i s t s such as the Hanson Brothers and H.S. Holt and to the Toronto railway promoter, William Mackenzie. He t r i e d to form a new syndi-cate to amalgamate the W. & V.T. and the V.E.R. & L. Company and to purchase preferred stock in the new company. Eastern investors were not interested. Vancouver voters rejected a proposal that the City take over the Tramway. On August 10, 1894, the W. & V.T. went into receivership. Smith, acting as trustee, continued his attempts to refinance the Company. Fi n a l l y , the Bank of B r i t i s h Columbia^ and the Yorkshire Com-pany agreed to take $700,000 worth of bonds at 95 i f an addi-t i o n a l $150,000 worth of c a p i t a l were put into the Company. I n s p i t e o f S m i t h ' s e f f o r t s , t h e r e f i n a n c i n g scheme f a i l e d . I n J a n u a r y 1 8 9 5 , i n t e r e s t o f $1,740 was due on bonds h e l d b y t h e M o n t r e a l S a f e D e p o s i t . Company. The d i r e c t o r s , who c l a i m e d t o h a v e s u f f i c i e n t f u n d s on h a n d t o p a y o f f t h e s i n k i n g f u n d and t h e i n t e r e s t i n a r r e a r s , w e r e s o o n o v e r t h r o w n b y t h e s h a r e -h o l d e r s „ E v e n b e f o r e t h e c o r p o r a t e r e v o l u t i o n , t h e end o f t h e W. & V.T. h a d b e e n i m m i n e n t . On J a n u a r y 1 8 , 1 8 9 5 , t h e M o n t r e a l S a f e D e p o s i t Company a d v e r t i s e d t h a t t h e a s s e t s o f t h e W.&V.T, w o u l d be a u c t i o n e d on A p r i l 1 3 , 1895 a t T r a p p ' s A u c t i o n Room i n New W e s t m i n s t e r . The p u r c h a s e r — f o r $2 80,000 — was F . S . B a r n a r d o f V i c t o r i a , a c t i n g f o r t h e C o n s o l i d a t e d R a i l w a y and L i g h t Company w h i c h ha d c l o s e c o n n e c t i o n s w i t h B r i t i s h c a p i t a l . The d a y o f t h e l o c a l p r o m o t e r o f e l e c t r i c u t i l i t i e s was o v e r . L o c a l e n t r e p r e n e u r s h a d p r o v i d e d modern u r b a n t r a n s p o r t a t i o n and l i g h t i n g b u t l a c k e d t h e c a p i t a l n e c e s s a r y t o s u s t a i n t h e i r i n f a n t e n t e r p r i s e s t h r o u g h h a r d t i m e s . T h e s e h a r d t i m e s r e s u l t e d f r o m t h e i n t e r n a t i o n a l f i n a n c i a l c r i s e s w h i c h f o l l o w e d t h e A m e r i c a n b a n k i n g p a n i c o f 1 8 9 3 . B r i t i s h C o l u m b i a , w i t h h e r economy b a s e d p r i m a r i l y on t h e p r o -d u c t i o n o f s t a p l e s s u c h as l u mber and m i n e r a l s , was p a r t i c u -l a r l y v u l n e r a b l e t o f l u c t u a t i o n s i n t h e economy. A d e c l i n e i n . t h e A m e r i c a n and A u s t r a l i a n demand f o r l u m b e r h a d p r e -c e d e d t h e g e n e r a l d e p r e s s i o n . The r e p e a l o f t h e Sherman. S i l v e r 33 Purchase A c t by the American government i n 1893 s e v e r e l y l i m i t e d t he markets f o r the mines of t h e B r i t i s h Columbia i n -t e r i o r . Over n i n e t y per c e n t o f t h e min i n g companies promoted by c o a s t a l " c a p i t a l i s t s " i n the Kootenay and Boundary d i s t r i c t s between 1890 and 1900 f a i l e d . 4 2 The d e c i s i o n of t h e B e h r i n g Sea S e a l i n g A r b i t r a t i o n T r i b u n a l i n 1893 t o l i m i t . Canadian access t o B e h r i n g Sea s e a l s e f f e c t i v e l y ended V i c t o r i a ' s once p r o f i t a b l e s e a l i n g i n d u s t r y and caused a d i r e c t c a p i t a l l o s s 43 o r i g i n a l l y e s t i m a t e d t o be $1,289,008. The g e n e r a l economic d e c l i n e a l s o depressed r e a l e s t a t e v a l u e s . S m a l l l o c a l " c a p i -t a l i s t s " who had s p e c u l a t e d i n r e a l e s t a t e , e s p e c i a l l y i n 44 Vancouver, l o s t h e a v i l y . And, the i n t e r n a t i o n a l f i n a n c i a l c r i s e s a l s o r e s t r i c t e d the a v a i l a b i l i t y o f o u t s i d e c a p i t a l on which Vancouver, and t o a l e s s e r e x t e n t , V i c t o r i a , had de-pended f o r t h e i r development. The s h o r t a g e of c a p i t a l and the g e n e r a l d e p r e s s i o n were r e s p o n s i b l e f o r t h e f a i l u r e of the l o c a l e l e c t r i c l i g h t and 42 J.S. Church, "Mining Companies i n t h e West Kootenay and Boundary Regions o f B r i t i s h Columbia: C a p i t a l F o rmation and F i n a n c i a l O p e r a t i o n s , " U.B.C.,M.A. T h e s i s , 1961, pp.204-5. C o a s t a l i n v e s t o r s were t h e l e a s t s u c c e s s f u l o f any mine owners. 43 F.W, Howay, B r i t i s h Columbia, Vancouver, S.J. C l a r k e , 1914, v o l . I I , p.465. The c l a i m s were f i n a l l y a s s e s s e d a t $463,454. 44 For f u r t h e r d e t a i l s on t h e d e p r e s s i o n i n Vancouver, see my " R a i l w a y s , P o l i t i c i a n s and t h e Development of the C i t y of Vancouver as a M e t r o p o l i t a n C e n t r e , 1886-1929," U n i v e r s i t y of Tor o n t o , M„A. T h e s i s , 1963, chapter I I , passim. 34 s t r e e t r a i l w a y companies. By 1895 the V i c t o r i a E l e c t r i c R a i l -way and L i g h t i n g Company, t h e Vancouver E l e c t r i c R a i l w a y and L i g h t i n g Company, and the Westminster and Vancouver Tramway were i n receivership„ As a r e s u l t of the i n i t i a t i v e of t h e Bank o f B r i t i s h Columbia and t h e Y o r k s h i r e C o r p o r a t i o n , t h e major c r e d i t o r s of t h e Vancouver E l e c t r i c R a i l w a y and L i g h t i n g Company and t h e Westminster and Vancouver Tramway, the mainland u t i l i t y companies were amalgamated and r e o r g a n i z e d i n 1895 as the C o n s o l i d a t e d R a i l w a y and L i g h t i n g Company. i v The C o n s o l i d a t e d R a i l w a y and L i g h t i n g Company which e v e n t u a l l y g a i n e d c o n t r o l of t h e two mainland companies and t h e V i c t o r i a E l e c t r i c R a i l w a y and L i g h t i n g Company, marks a t r a n s i t i o n a l s t a g e between the e a r l y companies which were p r o -moted and managed l o c a l l y u s i n g c a p i t a l from wherever i t c o u l d be o b t a i n e d and the B.C.E.R. which was promoted and c o n t r o l l e d i n England u s i n g B r i t i s h c a p i t a l almost e x c l u s i v e l y . The Con-s o l i d a t e d Company t h e name i s a p p r o p r i a t e — was promoted p a r t l y i n B r i t i s h Columbia and p a r t l y i n England. I t was managed l o c a l l y but used B r i t i s h c a p i t a l . Once t h e y had i n c o r p o r a t e d t h e . C o n s o l i d a t e d R a i l w a y and L i g h t i n g Company, the Bank of B 0 C 0 and the Y o r k s h i r e Corpora-t i o n approached F.S. Bar n a r d , a prominent V i c t o r i a businessman 3 and Member o f P a r l i a m e n t . They a s k e d h i m t o e n d e a v o u r t o i n t e r e s t R.M. Horne-Payne o f S p e r l i n g & Company, t h e London s t o c k b r o k e r s who had a c q u i r e d t h e bonds o f t h e V i c t o r i a E l e c t r i c R a i l w a y and L i g h t i n g Company e a r l y i n 1094, i n amalgamating t h e V i c t o r i a f i r m w i t h t h e r e c e n t l y c h a r t e r e d C o n s o l i d a t e d R a i l w a y and L i g h t i n g Company. I n 1894, H o r n e -Payne was v i s i t i n g B r i t i s h C o l u m b i a as t h e g u e s t o f S i r W i l l i a m Van H o m e o f t h e C a n a d i a n P a c i f i c R a i l w a y and i n -v e s t i g a t i n g t h e i n v e s t m e n t p o t e n t i a l o f K o o t e n a y m i n e s . ^ Horne-Payne, i n t e r e s t e d i n B a r n a r d ' s p r o p o s a l , a s k e d f o r f u r t h e r i n f o r m a t i o n . B a r n a r d t h e n o b t a i n e d an o p t i o n f r o m t h e Bank and t h e Y o r k s h i r e C o r p o r a t i o n . B o t h f i n a n c i a l h o u s e s a g r e e d t o t a k e C o n s o l i d a t e d R a i l w a y and L i g h t i n g Company de-b e n t u r e s t o s a t i s f y t h e i r c l a i m s a g a i n s t t h e o l d companies i f B a r n a r d c o u l d r a i s e £ 1 0 0 , 0 0 0 o f new c a p i t a l t o be u s e d s o l e l y .45 B a r n a r d a l s o i n t e r e s t e d Horne-Payne i n i n v e s t i n g i n a K o o t e n a y m i n i n g v e n t u r e , t h e L a n a r k C o n s o l i d a t e d M i n i n g and S m e l t i n g Company, w h i c h B a r n a r d and s e v e r a l o t h e r V i c t o r i a n s owned. In 1895 t h e L a n a r k became t h e L i l l o o e t , E r a s e r R i v e r and C a r i b o o G o l d F i e l d s L t d . i n w h i c h Horne-Payne and R.K. S p e r l i n g were among t h e o r i g i n a l s u b s c r i b e r s . (Church, " M i n i n g Companies," pp 29- 93-94, 294.) B a r n a r d was t h e managing d i r e c t o r o f t h e L.F.R.&C.G.F. L t d . I n May, 1897 B a r n a r d ap-p e a r e d w i t h Thomas Dunn, a V a n c o u v e r hardware merchant, Wm. F a r r e l l , J.H. Payne, R.M. Horne-Payne, R.N. L a u r i e and F.G. Vern o n as d i r e c t o r s o f t h e S u n s h i n e Mine w h i c h was r e g i s t e r e d i n London. (B.C. Review, v o l . 1, May 29, 1897, p . 6 3 ) . F o r d e t a i l s o f B a r n a r d ' s m e e t i n g s w i t h Horne-Payne see F.R. G l o v e r , " B i r t h o f t h e B.C.E.R. Company," B.C. E l e c t r i c Employees'^ ^S^BiBS,' v o l ° X I ( O c t o b e r 1928), p p . 5-7. 36 f o r improvements. A f t e r the 1895 P a r l i a m e n t a r y S e s s i o n B a r n a r d went t o London, met Horne-Payne and arranged t h e f o r m a t i o n o f t h e R a i l w a y Amalgamation S y n d i c a t e . T h i s s y n d i c a t e , composed o f Horne-Payne Js a s s o c i a t e s , was p r e p a r e d t o advance th e felOO,000 n e c e s s a r y t o s a t i s f y the c r e d i t o r s . Barnard's main r o l e was t o a c t as an i n t e r m e d i a r y between the C.R. & L. Company and the B r i t i s h c a p i t a l i s t s r e p r e s e n t e d by Horne-Payne. I n A p r i l 1895 B a r n a r d had become r e c e i v e r of t h e W. & V.To I n August, w h i l e i n London, he became r e c e i v e r o f the Vancouver E.R. & L. Company. As r e c e i v e r and g e n e r a l manager, Barnard a l s o concerned h i m s e l f w i t h t h e o r g a n i z a t i o n o f the new Company and w i t h ' such r o u t i n e matters as i m p r o v i n g t h e system, d e v e l o p i n g t r a f f i c and n e g o t i a t i n g w i t h t h e c i t i e s . W i t h the promise of funds from th e R a i l w a y Amalgamation S y n d i -c a t e and a s l i g h t improvement i n the economy, the C.R. & L. Company improved the l i g h t i n g and r a i l w a y systems and made p l a n s f o r t h e f u t u r e i n c l u d i n g the development of water power a t Seymour C r e e k . ^ 46 Barnard used the p r o s p e c t of cheap water power i n an argu-ment w i t h the C i t y of Vancouver over the renewal of the s t r e e t l i g h t i n g c o n t r a c t . The C i t y was unhappy about the C.R.C.'s h i g h r a t e s . B e f o r e t h e c o n t r a c t e x p i r e d i n 1895, the C i t y c a l l e d f o r t e n d e r s . Barnard bought out a p o t e n t i a l l y s e r i o u s r i v a l , the Western E l e c t r i c L i g h t , H e a t i n g and Power Company, but was f o r c e d t o o f f e r a s u b s t a n t i a l r e d u c t i o n i n order t o get t h e c o n t r a c t . A f t e r r e d u c i n g the p r i c e from an average of 33£ p e r l i g h t p e r n i g h t t o 27%$, Barnard was s t i l l a b l e t o r e p o r t t h a t s t r e e t l i g h t i n g r e t u r n e d "a r e munerative f i g u r e . " Barnard t o S h a r e h o l d e r s , August 24, 1896, Box 3 34. 37 By 1 8 9 5 , the d e p r e s s i o n was s l o w l y l i f t i n g . T h e r e were f e w e r b u s i n e s s f a i l u r e s t h a n i n p r e v i o u s y e a r s , some new i n -d u s t r i e s w e r e e s t a b l i s h e d , t h e r e a l e s t a t e b u s i n e s s was r e v i v i n g and b u i l d i n g was a d v a n c i n g q u i e t l y . T h e s e s l i g h t i m p r o v e m e n t s i n t h e economy were r e f l e c t e d i n i n c r e a s e d n e t e a r n i n g s and i n t h e a b i l i t y o f t h e C o n s o l i d a t e d Company t o e a r n enough t o p a y 47 i n t e r e s t . E c o n o m i c g r o w t h was a l s o d e m o n s t r a t e d b y t h e f a c t t h a t t h e V a n c o u v e r l i g h t i n g p l a n t was n e a r i n g c a p a c i t y . I n a d d i t i o n , t h e Company was p r e p a r i n g t o b u i l d a new s t r e e t c a r l i n e on Robson S t r e e t , a m a i n t h o r o u g h f a r e t h r o u g h t h e f a s h i o n -a b l e r e s i d e n t i a l d i s t r i c t o f t h e West E n d , t o S t a n l e y P a r k ; t o d o u b l e t r a c k some e x i s t i n g downtown l i n e s ; and t o r e a c t i v a t e t h e P o w e l l S t r e e t l i n e . The Company w a n t e d a l o n g t e r m a r r a n g e -ment f o r t h e use o f t h e s e s t r e e t s b u t t h e V a n c o u v e r C i t y C o u n c i l s u c c e s s f u l l y i n s i s t e d t h a t t h e C i t y s h o u l d h a v e t h e o p t i o n t o 4 8 p u r c h a s e a n y o f t h e s t r e e t r a i l w a y l i n e s a f t e r f i v e y e a r s . The C o n s o l i d a t e d Company was a l s o i n t e r e s t e d i n d e v e l o p i n g t r a f f i c f o r t h e i n t e r u r b a n . I n o r d e r t o e n c o u r a g e s e t t l e m e n t , t h e Tramway g r a n t e d r e d u c e d f a r e s t o b o n a f i d e s e t t l e r s . The Company a l s o a s k e d t h e P r o v i n c i a l Government t o o f f e r more 47 B a r n a r d t o R.H. S p e r l i n g , J a n u a r y 2, 1896, C o n s o l i d a t e d R a i l w a y Company, L e t t e r B o o k , 1 8 9 5 - 1 8 9 6 . 48 V a n c o u v e r D a i l y N e w s - A d v e r t i s e r , A p r i l 9, 1 8 9 5 . T h i s p a p e r s u p p o r t e d the c i t y ' s c o n t e n t i o n . 38 r e a s o n a b l e terms t o b u y e r s o f government l a n d and t o c a n c e l stumpage f e e s f o r s e t t l e r s who made c e d a r s h i n g l e b o l t s as t h e y c l e a r e d t h e i r l a n d . S e t t l e m e n t , however, was s l o w . O n l y a f t e r t h e t u r n o f t h e c e n t u r y d i d f a r m i n g r e p l a c e l o g g i n g as a major i n d u s t r y a l o n g t h e t r a m l i n e 9 When t h e Bank o f B.C. and t h e Y o r k s h i r e C o r p o r a t i o n o r i g i n a l l y i n v i t e d Horne-Payne and S p e r l i n g & Co. t o p a r t i c i -p a t e i n t h e C o n s o l i d a t e d Company, t h e y hoped t o amalgamate t h e m a i n l a n d companies w i t h t h e V i c t o r i a E.R. & L. Company. Ho r n e -Payne was a n x i o u s t o b r i n g t h i s a b o u t . When S p e r l i n g & Co. f o r e c l o s e d i n November 1895 on t h e V i c t o r i a company and t h e n a u c t i o n e d i t s a s s e t s i n A p r i l , 1896, F.S. B a r n a r d , a c t i n g f o r t h e C.R. & L . Company, was t h e h i g h e s t b i d d e r . On May 1, 1896 t h e V i c t o r i a E l e c t r i c R a i l w a y and L i g h t Company o f f i c i a l l y became p a r t o f t h e C o n s o l i d a t e d R a i l w a y Company. In t h e s p r i n g o f 1896 Horne-Payne and s i x o f h i s a s s o c i a t e s v i s i t e d V a n c o u v e r t o l o o k o v e r t h e s t r e e t r a i l w a y and t h e i r i n -t e r i o r m i n i n g i n v e s t m e n t s . On May 2, 1896, t h e C o n s o l i d a t e d R a i l w a y Company ( i t h a d r e c e n t l y s h o r t e n e d i t s name) h e l d i t s 49 B a r n a r d t o C h i e f Commissioner o f Lands and Works, May 22, 1896, C . R . C . , L e t t e r Book, 1895-1896; C „ F 0 G i b s o n , t r a f f i c manager, t o J 0 H . T u r n e r , March 13, 1895, B r i t i s h C o l u m b i a , P r e m i e r ' s C o r r e s p o n d e n c e , Inward, 1895, (PABC); R.M. H o r n e -Payne, Chairman's R e p o r t , F e b r u a r y 1902, p . 6. " f i r s t meeting of p r o v i s i o n a l d i r e c t o r s - nominees o f the Y o r k s h i r e and t h e Bank - and e l e c t e d permanent o f f i c i a l s w i t h m y s e l f / " B a r n a r d / as P r e s i d e n t , Mr. Horne-Payne, V i c e - P r e s i d e n t , Messrs. F a r r e l l , T a t l o w and Loewen the o t h e r d i r e c t o r s . " The c h o i c e o f p r o v i s i o n a l d i r e c t o r s i n d i c a t e s the l i m i t s o f l o c a l c o n t r o l i n t h e Company.^0 . A t t h i s f i r s t meeting the d i r e c t o r s c o n s o l i d a t e d the v a r i o u s debentures i n t o one charge of £250,000 at 4%%. H a l f of t h i s was exchanged f o r e x i s t i n g f i r s t mortgage bonds; one q u a r t e r was used t o pay f o r t h e V i c t o r i a E l e c t r i c R a i l w a y and L i g h t i n g Company, p a r t of the remainder was s o l d a t 95 and 5 1 another p a r t was used as s e c u r i t y on advances from London. x The f u t u r e seemed promising;- t h e new Company was complete, t h e economy was i m p r o v i n g and the Company had promises of adequate c a p i t a l from the R a i l w a y Amalgamation s y n d i c a t e and was a b l e t o p l a n e x t e n s i o n s and t h e c o n s t r u c t i o n of water power p l a n t s on Seymour Creek near Vancouver and a t Goldstream near V i c t o r i a . Then d i s a s t e r s t r u c k . On May 24, 1895, a s t r e e t c a r crowded w i t h passengers en r o u t e t o E s q u i m a l t t o see a m i l i t a r y and 50 F.S. Barnard, " E a r l y H i s t o r y of the Formation, o f B r i t i s h Columbia E l e c t r i c R a i l w a y Company L i m i t e d , Preceded by the Con-s o l i d a t e d R a i l w a y Company," t y p e s c r i p t , J u l y , " 1 9 2 1 , Box 65. C.J. Loewen, a Vancouver f i n a n c i a l , r e a l e s t a t e , l o a n and i n s u r a n c e agent was Barnard's b r o t h e r - i n - l a w . R.G. Ta t l o w , a f u t u r e p r o -v i n c i a l cabinet, m i n i s t e r was a Vancouver b r o k e r , Of t h e 6,469 shares i s s u e d i n t h e C.R.C., 4,838 were taken by Barnard; 680 went t o D a v i d Oppenheimer and 469 t o Horne-Payne and H.M. Hubbard i n T r u s t . Q u a l i f y i n g shares were a l s o i s s u e d t o the d i r e c t o r ' s . J . Buntzen t o E.A. Bennett, March 10, 1899, Box 73. 51 Barnard t o S h a r e h o l d e r s , August 24, 1896, Box 3 34. 40 n a v a l d i s p l a y f e l l i n t o V i c t o r i a ' s h a r b o u r when t h e P o i n t E l l i c e b r i d g e c o l l a p s e d . F i f t y - f o u r p a s s e n g e r s l o s t t h e i r l i v e s , many o t h e r s w e r e i n j u r e d . The c o r o n e r ' s j u r y f o u n d t h e C o n s o l i d a t e d Company d i r e c t l y r e s p o n s i b l e f o r t h e a c c i d e n t be-c a u s e o f t h e o v e r c r o w d i n g o f t h e c a r . The j u r y a l s o d e c i d e d t h a t t h e C i t y was g u i l t y o f c o n t r i b u t o r y n e g l i g e n c e b e c a u s e t h e b r i d g e h a d n o t b e e n c o n s t r u c t e d a c c o r d i n g t o t h e o r i g i n a l s p e c i -f i c a t i o n s . As a r e s u l t o f t h e a c c i d e n t , s e v e r a l l a w s u i t s were l a u n c h e d a g a i n s t t h e Company. The Company's l e g a l c o u n s e l was c e r t a i n t h a t t h e Company w o u l d n o t be h e l d r e s p o n s i b l e s i n c e t h e b r i d g e b e l o n g e d t o t h e C i t y . B a r n a r d c l a i m e d t h a t any s u c c e s s f u l a c t i o n a g a i n s t t h e Company w o u l d be c o v e r e d b y i n -^9 • • s u r a n c e .J i The R a i l w a y A m a l g a m a t i o n S y n d i c a t e , h o w e v e r , w i t h -d r e w i t s f i n a n c i a l s u p p o r t . W i t h h e a v y damage c l a i m s p e n d i n g , t h e C o n s o l i d a t e d Company c o u l d n o t o f f e r any s e c u r i t y f o r f u r t h e r a d v a n c e s . O t h e r p o t e n t i a l s o u r c e s o f c a p i t a l s u c h as t h e Bank o f B.C. t h o u g h t t h e same way. Any f o r m o f s e c o n d mort-g a g e , a p p a r e n t l y t h e o n l y p o s s i b l e s e c u r i t y , was open t o t h e o b j e c t i o n t h a t i f any o f t h e l i t i g a n t s o b t a i n e d a j u d g m e n t , t h e l i a b i l i t y w o u l d e x c e e d t h e Company's r e s o u r c e s and " t h e f i r s t m o r t g a g e e s w o u l d , u n d e r t h e i r d e e d , be e n t i t l e d t o t a k e p o s s e s s i o n , and t h e p r o s p e c t o f t h o s e h o l d i n g s e c o n d m o r t g a g e s •52 B a r n a r d t o R. N o r t h a l l L a u r i e , j o i n t m anager, R.A. S y n d i -c a t e , J u n e 1 8 , 1 8 9 7 , C.R.C. L e t t e r B o o k , 1 8 9 5 - 1 8 9 6 . 41 or charges g e t t i n g t h e i r money would be e x c e e d i n g l y d o u b t f u l . " U n t i l t h e R a i l w a y Amalgamation S y n d i c a t e d e f i n i t e l y de-c i d e d e a r l y i n August t h a t i t would no l o n g e r advance funds, t h e C o n s o l i d a t e d Company had proceeded w i t h e x t e n s i o n s and im-provements wor t h $19,000 more than the a u t h o r i z e d l o a n o f $100,000. The R a i l w a y Amalgamation S y n d i c a t e and o t h e r c r e d i t -o r s expected t h e Company would use loans t o pay c a p i t a l c o s t s and r e s e r v e o p e r a t i n g revenues t o pay debenture i n t e r e s t . B ar-n a r d , hov/ever, had used o p e r a t i n g revenue f o r c a p i t a l c o s t s . When t h e S y n d i c a t e r e f u s e d t o p r o v i d e funds beyond the o r i g i n a l l o a n , the C o n s o l i d a t e d Company had no money t o pay overdue de-ben t u r e i n t e r e s t . On Horne-Payne !s a d v i c e , Barnard appealed t o the Bank of B.C. f o r an advance. The Bank r e p l i e d t h a t i t was t a k i n g s t e p s t o c o l l e c t i n t e r e s t p a s t due on the debentures i t h e l d . 5 4 As a r e s u l t of t h e P o i n t E l l i c e b r i d g e d i s a s t e r and the o v e r c o n f i d e n c e o f t h e Managing D i r e c t o r , B a r n a r d , the debenture h o l d e r s once more f o r e c l o s e d . On October 13, 1896, W i l l i a m 53 A.C. M i t c h e l l - I n n e s t o B a r n a r d , August. 3, 1896, Box 334; Bar n a r d t o S h a r e h o l d e r s , August 24, 1896, Box 334. 54 Barnard t o M i t c h e l l - I n n e s , August 3, 1896, C.R.C, L e t t e r Book, 1895-1896; M i t c h e l l - I n n e s t o Barnard, August 10, 1894, Box 334; Manager of Bank of B.C., Vancouver t o Buntzen, Sept-ember 12, 1896, Box 334; Horne-Payne t o Barnard, September 9, 1896, C.R.C. L e t t e r Book, 1895-1896. 42 F a r r e l l o f t h e Y o r k s h i r e C o r p o r a t i o n became t h e r e c e i v e r o f t h e Company. He a d v e r t i s e d an a u c t i o n o f i t s a s s e t s . T h e r e 5 5 were no b u y e r s . " D u r i n g t h e n e x t s i x months t h e s t r e e t r a i l w a y s and e l e c t r i c l i g h t s c o n t i n u e d t o o p e r a t e i n V a n c o u v e r and V i c t o r i a . In London, t h e o w n e r s h i p went t h r o u g h s e v e r a l changes o f hand. w In December 1896 t h e Y o r k s h i r e C o r p o r a t i o n a g r e e d t o s e l l t h e a s s e t s o f t h e C o n s o l i d a t e d Company t o a new f i r m , t h e C o l o n i a l R a i l w a y and I n v e s t m e n t Company. T h i s new company, i n t u r n , 57 s o l d t h e p r o p e r t y f o r £ 4 6 2 , 0 0 0 t o a s e c o n d new fxrm, t h e B r i t i s h C o l u m b i a E l e c t r i c R a i l w a y Company. T h i s company, r e -g i s t e r e d i n London on A p r i l 3, 1897, h e l d i t s f i r s t B o a r d m e e t i n g on A p r i l 8, 1897. S e v e r a l o f t h e d i r e c t o r s o f t h e new 58 company had been members o f t h e R a i l w a y Amalgamation S y n d i c a t e 55 Wm. F a r r e l l t o employees, C.R.C.,October 13, 1896, C.R.C. L e t t e r Book, 1895-1896; V i c t o r i a C o l o n i s t , O c t o b e r 16, 1896,p.5; November 18, 1896, p.8. 56 B e c a u se t h e f i n a n c i a l c o n t r o l o f t h e Company now l a y i n E n g l a n d , t h e l o c a l r e c o r d s o f the. C o n s o l i d a t e d Company r e v e a l o n l y t h e b a r e s t s k e t c h o f t h e s e t r a n s a c t i o n s . 57 H a r o l d G. Brown, a d i r e c t o r o f t h e B.C.E.R., c l a i m e d t h e C R . & L. Co. made a p r o f i t o f a l m o s t £50,000 on t h e s a l e t o t h e B.C.E.R. Brown t o D a v i d s o n , June 27, 1921, Box 65. 58 F.S. B a r n a r d ; R.M0 Horne-Payne; A . C M i t c h e l l - I n n e s o f Montague, H a l l & Co., London; R.N. L a u r i e , C P . N o r t o n and R.K. S p e r l i n g . 43 Both t h e c a p i t a l and the c o n t r o l of the new f i r m came from London. W i t h i n t h e y e a r , Barnard, the o n l y d i r e c t o r n o r m a l l y re s i d e n t i n B r i t i s h Columbia, had "arranged t o r e s i g n " as managing d i r e c t o r . L o c a l c a p i t a l i s t s , w i t h more optimism t h a n c a p i t a l , had been a b l e t o p r o v i d e modern e l e c t r i c l i g h t i n g and urban t r a n s p o r t a t i o n i n southwestern B r i t i s h Columbia; t h e y l a c k e d t h e f i n a n c i a l r e s o u r c e s n e c e s s a r y t o s u s t a i n t h e i r e n t e r p r i s e s t h r o u g h h a r d times or t o w a i t f o r the c i t i e s t o grow s u f f i c -i e n t l y t o use t h e s t r e e t r a i l w a y t o advantage. The f o r m a t i o n of t h e B r i t i s h Columbia E l e c t r i c R a i l w a y Company marked the f i n a l p a s s i n g of c o n t r o l t o London from t h e hands o f l o c a l would-be c a p i t a l i s t s . The major e l e c t r i c u t i l i t i e s i n Vancouver, V i c t o r i a and New Westminster were now owned and a d m i n i s t e r e d by a B r i t i s h company o p e r a t i n g i n B r i t i s h Columbia, CHAPTER I I A SOLID FOUNDATION, 1897-1905 i I n c o n t r a s t t o i t s p r e d e c e s s o r s , the B.C.E.R. was a s o u n d l y f i n a n c e d company f u n c t i o n i n g i n a prosperous B r i t i s h Columbia. Being s u b j e c t t o the v i c i s s i t u d e s of the s t o c k and bond markets, i t d i d not enjoy an u n l i m i t e d s u p p l y of funds. The soundness of the company was l a r g e l y the r e s u l t o f t h e r e l u c t a n c e o f t h e d i r e c t o r s t o spend c a p i t a l b e f o r e a c t u a l l y r a i s i n g i t , t h e i r r e f u s a l , except i n emergencies, t o rai.se c a p i t a l o t h e r than by the, s a l e of s t o c k s and long term debentures, and t h e i r g e n e r a l u n w i l l i n g n e s s t o expand t h e i r o p e r a t i o n s w i t h o u t c o n v i n c i n g evidence of immediate r e -t u r n s from a d d i t i o n a l i n v e s t m e n t s . Between 1897 and 1905, t h e s h o r t a g e o f c a p i t a l was a g r e a t e r problem than f i n d i n g p r o f i t a b l e new o p p o r t u n i t i e s f o r investment i n B r i t i s h Columbia. The b a s i c d i f f i c u l t y o f t h e B.C.E.R. was ' r e c o n c i l i n g the a v a i l a b i l i t y of c a p i t a l w i t h the d e s i r e s of B r i t i s h Columbians f o r more s t r e e t r a i l w a y s and a d d i t i o n a l e l e c t r i c l i g h t s and power. T h i s d i f f i c u l t y most c l e a r l y e x p r e s s e d i n the t e n s i o n 44 between the London Board of D i r e c t o r s , who had t o r a i s e the c a p i t a l , and the management i n Vancouver, who had t o d e v e l o p th e company's p h y s i c a l f a c i l i t i e s , earn a p r o f i t and e s t a b l i s h good w i l l -- was p a r t i c u l a r l y acute between 1897 and 1905, T h i s c o n f l i c t between the c a u t i o n o f the B.C.E.R.'s London f i n a n c i e r s and t h e enthusiasm of the Vancouver management f o r expansion i s a major theme of the f i r s t p e r i o d of t h e B.C.E.R.'s h i s t o r y . N e v e r t h e l e s s , i n s p i t e o f t h i s c o n f l i c t , or perhaps because of i t , the B.C.E.R. succeeded i n e s t a b l i s h i n g a s o l i d f o u n d a t i o n — f i n a n c i a l l y and p h y s i c a l l y — between 1897 and 1905. In the two decades p r i o r t o World War I , London was t h e c e n t r e of t h e most e x t e n s i v e f i n a n c i a l empire i n the w o r l d . The E n g l i s h money markets were d e e p l y i n v o l v e d i n overseas i n -vestment. From these markets, p a r t i c u l a r l y from t h a t of London, c a p i t a l f l o w e d t o a l l p a r t s of t h e w o r l d . Canada was e s p e c i a l -l y p o p u l a r among B r i t i s h o r s . By 1913 t h e r e were more B r i t i s h funds i n Canada than i n any o t h e r overseas c o u n t r y save the U n i t e d States.-'- B r i t i s h i n v e s t o r s c o u l d choose from a g r e a t v a r i e t y of Canadian i s s u e s which were quoted on t h e London and, t o a l e s s e r e x t e n t , on the p r o v i n c i a l s t o c k exchanges. Government and r a i l w a y s e c u r i t i e s were the most p o p u l a r i n v e s t -1 A.R 0 H a l l , The London Capita]. Market and A u s t r a l i a , 187 0-1914, Canberra, A u s t r a l i a n N a t i o n a l U n i v e r s i t y , 1963, p. 11. merits but B r i t i s h money went i n t o p u b l i c u t i l i t y companies, m i n i n g endeavours and r e a l e s t a t e s p e c u l a t i o n s . Both domestic and overseas companies c a t e r e d t o t h e d i f f e r i n g needs of i n v e s t o r s by o f f e r i n g v a r i o u s k i n d s of o r d i n a r y and p r e f e r e n c e shares as w e l l as debentures t o the i n v e s t i n g p u b l i c . O r d i n a r y shares d i d not promise a dividend, e v e r y year but o f f e r e d the h i g h e s t r a t e of d i v i d e n d i n times of p r o s p e r i t y . P r e f e r e n c e s h a r e s , of which t h e r e were s e v e r a l v a r i e t i e s , had f i r s t c l a i m on d i v i d e n d payments and promised t h e i n v e s t o r ." a r e a s o n a b l y secure though modest r e t u r n . De-bentu r e h o l d e r s n o r m a l l y r e c e i v e d the lowest r a t e of r e t u r n but had t h e g r e a t e s t s e c u r i t y of in v e s t m e n t . I f t h e company f a i l e d t o pay i n t e r e s t , the debenture h o l d e r s had f i r s t c l a i m on i t s a s s e t s . The B.C.E.R., l i k e most o t h e r companies, f o l l o w e d t h e custom of i s s u i n g d i f f e r e n t forms o f s e c u r i t i e s . Between 1897 and 1913, the B.C.E.R. r a i s e d over £9,000,000 a t c o m p a r a t i v e l y cheap r a t e s i n B r i t a i n f o r use i n B r i t i s h Columbia. About s i x t y per cent of t h i s c a p i t a l was r a i s e d by the s a l e of debentures, an i n c r e a s i n g l y p o p u l a r form of i s s u e s i n c e i t p e r m i t t e d e x i s t i n g s h a r e h o l d e r s t o r e t a i n c o n t r o l o f th e company. E i g h t y per cent of these debentures were i s s u e d a t 4%%. I n the years between 1897 and 1913 when t h e company r a i s e d most of i t s c a p i t a l , t he average E n g l i s h bank r a t e 47 f l u c t u a t e d between 3,00% and 4.93%.^ The government o f Canada p a i d bond i n t e r e s t a t r a t e s between 3.43% and 3.68%, and C a n a d i a n i n d u s t r i a l bond i s s u e s , t h e k i n d o f i n v e s t m e n t w i t h w h i c h t h e B.C.E.R. c a n be most c l o s e l y compared, p a i d between 4.94% and 5.33%. 3 The r e m a i n i n g f o r t y p e r c e n t o f t h e B.C.E.R.'s c a p i t a l was r a i s e d by t h e i s s u i n g o f s h a r e s . These were r e a d i l y s o l d . Not o n l y was t h e i r u s u a l d e n o m i n a t i o n o f L l a t t r a c t i v e t o t h e s m a l l i n v e s t o r , b u t t h e B.C.E.R. was a " s a f e " i n v e s t m e n t . The l i m i t e d e v i d e n c e a v a i l a b l e a bout s t o c k h o l d e r s s u g g e s t s t h a t t h e B.C.E.R. was i n d e e d a "widows' and o r p h a n s ' s t o c k . " Such a r e p u t a t i o n f o r s a f e t y was j u s t i f i a b l e . E x c e p t d u r i n g t h e war y e a r s , a l l s h a r e h o l d e r s r e c e i v e d r e g u l a r d i v i d e n d s , and even d u r i n g t h o s e a n x i o u s y e a r s , p a s t p r u d e n c e p e r m i t t e d t h e company t o pay 5% d i v i d e n d s t o h o l d e r s o f C u m u l a t i v e P e r p e t u a l P r e f e r e n c e S t o c k . 4 • i -.2 C.K. Hobs on, The E x p o r t o f B r i t i s h C a p i t a l , New Y o r k , Mac.millan, 1914, p . 190. 3 J a c o b ' V i n e r , Canada's B a l a n c e o f I n t e r n a t i o n a l I n d e b t e d n e s s , 1900-1913, Cambridge ,Harvard U n i v e r s i t y Press', 1924, p. 98. 4 C u m u l a t i v e P e r p e t u a l P r e f e r e n c e s t o c k was a r e l a t i v e l y new f o r m o f p r e f e r r e d s h a r e ' d e s i g n e d t o overcome o b j e c t i o n s t o o r d i -n a r y p r e f e r e n c e s h a r e s w h i c h , i n t h e c a s e o f many companies, had l i t t l e s e c u r i t y . C u m u l a t i v e P e r p e t u a l P r e f e r e n c e s h a r e h o l d e r s had f i r s t r i g h t t o d i v i d e n d s . . The company was o b l i g e d t o pay any a r r e a r s on t h e s e s h a r e s b e f o r e p a y i n g d i v i d e n d s on any o t h e r s h a r e s . 48 D u r i n g prosperous p e r i o d s t h e r e were o n l y two l i m i t a t i o n s on t h e company's a b i l i t y t o pay handsome d i v i d e n d s t o t h e h o l d e r s o f D e f e r r e d and P r e f e r r e d O r d i n a r y s h a r e s . When the company was e s t a b l i s h i n g i t s e l f and w h i l e i t was expanding r a p i d l y i t used much o f i t s p r o f i t s f o r new c a p i t a l p r o j e c t s or f o r the c r e a t i o n of generous r e s e r v e . f u n d s . L a t e r , - t h e main l i m i t a t i o n on d i v i d e n d s was t h e f e a r o f a n g e r i n g customers and t h e i r p o l i t i c a l l e a d e r s or o f s t i m u l a t i n g employee demands f o r h i g h e r wages. P r e f e r r e d shares u s u a l l y p a i d o n l y 5% t o 6%. The 8% p a i d t o h o l d e r s of D e f e r r e d O r d i n a r y Stock t h e s t o c k which had the l e a s t p r e f e r e n c e i n t i m e o f a d v e r s i t y — was not e x t r a o r d i n a r i l y h i g h . The C.P.R,, a g i l t - e d g e i n -d u s t r i a l s t o c k , was p a y i n g 10% on i t s o r d i n a r y shares w h i l e t h e B.C.E.R. was paying. 8%. in 1912, t h e l a s t f u l l year of p r o s p e r i t y b e f o r e t h e war, o t h e r Canadian tramway companies 6 and l i g h t i n g e n t e r p r i s e s were p a y i n g d i v i d e n d s of 6% t o 12%. The B.C.E.R. enjoyed i t s cheap c a p i t a l because i t s f i n a n c i a l agent and t h e chairman of i t s Board, R.M. Horne-Payne b e i n g c a r e f u l l y tuned t o t h e s t a t e of t h e money markets, 5 Canadian P a c i f i c R a i l w a y , Annual R e p o r t s , 1912-1918,passim. 6 The London / 0 n t a r i £ 7 S t r e e t R a i l w a y and the Shawinigan Wate and Power Company p a i d 6%; the M o n t r e a l Tramways,7^%; the Toron t o R a i l w a y Company, 8%; the M o n t r e a l L i g h t , Heat and Power Company, 1.0%; and the Winnipeg E l e c t r i c R a i l w a y Company, 12%. Thomas S k i n n e r , ed., The Stock Exchange Year Book, London, 19.13, passim. 49 d e l a y e d i s s u e s whenever c o n d i t i o n s were u n f a v o u r a b l e . T h e s e d e l a y s , which i n the l o n g run c o n t r i b u t e d t o t h e suc c e s s o f t h e company, were l a r g e l y r e s p o n s i b l e f o r t h e t e n s i o n between t h e Board i n London and the management i n Vancouver. 7 Horne-Payne,' a p r e c o c i o u s " f i n a n c i a l genius' had a shrewd u n d e r s t a n d i n g of B r i t i s h i n v e s t o r s . He c l a i m e d r e s p o n s i b i l i t y f o r i n v e s t i n g $500,000,000 of B r i t i s h c a p i t a l i n Canadian p r o -j e c t s i n c l u d i n g t h e B.C.E.R. and t h e Canadian N o r t h e r n R a i l w a y s . Throughout h i s r e l a t i o n s h i p w i t h the B.C.E.R. h e - p e r i o d i c a l l y t h r e a t e n e d t o use h i s f i n a n c i a l i n f l u e n c e -in London a g a i n s t t h e p r o v i n c i a l government or m u n i c i p a l i t i e s i f t h e y i n t e r f e r e d w i t h the w e l l - b e i n g o f t h e B.C.E.R. A l t h o u g h l o c a l governments d i d not always heed th e s e w a r n i n g s , Horne-Payne never gave a r e a l d e m o n s t r a t i o n of t h e e x t e n t of h i s f i n a n c i a l power. 7 D-B. Planna .Trains of R e c o l l e c t i o n , T o r o n t o , M a c m i l l a n ^ 1924, pp. 243-245. Horne-Payne was i n h i s l a t e t w e n t i e s when he o r g a n i z e d the B.C.E.R. 8 Horne-Payne was t h e o n l y member of t h e Canadian N o r t h e r n Board not n o r m a l l y r e s i d e n t i n T o r o n t o . H is work i n r a i s i n g c a p i t a l was v i t a l f o r t h e success of t h e C.N.R.; however, h i s r o l e i n forming Canadian N o r t h e r n p o l i c y does not seem t o have been an i n f l u e n t i a l one. He k e p t t h e i n t e r e s t s of t h e B.C.E.R. and t h e C.N.R. q u i t e s e p a r a t e . The two r a i l w a y s competed i n th e E r a s e r V a l l e y and on t h e Saanich P e n i n s u l a . I n t h e p u r -chase of t h e Vancouver Gas Company and the b u i l d i n g of the M i l l s i d e e x t e n s i o n t o the Canadian Western Lumber Company m i l l and t o w n s i t e , Mackenzie and Mann and t h e B.C.E.R. co-operated as businessmen, not as c l o s e a s s o c i a t e s or f r i e n d s . 50 Horne-Payne's lo n g c a r e e r w i t h the B.C.E.R. he was chairman of t h e Board from 1897 u n t i l 192 8 when t h e company was s o l d t o t h e N e s b i t t , Thomson i n t e r e s t s — i s i n d i c a t i v e of t h e c o n t i n u i t y i n t h e p e r s o n n e l of the B.C.E.R.'s Board. Two o t h e r o r i g i n a l d i r e c t o r s , F.S. Barnard and G.P. Norton had e q u a l l y l o n g s e r v i c e . Many o t h e r d i r e c t o r s s e r v e d f o r more than t e n y e a r s . 9 The r e c o r d s i n Vancouver do not. f u l l y r e v e a l t h e e x t e n t of each d i r e c t o r ' s p e r s o n a l h o l d i n g s i n the company. Some d i r e c t o r s h e l d o n l y t h e i r £500 worth of q u a l i f y i n g s h a r e s ; o n l y one, R.K. S p e r l i n g , was l i s t e d , i n 1909, among t h e t e n l a r g e s t s h a r e h o l d e r s . I n the same year (the o n l y year f o r which t h e evidence i s a v a i l a b l e ) , Horne-Payne h e l d £25,250 worth of D e f e r r e d O r d i n a r y Stock i n h i s own name or about 4% of t h e i s s u e d s t o c k o f t h a t c l a s s . The evidence i n d i c a t e s t h a t the d i r e c t o r s d i d not s e p a r a t e l y or c o l l e c t i v e l y h o l d anywhere near a m a j o r i t y of t h e s h a r e s . I t was, however, t o t h e i r p e r s o n a l p e c u n i a r y advantage t o ensure t h a t the company earned a p r o f i t . I t was customary t o a l l o w the d i r e c t o r s t o d i v i d e 10% of t h e p r o f i t s among themselves a f t e r 5% had been p a i d on the i s s u e d capital„ 9 See Appendix 9. 1 0 Stock Exchange Year Book, 1901, p. 741. Of a l l t h e tram-way and omnibus•companies l i s t e d i n . t he Stock Exchange Year Book i n 1901, the B.C.E.R. was t h e o n l y one w i t h t h i s p r o v i s i o n , The B.C.E.R. r e t a i n e d t h i s custom of g i v i n g d i r e c t o r s a s p e c i a l share i n t h e p r o f i t s u n t i l 192 8. 51 Horne-Payne had f i r s t become i n t e r e s t e d i n B r i t i s h Columbia t h r o u g h h i s work w i t h S p e r l i n g & Co., t h e London s t o c k b r o k e r s who o r i g i n a l l y f l o a t e d t h e B.C.E.R. I n 1903, th e B r i t i s h Empire T r u s t Company which had been formed a year-e a r l i e r t o c a r r y on a f i n a n c i a l b u s i n e s s and t o a c t as t r u s t e e s agents, r e g i s t r a r s and s e c r e t a r i e s f o r c o l o n i a l and o t h e r com-pan i e s took over t h e t a s k o f making f i n a n c i a l arrangements f o r th e B.C.E.R. For many years the B.C.E.R. and t h e B r i t i s h Em-p i r e T r u s t Company shared o f f i c e s on S t . N i c h o l a s Lane o f f Lombard S t r e e t . Horne-Payne a c t e d as chairman of t h e Board f o r b o t h companies and t h e r e was some o v e r l a p p i n g i n the d i r e c t o r s h i p s of the two f i r m s . Without r e f e r e n c e t o t h e r e c o r d s of t h e B r i t i s h Empire T r u s t Company or l i s t s of s h a r e -h o l d e r s of t h e B.C.E.R., i t i s i m p o s s i b l e t o determine the e x t e n t t o which the T r u s t Company i t s e l f i n v e s t e d i n the B.C.E. I f i t was t y p i c a l of i t s k i n d — and t h e r e i s no reason t o t h i n k t h a t i t was not — i t p r o b a b l y d i r e c t l y and i n d i r e c t l y p l a c e d t h e s a v i n g s of many s m a l l and medium B r i t i s h i n v e s t o r s i n t h e B.C.E.R. and o t h e r Canadian e n t e r p r i s e s i n which i t had I I ' an i n t e r e s t . T h i s c l o s e r e l a t i o n s h i p w i t h the B r i t i s h Empire T r u s t Company gave the B.C.E.R. en t r e e t o B r i t i s h markets; i t d i d n o t , however, guarantee a s t e a d y and u n l i m i t e d f l o w of B r i t i s h c a p i t a l t o B r i t i s h Columbia." 11 These i n c l u d e d the Canadian N o r t h e r n Railways and i t s man} a s s o c i a t e d companies, the Winnipeg E l e c t r i c R a i l w a y and the Canadian Western N a t u r a l Gas, L i g h t , Heat and Power Company of C a l g a r y . 11 R a i s i n g i t s c a p i t a l i n England, t h e B.C.E.R- was not unique among companies o p e r a t i n g i n Canada a t t h e t i m e . Most B r i t i s h i n v e s t o r s i n Canada, however, p e r m i t t e d Canadians t o manage t h e i r b u s i n e s s e s t h e m s e l v e s . J-£l What was u n u s u a l about the B.C.E.R. was t h e c l o s e c o n t r o l which the Board of D i r e c t o r s , and p a r t i c u l a r l y Horne-Payne, e x e r c i s e d over the company. As the company developed and p r o s p e r e d , t h e Board gave t h e l o c a l management g r e a t e r freedom of a c t i o n i n making d e c i s i o n s on r o u t i n e m a t t e r s but no major d e c i s i o n was ever made w i t h o u t l e n g t h y d i s c u s s i o n s by c a b l e and l e t t e r between t h e management i n Vancouver and t h e Board i n London. The manager i n Van-couver was o n l y an o f f i c i a l of the company. His task, was t o i n t e r p r e t the needs of B r i t i s h Columbia t o the d i r e c t o r s as b e s t he c o u l d and t o execute t h e d e c i s i o n s of the London Board. U n l i k e t h e d i r e c t o r s o f modern c o r p o r a t i o n s who are o f t e n t h e t o o l s of management, th e management of t h e B.C.E.R. was v e r y much th e s e r v a n t of the d i r e c t o r s . When the B.C.E.R. was o r g a n i z e d i n 1897, t h e d i r e c t o r s r e t a i n e d F.S. Barnard as managing d i r e c t o r . Barnard found i t 12 C P . Howland, " I n t r o d u c t i o n , " t o H e r b e r t F e i s , Europe; the WorId's Banker, 187 0-1914, New Haven, Y a l e U n i v e r s i t y P r e s s , 1930, p. i x ; see a l s o C l a r k C. Spence, B r i t i s h Investments and the American M i n i n g F r o n t i e r , 1860-1901, I t h a c a , C o r n e l l U n i -v e r s i t y P r e s s , 1958, pp. 92-93; F.W. F i e l d , C a p i t a l Investments. i n Canada, M o n t r e a l , Monetary Times of Canada, 1911, p.22 53 d i f f i c u l t t o be me r e l y a manager. Wit h o u t the s a n c t i o n of the Board, he i n c o r p o r a t e d t h e Vancouver Power Company and spent money on c a p i t a l account b e f o r e t h e Board a p p r o p r i a t e d t h e s e sums."'-3 W i t h i n a y e a r , Barnard "arranged t o r e s i g n " h i s mana-g e r i a l p o s t . He c o n t i n u e d t o se r v e on t h e Board b u t , as h i s u s u a l r e s i d e n c e was V i c t o r i a , he d i d not a t t e n d t h e Board meet-i n g s which were h e l d i n London. Barnard's s u c c e s s o r as manager was Johannes Buntzen, a Dane who had m i g r a t e d t o Vancouver i n 1890 and who had become bookkeeper of the V.E.R. & L. Company and l a t e r , business. manager o f t h e C o n s o l i d a t e d R a i l w a y and L i g h t i n g Company. 14 Though graced w i t h the t i t l e , "manager," Buntzen had l i t t l e more than the a u t h o r i t y of a s u p e r v i s o r . Indeed, t h e d i r e c t o r s wished t o d e s i g n a t e him "General S u p e r i n t e n d e n t , " a t i t l e which he r e j e c t e d on the grounds t h a t i n N o r t h American usage such a 15 name i m p l i e d an e x p e r t e l e c t r i c i a n . 13 A.Eo Knos t o Buntzen, May 25, 1898, Box 687; Hiram W i l l i a m s t o B a r n a r d , November 24, 1897, Box 687; Minutes of the Board of D i r e c t o r s , F e b r u a r y 21, 1898, Box 687. 14 F.R. G l o v e r , "Mr. J . Buntzen," B.C.E.E.M., v o l . V (November 1922), pp. 4-5. Buntzen's s a l a r y i s i n d i c a t i v e of the company's a p p r e c i a t i o n of h i s s e r v i c e s . In 1898 i t v/as- r a i s e d from $200 t o $250 per month. L a t e r , i t was r a i s e d t o $5,000 per year and on A p r i l 1, 1902 t o $6,000 o From time t o time Buntzen r e c e i v e d a d d i t i o n a l bonuses. In 1898 he was g i v e n 75 shares of f u l l y p aid-up shares v a l u e d at L10 each. In 1903 he had a s i x months' h o l i d a y and was g i v e n $2,000 ' f o r t r a v e l expenses. For compar-a t i v e purposes, i n 1904, motormen and conductors earned 20-27 9 per hour. 15 Buntzen t o F r a n c i s W i l l i a m s , J a n u a r y 27, 1898, GLB, #1. 54 Throughout t h i s e a r l y p e r i o d , the o r g a n i z a t i o n of the company i n B r i t i s h Columbia was uncomplicated,. Buntzen a c t e d as g e n e r a l manager over a l l o p e r a t i o n s i n B r i t i s h Columbia w i t h 16 A.T. Goward as l o c a l manager i n V i c t o r i a and a s u c c e s s i o n of l o c a l managers i n New Westrainster. Under th e managers v/ere v a r i o u s s u p e r i n t e n d e n t s and o p e r a t i n g p e r s o n n e l . The c a r e e r of one o f t h e f i r s t s u p e r i n t e n d e n t s i l l u s t r a t e s t h e c l o s e c o n n e c t i o n which the company maintained, w i t h i t s Board. R.H. S p e r l i n g , t h e son of R.K. S p e r l i n g , a d i r e c t o r , was an e l e c t r i c a l e n g i n e e r by p r o f e s s i o n . He came t o B r i t i s h Columbia v/ith Horne-Payne i n 1896, remained t o work f o r the CoR. & L. Company and became the B.C.E.R. 's f i r s t superintend--ent i n V i c t o r i a . In 1902 S p e r l i n g moved t o Vancouver as c h i e f e n g i n e e r and g e n e r a l s u p e r i n t e n d e n t . On B u n t z e n 1 s r e t i r e m e n t i n 1905, he became g e n e r a l manager, a p o s i t i o n he a b l y h e l d u n t i l h i s r e t u r n t o England' i n 1914. S p e r l i n g p r o b a b l y got h i s f i r s t j o b w i t h the company because of h i s f a m i l y c o n n e c t i o n s he rose t o the g e n e r a l managership on h i s own m e r i t s . The d i r e c t o r s would not s a c r i f i c e the s a f e t y of the investment i n order t o p r a c t i c e nepotism. 16 Goward, of Welsh b i r t h , began as a j u n i o r o i l e r i n the Rock Bay steam p l a n t i n 1890 and s e r v e d b r i e f l y as a conductor w i t h the N.E.T. & L. Company, He r e t i r e d i n 1945 as v i c e - p r e s i -dent of the B.C.E.R. a f t e r h a v i n g spent h i s e n t i r e c a r e e r w i t h the company i n V i c t o r i a . In London, th e company op e r a t e d from a s m a l l o f f i c e w i t h a s e c r e t a r y as the c h i e f employee. The main f u n c t i o n of t h e s e c r e t a r y , who was an o f f i c e r o f t h e company, was t o t r a n s m i t i n f o r m a t i o n from E r i t i s h Columbia t o the Board and v i c e v e r s a . As he was i n an e x c e l l e n t p o s i t i o n t o g a i n an o v e r a l l view of t h e company, t h e s e c r e t a r y ' s p o s i t i o n was used as a t r a i n i n g ground f o r management. F r a n c i s Hope, who a c t e d as s e c r e t a r y from 1898 t o 1905, moved t o Vancouver as a s s i s t a n t g e n e r a l manager. L a t e r , George K i d d , a c h a r t e r e d accountant, s e r v e d t h r e e years as s e c r e t a r y - b e f o r e moving t o Vancouver as a s s i s t -ant g e n e r a l manager t o r e p l a c e Hope who r e t u r n e d t o England because of poor, h e a l t h . Buntzen and h i s s u c c e s s o r s k e p t the Board w e l l - i n f o r m e d o f o p e r a t i o n s i n B r i t i s h Columbia. R o u t i n e l y , t h e y s u b m i t t e d weekly r e p o r t s on s t r e e t r a i l w a y t r a f f i c r e c e i p t s , monthly r e -p o r t s on t h e number of l i g h t i n g and power c o n n e c t i o n s and f r e -quent r e p o r t s on a c c i d e n t s and matters of g e n e r a l i n t e r e s t t o t h e company. These r e p o r t s were not merely f i l e d i n London: the chairman of t h e Board read e v e r y l e t t e r the company r e -c e i v e d i n London and spent some time each morning on the B.C.E.R. a f f a i r s b e f o r e a t t e n d i n g t o h i s o t h e r b u s i n e s s i n t e r e s t s . Because of t h e i r r e s p o n s i b i l i t y f o r the company's c a p i t a l , the Board i n s i s t e d on a u t h o r i z i n g a l l but v e r y r o u t i n e o p e r a t i n g e x p e n d i t u r e s and expected t o be informed of c u r r e n t o p e r a t i n g 56 c o s t s . The Board, however, d i d not always keep Buntzen w e l l -informed of developments a f f e c t i n g the company. He d i d not always r e c e i v e r e p o r t s of t h e company's annual meeting. Ex-cept f o r the Canadian s h a r e h o l d e r s whose d i v i d e n d s were p a i d t h r o u g h h i s o f f i c e , he knew o n l y ' v a g u e l y t h a t "the Company's p r o p e r t y i s owned by a l a r g e number of p e o p l e o f d i f f e r e n t ranks i n l i f e a t home and i n B r i t i s h Columbia. Many of whom are en-17 t i r e l y dependent on t h e x r i nvestments f o r t h e i r income...." O r d i n a r y communications were v i a l e t t e r which took about two weeks each way. Cables were used w i t h i n c r e a s i n g f requency as the company grew, m a i n l y t o send monthly r e p o r t s t o London. L e t t e r s were used m a i n l y f o r matters of f i n a n c e and a p p r o p r i a -t i o n s . Buntzen, however, o b j e c t e d t h a t a p p r o p r i a t i o n s were as im p o r t a n t as o p e r a t i n g r e s u l t s and persuaded the Board t o use the c a b l e more o f t e n . The a v a i l a b i l i t y of r a p i d communication b y c a b l e s t r e n g t h e n e d t h e c o n t r o l of the d i r e c t o r s over day t o day d e c i s i o n s as w e l l as over l o n g term p o l i c i e s . U n f o r t u n a t e l y , n e i t h e r l e t t e r s nor c a b l e s c o u l d convey t o t h e Board the r a p i d growth of B r i t i s h Columbia at t h e t u r n of the c e n t u r y . On s e v e r a l o c c a s i o n s , Buntzen asked f o r the e s t -a b l i s h m e n t of a l o c a l a d v i s o r y committee t o a s s i s t him i n making 17 Buntzen t o Hope, August 9, 1901, LFGM, 1901; Hope t o Buntzen, February 9, 1900, Box 688. 57 recommendations t o t h e Board,. 'This r e q u e s t , t h e Board d e n i e d , c l a i m i n g t h a t t h e r e was "a v e r y s t r o n g f e e l i n g " among B r i t i s h i n v e s t o r s i n f a v o u r of d i r e c t management through an E n g l i s h 18 Board o f Directors„ Buntzen a l s o suggested t h a t the s a l e of some shares i n t h e p r o v i n c e would pay handsome rewards i n g o o d w i l l : The very .nature of our b u s i n e s s compels us t o a p p e a l t o t h e g e n e r a l p u b l i c f o r s u p p o r t , and i t i s a b s o l u t e l y n e c e s s a r y f o r us t o be on good terms w i t h t h e p u b l i c . . . /but"/7. . .the Company i s c o n s i d e r e d an o u t s i d e r , a l l i t s money goes t o England. Of c o u r s e , you cannot e x p l a i n t o everybody, t h a t a l l t h e p r o f i t s and even more, a r e expended on t h i s s i d e of the A t l a n t i c , t h e c r y of " M o n o p o l i s t s , " and " E n g l i s h Bondholders" i s always i n t h e a i r and you have no s h a r e h o l d e r s or i n v e s t o r s 19 p r e s e n t t o ta.ke the Company's p a r t . Buntzen p r o b a b l y exaggerated the e x t e n t of the a g i t a t i o n a g a i n s t t h e company's E n g l i s h ownership. N e v e r t h e l e s s , Horne-Payne r e -l u c t a n t l y s e t a s i d e fc20,000 of a £.120,000 i s s u e of P r e f e r r e d O r d i n a r y Stock t o be u n d e r w r i t t e n i n B r i t i s h Columbia and s e n t s i x hundred c o p i e s o f t h e p r o s p e c t u s t o the p r o v i n c e . The i s s u e was a d v e r t i s e d l o c a l l y and the p r o s p e c t u s c i r c u l a t e d . Only hi,810 of shares were taken up i n B r i t i s h Columbia and, of t h e s e , fcl,190 were purchased by company o f f i c i a l s . Buntzen's hope of 18 Buntzen t o Hope, February 24, 1900, GLB, #5,- Horne-Payne t o Buntzen, January 10, 1900, Box 7 3; Buntzen t o Hope, Sept-ember 14, 1898, LFGM, 1898; Buntzen t o Norton, F e b r u a r y 5, 1904, Box 73; Buntzen t o Norton, A p r i l 27," 1904, Box 73. 19 Buntzen t o Horne-Payne, May 17, 1898, Box 73. 58 h a v i n g many l o c a l s h a r e h o l d e r s t o l e n d hirn moral s u p p o r t i n n e g o t i a t i o n s w i t h the c i t y and the p r o v i n c i a l government f a i l e d . The i s s u e had been s o l d at a twenty per cen t premium, t h a t i s , a &10 share c o s t i l l , and E n g l i s h income t a x had t o be p a i d on d i v i d e n d s s i n c e t h e company was r e g i s t e r e d i n England. In 1900 t h e B.C.E.R. arranged t o have i t s shares quoted on the Tor o n t o and M o n t r e a l Stock Exchanges. The problem of E n g l i s h income t a x e s and l o s s e s on c u r r e n c y exchange, however, made B.C.E.R. shares u n a t t r a c t i v e t o Canadian i n v e s t o r s . T h e B.C.E.R. had made a token g e s t u r e t o get l o c a l s h a r e h o l d e r s ; I t con-t i n u e d t o be a B r i t i s h company o p e r a t i n g i n B r i t i s h Columbia w i t h i t s l o c a l manager a c t i n g o n l y as the agent of t h e d i -r e c t o r s i n England. i i i Between 1898 and 1901 w h i l e Vancouver and V i c t o r i a were r a p i d l y r e c o v e r i n g from the doldrums of the m i d - n i n e t i e s , t h e s u p p l y of c a p i t a l i n the London money markets was l i m i t e d . The U n i t e d Kingdom i t s e l f "was e x p e r i e n c i n g an investment boom on a s c a l e t h a t p r o v i d e d ample domestic o p p o r t u n i t i e s f o r c a p i t a l 20 Horne-Payne t o Buntzen, September 28, 1898, Box 687; Hope t o Buntzen, May 6, 1899, Box 683; Barnard t o Buntzen, November 3, 1898, Box 47 0; Buntzen t o Horne-Payne, February 11, 1903, Box 73; V i c t o r i a C o l o n i s t , November 17, 1898, pp.2, 5. Horne-Payne a l s o f e a r e d t h a t shares might get i n t o the hands of c r e d i t o r s of the pr e d e c e s s o r companies who had i n t e r e s t s c o n t r a r y t o those of the o r d i n a r y s h a r e h o l d e r s . (Horne-Payne to Buntzen, August 13, 1898, Box 667). M o n t r e a l and Toronto i n t e r e s t s took up L3,660 worth of s h a r e s . (Hope t o Buntzen,May .6,1899,Box 688) 59 and l a b o u r . " " About: t h i s t i m e , a s e r i e s of i n t e r n a t i o n a l and i m p e r i a l c r i s e s : t h e Spanish-American War, t h e Anglo-Boer War, t h e Russo-Japanese War and rumours of wars w i t h France and i n C h i n a , p e r i o d i c a l l y a f f e c t e d c a p i t a l markets. P r o s -p e r i t y i n B r i t i s h Columbia and t i g h t money i n London caused a s e r i e s o f disagreements between Buntzen and the Board. These d i f f e r e n c e s i l l u s t r a t e t h e d i f f i c u l t y of a d m i n i s t r a t i o n , by remote c o n t r o l . The immediate f i n a n c i a l needs of the B.C.E.R. were g r e a t . The p r e d e c e s s o r companies had n e i t h e r m a i n t a i n e d t h e s t r e e t r a i l w a y and l i g h t i n g systems i n f i r s t c l a s s c o n d i t i o n nor i n s t a l l e d t h e newest and most e f f i c i e n t equipment. Indeed, so poor was some of the t r a c k and road-bed t h a t r e s i d e n t s of some p a r t s of Vancouver complained t h a t t h e y had t o move be-cause of the v i b r a t i o n s caused by the s t r e e t c a r s . The compan had t o make l a r g e e x p e n d i t u r e s on new road-beds and on r o l l i n g s t o c k as w e l l as on the development o f t h e Goldstream power p l a n t , and on a d d i t i o n a l l i g h t i n g c a p a c i t y i n Vancouver. In A p r i l , 1898, the c a p i t a l funds of t h e company were exhausted. The p r o s p e c t s of r a i s i n g more money were u n c e r t a i n . By summer, a s u c c e s s f u l s t o c k i s s u e seemed l i k e l y , but w i t h o u t cash i n hand the Board approved few c a p i t a l e x p e n d i t u r e s and even p l a c e d management i n the p o s i t i o n of h a v i n g t o v i o l a t e 21 Kenneth B u c k l e y , C a p i t a I Formation i n Canada, 1896-1930, T o r o n t o , U n i v e r s i t y of Toronto P r e s s , 1955, p. 5. 60 i n s t r u c t i o n s by p a y i n g f o r c a p i t a l e x p e n d i t u r e s from c u r r e n t e a r n i n g s which were supposed t o be r e s e r v e d t o meet i n t e r e s t 2? and d i v i d e n d payments. For Buntzen, the i n c r e a s i n g demand f o r s e r v i c e , p a r t i c u -l a r l y f o r e l e c t r i c l i g h t i n g i n Vancouver, made the s i t u a t i o n - d e sperate. As e a r l y as- January 1898 he had r e p o r t e d t h a t t h e demand f o r l i g h t i n Vancouver would soon exceed the s u p p l y . The Board gave him no c o m f o r t . F i n a l l y , i n November 1898, he wrote t o t h e d i r e c t o r s , d e s c r i b e d Vancouver's r a p i d growth and e x p l a i n e d t h a t l a c k o f power had f o r c e d t h e e x t i n c t i o n of s t r e e t l i g h t s on f o u r o c c a s i o n s and produced a poor q u a l i t y i n c a n d e s c e n t l i g h t f o r commercial and i n d u s t r i a l use. He warned: People w i l l not s t a n d any l o n g e r , dark and d i s m a l s t r e e t s , or s t o r e s where the lamps are l i t t l e b e t t e r than c a n d l e s . I know i t may be s a i d t h a t t h e Company cannot e r e c t a new S t a t i o n w i t h o u t the n e c e s s a r y funds, but i n t h a t case one of two t h i n g s must o c c u r ; e i t h e r the money must be borrowed f o r t h e purpose, or t h e Company must be c o n t e n t t o accept competition„23 22 B.C.E.R,, Chairman's R e p o r t , F e b r u a r y 1902, p.5; Hope t o Buntzen, A p r i l 27, 1898, Box 687; Minutes of the Board of D i r e c t o r s , October 28, 1898, Box 687. The g r o s s l y exaggerated r e p o r t s of t h e New Westminster f i r e , September 10, 1898, which reached London t e m p o r a r i l y i n -t e r f e r e d w i t h the B.C.E.R.'s u s u a l a b i l i t y t o borrow s h o r t term funds from London banks. (Horne-Payne t o Buntzen, Sept-ember 14, 1898, Box 6 8 7 ) . 23 Buntzen t o Hope, November 1, 1898, GLB # 1 . 61 The problem was so p r e s s i n g t h a t Buntzen spent $6,500 f o r a new b o i l e r and i n c a n d e s c e n t dynamo w i t h o u t w a i t i n g f o r t h e u s u a l a p p r o v a l of a p p r o p r i a t i o n s by the Board. F o r t u n a t e l y , t h e Board had j u s t succeeded i n i s s u i n g £120,000 of P r e f e r r e d O r d i n a r y Stock and was a b l e t o cover the e x p e n d i t u r e . I n s p i t e o f the a p p a r e n t l y i m p r o v i n g f i n a n c i a l p i c t u r e , t h e Board c o n t i n u e d t o f o l l o w a c o n s e r v a t i v e p o l i c y . A sum of $94,000 was a l l o t t e d f o r new e x p e n d i t u r e s , p a r t i c u l a r l y improvements i n t h e l i g h t i n g systems i n Vancouver and V i c t o r i a , but $122,240 of e a r l i e r a p p r o p r i a t i o n s , m a i n l y f o r t h e r e -b u i l d i n g of s t r e e t r a i l w a y t r a c k s and the e x t e n s i o n of the New Westminster c a r l i n e t o Sapperton were c a n c e l l e d . A l -though a gross p r o f i t of £30,189 seemed t o j u s t i f y a l a r g e r d i v i d e n d than 4% on o r d i n a r y s h a r e s , the s u r p l u s was t r a n s -f e r r e d t o r e s e r v e s . D e s p i t e t h i s c a r e f u l husbanding of r e -sources , the Board was a g a i n " e n t i r e l y w i t h o u t funds f o r ex-p e n d i t u r e . " Once more Buntzen made h i s p l a i n t i v e c r y of the need t o i n c r e a s e the power s u p p l y i n Vancouver and t o double t r a c k the c a r l i n e s . He r e p e a t e d h i s warning, "these t h i n g s are a b s o l u t e l y n e c e s s a r y , and i f we cannot do them, o t h e r s w i l l come forwa r d who c a n . " 2 4 24 Minutes of the Board of D i r e c t o r s , May 5, 1899, Box 688; Hope t o Buntzen, October 19, 1899, Box 688; Buntzen t o Hope, November 13, 1899, LFGM, 1899. 62 H o r n e - P a y n e c o u l d n o t o f f e r a d d i t i o n a l f u n d s . I n d e e d , he s u g g e s t e d t h a t b e c a u s e o f t h e A n g l o - B o e r War, t h e money m a r k e t s were s o t i g h t t h a t t h e Company had t o " l o o k t o V a n c o u v e r w i t h t h e a s s i s t a n c e o f t h e I m p e r i a l Bank t o s u p p l y us w i t h money f o r t h e d i v i d e n d s on D e b e n t u r e s and P r e f e r e n c e and O r d i n a r y S h a r e s . " A l t h o u g h i t was n o t e s s e n t i a l t o do s o , t h e B o a r d was a n x i o u s t o p a y d i v i d e n d s on i t s o r d i n a r y s h a r e s . By p a y i n g o r d i n a r y d i v i d e n d s f o r t h r e e c o n s e c u t i v e y e a r s , t h e Company c o u l d make i t s p r e f e r e n c e s h a r e s e l i g i b l e as t r u s t i n v e s t m e n t s u n d e r E n g l i s h l a w . I n t h e m e a n t i m e , t h e o n l y c o n s o l a t i o n H o r n e - P a y n e o f f e r e d t o h i s manager was t h e o b s e r v a t i o n t h a t c a p i t a l w o u l d be e q u a l l y u n a v a i l a b l e t o any p o s s i b l e r i v a l . B u n t z e n r e i t e r a t e d t h e n eed f o r more f u n d s . He a s k e d f o r a c l e a r - c u t p o l i c y s t a t e m e n t : A r e we t o f o l l o w up t h e g r o w t h o f B r i t i s h C o l u m b i a c i t i e s and e x t e n d o u r l i g h t i n g s y s t e m as t h e c i t y e x t e n d s and r u n new c a r s e r v i c e where s u c h s e r v i c e , i n o u r judgment h e r e , i s r e q u i r e d ? Or w i l l t h e Company be s a t i s f i e d t o ' d o t h e b u s i n e s s t h e y a r e now d o i n g and l e a v e i t t o o t h e r s t o t a k e up t h e hew b u s i n e s s w i t h t h e k n o w l e d g e t h a t any new company c o m i n g i n w i l l n o t be s a t i s f i e d w i t h s u c h new g r o u n d o n l y , b u t w i l l a l s o c u t i n t o o u r p r e s e n t b u s i n e s s as s o o n as t h e y h a v e a f i r m f o o t i n g i n t h e C i t y . The B o a r d was w i l l i n g t o r i s k t h e p & s s i b l i t y o f c o m p e t i t i o n . T hey i n f o r m e d B u n t z e n t h a t once t h e I m p e r i a l Bank l o a n o f 25 H o r n e - P a y n e t o B u n t z e n , J a n u a r y 10, 1 9 0 0 , Box 7 3 . 63 $75,000 was e x p e n d e d , and u n t i l a new p r e f e r e n c e i s s u e c o u l d be s u c c e s s f u l l y f l o a t e d , "no m a t t e r how much o r how p r o f i t a b l e b u s i n e s s may be o f f e r e d y o u , i f i t i n v o l v e s f u r -t h e r c a p i t a l o u t l a y i t must be r e f u s e d . . . / i p e c a u s e / . . . t h e B o a r d p r e f e r r u n n i n g a l l t h e r i s k s o f c o m p e t i t i o n . . . . t o t h e r i s k s t h e y w o u l d r u n b y b o r r o w i n g money on c a p i t a l a c c o u n t r e p a y a b l e a t f i x e d d a t e s . " P r i v a t e l y , H o r n e - P a y n e a d v i s e d t h a t , " f l o a t i n g d e b t i s t h e g r e a t enemy o f J o i n t Stock, e n t e r p r i s e and h a s b r o u g h t more good c o n c e r n s t o b a n k r u p t c y t h a n any 26 o t h e r c a u s e . " B u n t z e n now h a d a c l e a r - c u t p o l i c y s t a t e -ment: t h e B o a r d d i d n o t want t o e x p e r i e n c e t h e f i n a n c i a l a g o n i e s o f t h e i r p r e d e c e s s o r s , t h e y w o u l d f o l l o w a p r u d e n t c o u r s e . B u n t z e n w o u l d h a v e t o do l i k e w i s e . The d i r e c t o r s were p r e p a r e d t o i g n o r e p u b l i c p r e s s u r e f o r i m p r o v e d s e r -v i c e u n t i l t h e w h o l e f i n a n c i a l p i c t u r e was more f a v o u r a b l e . The r i s k , h o w e v e r , was n o t t h a t g r e a t . The B o a r d knew t h a t any p o t e n t i a l r i v a l , p r i v a t e o r p u b l i c , w o u l d a l s o h a v e g r e a t d i f f i c u l t y i n r a i s i n g f u n d s . The B o a r d s y m p a t h i z e d w i t h B u n t z e n ' s c o n t i n u a l c a l l s f o r more c a p i t a l f o r n e c e s s a r y e x p a n s i o n ; t h e y s i m p l y d i d n o t a l w a y s h a v e t h e f u n d s a v a i l a b l e t o meet h i s r e q u i r e m e n t s . 26 B u n t z e n t o Hope, F e b r u a r y 24, 1900, GLB, #5; Hope t o B u n t z e n , M a r c h 2 0 , 1 9 0 0 , Box 688; H o r n e - P a y n e t o B u n t z e n , M a r c h 2 1 , 1 9 0 0 , Box 7 3 . 64 The company s u c c e s s f u l l y i s s u e d £ 6 4 , 0 0 0 v/orth o f P r e f e r r e d O r d i n a r y s t o c k i n 1901 b u t , a f t e r a l l o w i n g f o r t h e payment o f e x i s t i n g d e b t s , d i v i d e n d s and r e s e r v e s , l e s s t h a n a q u a r -t e r was a v a i l a b l e f o r new e x p e n d i t u r e s . And t h e d i r e c t o r s d i d n o t e x p e c t t o be a b l e t o i s s u e a d d i t i o n a l p r e f e r e n c e c a p i t a l f o r two y e a r s . T h e y warned s h a r e h o l d e r s o f t h e p o s -s i b i l i t y o f h a v i n g t o s e t a s i d e a l a r g e p o r t i o n o f e a r n i n g s t o meet e x p e n d i t u r e s . Two y e a r s l a t e r , t h e s h a r e h o l d e r s a u t h o r i z e d t h e B o a r d t o i s s u e an a d d i t i o n a l £ 2 2 0 , 0 0 0 w o r t h o f d e b e n t u r e s t o p u r c h a s e s h a r e s i n t h e V a n c o u v e r Power Com-p a n y " o r i n any manner t h e d i r e c t o r s may c o n s i d e r c o n d u c i v e f o r t h e p r o s p e r i t y o f t h e company." T h i s i n c r e a s e i n c a p i -t a l i z a t i o n , hov/ever, p r o v i d e d f u n d s f o r a s p e c i f i c m a j o r p r o -j e c t , t h e d e v e l o p m e n t o f C o q u i t l a m w a t e r p o w e r , To s u p p l y f u n d s f o r o r d i n a r y n e e d s , t h e company i s s u e d £7 5,000 w o r t h o f 5% C u m u l a t i v e P e r p e t u a l P r e f e r e n c e S t o c k . A g a i n , l e s s t h a n h a l f was a v a i l a b l e f o r c a p i t a l e x p e n d i t u r e . The s h o r t -age o f c a p i t a l a l s o meant t h a t t h e o r d i n a r y d i v i d e n d f o r t h e f i f t e e n months had t o be p a i d i n s t o c k r a t h e r t h a n i n c a s h and t h a t a s u b s t a n t i a l p a r t o f new a p p r o p r i a t i o n s . h a d t o 27 be met f r o m c u r r e n t e a r n i n g s . 27 Hope t o B u n t z e n , A u g u s t 7, 1 9 0 1 , Box 689; H o r n e - P a y n e t o B u n t z e n , J a n u a r y 1 7 , 1 9 0 3 , Box 73; Hope t o B u n t z e n , J a n u a r y 23 1 9 0 3 , Box 690; B . C . R e v i e w , v o l . 8 (August 1 7 , 1 9 0 1 ) , p . 3 9 5 ; v o l . 1 1 (September 13 ,1902) ,p. 139,- v o l . 11 ( O c t o b e r 4 ,1902) ,p. 177 . D u r i n g 1901-1902 t h e f i s c a l y e a r was c h a n g e d t o c o n f o r m w i t h C a n a d i a n g o v e r n m e n t r e q u i r e m e n t s f o r a n n u a l r e t u r n s . As p a r t o f t h e t r a n s i t i o n f r o m one y e a r end d a t e t o a n o t h e r , t h e B.C.E.R, had a f i f t e e n month y e a r . D u r i n g n o s t o f 1903 and p a r t of 1904 t n e London c a p i t a l market c o n t i n u e d t o be d i f f i c u l t ; even t h e Canadian government and t h e Canadian N o r t h e r n and Grand Trunk R a i l w a y s had d i f f i -c u l t y i n g e t t i n g l o a n s . The B.C.E.R. d i d not make a planned i s s u e o f L50,000 p r e f e r e n c e shares which would have eased t h e company's "v e r y t i g h t p o s i t i o n as r e g a r d s money." So s e r i o u s v/as the c a p i t a l s i t u a t i o n t h a t the d i r e c t o r s had t o r e s o r t t o b o r r o w i n g Ll00,000 on the b a s i s of two year p r o m i s s o r y notes 2 8 b e a r i n g 6% i n t e r e s t . The d i r e c t o r s a d v i s e d Buntzen t h a t i n s p i t e of h i s " s p l e n d i d r e t u r n s " he would have t o c u t down as f a r as pos-s i b l e on e x i s t i n g a p p r o p r i a t i o n s and on f u r t h e r c a p i t a l ex-p e n d i t u r e s . T h i s meant s h e l v i n g a proposed one and a h a l f m i l e e x t e n s i o n of the s t r e e t r a i l w a y l i n e t hrough a r a p i d l y d e v e l o p i n g r e s i d e n t i a l a r ea of Vancouver t o t h e cemetery and c u r t a i l i n g p l a n s f o r new r o l l i n g s t o c k and machinery. The growth of Vancouver was o u t p a c i n g the company's c a p i t a l r e -sources . Because of the Board's i n a b i l i t y t o keep up w i t h the 'needs of Vancouver, disagreements p e r i o d i c a l l y developed be-28 Norton t o Buntzen, March 16, 1904, Box 73; C l i f f o r d S i f t o n t o W i l f r i d L a u r i e r , October 10, 1903, L a u r i e r papers, No. 77742 ( M i c r o f i l m i n the L i b r a r y of the U n i v e r s i t y of B r i t i s h Columbia); Hope t o Buntzen, February 12, 1904, Box 691; Hope t o Buntzen, January 20, 1904, Box 73; B.C.E.R.Annual Report and Balance Sheet, 1904 and 1905. The B.C.E.R. p a i d 4%% on i t s debentures. 66 tween t h e Board and Buntzen. The. manager complained t h a t "the Board, w i t h o u t l o c a l knowledge, and w i t h o u t b e i n g i n t o u c h w i t h B r i t i s h Columbia p e o p l e , cannot p o s s i b l y form an independent o p i n i o n of our b u s i n e s s h e r e . With the Board i t must be a case of f u l l t r u s t i n t h e i r l o c a l o f f i c i a l s , or e l s e r e p l a c i n g t h e s e o f f i c i a l s . . . . " T h i s was not t h e f i r s t o c c a s i o n on which Buntzen had t h r e a t e n e d t o r e s i g n i f the Board d i d not p r o v i d e more c a p i t a l . He a l s o r e p e a t e d h i s r e q u e s t s f o r t h e appointment o f a l o c a l a d v i s o r y committee and f o r a v i s i t of t h e d i r e c t o r s t o B r i t i s h Columbia. Three years e a r l i e r , i n 1901, Horne-Payne 1s v i s i t t o Vancouver and r e a l i z a t i o n of the growth of the area had eased the d i f f i c u l t r e l a t i o n s which then e x i s t e d between the Board and management. F i n a l l y , Buntzen suggested t h a t t h e r e would be no d i f f i c u l t y " i n f i n d i n g a l l t h e money we want f o r new c o n s t r u c t i o n i n Canada." I n view o f t h e f a c t t h a t t h e Canadian government, banks and r a i l w a y s were a t t e m p t i n g t o borrow money i n London, B u n t z e n 1 s i d e a of t h e Canadian c a p i t a l market seems s u r p r i s i n g l y n a i v e . ^ 9 29 Buntzen t o Hope, Feb r u a r y 3, 1904, LFGM, 1904; Buntzen t o N orton, F e b r u a r y 6, 1904, Box 73; Norton t o Buntzen, March 16, 1904, Box 73. At t h i s time Buntzen and t h e Board had another s l i g h t mis-u n d e r s t a n d i n g i n connecti.on w i t h the company's c o n t r i b u t i o n s t o p r o v i n c i a l p o l i t i c a l p a r t i e s . The d i r e c t o r s m i l d l y cen-su r e d Buntzen f o r such d o n a t i o n s . T h i s annoyed Buntzen who complained t h a t he d i s l i k e d h a v i n g "to a t t e n d t o the l o b b y i n g 67 The Board c o u l d o n l y c o u n s e l p a t i e n c e . They agreed t h a t e s s e n t i a l works must c o n t i n u e , t h e y r e c o g n i z e d t h a t the com-pany needed t o keep pace w i t h t h e growth of t h e c i t i e s , but t h e y admonished, " i f money cannot be got at a g i v e n moment, and j u s t a t a time when demands are somewhat l a r g e r than u s u a l the D i r e c t o r s f e e l t h a t a l i t t l e c a u t i o n on t h e i r p a r t i s not out of p l a c e , " F o r t u n a t e l y , f o r b o t h the Board and B u n t z e n , and w i r e p u l l i n g which i n t h i s c o u n t r y i s c o n s i d e r e d n e c e s s a r y i n o r d e r t o get a f a v o r a b l e h e a r i n g from t h e r u l i n g b o d i e s . " (Buntzen t o Hope, December 12, 1903,GMLB, 1 9 0 3 ) . To assuage Buntzen, G.P. N o r t o n , a d i r e c t o r , e x p l a i n e d t h a t t h e Board p l a c e d a b s o l u t e c o n f i d e n c e i n Buntzen's d i s c r e t i o n and h i s u n d e r s t a n d i n g "of t h e t e n o r of our f o r m a l r e p l i e s t o you through t h e S e c r e t a r y . " (Norton t o Buntzen, January 20, 1904, Box 7 3 ) . T h i s i n c i d e n t i n 1903 i s one of the two d i r e c t r e c o r d s i n t h e B.C.E.R. papers of t h e company making a p o l i t i c a l dona-t i o n . The o r i g i n a l l e t t e r (Buntzen t o Hope, October 29, 1903) e x p l a i n s the method of p o l i t i c a l d o nations and i s quoted ex-t e n s i v e l y below: When you g e t t h e September t r a n s c r i p t s you w i l l f i n d a cash payment of $1200 t o me f o r ' s p e c i a l s e r v i c e ' , one h a l f of the amount charged t o the B.C.E.R,, & the o t h e r h a l f t o the Power Co. The amount r e p r e s e n t s our c o n t r i b u t i o n t o the Campaign Funds of t h e two p a r t i e s i n the r e c e n t P r o -v i n c i a l E l e c t i o n s , $1000 t o the C o n s e r v a t i v e P a r t y t h a t won, $200 t o the L i b e r a l s who l o s t . We must be on good terms w i t h b o t h p a r t i e s . Our c o n t r i b u t i o n was the same as made by o t h e r l o c a l C o r p o r a t i o n s w i t h l a r g e i n t e r e s t s . There was no time t o submit the matter t o London, but I d i s c u s s e d , w i t h Mr. R.H. S p e r l i n g who agreed w i t h me. I may say t h a t we are a s k i n g the Government c o n s t a n t l y f o r g r e a t f a v o r s and we are g e t t i n g them. P l e a s e drop me a "per-s o n a l 8 l i n e a p p r o v i n g of the payment t h a t I may show the a u d i t o r s . The o n l y o t h e r r e c o r d i s of a $50 d o n a t i o n made by A.T.Goward t o the V i c t o r i a C o n s e r v a t i v e A s s o c i a t i o n i n 1913 on b e h a l f of the B.C.E.R. ( S p e r l i n g t o Goward, May 19, 1913, Box 7 1 4 ) . 68 t r a d e i n B r i t a i n was B e g i n n i n g to r e v i v e a f t e r the post-Boer War d e p r e s s i o n . The amount of c a p i t a l a v a i l a b l e f o r o v e r -seas investment i n c r e a s e d r a p i d l y . By t h e s p r i n g c f 1904 t h e Board was a b l e to r a i s e some funds among i t s f r i e n d s and l a r g e r s h a r e h o l d e r s . During the year i t succeeded i n i s s u -3 n i n g £140,000 worth of v a r i o u s c a t e g o r i e s of s t o c k . ~ u Money was a g a i n e a s i e r . The c a p i t a l demands of the B.C.E.R. how-ev e r , k e p t pace w i t h the c a p i t a l s u p p l y . i v D e s p i t e p e r i o d i c shortages of c a p i t a l , the B.C.E.R. i n v e s t e d $6,771,990 i n B r i t i s h Columbia between 1897 and 3] 1905, ~ W i t h t h e s e funds i t b u i l t on the work of i t s p r e -d e c e s s o r s and undertook a number of new p r o j e c t s . Old s t r e e t r a i l w a y l i n e s were improved, s e t t l e m e n t was en-couraged along the i n t e r u r b a n r o u t e , the l i g h t i n g system was extended and o l d f r a n c h i s e s were r e v i s e d . Of t h e new p r o j e c t s , t h e most important, were the development of hydro-e l e c t r i c power f a c i l i t i e s t o s e r v e Vancouver and V i c t o r i a , 30 Hope to Buntzen, March 5, 1904, Box 691; Hope t o Buntzen, A p r i l 23, 1904, Box 681; Report of Norton & S l a d e , a u d i t o r s , J u l y 9, 1917, Box 89. 31 Chairman's Address t o the Annual Meeting, 1912, Box 105-1.424. t h e purchase o f the Vancouver Gas Company and the e l e c t r i f i -c a t i o n of t h e Vancouver and L u l u I s l a n d R a i l w a y . The develop-ment of e a r l i e r endeavours, the c r e a t i o n of new ones and a g e n e r a l expansion of b u s i n e s s i n B r i t i s h Columbia made the y e a r s between 1897 and 1905 a p e r i o d of s o l i d development and l a i d t h e f o u n d a t i o n f o r f u t u r e growth. I t was i n t h e t r a n s p o r t a t i o n department t h a t t h e B.C.E.R. was c l e a r l y a b l e t o b u i l d on the work of i t s p r e d e c e s s o r s and t o p r o f i t from B r i t i s h Columbia's r a p i d growth a f t e r the K l o n d i k e boom. Vancouver's F a i r v i e w l i n e p r o v i d e s the b e s t example of t h e B.C.E.R. p r o f i t i n g from t h e e f f o r t s of i t s p r e d e c e s s o r s . I n 1898, Buntzen regarded t h i s l i n e t o "a f a r d i s t a n t suburb" as "the worst l e g a c y l e f t the Company from t h e r e a l e s t a t e s p e c u l a t i o n s of former y e a r s " and sug-g e s t e d c l o s i n g i t down. F o r t u n a t e l y , Buntzen d i d not c a r r y out h i s i d e a . W i t h i n the y e a r , Vancouver's p o p u l a t i o n began t o grow r a p i d l y . A l t h o u g h l o t s i n F a i r v i e w were s e l l i n g f o r l i t t l e more than h a l f the p r i c e l i s t e d i n 1891, t h e y were s e l l i n g . Buntzen o b t a i n e d the t i t l e t o t h e s i x t y - e i g h t l o t s which the C.P.R. had promised the V.E.R. & L. Company by a g r e e i n g t o run a twenty minute s e r v i c e between F a i r v i e w and t h e downtown a r e a . 3 2 F a i r v i e w developed q u i c k l y i n s p i t e of 32 Buntzen's Report, October 12,1897,Box 73;Buntzen t o Hope, J u l y 23 ,1898,LFGM f 1898,-Minutes of • the Board of D i r e c t o r s , F e bruary 13,1900,Box 688;Buntzen t o Houe.January 27,1900, LFGM, 1900;VDP, A p r i l 10, 1900,p.1., 70 i t s muddy s t r e e t s and "bad s i d e w a l k s . D u r i n g 1900 and the f i r s t few months o f 1901, the c i t y i s s u e d b u i l d i n g p e r m i t s f o r $164,000 worth of houses i n F a i r v i e w . The l a n d p r i c e s were r e a s o n a b l e ; t h e terms, a t t r a c t i v e t o c l e r k s and a r t i s a n s ; and assessments f o r c i t y t a x e s , low. Improving t h e F a i r v i e w s e r v i c e had r e q u i r e d some p r e c i o u s c a p i t a l ; t h e F a i r v i e w l i n e , 3 3 however, c o n t r i b u t e d handsomely t o s t r e e t r a i l w a y p r o f i t s . A second example of the B.C.E.R. b e n e f i t i n g from the work o f i t s p r e d e c e s s o r s . was the i n t e r u r b a n l i n e . P r i o r t o 1900 t h i s l i n e , which r e l i e d almost e x c l u s i v e l y on i n t e r c i t y t r a f f i c f o r b u s i n e s s , produced c o m p a r a t i v e l y l i t t l e revenue. A f t e r the t u r n o f t h e c e n t u r y , the area between New West-m i n s t e r and Vancouver came i n t o i t s own. S e t t l e r s , many of whom had come from the No r t h West T e r r i t o r i e s and Manitoba i n s e a r c h of a m i l d e r c l i m a t e , moved i n t o t h e a r e a , c l e a r e d t h e l a n d , b u i l t homes and p l a n t e d gardens and o r c h a r d s . To a t t r a c t s e t t l e r s , t he B.C.E.R. a d v e r t i s e d the area and, i n co-o p e r a t i o n w i t h r e a l e s t a t e agents who s u b d i v i d e d t h e l a n d i n t o one and. two acre p l o t s , o f f e r e d s p e c i a l inducements such 33 The B.C.E.R. l o t s s o l d f o r p r i c e s r a n g i n g from $340 t o $47 5 each depending on l o c a t i o n . The terms were l / 5 t h cash and f o u r years t o pay the bal a n c e at 6% i n t e r e s t . The B.C.E.R. a l s o o f f e r e d one year's f r e e t r a n s p o r t a t i o n t o one member of each s e t t l e r ' s f a m i l y . VDP, June 1, 1904, p . l . as " f r e e " t r a n s p o r t a t i o n and easy terms t o nev; s e t t l e r s . Even though many new s e t t l e r s e s t a b l i s h e d themselves a l o n g the Westminster Wagon road r a t h e r than along t h e tram l i n e , t h e i n t e r u r b a n f r e i g h t c a r s c a r r i e d t h e i r eggs, p o u l t r y and vege-t a b l e s t o market. By 1903, t h e B.C.E.R. put on a " S t r a w b e r r y S p e c i a l " t o handle p a r t of the f r u i t c r o p and o b t a i n e d new and l a r g e r f r e i g h t c a r s t o handle g e n e r a l f r e i g h t . Not a l l t h e s e t t l e r s were f u l l t i m e f a r m e r s . Many workingmen s e t t l e d i n t h e area t o e n j o y cheap l a n d and low t a x e s . I n 1904, t h e B.C.E.R. i n a u g u r a t e d a h a l f h o u r l y s e r v i c e and used l a r g e r c a r s on the " S e t t l e r s ' S p e c i a l s " — t h e 4:30, 5:30, and 6:30 t r a i n s . 3 4 The i n t e r u r b a n had become a v i a b l e e n t e r -p r i s e s e r v i n g b o t h t h e i n t e r c i t y t r a f f i c and t h e nev/ s e t t l e r s between the c i t i e s . W i t h i n New Westminster, t h e B.C,E,R. a l s o c o n c e n t r a t e d on d e v e l o p i n g t r a f f i c f o r an e x i s t i n g l i n e . The c i t y l i n e , completed by the Westminster S t r e e t R a i l w a y Company i n 1891, had never p a i d . I n 1900, i t s average monthly r e c e i p t s o f $420. covered o n l y s l i g h t l y more than h a l f i t s monthly opera-t i n g expenses. To p r o v i d e revenue, Buntzen proposed t o ex-34 The B.C.E.R. c o n t r i b u t e d $50 f o r a s p e c i a l w r i t e - u p on Burnaby which appeared i n The Farmers'' Advocate (Winnipeg) , January 4, 1905, pp. 22-24, Copy i n Box 519. In the case of l o t s at CollJhgwood, t h e B.C.E.R. s o l d passes t o Mahon,McFar-l a n d and Mahon,real e s t a t e agents,who then added the c o s t of t h e pass t o t h e p r i c e of t h e l a n d . 72 t e n d t h e l i n e t o S a p p e r t o n , a d i s t r i c t o f s a w m i l l s and w o r k -i n g c l a s s homes. The S a p p e r t o n l i n e , t h e c o s t o f w h i c h was e s t i m a t e d t o be $12,000 was n o t a p r e s s i n g n e c e s s i t y and. was d e l a y e d s e v e r a l t i m e s because o f s h o r t a g e s o f c a p i t a l . A f t e r t h e l i n e was opened i n 1900, i t e a r n e d a s t e a d y r e v e n u e . T h r e e y e a r s l a t e r , t h e B . C . E . R . c o n s t r u c t e d a s p e c i a l l i n e i n New W e s t m i n s t e r t o s e r v e a b r i c k y a r d n e a r Queen's P a r k . T h i s f r e i g h t s p u r p r o v i d e d an average o f two c a r s per day f o r t h e i n t e r u r b a n and t h u s c o n t r i b u t e d t o t h e g e n e r a l w e l l -b e i n g o f t h e c o m p a n y . 3 ^ I n V i c t o r i a , as i n New W e s t m i n s t e r , t h e B . C . E . R , f o l l o w e d a p o l i c y o f d e v e l o p i n g t r a f f i c f o r e x i s t i n g r o u t e s r a t h e r t h a n u n d e r t a k i n g t h e c o n s t r u c t i o n o f major new l i n e s . Though V i c t o r i a had b e n e f i t e d from t h e K l o n d i k e boom and i t s a f t e r m a t h , h e r p o p u l a t i o n grew r e l a t i v e l y more s l o w l y 36 t h a n V a n c o u v e r ' s . The younger c i t y had g r a d u a l l y t a k e n o v e r V i c t o r i a ' s r o l e as t h e l e a d i n g c o m m e r c i a l c e n t r e of t h e p r o v i n c e . I n s p i t e of h e r r e l a t i v e d e c l i n e , V i c t o r i a s t i l l r e t a i n e d many o f h e r t i e s w i t h t h e i n t e r i o r o f t h e p r o v i n c e . The p r e s e n c e o f a number o f " o l d " f a m i l i e s gave t h e c i t y an a i r o f w e a l t h . Summer t o u r i s t s , w i n t e r v i s i t o r s and t h e navy . 35 B u n t z e n t o F.R. G l o v e r (New W e s t m i n s t e r C i t y C l e r k ) , J u l y I I , 1900, GLB #6. 36 See A p p e n d i x 1. 73 a l s o p l a y e d an important r o l e i n V i c t o r i a ' s economy. Un-f o r t u n a t e l y , t h i s t r a d e was of a s e a s o n a l n a t u r e . Thus, s t r e e t r a i l w a y revenues tended t o f l u c t u a t e w i t h the weather and w i t h s p e c i a l events such as the v i s i t of a f l e e t t o E s q u i m a l t , a b a s e b a l l game at Oak Bay or a c o n c e r t i n one o f t h e p a r k s . The l o c a l manager i n V i c t o r i a , A.T. Goward, worked hard t o d e v e l o p t h i s s p e c i a l b u s i n e s s . He changed the overhead s i g n s on t h e s t r e e t c a r s t o make the r o u t e s more a t t r a c t i v e t o t o u r i s t s . The " E s q u i m a l t " c a r , f o r example, became the "Esquimalt Harbour and N a v a l Yard" c a r and t h e "oak Bay" c a r 37 v/as r e - l a b e l l e d "Oak Bay Beach." In 1905 t h e Company added an open o b s e r v a t i o n c a r t o V i c t o r i a ' s r o l l i n g s t o c k and d i s -t r i b u t e d f l y e r s a d v e r t i s i n g s i g h t s e e i n g t r i p s t o passengers a r r i v i n g at the C.P.R, dock. A unique f e a t u r e o f t h e s t r e e t r a i l w a y b u s i n e s s i n V i c -t o r i a was the tendency for.permanent r e s i d e n t s t o s e t t l e be-yond th e c i t y l i m i t s around E s q u i m a l t Road, Sa a n i c h Road and Oak Bay. T h i s t r e n d towards d i s p e r s e d s e t t l e m e n t which was p a r t i c u l a r l y e v i d e n t a f t e r 1897 b e n e f i t e d t r a f f i c r e t u r n s but was i n s u f f i c i e n t t o make i t f e a s i b l e t o r e v i v e s e r v i c e on t h e Douglas S t r e e t l i n e from B u r n s i d e t o the c i t y l i m i t s at Tolmie Avenue. Indeed, no e x t e n s i o n s were made t o t h e 13.5 37 Goward t o Buntzen, August 29, 1904, Box 483. 74 m i l e s of t r a c k the E.C-.E.R. had a c q u i r e d i n 1897 u n t i l 1905 when the Gorge E x t e n s i o n was completed. T h i s l i n e , p a r t l y s u b s i d i z e d by l a n d owners along i t s r o u t e , served a s e a s o n a l t r a d e t o t h e Gorge Park which the B.C.E.R. developed as a. p u b l i c p i c n i c s i t e . In Vancouver, which was r a p i d l y emerging as the metro-p o l i s o f t h e p r o v i n c e , t h e B.C.E.R. was s l i g h t l y more a c t i v e i n b u i l d i n g new l i n e s . Because of the sho r t a g e of c a p i t a l , hov/ever, new l i n e s were b u i l t or operated o n l y when t h e y r e -q u i r e d l i t t l e d i r e c t c a p i t a l o u t l a y . To a v e r y l i m i t e d e x t e n t , the B.C.E.R. was pr e p a r e d t o vent u r e i n t o new a r e a s . The C.P.R. v/hich owned t h e l a n d a t Greer's Beach, as K i t s i l a n o was then known, wanted t o b u i l d a r a i l w a y l i n e t o develop t h e area f o r r e c r e a t i o n a l and r e s i -d e n t i a l purposes. The C.P.R. proposed t o have the B.C.E.R. operate t h e l i n e . Buntzen was i n t e r e s t e d ; i f the C.P.R. would agree t o e r e c t the overhead w i r i n g as w e l l as l a y t h e t r a c k . Horne-Payne, who was i n Vancouver at the t i m e , r e -j e c t e d the p r o p o s a l s i n c e he d i d not b e l i e v e t h a t revenues would meet the e s t i m a t e d t e n d o l l a r s per day o p e r a t i n g ex-penses. Three years l a t e r , i n 1904, the C.P.R. o f f e r e d the B.C.E.R. twelve acres of l a n d , worth an e s t i m a t e d $30,000 i n r e t u r n f o r a d a p t i n g the l i n e f o r e l e c t r i c a l o p e r a t i o n and 7 5 38  Pt p r o v i d i n g a m i n i m a l s e r v i c e . By t h i s time t h e West End was almost c o m p l e t e l y f i l l e d ; t he K i t s i l a n o a r e a seemed t o be the next d i s t r i c t t o be opened f o r middle and h i g h c l a s s r e s i d e n t i a l use. The arrangement between t h e C.P.R. and t h e B.C.E.R. was made as p a r t of the'Vancouver and L u l u I s l a n d R a i l w a y Agreement, Both t h e e l e c t r i f i e d V. & L . I . and the K i t s i l a n o s t r e e t c a r began s e r v i c e on J u l y 4, 1905. The C.P.R. which had i n c o r p o r a t e d the V. & L . I . i n 1891 planned t o op e r a t e i t as an e l e c t r i c r a i l w a y between downtown Vancouver and the N o r t h Arm of the F r a s e r R i v e r . The d e p r e s s i o n o f t h e m i d - n i n e t i e s and some u n c e r t a i n t y as t o whether a l i n e t o L u l u I s l a n d s h o u l d be b u i l t from Van-couver or New Westminster d e l a y e d c o n s t r u c t i o n . W ith t h e dr a m a t i c r e v i v a l i n t h e l o c a l economy i n t h e l a t e n i n e t i e s , the C.P.R. renewed i t s p l a n s and completed surveys which i n -d i c a t e d i t would be cheaper t o b u i l d t o L u l u I s l a n d from Van-couver r a t h e r than from New Westminster. The C.P.R. then suggested t h a t t h e B.C.E.R. l e a s e and operate the l i n e . Buntzen was d o u b t f u l ; t h e t r a f f i c might be remunerative o n l y d u r i n g the salmon canning season and t h e V. & L . I . might draw t r a f f i c away from the i n t e r u r b a n l i n e t h r ough Burnaby. There-f o r e he d i d not pursue the m a t t e r . In 1900, a f t e r t h e C.P.R. 38 Buntzen t o Hope, J u l y 23, 1898, LFGM, 1898? Buntzen t o Hope, March 10, 1904, GMLB, 1904. 76 had s t a r t e d c o n s t r u c t i o n , H a rry A b b o t t , the p r e s i d e n t of the V. & L . I . , again suggested t h a t the B.C.E.R. s h o u l d operate th e l i n e . Buntzen s u b m i t t e d a p r o p o s i t i o n t o the C.P.R. sub-j e c t t o the a p p r o v a l of the B.C.E.R.'s Board. The m a t t e r , however, seems t o have been dropped u n t i l December 1901 when Buntzen suggested resuming n e g o t i a t i o n s . The c o m p l e t i o n of the Lake Buntzen water power p r o j e c t would p r o v i d e the B.C.E.R. w i t h a s u r p l u s o f power which c o u l d be used t o e l e c t r i f y t h e V. & L . I . The C.P.R., however, d e c i d e d t o use steam power when i t began s e r v i c e on the V. & L . I . on J u l y 14, 1902. The B.C.E.R. and the C.P.R, d i d not resume n e g o t i a t i o n s u n t i l l a t e i n 1904. Buntzen was anxious t o l e a s e and e l e c t r i f y the l i n e which ran from the south end of the G r a n v i l l e S t r e e t b r i d g e at F a l s e Creek t o the s a w m i l l i n g c e n t r e o f Eburne (Marpole) and a c r o s s t h e N o r t h Arm of the F r a s e r R i v e r through the r i c h a g r i -c u l t u r a l l a n d of L u l u I s l a n d t o t h e f i s h i n g and canning c e n t r e of S t e v e s t o n a t the mouth of the F r a s e r R i v e r . Buntzen e s t i -mated the c o s t of e l e c t r i f i c a t i o n t o be about $100,000 and a n t i c i p a t e d an annual p r o f i t of $20,000. Summertime, when 39 B.C., S t a t u t e s , 54 V i c , c 60; H. Abbott t o D„ Oppen-heimer, February~13, 1894, Box 324; Knos t o Buntzen, June 18, 1898, Box 687; Buntzen t o Hope, J u l y 23, 1898, GMLB, 1898; H. Abbott t o Buntzen, May 1, 1900, Box 324; Buntzen t o R. Mar-p o l e , December 17, 1901, Box 3 3 9.-7 7 t h e c a n n e r i e s a t t r a c t e d workers and t o u r i s t s , was th e busy season f o r t h e l i n e . The c a n n e r i e s , t h e Eburne m i l l and farm produce p r o v i d e d t h e main revenue. There was l i t t l e s e t t l e -ment between F a l s e Creek and Eburne but the C.P.R. which owned t h e l a n d p l a n n e d t o de v e l o p i t as a h i g h c l a s s r e s i d e n t i a l area. The agreement between t h e B . C . E . R . and the C P . R . f o r th e o p e r a t i o n of th e V. & L . I . i n c l u d e d an arrangement f o r t h e h a n d l i n g of each o t h e r s ' f r e i g h t . T h i s arrangement marked t h e r e a l b e g i n n i n g of th e B . C . E . R . ' s r o l e as a t e r m i n a l r a i l -way i n t h e Lower F r a s e r V a l l e y . The B . C . E . R . undertook t o do t h e C . P o R . ' s s w i t c h i n g f o r t h e s a w m i l l s s o u t h of F a l s e Creek; i n r e t u r n , t h e C . P . R . agreed t o s w i t c h B . C . E . R . L u l u I s l a n d f r e i g h t c a r s from G r a n v i l l e S t r e e t t o the C a r r a i l S t r e e t terminus of the B . C . E . R . i f t h e c i t y o b j e c t e d t o the run n i n g o f f r e i g h t c a r s on t h e s t r e e t s . The B . C . E . R . a l s o agreed t o handle C . P . R . f r e i g h t c a r s between S t e v e s t o n and the G r a n v i l l e S t r e e t B r i d g e at a f i x e d charge per c a r and t o 40 run no o t h e r r a i l w a y company's c a r s over t h e r o a d . 40 Buntzen t o B.C.E.R.. (London), December 12, 1904, Box 324; Buntzen t o Wm. Whyte, Second V i c e - P r e s i d e n t , C.P.R., September 26, 1904, Box 323; TOP, January 21, 1905, p . l 7 8 The immediate o p e r a t i n g r e s u l t s of the V. fk L . I . were l e s s s a t i s f a c t o r y than a n t i c i p a t e d . The salmon canners were r e l u c t a n t t o use t h e r a i l l i n e e x t e n s i v e l y s i n c e r a i l f r e i g h t r e q u i r e d more h a n d l i n g than water-borne shipments. F r e i g h t r e c e i p t s became dependent on a g r i c u l t u r a l p r o d u c t s f o r which the B.C.E.R. o f f e r e d s p e c i a l commodity r a t e s . ^ 1 The f u t u r e of t h e V. & L . I . , however, l a y i n passenger t r a f f i c which developed q u i c k l y a f t e r the C.P.R. s u b d i v i d e d i t s l a n d be-tween the c i t y l i m i t s a t 16th Avenue and Magee (49th Avenue), A f t e r the B.C.E.R.'s E r a s e r V a l l e y l i n e was completed i n 1910, t h e V. & L . I . c a r r i e d a g r e a t d e a l o f g e n e r a l f r e i g h t . The V. & L . I . agreement, t h e r e f o r e , was another s o l i d a c hieve ment which l a i d a f o u n d a t i o n f o r f u t u r e growth. v Two v e r y i m p o r t a n t but u n s p e c t a c u l a r s t r e e t r a i l w a y achievements a l s o h e l p e d t o l a y a s o l i d f o u n d a t i o n . These achievements were the c o n s o l i d a t i o n of the Vancouver s t r e e t r a i l w a y f r a n c h i s e s and the arrangement of the " p r o t e c t i v e c l a u s e " i n t h e Vancouver C i t y C h a r t e r . 41 H. Hemlow, Manager, L u l u I s l a n d Branch, t o S p e r l i n g , August 26, 1905, Box 324; " F r e i g h t Rates f o r L u l u I s l a n d R a i l w a y , " Box 4-42. 79 A l t h o u g h the b a s i c frcsmchi.se which, the B.C.E.R. i n -h e r i t e d from i t s p r e d e c e s s o r s d i d not e x p i r e u n t i l 1918, the Vancouver S t r e e t R a i l w a y and the Vancouver E.R. & L. Company had. n e g o t i a t e d s e p a r a t e l e a s e s f o r each s t r e e t r a i l w a y l i n e . The terms of the s e l e a s e s v a r i e d but on the l i n e s t o S t a n l e y Park and E n g l i s h Bay t h e l e a s e was renewable every f i v e y e a r s . I t was due f o r f i r s t renewal i n 1900 0 These s h o r t term l e a s e s meant " t h a t e v e r y 5 years the C i t y c o u l d t a k e o v e r . . . t h e b e s t p a y i n g p a r t s . . . o r buy them and t r a n s f e r them t o some competing company." Though not e x p e c t i n g the c i t y t o t a k e over the system i n the immediate f u t u r e , Buntzen f e a r e d the p o s s i b i l i t y of a C i t y C o u n c i l "where a m a j o r i t y o f the members were f a d d i s t s or demagogues whose o n l y ob-j e c t was t o pander t o the a n t i - c o r p o r a t i o n and anti-mono-42 p o l y Ideas." Buntzen was anxious t o c o n s o l i d a t e the v a r i o u s short-term, f r a n c h i s e s . He recommended that, the company n e g o t i a t e an agreement w i t h the c i t y so t h a t a l l the" agreements would e x p i r e i n 1919 when the l a t e s t of the o r i g i n a l agreements was due t o e x p i r e . In r e t u r n f o r t h i s time e x t e n s i o n , 42 Memo by Buntzen, August 1, 1914, London l e t t e r s , Inward, #1; Buntzen t o Hope, February 27, 19,01, LFGM, 1901; Buntzen t o Hope, August 3, 1899, Box 73. 80 Buntzen suggested t h a t t h e B.C.E.R. i n c r e a s e the percentage of e a r n i n g s i t p a i d f o r the use of the c i t y s t r e e t s . I n p r i n c i p l e , t he Board approved but a d v i s e d Buntzen t o t r y t o get t h e percentage based on net r a t h e r than g r o s s e a r n -4 3 i n g s and t o extend the f r a n c h i s e t o t h i r t y y e a r s . W i t h t h i s apparent a p p r o v a l , Buntzen proceeded t o n e g o t i a t e w i t h the c i t y by o f f e r i n g t o i n c r e a s e t h e company's payments. He suggested t h a t a c o n s o l i d a t e d agreement would e l i m i n a t e many c l a s h e s between t h e c i t y and the company as each l e a s e came up f o r renewal and would a s s i s t the company i n r a i s i n g funds f o r e x p a n s i o n . The u n w i l l i n g n e s s of the C o u n c i l t o r e l i n q u i s h i t s r i g h t s t o purchase the B.C.E.R. l i n e s brought these e a r l y n e g o t i a t i o n s t o an e n d . 4 4 Buntzen s t i l l d e s i r e d t o c o n s o l i d a t e the f r a n c h i s e s . When the c i t y r e q u e s t e d a h a l f - m i l e e x t e n s i o n of the West-m i n s t e r Avenue l i n e t o the c i t y l i m i t s , and a m i l e e x t e n -s i o n o f t h e P o w e l l S t r e e t l i n e from Campbell Avenue t o Cedar Cove, Buntzen o f f e r e d t o b u i l d the e x t e n s i o n s i n r e t u r n f o r 43 Buntzen t o Hope, August 3,1899, Box 7 3 . The B.C.E.R. had been p a y i n g a percentage s l i d i n g from 3 t o 1 2 % based on o n e - n i n t h of the gros s r e c e i p t s , i . e . a maximum of 1-1/3% o f the t o t a l g r o s s . Buntzen proposed a s c a l e of 1 t o 1 0 % based on t o t a l g r o s s r e c e i p t s . (Minutes of Board of D i r e c t o r s , August 22, 1899, Box 6 8 8 ) . 44 VDP, J u l y 7, 1900, p.6; J u l y 28, 1900, p.6,- October 15, 1900, p.7. 81 f r a n c h i s e c o n s o l i d a t i o n . , The C o u n c i l was w i l l i n g t o accept t h i s p r o p o s a l . I n s p i t e of B u n t z e n 1 s i n s i s t e n c e on the need t o work i n harmony w i t h the c i t y and h i s assurance t h a t the e x t e n s i o n s would o n l y c o s t $15,000 t o $20,000, the Board was n o t . Once a g a i n , the Board, ever c a u t i o u s about, i t s f i n a n -c i a l s t a t e m e n t s , f a i l e d t o understand the s i t u a t i o n i n B r i t i s h Columbia d e s c r i b e d by t h e i r manager. Though, a c c e p t i n g the s l i d i n g s c a l e i n p r i n c i p l e , the Board thought the company c o u l d get the c i t y t o agree t o a lower percentage based o n l y on excess e a r n i n g s r a t h e r than on gross e a r n i n g s . In t h i s , the Board depended on the ad-v i c e of un-named " f r i e n d s " , ( p r obably Mackenzie and Mann) who had l a r g e e l e c t r i c r a i l w a y i n t e r e s t s , r a t h e r than on Buntzen who c l a i m e d t h a t , under the excess e a r n i n g s a r r a n g e -ment, th e s t r e e t r a i l w a y s of T o r o n t o , MontreaJ. and H a m i l t o n p a i d more t o the c i t y t h a n , d i d the B.C.E.R. T h i s near cen-sure of Buntzen's p o l i c y , c o u pled w i t h c o n t i n u i n g d i f f i c u l t i e s i n g e t t i n g funds f o r n e c e s s a r y e x t e n s i o n s and improvements, l e d Buntzen t o suggest t h a t he might r e s i g n . H i s t h r e a t con-v i n c e d the Board of the s e r i o u s n e s s of the s i t u a t i o n . They p r o m p t l y a d v i s e d him t o go ahead immediately, i f d e l a y would be dangerous, but asked him, i f p o s s i b l e , t o w a i t u n t i l Horne-Payne 's planned v i s i t t o Vancouver. The d e l a y was p o s s i b l e . W h i l e Horne-Payne v/as i n Vancouver, he approved the scheme. 82 I n October, 1901, the C i t y C o u n c i l agreed t o c o n s o l i d a t e the f r a n c h i s e s i n r e t u r n f o r t h e BoC.E.R.'s proposed s c a l e o f payments, t h e e x t e n s i o n of the Westminster. Avenue and P o w e l l S t r e e t l i n e s and the acceptance of c e r t a i n r e g u l a t i o n s such as a maximum f i v e c e n t f a r e , f r e e passes f o r c i v i c o f f i c i a l s , a s p e c i f i e d s c h e d u l e o f minimum s e r v i c e , and a speed l i m i t of 8-10 m i l e s p e r h o u r . s D The s e t t l e m e n t o f t h e f r a n c h i s e q u e s t i o n d i d not end the company's problems w i t h the c i t y . E a r l y i n 1904 the Vancouver C i t y C o u n c i l began t o d i s c u s s an amendment t o the c i t y c h a r t e r removing the " p r o t e c t i v e c l a u s e " i n s o f a r as i t r e l a t e d t o commercial l i g h t i n g . When the B.C.E.R. o b j e c t e d , 46 the C o u n c i l agreed t o abandon the i d e a . The " p r o t e c t i v e c l a u s e " had been added t o t h e Vancouver C i t y C h a r t e r i n 1901 as a r e s u l t of Buntzen's l o b b y i n g f o r p r o v i n c i a l l e g i s l a t i o n t o reduce the l i k e l i h o o d o f m u n i c i p a l 45 Buntzen t o Hope, F e b r u a r y 27, 1901, GMLB, 1901; Buntzen t o T.F. McGuigan, February 11, 1901, GMLB, 1901; Horne-Payne t o Buntzen, A p r i l 3, 1901, Box 73; Buntzen t o Horne-Payne, A p r i l 2 3 , 1901, GMLB, 1901; B.C.E.R. (London) t o Buntzen,May 17, 1901 quoted i n Buntzen t o Hope, May 18, 1901, GMLB;McGuigan t o Buntzen, October 15, 1901, Box 637. Copies of the agreement may be found i n Box 73. A u s e f u l s h o r t summary i s i n c l u d e d i n Adam S h o r t t , Report of Commissioner Appointed t o I n v e s t i -gate t h e Economic C o n d i t i o n s _ and O p e r a t i o n s of the B r i t i s h Columbia E l e c t r i c R a i l w a y Company and S u b s i d i a r y Companies,-V i c t o r i a , K i n g ' s P r i n t e r , 1918, pp. 8-9. 46 McGuigan t o Buntzen, January 5, 1904, Box 637. 83 or p r i v a t e c o m p e t i t i o n . The " p r o t e c t i v e c l a u s e " p r o t e c t e d the B.C.EoR. a g a i n s t newcomers by making " i t compulsory on the p a r t of the C i t y t o buy out our Company, but not any o t h e r Company t h a t might w i s h t o come i n and compete" w i t h the B.C.E.R. When r a i s i n g new c a p i t a l , t he B.C.E.R. used t h i s c l a u s e t o ass u r e i n v e s t o r s of the u n l i k e l i h o o d of c o m p e t i t i o n . And, whenever the Vancouver C i t y C o u n c i l began t o d i s c u s s amend-ments t o the c i t y c h a r t e r which might i n t e r f e r e w i t h the c l a u s e , t h e B.C.E.R. r e f e r r e d t o the " p r o t e c t i v e c l a u s e " as the b a s i s . • 43 of x t s fund r a i s i n g . Buntzen's f e a r of m u n i c i p a l c o m p e t i t i o n had c o n s i d e r a b l e j u s t i f i c a t i o n . The i d e a of p u b l i c ownership of r a i l w a y s and m u n i c i p a l u t i l i t i e s was b e i n g d i s c u s s e d w i t h i n c r e a s i n g frequency throughout C a n a d a . 4 4 Such t a l k was p a r t i c u l a r l y 4 3 VDP, Ja n u a r y 8, 1900, p.5. The 1895 c l a u s e r e f e r r e d t o gas, water and t e l e g r a p h s as w e l l . B.C., S t a t u t e s , 58 V i c . , c. 68, s e c . 16, s.s„ 6A; VDP, January 16, 1900, p.8;January 30", 1900, p.2;Buntzen t o Plope, September 7, 1900, LFGM, 1900; B - c « ' S t a t u t e s , 64 V i c , c.54 s e c . 125, s . s . 4-9; Buntzen t o T.P. McGuigan, January 4, 1904, Box 637; 44 For examples see J . C a s t e l l Plopkins , comp. ,Canadian Annual Review,Toronto, Annual Review P u b l i s h i n g Company, 1901, p.419; 1904, pp.59-66; 1905, pp. 130-137. The b e s t example of a pub-l i c l y - o w n e d u t i l i t y c r e a t e d d u r i n g t h i s p e r i o d i s the Hydro-E l e c t r i c Power Commission of O n t a r i o . Some s p e c i f i c examples of a g i t a t i o n f o r p u b l i c ownership i n Vancouver i n c l u d e a 1901 r e s o l u t i o n of the Trades and Labor C o u n c i l c a l l i n g f o r the pur-chase o f e i t h e r t h e whole o f the B.C.E.R. system or the l i g h t -i n g p l a n t a l o n e ; a p e t i t i o n s i g n e d by 1100 Vancouver r e s i d e n t s f a v o u r i n g government ownership of r a i l w a y s and the e n d o r s a t i o n by the Board of Trade of a r e s o l u t i o n f a v o u r i n g n a t i o n a l owner-s h i p o f t e l e g r a p h l i n e s . 84 d i s t r e s s i n g t o the E n g l i s h d i r e c t o r s who were f a m i l i a r w i t h t h e e f f e c t s o f m u n i c i p a l c o m p e t i t i o n on privately-downed com-. . 45 pa n i e s i n E n g l i s h c i t i e s . T h i s E n g l i s h e x p e r i e n c e p r o b a b l y e x p l a i n s the d i r e c t o r s ' almost p a r a n o i c f e a r of m u n i c i p a l competition„ Once the f r a n c h i s e s were c o n s o l i d a t e d and t h e " p r o t e c t -i v e c l a u s e " a c h i e v e d , t h e B.C.E,R. c o u l d make p l a n s w i t h a f a i r degree o f c e r t a i n t y t h a t i t would own the c i t y l i n e s and have no d i r e c t s t r e e t r a i l w a y c o m p e t i t i o n a t l e a s t u n t i l 1919 These agreements p r o v i d e d t h e b a s i s on which the Company made p l a n s f o r suburban e x p a n s i o n . They were p a r t of t h e . s o l i d f o u n d a t i o n l a i d between 1897 and 1905. By 1905, the B.C.E.R., through the work of i t s B r i t i s h Board o f D i r e c t o r s and i t s l o c a l manager, Johannes Buntzen, had e s t a b l i s h e d a s o l i d f o u n d a t i o n f o r f u t u r e growth. I t had reduced the p o s s i b i l i t y of c o m p e t i t i o n through the "pro-t e c t i v e c l a u s e . " I t had s t r e n g t h e n e d the p o s i t i o n of the s t r e e t r a i l w a y s w i t h o u t g r e a t e x p e n d i t u r e s of c a p i t a l by promoting t r a f f i c , by a r r a n g i n g t o operate the V. & L . I . f o r the C„P.B.o and by j u d i c i o u s e x t e n s i o n s t o e x i s t i n g l i n e s such as the Sapperton branch i n New Westminster. 45 J.H. Clapham, An Economic H i s t o r y of M o d e r j i _ B r j : t ^ i n > New York' M a c m i l l a n , " l 9 3 8 , v o l . I l l , pp. 137-138. 85 The c a u t i o u s a p p r o a c h o f t h e d i r e c t o r s t o e x p a n s i o n seems t o be o n l y p a r t l y t h e r e s u l t o f t h e i r i n n a t e c o n s e r v a -t i s m . I t was a l s o t h e c o n s e q u e n c e o f t h e i r i n a b i l i t y t o r a i s e f u n d s a t a u n i f o r m l y s t e a d y r a t e o r t o h a v e c a p i t a l a l w a y s a v a i l a b l e i n s u f f i c i e n t l y l a r g e q u a n t i t i e s t o meet l o c a l demands. From t i m e t o t i m e , t h i s l a c k o f c a p i t a l c r e -a t e d t e n s i o n b e t w e e n t h e B o a r d and t h e manager i n V a n c o u v e r . The b a s i c r e a s o n s f o r t h i s t e n s i o n , h o w e v e r , v/ere t h e d i s t a n c e b e t w e e n London and B r i t i s h C o l u m b i a , t h e l i m i t a t i o n s o f com-m u n i c a t i o n b y l e t t e r and c a b l e , and t h e w i s e r e l u c t a n c e o f t h e B o a r d t o g i v e t h e i r manager u n l i m i t e d a u t h o r i t y e v e n t h o u g h t h e y r e c o g n i z e d h i s a b i l i t y and h i s u n d e r s t a n d i n g o f t h e l o c a l s i t u a t i o n , , When c a p i t a l was a v a i l a b l e i t was s p e n t on p r o j e c t s s u c h as h y d r o - e l e c t r i c p