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Annual reports, 1883 to 1891 Canadian Pacific Railway Company Limited 1891

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To the .Shareholders of the Canadian Pacific Railway Company}:
It ^now*->ac.ntile; less than a year jsincara portion of the Capital
f^te^fe ^fe$*Ms ^<$M$Jt?y was thrown open for public subscription. During that
pe^rjpd there h^h^n a vervrgreat decline in the market values of American
j^ihMayfSecurities in general, and especially of shares in corporations operating
throughr lines of railway between the Eastern States and the Pacific coast. It is
not a matter for surprise, therefore, that some anxiety should have been felt by
holders of the Stock of this Company, or that speculators should have taken advan-
~ffli$& o'FSifie7 opportunity, to make a concerted effort- to depress the market price
of the share%''e^ecially in view of the malign'am attacks with whicn the Company-Has beenIHTmost dally as^irM-j1^ a section of the local and foreign press,
'ffisffrred#y rfyal-raSfway lilies, or innuwMr*Hy politlcaTmotives: The shareholders
ai'e rathe'r^tio be congratula>'felI that iiithe fd,6*e of these attacks and of such widespread depression in the Wocks of other transcontinental lines, the Stock of
this Company, wim its line not yef completed, should have maintained such
comparative steadiness.
ma
la
"JFBr the purpose of gWin'g to'fhe shareholders the earliest possible information of^xf& resurWacmeve'd during 'the now cldsrng calendar year, and in view
**6f*ilie^^$i ffi as to the position of tne
Company, the Directors have thought it well,^ advance of the regular annual
rep6rt, to JiJERSntirS':s,iS5?t' sumirfary of wliat has TOen done, and also a brier statement of %<$§\ia-"ffe#ting the iftMniiichaud m^tkefcJT^lw&pf the shares of the] Com-
■pia^iyhi
It is nece&s^fy'at the otits*et. not to Tor^et that the position of thfe-fGanadIala
Pacific Railwaying ^ique—^ith^tjj*s. own line^ jstr^phing from the(At)$i£tic to
the   i*&L<$Kf|c—a   complete   and    independent  Railway,, system   within   itself.
^Differing in this^e^pafttafrom evmj oth^r^ans.^ntinental line on the continent,
it ne,e,d look -for nothing from its rivals, beyond reasonably fair treatment.
Duringlhe year 1883 the Company built 693 miles of Railway; .consisting
of 5515 miles of Thain line, and 140 miles of Branch lines.
On the Western Division 3*7*7 miles of rails have been laid—completing the
track to the Summit of the Rocky mountain pass* 960 miles west of "Winnipeg—
leaving a gap of less than 300 miles to complete the connection with the Pacific
Ocean, and th.erc is, every -reason to expect that this connection will be completed
within rhe next two years.
On the opening of navigation next season, the Company will have its own
steel steamships, built this year on the Clyde expressly for the Lake traffic, ready to
run between Lake Huron, and Thundei* Bay on Lake Superior. A new through
line ol' its own will thus , be opened, rarrymg freight and passengers from
Montreal to all points in the newly opened country for a continuous distance of
1,400 miles west of Port Artnur.
On the* section of the line north of Lake Superior 167 miles oi track have
been laid during this year, and within the next few weeks  54 miles more will
be added, making a total on that section of 221 miles, leaving 430 miles yet to be
^puilt in order to complete the through all rail  connection between  Montreal
ind t&j North West Provinces.     There are at the present time over 9,000 men at work upon  this section, which, it  is  fully expected, will be completed and |
ready for operation before theMlQSe^ptih^ y£ap*Sj885.
Without the through. aU rail line which the completion of this section wijj
provide, and wrthout tne necessary connections  with the Provinces of Ontariw
and Quebec, now being secured, the Canadian Pacific Railway would hav^little
or no control over the large west bound traffic in Immigrants, settlers and general]
-■freYg-hii, wnicn ffie^'s^BtlSm^flF'of -"ffie -^ortifwe'st is'Rapidly developing; and that
^ranic would c6^HnJrt§TtfJtli^lm-ture.'>ii.s in the past, to be carried oVeVthe G-rlin^
Trank Railw^'aM tfift'*u^*h tfrre Tjiiited: States.    This west bound traffiiHs of the
l|^dtesi;0iMp^^ Pacific'Railway, enabling *i*if "to carr^Wefg^ffl
and passengers' 'at lower rales than would be possible,  if the line ha^r'only dn
east bound1 business, ana notnm^* to carry west but empty cars.
^^enfl^h^Corn|)ffi"^ ^jinr#{jp>os*ition to send trains through, dir^t^frpm Mon-
.jtx^aj pfy ^j^mLp^gj tp ^efij5>^c|^PnQfl§^'11 S.iffj8"; express tfrains making the ^entire
distance in niijgjiv hj^s^anj^w^hen the connexions of the liii^with th^lmsiness
cent^pf thePpoy^nees^fjOiitaooandQu^h^hja^ebeen established; the Canadian
BapifiG Railwayr will assume&commandkig position as Cana^^^aiaor^Lhighway,
and by ^better service, a shorter JLiiie, superior accommodation, and moderate rates!
will secure.the traffic which naturally belongs to it, and effectually prevent it Iroml
i.-.Uf.lj {iiijtrrrr.nr •*7<-rf jDinorTg ,;      f   .3* ' a J *s
seeking transportation over foreign lines.
the "V^stgjm. Dj^siom^^ .bg^|(3omp^ej*ed,.,^s;well as the surveys across the
Roc^j* a^^j§g^ijJ|^rjmunj"aj^^?j The work Jhasi in both,.cases+b^en formd much
eas^r tba*^.2^a^^a*q^c^r]g^|)i,ami j*|he Directors ifeel now thatr;th§y. may safely
.sjtate ^^{th^^*gti^^lin^0will b(e ^o^irjgted^ithin the qrigmaLestimates of cost.
It hats* ¥e"8ril^g6teMiSevd')feliat*^he Cofeti%f>ffinishing^ih$tcli'B^will not exceed
twenty-seven million dollars—barely the amount of the cash subsidy and land!
,grar^,BondSfUnsQ^and remaining, in the hands ofrthe Gjoyernxnent.
'■^n^Ms ^e-a'tnilp1 'tio&HsSS  (Minting  the   month   of
%ece-*$fe~*c)* w^ere'A^ll..W$k{ $P,....: >>$5;4$b$i8 '
"TMife'iMlhi^s^OT m&^^ii$tyyrtiM$Sii o$ borXstructibn mat^riaJteij
and supplies     1,*2t4,O00
The actual revenue ij^j^p^umm'^8^^,^^ t^f8^016 *n 1-883.    4146.913
As against in 1882     2,449,824
QHl^ffiteiq^fe-bi^I irsstf^fM aiiBl^^iinr 	
Increase intlSSS^aiiin .(we-&mq •«•]•:,     1,697,089,
>ai*j.fici mil dSrv7 noiiosxiiiQo 9ild 9teIqjno6 pi* > xr.Bift •    i lo q,. :
hn
The net earnings'fortune '# mon ins ending Nov. 30th have been $889,811
Considering the adverse circumstances under which this result has been
HW.O.at•£v-bil,Iuv/ vifscrmoJ yrli .uohhsz i      ( vf<    , -.      GFd,9   LuO
obtained, and. m view of .me extraordinary development and rapid settlement
<J 'cZ VftMTb-!-r'j-1' '-rrr'/! !M diif.'foi . YISS31QX9 Q -,     (.,,,,,    , "jinn I       „ .     'M«v'
ol tne rNoitn-West during the past y§fi\ and oi,fhe fact that on the opening ot
navigation, tne Company .will have—as already stated.—a through line ot its
own front Montreal 'io the' summit,of' tlie Rocky'Mountains ; a,still greater into 'rim .   o-j^noji     ico*) h'li'l '/tinnot D'jhmcio ^
crease m tne earnings of the'coming year may fairly be looked for.
Seeing the effeqt which the operations of speculators, aided by the hostile
efforts oi tne enemies of tne Company m tne press and elsewhere, had on the market
price  of the  shares f. being unwilling that the shareholders should be mtimi-
4d .i i i.-r,' aolirn.uKl 'Qifivfi^i ^efiiii riy- i*fi £roit">e g- *< jj
dated into sacrificing their property"; "and desiring to increase the value of the'stock
^S^9nnd mWs^ejStft^eriMreci;^
HtfMiTne 'Dbmiuloii. (*#^e^l$m&iit  leisure for t$Lrjty&&£§\ ixtimiimm d3$idei^ of three per centum (3 p. c.) per annum upon the outstanding capital stock of the
Company: the Company continuing to pay an additional two per centum (2
p. c.) per annum, during construction, making five per cent (5 p. c.) per annum
in all.
This arrangement has also been made the object of attack even to the extent
of pretending to impugn the ability of the Grovernment to carry it out, but it
will probably suffice to say, that it consists of the deposit with the G-overnment
of cash and securities to an amount sufficient to provide the money with which
to pay each half-yearly dividend; that the G-overnment has absolutely
assumed such payments, and has bound itself to place the required amount each
half year in the bank of Montreal as Trustee for the shareholders, and that the
Bank has covenanted to pay the dividend so deposited on the 17th day of February and August in each year of the next ten years.
Fuller details of the operations of the Company during the past year, of its
position generally, its resources and its prospects, will be furnished to the shareholders, as soon as the report embodying the same can be prepared.
In conclusion it may safely be stated :—
1. That the work of construction has been economical, and rapid beyond all
previous experience.
2. That the contract with the Government will be finished, and an all rail
route through Canadian territory, from Montreal to the Pacific Ocean, established
within two years, or in barely half the time specified in the contract.
3. That the business of the line is already much greater than could fairly
have been expected, before the completion of the road.
4. That the settlement of the North-West, notwithstanding all the efforts to
depreciate its advantages, is progressing more rapidly than any one, three years
ago, supposed possible.
5. That the cost of the completed road will not exceed previous estimates.
6. That the road, when finished, will be practically unencumbered.
7. That the net earnings, from and after the completioarof the line, will, it is
firmly believed, be sufficient to give the shareholders a handsome dividend over
and above the three per cent already provided, without counting on the income
from the Company's Land Grant: thus making the shares of the Company a
sound and profitable investment.
The Directors are satisfied that, with such resources and prospects as are here
set forth, the Company has a great and successful future before it; and they hope
that the statements, which the facts have thus enabled them to make, will be
accepted by the shareholders, as a sufficient answer to the misrepresentations, by
which it has been sought to induce them to sacrifice their investment.
GEORGE STEPHEN,
President.
Montreal, 29th December, 1883.    CANADIAN PACIFIC RAILWAY
EEPOET
FOR THE
Year Ending December 31st, 1883.  BOARD  OF  DIRECTORS.
GEORGE STEPHEN,
R. B. ANGUS,     .
Hon. DONALD A. SMITH,
WILLIAM C. VAN HOENE,
JOHN TURNBULL,    .
PASCOE du P. GRENFELL,
H. S. NORTHCOTE,    .
C. D. ROSE,
Baeon J. de REINACH,     .
R V. MARTINSEN,
W. L. SCOTT,     .
MONTREAL.
London.
Paris.
New York.'
Erie, Pa.
OFFICERS.
GEORGE STEPHEN, President,     .
R B. ANGUS, I  -rr     D     WM
W. C. VAN HORNE,    j ^'Presidents,
Hon. J. J. C. ABBOTT, General Counsel,
CHARLES DRINKWATER, Secretary,    .
I. G. OGDEN, Auditor	
W. SUTHERLAND TAYLOR, Treasurer,
JOHN H. McTAVISH, Land Commissioner,     .
HENRY BEATTY, Manager Lake Transportation,
JOHN M. EGAN, Oen.-Supt.  Western Division,
ARCHER BAKER, Gen. Supt. Eastern Division,
WILLIAM WHYTE,       "       Ontario
Montreal
Winnipeg
Toronto
Winnipeg
Montreal
Toronto.
EXECUTIVE  COMMITTEE.
GEORGE STEPHEN.
R B.  ANGUS.
Hon. DONALD A. SMITH.
WM. C. VAN HORNE.
GENERAL OFFICES,
MONTREAL.  REPORT
OP THE
Board  of Directors on the Operations  of the Canadian
Pacific Eailway Company, for the Year ended
December 31st, 1883, submitted to the
Shareholders at the Annual
Meeting.
Montreal, May 14th, 1884.
To the Shareholders:
A statement of the progress of the work of construction
of the Main Line and branches, and of the condition of the
work, and prospects of the Company generally, having
recently been made and transmitted to the Shareholders,
it is unnecessary to go over the ground again in this
Report, which will deal mainly with the financial position
ot the Company at the 31st December last, that being the
date to which the Annual Report is, by the Company's
By-Laws, required to be made.
It may be stated, however, that the progress made in
the construction of the eastern section of the Main Line
warrants the Directors in the confident belief that the rails
will be laid from Callander to Port Arthur, within a year
from thib time, thus opening a through line from Montreal
to the western end of the track, which will then be
extended to or beyond the Columbia River ; or a continuous line of about 2,500 miles.
' II
The work of construction of the Mountain section is making satisfactory progress, and the Directors have good
reason to expect that this portion of the line will be
nearly, if not quite, completed by the end of next year.
The rails have been laid on the Government section from
Port Moody, on the Pacific coast, eastward to Lytton, a
distance of 144 miles ; and the remainder of this section
is nearly ready for the track. The Company have arranged
to avail themselves of this, to commence construction from
Kamloops Lake eastward, which can now be done with
advantage both as regards time and expense.
A Map of the line is attached to this Report. This will
explain, to some extent, the* present position of the work,
the solid black lines indicating the completed track, and
the dotted lines those portions where construction is in
progress.
It is gratifying to be able to state, that on a careful
xevision of the surveys north of Lake Superior, where the
heaviest and most expensive work east of the Rocky
Mountains is encountered, an improved location has been
found, which will greatly reduce the cost of construction
as compared with the original estimates, without in any
way degrading the standard and character of the work.
A General Balance sheet to 31st December, certified by
the Auditor of the Company, is appended.
This statement does not call for special remark in this
Report, the expenditures under the different heads having
been fully explained in the Report submitted to the
Shareholders at the Special General Meeting held on the
6th March last, for the purpose of accepting the Act of the
Dominion Parliament, passed during the recent Session,
by which a loan to the Company of $22,500,000 was
granted, and the payment of $2,853,912, due by the Company in February last, under the agreement  with the Government, guaranteeing a dividend of three per cent,
per annum on the stock of the Company for ten years,
was postponed until November, 1888.
It may be stated that so far the cost of the work has
not exceeded the original estimates, whilst the character
of the line, road-bed, bridges, and all permanent structures
is of the highest.
From the information laid before the Board by the
Company's Engineers concerning the work remaining to
be done, the Directors are enabled to state with confidence,
that the completion of the line can be effected out of the
cash subsidy yet remaining to be paid by the Government,
and the loan granted by the Government to the Company,
without incurring further liability.
Traffic and Earnings.
The following statement shows the earnings of different
sections of the line for the years 1882 and 1883.
It must be borne in mind that these earnings are from
isolated and incomplete portions of the railway, which
cannot, of course, develop e their full earning power until
the system is complete.
Notwithstanding this, the result cannot be considered
unsatisfactory.
EARNINGS.                                                                              1882. 1883.
Eastern Division $ 999,289 44 $1,497,047 90
Western Division  2,327,630 97 3,976,849 74
Total $3,326,920 41 $6,473,897 64
Average miles operated                 748 1,552
Earnings per mile      $ 4,447 75 $ 3,527 00
Note.—These figures include a charge for transportation of construction material,
based on the actual cost ol haulage. The earnings per mile on those portions of the line
under operation when the contract was entered into by
the Company in 1881, and on the acquired lines, have
steadily increased; the percentage of earnings, however,
to total mileage has necessarily been gradually reduced
owing to the rapid construction of the railway in advance
of settlement, and through districts where business could
only be created by opening up the country by the construction of the railway.
The prairie section being now completed, and in operation to the Rocky Mountains, it is believed that the
increase in local business will be rapid and permanent.
Within the past week connection between the Eastern
and Western sections of the line has been established by
means of three Clyde built steel Steamships, belonging to
the Company. The Ontario and Quebec Railway, which
has been leased by this Company, will be open for freight
traffic within two weeks from this date, and for passenger
traffic before the first of July. The opening of this
important line, commanding, as it will, a large amount of
traffic for the main system, together with the steamship
connection before mentioned, will undoubtedly result in
a large and immediate increase in the revenue of the
Company
Land Department.
A statement of land sales from the commencement of
the Company's operations is also submitted.
It will be observed that a considerable reduction is
shown in the acreage sold, as compared with the statement
published in the official memorandum dated December
12th, 1882. 9
This has been caused, mainly, by a reduction of the
acreage originally sold to the Canada North-West Land
Company, from 5,000,000 acres to 2,200,000 acres.
The Canada North-West Land Company having found
themselves unable to deal with so large a quantity of
land, it was considered desirable, both in the interest of
the Railway Company, as well as of North-West settlement, that relief should be afforded them; and a new
agreement reducing the quantity of land, but maintain,
ing the same terms and conditions as to price, &c, was
entered into.
It may be added that full payment has been made for
the reduced acreage, and that the Land Company are
actively engaged, both in this country and abroad, in
securing purchasers and settlers for their lands.
Land Sales to December 31st, 1883 :—
To settlers    794,240 acres
To companies 2,837,400    "
3,631,640   =  $10,378,899 63
Town sites        178,864 25
 $10,557,763 88
Less payments deferred, and due by Land Companies...       3,126,849 64
Less expenses:
Premium of 10 p. c. on bonds taken in
payment for lands $    666,700 00
General charges, including interest        146,794 84
$ 7,430,914 24
Sundry outstanding accounts.
813,494 84
$ 6,617,419 40
49,580 60
Land Grant bonds redeemed and cancelled. *       $6,667,000 00
Average price per acre:
Gross $2 85.
Nett    2 64. Land Grant Mortgage.
The following is the position of the 5 per cent. Land
Total Issue      $25,000,000.
Deposited with, .the Government as security
for completion of the contract, no interest being payable thereon     $   5,000,000
Deposited with the Government in trust
until earned by the Company        10,000,000
Redeemed by Land Sales and cancelled— 6,667,000
 21,667,000
Balance Outstanding        $3,333,000
Against this amount there are deferred payments on land sales contracts, on which interest is payable to the Company, amounting to
$3,126,849.64, the greater portion of which will doubtless be paid in
bonds.
mmam
Equipment.
The following was the equipment of the Company at
the close of the year:—
236 locomotive engines.
•73 first class passenger cars.
33 second class passenger cars.
48 baggage and mail cars.
20 dining, sleeping, palace, &c, cars.
4,386 platform cars.
1,*IS5 box cars.
126 cabooses, pay cars, &c.
6 derrick, and coal cars.
1*7 snow ploughs.
The extensive workshops of the Company at Montreal
are now in full operation, and locomotives are being built
at a price considerably less than hitherto paid by the
Company. 11
Fifteen heavy freight engines have just been turned out
at a cost of a little over $^,000 each. This is owing, to a
great extent, to the excellent arrangement of the shops for
economical working, and the fact that they are fitted up
with the best and most modern labour-saving machinery.
Telegraph.
The construction of the telegraph has kept pace with
that of the railway; in fact, in view of the great advantage to the Company of having their own wires across
the continent at as early a date as possible, construction
of the telegraph has been to some extent pushed ahead of
the railway, and during the present season it is expected
that a continuous line will be in existence from Montreal
to the end of the track, beyond the summit of the Rocky
Mountains. The importance and value of this franchise of
the Company, will be well understood and cannot be overestimated. Its assistance has been of the greatest value in
oonnection with the rapid construction of the line.
Branch Lines.
The Algoma Branch, 96 miles, and the Selkirk Branch,
22 miles, were completed during the year.
Manitoba South-western Colonization Eailway.
In view of the great importance to the interests of the
Canadian Pacific Railway Company that railway facilities
should be extended to the fertile districts of Southern
Manitoba, at the earliest moment, the Directors recommend
to the Shareholders the leasing of the Manitoba Southwestern Colonization Railway, at a rental which will cover
the interest on bonds of that railway, to be issued at the
rate of $12,000 per mile Fifty-two miles of the line are in
operation, and it is proposed to extend it 100 miles further 12
when the necessary financial arrangements can be
made. The railway has a concession of 6400 acres
of land per mile, for which it has to pay the Government $1.00 per acre within ten years. The lands are
considered among the best in the North-west, and owing
to their proximity to the railway are expected to be
immediately saleable at good prices. All the advantages
of the Land Grant will accrue to the Canadian Pacific
Railway Company, under the proposed lease, a resolution
respecting which will be submitted for the approval of
Mr. John S. Kennedy retired from the Board in January
last, and was replaced by the appointment of Mr. John
Turnbull.
Mr. Duncan Mclntyre declines re-election.
George Stephen,
President.          Zstter of Mr. George Stephen, President of the Canadian
Pacific Railway Company, to the Hon. Minister of Railways
and Canals.
Canadian Pacific Railway Company,
Montreal, 18th March, 1885.
Sir,
In view of the approaching completion of the contract
for the construction of the Canadian Pacific Railway from
Callander to the Pacific ocean, according to the contract
entered into by this company, and  of the  consequent
necessity for making timely and adequate provision for
Ihe unexpectedly large volume of traffic which the line
has already developed, as well as for the great increase
which it is now certain will take place on the opening of
the through line in the spring of  1886,  the company
finds itself compelled to seek for some re-arrangement of
its finances which will enable it to procure the necessary
oapital required for this purpose.    I have, therefore, the
honor, on behalf of the Board of Directors of this Company,
to submit to you some obs ervations upon the position of
the company, and offer some   suggestions as to the necessary remedial measures for restoring to the company the
free  use and control of its   own resources, and, at  the
same time, of practically   providing for the repayment of
the loan of last session,   and relieving the Government,
finally and forever, from all responsibility for or connection with the Canadian Pacific Railway.
It will be remembered, that under the provisions of
the Act of last session, the Government, as security for
the repayment of the loan to the company, deemed it
necessary to take a statutory lien, not only on the line con- E
tracted to be built, but on the whole property of the company, including its steamers and branch lines, practically-
stripping it of every resource it possessed, and leaving it
without any means of providing for the important purposes of the enterprise, outside of the mere work of construction of the main line from Callander to the Pacific
Ocean, and its equipment, to the extent contemplated by
the contract, except its unsold stock. That resource, the-
only one the company had left, was rendered unavailable-
owing, to some extent, to the provision in the Act, by^
which, in case of default on the part of the company in
performing the conditions on which the loan was granted,,
the Government could practically confiscate the whole-
property of the Company, but also, in a greater measure,,
to the unfair and malevolent attacks of the enemies of the
company, acting in concert with some, happily only some,
of the political opponents of the Government, aided by a-
venal section of the newspaper press of the country.
From these quarters the company and its resources have-
been unceasingly assailed and discredited during the-
whole of the past year in the most unprincipled and unpatriotic manner. A large portion of the country traversed
by its lines has been decried as a barren and worthless
desert; the advantages of the Northwest, as a field for
emigration, have been depreciated, and attempts have-
been made to create the impression that the line, when
opened, could not possibly pay its working expenses, and
that the* Government would be compelled to take possession of it and operate it at a loss to the country, variously
estimated at from $3,000,000 to $8,000,000 annually. In
fact, the enemies of the company, both at home and abroad,,
availed themselves of the stringency of the provisions of
the Loan Act, and of persistent and unfounded misrepresentations of the country, and of the conduct of the company, for the scarcely concealed purpose of wrecking the-
enterprise. By these means investors were alarmed, the stock was
prevented from becoming, as was expected, a means of
providing the company with the funds necessary for carrying on its business efficiently, and the credit of the company was all but destroyed.
The company, it will be remembered, at the time of the
passage of the Act, earnestly, but ineffectually, remonstrated against the severity of the conditions on which
the loan was granted ; especially pointing out the damaging effect on the future credit of the company, of the
stringent and apparently inequitable character of the
remedy taken by the Government, in the event of default
by the company, and their apprehensions in these respects
have been fully realized.
The shares of the company, at the time of the passing
of the Act last session, were selling at about $60 per $100
shares, and were expected to advance to $75 or $80.
Shortly afterwards they began to decline ; and they are
now quoted under $40 And, under the circumstances
stated, it is not surprising that the stock of the company
should fail to command the confidence of the investing
public.
The amount of the loan provided for by the act of last
session was $22,500,000 ; $"7,500,000 of which were appropriated to pay existing obligations, leaving $15,000,000
for the purpose of completing the contract. This amount,
plus $12,710,000 unpaid subsidy then in the hands of the
Government, gave a total of $27,710,000 applicable only to
the work under contract. The mode provided by the Act for
obtaining payment out of this fund rendered it impossible
that any part of it could be drawn from the Government
for any pupose, except for the bare cost of construction,
with the stipulated amount of rolling stock. Before any
such payment could be made, an estimate was required to
be prepared by the Government engineers, as the work
proceeded, of the proportionate value of the work done ;
II 6
and the amount of such estimate, less ten per cent., was
paid to the company. But. in order to make the Railway
a first class carrying power, with all the appurtenances
and appliances necessary to enable it to compete successfully with the best of the American trans-continental
lines, much had to be done and provided besides the mere
work of construction and equipment according to the contract, and these requirements are not materially diminish^
ed by the fact, which is admitted, on all hands, that the
whole line has been constructed of a quality and character
far exceeding the standard agreed upon between * the
Government and the company.
Upon the opening of the Railway in the Spring of next
year, it cannot dispense with a full provision for its efficient
and vigorous operation without great injury to its prestige
and future reputation. Its road bed for the 2,900 miles
from Montreal to the Pacific Ocean, its facilities for handling traffic, and its equipment, must be of the highest
class, not inferior to those of any other trans-continental
line, otherwise it will not command the traffic, and the
enemies of the enterprise will take a delight in pointing
to il as a reproach, both to the country and the company.
For these purposes, the usual improvements required
upon all new railways have to be made. Terminal facilities require to be provided, workshops have to be built
and furnished with expensive machinery, elevators require
to be constructed and many other things have to be done
to provide for the unexpected development of traffic
already reached, and for the still greater volume which is
certain to follow the opening of the line. Many of these
things had to be done at once, and could be most
economically provided concurrently with construction.
It would have been unwise and improvident in the
extreme to have postponed such provision until the last
rail should be laid; and the Company accordingly felt
obliged to proceed to some extent with the most important of these improvements. In doing so it relied upon the
proceeds of its unsold stock. It could not obtain one
dollar for any of these purposes under the Act of last Session, the provisions of which, as has been shown, were
confined to the actual work of creating the bed of the
railway, laying the track, and supplying it with a certain
quantity of rolling stock. The expenditure during the
past year, outside of the contract, for the purposes referred
to, amounts to about $5,000,000, and, in addition, in order
to keep faith with the shareholders, provision had to be
made for the payment of the promised extra dividend;
and interest had to be paid amounting altogether to about
$3,000,000 more. And as it was found impossible to
realize upon the unsold stock, some of the Directors resident in Montreal gratuitously came to the assistance of
the Company, pledging their personal credit and their
own private securities for the benefit of the Company,
and so the money for the latter expenditure was found.
In the meantime the work of the contract has been carried on with the utmost energy and rapidity; and it will
be completed before the stipulated time, the money
remaining in the hands of the Government, amounting*
on the 31st December last to $8,726,949, being sufficient
to complete the performance of all the obligations of the
Company under the contract. As was expected, there
has been a large saving effected on the cost of the work
on the Mountain Section, but the advantage thus obtained
has been absorbed in extra expenditure on the Lake
Superior section.
To enable the Company to procure the additional capital
that will be required for the purposes indicated, I beg
respectfully to propose :—
1. That the $35,000,000 unsold stock shall be cancelled.
2. That authority be granted to the Company to issue, in lieu thereof,
$35,000,000, four per cent., fifty year, first mortgage bonds secured by a
first hen on the main line of the Railway from Montreal to the Pacifio-
: j
m
1
■ w
[■pi
if
l Ocean, covering all terminals built, or to be built, and all equipment and
rolling stock now on the line, or that may be hereafter put upon it;
together with its tolls and revenues, subject, of course, to the existing
mortgages on the line from Montreal to Callander.
3. The Government to accept $15,000,000 of these bonds in part settlement of the loan to the Company, the balance of the loan to be paid off by
a reduction of the land grant, to an extent necessary to cover the amount
of the balance of tbe loan, at the rate of $2 per acre, which is 46 cents per
acre less than the lands already sold have netted the Company in cash.
The loan of last session would thus be practically paid off, and the
Company would have in its Treasury ample resources from its first mortgage and land grant bonds to provide for its present wants as well as for
the future development of its business; and with its credit restored and
re-established in the confidence of its shareholders it would then be in a
position to proceed, lst, with the much wanted extension of the Manitoba
South Western Railway; 2nd with the completion of the line to Sault Ste.
Marie ; 3rd, to secure, in some way, a connection with the City and Harbor
of Quebec; 4th, with reasonable aid from the Government to extend the
Canadian Pacific system to the ocean ports of the Maritime Provinces;
5th, it would also be in a position to aid indirectly in securing the early
completion of its Ontario Division to the Detroit River, and at the same
time, removing for ever, all necessity for any further applications to the
Government for assistance on the part of the Company. Its further necessities and the success or failure of the enterprise would thus be entirely
the affair of the shareholders themselves.
4. To enable the company to provide for present wants, and to give it
time to realize on its securities, the Government to make a temporary loan
of $5,000,000 for a term not exceeding eighteen months, on the security
of the postal subsidy payable by tbe Government to the company, supplemented by a deposit with the Government ef $5,000,000 four per cent first
mortgage bonds.
5. If the foregoing suggestion is adopted, an amount of the Land Grant
Bonds in the hands of the Government, equivalent to the number of acres
deducted from the land grant, must be cancelled; the balance of those
bonds, then remaining, to be returned to the company.
1 regret that circumstances should have placed it in
the power of the enemies of the Company to compel it to
make this application to the Government; but hope the
suggestions now offered will receive favorable consideration. Their adoption would have the effect of gradually
restoring the credit of the Company, and of placing the
enterprise in a condition to do its work efficiently and 9
asuccesfully, without involving the government in ny
-permanent additional outlay on behalf of the Company,
tmd actually providing for the practical repayment of the
existing loan.
In conclusion it only remains for me to add that, in
making this application to the Government, I do so with
tho fullest faith and confidence in the present and future
money-earning power of the enterprise. I am satisfied
that the resources of the Company are amply sufficient
faithfully and honestly to discharge every obligation it
has incurred, whether to the Government or to others ; and
lhat the Canadian Pacific Railway, upon its final completion and equipment, will be one of the most important
and prosperous Railway properties on this continent.
Statements are appended showing the amounts expended on improvements, on main line and branches,
rolling stock, etc., in 1884, beyond the requirements of
"the contract; and an estimate of the probable expenditure, for similar purposes, up to May, 1886, with several
•other statements bearing on some of the matters referred
*to in this letter.
I have the honor to be
Sir,
Your obedient servant,
(Signed, Geo. Stephen
President.
The Honorable the Minister
of Railways and Canals, Ottawa.
Statement showing the amounts expended by the Company on 31st December, 1884, on construction of main
line and branches, extensions, terminals, improvements,
•^equipment, interest and dividends ; also showing the total 10
amount received'by the Company from its cash and land
subsidies, and from Government loan:
1. Expended on main line and branches  $52,595,842*
2. Expended on equipment -  9,168,755-
3. Expended on improvement of Government lines  1,241,780'
4. Material on hand  3,687,729*
5. Expended on advances to secure access to the Seaboard,
and for other purposes within the charter, and on
leased fines -        5,857,223
Total expenditure to 31st December     $72,551,329*
.   ADDITIONAL EXPENDITURE.
Sum now in hands of Government to pay nine years guaranteed dividend     $14,288,288
Dividend paid •        5,378,000-
Tuterest on land grant bonds  582,734
j 	
$92,800,351
Total amount received from cash and land subsidies and
from Government loan       55,532,651
Balance     $37,267,700
I. G. OGDEN,
Auditor-
Amount expended in excess of receipts up to 31st December,
1883, as shown by statement of that date     $37,377,175
Amount received from Government loan to apply on 1883
expenditure        7,500,000
$29,877,175-
Amount expended in excess of receipts up to 31st December,
1884, as shown by statement of that date       37,267,700-
$7,390,525
Add—Amount deducted from estimates paid by Government
to repay advances on rails of 1883  339 235-
Net increase of expenditure over receipts from Government
subsidy and loan during 1884      3*7 729 76O-
I. G. OGDEN,
Auditors 11
The above statement is made in comparison and to
cover items in statement of 1883, but does not cover expenditure for interest, general expenses, interest on Government loans, &c.
Estimated probable expenditure to June, 1886, for additional equipment and improvements, and for additional
facilities necessary to advantageous operation, and full
development or traffic.
For sleeping cars, passenger cars, dining cars, baggage, mail
and express cars, emigrant cars, box and cattle cars,
conductors' cars, derrick, tool and other auxiliary cars,
locomotives, hand' cars, push cars, track tools, semaphores and other equipment requisite for operation of
fine, also for restoring construction locomotives to good
working condition       $1,000,000
For elevators, Port Arthur, Montreal, &c., coal bunkers,
Montreal, additional real estate, Montreal and elsewhere, revetment walls at Montreal, additional depot
and tracks and other facilities, Montreal and other
points, additional yard room and tracks, coal and other
docks, and other terminal facilities at Fort William
and Port Arthur         1,500,000
For Divisional shops and machinery at nine points, coal
docks and machinery at two points on Lake Superior
section. Station buildings, section houses and miscellaneous buildings at various points, additional station
sidings and crossings, tracks at various points, extension of Divisional yards, additional engine houses, improvement in water supply, additional tanks, permanent bridge work at various crossings Bow River and
on other sections, additional ballasting, filling trestles
and raising roadway  600,000
For completion telegraph system, main line and branches... 275,000
For connection with Coal Harbor and English Bay, shops,
buildings, docks, tracks and other facilities at Pacific
terminus  760,000
Contingent expenses  910,000
$5,045,000
CONTINGENT EXPENDITURE.
Snow sheds in Mountains * \ $450,000
Snow protection, Lake Superior section  160,000
Prairie section, obliterating remaining cuttings ft  100,000
Terminal facilities at Quebec  200,000
$910,000 12
Statement of amounts expended on improvements on
main line and branches, additional equipment, &c, in
1884 in excess of estimates received, and beyond requirements of the contract, and for which no part of the government loan or subsidy was available :—
Montreal to Sudbury  $ 843,694
•Sudbury to Winnipeg  1,382,845
Winnipeg West j 1 1,209,796.
Expended on branches  578,048
Expended on Government lines  150,435
Expended in additional equipment  547,866
$4,702,684
Amount paid during 1884 on interest dividends, exchange,
insurance and general expenses         3,478,485
$8,181,269
Not included in above the estimate of extra expenditure on
construction between Michipicoten and Port Arthur
beyond the requirements of the contract, amounting to     $2,500,000
Statement of the Accountant appointed by the Government to
examine the books of the Company.
Ottawa, 4th May, 1885.
Sir,—I have the honour to state that, in accordance
with your instructions of the 13th ult, and the further
verbal request of the honourable the Finance Minister, I
have carefully examined into the books of the Canadian
Pacific Railway Company, and have extracted from them
a balance sheet showing the state of affairs on the 31st
December, 1883, and the 31st December, 1884, respectively. From this balance sheet I have constructed a
statement, exhibiting those phases of their expenditure
into which the honourable the Finance Minister directed
me more particularly to enquire, viz.:—The extent of
expenditure made by the Company upon the main line
■(from Montreal to the Pacific Coast) out of its own resources, independently of moneys received from the Gov- 13
ernment, and the proximate causes which have led to the
existence of a floating debt of from $6,000,000 to $7,000,-
000. I append the statement hereto, and have the honour
to be, Sir
Your obedient servant,
Edward Miall.
Hon. J. H. Pope, Minister of Railways and Canals.
BALANCE SHEET.
Canadian Pacific Railway—Condensed balance sheet lst January, 1885:
West of Callander—
Construction  $48,382,084
Improvements  1,241,780
Materials  3,687,729
East of Callander—
On main line	
Equipments on main line	
Interest, etc., on financial matters in connection with
e onstruction, handing material, etc
Received from Government—
Subsidy     $20,240,317
Loan—
Less   retained   for   dividend   guarantee,
$7,380,912       18,626,600
Land—
Proceeds of j         8,702,086
Expended on main line out of Company's resources  $20,514,577
Expended out of Company's funds on connections  5,857,224
Dividend *  5,378,000
Deposit with Government to guarantee dividend  6,907,377
Total expenditure made and liabilities incurred of other than
Government resources     $38,657,178
Provided thus .
Capital        $29,568,123
Bonuses  232,600
Town sites  504,675
Earnings     $1,626,063
Less—Balances due  169,745
1,456,318
Floating debt. 14
Resolutions.
On Tuesday, the 30th April, 1885, the Premier, The
Rt. Hon. Sir John A. Macdonald, gave notice in the
House of Commons of, and laid on the table, the following Resolutions :—
1. That the Canadian Pacific Railway Company, under
the authority of its shareholders, as provided by the 28th
section of its Charter, may issue and deliver to the Government first mortgage bonds to the extent of $35,000,000,
bearing 5 per #ent. interest, such bonds to constitute and
.be a first lien and charge on the entire property, of the
Company, real and personal, now owned or hereafter to
be acquired, or owned by it (save and except the lands
granted or to be granted by the Government to the Company under the said contract), including its main line of
Railway with its tolls and revenues, the extensions thereof; its branch lines of Railway (except the Algoma
Branch), the whole of its equipment, rolling stock and
plant, and all its steamers and vessels, saving always,
however, the rights of the holders of the existing mortgages on the extensions of the line of the Railway from
Callander to Brockville and Montreal as security for the
unpaid balances of the purchase money of the said extensions.
2. That the Company may secure the payment of the
said Bonds and of the interest thereon by a Deed of Mortgage executed by the Company to Trustees to be approved
by the Government, with the authority and of the tenor
and purport, and containing the conditions, remedies, provisions and powers authorized and provided for by the
28th Section of the Charter of the Company, to such
extent and in such manner and form as shall be approved
by the Governor in Council.
3. That upon the issue and delivery of the said Bonds
to the Government, the lien and charge created by the 15
Act 47 Victoria, Chapter 1, intituled: " An Act to amend
the Act respecting the Canadian Pacific Railway Company and for other purposes "; upon the Railway and property of the Company affected by the said Bonds and by
the Deed of Mortgage securing the same shall cease to
exist, and shall be released and discharged in respect of
the Railway and property so affected, and the shares in
the capital stock of the Company, to the extent of
$35,000,000 now in the hands of the Government shall be
cancelled and destroyed. But the Algoma Branch shall
still remain charged with the lien and charge created by
the said Act.
4. That the time for the payment of the entire loan to
the Company of $29,880,912 shall be fixed at the first day
of May, 1891, and so long as default shall not occur in the
payment of principal or interest at the times when they
shall respectively become due, the interest upon the said
loan shall be computed at the rate of 4 per cent, per
annum. But the Company may at any time pay the
amount of the said debt or any part thereof in sums of not
less than $1,000,000 ; and if such payment be made on
account of the sum of $20,000,000, hereinafter mentioned,
son ding* amount of Bonds shall be returned to it.
5. That as security for the payment of $20,000,000 of
such loan and of the interest thereon, the Government
shall hold and retain $20,000,000 of the said first mortgage bonds, and in respect of such bonds shall have all
the rights of bondholders except as to the rate of interest
as provided in the last preceding section. And upon payment of any half-yearly instalment of such interest the
half-yearly coupons attached to the said bonds, corresponding to such half-yearly payment of interest, shall be
cancelled and surrendered to the Company. But if the
Company makes default in the payment of the interest on
the said sum of $20,000,000 or of the principal thereof at 16
the time when the same shall become due respectively,
the rate of interest upon the whole loan shall thereafter
be computed at the rate of 5 per cent, per annum; and
such default shall be equivalent to a default in the payment of the interest on the said Bonds, and shall entitle
the Government to the same remedies as if default had
been made in the payment of the interest or principal of
the said Bonds; and upon the Company remaining in
default in respect of either the principal or interest on the
said $20,000,000 for a period of 12 months, the Trustees
shall be authorized and empowered to take possession of
the property mortgaged and to administer the same for
the benefit of the bondholders generally.
6. That as security for the payment of the balance of
the said loan amounting to the sum of $9,880,912, and
the interest thereon, the Government shall have a first
lien and mortgage, subject to the outstanding Land Grant
Bonds, on the whole of the unsold lands forming the
remaining part of the Company's Land Grant earned and
to be hereafter earned, such principal and interest to be
paid out of the nett proceeds of the sale of such lands ;
and the Government shall continue to hold and retain
the entire amount of Land Grant Bonds now in its custody
and possession as provided by the said Act. And if the
nett proceeds of such sales to be made from time to time
in due course, shall be insufficient to pay the interest on
the said last mentioned amount as the same shall fall due,
or the principal thereof, when the same shall become due,
the Governor in Council may order the sale by the trustees of such lands or any part thereof in such manner as
shall be fixed by such order, in satisfaction of the interest
or principal in respect of which default has occurred.
And after the sale of the whole of such lands any deficiency in the proceeds thereof to pay the amount charged
thereon, shall be a charge upon the Company's entire
revenue after providing for its fixed charges, and by pre- 17
ference over the shareholders. And no further or other
charge shall be created on the property mortgaged as
security for the said first mortgage bonds until the said
sum of $9,880,912 and interest, and also the said sum of
$20,000,000 and interest shall have been paid in full; and
after payment out of the proceeds of such lands of the
outstanding Land Grant Bonds, and of the said sum of
$9,880,912 and interest, the remainder of such lands shall
remain charged with a first lien and privilege in favor of
the Government as additional security for the payment of
the said sum of $20,000,000 and interest.
7. That the Government may make a temporary loan to
the Company of $5,000,000 to be repaid by the Company
to the Government on or before the lst day of July, 1886,
with interest at the rate of 4 per cent, per annum payable
on the lst day of January and the lst day of July, 1886,
the Company to have the right to repay the said loan by
instalments of not less than $1,000,000 each, and to receive
on the payment thereof, a corresponding proportion of the
amount of said bonds held as security therefor ; and after
reserving part ol the said bonds to the amount of $8,000,000
to be held by the Government as security for the said
temporary loan, and to be dev ered to the Company on
payment to the Government of the said sum of $5,000,000
and interest in whole or in part in proportion to such
payment, the remainder of the said Bonds shall be from
time to time paid by the Government to the Company, to
be applied by the Company under the supervision of the
Government to the payment for work done or to be done
for the development, improvement and extension of the
Railway, its connections and equipment, and for the maintenance of the credit, and efficiency of the Company generally to the satisfaction of the Government; and if the
Bonds in the hands of the Government, or any part thereof,
shall be sold by the Company at a price satisfactory to the
Oovernment, the proceeds of such sale shall be paid into
1, 18
the hands of the Government in the place and stead of
the Bonds so sold, and such proceeds shall be dealt with
as is hereinbefore provided with respect to the Bonds they
represent.
8. That the proportion to which the Government is entitled of the moneys realized by the Trustees of the Land
-Grant Bonds ; and after the redemption of the Land Grant
Bonds, the proceeds of all sales of Land granted or to be
granted to the Company, under the contract, realized as
provided by the said Act, shall be applied to the payment of the interest and principal of the said sum of
$9,880,912. And after payment thereof in full, towards
the payment to the Government of the interest and principal of the said sum of $20,000,000.
9. That the said Act of last Session (47th Victoria, Chap.
1), shall remain in force except in so far as it is affected
by the provisions hereof.
10. That if at any time any line connecting with the
United States system of Railways shall be in course of
construction to a point on the river St. Mary's, and there
shall be a probability of the early completion thereof;
and the Company shall desire to continue the Algoma
Branch to a junction with such line; the Governor in
Council may, in their discretion, and upon such conditions as they shall determine, order the release and discharge of the said Branch from the lien and charge thereon
created by the said Act, and continued by this Act, and
may, by such order, authorize the Company to exercise in
respect of the said Branch, the power of mortgaging the
same in manner and form as provided by its charter with
respect to mortgaging the main line thereof, to such extent per mile as shall be fixed by such order, the proceeds
of such Bonds to be applied exclusively to the construction of the extension of the said Branch to such junction.     CANADIAN PACIFIC RAILWAY.
REPORT OF PROCEEDINGS
AT   THE '
ADJOURNED ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
HELD AT THE OFFICES OF THE COMPANY, MONTEEAL,
ON
SATURDAY,  13th JUNE,  188S.
j? i  BOARD OF DIRECTORS.
-GEORGE STEPHEN,        -       -    ' -■      -       -       -       - Montreal.
Wm. C VAN HORNE,  do
JSon. DONALD A. SMITH,        ------ do
JRICHARD B. ANGUS,  do
EDMUND B. OSLER,  Toronto.
<SANDFORD FLEMING, C.E., C.M.G., -       -       - Ottawa.
H. S. NORTHCOTE,   -------- London.
P. du P. GRENFELL,  do
•C.D.ROSE,  do
R. V. MARTINSEN,       - Amsterdam and New York.
Hon. W. L. SCOTT,  Erie, Pa.
•GEORGE R. HARRIS, of Messrs. Blake Bros. & Co.,    - Boston.
OFFICERS.
■GEORGE STEPHEN, President,  Montreal.
W. C. VAN HORNE, Vice-President,       ...       - do
Hon. J. J. C. ABBOTT, General Counsel,     -       -       -       - do
-CHARLES DRINKWATER, Secretary,  -       -       -       - do
I. G. OGDEN, Auditor,  do
W. SUTHERLAND TAYLOR, Treasurer,       -      -       - do
-JOHN H. McTAVISH, Land Commissioner,        - Winnipeg.
JHENRY BEATTY, Manager Lake Transportation, -       - Toronto.
JOHN M. EGAN, Gen.-Supt. Western Division, -       - Winnipeg.
"WILLIAM WHYTE,     "       Eastern & Ontario Divisions, Montreal.
EXECUTIVE COMMITTEE.
Ill
GEORGE STEPHEN.
WM. C. VAN HORNE.
«jri
NERAL OFFICES,
Hon. DONALD A. SMITH.
R. B. ANGUS.
MONTREAL.  Canadian pacific ^ailrtratj.
FOURTH  ANNUAL  MEETING.
JReport of the Proceedings at the adjourned Annual and Special
Meeting of Shareholders held, this 13£A day of June, 1885, in
pursuance of a resolution of adjournment passed at the Meeting
held, in accordance with the provisions of the Company's chanter,
on Wednesday the \Mh day of May last.
The shareholders assembled, in conformity with the
notice convening the meeting, at noon, at the offices of
the Company in Montreal. The President, Mr. Greorge
^Stephen, took the chair, and the Secretary of the Company
Acted as Secretary of the meeting.
The shareholders present in-person, and duly represented by proxy were ascertained to be 269 in number,
iolding 382,138 shares of the stock of the Company.
The annual report, a copy of which is attached hereto,
laving been read, the President made the following
remarks:—
In moving the adoption of the report which has just
been read, I desire to say a few words which I think
necessary fully to explain the position of this Company's
.affairs at present, and which could not well be compressed within the limits of the official report. 6
Tou will, no doubt, concur with me in thinking that
the statements which the Directors have laid before you
in the report are such as to inspire confidence in the success of the undertaking, while, at the same time, they
indicate much that remains to be done before that success-
can be secured to its fullest extent.
I congratulate you upon what I think I may venture-
to call the unparalleled rapidity with which the railway
has been constructed, and upon the results which its-
operation has already accomplished. The figures placed
before you are not approached in the history of railway
construction, and as well from the reports of persons-
skilled in such matters, as from my own observation, I
can state that the efficiency and thoroughness of the work
are as remarkable as the rapidity with which it has been
performed.
In the recent unhappy disturbances in the North-Westr
the Company has been fortunate in being able to assist in
the transport of troops and material to the field of action y
and although, of necessity, some discomfort was * experienced by the volunteers in their passage north of Lake
Superior, the speed with which that transport was-
effected contributed, in no small degree, to the suppression of the outbreak. This circumstance has drawn
attention, both here and in Europe, to the probability
that the railway may, upon its completion to the Pacific
Ocean, bear a still more important part in the defence of
the Empire, and that its usefulness, in that respect, will
form an important adjunct to its value as a peaceful
instrument in the consolidation and development of the*
resources of the Dominion.
One of the subjects which are most debated with refer- ence to the railway, is the position and value of its
acquired and leased lines. On this subject you have some
statistics in the report, and I would only desire to add a
few words to the information so given you. The main
line of the railway, as you are aware, terminates at Callander, but for the purpose of connecting it with the seaboard, with inland navigation, and with the railway
systems of Ontario and Quebec, an extension of it to Montreal and Brockville has been acquired, .and the consolidated line known as the Ontario and Quebec Railway,
passing through Ontario and connecting with American
lines and with Lake Huron, has been leased in perpetuity.
_ These acquisitions by purchase and lease have been frequently referred to as involving the expenditure of money
more properly applicable to the construction of the main
line. But as respects the original expenditure upon these
lines, it is sufficient to say that it has already been
repeatedly shown that the cost of the acquisition of the
extension to Brockville and Montreal, with many other
similar expenditures, was more than provided for by the
Company itself from funds derived from its own stock';
and that the Ontario and Quebec system was acquired
and constructed by individuals, independent of assistance
from any portion of the funds of this Company.
What I desire now to point out to you, is, that returns
of the actual traffic on the acquired and leased lines east
and south of Callander show, at this moment, a net
revenue exceeding by 25 per cent, the fixed charges upon
them, and exceeding by above 10 per cent, the interest
upon the entire cost of those extensions and leased lines,
including such fixed charges. This gratifying result, as
it seems to me, should put an end to the statement so
freely made in various quarters, that the  acquisition of
a III
]jll 1
II ill
11 these lines by the Company, constitutes a burden upon
the enterprise, to say nothing of the argument, which I
fully endorse, that their importance to the Canadian Pacific
Eailway, in securing for it the handling of traffic, will be
at least equal to, and probably greatly exceed, in value, the
revenue directly derived from them.
I am pleased also to be able to point out to you that
the advantages afforded by the Company's stock, as an
investment, are beginning to be apreciated by foreign
investors. Large numbers of persons in Britain are holders
of the stock, and as very little speculation prevails, these
persons seem to have purchased mainly for investment. I
am enabled to state that of the $65,000,000 of stock issued
by the Company, about $40,000,000 are held in England,
about $10,000,000 in the United States, and about $15,000,-
000 in Canada ; and it may not be uninteresting also for
you to know that the amount of stock now held by the
original promoters of the enterprise is greater than at any
previous time in the history of the Company.
Another subject has been engaging the attention of the
Directors which had not reached a position to be mentioned
in the report. I refer to the informal discussions which
have been taking place during the past year with reference
to obtaining access to the Port of Quebec, and towards procuring the construction of a shorter line of railway from
Montreal to the Atlantic coast in the Maritime Provinces.
The Directors have felt the importance of obtaining access
to the city of Quebec, and to the sea-board at points open
in the winter season, and Eesolutions are now before the
House of Commons tending to further both these objects
The importance of a free access to Quebec was stiongly felt
at the time of the acquisition of the western seclion of the 9
Quebec, Montreal, Ottawa and Occidental Eailway, and
conditions were inserted in the agreement of purchase from
the Quebec Government, which, if carried out, would
have afforded the Company the desired exit for its summer
traffic.
Those conditions, however, were not performed by
the Company which obtained control of the Eastern section, and although, as you will no doubt have perceived
by the published correspondence, every effort was made
by the Canadian Pacific Eailway Company to obtain the
carrying out of the agreement with the Quebec Government, short of proceedings at law for enforcing them, these
efforts were not successful. And the discontent which
arose among the citizens of Quebec respecting the very
imperfect connection with the interior which was afforded by the North Shore Eailway, through the controlling
influence under which it has fallen, had culminated in an
agitation for an efficient and convenient access, to and
from the City, for the internal and foreign trade which
naturally appertains to that important sea-port.
Such access this Company is equally solicitous with the
citizens of Quebec to have placed on a proper footing, and
-no effort will be spared on its behalf to obtain such access,
either by acquiring the North Shore Eailway, if that be
practicable upon reasonable terms, or by making arrangements for such access as will operate as effectually as
would the actual acquisition of the railway itself.
The further alternative of procuring the construction
of a second line of railway from Montreal to Quebec, by
a company to be incorporated by the G-overnment for
that purpose, and to be operated by this Company, is contemplated and conditionally subsidized by the Govern- 10
ment measure;  but is an alternative which I sincerely
trust there will be no necessity for resorting to.
"While on this subject I would like to take the opportunity of expressing my regret that the President of the
Grand Trunk Eailway Company should have seen fit, at
the half-yearly meeting of the Shareholders of that Company held recently in London, to indulge in an unfair
and uncalled for attack upon this Company. It would
serve no useful purpose for me either to answer his personal attacks, or to notice the insolent language of some
of the other speakers at that meeting—speakers who are
regularly put forward at such meetings, to speak not
only of the Canadian Pacific Company, but also of the
Canadian Government, in terms that would be impolitic
for the President himself to use.
The President of the Grand Trunk Company, after
expressing grave doubts as to the possibility of the
Canadian Pacific ever being able to pay its own working
expenses, and pointing out the consequent worthlessness
of its obligations to pay the rental of its leased lines, the
Ontario and Quebec in particular, becomes sympathetic
over the troubles he pictures for us, quite forgetting his
own for the time. He goes on to say that the question
is not how much profit we will make in the first few
years, but how much loss we will suffer in working our
Eailway, and how much more money we will want to
complete it. He winds up his melancholy forecast of our
future by observing, that the best thing for the Government and ourselves, would be that our Eailway should
be taken over by the Government, and that when that
happy time comes, as he thinks'it must come, there will
be an end to undue competition ; and he promises the
friendly assistance of the Grand Trunk proprietors  to 11
enable the Government to work our line with as little
loss as possible.
What weight the Grand Trunk shareholders attach to
the oracular utterances of their President I do not know,
but I think, in fairness to them, if not to ourselves, he
should have stated that his information was entirely
second-hand. I doubt if he has ever seen a mile of the
Canadian Pacific Eailway or been within a thousand
miles of that " vast country," the opening of which he
was obliged to say might do the Grand Trunk Eailway
much good by bringing new traffic into Canada.
Had he told his hearers how ill-qualified he was to
form a correct opinion on the subject on which he was so
confidently presuming to enlighten them, they would
have been better able to judge as to the value of the
gloomy forecast of our future with which he tried to
cheer up his desponding and somewhat restive audience.
I will not follow the example set by the President of
the Grand Trunk Company, and occupy your attention
with any opinions I may have on the position and prospects of that railway, or of any other business competitor ; I could not do so without feeling that I was guilty
of wanton impertinence.
With reference to the conundrum proposed by Sir
Henry Tyler to his shareholders about the difficulty of
working our line " with a very severe climate and with
I all sorts of disadvantages," much greater, as he claims,
than those under which his line labors, it is sufficient to
say that during the two years we have been working the
line between Lake Superior and the Eocky Mountains, a
distance of nearly 1,500 miles, we have not—it may surprise you to know—had occasion to use a snow-plough
li
in 12
to keep the line open: and during the past unusually
severe winter not one train has been delayed a minute
on all of our lines in the North-West by snow or cold
weather. Nor have I any apprehension that in publishing our weekly statements of earnings we will often be
obliged to resort to the explanatory cable, familiar of
Grand Trunk shareholders, "Line blocked by snow."
For is it not within the knowledge of every Canadian
present that during the past winter there was more
trouble from snow, and more detentions to trains from
severe weather, on the 330 miles of the Grand Trunk
Eailway between Montreal and Toronto than on all the
2,800 miles operated by the Canadian Pacific Company?
I commenced these remarks by saying that I regretted
that the President of the Grand Trunk Company had
gone out of his way to speak ill of this Company, and I
repeat this regret most sincerely.
He has set an example which I hope will never be
imitated by any President of the Canadian Pacific Eailway Company. If it is a fact, as Sir Henry Tyler stated,
that the few individuals connected with the Canadian
Pacific Company, who, at great personal sacrifice and
inconvenience to themselves, found the capital necessary
to provide the Canadian Pacific with a valuable and indispensable connection in the Province of Ontario, did a very
foolish thing for themselves, why waste time in persistently reminding them of their folly ?
If any of us have made a bad investment, it is our own
affair, and the loss will be ours. If, however, we are
satisfied, why should the President of the Grand Company vex his soul about the safety of our investments ? 13
I have always held the opinion that there is in Canada
plenty of room for both Companies, and every day that
conviction becomes stronger. Competition between us
there must always be, but being competitors why should
we be enemies, always at war ?
Eeading between the lines of Sir Henry Tyler's
speech, I think you will perceive some faint grounds for
hope that he is tardily coming to the same conclusion as
my colleagues and myself have always held on this question. He says to his Shareholders that " there is nothing
I the Grand Trunk desires more than to contribute to the
| prosperity of Canada in every way by extensions of
I railways throughout the country, and by opening out
I those lines which will tend to develope the resources of
" the Dominion."
ill
If Sir Henry Tyler and his Grand Trunk Trunk friends
had acted upon these patriotic sentiments, how different
would have been the relations of the two Companies!
But we can well afford to bury the past and to forget the
hard words and unfriendly acts of the past four years.
Both railways are here, and here they must remain, and
it is the duty of those who are responsible for their
management to devote themselves honestly and earnestly
to the development of the resources and trade of this
great and growing country; and in this way they will
best promote the interests of their respective Shareholders, and secure a fair return on their invested capital.
The two Companies, each independent of the other as
they must always be, but working harmoniously for
these common objects, will accomplish the purpose for
which their Charters were granted, and for which the
Country has so freely given aid to both. 14
The Chairman then moved a Eesolution adopting the
report, which was seconded by Mr. Van Home, and carried unanimously.
The following resolutions were also unanimously
adopted:—
That the following resolution passed by the Board at the meeting held
on the 9th June instant be, and the same is, hereby ratified and confirmed :—
" That By-law No. 50, fixing the tariff of tolls, rates and fares be
amended, so that the section relating to the conveyance of emigrants
shall read as follows:—
I Emigrant fares one half first class passenger rates,,
except from Emerson and Gretna."
That the minutes of the meetings of the Board and Executive Committee held since the Annual Meeting held on the 14th May, 1884, and
now laid on the table be, and the same are, hereby approved, ratified and
confirmed.
That the remuneration of the President for the current year be $5,000,
and of each Director other than the President, $1,000 ; that there be no
special remuneration attached to the office of member of the Executive
Committee; and that the remuneration of the Vice-President, performing
the functions of General Manager, remain as heretofore.
The Chairman having named Messrs. Edmund B. Osier
and John Turnbull as Scrutineers, a ballot was taken for
the election of Directors for the ensuing year ; and on the
report of the Scrutineers the following were declared
duly elected:—
George Stephen,
Hon. Donald A. Smith,
Wm. C. Yan Home,
Eichard B. Angus,
Edmund B. Osier,
Sandford Fleming, C.E., C.M.G
H. S. Northcote,
P. du P. Grenfell,
C. D. Eose,
E. V. Martinsen,
Hon. W. L. Scott,
Montreal.
Toronto.
Ottawa.
London.
Amsterdam & New York
Erie, Pa.
George E. Harris, of Mess. Blake Bros. & Co., Boston 15
And on motion it was
Resolved, That the General Annual Meeting convened for the election
of Directors, and the transaction of business generally be adjourned
until Thursday, the 25th day of June instant, at the same hour and
place ; and that such adjournment do take effect upon the termination of
the special business of which notice has been given.
The meeting was then made special for the consideration of the said special business.
And the President stated that some informal discussion had taken place with the Government respecting the
best mode of obtaining access to Quebec, and with officials of the Grand Trunk Eailway as to the North Shore
Eailway ; and that in view of the resolutions now before
the House of Commons, it was expedient that such authority as the Shareholders might determine upon in respect
of that important subject, should be conferred upon the
Board:—
Whereupon it was
Resolved, That the Directors of this Company be, and they are, hereby
authorized to enter into snob agreement with the Government and with
the Company, controlling the North Shore Railway as they shall determine upon, and as they consider necessary to meet the requirements of
the said Resolutions and of the Government, in connection therewith.
And on motion it was further
Resolved, That this meeting for special business be also adjourned until
Thursday, the 25th day of June instant, at the same hour and place, such
business to be taken up immediately after the business of the adjourned
General Annual Meeting has been transacted.
At a meeting of the new Board subsequently held
Mr. George Stephen was re-elected President, and Mr. W.
C. Yan Home, Yice President of the Company. 7 REPORT
OF THE
Directors of the  Canadian Pacific Eailway Company,
submitted at the adjourned annual greneral
Meeting   of   the   Shareholders,   held   at
Montreal  on the  13th June,   1885.
A general balance sheet, with accounts and statements
showing the position of the Company at 31st December,
1884, are herewith submitted to the Shareholders.
Progress of Construction.
The Directors beg to report that—
During the past year, the work of construction on the
main line has been prosecuted with uninterrupted energy
and success ; the promise made in May last to the Shareholders, in the Annual Eeport, "that the rails will be
I laid from Callander to Port Arthur within a year from
" this time," having been literally fulfilled.
On the Mountain Section the rails are now laid to a
point near the summit of the Selkirks, forming a continuous rail connection from Montreal westward for a
distance of nearly 2,500 miles.
On the Government Section between Port Moody (the
present Pacific Ocean terminus) and Savona's Ferry, a
distance of 213 miles, the rails have been laid; and this
section of the line, which will soon be handed over by the
Government to the Company, has been operated for some
time past by the Contractor who built it.
2
;     ::
\mti 18
On the section between Savonas' Ferry and the present
end of the track, near the summit of the Selkirks, a distance of 203 miles (the only remaining gap between
Montreal and the Pacific Ocean), the work is so far
advanced, as to justify the expectation that the rails will
be laid before the end of September—completing the
track from end to end of the entire Main Line.
The Directors, therefore, can confidently assure the
shareholders that by the early spring of next year
the through line from Montreal to the Pacific Ocean
(a distance of 2,895 miles) will be finished and in perfect condition, thoroughly equipped, possessing every
requisite facility for doing its work economically and
efficiently, and at least equal to the best of its competitors in all respects ; particularly as to curves and gradients, permanent way and rolling stock ; the quality
and character of the railway being far above the standard
fixed in the contract with the Government. The Company
will then have built and equipped 2,244 miles of railway
within five years from the time it began work.
Financial Position.
In considering the financial position of the Company,
it may be well to remind the Shareholders, that at the
beginning of the present year there remained in the
hands of the Government; an unexpended cash balance of
18,633,082, available for the work under contract with
the Government. This sum, as has already been officially stated, is sufficient to complete the work remaining
to be done, according to the terms of the contract.
It will be remembered that under the contract with
the Government, it was stipulated thai the line to be
built by the Company should be of a quality and charac- 19
ter equal to the Union Pacific Eailway as it was in February, 1873. But since that date the Union Pacific Eailway has been greatly improved, and other Pacific railways
of a high class have been built; and it will be obvious
to the Shareholders, that in order to ensure the complete
success of the enterprise, as a commercial undertaking,
it is absolutely necessary that the railway, on its opening for through traffic, shall be in all respects, at least
equal in efficiency to any of its transcontinental competitors as they now exist; and that it should be provided
with ample facilities for taking care of its rapidly increasing local traffic.
Eecognising this necessity, the Directors have made
during the past year large expenditures for rolling stock,
grain elevators, terminal and other facilities, and for the
general improvement of the lines in operation,—all necessary to secure the requisite high standard of efficiency,
though not fully foreseen at the time the contract was
made with the Government.
The amount expended towards this object during the
past year was $4,-702,684, and this sum, it will be noticed,
accounts for the greater part of the floating debt shown
in the balance sheet. Further additions to the equipment
are now being made; additional facilities will have to be
provided immediately, and the usual improvements incident to all new lines must be made from time to time.
All the various needs of a new railway in a new and
rapidly growing country, and everything necessary to
secure economical and efficient operation, and the full
development and permanent control of its traffic, must be
supplied.
For these purposes, the estimated amount required
will be as follows: 20
For sleeping cars, passenger cars, dining cars, baggage, mail and
express cars, emigrant cars, box and cattle cars, conductors'
cars, derrick, tool and other auxiliary cars, locomotives, hand
cars, push cars, track tools, semaphores and other equipment
requisite for operation of line, also for restoring construction
locomotives to good working condition     $1,000,000
For elevators, at Port Arthur, Fort William, Montreal, etc.; coal-
bunkers, Montreal; additional real estate, Montreal and elsewhere ; revetment walls at Montreal; additional depots and
tracks and other facilities, Montreal and other points; additional yard room and tracks, coal and other docks, and other
terminal facilities at Fort William "and Port Arthur       1,500,000
For divisional shops and machinery at nine points, coal docks
and machinery at two points on Lake Superior section; station* buildings, section houses and miscellaneous buildings
at various points; additional station sidings and crossing
tracks at various points ; extension of divisional yards;
additional engine houses; improvement in water supply ;
additional tanks; permanent bridge work at the various
crossings of Bow Kiver and on other sections; additional
ballasting, filling trestles and raising roadway  600,000
For completion of telegraph system, main line and branches.... 275,000
For connection with Coal Harbour and English Bay; shops, buildings, docks, tracks and other facilities at Pacific terminus.... 760,000
Contingent expenditures  910,000
$5,045,000
At the end of December last, according to the Balance
Sheet submitted, the total assets of the Company amounted
to $216,Y11,'725.58, as under :—
2,658  miles railway  and "appurtenances, including steamships and telegraph lines  $115,173,416 26
,713 miles railway, built by Government, and given to Company free, as part of subsidy  35,000,000 00
21,399,737 acres agricultural land, valued at $2 per acre.... 42,799,474 00
Amount in hands of Government to pay 9 years 3 per cont.
dividend on Capital Stock of Company  14,288,288 8 7
Balance due on lands sold  2,078,286 56
Land Grant Bonds in Treasury  728,500 00
Outside assets  6,643,759 89
Total assets ,  $216,711,725 58 21
f
Represented by total liabilities amounting to $106,914,306
As under:
Capital stock  $65,000,000
Canada Central Bonds  1,823,333
Quebec Province (due on account Q. M. O. & 0.
Railway)  3,500,000
Dominion Government Loan  26,007,512
Land Grant Bonds (outstanding)  3,688,000
Floating Debt  6,895,461
$106,914, 306
Assuming that the re-arrangement of the Company's
finances now under the consideration of Parliament becomes law, and that the $15,000,000 mortgage bonds
provided for under this re-arrangement are sold at par,
the following may be taken as the prospective financial
position of the Company at the lst of June next (1886);
after having expended the $8,633,082 remaining in the
hands of the Government for the completion of the main
line, after having provided for the payment of the floating debt amounting to $6,895,461, and after having expended the estimated $5,045,000 required for additional
equipment and facilities,:
ASSETS.
2658 miles railway and appurtenances, including steamships
and telegraph lines  $128,851,498
713 miles built by Government, forming part of subsidy  35,000,000
21,399,737 acres of land valued at $2 per acre  42,799,474
Amount remaining in hand to  pay 3 per cent, dividend on
Capital Stock for 7£ years  12,528,029
Balance due on lands sold  2,078,286
Outside assets  6,643,759
Cash balance from proceeds mortgage bonds  3,059,539
$230,960,585 99
liabilities.
Capital Stock  $65,000,000
Canada Central Bonds  1,823.333
Province of Quebee  3,500,000
Government Loans (secured by bonds)  20,000,000
*Government Loan Balance (secured by lands)  9,880'912
First Mortg ige Bonds (outstanding)  15,000,000
*Land Grant Bonds  3,688,000
$118,892,245
The Fixed  Charges will then be approximately as
follows:—
$20,000,000 Government Loan, 4 per cent  $800,000
$15,000,000 First Mortgage Bonds, 5 per cent  750,000
$3,500,000 due Government Quebec (account Q. M. O'. & O. Railway), 5 per cent  175,000
$1,823,000 Canada Central Bonds and Sinking Fund, 6 per cent. 107,400
Rental Leased Lines  778,434
$2,610,834
Add
$9,880,912 Government Loan, secured on Land Grant, 4 per cent. 395,236
Total fixed charges     $3,006,070
As the Shareholders are already aware, persistent efforts
of the enemies of the Company at home and abroad, to
destroy confidence in the enterprise, have been1 so far successful, that the $35,000,000 of unsold shares of the Capital
Stock of the Company have become practically useless as
an available resource. The Directors have in consequence
been obliged to apply to the Dominion Government for a
modification of the terms of the Act, under which the loan
of last year was granted to the Company. And a measure
is now before the Dominion Parliament which provides
* These items will.be reduced by land sales. 23
amongst other things for the cancellation of the $35,000,000
of unsold shares, and the substitution therefor of $35,-
000,000 five per cent. lst. Mortgage Bonds. The measure also provides for the postponement of the payment
of the indebtedness of the Company to the Government,
amounting to $29,880,912, to lst May, 1891, and for the
reduction of the rate of interest from five per cent to four
per cent; the Government agreeing to accept $20,000,000
of the proposed bonds as security for the payment of an
equal amount of the debt; and, as security for the payment
of the remaining $9,880,912, to retain a first lien on the
Unsold land of the Company, subject to the outstanding
Land Grant Bonds.
This measure does not afford means for so complete and
advantageous an arrangement of the Company's affairs as
would have been attained under the conditions suggested
in the President's letter of the 18th March last, a copy of
which and of the Eesolution based thereon now before
Parliament will be found in the Appendix to this Eeport.
But the proceeds of the $15,000,000 of first Mortgage Bonds
which will be available for use by the Company, will be
sufficient to enable it to pay the floating debt, and to provide
for all the additional equipment and facilities which will
be needed to place the carrying powers of tha Company,
and its accommodations for traffic, in the highest condition
of convenience and efficiency. But the Company is being
pressed in several quarters, for extensions and additional facilities beyond its main line, some of which it
desires to provide ; and although the Directors hope that
the measure proposed may also enable them to meet the
more important of these requirements, it remains to be
seen how far the Government measure, in reducing so
largely the relief the Company requested, may not restrict
its power of providing for the extensions of its connec- 24
tions, which the Company and the public, and it is
believed the Government also, desire to see carried out;
and may not also interfere with the intention and wish of
the Company to anticipate the period of the repayment of
the Government loan.
Should this measure become law, the position the Company will occupy on the opening of the through line next
spring may be summed up as follows:—
It will have a cash deposit in the hands of the Dominion Government, sufficient to pay semi-annual dividends
at the rate of 3 per cent, per annum on its $65,000,000
capital stock for seven and a half years, or until the end
of the year 1893. It will own 3,299 miles, and will hold
under lease 695 miles, of fully completed and thoroughly
equipped railway, forming a total mileage of 3,994 miles.
It will own more than 21,000,000 acres of agricultural
lands. It will own three fine steel steamships on the
great lakes, and an extensive and well appointed telegraph system, with power to extend its telegraph lines to
all parts of the country. All this property, together with
certain outside assets, in all valued at $230,960,585, will
be represented by a total indebtedness of $53,892,245,
bearing an unusually low rate of interest; and by $65,-
000,000 capital stock, for which dividends for seven and
one:half years will be in hand.
Traffic and Earnings.
The opening of the through line to the Pacific Ocean
for regular traffic in the spring of next year, will be the
full accomplishment of the national and political objects
which the Government of the Dominion had in view in
subsidising and aiding the construction of a transcon- 25
tinental line through Canadian territory ; the Company
will then have fulfilled all its obligations to the Government under its contract: it will be in the same position
as any other purely commercial enterprise; and will
depend for its prosperity upon the development of traffic
and prudent management. The value of the property as
an investment must then be measured and determined
solely by the amount of money it can earn.
The following results of the operation of the railway
for the last two years have been obtained from it as a
new and incomplete railway, only in partial operation, and
having to a large extent to create its own traffic; and that,
too, during a period of unexampled commercial depression:
Earnings and Expenses.
1883 1884
Passengers     $1,464,631 37 $1,980,902 30
Freight        3,755,915 99 3,410,365 39
Mail             69,109  16 85,736 83
Express             57,17116 95,67168
Sleeping cars             24 07155 43,492 60
Miscellaneous             52,796 72 134,352 47
$5,423,695 95 $5,750,521 27
Expenses       4,862,552 85 4,558,630 75
Net $561,143 10 $1,191,890 52
Construction material included in above earnings
1883
$1,274,000 Gross.
1884
$623,193 Gross.
The amounts included for carriage of construction
material do not affect the net result, as it was carried at
absolute cost, and such cost is included in the expenses. 26
Statement of Earnings, Expenses and Net Earnings for
1884.
Month.
Earnings.
S  cts.
274 645 02
224,638 54
279,575 22
343,966 52
424,556 77
550,661 22
549,367 21
565,814 47
639 839 78
735,531 11
640,373 38
521,552 03
$   cts.    $   cts.
401,915 19    127,270 17
363,965 48    139,326 94 .
355,275 76    75,700 54
318,938 71    25,027 81
349,739 93     74,816 84
399.030 12    151.631 10
Deficit,
do.
do.
March	
May	
July	
August.    ....
October	
December	
394,673 03
383,983 85
407,628 74
438,082 62
395,160 37
350,236 95
154,694 18
181,830 62
232,211 04
297,448 49
245,213 01
171,315 08
$5,750,521 27 $4,558,630 75 $1,191,890 52
1
During the first four months of the present year, 1885,
the earnings and expenses have been as follows :—
Month.
Earnings.
Expenses.
January .
February.
March ..
April ...
$       cts.
423,764 16
401,508 14
489,151  89
692,141 43
$        cts.
339,058 50
334,361  71
360,624 66
367,776 59
Total $2,006,565 62     $1,401,821 46
Net Earnings.
S       cts.
84,705 66
67,146 43
128,527 23
324,364 84
$604,744 16
There is thus shown an improvement in net results
over the first four months of last year of $922,014.
The amount of construction material carried this year
being $129,318 gross, as compared with $106,120 gross,
for the same time last vear. 21
According to the above statement, and assuming that
the net earnings for the last eight months of the present
year will be no more than they were for the last eight
months of 1884, the result for the present year will be
a net profit of $2,113,904.
As an increase in net earnings for the last eight months
of this year may fairly be expected, the Directors believe
that the net result of the present year's operations will
not fall short of $2,400,000 ; and without pretending to
be able to forecast the future, or wishing to indulge in
what might seem to be extravagant estimates of the
prospective earning power of the property, they believe
themselves justified in estimating that for the year beginning June lst, 1886, which will be the first year of the
full operation of the through line, the gross earnings will
not be less than $12,000,000, and the net profit not less
than $3,600,000 ; and the Directors feel confident that
every succeeding year, as the country traversed by the
line is brought under cultivation, there will be a large
and constant increase in the earnings and net results.
The Ontario and Quebec line, from Perth to Toronto,
was not opened for traffic until late in August last, and
it was in partial operation only during the remainder
of the year ; but the results were such as fully to satisfy
the expectations of the Directors, and to establish beyond
question its great value as a large contributor to the
profits of the Company, and its necessity for the protection of the traffic of the main line.
The Directors have no misgivings about the wisdom of
their policy in securing the control of new and independent connecting lines in Ontario and Quebec, the
necessity for which was impressed upon them by the
bitter hostility and unreasoning jealousy with which the 28
Oompany has been pursued, from its very inception, by
another Canadian railway company which has so long
enjoyed an almost undisputed monopoly of the railway
business of the Dominion. The Directors are convinced
that without the control of tributary lines., reaching all
the important centres of trade in the older provinces of the
Dominion, the Company could have no adequate command
of the traffic to and from the Canadian North-west and the
Pacific Coast, and that the greater part of it would continue to be carried by the American lines, as it has been
in the past, and the Canadian Pacific Railway would fail
to accomplish one of the main objects for which it was
brought into existence.
Lands.
The land sales for the past year have been as follows:—
798,584 acres, at an average price of $3.0If per acre.
The total sales up to Dec. 31st, 1884, were 3,l730,18t7 acres
Less cancelled sales      129,924    "
3,600,263 acres
These cancelled sales were the result of failure on the
part of the purchasers to carry out the terms of their contracts—in some cases as to cash payments, in others as to
cultivation. Where the lands were held by speculators
who defaulted in payments or in conditions as to cultivation, it was thought best that the lands should revert to
the Company; but the most liberal treatment has been
accorded to all bona fide settlers who appeared to have
acted in good faith.
The experience of the Company in the matter of land
sales has been to some extent similar to that of nearly all
the land grant railways in the United States, where the 29
first speculative fever has almost invariably been followed by a heavy falling off in land sales, owing to the
presence of vast quantities of free G-overnment lands;
but as these were taken up by settlers, the sales of railway lands increased, and prices increased as well.
Profiting by the experience of others, this Company has
extensively advertised the free G-overnment lands, and
made every effort to stimulate their settlement.
The settlements along the main line now extend something more than 400 miles west of "Winnipeg, and fortius distance the greater part of the Government lands
within ten miles of the railway have been taken up, and
there are indications of renewed activity in the sales of
the lands of the Company.
Land G-eant Mortgage.
The following was the position of the 5 per cent. Land
Grant and Mortgage Bonds, at 31st December, 1884 :—
Total issue  $25,000,000
Deposited with the Government as security under the
contract, without interest   $5,000,000
Held by tbe Government under the Loan Act, 1884,
without  interest     8,996,000
Redeemed by land sales and cancelled     7,316,000
 21,312,000
Balance outstanding  $3,688,000
Against this balance the Company holds interest-bearing obligations, on land sales contracts, amounting to
$2,078,286.56 and has on hand $728,500 unsold Bonds.
It will, no doubt, be gratifying to the shareholders to
know that there are no telegraph, sleeping-car or elevator companies, or anything of that nature, connected with 30
their line, nor any private interests of any description to
absorb any portion of their profits.
The disturbance among the Metis and Indians of the
North-West Territories, although occurring in a district
several hundred miles north of the railway, and in no
way affecting the Province of Manitoba nor any of the
territory adjacent to the Company's lines, may for this
season have a deterring effect upon emigration; but its
ultimate influence will not be injurious in this respect;
while the outbreak itself, and recent events in Europe
and Asia, have demonstrated the vast importance of the
Canadian Pacific Railway to the welfare of this country,
and to the Empire at large.
The Directors, without having come to any decision in
the matter, strongly incline to the opinion that, under all
the circumstances of the case, and especially in view of
the fact that the 3 per cent, guaranteed dividend, secured
for the next eight and half years, yields to the Shareholders a fair return for the capital invested, it would
not be expedient to pay any further supplementary
dividend out of capital, during the short period which
will be occupied in completing construction. The Directors, however, believe, that after that period has expired
the net earnings of the Company will soon be sufficient
to warrant the payment of increased dividends. '
The Directors are happy to state that in the operation of
the railway no material difficulties have been encountered,
and that, notwithstanding the unusual severity of the
past two winters, the traffic has been carried, both on the
Eastern and North-Western sections of the line, with
singular freedom from accident or delays ; and the
statement is now submitted with entire confidence,
that fewer difficulties will be experienced, in the future, r
31
than on any other railway in Canada or the northern
United States, and that, owing to the superior character
of the line, the expenses of maintenance and operation
will be considerably below the average.
The Directors regret losing another of the original associates, who together undertook to carry through this
work. Baron Reinach of Paris, having resigned his seat
at the Board in December last. Mr. John Turnbull, who
consented to join the Board temporarily in March 1884,
now desires to retire.
In conclusion the Directors desire to say, that it has
been their aim in this report to give information necessary to enable each Shareholder to form his own opinion
of the position and prospects of the Company. While the
past eighteen months have been a period of some anxiety
to the Directors, and the difficulties and embarrassments
connected with the undertaking sometimes seemed as if
they might prove to be overwhelming, yet amid them all
the Directors have never for a moment lost confidence in
the ultimate success of the enterprise.
G-EOROE STEPHEN,
President.  BALANCE    SHEET
AND
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DESCRIPTION
OF
FREIGHT CARRIED DURING THE YEAR 1884
Flour  975,084 Barrels
Grain  6,474,192 Bushels
Livestock  136,890 Head
Lumber 244,799,171 Feet
Firewood  54,657 Cords
Manufactured Goods  367,321 Tons
Other Articles  375,701 Tons
Number of Passengers carried during the year 1884....     1,171,851 MILEAGE OF ALL THE COMPANY'S LINES.
Miles.
Montreal to end of track, near summit of Selkirk Mountains   2478.5
End of track to Savona's Ferry, under construction     203.2
Savona's Ferry to Port Moody (completed by the Government but not
yet transferred to the Company)        213
Total Main Line  2894.7
Branch Lines.
Eastern Division, in Operation.
Miles.
Aylmer Branch,  Hull to Aylmer  7.5
St. Jerome   "       Ste. Therese to St. Jerome  12.4
St, Lin         I       St. Lin Junction to St. Lin  13.0
St. Eustache"       Ste. Therese to St. Eustache  8.0
Brockville   "       Carleton Junction to Brockville  45.5
Algoma       |       Sudbury to Algoma Mills  96.0
183.0
Western Division, in Operation.
Emerson          Branch, Emerson to Winnipeg Junction  64.5
Selkirk                   " Winnipeg to West Selkirk  22.6
Stonewall               " Air Line Junction to Stonewall  18.3
Pembina Mountain" Winnipeg to Manitou  102.4
Gretna                   " Kosenfeld to Gretna     13.9
221.7
Total Branch Lines      404.7
Leased Lines, in Operation.
Ontario and Quebec Railway.
Miles.
Smith's Falls to Toronto Junction   211.0
Toronto to St. Thomas  124.1
Toronto to Owen Sound   121.5
Streetsville to Orangeville (Orangeville Branch)     31.6
Church's Falls to Elora (Elora Branch)     27.6
Orangeville to Teeswater (Teeswater Branch)     69.5
Total, Ontario and Quebec Railway  582.2
St. Lawrence & Ottawa Eailway     54.0
Manitoba & South-Western Colonization Railway     51.0
Atlantic and North-West Eailway (not in operation)       8.0
113.0
Total Leased Lines      695.2
Total Mileage of the Company's Lines  3,994.6 Locomotives   304
First Class Passenger Cars  85
Second Class Passenger Cars  58
First and Second Class   Passenger  Cars
(composite) ;  3
Baggage, Mail, Express and Smoking Cars 11
Exhibition Car  1
Dining Car  1
First Class Sleeping Cars  i  19
Emigrant Sleeping Cars  22
Parlor Cars  9
Street Car  1
Official Cars  1
Flat Cars  4,411
Stone Cars  60
Lime Cars  22
Coal Cars  63
Box Cars   2,435
Stock Cars  281
Refrigerator Cars  10
Vans  163
Pay Cars   5
Derrick and Tool Cars  32
Snow Ploughs andFlangers  37
Total number Locomotives	
Total number of Passenger Cars of all
descriptions	
Total number Freight Cars of all descriptions 	
Conductors' Vans 	
Snow Ploughs, &c	  APPENDIX.
Copy of the application to the Government for relief, together
with the Resolutions based thereon submitted to Parliament.
Canadian Pacific Railway Company,
Montreal, 18th March, 1885.
Sir,
In view of the approaching completion of the contract
for the construction of the Canadian Pacific Railway from
Callander to the Pacific ocean, according to the contract
entered into by this company, and of the consequent
necessity for making timely and adequate provision for
the unexpectedly large volume of traffic which the line
has already developed, as well as for the great increase
which it is now certain will take place on the opening of
the through line in the spring of 1886, the company
finds itself compelled to seek for some re-arrangement of
its finances which will enable it to procure the necessary
capital required for this purpose. I have, therefore, the
honor, on behalf of the Board of Directors of this Company,
to submit to you some observations upon the position of
the company, and offer some suggestions as to the necessary remedial measures for restoring to the company the
free use and control of its own resources, and, at the
same time, of practically providing for the repayment of
the loan of last session, and relieving the Grovernment,
finally and forever, from all responsibility for, or connection with the Canadian Pacific Railway.
It will be remembered, that under the provisions of
the Act of last session, the Grovernment, as security for
the repayment of the loan to the company, deemed it
necessary to take a statutory lien, not only on the line con- ms.
40
tracted to be built, but on the whole property of the company, including its steamers and branch lines, practically
stripping it of every resource it possessed, and leaving it
without any means of providing for the important purposes of the enterprise, outside of the mere work of construction of the main line from Callander to the Pacific
Ocean, and its equipment, to the extent contemplated by
the contract, except its unsold stock.    That resource, the
only one the company had left, was rendered unavailable
owing, to some extent, to the provision in the Act, by
which, in case of default on the part of the company m
performing the conditions on which the loan was granted,
the Government could practically confiscate the whole
property of the Company, but also, in a greater measure,
to the unfair and malevolent attacks of the enemies of the
company, acting in concert with some, happily only some,
of the political opponents of the Government, aided by a
venal section of the newspaper press of the country.
From these quarters the company and its resources have
been unceasingly assailed and discredited during the
whole of the past year in the most unprincipled and unpatriotic manner. A large portion of the country traversed
by its lines has been decried as a barren and worthless
desert; the advantages of the Northwest, as a field for
emigration, have been depreciated, and attempts have
been made to create the impression that the line, when
opened, could not possibly pay its working expenses, and
that the Government would be compelled to take possession of it and operate it at a loss to the country, variously
estimated at from $3,000,000 to $8,000,000 annually. In
fact, the enemies of the company, both at home and abroad,
availed themselves of the stringency of the provisions of
the Loan Act, and of persistent and unfounded misrepresentations of the country, and of the conduct of the company, for the scarcely concealed purpose of wrecking the
enterprise. 41
By these means investors were alarmed, the stock was
prevented from becoming, as was expected, a means of
providing the company with the funds necessary for carrying on its business efficiently, and the credit of the company was all but destroyed.
The company, it will be remembered, at the time of the
passage of the Act, earnestly, but ineffectually, remonstrated against the severity of the conditions on which
the loan was granted ; especially pointing out the damaging effect on the future credit of the company, of the
stringent and apparently inequitable character of the
remedy taken by the Government, in the event of default
by the company, and their apprehensions in these respects
have been fully realized.
The shares of the company, at the time of the passing
of the Act last session, were selling at about $60 per $100
shares, and were expected to advance to $75 or $80.
Shortly afterwards they began to decline ; and they are
now quoted under $40 And, under the circumstances
stated, it is not surprising that the stock of the company
should fail to command the confidence of the investing
public.
The amount of the loan provided for by the act of last
session was $22,500,000 ; $7,500,000 of which were appropriated to pay existing obligations, leaving $15,000,000
for the purpose of completing the contract. This amount,
plus $12,710,000 unpaid subsidy then in the hands of the
Government, gave a total of $27,710,000 applicable only to
the work under contract. The mode provided by the Act for
obtaining payment out of this fund rendered it impossible
that any part of it could be drawn from the Government
for any purpose, except for the bare cost of construction,
with the stipulated amount of rolling stock. Before any
such payment could be made, an estimate was required to
be prepared by the Government engineers, as the work
ill ».,..,"—tii'iriiiiiiiiiiiimurr
42
proceeded, of the proportionate value of the work done ;
and the amount of such estimate, less ten per cent., was
paid to the company. But, in order to make the Railway
a first class carrying power, with all the appurtenances
and appliances necessary to enable it to compete successfully with the best of the American trans-continental
lines, much had to be done and provided besides the mere
work of construction and equipment according to the contract, and these requirements are not materially diminished by the fact, which is admitted, on all hands, that the
whole line has been constructed of a quality and character
far exceeding the standard agreed upon between the
Government and the company.
Upon the opening of the Railway in the Spring of next
year, it cannot dispense with a full provision for its efficient
and vigorous operation without great injury to its prestige
and future reputation.    Its road bed for the 2,900 miles
from Montreal to the Pacific Ocean, its facilitates for handling traffic, and its equipment, must be of the highest
class, not inferior to those of any other trans-continental
line, otherwise it will not command the traffic, and the
enemies of the enterprise will take a delight in pointing*
to it as a reproach, both to the country and the company.
For these purposes, the usual improvements required
upon all new railways have to be made.    Terminal facilities require to be provided, workshops have to be built
and furnished with expensive machinery, elevators require
to be constructed and many other things have to be done
to provide for the  unexpected  development  of traffic
already reached, and for the still greater volume which is
certain to follow the opening of the line.    Many of these
things  had to  be done  at  once,   and   could  be   most
economically provided concurrently  with  construction-
It would  have  been unwise  and improvident in the
extreme to have postponed such provision until the last
rail should be laid; and the Company accordingly felt
obliged to proceed to some extent with the most important 43
of these improvements. In doing so it relied upon the
proceeds of its unsold stock. It could not obtain one
dollar for any of these purposes under the Act of last Session, the provisions of which, as has been shown, were
confined to the actual work of creating the bed of the
railway, laying the track, and supplying it with a certain
quantity of rolling stock. The expenditure during the
past year, outside of the contract, for the purposes referred
to, amounts to about $5,000,000 ; and, in addition, in order
to keep faith with the shareholders, provision had to be
made for the payment of the promised extra dividend;
and interest had to be paid amounting altogether to about
$3,000,000 more. And as it was found impossible to
realize upon the unsold stock, some of the Directors resident in Montreal gratuitously came to the assistance of
the Company, pledging their personal credit and their
own private securities for the benefit of the Company,
•and so the money for the latter expenditure was found.
In the meantime the work of the contract has been carried on with the utmost energy and rapidity; and it will
be completed before the stipulated time, the money
remaining in the hands of the Government, amounting
on the 31st December last to $8,726,949, being sufficient
to complete the performance of all the obligations of the
Company under the contract. As was expected, there
has been a large saving effected on the cost of the work
on the Mountain Section, but the advantage thus obtained
has been absorbed in extra expenditure on the Lake
Superior section.
To enable the Company to procure the additional capital
that will be required for the purposes indicated, I beg'
respectfully to propose :—
1. That the $35,000,000 unsold stock shall be cancelled.
2. That authority be granted to the Company to issue, in lieu thereof,
$35,000,000, four per cent., fifty year, first mortgage bonds secured by a
first lien on the main line of the Railway from Montreal to the Pacific 44
Ocean, covering all terminals built, or to be built, and all equipment and
rolling stock now on' the line, or that may be hereafter put upon it;
"together with its tolls and revenues, subject, of course, to the existing
mortgages on the line from Montreal to Callander.
3. The Government to accept $15,000,000 of these bonds in part settlement of the loan to the Company, the balance of the loan to be paid off by
a reduction of the land grant, to an extent necessary to cover the amount
of the balance of the loan, at the rate of $2 per acre, which is 46 cents per
acre less than the lands already sold have netted the Company in cash.
The loan of last session would thus be practically paid off, and the
Company would have in its Treasury ample resources from its first mortgage and land grant bonds to provide for its present wants as well as for
the future development of its business; and with its credit restored and
re-established in the confidence of its shareholders it would then be in a
position to proceed, lst, with the much wanted extension of the Manitoba
South Western Railway; 2nd with the completion of the line to Sault Ste.
Marie; 3rd, to secure, in some way, a connection with the City and Harbor
of Quebec; 4th, with reasonable aid from the Government to extend the
Canadian Pacific system to the ocean ports of the Maritime Provinces;
5th, it would also be in a position to aid indirectly in securing the early
completion of its Ontario Division to the Detroit River, and at the same
time, removing for ever, all necessity for any further applications to the
Government for assistance on the part of the Company. Its further necessities and the success or failure of the enterprise would thus be entirely
the affair of the shareholders themselves.
4. To enable the company to provide for present wants, and to give it
time to realize on its securities, the Government to make a temporary loan
of $5,000,000 for a term not exceeding eighteen months, on the security
of the postal subsidy payable by the Government to the company, supplemented by a deposit with the Government ef $5,000,000 four per cent, first
mortgage bonds.
5. If the foregoing suggestion is adopted, an amount of the Land Grant
Bonds in the hands of the Government, equivalent to the number of acres
deducted from the land grant, must be cancelled; the balance of those
bonds, then remaining, to be returned to the company.
I regret that circumstances should have placed it in
the power of the enemies of the Company to compel it to
make this application to the Government; but hope the
suggestions now offered will receive favorable considera-
tion. Their adoption would have the effect of gradually
restoring the credit of the Company, and of placing the
enterprise in a condition to do its work efficiently  and 45
successfully, without involving the government in any
permanent additional outlay on behalf of the Company,
and actually providing for the practical repayment of the
existing loan.
In conclusion it only remains for me to add that, in
making this application to the Government, I do so with
the fullest faith and confidence in the present and future
money-earning power of the enterprise. I am satisfied
that the resources of the Company are amply sufficient
faithfully and honestly to discharge every obligation it
has incurred, whether to the Government or to others ; and
that the Canadian Pacific Railway, upon its final completion and equipment, will be one of the most important
and prosperous Railway properties on this Continent.
Statements are appended showing the amounts expended on improvements on main line and branches,,
rolling stock, etc., in 1884, beyond the requirements of the
contract: and an estimate of the probable expenditure,,
for similar purposes, up to May, 1886, with several other
statements bearing on some of the matters referred to^in
this letter.
I have the honor to be,
Sir,
Your obedient servant,
(Signed),        Geo. Stephen,
President.
The Honorable the Minister
of Railways and Canals, Ottawa. 46
STATEMENT
Showing the amounts expended by the Company on 31st
December, 1884, on construction of main line and branches,
extensions, torminals, improvements, equipment, interest
and dividends ; also showing the total amount rceeivedby-
the Company from its cash and land subsidies, and from
Government loan:
Expended on main line and branches  $52,595,842
Expended on equipment  9,168,755
Expended on improvement of Government lines  1,241,780
Material on hand  3,f87,729
Expended on advances to secure access to the Seaboard, and
for other purposes within the   charter and on leased
lines  5,857,223
Total expenditure to 31st December  $72,551,329
ADDITIONAL EXPENDITUEE.
•Sum now in hands of Government to pay nine years guaranteed
dividend  $14,288,288
Dividend paid  *] 5,378,000
Interest on land grant bonds  582,734
$92,800,351
'Total amount received from cash and land subsidies and from
Government loan        55,532,651
Balance     $37,267,700
I. G. OGDEN,
Auditor.
Amount expended in excess of receipts up to 31st December,
1883, as shown by statement of that date     $37,377,175
Amount received from Government loan to apply on 1883 expenditure	
Amount expended in excess of receipts up to 31st Pecember,
1884, as shown by statement of that date ,....
Add—Amount deducted from estimates paid by Government to
repay advances on rails of 1883	
Net increase of expenditure over receipts from Government subsidy and loan during 1884	
I. G,  OGDEN,
7,500,000
$29,877,175
$37,267,700
$7,390,525
339,235
$7,729,760
Auditor. The above statement is made in comparison and to
cover items in statement of 1883, but does not cover expenditure for interest, general expenses, interest on Government loan, &c.
Estimated probable expenditure to June, 1886, for additional equipment and improvements, and for additional
facilities necessary to advantageous operation, and full
development of traffic.
For sleeping cars, passenger cars, dining cars, baggage, mail and
express cars, emigrant cars, box and cattle cars, conductors'
cars, derrick, tool and other auxiliary cars, locomotives,
hand cars, push cars track tools, semaphores and other
equipment requisite for operation of line, also for restoring construction locomotives to ^ood working condition       $1,000;000
For elevators, Port Arthur, Montreal, &c, coal bunkprs,
Montreal, additional real estate, Montreal and elsewhere,
revetment walls, Montreal, additional depot and tracks
and other facilities, Montreal and other points, additional yard room and tracks, coal aDd other docks, and
other   terminal  facilities   at Fort  William   and   Port
Arthur         1,500,000
For Divisional shops and machinery at nine points, coal docks
and machinery at two points on Lake Superior section.
Station buildings, section houses and miscellaneous buildings at various points, additional station sidings, and
crossings, tracks at various points, extension of Divisional
yards, additional engine houses, improvement in water
supply, additional tanks, permanent bridge work at various crossings Bow Eiver and on other sections, additional ballasting, filling trestles and raising roadway.... 600,000
For completing telegraph system, main line and branches  275,000
For connection with Coal Harbor and English Bay, shops, buildings, docks, tracks and other facilities at Pacific terminus. 760,000
Contingent expenses            910,000
$5,045,000
CONTINGENT  EXPENDITUEE.
Snow sheds in Mountains  $450,000
Snow protection, Lake Supeiior section  160,000
Prairie section, obliterating remaining cuttings ".-  100,000
Terminal facilities, at Quebec  200,000
$910,000 48
Statement of amounts expended on improvements on
main line and branches, additional equipment, &c. in
1884 in excess of estimates received, and beyond requirements of the contract, and for which no part of the government loan or subsidy was available :—
Montreal to Sudbury  $843,694
1 392 845
Sudbury to Winnipeg         i.aa^Mo
TTT.     .       w   .   1,209,796
Winnipeg West  "
Expended on branches 	
Expended on Government lines  130,435
Expended in additional equipment  ^
$4,702,684
Amount paid during 1884 on inter* st dividends, exchange, insurance and general expenses         3,478,585
$8,181,269
Not included in the above estimate of extra expenditure on contraction between Michipicoten and Port Arthur beyond
the requirements of the contract, amounting to       $2,500,000
Statement of the Accountant appointed by the Government to
examine the books of the Company.
Ottawa, 4th May, 1885.
gIR>—I have the honor to state that in accordance
with your instructions of the 13th ult., and the further
verbal request of the honourable the Finance Minister; I
have carefully examined into the books of the Canadian
Pacific Railway Company, and have extracted from them
a balance sheet showing the state of affairs on 31st
December, 1883, and the 31st December, 1884, respectively. From this balance sheet I have constructed a
statement, exhibiting those phases of their expenditure
into which the honorable the Finance Minister directed
me more particularly to inquire, viz. :—The extent of
expenditure made by the Company upon the main line
(from Montreal to the Pacific Coast) out of its own resources, independently of moneys rceeived from the Gov- 49
ernment, and the proximate causes which have led to the
existence of a floating debt of from $6,000,000 to ^OOO,-
000. I append the statement hereto, and have the honour
to be, Sir
Your obedient servant,
Edward Miall.
Hon. J. H. Pope, Minister of Railways and Canals.
BALANCE   SHEET.
Canadian Pacific Eailway—Condensed balance sheet lst January, 1885 :
West of Callander—
Construction    $48,382,084
Improvements       1,241,780
Materials       3,687,729
 $53,311,593
East of Callander—
On main line	
Equipments on main line *.	
Interest,   etc.,  on financial matters   in connection with
main line construction, handling material, etc	
Eeceived from Government—
Subsidy   $20,240,317
Loan—
Less retained for dividend guarantee,$7,380,912. 18,626,600
Land—
Proceeds of       8,702,086
4,213,758
9,168,755
1,389,474
$68,083,580
Expended on main line out of Company's resources,
Expended out of Company's funds on connections..
Dividend    	
Deposit with Government to guarantee dividend
$47,569,003
20,514,577
5,857,224
5,378,000
6,907,377
Total expenditure made and liabilities incurred of other than
Government resources       $38,657,17'
Provided thus.
Capital   $29,568,123
Bonuses  232,600
Town sites  504,675
Earnings     $1,626,063
Less—Balances due  169,745
 1,45*6,318
Floating debt ,       6,895,462
 $38,657,17? 50
Resolutions.
On Tuesday, the 30th April, 1885, the Premier, The
Rt. Hon. Sir John A. Macdonald, gave notice in the
House of Commons of, and laid on the table, the following Resolutions :—
1. That the Canadian Pacific Railway Company, under
the authority of its shareholders, as provided by the 28th
section of its Charter, may issue and deliver to the Government first mortgage bonds to the extent of $35,000,000,
bearing 5 per cent, interest, such bonds to constitute and
be a first lien and charge on the entire property of the
Company, real and personal, now owned or hereafter to
be acquired, or owned by it (save and except the lands
granted or to be granted by the Government to the Company under the said contract), including its main line of
Railway with its tolls and revenues, the extensions thereof; its branch lines of Railway (except the Algoma
Branch), the whole of its equipment, rolling stock and
plant, and all its steamers and vessels, saving always,
however, the rights of the holders of the existing mortgages on the extensions of the line of the Railway from
Callander to Brockville and Montreal as security for the
unpaid balances of the purchase money of the said extensions.
2. That the Company may secure the payment of the
said Bonds and of the interest thereon by a Deed of Mortgage executed by the Company to Trustees to be approved
by the Government, with the authority and of the tenor
and purport, and containing the conditions, remedies, provisions and powers authorized and provided for by the
28th Section of the Charter of the Company, to such
extent and in such manner and form as shall be approved
by the Governor in Council.
3. That upon the issue and delivery of the said Bonds
to the Government, the lien and charge created by the 51
Act 47 Victoria, Chapter 1, intituled; " An Act to amend
the Act respecting the Canadian Pacific Railway Company and for other purposes"; upon the Railway and
property of the Company affected by the said Bonds and
by the Deed of Mortgage securing the same shall cease to
exist, and shall be released and discharged in respect of
the Railway and property so affected, and the shares in
the capital stock of the Company, to the extent of
$35,000,000 now in the hands of the Government shall
be cancelled and destroyed. But the Algoma Branch
shall still remain charged with the lien and charge created
by the said Act.
4. That the time for the payment of the entire loan to
the Company of $29,880,912 shall be fixed at the first day
of May, 1891, and so long as default shall not occur in the
payment of principal or interest at the times when they
shall respectively become due, the interest upon the said
loan shall be computed at the rate of 4 per cent, per
annum. But the Company may at any time pay the
amount of the said debt or any part thereof in sums of not
less than $1,000,000 ; and if such payment be made on
account of the sum of $20,000,000, hereinafter mentioned,
corresponding amount of Bonds shall be returned to it.
5. That as security for the payment of $20,000,000 of
such loan and of the interest thereon, the Government
shall hold and retain $20,000,000 of the said first mortgage bonds, and in respect of such bonds shall have all
the rights of bondholdars except as to the rate of interest
as provided in the last preceding section. And upon payment of any half-yearly instalment of such interest the
half-yearly coupons attached to the said bonds, corresponding to such half yearly payment of interest, shall be
cancelled and surrendered to the Company. But if the
Company makes default in the payment of the interest on
the said sum of $20,000,000 or of the principal thereof at the time when the same shall become due respectively,
the rate of interest upon the whole loan shall thereafter
be computed at the rate of 5 per cent, per annum; and
such default shall be equivalent to a default in the payment of the interest on the said Bonds, and shall entitle
the Government to the same remedies as if default had
been made in the payment of the interest or principal of
the said Bonds; and upon the Company remaining in
default in respect of either the principal or interest on the
said $20,000,000 for a period of 12 months, the Trustees
shall be authorized and empowered to take possession of
the property mortgaged and to administer the same for
the benefit of the bondholders generally.
6. That as security for the payment of the balance of
the said loan amounting to the sum of $9,880,912, and
the interest thereon, the Government shall have a first
lien and mortgage, subject to the outstanding Land Grant
Bonds, on the whole of the unsold lands forming the
remaining part of the Company's Land Grant earned and
to be hereafter earned, such principal and interest to be
paid out of the  net proceeds of the sale of such lands ;
and the Government shall continue to hold and retain
the entire amount of Land Grant Bonds now in its custody
and possession as provided by the said Act.    And if the
net proceeds of such sales to be made from time to time
in due course, shall be insufficient to pay the interest on
the said last mentioned amount as the same shall fall due,
or the principal thereof, when the same shall become due,
the Governor in Council may order the sale by the trustees of such lands or any part thereof in such manner as
shall be fixed by such order, in satisfaction of the interest
or principal in respect of which default has occurred.
And after the sale of the whole of such lands any deficiency in the proceeds thereof to pay the amount charged
thereon, shall be a charge upon the Company's entire
revenue after providing for its fixed charges, and by pre- 53
ference over the shareholders. And no further or other
charge shall be created on the property mortgaged as
security for the said first mortgage bonds until the said
sum of $9,880,912 and interest, and also the said sum of
$20,000,000 and interest shall have been paid in full; and
after payment out of the proceeds of such lands of the
outstanding Land Grant Bonds, and of the said sum of
$9,880,912 and interest, the remainder of such lands shall
remain charged with a first lien and privilege in favor of
the Government as additional security for the payment of
the said sum of $20,000,000 and interest.
1. That the Government may make a temporary loan to
the Company of $5,000,000 to be repaid by the Company
to the Government on or before the lst day of July, 1886,
with interest at the rate of 4 per cent, per annum payable
on the lst day of January and the lst day of July, 1886,
the Company to have the right to repay the said loan by
instalments of not less than $1,000,000 each, and to receive
on the payment thereof, a corresponding proportion of the
amount of said bonds held as security therefor; and after
reserving part of the said bonds to the amount of $8,000,000
to be held by the Government as security for the said
temporary loan, and to be delivered to the Company on
payment to the Government of the said sum of $5,000,000
and interest in whole or in part in proportion to such
payment, the remainder of the said Bonds shall be from
time to time paid by the Government to the Company, to
be applied by the Company under the supervision of the
Government to the payment for work done or to be done
for the development, improvement and extension of the
Railway, its connections and equipment, and for the maintenance of the credit, and efficiency of the Company generally to the satisfaction of the Government; and if the
Bonds in the hands of the Government, or any part thereof,
shall be sold by the Company at a price satisfactory to the
Government, the proceeds of such sale shall be paid into 54
the hands of the Government in the place and stead of
the Bonds so sold, and such proceeds shall be dealt with
as is hereinbefore provided with respect to the Bonds they
represent.
8. That the proportion to which the Government is entitled of the moneys realized by the Trustees of the Land
Grant Bonds; and after the redemption of the Land Grant
Bonds, the proceeds of all sales of Land granted or to be
granted to the Company, under the contract, realized as
provided by the said Act, shall be applied to the payment of the interest and principal ef the said sum of
$9,880,912. And after payment thereof in full, towards
the payment to the Government of the interest and principal of the said sum of $20,000,000.
9. That the said Act of last Session (41th. Victoria, Chap.
1), shall remain in force except in so far as it is affected
by the provisions hereof.
16. That if at any time any line connecting with the
United States system of Railways shall be in course of
construction to a point on the river St. Mary's, and there
shall be a probability of the early completion thereof;
and the Company shall desire to continue the Algoma
Branch to a junction with such line; the Governor in
Council may, in their discretion, and upon such conditions as they shall determine, order the release and discharge of the said Branch from the lien and charge thereon
created by the said Act, and continued by this Act, and
may, by such order, authorize the Company to exercise in
respect of the said Branch, the power of mortgaging the
same in manner and form as provided by its charter with
respect to mortgaging the main line thereof, to such extent per mile as shall be fixed by such order, the proceeds
of such Bonds to be applied exclusively to the construction of the extension of the said Branch to such junction.    * fl   MEMOBAXD UM.
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Incorporated February, 1881, for the purpose of constructing a line from Callander near Lake Njpissing, in the
Province of Ontario, Dominion of Canada, to the Pacific
Coast. It has since acquired lines east of Callander to
Montreal, Quebec, etc., as described hereafter.
The Charter confers on the Company, the right of constructing branches along the entire length of the line, of establishing steamship lines at its termini, and of constructing and
working telegraph lines. The Company was subsidized by
the Dominion Government to the extent of $25,000,000, in
money, and 25,000,000, acres of land, and has had transferred to it by the Government free of cost 713 miles of railway, built by the Government at a cost of $35,000,000. Of
the main line 345 miles, from Montreal to Callander, together
with the St. Lin, St. Jerome, St. Eustache, Aylmer, Brockville and Perth branches, aggregating 98 miles, were acquired
by purchase. The North Shore Railway, from St. Martin's
Junction to Quebec, 159 miles, has also been acquired by the
Company, thus giving it access to the important harbor and
City of Quebec.
The capital stock of the Company was reduced in 1885
to $65,000,000. Upon this amount the Dominion Government has guaranteed a minimum dividend of three per cent
per annum for 10 years, from August 1883.
In 1884 the Company took a perpetual lease of the
Ontario and Quebec Railway, which includes the Credit
Valley, the Toronto Grey and Bruce, and Atlantic and North-
West Railways, by which it secures access to all the important centres of trade and agriculture in Ontario. The Company  pays  under  this lease five per cent on $9,590,000 Debenture Stock, and six per cent on $2,oco,oqo, Common
Stock of the Ontario andjj Quebec, and a rental of the Toronto-
Grey and Bruce Railway of $140,000 per annum. At Owen
Sound, Lake connection is made with the western section of the
Canadian Pacific line at Port Arthur, by means of first class
Clyde-built steel steamships belonging to the Company.
In the Session of 1884, the Parliament of the Dominion
authorized a loan to the Company of $29,880,912, due May
1st, 1891, with interest at five per cent per annum, the money
to be paid as the work of construction proceeded, the Company in consideration of the loan agreeing to proceed with
the work of construction and to complete it by the end of
May 1886. To secure re-payment of this loan a lien was
created upon the entire property of the Company, including
its land grant, subject however, to the outstanding land grant
bonds, and to existing mortgages on the line from Callander
to Montreal.
By legislation last year (1885) this lien was removed, the
Company being authorized to issue $35,000,000, five per cent
First Mortgage bonds in lieu of the $35,ooo,COO,unsold stock,
which has since been cancelled.
The Government accepted $20,000,000 of the bonds
as security for a like amount of the^floan, and for the
balance of the loan $9,880,912, took a lien, subject to the
outstanding land grant bonds, on the unsold lands of the
Company, the principal of this balance of the loan, and interest thereon being payable out of the proceeds of the sale
of lands.
$15,000,000 (£3,000,000 sterling) of the First Mortgage
bonds were sold in July 1885 by Messrs, Baring Bros & Co.
who issued the iollowing prospectus in relation thereto :— Canadian Pacifio Eailway Company.
Issue of -£3,000.000 Sterling 5 per Cent.
First Mortgage Debenture Bonds.
Forming part of a Total issue of $85,000,000
First Mortgage Debenture Bonds.
Messrs. Baring Brothers & Co. are prepared to receive application s for
^"3,ooo,boo Sterling First Mortgage Debenture*Bondstof the above Company,
bearing interest at the rate of 5 per cent, per annum, from the 1st. July, 1885,
payable by half- yearly Dividend Warrants, at their Counting House in London,
on the 1st January and 1st July of each year.
The Subscription List will be opened simultaneously in Amsterdam by
Messrs. Hope & Co.
The principal will be repaid on July 1, 1915, and both principal and interest
will be payable at the Counting House of Messrs Baring Brothers & Co.
Trustees for the Bondholders :—
The Hon. Sir Charles Tupper, K. C. M. G., High Commissioner for Canada.
The Right Hon. Lord Wolverton, \ Financial Agents for the Dominion of
The Right Hon. Lord Revelstoke, J       Canada.
Issue price 95 per cent., payable as follows :—
^5 per cent, on application.
20   " "    allotment.
20   " "     12th August.
20   I "     15th September.
30   " "     15th October.
£95 per cent.
Payment may be made in full under discount at the rate of 3 per cent, per
annum, on any Tuesday or Friday. The failure to pay any instalment when
due forfeits all previous payments.
The proceeds of the Bonds now offered will be applied to the purposes set
forth in the annexed Official Memorandum, which explains the position and
prospects of the Company.
The Bonds will be in denominations of ^1,000, ^500, and ^"ioo.
For the security of investors, the bonds may be exchanged for Registered Certificates at the Counting House of Messrs. Baring Brothers & Co., where a
Register of Transfers will be kept; Warrants for the Dividends being forwarded
by fast to the registered address of'the proprietor\
HI
•Hi The subscription will be opened on Tuesday, the 21st inst, and will be
closed on or before Wednesday, the 22nd inst., at 4 o'clock p. m.
Applications must be accompanied by a deposit of 5 per cent., as per
enclosed form, and in cases where it is not practicable to make any allotment,
the amount deposited on application will be returned as soon as possible.
Scrip Certificates to Bearer will be issued against Letters of Allotment, and
Bonds to Bearer, when ready, will be exchanged for fully paid-up Scrip,
8, Bishopsgate Street Within,
20th July, 1885.
OFFICIAL MEMORANDUM.
The Canadian Pacific Railway is built throughout on British territory ; when
complete it will form a direct line from Montreal to the Pacific Ocean, and will
have several large and important branches. The length of the main line is
2,895 miles, and over the small portion uncompleted, the rails will be laid within
two months.
The Canadian Pacific Railway, the only transcontinental route owned by one
Company, will then become the shortest railway line across the -North American
Continent, as the following table of comparative distances will show :—
•Statute Miles.
Main Line—Montreal to Port Moody, all Rail route     2,895
From New York to Port Moody, via Brockville and Canadian
Pacific Railway	
From New York to San Francisco, via Central and Union Pacific
Railways and shortest connecting lines through the United
States.:         3,331
From Liverpool to Montreal  3>°43
From Liverppol to New York  3,43*
From Liverpool to Port Moody, vid Montreal and Canadian
Pacific Railway  5*938
From Liverpool to San Francisco, vid shortest connecting lines
in the United States ,... 6,762
From Liverpool to Yokohama (Japan), via Montreal and Canadian Pacific Railway    10,974
From Liverpool to Yokohama (Japan), via New York aud San
Francisco   11,990
The Railway has been built under the supervision of the Dominion Government, which has subsidised it to the following extent:—
By cash, ^5,000,000.
By 713 miles of Railway, costing about ,£7,000,000.
By 25 million acres of Farming Lands.
The Bonds now offered form part of a total issue of $35,000,000, secured by
a first mortgage on properties representing an expenditure of upwards of
$100,000,000, viz:—
Main Line from Callander to Port Moody, 2, 548 miles.
Branch Lines, 308 miles.
Equipment. Steamers, & c. 5
It is agreed that the remainder of this issue, viz., $20,000,000, shall be held
until 1891 by the D jminion Government as security fjr advances made to the
Company. The Company retain the right of disposing of these Bonds, but it
would not be to their advantage to do so, except at a high premium, as the Loan
to the Government bears but 4 per cent, interest, whereas these Bonds carry 5
per cent.
The proceeds of the Bonds now offered will be applied to the payment for,
or purchase of, equipment and Terminal facilities and to the general purposes
of the Company,
Upon the completion and opening of the Main Line the Fixed Charges will
be approximately as follows :—
$20,000,000 Government Loan, 4 per ceft     $800,000
$15,000,000 First Mortgage Bonds, 5 per cent       750,000
$3, 500,000 due Government Quebec (account Q. M.O. & O.
Railway) 5 percent       175,000
$l,823,oooCanada Central Bonds and Sinking Fund,6 per cent     107,400
Rental Leased Lines        778,434
$2,610,834
There are also $3,688,000 5 per cent Land Grant Bonds still outstanding;
but they are not included in the above calculation, because the greater part of
the interest thereon is covered by deferred payments on lands already sold, and
it is only reasonable to suppose that within a short time all these Borids will be
redeemed by the sale of land, of which the Company still own over 21,000,000
acres. The additional sum due to the Government ($9,880,912), and the interest
charge thereon at 4 per cent, are also not included in the fixed charges, as it is
provided tbat both principal and interest shall be paid out of the nett proceeds
of the sale of the Lands,
As regards the earning capacity of the line to meet these charges, the gross
income of the first six months of the current year amounted to $3,272,000 as
compared with $2,216,000 in the corresponding period of 1884; the mileage
operated on June 30th, 1884, was 2,408, and on June 30th. 1885, 2,794.
The nett revenue of the first five months of the current year has been
$830,000, and it is now calculated that the nett result of the current year will
exceed $2,400,000. With the main line completed and in full operation, it is
estimated that the gross traffic for the first year will be not less than $12,000,000,
yielding a nett profit of not less than $3,600,000. Statement of Earnings for the Year 1885.
From Passengers     $2,859,222.98
Freight       4,881,865.58
137,151.92
172,303.01
3,523.55
244,426.08
$8,368,493.12
STATEMENT of OPERATING EXPENSES for the YEAR 1885.
 :o:	
Conducting transportation  $1,225,801.71
Maintenance of Way and Structures  961,330 34
Motive Power.  1,915,250.49
Maintenance of Cars  399,084.37
Parlor and Sleeping Cars  24,098.99
Expenses of Lake Steamers  165,430.08
General Expenses  452,280.47
Total Expenses     $5,143,276.45
The number of passengers carried in 1885 was 1,660,719
and the average rate per mile was 2-j-1nr cents. The number
of tons of freight carried was 1,996,355, and the average rate
per ton per mile was iT%\ cents.
EQUIPMENT AT 31st. DECEMBER 1885.
Locomotives  336
First and Second Class Passenger Cars, Baggage Cars and Colonists Sleeping Cars  289
First Class Sleeping and Dining Cars  31
Parlor Cars, Official and Paymasters Cars  25
Freight and Cattle Cars, all kinds 7,838
Conductor's Vans  168
Boarding, Tool and Auxiliary Cars  48 FUNDED DEBT.
The amount of funded debt at December 31st 1885, consisted of $14,600,000 First Mortgage, 5 % Thirty-
Year Bonds;
$850,000 being the amount necessary with sinking fund to
redeem the 1st .Vlortgage 5 % Canada Central Bonds,
amounting to $2,433,333 (Sinking Fund deposited with
Government $1,560,000.)
•'$973,333-33 2nd  Mortgage 6 °/o Canada Central Mortgage
Bonds.
$3>5°0>°oo  due   Province  of Quebec  for purchase of the
Western Section of the Q. M. O. & O. Ry.
The Canada Central 1st Mortgage Bonds are due Sept.
1st 1899, the 2nd Mortgage Bonds Nov. 1910. The Mortgage to the Government of Quebec is payable March 4th
1902, interest 5 % semi-annually. These mortgages apply
•only to the purchased lines they cover, the Canada Central
and the Q. M. O. & O., and are not a charge on the Canadian Pacific proper. The acquisition of the North Shore,
•effected since the close of the year, involves an interest
■charge of about $200,000 a year.
LAND GRANT.
The Company has a Land Grant from the Dominion
Parliament of 25,000,000 acres, in alternate sections of 640
•acres each, within 24 miles of the railway on either side
from Winnipeg to the Rocky Mountains. Under their
Charter the Company is only bound to accept lands fit for
.settlement. The following shows the position of the land
.sales at December 31st 1885.
Acres. Acres.
Total Land Grant     26,000,000
Sales to 31st. December 1885     3,757,662
Less cancelled       285,644
      3,472,018
21,527,982
RECEIPTS :—
3,472,018 acres sold for $10452,302.
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LAND GRANT BONDS.
The Company issued $25,000,000 Land Grant Bonds,
secured on the Land Grant. The following was the position
of these Bonds at Dec. 31st 1885 :
Total issue $25,000,000
Deposited with the Government as security
under the contract, without interest....    $5,000,000
Held by the Government under the Loan Act,
1884, without interest        8,996,000
Redeemed by Land Sales and cancelled....      7,391,500
 21,387,500*
Balance outstanding in hands of public $ 3,612,500
Against this the Company holds interest bearing obligations for lands sold on deferred payments amounting to
$i,579>708.
The Bonds bear interest at 5 9/o the principal being
due 1st October 1931. Interest payable half-yearly on 1st
April, and 1st October at the office of the Company in
Montreal, New York or London. They are accepted in
payment for lands at IO °/o premium.
ANNUAL MEETING second Wednesday in May.
Books close in New York one week, and in London not less
than two weeks before Meeting. For dividends payable
February 17th, and August 17th, books close in Montreal
and New York two weeks, and in London not less than
three weeks before payments. Stock listed in Montreal,
New York, London, Amsterdam and Berlin.
Since the close of the period dealt with in the above
summary, a new agreement has been entered into with the
Government of the Dominion, a synopsis of which is given
below. 9
This agreement, in effect, provides that the Company
shall, by the ist July 1886, repay to the Government in full,,
in cash, the amount of that portion of the debt secured by
the pledge of the $20,000,000 First Mortgage Bonds, and
that the Government shall then accept in full satisfaction of
its claim for the balance of the debt, amounting to $9,880,-
912, with interest, lands sufficient to cover the amount at the
rate of $1.50 per acre. It also provides for the immediate
cancellation of the $8,996,000 of Land Grant Bonds now
held by the Government; and for the ultimate cancellation
of the remaining $5,000,000. When these Bonds have all
been cancelled, the $3,612,500 bonds outstanding in the
hands of the public, will be the only charge on the Company's land grant of 14,734,667 acres.
In pursuance of this agreement, the unsold balance of
the 5 0/0 First Mortgage Bonds, authorized by* *he Act of
last year, amounting to ,-£4,191,500, was recently placed on
the London Market by Messrs. Baring Bros. & Coy. From
the proceeds of this issue, the Company was able on the ist
May instant, to make a payment to the Government of over
^2,000,oco on account, and on the ist July 1886, the remainder of the debt due to the Government will be paid.*
The position of the Company on the ist July next, the
balance of the debt to the Government having then been
paid, will be approximately as follows:
FIXED CAPITAL LIABILITIES.
lst. Mortgage Bonds  $35,000,000
Canada Central Bonds  1,823,333
Province of Quebec  3,500,000
Leased lines capitalised at 5 °j0  21,560,680
Total fixed liabilities      61,884,013
Add ordinary Share Capital       65,000,000
•Total Capital  $126.884,013
* This indebtedness has since been paid in full.  00
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1  12
MILEAGE OF ALL THE COMPANY'S LINES.
Main Line.
Miles.
Montreal to Savona's Ferry  2,679.0
Savona's Ferry to Port Moody (built by the Government but not
yet transferred to the Company)      213.0
Port Moody to Vancouver (under construction)          14.0
Total Main Line  2.906.0
Other Lines Owned.
JSastern Division.
Miles.
Quebec  Section —Quebec to St. Martin's Junction  159.1
Piles      Branch   —Piles Junction to Grand Piles  27.5
Joliette          "     —Joliette Junction to St. Felix  17.1
Berthier        |     —Berthier Junction to Berthier  2.0
Aylmer         '*      —Hull to Aylmer  7.5
St. Jerome     "     —Ste Therese to St. Jerome  13.6
St. Lin          I     —St. Lin. Junction to St. Lin  12.4
St. Eustache "     —Ste. Therese to St. Eustache  8.0
Brockville     |     —Carleton Junction to Brockville  45 5
Algoma         " —Sudbury to Algoma (not in operation) 96.0
Buckingham "     —Buckingham Station to Village  4.0
Atlantic & North West Section (not in operation      8.0
    400.7
Western Division.
Emerson Branch—Emerson to Winnipeg Junction     64.5
Selkirk *'     —Winnipeg to West Selkir1*;     22.6
Stonewall     "     —Air Line Junction to Stonewall     18.3
Gretna *'     —Rosenfeld to Gretna     13.9
Pembina Mountain Branch—Winnipeg to Boissevain  182.4
Manitoba & South Western—Winnipeg to Holland     91.0
    392.7
Pacific Division.
New Westminster Branch (under construction)  9.1
Leased Lines.
Ontario & Quebec Railway.
Miles.
Smith's Falls to Toronto Junction  211.0
Toronto to St. Thomas  116.2
Toronto to Owen Sound  120.5
Orangeville Branch—Streetsville to Orangeville  31.6
Elora Branch—Church's Falls to Elora  27.5
Teeswater Branch—Orangeville to Teeswater  69.5 .
<St. Lawrence & Ottawa Railway—Ottawa to Prescott  53.0
Total Leased Lines  629.3
Total Mileaee of the Company's Lines  4,337 ■ 8
i
m 13
BOARD OF DIRECTORS.
SIR GEORGE STEPHEN, Bart.,
Mr. Wm. C. VAN HORNE,	
DONALD A. SMITH, K. C. M- G.
Mr. RICHARD B. ANGUS, 	
I   EDMUND B. OSLER,	
4.   SANDFORD FLEMING, C.E., C. M. G., ..
"   H. S. NORTHCOTE, 	
Montreal.
do
do
do
Toronto.
Ottawa.
London.
"   R. V. MARTINSEN       Amsterdam and New York.
Hon. W. L. SCOTT,   Erie, Pa.
Mr. GEORGE R. HARRIS, of Messrs. Blake Bros. & Co-,        Boston.
Hon. LEVI. P. MORTON,
Mr. RICHARD J. CE
TON, )
tOSS,)
of Messrs. orton, Bliss & Co..
New York
OFFICERS.
SIR GEORGE STEPHEN, Bart., President,
Mr. Wm. C. VAN HORNE, Vice-President,     .
"   CHAS.  DRINKWATER, Secretary.
•'   GEORGE OLDS, General Traffic Manager,
Montreal.
do
do
do
"   HENRY B E ATTY, Manager Steamship Lines & Lake Traffic, Toronto.
Hon. J. J. C. ABBOTT, General Counsel,              Montreal.
Mr. T. G. SHAUGHNESSY. Asst. General Manager, ..        .. do
"    I. G. OGDEN, Auditor,        -do
"    VV. SUTHERLAND TAYLOR, Treasurer, ..        .. do
"    W. WHYTE, Gen. Supt. East. Ontario and Quebec, Divisions,    do
|    JNO. M. EGAN, Gen. Supt. Western Division, ..        ..        Winnipeg.
I    HARRY ABBOTT, Gen. Supt. Pacific Division, .      Vancouver, B.C.
I    JOHN H. McTAVISH, Land Commissioner         Winnipeg.
"    A. C. HENRY, Purchasing Agent,    ..        ..        ..        .. Montreal.
"    tta-rtjv Tvrr»nr>"v*    {Manager ofLondon Office and Regis-
tiB.an. x OYLUU.U i,   ■•    tm). Qf Transf&rs> 88 (jannon st, London, E.C.
Messrs. J. KENNEDY TOD & Co., Agents, 63 William Street, New York.
EXECUTIVE COMMITTEE.
SIR GEORGE STEPHEN, Bart.        Mr. WM. C. VAN HORNE.
Sir DONALD A SMITH, K. C. M. G.   "   R. B. ANGUS.
GENERAL OFFICES    .           MONTREAL. i illi
:en
issued covering 171 mnes completed road.    The bonds   14
ST. LAWRENCE & OTTAWA RAILWAY.—Prescott,
Ontario to Ottawa Ontario, 53 miles, Branch junction
to Chaudiere 5 miles,-total—58 miles. Chartered as
By Town & Prescot:* Railway Company May 19th 1850.
Road opened May 10th 1854. Sold under forecl@sures
in 1866, and present Company organized ; Chaudiere
Branch built in 1871. See Canadian Pacific Railway
Company by which it is leased.
ATLANTIC & NORTH-WEST RAILWAY.—Mile End,
to Lachine. 8 miles completed. Surveys are made to
Chambly and St. Johns. Leased to the Ontario &
Quebec Railway Company and lease transferred to the
Canadian Pacific Railway Company. The line is now
being extended to a junction with the Ontario &
Quebec Railway now in course of construction eastwards
from Smith's Falls, and thence to the bridge in course of
erection across the River St. Lawrence near Lachine.
When these works are completed, connection will be
made on the south side of the St. Lawrence with the
lines running south to New York and Boston, and east
to the Maritime Provinces.
MANITOBA SOUTH-WESTERN RAILWAY—Winnipeg to Holland 91 miles ; Manitou, where it starts
from the terminus of the Pembina Branch of the Canadian Pacific Railway to Whitewater Lake 80 miles,
total 171 miles, steel rails. Incorporated by Act of the
Dominion Parliament in 1879 to build a road from
Winnipeg to Rock Lake. Charter amended in 1880 to
extend the terminus to the Souris River, 312 miles
from Winnipeg. The road is now working to Holland
and Whitewater Lake. The Company has a land grant
of 6,400 acres per mile. Capital Stock $730,000. I .eased
to the Canadian Pacific Ry. Coy. First Mortgage
Bonds to the extent of $12,000 per mile have been
issued covering 171 miles completed road.    The bonds 15
are 5 /0 Fifty year bonds, and are a first charge upon*
the railway, but not upon the Land Grant. Interest
, payable half-yearly, June and December at the Agency
of the Company in New York, Messrs J. Kennedy Tod
& Co. 63 William St. and at the office of Messrs Blake
Boissevain & Co. 11 Copthall Court, London. England.
CREDIT VALLEY RAILWAY.— Toronto, Ont. to St.
Thomas, Ont. 116 miles, Orangeville Branch 31.6 miles;
Elora Branch 27.5 miles, [total 179.1. Total track
(steel) 197.70 miles. Chartered Feb. 15th 1871, and
road completed in 1879. See Canadian Pacific Railway*
Company by which it is leased.
ONTARIO & QUEBEC RAILWAY— Smith's Falls to
Toronto Junction 211 miles. Road opened early in
1884. This Company leased the Atlantic & North-
West, Credit Valley & Toronto Grey & Bruce Rys.and
transferred them with its own line to the Canadian
Pacific Railway Company under a perpetual lease. See
Canadian Pacific Railway Company by which it is-
leased.
TORONTO GREY & BRUCE RAILWAY. — Toronto
Ont. to Owen Sound 120.5. Western Div. Orangeville
to Teeswater 69.5 miles, total 191.0 miles. Chartered
in 1868, mainline opened in June 1873, branch in May
1874. Leased to Ontario & Quebec Railway Company
for 999 years, rental $140,000. See Canadian Pacific
Railway Company by which it is leased. i^
ill
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I ill    CANADIAN PACIFIC RAILWAY.
. ! i. •
ANNUAL REPORT  FOR   1885
S    M
REPORT OF PROCEEDINGS
AT the
FIFTH ANNUAL MEETING
OF   SHAREHOLDERS,
HELD AT THE GENERAL OFFICES OF THE COMPANY,
MONTREAL,
WEDNESDAY, 12th MAY, 1886.
ill
i
■
i:l
I  •SIR GEORGE STEPHEN, Bart., Montreal.
Mr. WM. C. VAN HORNE, do
Hon. DONALD A. SMITH,  do
Mr. RICHARD B. ANGUS, ------ do
I   EDMUND B. OSLER, Toronto.
"   SANDFORD FLEMING, OE., C.M.G.,       -       -      -   Ottawa.
1   H. S. NORTHCOTE, London.
|   R. V. MARTINSEN,     -      -      -       Amsterdam and New York.
Hon. W. L. SCOTT, Erie, Pa.
Mr. GEOBGE E. HARRIS, of Messrs. Blake Bros. & Co.,     Boston.
Hon. LEVI P. MORTON,    )    „,, ,,   I      „,.     . n     ,T     v
Mr. RICHARD J. CROSS, { °f MeSSrS' M°rt°n' BllSS & °°" Nw Y°EK'  <&&UK&mn ^vitiiit g£ailttraij«
FIFTH   ANNUAL   MEETING.
Report  of  Proceedings at  the   Fifth  Annual
Meeting of Shareholders, held this
12th Day of May, 1886.
The meeting assembled in conformity with, the notice
•convening the same, at noon, at the General Offices of
the Oompany in Montreal. The President, Sir G-eorge
Stephen, Bart., took the chair, and the Secretary of the
•Company acted as Secretary of the meeting.
The notice calling the meeting having been read, the
President submitted and read the following report on the
affairs and operations of the Company for the year ended
-81st December last:
FIFTH  ANNUAL REPORT
OF  THE
Directors op the Canadian Pacific E ail way Company,
submitted at the Annual General Meeting op
the Shareholders op the Company, held at
Montreal on the  12th May, 1886.
The Directors take great pleasure in congratulating the
Shareholders on the successful accomplishment of the
•great work which called the Company into existence five
years ago.
On the llth. February 1881, the Company was incorporated under the authority of the Parliament of the
Dominion. In the month of June following, active operations were begun, and on   the  7th November   last,   at
sm. 6
Craigellachie, British Columbia, after fifty-three months-
of arduous labor, some anxiety, and much unfair and undeserved hostility, the last rail was laid ; our co-Director,,
the Honourable Donald A. Smith, driving the last spike.
On the same day, Her Majesty the Queen, through His-
Excellency the G-overnor-G-eneral, graciously congratulated the people of Canada on the completion of the Railway ;—a work which Her Majesty regarded as of great
importance to the whole British Empire.
Within tnree or four weeks from this time, through
freight and passengers trains will be running regularly
between Montreal and the Pacific Ocean. The Company
will then, within a period of five years, have built,
equipped, and put into operation, over 2,400 miles of
new railway, embracing on the Lake Superior and Mountain Sections many hundreds of miles of the heaviest and
most difficult railway work to be found on either side of
the Atlantic.
Financial Position.
A balance sheet of the affairs of the Company at 31st
December last, and the usual statements relating to the
business of the past year, are herewith submitted.
The following is a comparative statement of earnings-
and expenses, showing the results of the operation of the
railway for the last two years :
1884 1885
Passengers  1,980,902 30 2,859,222 98
Freight  3,410,365 39 4,881,865 58
Mails  85,736 83 137,15192
Express  95,67168 172,303 01
Parlor and Sleeping Cars  43,492 60 73,523 55
Miscellaneous  134,352 47 244,426 08
Total       5,750,521 27      8,368.493 12
Expenses       4,558,630 75      5,143,276 45
Net        1,191,890 52      3,225,216 67
Construction material included in above earnings and charged at actual cost
1884 1885
$623,193 Gross.   $716,418 Gross. It will be observed, that the net result of the past year's
operation is $825,216, in excess of the estimate made to
the shareholders in the last annual report.
The balance sheet now submitted shows clearly the position of the Company on 31st December last. It will be
seen that of the .£7,191,500 sterling, 5 p.c. first mortgage
bonds, authorized by the Act of the Dominion Parliament
last year, the sum of £3,000,000, had been sold, and that
the year was closed with a cash balance in hand of
$5,29*7,812, available for the work of improving and perfecting the railway, and for providing it with the equipment and appurtenances necessary for successful operation.
It will be remembered that, under the legislation of the
last session, the Company's debt to the G-overnment,
amounting to $29,880,912, was divided into two parts,
and the time of its repayment postponed until 1891.
To secure the repayment of the first part, amounting to*
$20,000,000, the Government agreed to hold $20,000,000*
of the newly authorized 5 p.c. first mortgage bonds.
To secure the repayment of the balance, amounting to*
$9,880,912, the G-overnment took a lien on the whole of
the Company's Land Grant, with the provision that the
interest on this part of the debt should be paid out of the
proceeds of land sales, and, failing the sufficiency of the
income from that source to meet the annual interest,
that it should,ultimately become the first charge on the
net revenues of the Company, after the payment of interest on bonds and rentals of leased lines; and consequently no dividend from net earnings could be paid to
the shareholders, while any arrears of interest due to the
Government should remain unpaid.
In view of the practical completion of the contract with
the Government, for the construction of the railway, and
of the necessity  for restoring to the Company the free
II   '. 8
control of its own resources ; and for the purpose of providing for a final settlement of all matters between the
Government and the Company ; a new agreement was
made with the Government on the 30th March last, a copy
of which is herewith submitted.
This agreement, in effect, provides that the Company
shall, by the lst July next, repay to the Government in
full, in cash, the amount of that portion of the debt
secured by the pledge of the $20,000,000, First Mortgage
Bonds, and that the Government shall then accept in full
satisfaction of its claim for the balance of the debt,
amounting to $9,880,912, with interest, lands sufficient
to cover the amount at the rate of $1.50 per acre.
In pursuance of this agreement, the unsold balance of
the 5% First Mortgage Bonds, authorized by the Act of
last year, amounting to £4,191,500, was recently placed
on the London market by Messrs. Baring Brothers & Co.
at the price of 104. From the proceeds of this issue,
the Company was able, on the lst May instant, to make a
payment to the Government of over £2,000,000 on account ; and on the 1st July next, the remainder of the debt
due to the Government, will be paid.
The Company will then have discharged all its obligations to the Government, and will have honorably paid
back in full, the money loaned to it, five years before
it was due; in this respect standing alone among
Canadian and American railways. And it will have completed its contract for the construction of the railway
within one half of the stipulated time. In the future it
will neither expect nor need anything from the Government but fair treatment, and earnest and judicious effort
in the important work of settling up the country, developing its resources, and promoting the general prosperity of
the whole people of the Dominion ; in all which it will
have the hearty co-operation of the Company. 9
The position of the Company on the lst July next, the
'balance of the debt to the Government having then been
,paid, will be approximately as follows :—
Fixed capital liabilities.
1st Mortgage Bonds  $35,000,000
■Canada Central Bonds  1,823,333
Province of Quebec  3,500,000
'Leased lines capitalized at 5 p. c  21,560,680
Total fixed liabilities       61,884,013
-Add ordinary Share Capital       65,000,000
Total Capital $126,884,013
#
Annual Fixed Cbarges.
•'$35,000,000, lst Mortgage Bonds, 5 p. c. interest on  $1,750,000
$3,500,000, due Province of Quebec, account Q. M. O & O.
Railway, 5 p. c. interest on  175,000
$1,823,000, Canada Central Bonds and Sinking fund, 6 p. c.. 107,400.
Rentals and Interest.
'Ontario Lines         $739,500
-St Lawrence & Ottawa Railway  38,934
Manitoba South Western Railway  102,600
.North Shore Railway  197,000
 1,078,034
$3,110,434
These fixed charges will represent 4338 miles of completed railway ; a completed telegraph system ; $12,263,-
264 in cash on deposit with the Government to provide
the guaranteed dividend of 3% on the capital stock of the
•company for 7J years ; and about 14,734,000 acres of farming lands, subject to $3,612,500 outstanding Land Grant
Bonds as hereinafter stated. 10
The Ontario and Quebec Railway Company, under its.
chartered rights, and in accordance with the terms of the-
lease of its railway to this company, is now engaged in
the construction of the extension of its line from Smith's-
Falls to Montreal, and in building a bridge across the St.
Lawrence river at Montreal.  Both these important works-
will be finished this year, and when finished, will be
handed over to this company for operation, as provided
by the lease;  adding greatly to the volume of the company's business, increasing the efficiency of the railway,
and diminishing the cost of operating it,while only adding
to the fixed charges about $200,000 per annum.    These,,
with some not important extensions in the North West,..
in "V^estern Ontario, and on *the Pacific Coast, constitute
this season's new work.
The negotiations with the Government for obtaining-
access to the city and harbour of Quebec, alluded to in
last year's report, resulted in the acquisition of the North.
Shore Railway by this company on the 20th September
last, on terms which, aided by the Government subsidy
make the cost to this company practically something less-
than $200,000 a year.
It is impossible, and it would be folly for the Directors-
to attempt, to forecast the nature or the extent of the
opportunities that may occur for the profitable employment of additional capital in the future, in developing and.
increasing the business of the company. But to " hasten,
slowly," will, now that the main line is finished, be the-
wisest [policy for the company to pursue. And while
the results of the operation of the railway up to-
the present time have been highly satisfactory and
have exceeded the expectations of the most sanguine, and.
while everything points to a continued and rapid increase* 11
in profits, the Directors feel strongly, that until the net
earnings have reached an amount sufficient to pay, above
fixed charges, a reasonably fair dividend to the shareholders-
independently of the 3 per cent, guaranteed dividend,,
they are bound to take special care not to incur any expenditure on capital account, involving an increase in
fixed charges, unless such expenditure can be clearly
shown to be to the immediate advantage of the holders-
of the ordinarv shares.
Traffic.
The number of passengers carried in 1885 was 1,660.-
719 and the average rate per mile was 2 -^ cents. The
number of tons of freight carried was 1,996,355 and the
average rate per ton per mile was 1 -^ cents.
The wisdom of establishing unusually low tolls for the
carriage of freight and passengers is already manifest
in the development of business along the line. The
gratifying results of the operation of the railway for the
past year were obtained from tolls far below those of
most of the neighbouring lines in the United States as.
shown by the following comparisons:
Freight
Passengers    per ton
per mile,   per mile.
Canadian Pacific 1885 2.45 1.20
* Northern Pacific 1884 3.44 1.96
* St. Paul, Minneapolis and Manitoba 1884 3-11 1-80
* Union Pacific 1884 2-90 1.91
* Central Pacific 1884 2-63 1.96
Chicago, Milwaukee and St. Paul 1885 2.56 1.28
* Chicago and North Western 1884 2.40 1.31
Atchison, Topeka and Santa F6 1885 2.59 1.79
Illinois Central 1885 2-21 1.31
* Boston and Lowell 1884 2.12 2.33
New York and New England 1885 1-93 1.72
Boston and Providence 1885 1.84 2.83
■3fr Lines given for 18S4 have not yet reported for 1885.
i    3    . .-. ir ,t    . 12
It is worthy of note that throughout Canada the average local railway tolls are lower than in any other country ; and that in the older Provinces of Canada especially,
they are lower than in any other district in America or in
Europe. *  .
The ability of the Canadian Pacific Railway to earn
a handsome profit from the carriage of traffic at comparatively low rates, is owing to the fact, that in its construction no reasonable expense has been spared to secure
light gradients- and easy curvature, and in every other
way suggested by modern experience to provide for its
economical working; and the Directors feel safe in stating
that in almost every condition affecting economy, the
Canadian Pacific has a great advantage over any of its
competitors. But its greatest advantage lies in the very
small capital charges for which it has to provide.
It is too early to estimate with any degree of accuracy
the earnings of the railway for the present year, but in
view of the constant increase in business, the large emigration to the North-West from the older Provinces and
from abroad, and the signs of prosperity everywhere along
the line, a large increase in net as well as in gross earnings
over 1885, may be confidently expected.
A grain elevator, of 600,000 bushels capacity, has been
built by the Company at Montreal within the year, affording needed facilities for storing and shipping grain. The
Company has also grain elevators at Port Arthur and Fort
William, with storage capacity for 1,700,000 bushels, and
another at Owen Sound, holding 350,000 bushels. The
rapid increase in the production of grain in the North-
West will require additional elevators at Fort William,
Toronto, Montreal, and Quebec, in the near future.
The Directors, believing it an unwise policy that would
starve the traffic of the railway for want of ample facilities for handling it, have made liberal provisions in the 13
way of equipment of all kinds, and will continue to provide amply for the growing needs in this direction.
The development of coal mining in the Canadian North-
West has already had a most beneficial effect on the operating expenses of the Company, and the transportation
of, coal has become an important item in its traffic.
The general use of local coals for railway and domestic
purposes has put at rest all questions as to their
quality ; and the discovery of coal beds in all directions, in, and for hundreds of miles east of the mountains, indicates the existence there of one of the most extensive coal areas in the world The great coal deposits at
the Pacific terminus, which already supply nearly all of
the North American Pacific Coast, and most of the steamships crossing the North Pacific Ocean, have been
mentioned in former reports.
Extensions and Connections.
The working of the Company's line between Montreal
and Toronto (via Ottawa), while most satisfactory in its-
results, has been conducted under great disadvantage,
owing to its greater length as- compared with its competitor ; but the extension of the Ontario and Quebec line
from Smith's Falls to Montreal, before mentioned as.
under construction, will overcome this disadvantage, and
largely increase the earnings of the Company. It is expected that this extension will be in operation before
another winter, and that by the same time the bridge across
the St. Lawrence River, at Montreal, and a short line connecting this bridge with the South Eastern Railway which
is mainly owned by this Company, will also be completed.
The completion of the St. Lawrence Bridge will enable
the company to turn to good account its investment in
J J 14
"the South Eastern Railway, and to secure at the same
time independent connections with the Maritime Provinces, the New England States, and the Atlantic Seaboard,
for want of which connections the interests of the company have suffered severely in the past.
The American lines advancing towards a connection
with the Algoma branch of the Canadian Pacific at Sault
iSte. Marie, from St. Paul and Minneapolis on the one
hand and from Duluth on the other, will almost certainly
be completed before the end of next year. These connections will afford to the States of Minnesota and Dakota
#ud a large part of Wisconsin, the shortest and cheapest
possible route to the tide-waters of the Atlantic, and to
New York and the New England States, and bring to the
"Canadian Pacific a great volume of valuable traffic.
Since the last annual report the Manitoba South Western
Railway, owned by this Company, has been extended to
Holland, 40 miles, and another extension of 80 miles has
been made, under the same charter, from Manitou to
Whitewater Lake, to both of which extensions a grant
of 6,400 acres per mile of valuable agricultural lands in
•Southern Manitoba is attached. These extensions afford
much needed railway facilities to the already well settled
^districts they traverse.
A branch line of 4 miles was built last year to Buckingham, about 20 miles east of Ottawa, to secure the important traffic afforded by the phosphate mines on the
Lievre river.
Owing to the inadequacy of the harbour at Port Moody,
and the unfavorable topography of the surrounding lands,
the Pacific terminus of the Railway has been fixed at the 15
•entrance to Burrard Inlet, embracing both Coal Harbour
and English Bay, where the harbour advantages are all
that could be desired, and where the adjacent lands afford
an excellent site for a city. In consideration of the extension of the main line of'the railway to the new terminus,
the company has received a grant from the Government of
British Columbia of about nine square miles of land, upon
which a city has been laid out and named Yancouver.
This extension will be completed within a few
months, and a branch line of 9 miles, also under
construction, from a point near Port Moody to the important town of New Westminster will be completed about
the same time. A considerable town has already sprung
up at Yancouver, and the company has sold many
building lots. The Docks and other terminal works of the
oompany at this point will be extensive and of the best
-description; but the proceeds of the sale of its city property will much more than cover all expenditures in this
direction, including the cost of the extension of the main
line and the building of the New Westminster Branch.
Ill
! 1 II
The Gravenhurst extension of the Northern Railway
which has been completed to the main line of the Canadian Pacific at Thorncliff, near Lake Nipissing, will soon
be in operation.
The Manitoba Northwestern Railway—an independent
company—connecting with the Canadian Pacific at Portage la Prairie, has been extended 50 miles within the
year. That company has now 130 miles in operation
north of the Canadian Pacific main line and brings to it
considerable traffic. Another independent railway has
been built from Dunmore on the Canadian Pacific to the
coal mines at Lethbridge, 110 miles, and the principal
coal supply for railway and  domestic purposes in the 16
Northwest now comes from that line.     Still another rail-,
way has been built from Regina northward to Long Lake,,
about 20 miles, and other independent extensions will be
made in the Northwest during the present year ;  all of
which will greatly benefit the Canadian Pacific Railway.
The negotiations with the Imperial Government, of
which the shareholders are already aware, for the establishment of a first-class line of steamships between the
Pacific terminus of the railway and Japan and China,,
are still pending. The many advantages to Imperial
interests, and the sense of security tjiat would be created
by a thoroughly efficient and purely British alternative
route to the East, inspire the Directors with the belief
that their proposals must soon be accepted by Her
Majesty's Government. The question of connections
with the Australasian Colonies is also receiving the
attention of the Directors, and they are also looking
towards such steamship service on the Atlantic as will
fully meet the requirements of the Company.
Arrangements have been made with the Pacific Coast
Steamship Company for a first class steamship connection
between the Pacific terminus of the railway and San
Francisco, immediately upon the opening of the through
line for traffic; and other important water connections on
the Pacific Coast will be established shortly, from all of
which a considerable amount of paying traffic will be
obtained. The Directors are confident that the opening
of the line to the Pacific will result in a large and immediate development of through traffic, which, in a very
short time, will exceed any estimate that has yet been
made. 17
Telegraph.
The Company's telegraph lines have as yet only been
opened for commercial service between Lake Superior and
the Rocky Mountains, and on the branch lines of railway
in the North-west; but the net profit from their operation in that district in 1885 was $60,530 as against $36,273
for the previous year. The Company's wires both east
and west are being rapidly extended, and it is expected
that its telegraph system will soon be in full operation.
Desirable connections with the principal cities in the
United States have been practically secured, and cable
connections with Europe are also available.
The Directors place a very high money value upon the
telegraphic property and privileges of the Company,
which they intend to fully protect and develope.
Land Grant Mortgage Bonds.
Total issue 	
Deposited with the Government as security under
the contract, without interest $5,000,000
Held by tbe Government under the Loan Act, 18843
without interest    8,996,000
Redeemed by Land sales and cancelled    7,391,500
$25,000,000
21,387,500
Baiance outstanding in hands of public..
$3,612,500
Against this the Company holds interest-bearing obligations for lands sold on deferred payments, amounting
to $1,579,708.
The new agreement with the Government provides for
the immediate cancellation of the $8,996,000 of these bonds
now held by the Government; and for the ultimate cancellation of the remaining $5,000,000. When these bonds
have all been cancelled, the $3,612,500 bonds outstanding
in the hands of the public, will be the only charge on the
Company's land grant of 14,734,667 acres.
rt- ■ 18
Lands.
Acres. Acres.
Total Land Grant  25,000,000
Sales to 31st December, 1885  3,757,662
Less cancelled      285,644
 3,472,018
21,527,982
To be retained by Government, under new agreement, approximately         6,793,315
14,734,667
In accordance with the policy indicated in the last annual report; and as the most practical and effectual method
of giving a value to, and creating a market for, the Company's lands ; the Directors have devoted their attention
almost entirely to promoting the settlement of the free
Government lands within the railway belt and south of it
to the International boundary, meantime making little
effort to effect sales of its own lands. Until the free
homesteads are pretty well taken up and occupied, there
cannot be any great quantity of land sold to settlers. The
free homestead lands in the railway belt and south of it,
as far west as Moosejaw, are already largely taken up, and
it cannot be long before there will be a good market for
the Company's lands in all that section of country, when
the great importance of the Land Grant as an asset of the
Company will begin to be appreciated.
In conclusion, the Directors beg to renew their expressions of entire confidence in the success of the enterprise,
as a commercial undertaking. With its main line stretching from the Atlantic seaboard to the shores of the Pacific;
with its extensive system of branch and connecting lines,
enabling it to reach the chief centres of trade in Canada and
the Northern United States, with its own steamships on
the great Lakes, and  all this under one management; 19
with the further great advantage of having only to provide for a total capital charge, including bonds, leases
and ordinary shares, of less than $30,000 per mile, or
about one-fifth of that of its principal Canadian competitor,
and far below that of any of its American competitors;—
with all these advantages, and its superior facilities for
attracting business and conducting it economically and
efficiently, and with no telegraph, sleeping car or elevator
companies, or any other private interests whatever to sap
its revenues, the Canadian Pacific Railway can hardly
fail to meet the expectations of its projectors, and to be
a source of large and certain profit to its shareholders;
and, finally, with the establishment of steamship connections of the best class, both on the Atlantic and the
Pacific, it must soon become a powerful factor in the
world's commerce.
The railway being now practically in operation throughout, and the Company beyond the reach of the political
or other motives which have prompted many persons at
home and abroad to decry the country traversed by the
line; and their statements having been proved false as to
the lands by the results of agriculture, and as to the railway, by the results of its operation, it is hoped that we
may henceforth escape the malice, which in the past has
done so much to embarass the Company and retard the
settlement of the country.
The contract with the Government having been completed, Messrs. P. du P. Grenfell and Charles D. Rose
decline re-election as Directors. The Hon. Levi P. Morton
and Mr. Richard J. Cross, of the firm of Morton, Bliss &
Co., of New York, are willing to accept the vacant seats
on the Board and now offer themselves for election.
For the Directors.
Geo. Stephen,
President. 20
And the report having been considered, it was moved
by Sir George Stephen, seconded by Mr. W. C. Yan
Home, and unanimously
Resolved:
That the Annual Report on the affairs and operations
of the Company for the year ended December 31st, 1885,
now submitted, be adopted; and that the same be published and forwarded to the Shareholders and others
interested in the Company.
The President submitted a copy of the agreement, between the Grand Trunk Railway Company, and the
Government, dated the 19th September 1885 ; also copy
of the agreement between the Canadian Pacific Railway
Company and the Government, bearing the same date;
and copies of Orders in Council dated the 13th March, and
5th April last, having reference to the acquisition by and
transfer to this Company of the North Shore Railway ;
And the same having been considered, it was moved
by Mr. Sandford Fleming, seconded by Mr. Andrew Robertson, and unanimously
Resolved:
That the action of the Board in respect of the acquisition
of the North Shore Railway be approved, and that the
agreement relating thereto be and the same is hereby
ratified and confirmed.
Submitted also the agreement dated 30th March 1886,
between the Government and the Company, relating to the
re-payment to the Government of the loan of $29,880,912,
secured, as to $20,000,000, under the Act 48 and 49 Yic.
Cap. 57, by the deposit with the Government of First
Mortgage Bonds of the Company to that amount; and 21
providing for the satisfaction of the remainder of the said
loan, viz : $9,880,912, by a reduction of the Land Grant
by such number of acres as shall be sufficient, computing
the value thereof at $1.50 per acre, to extinguish the said
sum.
A copy of the Bill now before the Dominion Parliament to carry the arrangement into effect was also submitted :—
Whereupon it was moved by Mr. Richard J. Cross,
seconded by Mr. Geo. R. Harris, and unanimously
Resolved:
That the action of the Board in respect of the said
agreement be, and the 'same is hereby ratified and confirmed ; that the terms of the Bill relating thereto be
also approved, and that the Board of Directors are hereby
authorized to accept the same as binding on this Company.
The President referred to the steps that are being taken,
as mentioned in the Annual Report, for the construction
of the St. Lawrence Bridge and approaches, and of the extension of the Ontario & Quebec Railway from Smith's
Falls to a junction with the Atlantic and North-West Ry.,
and stated that in conformity with resolutions of the
shareholders and Boards of Directors of the several Companies interested, a further issue of the Debenture Stock
of the Ontario and Quebec Railway Company would have
to be made to meet the cost of such construction. And
that, although the requisite authority for the purpose had
already been voted and was technically sufficient, it might
be as well that the meeting should signify the approval
of the measures adopted, and of those which must necessarily follow in respect of the requisite financial arrangements : 22
Whereupon it was moved by the Hon. Donald A. Smith,
seconded by Mr. Henry Beatty, and unanimously
Resolved:
That the proceedings of the Board, in conjunction with'
the Boards of the Ontario and Quebec and Atlantic &
North-West Railway Companies, for the construction of
the extension from Smith's Falls, eastward, and of the
St. Lawrence Bridge ; and the contemplated issue of Debenture Stock of the Ontario & Quebec Railway Company, under the terms of the lease executed by that Company to this Company on the 4th day of January 1884,
and of the agreement between the Ontario & Quebec
Railway Company and the Atlantic & North-West Railway Company, dated the 3rd and 27th December 1883
be, and the same are hereby approved and confirmed.
On motion of Mr. Andrew Robertson, seconded by Mr.
Henry Beatty, it was also unanimously
Resolved:
That the minutes of the meetings of the Board, and
of the Executive Committee, held since the adjourned
Annual Meeting, held on the 13th of June last, and now
laid on the table, be, and the same are hereby approved,
ratified and confirmed.
The President having named Messrs. Andrew Robertson and John W. Sterling as Scrutineers, a ballot was
taken for the election of Directors for the ensuing year ;
and on the report of the Scrutineers the following gentlemen were declared duly elected :—
Sir George Stephen, Bart Montreal.
Mr. Wm. C. Yan Home	 23
Hon. Donald A. Smith Montreal.
Mr. Richard B. Angus       "
Mr. Edmund B. Osier Toronto
Mr. Sandford Fleming, C.E., C.M.G Ottawa.
Mr. H. S. Northcote London.
Mr. R. Y. Martinsen New York & Amsterdam.
Hon. W. L. Scott Erie, Pa.
Mr. George R. Harris, of Mess. Blake, Bros. & Co., Boston.
Hon. Levi P. Morton, j of Messrs. Morton, Bliss & Co.,
Mr. Richard J. Cross, j New York.
And the proceedings terminated.
Geo. Stephen,
President.
C. Drinkwater,
Secretary.
Note.—At a meeting of the new Board, subsequently
held, Sir George Stephen, Bart., was re-elected President,
and Mr. William C. Yan Home, Yice-President, of the
Company ; and the following were appointed the
Executive Committee :
'■■1!-S
Sir George Stephen, Bart., (ex-officio).
Mr. Wm. C. Yan Home.
Hon. Donald A. Smith.
Mr. Richard B. Angus.  APPENDIX.
ZBALAHSrOIE]   SHEET
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Statement of Earnings fob the Year 1885.
From Passengers  $2,859,222 98
"     Freight  4,881,865 58
"     Mails  137,15192
"     Express...  172,303 01
"     Parlor and Sleeping Cars  73,523 55
"     Miscellaneous; Telegraph, &c  244,426 08
Total earnings  $8,368,493 12
Statement of Operating Expenses for the Year 1885.
Conducting transportation.  $1,225,801.71
Maintenance of Way and Structures  961,330 34
Motive Power  1,915,250 49
Maintenance of Cars  399,084 37
Parlor and Sleeping Cars  24,098 99
Expenses of Lake Steamers  165,430 08
General Expenses  452,280 47
Total expenses  $5,143,276 45
Note.—The usual Statement of description of Freight carried during
the year 1885 is omitted, owing to the loss of a great portion of the
Statistics necessary for its preparation, by the burning of the Company's
Station and Offices at Winnipeg. Miles.
Montreal to Savona's Ferry  2,679.0
Savona's Ferry to Port Moody (built by the Government, but
not yet transferred to the Company)      213.0
Port Moody to Vancouver (under construction)       14.0
Total Main Line  2,906.0
Other Lines owned.
Eastern Division. O
Miles \
Quebec   Section—Quebec to St. Martin's Junction.... 159.1
Piles Branch    —Piles Junction to Grand Piles  27.5
Joliette         "   —Joliette Junction to St. Felix  17.1
Berthier       "   —Berthier Junction to Berthier  2.0
Aylmer        "   —Hull to Aylmer  7.5
St. Jerome   "   —Ste. Therese to St. J6r6me  13.6
St. Lin           "   —St. Lin Junction to St Lin  12.4
St. Eustache "   —Ste. Ther&se to St. Eustache v  8.0
Brockville    "   —Carleton Junction to Brockville.... 45.5
Algoma        "   —Sudbury to Algoma (not in operation) 96.0 —
Buckingham "   —Buckingham Station to Village  4.0
Atlantic & North West Section (not in operation)  8.0'
400.7
Western Division.
Emerson Branch—Emerson to Winnipeg Junction.... 64.5
Selkirk        "     —Winnipeg to West Selkirk  22.6
Stonewall    "     —Air Line Junction to Stonewall.... 18.3
Gretna         "     —Rosenfeld to Gretna  13.9
Pembina Mountain Branch—Winnipeg to Boissevain. 182.4
Manitoba & South-Western —Winnipeg to Holand ... 91.0
Pacific Division.
New Westminster Branch (under construction).
392.7
9.1
Leased Lines.
Ontario & Quebec Railway.
Miles.
Smith's Falls to Toronto Junction  211.0
Toronto to St. Thomas  116.2
Toronto to Owen Sound  120.5
Orangeville Branch—Streetsville to Orangeville...    31.6
Elora Branch—Church's Falls to Elora     27.5
Teeswater Branch—Orangeville to Teeswater     69.5
St. Lawrence & Ottawa Railway—Ottawa to Prescott..   53.0
Total Leased Lines     629.3
Total Mileage of the Company's Lines  4,337.8 29
Statement of Equipment at December 31st, 1885
Locomotives  336
First  and Second Class Passenger Cars,
Baggage Cars and Colonists Sleeping
Cars   289
First Class Sleeping and Dining Cars  31
Parlor Cars, Official and Paymasters Cars.. 25
Freight and Cattle Cars, all kinds  7,838
Conductors' Yans  168
Boarding, Tool and Auxiliary Cars  48
' 30
This Agreement, made subject to the approval of
Parliament
Between Her Majesty the Queen acting for the Dominion of Canada, herein represented by the Hon. A. W.
McLelan, Minister of Finance, hereinafter called "The
Grovernment" and the Canadian Pacific Railway Company, herein represented by the Chief Executive Officer
thereof, hereinafter called " The Company."
"Witnesses.
1. That inasmuch as the amount actually advanced to
the Company by the G-overnment, on account of the sum
of $20,000,000 secured by the First Mortgage Bonds of
the Company, to the amount of ,£4,109,500 sterling, is
$19,150,700, it is agreed that the Company shall repay
to the G-overnment, with interest at the rate of four
per cent, per annum, as provided by the Act 48 and 49
Yict., chap. 57, the said sum of $19,150,700, such payment
to be made in two equal instalments, the first of which
shall be paid on the first day of May next, and the second
thereof on or before the first day of July next, both with
interest as aforesaid.
2. That upon full payment of the said two cash instalments and interest, as hereinbefore provided, the Land
Grant of the Company shall be reduced by such number
of acres as shall be sufficient, computing the value thereof
at $1.50 per acre, to extinguish the balance of the loan of
$29,880,912 mentioned in the Act 48 & 49 Yic, chap. 57,
that is to say, the sum of $9,880,912, with interest at the
rate aforesaid to the lst day of May next; and such reduc- 31
tion shall be effected by the retention by the G-overnment
of lands of equal average quality and value with the
lands constituting the portion of the Company's Land
Grant not heretofore disposed of by the Company.
3. That upon the settlement of all accounts respecting
the said authorized loan of $29,880,912, and payment and
settlement, as aforesaid, of all sums of money due thereon,
all the Bonds of the Company secured exclusively upon
the Land G-rant of the Company, commonly called Land
Grant Bonds, now held by the G-overnmeut in excess of
the sum of $5,000,000 of such bonds held by the G-overnment under the construction contract of the 21st October,
1880, shall be cancelled, and the Debenture Stock of the
Ontario & Quebec Railway Company, held by the G-overnment under the Act, 47th Yic, chap. .61, sec. 1, shall be
returned to the Company. And the G-overnment shall
authorize the Company, under section 10 of 48 and 49 Yic„
chap. 57 to mortgage the Algoma Branch to such amount
per mile as is authorized by the Charter of the Company,
with respect to the main line.
4. That upon the settlement in manner aforesaid of
the indebtedness of the Company to the Grovernment, the
Company may issue first mortgage bonds upon the remaining lands granted to them under their said contract,
in such manner as is provided by their Charter* in respect
of the issue of Land G-rant Bonds, and to such t.mount per
acre as they shall deem fit, not to exceed $2.00 per acre,
subject to the approval of the Governor in Council, all of
the outstanding Land Grant Bonds obtainable being first
duly cancelled, and a reserve being made from the new
issue to cover such outstanding Land Grant Bonds as cannot be obtained for cancellation. And in the event of the
Company making such issue, the Government will accept
in exchange for the said $5,000,000 of the said Land Grant
i:i ■■■ ■
liilw
•; .131 32
Bonds a like amount of the new issue of bonds, such bonds
to be held and dealt with in the same manner as the Government were by 44 Yict., chap. 1, intituled " An Act res*!
pecting the Canadian Pacific Railway,"  authorized to
hold and deal with the said $5,000,000 so exchanged.
6. That all necessary legislation required to carry the
provisions hereof into force shall be asked for from
Parliament at its present session.
In Witness whereof the Minister of Finance has
hereto set his hand and seal, and the Chief Executive
Officer and the Secretary of the Canadian Pacific Railway
Company have hereto set their hands and havo caused the
seal of the Company to be hereto affixed, the 30th day of
March, in the year of Our Lord one thousand eight hundred and eighty-six.
Signed and sealed by the Minister "|,«.      ■,..
of Finance, in the presence of [■*■   §nea.'
(Signed)    Geo. W. Buebidge.        J
A. W. McLELAN.
Minister of Mnance.
The Canadian Pacific Railway Co*
(Signed) GEORGE STEPHEN,
President.
(Signed) C. DRINKWATER,
Secretary. id ,  1 l
A!
• COMPARATIVE    DISTANCES
JCES-
Can--Ba.C:^: JWcrritrea/   to   Vccncouv'&r---- —2905 «
-n       *       «    J/e-wYbrk      » » ha. &rvckvi//e.  3162.
Nor . Pac: Ry   JfewYork  to TorHcmd,$ Shorter Co-nnecJ7or,s--'bZ&5
Union =iCen: Pac.- JVewYork tb San Franc/sco     » » 32.TI
Pl^OFILfE
Canadian l;7/\cinc Railway
<-/        West of Lake jSuperioT*
I ^COMPARISON    WITH
THEH0,VrHEPxf>l ,   U|vil0H A^D   CEInJtR^AL
^ACipiC 3?/!ILW/lYS •  I   1
I
1'     ■ Ii
Id i  m
CANADIAN PACIFIC RAILWAY
ANNUAL REPORT FOR THE YEAR
X IS O ©
AND
BBPOBT   OIF1   PROOEEDIITGS
AT THE
SIXTH UNNUULM
H  H
OF   SHAREHOLDERS,
HELD   AT   THE   GENERAL   OFFICES   OF   THE   COMPANY,
is/£02>r rr zR/Zela-Ij ,
ON
WEDNESDAY,  nth  MAY,   1887. GAZETTE PEINTING CO.,  MONTREAL. BOARD  OF  DIRECTORS.
Sir GEORGE STEPHEN, Bart., Montreal.
Mr. WM. C. VAN HORNE, do
Sir DONALD A. SMITH, K.C.M.G., M.P.,        ... do
Mr. RICHARD B. ANGUS, do
I   EDMUND B. OSLER,        Toronto.
I   SANDFORD FLEMING, C.E., C.M.G.,   -       -       - Ottawa.
"   R. V. MARTINSEN,'       -       -       -    Amsterdam and New York
Bon. W. L. SCOTT, Erie, Pa.
Mr, GEORGE R. HARRIS, of Messrs Blake Bros. & Co.,      Boston.
Hon. GEO. A. KIRKPATRICK, M.P., Kingston.
Son. LEVI P. MORTON,    \    f« „   .      B1.     .„    v     v
Mr RICHARD J  CROSS   1 of M-essrs-Morton, Bliss & Co., New York.
OFFICERS.
Sir GEORGE STEPHEN, Bart., President,        -       -      - Montreal.
.Mr. WM. C VAN HORNE, Vice-President, - do
1 CHAS. DRINKWATER, Secretary,       -       - do
I T. G. SHAUGHNESSY, Asst. General Manager,   -       - do
" GEORGE OLDS, General Traffic Manager,       -      - do
| HENRY BEATTY, Manager Steamship Lines cfe Lake Traffic, Toronto.
" LUCIUS TUTTLE, Passenger Traffic Manager,        -      - Montreal.
| I. G. OGDEN, Auditor,  do
" W. SUTHERLAND TAYLOR, 'Treasurer, do
'■ C. W. SPENCER, Acting Gen. Supt. Eastern Division, - do
" W. WHYTE, Gen. Supt. Western Division,       - Winnipeg.
f H. ABBOTT, Gen. Supt. Pacific Division,     -       -     Vancouver, B.C.
" JOHN H. McTAVISH, Land Commissioner,    -       -       - Winnipeg.
( Manager of London Office, and Regis-
\     trar of Transfers, 88 Cannon St.,   London, E.C.
HARRY MOODY,
EXECUTIVE   COMMITTEE.
Sir GEORGE STEPHEN, Bart. Mr. WM. C. VAN HORNE.
Sir DONALD A. SMITH, K.C.M.G., M.P.       " RICHARD B. ANGUS.
GENERAL OFFICES,
MONTREAL  ^attadxatr pacific %viilwu^
SIXTH ANNUAL MEETING.
Report of Proceedings at the Sixth Annual Meeting
of the Shareholders, held on Wednesday,
the 11th Day of May, 188T.
The meeting assembled in conformity with the notice
■convening the same, at noon, at the General Offices of
"the Company in Montreal. The President, Sir G-eorge
-Stephen, Bart., took the chair, and the Secretary of the
Company acted as Secretary of the meeting.
The notice calling; the meeting having* been read, the
President submitted and read the following report on the
affairs and operations of the Company for the year ended
•31st December last:
SIXTH   ANNUAL REPORT
OP   THE
Directors op the Canadian Pacific Eailway Company,
submitted at the annual meeting op  the shareHOLDERS, held at Montreal, 11th May, 1887.
A balance sheet of the affairs of the Company at
4Jlst December last, together with the nsual statements
relating to the business of the past year, are submitted
herewith.
The Directors have the satisfaction of reporting that,
•since the date of the last Annual Meeting, the obligations of the Company to the Dominion G-overnment have
been discharged in full, in accordance with the terms of
a the agreement between the Government and the Com-
The $29,880,912 loan having been repaid, the $8,896,000
Land Grant Bonds, held by the Government as security,,
have been surrendered to the Company and cancelled.
On 10th November last, a further agreement was entered
into which provided for the acceptance by the Government
of the work executed by the Company as fulfilling the conditions of the contract, and for the transfer to, and the
acceptance by the Company, of the portions of the road
constructed b*y the Government, subject, however, to the
adjustment of certain deficiencies in the Government,
section in British Columbia.
This agreement also provided for the payment to the
Company of the balance of the cash subsidy, and for the
release of $4,000,000 of the $5,000,000 of the Company's
Land Grant Bonds held by the Government under the
original contract. The $4,000,000 Land Grant Bonds
thus released are now held by the Company.
The following is a statement of the earnings and expenses, showing the results of the year's operations :—
Gross earnings for the year     $10,081,803.59
Working expenses, being at the rate of 63.26 per
cent, of the gross earnings         6.378,317.05
Net earnings 36.74 per cent        3,703,486.54
Deduct fixed charges accrued during the year...       3,068,041.84
Surplus  635,444.70
The receipts and expenditures for the year were as
follows :—
J 1
Eeceipts.
Surplus Revenue as per statement  $635,444.
Dominion Government Subsidy  460,087.
Proceeds £4,191,500 lst Mortgage Bonds $20,275,568.56
Less Dominion Government Loan and Interest   20,166,216.53
 109,352.
Ontario and Quebec Railway—
Sale of Debenture Stock, £1,400,000  6,908,233.33
Less payment of 1885 balance.. $1,219,018.15
Less expenditures during 1886.    3,914,264.03
  5,133,282.18
Balance in   hand for  completion of the*)
work, entrance   to, and terminals at j- 1,774,951.
Montreal and Toronto J
Repayment of amount due by Ontario and 1 , 91Q n1 a
Quebec Ry. at end of 1885 J i,^iy,ui».
Collections from Station balances and vari- \ <*;i fi 147
ous accounts receivable /
Add Balance in hand Dec. 31st, 18S5      5.297.812.73
Less current liabilities at that date       2,101,775.86
 3,196,036.
7,911,037.
Deduct cash in hand Dec. 31st, 1886       2,427,894.28
Less fund held for accrued fixed charges ....      1,222,205.78
 1,205,688.
6,705,348.
Add current liabilities at Dec. 31st, 1886  3,092,291.
9,797,640.
Expenditures.
Construction and Improvements as per Schedule A  6,398,713
Equipment  1,176,661.
Increase in Material and Stores in hand  87,685
Land Department—
Expended promoting Immigration and\ ,„. „.,.
settlement in the North-west J x6i,di*
Amount of Land Grant Bonds received on )
account of sales in terms of mortgage, [■ 85,500.00
and cancelled by Trustees J
10 % premium on redemption  8,550.00
 94,050.
Carried forward $7,888,424
70
13
03
15
15
40
50
93
66
59
29
75
47
00
88 8
Brought forward $7,888,424.88
Town sites—
Expenditure   at   Vancouver — Grading \        17017/1 00
streets, buildings, etc J i-ia,m.ao
Receipts of cash from sales of lots         156,534.28
 16,640.10
Advances—
To St. Lawrence and Ottawa Railway .... 7,072.67
To Atlantic and North-west Railway      1,885,502.94
 1,892,575.61
$9,797,640.59
The position of the Company on the 31st December last
is shewn by the balance sheet submitted, and may be
summarized as follows :—
Assets.
Cost of Railway including acquired and branch
lines, and lines built by Dominion Government.   $164,454,322
Equipment         10,520,959
Cash in hands of Government for a guaranteed
dividend        11,803,499
Accounts receivable, supplies, cash in hand and
advances, etc  8,483,477
Balance due on Land sold  1,223,538
196,485,795
14,959,718 acres land        29,919,436
Total assets     $226,405,231
Liabilities.
Capital Stock  $65,000,000
Funded Debt  44,258,019
Accounts payable  4,314,496
Land Grant Bonds outstanding  3,527,000
Total Liabilities      $117,099,515
Total Assets     $226,405,231
Total Liabilities       117,099,515
Nominal surplus of assets over liabilities     $109,305,716 9
On the 1st July next, when the St. Lawrence bridge and
the extensions of the Ontario and Quebec Eailway from
Smith's Falls to Montreal, and from Woodstock to London
are turned over to the Company in working order, and
provision having been made for the new terminals
at Montreal and Toronto, the position of the Company
will be approximately as follows :—
Fixed Capital Liabilities.
lst Mortgage Bonds, £7,191,500  $ 34,998,633
Canada Central Bonds  1,823,333
Province of Quebec  7,000,000
North Shore Railway Bonds  436,053
Leased Lines capitalized at 5 per cent  25,226,000
Total fixed Capital liability     $ 69,484,019
Add ordinary share capital        65,000,000
Total Capital Liability     $134,484,019
Annual Fixed Charges.
£7.191,500 lst Mortgage Bonds at 5 per
cent  $1,750,000
£200,000 Canada Central Bonds 6 per cent. 58,400
Canada Central lst Mtge. Sinking Fund.. 51,100
$7,000,000 due Province of Quebec 5 per
cent  350,000
$436,053 North Shore lst Mortgage Bonds
5 per cent  21,800
Rentals.
Ontario Lines     $1,095,166
St. Lawrence & Ottawa Railway  38,934
Manitoba South Western Railway         127,200
 $1,261,300
$3,492,600
To represent this capital liability, the Company has a
well equipped railway system of 4651 miles, a thoroughly efficient Commercial   Telegraph  system,  and nearly 10
lip
15,000,000 acres of selected agricultural lands—the latter
subject only to Land Grant Bonds of $8,52-7,000, of which
$4,000,000 are in the hands of the Company and
$1,000,000 are deposited with the Government, these
$5,000,000 not bearing interest. The Company has also
a cash deposit in the hands of the Dominion Government
sufficient to pay the guaranteed dividend of 3 per cent,
per annum on its entire capital stock, until August 1893.
The Lands, together with other valuable assets of the
Company held outside of capital account, will be available
when required, for providing for the further improvement
of the line, and for such additions to the equipment and
appurtenances as the increasing traffic may demand, so
that, after the completion of the works now in progress,
the surplus net earnings may be free, to be used for their
proper purpose of paying dividends to the shareholders.
At the beginning of the past year, the Lake Superior
section of the line had been put in operation, although
not in all respects fully completed. In view of the
importance of this section, as affecting through traffic,
and of the sharp competition likely to follow the
opening of the through line to the Pacific Coast, the
Directors deemed it wise to place it in' a condition to
meet any demands likely to be made upon it. A considerable amount was therefore expended in widening
cuttings, widening and raising embankments, filling
trestles, ballasting and in generally finishing the work of
construction and providing additional sidings, station
buildings, workshops and other facilities. The entire "main
line from Montreal to the summit of the Rocky Mountains
is now in a very satisfactory condition, and although, as the
business developes, further improvements will doubtless
have to be made, it is not expected that any considerable
outlay will be necessary in any one year. 11
At the beginning of the year the rails had been laid on
the Pacific Division, which embraces the mountain section of the railway, but a large amount of work remained
to be done to place it in effective working order, and in
providing station buildings, work-shops, etc., along
the line and at the Pacific terminus. A large part of
the amount expended on this section was for snow-
sheds and other works necessary for its protection
in winter. It was deemed best to carry out these works
in the most durable and substantial manner, in order
that the safety of the line might be placed beyond doubt.
So far as completed, these works have perfectly withstood
the tests of a winter of unusual severity and with an
extraordinary snowfall. The past winter's experience,
while most satisfactory in proving the sufficiency of the
methods adopted, has shewn additions to the length of
many of the snow-sheds to be necessary, and the need of
similar works at a number of places where no special protection had been provided. A considerable amount of
ballasting also remains to be done ; but aside from these
works, while, as in the case of the eastern section of the
line, some improvements in the roadway, etc., must be
made from year to year, no large expenditure in any
season beyond the present one is to be anticipated.
A detailed statement of the expenditures for construction and improvements is given in schedule " A."
The line was not ready  for  through  traffic  between
Montreal and the Pacific quite as early as was anticipated j
at the  date of the last annual  report ;   but a regular
through passenger service was established on the 28th
June, and a through freight service a month later.
At that time a rate-war between the older trans-continental lines had been in progress for six months, or more,
and rates both for passengers and freight had been reduced
SSI 12
to from one half to one third of their ordinary scale. Notwithstanding this, your line succeeded in securing a considerable share of the through traffic, mostly at remunerative rates. A considerable advance in trans-continental
rates has been made quite recently, and there is now a
prospect that they will soon be restored to something
near their normal basis.
Although the railway was open for through freight
traffic only for the last five months of the past year, no less
than seven cargoes of tea and other Chinese and Japanese
commodities were brought to your line during that time,
by sailing ships, consigned to the principal cities in Canada, and to St. Paul, Chicago, New York, and other cities
in the United States, indicating that the expectations of
the Directors as to a large and profitable trans-Pacific
trade, will be fully realized upon the establishment of a
regular line of steamships. And the fact that the teas
already received have been transported across the continent from Vancouver to Montreal and New York, in from
seven to eight days, is evidence of the satisfactory character
and condition of the railway.
A temporary service for the present season has been
arranged for on very favorable terms, to be performed by
three steamships between Vancouver, and Yokohama and
Hong Kong. Negotiations are in progress with the Imperial Government for the establishment of a first-class line
of steamships between Vancouver, and China and Japan,
and the Imperial interests involved in this question are so
important,that there can be little doubt of a satisfactory
result.
The establishment of a first class line of mail and
passenger steamships between Canada and the United
Kingdom, fully equal in speed and character to any
now crossing the Atlantic, is under the consideration of r~
13
the Dominion Government; and it is confidently expected
that the necessary steps to this end will be takenimmediate-
ly. Such a line, while being of the greatest possible advantage to Canada, would also be a most important supplement to the Pacific Service contemplated by the Company,
and could not fail to contribute largely to the trans-continental business of your Railway.
On the eastern section of the main line, settlements
have advanced far beyond Lake Nipissing. The movement of emigrants to the prairie section is constantly increasing, and the prospects of immigration, for this year, are
unusually favorable. The completion of the railway to
British Columbia has given a decided impetus to the
growth of that Province.
The grain trade of the Company is steadily increasing,
and since the last annual report a second elevator of 600,000
bushels capacity has been found necessary in Montreal.
This has now been completed, bringing the storage capacity at that point up to 1,200,000 bushels.
As indicated in the following comparison of earnings
for the past three years, the growth of local traffic has
been most gratifying, and there is every prospect that
this growth will be even more rapid in the future.
I I I
1884 1885 1886
Passengers  1,980.902.30 2,859,222.98 3,170,713.69
Freight  3,410,365.39 4,881,865.58 6,112,379.89
Mails  85,736.83 137,151.92 205,024.18
Express  95,671.68 172,303.01 206,872.41
Parlour and Sleeping Cars  43,492.60 73,523.55 118,658.99
Telegraph and Miscellaneous ... 134,352.47 244,426.08 268,154.43
Total I 5,750,521.271  8,368,493.12! 10,081,803.59
The earnings per ton per mile, and per passenger per
mile, for the past three years, were as under:—
• 3i 1884.
1885.
1886.
Freight	
.    1.45 cents.
1.20 cents.
1.10 cent
Passengers...
.    2.60    "
2.45    "
2.10   "
Great deposits of copper have been discovered near the
railway at Sudbury Junction. Large shipments of the
ore have already been made, and a number of smelting
furnaces are now being erected and will soon be in operation at the mines. Extensive iron deposits have been
found at various places near the railway. The silver
mines near Port Arthur are yielding ores of remarkable
richness, and attracting wide attention. A number of
mines of both bituminous and anthracite coal have been
opened on the line of the railway, between Calgary and
the summit of the Rocky Mountains. All along the line
in British Columbia discoveries of silver and gold are
reported, and a number of reducing and smelting works
are planned to be built this year. The Directors believe
that in time the mineral development on both the Lake
Superior and Mountain sections of the line will be such,
as to make these the most profitable portions of the
railway.
The grazing country, spreading out from the eastern
base of the Rocky Mountains, is rapidly filling up with
cattle from eastern Canada and from the United States.
A large number of American herds were brought over
to Canadian territory during the past year. The transportation of cattle from the grazing country eastwards to
the Atlantic seaboard will soon be an important item in
the Company's traffic.
The experience of the past winter, which was the
most severe for many years, has shown the great
advantages of the Canadian North-west over the adjacent territory in the United States for cattle raising,
the percentage of losses in the neighbouring territory of Montana having been greater than on the Canadian
side of the International Boundary. 15    -
The proportion of working expenses to gross earnings,
while comparing favorably with the neighbouring railways in Canada, is not yet as low as in the case of some
of the other Pacific Lines ; but as the local traffic of the
railway developes, this proportion will naturally decrease.
The following comparison with other companies, in respect
of the proportion of working expenses to gross earnings for
the past year may be of interest:—
Union Pacific  66.18 per cent.
Northern Pacific  50.19       "
Southern Pacific  58.22       "
Grand Trunk Railway of Canada  69.88       "
Northern & North Western of Canada  59.62       "
Canadian Pacific  63.26       "
m
I* I*UJ
Extensions and Branches.
The extension of the Algoma Branch from Algoma Mills
to Sault Ste. Marie, is in active progress, and will be fully
completed during the present season without subsidy
or bonus of any kind. The American lines approaching
Sault Ste. Marie, one from Duluth, and the other from
Minneapolis and St. Paul, are expected also to be completed by the end of the year.
The bridge over the St. Mary's River; the outlet of Lake
Superior; is under construction, and will be completed by
the time the railway lines are ready for traffic. The
bridge will be owned jointly by the Canadian Pacific arid
the two American Railway Companies, your Company
owning one-half and the two American ComDanies one-
fourth each.
It is proposed to issue mortgage bonds on the existing
branch and its extension, to the amount of $20,000 per
mile, and a deed of mortgage embodying the same, will
be submitted for the approval of the shareholders. You
will, also, be asked to make provision for this Company's
contribution to the cost of the Sault Ste. Marie bridge.
MP ! 16
The advantages, in point of distance, of the Sault Ste.
Marie route over the American lines by the way of Chicago
will be very great, and a large volume of traffic may be
expected immediately on the completion of this connection.
The extension of the main line of the Canadian Pacific
Railway from Port Moody, to Vancouver,—14 miles—
referred to in the last annual report, was well advanced
during the year, but its final completion having been
delayed by litigation, it is only now ready for traffic.
The branch line to New Westminster—9 miles in
length,—also referred to in the last Annual Report, was
completed and put in operation during the past year.
Both of these extensions are covered by the general
mortgage securing the first mortgage Bonds of the
Company.
During the year, the two branches of the Manitoba
South-Western Railway, owned by this Company,
were extended; the north line from Holland to Glen-
boro, 20 miles, and the south line from Boissevain
to Deloraine, 20 miles; thus bringing nearly all of
the settlements in Southern Manitoba within easy reach
of railway facilities.
Two short branch lines, the one four miles and the other
one mile in length, were built to the copper mines, [near -
Sudbury, during the year.
Leased Lines.
ONTARIO AND   QUEBEC.
The extension of the Ontario and Quebec Railway from
Smith's Falls to Montreal, which will afford to the Company the shortest practicable line between Montreal and ■
Toronto, is nearly completed, and is expected to be ready
(for business within a few weeks from this time. As this
dine is expected to have a very heavy traffic, it has been
■laid with 12 lb. steel rails, and completed in a more than
[usually substantial manner.
Satisfactory progress has been made towards securing
a western entrance to Montreal and a central passenger
station in that city, and an eastern entrance to the city of
Toronto, both of which will materially shorten the distance between the two cities, and give the Company a
more complete control of the traffic than it would other-
[wise have.    The western entrance to Montreal will be of
I the greatest advantage to the lines of this Company run-
j ning to the south and east by the way of the new St.
[Lawrence bridge.
The extension from Woodstock to the Detroit River,
will be completed as far as the important city of London,
Ontario, by the end of the present month. There is a prospect that arrangements may be made with other lines,
which may obviate the necessity of continuing this
extension to the Detroit River. It is very important,
however, in the interest of the Company, that failing
such arrangements, the Directors should be in a position
to proceed with the work. You will be asked, therefore,
to authorize the lease of this section of the Ontario and
Quebec Railway, for a rental equivalent to the interest
on $25,000 per mile at five per cent, per annum, this
being the amount of debenture stock set aside for its
construction. The distance Irom London to the Detroit
River is 112 miles.
The time has come when the Ontario and Quebec
Railway must in some way and without delay, secure such
a connection with the American Railway lines centering
HA at Detroit and Chicago, as will place it on an equal footing
with the other lines between Chicago and the Atlantic
seaboard.
The completion of the St. Lawrence bridge was delayed
by an unusually early and severe winter, and through
the dilatoriness of the contractor for the superstructure
It is not yet completed, but it will be open for traffic
within four or five weeks from this time; and by the same
time, the western section of the " Short Line" from
the bridge to St. Johns, P.Q., will have been extended to
a connection with the South Eastern Railway, establishing a direct and independent connection with that
system, and forming, in connection with the Boston and
Lowell Railroad, a direct line between Montreal and
Boston, bringing the traffic of the New England States
within easy reach of the Canadian Pacific, and affording
the shortest practicable line to the Atlantic seaboard.
ATLANTIC AND NORTH-WEST.
During the past year, the Atlantic and North-West
Railway Company, an organization controlled by thisj
Company, and created for the purpose of securing the
necessary connections with the Maritime Provinces and
the Atlantic seaboard ; entered into an agreement with the
Dominion Government to construct the " Short Line RailH
way," so-called, extending from the south end of the new
St. Lawrence bridge, eastward by the way of Sherbrooke
and Lake Megantic, and across the State of Maine to a
connection with the railway system of the Provinces of
New Brunswick and Nova Scotia.
This agreement provides for the payment by the Grovernment of a subsidy for twenty years of $186,000 equal
to ,£38,486 6s. annually, for that section of the "Short 19
Line" extending from the St. Lawrence bridge, near
Montreal, to Mattawamkeag in the State of Maine, where
junction is made with the Maine Central Railroad, over
which permanent trackage rights have been secured on
favorable terms to Vanceboro on the New Brunswick
boundary, where connection is made with the New
Brunswick Railway. Under the same agreement, a subsidy of $63,400 equal to £13,02*7.10 per annum for twenty
years for the construction of a line from Fredericton to
Moncton is also provided for.
The mortgage bonds authorized to be issued amounting
to £1,330,000, being at the rate of $20,000 per mile for
325 miles, the distance from the St. Lawrence bridge to
Mattawamkeag, were recently sold in London at 103. These
bonds bear five per cent interest, and the interest will
amount to .£66,500 per annum, of which the Government
subsidy will, for twenty years, provide £38,486-6, leaving
£28,013-14 per annum to be paid by the Company.
The Atlantic and North West Railway has been leased
in perpetuity to the Canadian Pacific Company, at a
rental equivalent to the interest on the mortgage Bonds,
less the amount of the Government subsidy, and this
lease you will be asked to confirm.
The " Short Line " traverses, in the Province of Quebec,
a well developed agricultural country, and touches a number of important manufacturing towns and cities. Crossing the State of Maine, it opens up a valuable timber and
mineral region, and, connecting with the railway system
of that State, it will at once bring to the other lines of
the Company a large and profitable traffic. The saving in
distance between Montreal and St. John, N. B., as compared with the Intercolonial route, will be 2I79 miles and
between Montreal and Halifax 101 miles. 20
It is expected that this line will be completed between
Montreal and Mattawamkeag, and a connection established with the Maritime Provinces, by the end of the
present year.
Connecting Lines.
The Northern and North-Western Railway, which was
stated in the last Annual Report to have been completed
to a connection with the main line of the Canadian
Pacific at Thorncliffe, on Lake Nipissing, was not put in
operation until very late in the year. This line materially
shortens the rail distance between Toronto and Western
Ontario points, and the Canadian North-West.
The Manitoba and North-Western Railway, an independent line, but an important feeder of the Canadian Pacific,
connecting with it at Portage la Prairie, extended its
main line and built branches to the extent of 11 miles
during the year. That Company has now in operation
20*7 miles of Railway.
Telegraph.
The Company's lines of telegraph were opened throughout for commercial business in September last, and the
results have been most satisfactory. Branch lines of telegraph have been built to the principal towns in Ontario
and Quebec, and within a very short time all of the principal towns in Canada will be reached by the Company's
system. The Company has secured telegraphic connection
with the lines of the Postal Telegraph Company
and the Baltimore & Ohio Company for all parts
of the United States, and also connections with the
Commercial and French Atlantic cables. A telegraph
line has been   built jointly by   the Canadian Pacific 21
Company and the Postal Telegraph Company from Vancouver, B.C., to San Francisco, Cal., which, although just
put in operation, has already a profitable business.
Lands.
For the reasons stated in the last Annual Report, the
efforts of the Company have been directed to the settlement of the free Government lands, instead of pressing
sales of its own. The sales to settlers during the year
were 55,93*7 acres, at an average price of $3.28 per acre.
The Government lands within the Railway belt are being
rapidly taken up.
The following shows the position of the Land Grant
at 31st December, 1886 : —
Acres.
Original grant  25,000,000
Surrendered to the Government under agreement of
March 30th, 1886     6,793,014
18,206,986
Sales to 31st December, 1886  3,527,954
Less—
Cancelled in 1886      280,686
    3,247,268
Quantity of land on hand  14,959,718
The cancellations of the past year include the contract
of the French Colonization Company for 200,000 acres.
This was one of the colonization companies formed in the
early years of the organization of the Railway Company
at a time when the speculative fever in lands in the
North-West was at its height. The Colonization Company failed to carry out the conditions of their contract
as to cultivation and settlement,   and   the   agreement 22
was cancelled. These lands are situated within the
Province of Manitoba, and will ultimately realize a
much better price than that provided for in the contract
with the Colonization Company.
Having now touched upon the chief points of interest
relating to the past year's transactions, the Directors, in
conclusion, feel that they may well congratulate the shareholders on the highly satisfactory condition of the affairs
of the Company, as disclosed by this report. They also
desire to offer their congratulations on the near approach
of the time when the vast railway system, on the creation of which the Company has been engaged for the last
six years, will be in full operation.
Before the next Annual Meeting of the Shareholders,
the trains of the Canadian Pacific Company will be running from Halifax to Vancouver; the important branch
to Sault Ste. Marie, connecting with St. Paul, Minneapolis and Duluth, will be open for traffic ; the Boston line,
affording connections with all parts of New England, Will
be fully established ; and it is expected that the Ontario
and Quebec Railway, which is of almost equal importance
to the main trans-continental line itself, will have secured an independent working connection with Chicago and
the Western States, making a new Trunk Line between
Chicago and the Atlantic seaboard, at least equal to its
older Canadian competitor.
It is worthy of especial note that the Company's great
system of subsidiary and branch lines, including the
Ontario and Quebec Railway and the Sault Ste. Marie
Branch, has been created without subsidies or Government aid of any kind.
For the purpose of increasing and widening the in- 23
fluence of the Company in Canada, and, if possible, of
identifying the enterprise more thoroughly with the
progress and development of all parts of the Dominion, it
is proposed to increase, during the current year, the
number of Directors from twelve to fifteen, the latter
number being the limit fixed by the Charter of the
Company.
For the Directors,
George Stephen,
President.
And the report having been considered, it was moved
by Sir George Stephen, seconded by Mr, Wm. C. Van Home,
and unanimously
Resolved:—
That the Annual Report on the affairs and operations
of the Company for the year ended December 31st, 1886,
now submitted, be adopted ; and that the same be published and forwarded to the Shareholders, and others interested in the Company.
The following amended By-laws, passed by the Board,
since the last meeting of Shareholders, were, on motion of
Mr. Henry Beatty, seconded by Mr. E. B. Osier, ratified
and confirmed :—
" That By-law No. 31, relating to the signing of cheques,
** be amended by adding thereto, after the words ' or by
" the Assistant Treasurer,'the following words, 'when so
" authorized by the Board or Executive Committee.' "
" That the office of the Bank of Montreal, at No. 59 Wall 24
" Street, in the City of New York, be and the same is
" hereby appointed the office of the Company in the said
" city, and that By-law No. 12 be amended in accordance
** with this resolution."
The President reported that arrangements had been
made for an advantageous sale of the property of the
Company in Place d'Armes, Montreal, now occupied as
offices ; and that negotiations are in progress for the sale
of the section of the Railway lying between Hull and
Aylmer, which is of no practical use to the Company;
and that it is desirable, with regard to that section of the
Railway, that the Board should have the authority of
the Company for completing such negotiations, and conveying the property in the event of their reaching a
result ; and that a bill is now before Parliament granting
authority for such sale.
Whereupon it was
Resolved:—
That the sale of the property of the Company in Place
d'Armes be approved.
That in the event of an agreement being reached for
the sale of the Aylmer Branch of the Railway, upon terms
satisfactory to the Board, and of legislation being obtained, authorizing its conveyance, the Board be, and they are
hereby authorized to cause a valid conveyance of the same
to be made to the purchaser thereof, upon the terms and
conditions agreed upon, and that the Trustees appointed
under the mortgage deed executed by this Company on
the 25th day of July, 1885, be requested to release the
mortgage thereby created upon the said Branch, upon
satisfactory assurances that the proceeds of such sale will
be applied to the improvement of the property affected by
such mortgage deed. 25
It was further moved by Mr. E. B. Osier, seconded by
Major C. A. Cooper, and unanimously
Resolved:—
That the minutes of the meetings of the Board, and of
the Executive Committee, held since the last Annual
Meeting of the Shareholders, and now laid on the table,
be and the same are hereby approved, ratified arid,
confirmed.
The President having named Mr. Henry Beatty and
Major C. A. Cooper as scrutineers, a ballot was taken for
the election of Directors for the ensuing year ; and on the
report of the scrutineers, the following gentlemen were
declared duly elected:—
Sir George Stephen, Bart Montreal.
Mr. Wm. C. Van Home	
Sir Donald A. Smith, K.C.M.G., M.P	
Mr. Richard B. Angus        "
Mr. Edmund B. Osier ., Toronto.
Mr. Sandford Fleming, C.E., C.M.G '. Ottawa.
Hon. Geo. A. Kirkpatrick, M.P Kingston.
Mr. R. V. Martinsen Amsterdam and New York..
Hon. W. L, Scott Erie, Pa.
Mr. Geo. R. Harris, of Messrs. Blake, Bros. & Co..Boston.
Hon. Levi P. Morton, ) of Messrs. Morton, Bliss
Mr. Richard J. Cross.) & Co New York.
The meeting was then made special for the consideration of the special business mentioned in the notice convening the same.
The President laid before the meeting the lease of the
ft
1 TiWiirrwn
26
Consolidated Line of the Atlantic and North-West Railway Company, extending from the River St. Lawrence
to Mattawamkeag, known as the " Short Line," executed
on behalf of the Company on the sixth day of December last, subject to the ratification of the Shareholders ; and the same having been read and considered,
it was, on motion of Sir Donald A. Smith, seconded by
Mr. R. B. Angus, unanimously
Resolved:—
That the said lease be, and the same is, hereby, ratified
and confirmed.
The President reported that the consolidation of the
Canadian and American Companies, formed for the construction of a bridge at Sault Ste. Marie, having been
completed, and this Company having acquired one-half
of the shares therein, as stated in the Report of the
Directors, it was now necessary to consider the contribution by this Company towards the construction of the
said bridge. He produced copies of the documents describing the proposed arrangement for the construction of
the bridge, which were now in process of execution, and
desired the concurrence of the Shareholders in the substance thereof; and further requested the decision of the
Shareholders as to the contribution to be made by this
Company thereto.
The documents in question were thereupon read and
considered, and the same were approved, namely :—
1. An Agreement between the Canadian Pacific Railway Company, the Duluth South Shore and Atlantic
Railway Company, and the Minneapolis Sault Ste. Marie
and Atlantic Railway Companies. 2-7
2. An  Agreement between the foregoing Companies
and the New Jersey Company.
Whereupon it was,  on motion of Mr.  E.
seconded by Mr. Henry Beatty,
Resolved:—
B. Osier,
That the arrangements embodied, in substance, in the
said Agreements are approved, and that the Board of
Directors be, and they hereby are authorized to cause the
same to be executed, and to aid in the construction of the
said St. Mary's bridge, by the subscription of Stock in the
St. Mary's Bridge Company, and by the guarantee of
Bonds in that Company, upon the terms, conditions and
restrictions embodied in the said Agreements.
The President laid before the meeting a draft of a Deed
of Mortgage securing an issue of First Mortgage Bonds
upon the Algoma Branch of the railway, under the provisions of the Charter of the Company, and of the Acts
respecting the same.
The Secretary read the By-laws of this Company applicable to the said Bond issue, which were made and
passed on the first day of March last, and are embodied
in the said Deed of Mortgage.
Whereupon it was, on motion of Mr. Wm. C. Van Home,
seconded by Sir Donald A. Smith,
Resolved:—
That the said draft Deed of Mortgage be, and the same
is hereby approved and ratified;
That an issue of First Mortgage Bonds amounting to
seven hundred and fifty thousand pounds sterling, secured
by the said Deed of Mortgage, be made upon the said
Algoma Branch, according to the description of the pro-
I 28
perty, upon the terms and conditions, with the rights
and remedies to be enjoyed by the holders of such Bonds,
or by any Trustee or Trustees for them, and subject to
the manner of enforcing such remedies, and to such provisions as to forfeitures and penalties in default of payment, as are inserted and contained in the said Deed of
Mortgage.
That the said By-laws be, and the same are hereby
approved and ratified;
And that the chief Executive Officers of this Company
be, and they are hereby authorized, to execute the said
Mortgage Deed, and the Coupons thereto appended, and
to make the said issue of Bonds in conformity with the
terms thereof.
The President reported that a line of railway, to be
constructed from Woodstock, via London, to the Detroit
River, by the West Ontario Pacific Company, is now inj
process of construction, and will afford convenient access
to the said point, and constitute a convenient and advantageous extension of the Ontario and Quebec Railway;
that an arrangement had been made between the
Ontario and Quebec Railway Company, and the said West
Ontario Pacific Railway Company, for the acquisition of
the said line when constructed; that it would be
for the advantage of this Company to have the right of
leasing the same in perpetuity from the said Ontario and
Quebec Railway Company in the event of such construction ; and that the consideration and determination
of the Shareholders on this point was desired.
Whereupon it was moved by Mr. R. B. Angus, seconded
by Sir Donald A. Smith, and
Resolved:—
That in the event of the Ontario and Quebec Railway 29
Company obtaining control of, or acquiring the West
Ontario Pacific Railway, extending from Woodstock to
the Detroit River, or any part thereof, this Company do
lease the same from the said Ontario and Quebec Railway
Company, upon terms and conditions similar to those on
which the main line of the Ontario and Quebec Railway
has already been leased by this Company, as shall be
determined by the Board of Directors.
That the said Board of Directors be and they are hereby
authorized to cause such lease to be made, and duly executed by this Company.
And the proceedings terminated.
George Stephen,*
President.
0. Drinkwater,
Secretary.
Note.—At a meeting of the new Board, subsequently
held, Sir George Stephen, Bart., was re-elected President,
and Mr. Wm. C. Van Home, Vice-President, of the
Company ; and the following were appointed the Executive Committee :
Sir George Stephen, Bart, (ex-officio.)
Mr. Wm. C. Van Home.
Sir Donald A. Smith, K.C.M.G., M.P.
Mr. Richard B. Angus.  APPENDIX.
B-A-L-A-HSTOIE   SIKEJIET
STATISTICS.
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Statement of Earning-s foe the Year 1886.
From Passengers  $3,170,713.69
  6,112,379.89
  205,024.18
  206,872.41
  118,658.99
  268,154.43
Freight	
Mails	
Express 	
Parlour and Sleeping Cars —
Telegraph and Miscellaneous.
Total Earnings    $10,081,803.59
Statement of Operating Expenses for the Year 1886.
Conducting Transportation  $1,543,166.54
Maintenance of Way and Structures  1,270,468.53
Motive Power  2,488,387-84
Maintenance of Cars  514,128.09
Parlour and Sleepin g Car Expenses  38,533-25
Expenses of Lake Steamers  67,898.80
General Expenses  405,114-72
Commercial Telegraph  50,619 - 28
Total Expenses  $6,378,317-05
II
I  35
SCHEDULE A.
Details of Expenditure on Construction and
Improvements during 188$.
main line.
Acquired Lines to Callander.
Elevators at Montreal  $101,995.29
Approach to East End Station, Montreal... 36,299.27
New Stations and Buildings between Quebec and Callander  19,957.19
New Round House and Turntable, Hoche-
laga  20,891.09
New Sidings between Quebec and Callander 7,079.40
New Fences between Quebec and Callander. 4,679.58
New Bridges between Quebec & Callander.. 9,872.98
New Drains in yards at Hochelaga and
North Bay  812.60
New Steel Rails  16,878.85
New Double Track at Montreal  4,987.92
New  Phosphate   Bins   at  Montreal   and
Buckingham  499.16
Additions to Round Houses, Quebec, to Callander   997.02
Improving Water Supply ditto  142.45
Surfacing and Ballasting ditto  8,831.22
Miscellaneous Construction,   Engineering,
etc  2,618.42
 236,542.44
Callandbe to Poet Aethue.
T   ,   -.■         ,,,         , f Grading  192,713.65
Including settlement   BridgeIW Culverts... 545 932.37
of Contractors', ac- j T    ^    .       48 765.44
counts for previous] Surfacing,Ballasting and
years*                        [    Widening Cuttings.. . 701,155.09
Stations and Buildings  117,918.87
Round Houses and Shops  52,647.44
Water Stations  19,619.09
CoalSheds  8,614.21
Fencing  9,29475
Engineering, Handling Material, Miscellaneous Construction  86,791.57
 1,783,452.48
Poet Aethue to Winnipeg.
Grading, Widening cuts, &c  15,086.04
Bridges and Culverts  30,770.41
Stations, Shops and other buildings  20,200.84
Surfacing and Ballasting  1,615.59
Stock Yards and Sidings  401.74
•Rails, Ties, Fastenings, and laying  46,200.00
      114,274.62
Carried forward ...$2,134,269.54
j;; fe 36
Brought forward ■ $2,134,269.54
Winnipeg to Canmoeb.
Grading, Widening cuts, &c  26,544.58
Bridges and Culverts  18,510.18
Stations, Shops and other Buildings  48,964.12
Surfacing and Ballasting  5,325.86
Stock Yards and Sidings  785.09
Waterworks  13,331.14
Rails, Ties, Fastenings and laying  3,766.42
Fencing  3,519.03
 120,746.42
Canmoee to Pacifio Coast, (Mountain Section).
Grading  802,704.41
Rails, Ties, Fastenings and laying  192,854.24
Bridges and Culverts  260,728.95
Water Works  64,764.00
Surfacing and Ballasting  425,595.13
Snow Sheds  1,477,510.08
Stations and Buildings «  233,111.05
Round Houses and Shops  42,818.89
Fencing  57,543.89
Wharves  16,904.20
Sidings  6,473.72
Right of Way  11,96658
Hotels  13,159.98
   3,606,13512
Telegraph Lines      420,806.37
Total $6,281,957.45
Branch Lines.
Mile End Branch -.  429.21
Buckingham  754.57
Brockville Loop Line  233.76
Sudbury Copper Mine Branches  21,367.53
Sault Ste. Marie Branch  25,185.50
New Westminster Branch  131,132.83
South Western Branch, Manitoba  33,170.19
$212,273.59
Credit—Rails, Ties and Fastenings taken \   qc ci 7
from Emerson Branch J      &'5*1' *7&
6116,755.84
$6,398,713.29 3-7
Statement of Equipment at December 31st, 1886.
Locomotives  3*72
First and Second Class Passenger Cars,
Baggage Cars and Colonists' Sleeping
Cars „  304
First Class Sleeping and Dining Cars  41
Parlor Cars, Official and Paymasters' Cars.. 21
Freight and Cattle Cars, all kinds  8,253
Conductors' Yans  118
Boarding, Tool and Auxiliary Cars.. e.  71
Lake Steamers   " Alberta"    and  " Athabasca." MILEAGE OF ALL THE COMPANY'S LINES.
Main Line. Milea.
Montreal to Port Moody  2,891.3
Port Moody to Vancouver       14.0
Total Main Line  2,905.3
Othee Lines owned.
Eastern Division. Miles.
Quebec Section—Quebec to St. Martin's Junction.  159.1
Piles Branch   —Piles Junction to Grand Piles  27.5
Joliette        "   —Joliette Junction to St. Felix  17-1
Berthier     "   —Berthier Junction to Berthier  2.0
Aylmer       "   —Hull to Aylmer  7.5
St. Jerome «   —Ste. Therese to St. Jer6me  13-6
St Lin        "   —St. Lin Junction to St Lin  12.4
St Eustache''   —Ste. Th6rese to St Eustache  8-0
Brockville  "    —Carleton Junction to Brockville  45-5
ai™           « /—Sudbury to Algoma (not in operation) 96-0
Aigoma          \—Algoma to Sault Ste. Marie (under
construction)    86.1
Buckingham"  —Buckingham Station to Village  4.0
Copper Mines Branches—Sudbury  5.0
    483.8
Western Division.
Emerson Branch—Emerson to Winnipeg Junction .... 64.5
• Selkirk         "     —Winnipeg to West Selkirk  22.6
Stonewall     "     —Air Line Junction to Stonewall  18-3
Gretna         "     —Rosenfeld to Gretna  13.9
Pembina Mountain Branch—Winnipeg to Manitou.... 102.4
Manitoba Southwestern—Manitou to Deloraine  100.4
"           "            "         Winnipeg to Glenboro  105.0
Maryland Branch  6.0
    433.1
Pacific Division.
New Westminster Branch        8.5
Leased Lines.
Ontario & Quebec Section.
* Montreal (Windsor St.) to Smith Falls  129.1
* Mile End Junction to south end Lachine Bridge. -. 9.1
Smith's Falls to Toronto Junction ■  211.0
Toronto to St Thomas  116.2
Toronto to Owen Sound  120.5
* Woodstock to London  27.0
Orangeville Branch—Streetsville to Orangeville... 31.6
Elora Branch—Church Falls to Elora  27.5
Teeswater Branch—Orangeville to Teeswater  69.5
741.5
Atlantic & North West Section.
* Lachine Bridge (South End) to St. John's     21.6
St. Lawrence & Ottawa Section.
Ottawa to Prescott     53.0
Chaudiere Branch      4.7
Total Leased Lines     820.8
Total Mileage of the Company's Lines 4,651.5
* These lines with the exception of that portion of the Ontario and Quebec Section
from Windsor Street, Montreal, to Bridge Junction, 5.6 miles, are nearly completed and
will be in operation this season. 11     'J¥M,impf\J -N   Ifc  CANADIAN PACIFIC RAILWAY COMPANY.
Montreal, 12th September, 1887.
To the Shareholders,
In view of the exaggerated accounts and persistent
mis-statements which have been sent out concerning the
railway agitation in Winnipeg, the Directors of the Company have thought it due to the shareholders to publish
a brief statement of the facts for their information.
On the 21st of October, 1880, the contract for the construction of the Canadian Pacific Railway was signed,
and for the purpose of carrying it out the Canadian
Pacific Railway Company was incorporated on the llth
February, 1881.
Article 15 of the contract provided that for twenty
years the Dominion Grovernment should not authorize
the construction of any line of railway running south
from the main line of the Canadian Pacific Railway to
any point within fifteen miles of the International
boundary.
It is asserted and widely believed that this clause has
no effect in the original province of Manitoba; but the
British North America Act, which settled and defined the
Constitution of Canada, distinctly assigns to the jurisdiction of the Dominion Parliament all matters not
specifically delegated to the Provincial Legislatures and
the power to legislate concerning railways extending
beyond the International boundary, or intended to connect .
•
with other lines at such boundary, is nowhere in the
Constitution given to the Provinces.
Whether or not the fifteen mile limit applies to the
original Province of Manitoba, the matter of a railway
connection at the International boundary is clearly
within the control of the Dominion and as clearly beyond
the power of the Province.
The object and spirit of the fifteenth clause of the contract with the Company was the temporary protection of
the interests of the Dominion, in the Northwest, as well as
the protection of the Canadian Pacific Railway from the
encroachment of lines from the south, during the infancy
of the enterprise. Could connections be made with the
American railway system at the southern boundary of the
original Province of Manitoba, the clause would be meaningless, for once across the boundary line there would be
practically no limit to the extensions that might be made.
The Company required protection because it was bound
under its contract to make an enormously expensive railway through what was thought to be an unproductive
wilderness north and east of Lake Superior. It was, also,
bound to take over and work the line then being built by
the Grovernment, from Lake Superior to Red River, through
a similar unpromising district, and it was required to give
security for the working of the entire line when completed. It was not expected at the time that sufficient
local traffic could be developed for many years to make
the section from Lake Nipissing to Red River, nearly
eleven hundred miles, self-sustaining. It was thought*
indeed, that this section could never be self-sustaining,
and that it must depend for its support upon the through
traflic to and from the great prairies beyond, and this
traffic had yet to be created as the settlement of the
prairies had then scarcely begun. Railway lines were
pushing northward from Chicago and St. Paul towards
the Manitoba boundary, threatening to tap the prairie section of the Canadian Northwest and to deprive the
Eastern section of the railway of the traffic so necessary
to its support and efficiency as part of the through line.
It was, therefore, on the part of the Company, deemed
to be absolutely necessary to the procuring of the requisite capital, to the safety of the capital proposed to be
invested, and, generally, to the success of the enterprise,
that the traffic of the territory to be developed by the
railway should be secured to it for a reasonable period ;
and the term of ten years from the time fixed for the completion of the railway was agreed upon. Without this
provision for protection the necessary capital could not have
been secured and the railway could not have been made.
The Grovernment had strong reasons, of a more exclusively public nature, for this protection. It was a political necessity that the detached Provinces should be
connected and bound together by a railway, and the
older Provinces were to be heavily taxed for the building
of it. Political reasons alone would not justify the
heavy burden it would put upon the country, but a vast
territory was to be opened up, and the older Provinces
looked to the extension of their trade and manufactures
over the entire northern half of the continent, to justify
the expenditure. Their interests required protection,
and the protection afforded to the Company protected
them as well. It was most important to the whole
country that the railway, when made, should be in a
position to efficiently serve the purposes for which it
was intended, and the need of protection was generally
recognized. Indeed, the same protection was insisted
upon by the Grovernment in respect of the Canadian Pacific Railway, when it was commenced as a public work,
long before the Company was thought of.
Winnipeg at the time was a mere village, and the settlements in Manitoba were mainly confined to a narrow
fringe along Red River.   The province hailed the signing
m
uw;
| i| of the contract with satisfaction, and hardly a voice was
raised in objection to the so-called   ' Monopoly Clause."
The Company set about its work, and completed it in
less than half the time required by the contract. Feeling
that the protective clause in its contract placed upon it a
moral obligation to provide railway facilities as' rapidly
as possible in southern Manitoba, where the making of
railways was to some extent restricted, the Company,
almost simultaneously with the commencement of work
on its main line, laid out and commenced work on a
system of branch lines extending south and south-west
from Winnipeg; and up to this time it has expended
on branch lines in Manitoba, in addition to those previously made by the Grovernment, more than $5,700,000.
Partly in view of the same moral obligation, but chiefly
for the purpose of promoting the development of the
country, the Company made its rates both for freight and
passengers on a scale far below the rates of any of the
railways in the United States, similarly situated. The
immediate effect of the opening of the railway between
Lake Superior and Winnipeg was an enormous reduction
in the rates theretofore paid by the Province to and from
the east over the American lines. For the chief products,
and for fuel and the commodities most essential to the
growth of the country, the rates were made especially
low, and year by year, as the traffic has increased, these
rates, in whole or in part, have been reduced until they
are now in many cases less than one half the rates originally authorized. The charge that the rates are excessive
or unreasonable is simply untrue.
The average earnings of the Company for the past
three years have been as follows :—
1884. 1885. 1886.
Freight per ton per mile 1.45 cts.       1.20 cts.       1.10 cts.
Passengers per mile 2.60  " 2.45  " 2.10   "
And  omitting the  through  traffic  to  and from  the Pacific from the figures of 1886, they stand: 1.14 cents
per ton per mile for freight, and 2.13 cents per mile for
passengers,—a lower average than is shown by any important American line, aside from the old Trunk lines in
the east.
It has been the aim of the Company to so adjust its
tariffs that the settlers in the Canadian Northwest should
receive more for the products of their farms, and pay less
for fuel and no more for the other necessaries of life, than
settlers similarly situated in the United States ; and that
it has succeeded in this is clearly shewn by a comparison
of prices with the neighbouring sections of Minnesota and
Dakota. The Company has also dealt in the most liberal
manner with all the independent railway enterprises in
the North-west, and the building and operation of at
least two of these would have been impossible but for
its cooperation and liberality.
The development of the prairie section west of Winnipeg has been rapid, and on the section from Winnipeg
eastward to Lake Nipissing, where little was at first
expected, a valuable local traffic from the forests, and
mines is growing up, giving promise that even this part of
thekline will, before long, be self-supporting. It may, therefore, be argued that the protection afforded by the contract
is no longer necessary ; but it should be remembered that
the Company, encouraged and aided by the growth of
its traffic, and on the faith of this protection, has expended a vast amount of money on local lines in Manitoba,
and, unless prevented by the acts of the Province itself,
will yet expend a large amount in the completion of the
system of branch lines it has planned, and has been carrying
out as rapidly as its means would permit; and it should
also be remembered that all of the 433 miles of branch
lines operated by the Company in the Northwest are in
Manitoba ; that all but sixty-five miles were paid for with
the Company's money, and that many miles were made
1-i 6
prematurely at the urgent solicitation of the Provincial
Grovernment and without expectation of immediate profits.
But, notwithstanding the liberal pplicy of the Company as regards branch lines, and independent lines, and
rates of transportation, notwithstanding that the tariff
rates of the Company have as yet been approved by the
Grovernment only from year to year, and are subject to
annual revision, and notwithstanding that no complaint
of these rates has ever been made to the Railway Committee of the Privy Council, the natural and inevitable
consequences of over-speculation have been mistaken by
many people in Winnipeg, and some other towns in Manitoba, for the need of railway competition. This idea has
been fostered by individuals with selfish ends to serve;
by towns seeking advantages over others in trade; by
local politicians striving for popularity, and by politicians
at large for party ends. The usual means have been employed for creating and keeping up a ferment—the cry of
monopoly and extortionate rates; sensational articles in
the local press ; unfair and false comparisons of rates ; inflammatory speeches, and appeals to prejudice. The local
political parties have vied with each other in securing to
themselves the support of the malcontents, and this has
resulted in the undertaking by the Provincial Grovernment to construct a line of railway to the International
boundary, where it has agreed to make a connection with
a line advancing northward from the Northern Pacific
Railway, and -which is supposed to be building under the
auspices of that Company. The acts of the Local G-overnment, providing for the railway in question, are in direct
violation of the British North America Act and beyond
the powers of a Province, and are consequently without
warrant of law.
In attempting to proceed without legal right, the Province has been checked by a. temporary injunction, and it
is not to be believed that in the event of a permanent injunction being granted by the Courts, the Local Grovernment will set the law at defiance. Nor can it be
expected that the wishes of even a majority of the
100,000 people of Manitoba will prevail against the
interests of the 5,000,000 people of the Dominion.
Independent of any constitutional question, and particularly in view of the heavy expenditures by the Company in making branch lines, largely at the instance of
the Local Grovernment, and of the other great expenditures that have been made by the Company for the
development of the Province, the action of that G-overnment in attempting to divert its traffic by building a
railway to the boundary, however insignificant that railway may be, is unfair, unjust, and a breach of faith with
the Company. The service of the Company has given
universal satisfaction, and if the rates were oppressive, no
complaint has ever been laid before the constituted
authorities, that the facts might be authoritatively
brought out and redress obtained.
It would be absurd to urge that the completion of the
sixty-six miles of railway undertaken by the Grovernment
of Manitoba, would ruin the vast Canadian Pacific system,
but its construction would be a violation of the contract
with this Company, and the Directors feel it to be their
duty to maintain the rights of the Company in the matter, in every legitimate way.
That the Country will carry out the contract with
the Company in good faith, the shareholders may rest
assured. The Parliament of Canada, at its last session,
sustained the G-overnment by an extraordinary majority,
in the determination to prevent, if only as a matter
of public policy, the building of railways in the
North-west to the International boundary; and the
prompt action of the Governor Greneral in disallowing
the acts of the Manitoba legislature relating to the Red
River Yalley Railway, followed by active steps by the ~8
Minister of Justice to stop the work by injunction, is
sufficient evidence of the intention of the G-overnment
in this regard.
The present agitation in Winnipeg is chiefly damaging
in its effect on the Province itself. The intemperate, sensational and ridiculous utterances of a section of the local
press are reprinted, and read abroad with alarm ; and the
effect upon emigration and upon the credit of every enterprise in the Province, has already been most serious.
Your Directors believe, however, that this agitation, like
those which have preceded it, will disappear as soon as
the people of the country come to understand the facts,
and discover the motives of those by whom it was
created.
GEORGE   STEPHEN,
President.     CANADIAN PACIFIO RAILWAY.
ANNUAL REPORT FOR THE YEAR
i
iee"7-
AND
il -8
il
lELIEIFOIR/r  OIF   ZP^OQIEIEIDIIIlsrGi-S
AT THE
Seventh Annual Meeting
91-
OF   SHAREHOLDERS,
HELD  AT  THE  GENERAL   OFFICES  OF  THE  COMPANY,
IL^OIISrTIEaiE-A.Ij,
ON
WEDNESDAY,   9th  MAY,   1888. GAZETTE PRINTING CO., MONTREAL. BOARD OF   DIRECTORS.
Sir   GEORGE STEPHEN, Bart., Montreal.
Mr. WM. C. VAN HORNE, - do.
•Sir   DONALD A SMITH, K.C.M.G., M.P.,     ... do.
Mr. RICHARD B. ANGUS, do.
|   EDMUND B. OSLER Toronto.
I     ANDFORD FLEMING, C.E., C.M.G.,....   Ottawa.
|   R. V. MARTINSEN,     -       -       -        Amsterdam and New York.
Hon. W. L. SCOTT,       -  Erie, Pa.
Mr. GEORGE R. HARRIS, of Messrs. Blake Bros. & Co., Boston.
Hon. J. J. C. ABBOTT, Q.C., Senator, Montreal.
"    GEO. A. KIRKPATRICK, M.P.,     ....       Kingston.
"    LEVI P. MORTON     1™,,, «   i      m.     . n    U      ^
.Mr. RICHARD J. CROSS, }0f Messrs* Morton* Bliss & Co., New York.
"    WILMOT D. MATTHEWS, Toronto.
"    P. DU P. GRENFELL, London.
i iSiil
OFFICERS.
Sir   GEORGE STEPHEN, Bart., President,   -
Mr. WM. C. VAN HORNE, Vice-President, -
I   CHAS. DRINKWATER, Secretary    -
I   T. G. SHAUGHNESSY, Asst. General Manager,
I   GEO. M.CLARK, Chief Solicitor
1   GEORGE OLDS, General Traffic Manager,     -
Montreal.
do.
do.
do.
do.
do.
HY. BEATTY, Manager Steamship Lines & Lake Traffic, Toronto.
LUCIUS TUTTLE, Passenger Traffic Manager, -      -      Montreal.
I. G. OGDEN, Comptroller, do.
W. SUTHERLAND TAYLOR, Treasurer,        -      - do.
C. W. SPENCER, Gen. Supt. Eastern Division,     -      - do.
T. A. MACKINNON, Gen. Supt. Ontario & Atlantic Div-,        do.
W. WHYTE, Gen. Supt. Western Division,    - Winnipeg.
H. ABBOTT, Gen. Svpt. Pacific Division   -      -       Vancouver, B.C.
L. A. HAMILTON, Land Commissioner,      ...  Winnipeg.
tt a i?tjv Mnnnv / Manager of London Office, and Regis-
ttM4K * blwii x, ^    irar Qj 11,.^^ 88 Gannon Street, London,E.C.
EXECUTIVE COMMITTEE.
:J3ir GEORGE STEPHEN, Bart., Mr. WM. C. VAN HORNE.
I DONALD A. SMITH, K.C.M.G., M.P.     "    RICHARD B. ANGUS.
GENERAL OFFICES
MONTREAL.
II I      I <®awadxan   gacxfic   %mlmK^
i I'
SEVENTH   ANNUAL  MEETING.
IReport of Proceedings at the Seventh Annual Meeting and Special General Meeting op the
"Shareholders, held on "Wednesday,
the 9th day op may, 1888.
The meeting assembled in conformity with the notice
convening the same, at noon, at the G-eneral Offices of
ithe Oompany in Montreal. The President, Sir George
Stephen, Bart., took the chair, and the Secretary of the
(Company, acted as Secretary of the meeting.
The Shareholders present in person, and by proxy,
were ascertained to represent 401,140 shares of the stock
<of the Oompany.
The notice calling" the meeting was read as follows :—
CANADIAN PACIFIC RAILWAY COMPANY.
NOTICE TO SHAREHOLDERS.
The Seventh Annual Meeting of the Shareholders of this Company, for
the election of Directors and the transaction of business generally, will be
held on Wednesday, the 9th day of May next, at the principal office of
the Company in Montreal, at 12 o'clock noon. 6
The Meeting will be made special for the. purpose of,
1. Authorizing the issue of Bonds secured by Mortgage on the Company's subsidy of lands, and determining, under the authority of the
Charter, all matters relating to such Bonds and Mortgage.
2. Confirming any Agreement that may be made with the Canadian
Government concerning the said Bonds and Mortgage, and authorizing;
the removal of certain restrictions imposed by the original Contract, as*
set out in the schedule to the Act 44 Victoria, Chapter 1.
3. Considering and accepting, and taking such steps as will make available any legislation during the present Session of the Canadian Parliament respecting the foregoing matters.
The transfer books of the Company will close in Montreal and New
York on Tuesday, lst May, and in London on Monday, 16th April, and
will be re-opened on Thursday, 10th May next.
By order of the Board,
CHARLES DRINKWATER,
Montreal, 7th April, 1888. Secretary^
The President submitted the following Report on the
affairs and operations of the Oompany for the year ended.
31st December last:—
SEVENTH ANNUAL REPORT
OF THE
Directors op the  Canadian Pacific Eailway Company, SUBMITTED AT  THE ANNUAL MEETING OF THE
Shareholders, held at Montreal,
9th May, 1888.
A balance sheet of the affairs~of the Company at 31st
December last, together with the usual statements relating to the business of the past year, are submitted herewith. The gross earnings for the year were   $11,606,412.80-
The working expenseswere       8,102,294.64
And the net earnings were     $3,504,118.16
Deducting the fixed charges accruing during the
year      3,250,263-81
The surplus was     $ 253,854-35
The working expenses amounted to 69-81 per cent of the gross earnings-
and the net earnings to 30.19 per cent.
The fixed charges for the year were :—
£7,191,500 1st Mortgage Bonds 5 p.c. from Jan. lst   $1,749,931.66
$7,000,000 Province of Quebec (Q., M., 0. & O. Ry.) 5 p.c.
from Jan. lst        350,000.00-
£89,600 North Shore Ry. lst Mortgage, 5 p.c, from Jan.
1st  21,802.66
£200,000 Canada Central 2nd Mortgage, 6 p.c. from Jan.
lst         58,400.0a
Canada Central lst Mortgage, Sinking Fund,
from Jan. lst  51,100.00-
£200,000 St. Lawrence & Ottawa 4 p.c. from Jan lst.  38,933.34
$2,544,000 Man. S. W. Col. Ry. lst Mortgage, 5 p.c, from
Jan. lst.        127,200.00
Toronto, Grey & Bruce Ry. rental        140,000.00
£2,032,19115s bd Ont. & Que. Ry. Debentures, 5 p.c, from
Jan.  lst        494,500.00
$2,000,000 Ont. & Que. Ry. ordinary stock, 6 p.c, from
Jan. lst        120,000.00
£1,090,000 Ont. & Que. Ry. Debenture, 5 p.c, issued on
Smith's Falls & Montreal Short Line, Western   Ontario    Pacific   Line,   St.   Lawrence
Bridge, interestfrom Sept. lst  88,411.15
£88,356 A. & N. W. Ry. lst Mortgage on 21J miles St.
Lawrence Bridge to St. John's, 5 p.c, from
Sept lst  7,166.00
£59,589 A. & N. W. Ry. lst Mortgage on 14J miles St.
John's to Farnham, 5 p.c, from Oct 21st... 2,819.00"
$3,250,263.81
The receipts and expenditures for the year were  as
follows:—
!'!;
Mi 8
Receipts.
Surplus revenue as per statement	
Bonuses on New Westminster Branch...
Sales of Real Estate	
Sales of construction plant and outfit....
Receipts from Town Sites	
Less Expenditure at Vancouver. •..
|  253,182.24
131,680.92
Atlantic and North West Ry.
Sale of £1,330,000 lst Mortgage Bonds $6,352,408.63
Less Expenditure during 1887     2,468,511.05
Deduct cash on hand Dec. 31st, 1887. •.. $1,014,802.11
do   balances at stations and accounts
receivable $2,615,323.29
Less amount at Dec. 31st,
1886  1,630,037.00      985,286.29
2,000,088.40
Less fund held for accrued fixed charges   1,250,189.06
Deduct current liabilities at Dec. 31,1886   4,314,497.44
Less^cash in hand     2,427,894.28
$253,854.35
75,600.00
123,748.22
6,404.75
121,501.32
3,883,897.58
4,464,406.22
Add current liabilities at Dec. 31st 1881"
749,899.34
3,714,506.88
1,886,603.16
1,827,903.72
7,036,820.69
Total     $8,864,724.41
Expenditures.
Construction and improvements as per
Schedule "A."	
Equipment	
Increase in material and stores in hand.
Land Department
Expenditures in connection with Land
Sales and promoting Immigration and
settlement in the North-west	
Less proceeds of land sales • •. $66,342.53
Deduct  amt.   remaining on
deferred payments     29,318.51
$4,996,616.09
49,974.06
211,142.56
110,052.44
,024.02
73,028.42
Carried forward
>3,330,7tjl .13 9
Brought forward     $5,330,761.13
Amount of Land Grant Bonds re-
ceived-on account of sales in terms
of mortgage and cancelled by
Trustees         56,000.00
Premium and costs of redemption.. 6,291.67
 62,291.67
•Ontario & Quebec Ry.
Amount on hand at Dec. 31,1886, for
completion of work, entrance to
and terminals at Montreal and
Toronto, and applied on expenditure during year  $1,774,951.15
Amount expended during year in permanent improvements, equipment
and construction of new lines, including Short Line Montreal Junction to Smith's Falls, Line Woodstock to London, entrance to and
terminals and stations at Montreal
and Toronto  $3,454,314.55
Less amount in hand at Dec. 31,1886,
■ applied as above  $1,774,951.15     1,679,363.40
Advances.
South Eastern Ry  9,092.50
St. Lawrence and Ottawa  8,264.56
 17,357.06
Total     $8,864,724.41
The following is a comparative statement of earnings
"Cor the past three years :—
i
Passengers	
Freight	
Jtlails	
Express	
Parlor and sleeping cars	
"Telegraph and miscellaneous
Total	
$ 2,859,222 98 $ 3,170,713 69$ 3,453,818 49
1885.
1886.
188*"
4,881.865
137,151
172,303
73,523
244,426
58
92
01
55
08
6,112,379 89
205,024 18
206,872 41
118,658 99
268,154 43
6,924,130 47
241,949 05
235,035 09
176,826 39
574,653 31
$ 8,368,493 12$10,081,803 59$11,606,412 80 10
The St. Lawrence bridge and the different sections of
new line referred to in the last annual report, with the-
exception of the extension of the main line from Port
Moody to Yancouver, were not completed in time to contribute to any but the results of the last three or four
months of the year.
Reference was made in the last report to the unusual
severity and extraordinary snow fall of the winter then
just ended. This so retarded and crippled the business
of the country, and so greatly increased the expense of
working the railway during the first four months of
the year, that the net earnings at the date of that report
had fallen nearly $400,000 below those of the corresponding period of the year before.
At that time, however, it was expected that this decrease-
would be more than made up before the end of the year,,
but this expectation was not fully realized owing mainly
to a serious deficiency in the grain crops ,in Ontario, and.
partly to the fact that the rolling stock and elevator
facilities of the Company were insufficient to take full
advantage of the heavy grain traffic offering in the Northwest during the last quarter of the year.
The deficiency in the Ontario crops affected the passenger and all other traffic in that Province, and the earnings of the Oompany were, consequently, derived in a.
greater proportion than usual from traffic to and irom th&
North-west and British Columbia; and as such longdistance traffic is carried at relatively low rates the average
earnings per passenger per mile and per ton of freight per-
mile were reduced 0.12 cents and 0.094 cents respectively*
as compared with 1886.
A   considerable   part  of last   year's   bountiful   crop-
in the North-west remains to   be   moved out after the
opening of lake navigation, now just at hand, assuring-
satisfactory returns for the first half of the present year.. 11
The total amount of grain moved during the past year
was 15,013,95-7 bushels as against 10,950,582 bushels for
the preceding year, an increase of nearly 50 per cent.,,
which was entirely due to the increased production in
the North-west.
The extraordinary success of the North-western farmers
last year, which was due largely to a better knowledge ol
the conditions surrounding them, and to improved and
more careful methods of cultivation, is beginning to be felt
in the trade of the country and in the impetus it has given
to immigration—the movement in that direction being now
much larger than at any time in the past. It has also
resulted in the preparation of a greatly increased acreage*
for crops for the present season.
The difficulties between the American trans-continental lines, mentioned in the last report, continued
without much change until November, when an agreement was reached looking to the restoration and mainte-
nance of rates. Up to that time, the greater part of the
freight traffic to and from the Pacific Coast was carried
without profit, and some of it at an actual loss; but
while satisfactory rates have not yet been fully established a great improvement has been made.
The through passenger business has grown steadily and
rapidly since the opening of the line, and although it has
been carried at very low rates, owing to the lack of harmony referred to between the American lines, it has, on.
the whole, afforded a not unsatisfactory profit.
The temporary steamship service between Vancouver
and Yokohama and Hong Kong, referred to in the last
Annual Report, has fully justified the expectations of
your Directors as to the value and importance of the
trade to be developed in that direction. The negotiations
then in progress with the Imperial Government for the*
m
m
111
III
ill 12
-establishment of a permanent line of first-class steamships, suitable for service as armed cruisers in case of
need, resulted in an official notification, early last autumn,
that Her Majesty's G-overnment had decided to grant a
subsidy of ,£60,000 per annum for a monthly service between Yancouver and Hong Kong via Yokohama.    In
December last the details of a formal contract were practically  settled, but  owing to   negotiations   still pending between the Imperial G-overnment and the G-overnment of the Dominion, with reference to an improved
Atlantic service, which concerns your Company only in a
•general way, the formal contract has not yet been signed.
The Company's Commercial Telegraph  system is rapidly growing in  importance and shows   a most satisfactory gain   in  earnings.      The  lines   have  been extended to most of the important towns in Ontario and
Quebec,  and during the present year they will reach
St. John, Halifax, and the other chief towns in the Maritime   Provinces.     Jointly  with   the   Postal  Telegraph
•Company of the United States, your Company has extended a telegraph line southward from Yancouver to
■ San  Francisco,  reaching all the intermediate towns and
cities of any importance, and bringing to its other lines
a large and profitable business.
The Company's grain elevators at Fort "William, Port
-Arthur, Owen Sound and Montreal, notwithstanding
"their large use for the special purposes of the railway,
liave earned a satisfactory return upon their cost. The
increase in the production of grain in the North-west
makes necessary an immediate increase in the elevator
•capacity at the lake ports, and two additional elevators of
large size are planned to be built at Fort William, and a
third, but smaller one, at Owen Sound during the present 13
season. With sufficient elevator capacity at Fort Williams.
and Port Arthur the movement of grain can be kept up.
throughout the winter, avoiding the necessity of carrying-
it through to the Eastern Provinces, and,to the sea-board,
by rail at a season when the rates must be either unre—
munerative or higher than the grain can bear.
The Company's Sleeping Car service, which has been
most satisfactory to the public, shews a handsome increase-
in its earnings.
The Lake Steamers belonging to the Company have
proved so useful to the railway, and yielded such gratifying results that your Directors contemplate the addition^
of one or more similar vessels at an early date.
The output of bituminous coal from the local mines in
the North-west has considerably increased during the year;.
and the anthracite mines near Banff are not alone supplying the local demand for hard-coals as far east as Winnipeg,,
but are shipping successfully to San Francisco and other
Pacific Coast points, by the way of Yancouver.
Considerable advance has been made in silver mining
in British Columbia, and the shipment of ores is already
important.
Towards the close of the year the first shipments of
cattle from the ranches near the mountains were successfully made to Eastern Canada and G-reat Britain.
The Town of Yancouver at the Pacific Terminus of the
Railway, although but two years old, has already a population of 1,000, and has become an important centre of
trade. It is admirably situated for commanding the
rapidly developing trade of the North Pacific coast which 14
is destined to become of very great importance in the
near future.
A detailed statement of the expenditures on Capital
Account is appended. The expenditures in this direction
liave been made chiefly on the Pacific Division, (embracing the greater part of the mountain section), and
include the completion of the extension from Port
Moody to Yancouver, and the yards, wharves, workshops
and other terminal facilities at the latter point.
The works required for snow protection in the mountains were practically completed during the year, and the
experience of the past winter has fully confirmed that of
the previous one as to the sufficiency of the methods
adopted. A comparatively small amount of work remains
to be done to secure the regular working of the mountain
section at all seasons.
A considerable expenditure was made on that part of
the railway in British Columbia between Savona's Ferry
and Port Moody, which was built by the G-overnment and
turned over to the Company in an unsatisfactory condition. An arbitration has been agreed upon to settle all
questions relating to that section of the line, and it is confidently expected that this will result in the recovery by
the Company of the greater part of the money it has ex-
expended in correcting defects, and that it will, at the
same time, provide for putting the section in proper condition without further expense to the Company.
The extension of the main line from Port Moody to
Yancouver was opened for traffic on the lst June, and
extensive wharves, warehouses and other terminal works
were constructed during the year. ■Wm
15
The rails were laid on the extension of the Algoma
branch from Algoma to Sault Ste. Marie before the end of
the year, but much ballasting remains to be done, and
the station buildings, permanent water service, and some
other facilities have yet to be provided before the line can
be opened for regular traffic. It is expected, however,
that all this work will be completed during the month of
June.
The rails on the Minneapolis, Sault Ste. Marie & Atlantic
Railway were laid continuously from Minneapolis and St.
Paul to Sault Ste. Marie at the close of the year, and this
important connection will also be ready for regular traffic
by the end of June.
Of the Duluth, South Shore & Atlantic Railway, extending from Sault Ste. Marie to Duluth, about thirty
miles remain to be completed, and it is expected that this
equally important railway will be in full working order
before August.
The Sault Ste. Marie bridge, connecting the Algoma
branch of the Canadian Pacific with the two American
lines above mentioned, was completed, in December. In
this bridge your Company holds a half interest, the other
half being divided between the two American companies.
The extension of the Ontario & Quebec Railway from
Smith's Falls to the Atlantic and North-west Junction,
near Montreal, was completed and put in regular operation on the lst September.
The St. Lawrence bridge was completed at the same date
and the section of the Atlantic & North-west Railway
from the bridge to West Farnham was opened for traffic
shortly afterwards, affording to the South Eastern Rail-
4: fIK
'is-J 16
way (mainly owned by your Company) an independent*,
connection with the Canadian Pacific, and an independent
entrance to Montreal, and affording to the Canadian Pacific
a direct connection with the lines of the Boston & Lowell
Railroad reaching Boston, Portland, and the other principal points in New England.
With a view to economy, and to the efficient working of
through traffic, the Company undertook, from the date of
the completion of the St. Lawrence Bridge, the operation
of the South Eastern Railway, for the account of the
Trustees. The earnings and expenses of the South
Eastern Railway are not included in any of the statements accompanying this report.
On the extension of the Atlantic & North-west Railway across the State of Maine (the " Short Line " to the
Maritime Provinces) unexpected difficulties and unfavorable weather have greatly retarded the work of construction, and it is not now expected that this line will be
ready for traffic before the end of the coming summer.
The first section of the extension to Detroit River, viz i
from Woodstock to the important city of London, Ont.,.
twenty-seven miles, was completed and put in operation
on lst September.
A branch of five miles was made during the year from
Glenannan, on the Toronto Grey and Bruce section, to*
Wingham, an important town in the Ontario Salt District.
A line from Campbellville, on the Credit Yalley Section,,
to Guelph, was commenced during the year by a Company organized and controlled by the city of Guelph.
This line, which will be completed during the early summer, has been leased to your Company at a rental of 40*
per cent, of its gross earnings. 1-7
The last Annual Report   referred to   the   steps   that
were being  taken to  secure a western entrance to  the
city of Montreal, and  an  eastern entrance to the  city
of  Toronto,  and central  stations in  both   cities.     The
rights of way and station grounds have practically all
been secured in both places, but  litigation has  caused
vexatious delays.    The Montreal passenger station, which
occupies the most favourable position in the city, will be
completed, with its approaches, by the end of October.
The  Company  has heretofore  been  at   a great  disadvantage in competing for passenger traffic in Montreal,
by reason of the inconvenient situation of its  station,
and it is believed that the new station will bring a large
and immediate increase  of business.    At Toronto  the
Company has likewise been at  a disadvantage both as
regards passenger and freight traffic, its trains to and from
the east having to go around the city at a loss of nearly
ten miles in distance, and its freight station being more
than twice as far from the business centre as that of its
chief competitor.    The eastern entrance for its passenger
trains will save the distance named, and the new freight
terminus will be in a most convenient position on the
lake front, and in the very centre of the city. ,
These terminal facilities are necessarily very expensive;
but they are indispensable to the railway, and any delay
in providing them would so greatly increase the cost as
to soon render them impracticable.
W
It has been the policy of the Company, as stated in previous reports, not to press the sale of its own lands so
long as large areas of free government lands should re-
main in their vicinity, but rather to encourage the settlement of the government lands instead.    It is believed that
a much better price can be obtained for the railway lands
9
t!& 18
when the free government lands are out of the way, and
this belief is justified by the experience of the Land Grant
railways in the United States.
It has also been the policy of the Directors to secure the
cancellation, as rapidly as possible, of such sales of lands
in large blocks as were made during the period of high
speculation to parties who proved to be unable to comply
with the conditions as to cultivation. These cancellations
amounted to 21,762 acres during the past year, against
280,686 acres in 1886. In many cases the lands recovered
have been re-sold to actual settlers, and are now producing crops. It is believed that these cancellations are now
practically at an end.
The sales to settlers during the year, including lands of
the Manitoba South Western Railway, were 59,993 acres,
at an average price of $3.39J per acre, as against $3.28 per
acre in 1886.
The following was the position of the Land Grant at
December 31st:—
Acres.
Original Grant     25,000,000
Surrendered to Government  under   agreement   of
March 30th, 1886       6,793,014
18,206,986
Sales to 31st December, 1887     3,294,511
Less—Cancelled in 1887  21,762
 3,272,749
Quantity of land unsold        Acres.    14,934,237
The agreement recently executed between the Dominion Government and the Company, a copy of which is
appended, provides for the termination of the restrictions
upon the Dominion Parliament, imposed by clause 15 of
the original contract between the Government and the
Company respecting charters for railways extending to 19
the International Boundary. This agreement will put an
end to the unfortunate agitation which has done so much
harm to the Company and the country for the past two
years, and will at the same time place the Company in a
position to provide at a very low rate of interest, the
necessary capital required for permanent improvements
of the railway, additional rolling stock, and facilities of all
kinds for its rapidly increasing traffic, so that the surplus
earnings may not in future be absorbed for these p ur
poses, but may be devoted to the payment of dividends
to the shareholders.
lm
In view of the large amount of grain from the last year's
crop remaining to be moved from the North-West, of the
large increase in acreage under crop for the present year, of
the unusual flow of emigration to the North-West and the
evidences of a general revival in the trade of the country;
in view of the growth of the local industries along the line
and the constant increase in the through traffic of the
railway, and the more harmonious relations with competing lines; and in view of the new lines of the Company
that have only recently been completed, and the new connections that have recently been made ; and of the early
opening of the two important American lines to Sault
Ste. Marie, both of which will command a heavy traffic,
already existing, the Directors feel justified in concluding
this report with an expression of their belief that the
results of the present year's operations will be most gratifying to the shareholders.
For the Directors,
George Stephen,
President.  ■ a I «
APPENDIX.
BALANCE   SHEET,
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1     ittS
STATISTICS.
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I      I 23
Statement op Earnings for the year 188-7.
From Passengers     $3,453,818 49
Freight	
Mails	
Express	
Parlour and Sleeping Cars...
Telegraph and Miscellaneous.
6,924,130 47
241,949 05
235,035 09
176,826 39
574,653 31
Total Earnings   $11,606,412 80
[Statement of "Working Expenses for the year 1887.
Conducting Transportation     $1,831,211 21
Maintenance of Way and Structures       1,871,175 41
Motive Power	
Maintenance of Cars	
Parlour and Sleeping Car Expenses.
Expenses of Lake Steamers	
General Expenses	
Commercial Telegraph	
2,969,716 91
612,052 66
52,468 57
122,724 91
462,150 08
180,794 89
Total Expenses     $8,102,294 64
.!'.'«
IS -I
Statement of Equipment at December 31st, 1887.
Locomotives  374
First and  Second Class Passenger Oars,
Baggage Cars and Colonist Sleeping
Cars  330
First Class Sleeping and Dining Cars  48
Parlor Cars, Official and Paymasters' Cars.. 23
Freight and Cattle Cars, all kinds  9296
Conductors'  Yans ;  185
Boarding, Tool, and Auxiliary Cars..  86
Lake Steamers
"Alberta"  and "Athabasca."
¥?''■" SCHEDULE " A."
Details of Expenditure on Construction and
Improvements during 1887.
main line.
Quebec to Callander.   503 Miles.
Grain Elevators at Montreal   $105,356.40
Approach to East End Station, Montreal...     26,605.76
Additional Stations and Buildings between
Quebec and Callander         4,753.72
Round House at Hochelaga         5,793.41
Additional  Sidings  between Quebec and
Callander         2,167.88
Additional Fences between Quebec and Callander         7,962.95
Iron Bridges between Quebec and Callander       64,990.06
Additional Freight Shed at Montreal       11,410.71
Extensions and improvements to yards at
Montreal and Hochelaga       24,555.22
Double track to Mile End         1,932.11
Improving Water Supply between Quebec
and Callander  114.31
Filling and widening Roadway and additional ditches between Quebec and Callander         1.S60.53
Balance paid on purchase of Canada Central Ry         6,499.65
Payments of principal and interest on
North Shore Railway Real Estate at
Quebec and Montreal       47,461.86
Callander to Port Arthur.   649 Miles.
Additional Stations and Buildings  11,468.42
Permanent Bridges  119,224.80
Additional Engine Houses and Shops  2,287 20
Improving Water Supply  1491.56
Additional Sidings  2,521.22
Additional Fences  14,811.60
Widening Cuttings, Embankments, Surfacing and Ballasting  238,749.60
Depreciation in value of construction plant
sold  3,600.00
Expenses and settlements of Contractors
disputed claims  34,675.20
Port Arthur to Winnipeg. 430.6 Miles.
Additional Stations, Shops and Buildings.. 5,010.18
Coal Derricks  1,292.40
Additional Fencing  286.57
Additional Sidings  7,755.16
Widening Embankments and Ballasting... 29,517.35
Improvement of Water Supply  4,294.80
1'ermanent Bridges.  40,216.68
Carried forward	
$ 311,464.57
428,829.60]
88,373.14
$828,667.31 Brought forward         $ 828,667.31
Winnipeg to Donald.   1023.6 Miles.
Widening Cuts and Embankments   and
Ballasting  88,287.59
Additional Stations, Shops and other buildings  15,228.08-
Right of Way  5,858.70
Additional Cattle Yards and Sidings  10,050 -07
Additional. Fences  7,206.89
Improving Water Supply  3,534.65
New line around | Mud Tunnel"  12,519.64
Improvements at Stations  1,269.24
Permanent Bridges  13,519-00
 157,473.86
Donald to Pacific Coast.   446 Miles.
Completing roadway and ballasting  849,920.58
Snow sheds  691,062.46
Completion of bridges and special bridges
over Snow sheds  252,851.20
Round Houses and Shops  32,186.96
Right of Way and Expenses of clearing... 6,313.20
Additional Fencing  6,273.61
Divisional Yard at Revelstoke  9,757.24
Additional Sidings  19,011.61
Additional Station and other Buildings.... 120,254.28
Permanent Water Supply  27,427-08
 2,015,058.22
Extension, Port Moody to Vancouver, 12.5 miles.
RightofWay  24,202.12
Engineering  12,099.68*
Grading - ••  166,896.02
Rails, Ties, Fastenings and laying  28,539.67
Surfacing and Ballasting  41,779.20
Water Stations  7,557-75
Terminal Yards and Buildings  36,636.90
Bridges  41,718.20
Round Houses and Shops  31,916.42
Fences and Road Crossings • • • • • 2,367.94
Wharves and Warehouses  31,778.10
 425,492.00
Telegraph Lines -  247,549.40
Total on Main Line  $3,674,240.79
Branch Lines.
Buckingham branch  108 04
Brockville Loop line  1,624 34
Sudbury Copper Mines Branches  25.989 02
Selkirk Branch  3,260 29
South Western Branches  4,489 29
Stonewall Branch  339 12
New Westminster Branch  11,579 50
Sault Ste. Marie Extension 1,274,985 70
$1,322,375.30
$4,996,616.09 26
Description of Freight Carried during the Tears
1886.
1887.
Flour 	
Grain	
Live Stock	
Lumber	
Firewood	
Manufactnred Articles
All other Articles....
1,000,044
10,960,582
244,257|
327,700,432
75,625
476,698
498,940
1,010,157
15,013,957
205,572
310,180,542
97,541
470,699
534,976
Barrels.
Bushels.
Head.
Feet.
Cords.
Tons.
Tons.
Freight Traffic
1885.
1886.
2887.
Number of Tons carried	
Number of Tons carried one mile.
Earnings per Ton per mile	
1,996,355
406,822,166
1.20 cents.
2,046,195
555,438,159
1.10 cents.
2,144,327
687,786,049
1.006 cents.
Passenger Traffic
1885.
1886.
1887.
Number of Passengers carried..
Number of Passengers carried one
mile	
116,702,980
Earnings per Pass, per mile.. |   2.45 cents.
1,660,719 1,899,319 2,057,089'
150,466,149 174,687,802
2.10 cents.      1-98 cents. if!
MILEAGE OF ALL THE COMPANY'S LINES.
Main Line. Miles.
Montreal to Vancouver ,     2,905 - 7
Other Lines Owned.
Eastern Division. ."*,&S1
Quebec Section—Quebec to St. Martin's Junction  159 il *—*
Piles Branch   —Piles Juncti on to Grand Piles  27.5
Joliette       „   —Joliette Junction to St Felix  17-1
Berthier     „   —Berthier Junction to Berthier  2.0
Aylmer       „   —Hull to Aylmer  7.5
St Jerome „   —Ste. Therese to St. Jer6me  13 6
St Lin        „   —St Lin Junction to St Lin  12.4
StEustache,,   —Ste. Th6rese to St Eustache  8.0
Brockville „   —Carleton Junction to Brockville  45.5
Algoma      „   — Sudbury to Sault Ste. Marie,—under
construction  183.0
Buckingham Branch—Buckingham Station to Village- 4.0
Copper Mines Branches—Sudbury (incomplete)  5-0
    484-7
Western Division.
Emerson Branch—Emerson to Winnipeg Junction     64.5
Selkirk „   —Winnipeg to West Selkirk     22.6
Stonewall      „   —Air Line Junction to Stonewall     18.3
Gretna „   —Rosenfeld to Gretna     13.9
Pembina Mountain Branch—Winnipeg to Manitou. .. 101.7
Manitoba South Western—Manitou to Deloraine  100.4
„            „              „        Winnipeg to Glenboro .... 104.3
„ „ „        Maryland Branch ,    6.0
    431.7
Pacific Division.
New Westminster Branch  8.5
Leased Lines.
Ontario & Quebec Section. \\ a/^
*Montreal (Windsor St.) to Smith's Falls  129.1 *    ' V
Mile End Junction to south end Lachine Bridge       9.1
Smith's Falls to Toronto Junction  211.0 -
Toronto to St Thomas  116.2
Toronto to Owen Sound  120.5
Woodstock to London     26.6
Orangeville Branch—Stree tsvillf* to Orangeville     31.6
Elora Branch—Church Falls to Elora     27.5
Teeswater Branch—Orangeville to Teeswater     69.5
Wingham      „     —Glenannan to Wingham       4.6
745-7
Atlantic & North West Section.
Lachine Bridge (south end) to Farnham     35.1 E
Farnham to Mattawamkeag (under construction)... 290-0
St. Lawrence & Ottawa Section. "idA^
Ottawa to Prescott     53.0 **—*
Chaudiere Branch       4.7
Total Leased Lines  1,128.5
Total Mileage of the Company's Lines  4,960-1
I
iS 81
i'li
* In operation with the exception of that portion from Windsor street, Montreal, to
Bridge Junction, 5.6 miles. Agreement relating to the building of lines to
the International Boundary in Manitoba
and the North "West Territories.
^tliB ^QKZZWLZXXt, made at Ottawa (subject to the
approval of tbe Parliament of Canada) between Her
Majesty the Queen, acting in respect of the Dominibn
of Canada, and represented herein by the Honourable
John Henry Pope, Minister of Railways and Canals,
hereinafter called " The G-overnment," of the one part, and
The Canadian Pacific Eailway Company, represented
herein by Sir G-eorge Stephen, Baronet, its President,
hereinafter called " The Company," of the other part.
Whereas it has been agreed between the G-overnment
and the Company, amongst other things, that the restrictions contained in clause fifteen (15) of the contract, dated
the twenty-first day of October, A.D. 1880, and executed
between the Government and the said Sir George Stephen
and others on behalf of the Company, shall be removed,
and that in order to enable the Company, notwithstanding
such removal, to preserve to Canada and its sea-ports the
carrying trade for which the Canadian Pacific Railway
was designed and constructed, the Government shall
assist the Company in the manner and upon the conditions hereinafter described, in obtaining funds wherewith
to perfect its connections, increase its rolling stock, and
otherwise improve its position, and that the said agreement shall be evidenced by the execution of these presents.
Now these presents witness that the said parties have
mutually agreed each with the other as follows, that is
to say:
1. The Company agrees that all restrictions imposed
upon the action of the Dominion Parliament by the terms
of the said clause fifteen of the said contract, as set out in
the schedule to the Act 44th Vic, chap. 1, shall now cease
to exist, and they are accordingly hereby removed forever. 29
2. The G-overnment agrees to guarantee the payment of
interest up to the time of maturity on bonds of the Company, to be hereafter issued, to an amount not exceeding in
the aggregate fifteen million dollars (or its equivalent in
sterling money) the principal to be payable not later than
fifty years from their date, and the interest thereon to be
payable half-yearly at the rate of three and one-half per
centum per annum, such bonds to be secured as hereinafter specified on the unsold lands to which the Company
is still entitled out of the subsidy of twenty-five million
acres mentioned in the said contract, and which unsold
lands are now estimated at fourteen million nine hundred
and thirty-four thousand, two hundred and thirty-eight
acres.
3. The security shall be by deed of bargain and sale, by
way of mortgage, to three trustees, of all the Company's-
title to the said unsold lands, which mortgage shall contain such conditions for securing the said bonds, such-
remedies for enforcing the payment thereof with interest,
and such provisions (consistent with the terms of this-
agreement) respecting the sale of the said lands and the
disposition of their proceeds as are authorized by the
charter of the Company and its amendments, and as shall
be approved by the Governor-in-Council.
4. It shall be a condition of the said mortgage that the
net proceeds of the sales of the said lands shall from time
to time be paid over to the Government, and the Oompany
may, at its option, also pay over other moneys to the
G-overnment, the whole to constitute a fund to be set
apart and held by the Government exclusively for the
purpose of satisfying the principal of the said bonds.
5. On the money thus set apart, which is not to exceed
an amount sufficient to redeem the outstanding bonds of
the said issue, the G-overnment shall pay to the Company
half-yearly on the first day of the months of July and
January, in each year, interest at the same rate as that
;§|||
ill
111
-lira 30
carried by the said bonds, namely, three and one-half per
centum per annum, the same to be applied towards satisfying interest as it shall mature on the said bonds. But
if the company should at any time make default in the
payment of any interest which may become due on any
of the said bonds, then, if required by the G-overnment,
he Oompany shall thereafter pay over to the Government
all interest which it may collect, under uncompleted sales,
upon the price of lands sold, as well as the principal
realized from sales thereof, aud the Government shall
allow, on the amount of such payments, interest at the
said rate, and shall apply all of such additional payments
and the interest thereon, as well as all interest accrued on
the said principal fund, towards satisfaction of the interest
on the said Bonds.
6. As soon as the aggregate amount of the said fund in
OO        O
the hands of the Government shall equal the principal of
all bonds of the said issue then outstanding, then the
Company may pay in to the said fund also a sum sufficient
to cover the interest, if any, up to that time, and thereupon the said mortgage shall be discharged, and the G-overnment shall assume and pay all interest which shall thereafter become due on the said bonds, as well as the principal of the said bonds at maturity; and the Company shall
be thereafter forever freed from any liability in respect
of such principal or interest; nothing herein contained to
be construed as making the Government liable at any
time to pay any part of the principal of the said bonds,
except in so far as the Company shall have provided it
with a fnnd for that purpose in the manner hereinbefore
specified.
1. The Minister of the Interior for the time being, or
such other Minister as the Government shall name, shall
be one of the trustees under the said mortgage, and the
appointment of any other trustee or trustees shall be subject to the approval of the Government. 31
8. All land grant bonds forming part of the former
issue by the Company, and now held by the Company
(amounting to four million dollars), shall be cancelled
and destroyed, and the said mortgage shall be subject to
the payment of such of the said land grant bonds as are
now outstanding in the hands of the public, amounting to
about ($3,463,000) three million four hundred and sixty-
three thousand dollars, but the sums due or to become
due to the Company for unpaid purchase money of lands
heretofore sold, amounting to about ($1,200,000) one million two hundred thousand dollars, shall be applied towards the payment of the said land grant bonds now outstanding, according to the provisions of the mortgage securing the same.
9. The Company, if it should deem it for its advantage
so to do, may, subject to the approval of the Governor-in-
Council, lease the branch of its railway east of Red River
between St. Boniface and the American Boundary or any
part thereof, on such terms as the Board of Directors of
the Company may decide,—or it may sell the same or any
part thereof at such price and on such terms as shall be
approved of at a special general meeting of its shareholders called for that purpose, and subject also to approval by the Governor-in-Council, and any incorporated
railway company leasing or purchasing the said branch,
or any part thereof, shall be empowered to hold and
operate it as fully as if such railway company had been
duly incorporated for that purpose ; provided always that
the rental under such lease or the proceeds of such sale,
as the case may be, shall be applied (to the satisfaction
of the Governor-in-Council, and with the assent of the
trustees appointed under the deed of mortgage securing
the bonds issued upon the said railway) either towards
payment of the said last mentioned bonds, or towards increasing the security for such bonds by expending the
a .fl: 32
same on the Company's railway, or partly in one way and
partly in the other.
10. If the Dominion Parliament shall hereafter authorize
the construction of a railway from "Winnipeg to the
American Boundary, or from St. Boniface to the American
Boundary and following the general direction of the Red
River, the Company shall thereafter be obliged to maintain and operate only such one of its two branches now
existing between these points as it shall think fit.
11. Whenever a Railway Oompany which has leased its
line to the Canadian Pacific Railway Company for more
than sixty years has power by law to make any arrangement concerning its line or any branch thereof with
another Company, then the Canadian Pacific Railway
Company shall, during the currency of the lease, have
power to make the same arrangement and to do whatever
is necessary to carry it out, but always at its own costs
and charges, and also subject to all conditions and restrictions which in such a case would be binding on the
Railway Company which has leased its line as aforesaid.
12. The Company will expend the proceeds of the sale
of the said Bonds so to be issued as aforesaid, as stated in
the schedule hereto marked " A ".
13. The rights and liabilities of the respective parties
hereto shall be determined, and this agreement shall be
construed as binding on them according to the law of
the place where it is executed.
14. The Supreme Court of Canada shall have jurisdiction to decide any question which may arise concerning
the rights or liabilities of the said parties, or of either of
them, under this agreement, and to enforce the provisions
thereof in such manner and by such proceedings as to the
said Court may seem proper.
15. The legislation necessary to give effect to this agree- 33
Irill
ment and to enable its provisions to be carried out shall
be asked for from Parliament at its present Session.
Witness our Hands and Seals at the City of Ottawa
this eighteenth day of April A. D. 1888.
Signed,Sealed, and deliver-
ed in the presence of, as ', /cr j\ T -rr -D/^-n-d
to the execution by f (Sl^ed) J" H- P0PE-
Hon  J. H. Pope. j
(Signed) Robt. Sedgewick.
As to the execution, by Sir /
George Stephen. ] (Signed) GEO. STEPHEN.
(Signed)     A. Piers.
SCHEDULE "A" REFERRED TO IN FOREGOING
AGREEMENT.
Showing how the Company will expend the proceeds
of the sale of the bonds referred to in the
annexed Agreement.
1. On account of Capital Expenditure on Main
Line between Quebec and Vancouver, in
buildings of various kinds, snow-sheds,sidings
permanent bridges, filling trestles, reducing
grades and curves and other improvements
and facilities, and on Vouchers and Pay rolls.   $     5,498,000
2. For required rolling-stock,   locomotives,   box
cars, passenger cars, flat cars, teol cars, snow
plows, etc  5,250,000
3. For required improvements on the said Main
Line, Elevators, Bridges, Locomotive shops,
filling trestles, sidings, docks, Lake and Coast
Steamers, the residue whatever it may be,
estimated at  4,252,000
$   15,000,000
Note.—The expenditure on Item 3 may be increased and for that purpose the expenditure on either of the other items may be diminished.
(Signed) J. H. Pope,
" Qm. Stephen,
3 34
And the report having been considered, it was moved
by Sir George Stephen, seconded by Mr. "Wm. C. Van
Home, and unanimously
Resolved,
That the report on the affairs of the Company for the
year ended December 31st, 1887, now submitted, be
adopted; and that the same be published and forwarded
to the Shareholders and others interested in the Company.
The following By-laws, passed by the Board, since the
last meeting of Shareholders, were read, viz.:—
By-law No. 53.
By-law No. 5 is hereby amended by the substitution of
the word " Fifteen " for the word " Twelve " therein.
. Note.—This refers to an increase in the number of Directors.
i     i
By-law No. 54.
The following shall be the Tariff of Tolls, Rates, and
Fares to be charged on the Pacific Division, comprising
that portion of the Railway between Vancouver and Can-
more, including Branch Lines.
{Here follows schedule of rates.)
Between Canmore and Vancouver, including Branch
Lines, the rates for excess baggage shall not exceed per
100 pounds, fifteen per cent of the First Class Passenger
Fares, but no less than 25 cents per 100 pounds shall be
payable in any case.
The Passenger Tariff of Fares to and from points between Vancouver and Medicine Hat, including Branch
Lines, shall be at the rate of five cents per mile, but no
less sum than fifteen cents shall be payable for a single
ticket. 35
The Emigrant Rates to Manitoba, the North-west territories, and British Columbia, via Port Arthur, shall not
exceed one half the authorised passenger tariffs applicable to the several sections of the railway.
The Maximum Tariff of Passenger Fares to and from
points between Quebec and Montreal, including Branch
Lines, shall be three and one-third cents per mile.
The following shall be the Maximum Tariff of Freight
Rates to be charged on that portion of the Railway between Pembroke and Port Arthur, including Branch
Lines.
(Here follows schedule of rates.)
That so much of By-law No. 50 as relates to the
charging of ten cents extra for each ticket purchased on
the Company's trains be rescinded and cancelled, and that
the following be substituted therefor, and incorporated
with and form part of By-law 54, viz :
I An additional sum of ten cents may be charged for
" each ticket purchased on the Company's trains on any
I portion of its line, or its leased or acquired lines, but for
I the additional amount so paid a rebate ticket shall be
" given to every person paying the same, on presentation
I of which ticket at any Ticket Office of the Company,
| within thirty days from date of issue, the amount will
I be refunded, but such ticket shall not be transferable."
That so much of by-law No. 54, passed at the meeting
of the Board held on the 21st day of July last as relates to
the Tariff of Freight Rates between Pembroke and Port
Arthur be rescinded; and that the following schedules of
rates to be charged between Pembroke and Callander,
and Callander and Port Arthur, respectively, be substi 36
tuted therefor, and be incorporated with and form part of
the said By-law :—
- {Here follows schedule of rates)
"Whereupon it was moved by  Sir Donald  A. Smith,
seconded by Mr. Sandford Fleming, and unanimously
Resolved :—
That the several by-laws and amendments now submitted be, and the same are hereby ratified and confirmed.
The President submitted a proposed By-law relating to
the number of Directors, etc., and on motion of the Hon.
George A. Kirkpatrick, seconded by Mr. R. B. Angus, it
was unanimously
Resolved :—
That by-law No. 5 be and the same is hereby repealed,
and the following enacted instead thereof, that is to say :—
By-law No. 5.
The Board of Directors shall be fifteen in number, and
shall be qualified as provided by the charter ; and at the
first meeting of the Board of Directors after each election
they shall elect from their own number a President, and
one or more Vice-Presidents for the ensuing year,—if
more than one, then one of such Vice-Presidents shall be
called the First Vice-President; if two, one shall be called
the First Vice-President, and the other shall be called the
Second Vice-President; if more than two, another shall
be called the Third Vice-President, and so on.
It was  further   moved   by Mr. P.  du P.  Grenfell,
seconded by Mr. R. J. Cross, and unanimously
Resolved,
That the minutes of the meetings of the Board, and of 87
the Executive Committee held since the last annual
meeting of the shareholders, and now laid on the table,
be and the same are hereby approved, ratified and confirmed.
The President having named Mr. John Burns and Mr.
Lorn S. Macdougall as Scrutineers, a ballot was taken for
the election of Directors for the ensuing year; and on
their report, the following gentlemen were declared
duly elected:—
Sir George Stephen, Bart Montreal.
Mr. W. C. Van Home       Do.
Sir Donald A. Smith, K.O.M.G., M.P       Do.
Mr. Richard B. Angus        Do.
Mr. Edmund B. Osier , Toronto.
Mr. Sandford Fleming, C.E., C.M.G Ottawa.
Hon. J. J. C. Abbott, Senator Montreal.
Hon. Geo. A. Kirkpatrick, M.P Kingston.
Mr. R. V. Martinsen Amsterdam and New York.
Hon. W. L. Scott Erie, Pa.
Mr. Geo. R. Harris, of Messrs. Blake Bros. & Co..Boston.
Hon. Levi P. Morton, ) Of Messrs. Morton, Bliss
Mr. Richard J. Cross, \ & Co New York.
Mr. Wilmot D.Matthews Toronto.
Mr. P. du P. Grenfell London.
This  ended the  proceedings of the  Annual  General
Meeting.
il:SIII
mm
111
The meeting was thereupon made special for the consideration of the special business mentioned in the notice
convening the same.
o
The President having laid upon the table the agreement
dated the 18th day of April, A.D. 1888, between the Gov-
-•■   .; 38
efnment of Canada, and the Company, respecting the
guarantee of interest on fifteen million dollars of Bonds,
and the removal of the restrictions imposed by section 15
of the original Contract, it was on motion of Mr. P. du P.
Grenfell, seconded by Mr. Gaspard Farrar, and unanimously
Resolved:
That the agreement between the Government of Canada
of the one part and the Company of the other part made
at Ottawa on the 18th day of April, A.D. 1888, as set out
in full in the appendix to the report of the Directors
made this day to the Annual Meeting of Shareholders, be
and the same is hereby approved, confirmed and adopted
as binding on the Company, and the Directors and officials
of the Company are hereby requested and authorized to
give effect to the same as the act and deed of the Company and to do all things necessary and proper to make
it effective.
The meeting then proceeded to consider the expediency
of making an issue of bonds, not exceeding in the aggregate fifteen million dollars, as contemplated by the agreement between the Government and the Company, dated
18th April, 1888.
Whereupon it was moved by Mr. Richard B. Angus,
seconded by Mr. George R. Harris, and unanimously
Resolved :—
That it is desirable and expedient in the interest of
the Company to make an issue of bonds to the extent of fifteen million dollars, or its equivalent in
sterling, payable at fifty years from the date of issue,
with interest at the rate of three and one half (3£)
per cent, per annum, payable half-yearly, and that
the Company do avail itself of the guarantee of the
Government for the payment of the interest thereon on
the terms of the agreement between the Government and 39
the Company, dated the 18th April, 1888, which agreement is set out in full in the appendix to the report of the
Directors made this day to the annual meeting of shareholders, the mortgage to secure this proposed issue being
subject to the mortgage already existing for securing the
outstanding Land Grant Bonds ; and that the Directors of
the Company are hereby requested and authorized to do
all things necessary and proper to complete the said issue
of bonds, and to have executed a mortgage on the said
f O    O
lands for the purpose of securing the payment of the same,
and the interest thereon, as provided by the terms of the
said agreement, such issue to be of such respective numbers and denominations as the Directors may decide, the
draft form of such bonds and the coupons to be attached
thereto, as well as of the mortgage to be executed in pursuance of this resolution, to be submitted for approval at
the time to which this meeting will be adjourned. And
that  the Directors be   and  they are hereby authorized
legislation, at the present session
Parliament, as will authorize the
bonds, and ensure the validity of
for securing the same, as well as
of all the provisions of the said
18th April, 1888; and that if the
directors shall decide that it be expedient to issue inscribed stock instead of bonds, either in whole or in part
of the said amount, then that may be done, the principal
of such inscribed stock and the interest thereon to be
payable, and to be secured in the same way as is provided
for in the said agreement in relation to bonds and the
interest thereon, and the interest on such inscribed stock
to be guaranteed by the Government to the same extent
and on the same terms as is provided for in the said agreement in relation to the interest on bonds.
to   ask   for   such
of  the   Dominion
issue   of  the   said
the  said mortgage
the  carrying   out
agreement of  the
III
a f(K :WK
II
And on motion of Mr. Edmund B. Osier, seconded by
Mr. Henry Beatty it was;
Resolved.'- 40
That this meeting stand adjourned till noon of Wednesday the 30th instant, at the safne place, for the further
consideration of the matters mentioned in the notice
calling this meeting.
C. Drinkwater,
Secretary.
George Stephen,
President.
Note.—At a meeting of the new Board, subsequently!
held, Sir George Stephen, Bart., was re-elected President,
and Mr. Wm. C. VanHorne, Vice-President, of the Company ; and the following were appointed the Executive
Committee:—
Sir George Stephen, Bart, (ex-officio.)
Mr. Wm. C. Van Home.
Sir Donald A. Smith, K.C.M.G.. M.P.
Mr. Richard B. Angus. as: jli."
all I
—     CANADIAN   PACIFIC   RAILWAY   COMPANY.
Montreal, 7th August, 1888.
To the Shareholders :
From the time when I became a party to the contract with the Dominion
Government for the construction of the Canadian Pacific Railway, and consented to
accept the position of President of the Company, it has always been my intention to
relinquish the active chief control of the affairs of the Company as soon as the task
which I then undertook should be completed. This task was partially finished when
the line was opened for traffic through to the Pacific Ocean over two years ago; but
at that time so much remained to be done towards the firm establishment of the
enterprise, and its future development and success, that, in deference to the wishes
of my colleagues, I consented to continue for a time in office. Warned now by the
state of my health, finding that the severe and constant strain which I have had to
bear, for the past eight years, has unfitted me for the continuous and arduous duties
of an office in which vigour and activity are essential; feeling the increasing
necessity for practical railway experience, and believing that the present satisfactory
and assured position of the Company offers a favourable opportunity for taking the
step I have so long had in contemplation, I have this day resigned the Presidency
of the Company, which I have had the honour to hold since its organization.
In taking this step it may not be out of place to say, that my pecuniary interest
in the enterprise remains undiminished, and that the welfare of the Company is, and
always must be, to me, a matter of the deepest possible interest; and that as a
member of the Board of Directors, I will always be ready to aid and cooperate with
my colleagues in everything calculated to protect and promote the interests of the
Shareholders.  —
In resigning the position of President of the Company, it is, to me, a matter of
the greatest possible satisfaction to be able to say, that, in my successor, Mr. Van
Home, the Company has a man of proved fitness for the office, in the prime of life,
possessed of great energy and rare ability, having a long and thoroughly practical
railway experience and above all an entire devotion to the interests of the Company.
In conclusion, I cannot refrain from congratulating the Shareholders upon the
arrangements recently completed by Sir Donald A. Smith and myself, which will
have the effect of securing to the Canadian Pacific Railway the permanent friendship
of the two new and important American lines extending from Sault Ste. Marie to
Minneapolis and St. Paul on the one hand, and to Duluth on the other, and reaching
a traffic the importance of which it would be difficult to overestimate.
It is also a matter for congratulation that arrangements have been practically
settled with the Wabash Railway for a permanent connection between the Detroit
River and Chicago, and the South-West; and further, that the long-pending
negotiations with the Imperial Government for the establishment of a first-class
steamship line between Vancouver and Japan and China have at last been concluded.
I have the honour to be,
Your obedient servant,
GEORGE STEPHEN.  CANADIAN PACIFIC RAILWAY.
ANNUAL REPORT FOR THE YEAR
1333
AND
BEPORT OIF JPIROOIEIEIDIIfcTa-S
AT THE
EIGHTH ANNUAL MEETING
OF SHAREHOLDERS,
HELD   AT   THE   GENERAL  OFFICES   OF  THE   COMPANY
nv^OIsTTI^E^-Ij,
ON
WEDNESDAY, 8th MAY, 1889 GAZETTE  PRINTING CO.,  MONTREAL. BOARD OF DIRECTORS.
Sir GEORGE STEPHEN, Bart.,  Montreal.
Mr. WM. C. VAN HORNE, do.
Sir DONALD A. SMITH, K.C.M.G., M.P.,        - do.
Mr. RICHARD B. ANGUS,  do.
"   EDMUND B. OSLER,  • Toronto.
"   SANDFORD FLEMING, C.E., C.M.G.,   -       -      - Ottawa.
"   R. V. MARTINSEN,       -       -       -       Amsterdam and New York.
Hon. W. L. SCOTT,  Erie, Pa.
Mr GEORGE R  HARRIS, of Messrs. Blake Bros. & Co.,  - Boston.
Hon. J. J. C. ABBOTT, Q.C., Senator,        .... Montreal.
1    GEO- A. KIRKPATRICK, M.P., -      -        - Kingston.
Mr.   RICHARD J. CROSS, of Messrs. Morton, Bliss & Co., New York.
|   WILMOT D. MATTHEWS,  Toronto.
Hon. D0NAND MacINNES, Senator,   - Hamilton.
Mr. THOMAS SKINNER,  London.
OFFICERS.
f I:8
i'ii
' w.-
Mr. WM. C. VAN HORNE, President,
CHAS. DRINKWATER, Secretary,
I  T. G. SHAUGHNESSY, Asst. General Manager,
I   GEO- M. CLARK, Chief Solicitor,
"   GEORGE OLDS, General Traffic Manager,   -
Montreal.
do.
do.
do.
do.
HY. BEATTY, Manager Steamship Lines and Lake Traffic, Toronto.
I. G. OGDEN, Comptroller,	
W. SUTHERLAND TAYLOR, Treasurer,
D. McNICOLL, General Passenger Agent,
C. W. SPENCER, Gen. Supt. Eastern Division,
T. A. MACKINNON, Gen. Supt. Ontario & Atlantic Div.,
W. WHYTE, Gen. Supt. Western Division,
H. ABBOTT, Gen. Supt. Pacific Division,   -
L. A. HAMILTON, Land Commissioner,
Montreal.
do.
do.
do.
do.
Winnipeg.
Vancouver, B.C.
Winnipeg.
Hiupv unnnv / Manager of London Office, and Regis-
nAKK * muuL* * > \  trar of Transfers, 88 Cannon Street, London, E.C.
EXECUTIVE COMMITTEE.
Mr. WM. C. VAN HORNE, Sir GEORGE STEPHEN, Bart.,
Sir DONALD A. SMITH, K.C.M.G., M.P.,   Mr. RICHARD B. ANGUS.
GENERAL OFFICES,
MONTREAL.
**-; : £  il
%m&\m% Mutilit mmi
EIGHTH ANNUAL MEETING.
Report of Proceedings at the Eighth Annual Meeting, and at a Special General Meeting of
the Shareholders, held on "Wednesday, the 8th day of May, 1889.
il
ii
The meeting assembled in conformity with the notice
convening the same, at noon, at the G-eneral Offices of
the Company in Montreal. The President, Mr. Wm.. C.
Van Home, took the chair, and the Secretary of the Company, acted as Secretary of the meeting.
The Shareholders present in person, and by proxy,
were ascertained to represent 306,190 shares of the stock
of the Company.
m
The notice calling; the meeting* was read as follows:—
CANADIAN PACIFIC RAILWAY COMPANY.
notice to shareholders,
The Eighth Annual Meeting of the Shareholders of this Company, for
the election of Directors and the transaction of business generally, will be held on Wednesday, the 8th day of May next, at the principal office
of the Company in Montreal, at 12 o'clock noon.
The Meeting will be made special, for the purpose of taking such steps
as will make available any legislation during the present session of the
Canadian Parliament, respecting the issue by the Company of Consolidated Debenture Stock, and of authorizing such issue for the purposes,
and within the limits prescribed by such legislation.
The transfer books of the Company will close in Montreal and New
York on Tuesday, April 30th, and in London on Tuesday, April 16th, and
will be re-opened on Thursday, May 9th next.
By order of the Board,
Montreal, 6th April, 1889.
CHARLES DRINKWATER,
Secretary.
The President submitted the following Report on the
affairs and operations of the Company for the year ended
31st December last:
EIGHTH    ANNUAL    REPORT
OF THE
Directors of the Canadian Pacific Eailway Company, SUBMITTED AT THE ANNUAL MEETING OF THE
Shareholders, held at Montreal,
8th May, 1889.
A balance sheet of the affairs of the Company at 31st
December last, together with the usual statements relating
to the business of the past year, are submitted. r
The gross earnings for the year were $13,195,535 60
The working expenses were     9,324,760 68
And the net earnings were $3,870,774 92
Deducting the fixed charges accruing during the year     3,544,351 00
The surplus was      $326,423 92
The working expenses amounted to 70.66 per cent, of the gross earnings
and the net earnings to 29.34 per cent.
The South-Eastern Railway was worked by your Company during the year, for account of the Trustees; but
the results are not included in this report.
ilmffl
The fixed charges for the year were :—
£7,191,500 lst Mortgage Bonds, 5 per cent  $1,749,931 66
$7,000,000 Province of Quebec (Q. M. O &. O. Ry.), 5 p. c. 350,000 00
£89,600      North Shore Ry. lst Mortgage, 5 per cent  21,802 66
£200,000    Canada Central, 2nd Mortgage, 6 per cent  58,400 00
Canada Central, lst Mortgage, Sinking Fund... 51.100 00
£200,000     St. Lawrence & Ottawa, 4 per cent  38,933 34
$2,544,000 Man. S. W. Col. Ry. lst Mortgage, 5 per cent... 127,200 00
Toronto Grey & Bruce Ry, rental  140,000 00
£2,032,191 15s. 5d. Ont. & Que. Debentures, 5 per cent  494,500 00
$2,000,000 Ont. & Que. Ry. ordinary stock, 6 per cent  120,000 00
£1,090,000 Ont. & Que. Ry. Debenture, 5 per cent., issued on
Smith's Falls & Montreal Short Line, West
Ontario Pacific Line and St. Lawrence Bridge 265,233 34
£147,945    A. & N. W. Ry. lst Mortgage on 36 miles, St.
Lawrence Bridge to Farnham, 5 per cent  36,000 00
£750,000    Algoma Branch, i lst Mortgage, 5 per cent, from
July lst  91,250 00
$3,544,351 Oo
The interest on the Land Grant bonds, while an obligation of the Company, is not included in the fixed charges,
because the interest paid is chargeable against the land
grant and will ultimately be returned to the shareholders.
The proceeds of land sales, less the expenses of the Land
Department, going for the present towards the extinguishment of the debt upon the lands, the* arrangement works
practically as a sinking fund. It is expected that the
annual receipts from Yancouver and other towrvsites,
together with  the surplus   proceeds   of  the Manitoba •■*
8
South-western lands (the property of your Company) will
cover the interest on the land grant bonds, leaving the
ordinary revenues of the Company intact.
The receipts  and expenditures for the year were as
follows :—
Receipts.
Cash on hand January lst, 1888  $1,014,802 1
Surplus Revenue (as per statement)  $ 326,423 92
Bonus (from St. Andrews Municipality)...        3,633 34
Land Department.
Proceeds of Land Sales  $435,995 81
Less expenditures in connection
with Land Sales, Premiums
on Bonds, &c     111,209 39
$324,786 42
Deduct amount remaining in
Deferred Payments      19,580 24
$305,206 18
Deduct amount of Land-Grant
Bonds redeemed & cancelled     29,000 00
 276,206 18
Land Bonds (3J per cent.).
Net proceeds, sale of £3,093,700  13,715,224 90
Algoma Branch, lst Mortgage Bonds.
Net proceeds, sale of £750,000... 3,457,951 16
Less   expenditure in construction and equipment of Branch  981,344 29
 2,476,606 87
 16,798,095 21
$17,812,897 32
Deduct Station balances, Accts receivable
&c  4,899,042 72
Less amount at December 31st, 1887  2,615,323 29
 2,283,719 43
$15,529,177 89 9
188,353 60
Expenditure.
Construction   and   improvements  as   per
Schedule "A."      $1,804,659 29
Equipment     ;  1,572,695 09
Increase in material and stores on hand,... 26,922 46
Additions to construction plant and outfit.. 2,928 50
Real estate \ 1,704 83
Amount  expended   in   construction   and
equipment of Hotel and other buildings
at Vancouver, and Banff Springs Hotel..  $361,782 71
Less received from town-sites.
Total proceeds of sales    $519,827 16
Amount remaining in deferred
payments at interest      264,416 29
Net cash     255,410 87
Deduct expenditures for clearing, improvements, &c 81,981 76
 173,429 11
Advances.
Ontario & Quebec Ry.    Amount expended
during year in improvements, equipment,
construction of lines including entrance
to, and terminals and stations at Toronto
and Montreal, and extension to Detroit 1,711,659 94
Less proceeds sale of debentures, &c... >     346,389 01
Atlantic & North-West Ry.   Am't expended
on line Farnham to Mattawamkeag....
Interest advanced against lands	
Interest on funded debt and rentals of leased
lines due Jan. lst, 1888, and accrued to
that date	
Ourrent Liabilities.
Amount at December 31st, 1887..'  7,036,820 69
Amount at December 31st, 1888  1,599,325 98
Add cash in Treasury, Dec. 31st-, 1888  2,616,059 43
Less amount on deposit in bank for accrued
fixed charges 1,791,792 07
1,365.270 93
2,664,798 72
389,893 34
1,250,189 06
9,267,415 82
5,437,494 71
14,704,910 53
>!$
824,267 36
$15,529,177 89
lif* The following is a comparative statement of earnings
and expenses for the past three years :—
1886.
Passengers	
Freight	
Mails 	
Express	
Parlor and Sleeping Cars	
Telegraph and Miscellaneous
$3,170,713 69
6,112,379 89
205,024 18
206,872 41
118,658 99
268,154 43
Total |$10,081,803 59
Expenses p |   6,378,317 05
Net Earnings |$ 3,703,486 54
1887.
$3,453,818 49
6,924,130 47
241,949 05
235,035 09
176,826 39
574,653 31
$11,606,412 80
8,102,294 64
$ 3,504,118 16
1888.
$3,800,883 18
8,017,313 66
263,344 4&
244,247 18
187,694 13
682,052 99
113,195,535 60-
9,324,760 68
3,870,774 92
The earnings per passenger per mile for the past year
were 1.79 cents, and per ton of freight per mile 1.02 cents,
as compared with 1.98 and 1.006 respectively for 1887.
The decrease in the rate per passenger per mile was
chiefly, if not entirely, due to the large increase in emigration to the North-West and British Columbia as compared with the previous year—the emigrants being carried at exceedingly low rates.
The results of the past year's working have not proved?
so satisfactory as was anticipated at the date of the last
annual report. This was mainly due to the exceedingly
light crop of Ontario in 1887. Nearly all of that crop
was moved before the close of the year in which it was
harvested, leaving but little to be carried in 1888. Ontario, in point of traffic, being equal to nearly half of the
entire Dominion, a crop failure there is a most serious
matter, affecting as it does passenger traffic and trade
generally.
The deficiency in Ontario was fortunately more than
made good by the development of business along the
main line, and of the through traffic to  and from the T
11
Pacific Coast; but the through traffic had to be carried
mt rates affording comparatively small profit, and the net
fearnings for the year, while $366,656.76 in excess of the
lyear before, were not in proportion to the increase in
Igross earnings. .
The average grain crop of 1888 in Ontario resulted
in a gratifying improvement in the gross earnings
land profits of the last quarter of the year, notwithstanding an unusually bad harvest in Manitoba ; and
[the first quarter of the present year shows a still greater
i improvement, the profits for January, February and
[March having been $426,978.36 more than for the corresponding three months of 1888; and with average crops
[this improvement should continue throughout the year.
Several important sources of traffic which were counted upon at the time of the last annual meeting, to commence soon to swell the earnings of the Company, were
t practically unavailable during the year.    The American
! Railways west of Sault Ste. Marie, connecting with the
; Algoma Branch, were delayed in completion by an unfavorable season.    The one to St. Paul and Minneapolis
was available for through freig*ht traffic to a limited extent
during the greater part of the year, but was not fully
completed until too late in the season to justify the establishment of a through passenger service.    The line to
Duluth was not ready for either through freight or passenger traffic when winter set in.
The line to St. Paul and Minneapolis will be fully
opened for traffic on the 2nd proximo, and that to
Duluth very soon thereafter.
The completion of the Atlantic and North-WestRailway
(your Company's leased line to the Maritime Provinces)
was also delayed by unfavorable weather as well as by 12
unexpected difficulties in construction. It was not quite
ready for traffic at the close of the year, but will be fully
opened on the 2nd proximo.
The development of traffic, especially in the newer districts traversed by your railway lines, is most gratifying.
Many sections, which at first promised nothing, are already
contributing materially to the earnings of the Company;
and your Directors are confident that their expectation,
as stated in earlier reports, that the most unpromising
sections would become self-sustaining, will be very soon
realized.
The increase in acreage already seeded in the North
West for the coming season is much greater than ever
before. The light crop of last year in the North-West
brought very high prices, affording even greater profit
to the farmers than they have obtained from the heavier
crops of other years, and the general trade of that part
of the country has not, therefore,  suffered appreciably.
The freight traffic, to and from China and Japan continues to increase, but the steamships forming the present temporary line on the Pacific have accommodation
for very few passengers, and the passenger business in
that direction, which should afford to the railway far
greater profit than the freight, is consequently limited.
The Company has obtained the authority of Parliament to issue debentures to cover the cost of steamships
with especial reference to a service between Yancouver
and China and Japan; but the Dominion G-overnment
being in negotiation with an independent company for
a fast Atlantic Steamship service, and a first class service
between Vancouver and Australia, your Directors are disposed to surrender the proposed Japan and China service r
13
o the same company if favorable arrangements can be
liade; otherwise you will be asked to confer upon the
Board the necessary authority to carry out the contract
Ivith the Imperial G-overnment, the terms of which have
already been arranged, for a line of steamships between
ITancouver and Yokohama and Hong Kong.
The profits from the Lake Steamers for the past year
Ivvere $32,914.02 less than for 1887, owing to the loss of
L, month by the late opening of navigation. The Company's Commercial Telegraph system, its Sleeping Cars
and the similar branches of its service all contributed
feu creased profits.
The town-sites along the line which have, as far as possible, been secured for the benefit of the Company are
[contributing handsomely to its revenues. The sales from
town-sites last year were $519,827, and the total sales to
i31st December last have been $i,399,327. Only a small
[proportion of the Company's interest in town-sites has,
as yet, been disposed of, and its receipts from this source
; will rapidly increase as the country increases in population.
At Vancouver alone the sales from the town-site last
■ year were $483,984, making a total of $868,059 since the
■ town  was  laid  out three  years   ago.     That  city has
E already ten thousand inhabitants and is still growing
rapidly.
From the proceeds of the town-sites, large and hand-
| some hotels have been built and equipped at Banff, in
I the Canadian Rocky Mountain Park, and at Vancouver,
t together with a number of other buildings at the latter
[ point.    These hotels have already had a marked effect
■-ill in attracting through passengers and tourists, and they
will soon be numbered among the available assets of the
Company, in addition to those shewn in the Balance
Sheet.
The railway system of the Company has been
thoroughly well maintained and is in excellent condi-
tion throughout; and the entire cost of maintenance and
renewals is included in the working expenses.
A large number of wooden bridges and other structures between Lake Nipissing and "Winnipeg have been
replaced by embankments or other permanent work, and
it is desirable that the remainder should be. similarly
dealt with as rapidly as the means at the disposal of the
Company will permit, in order to save the large expense
of watchmen, and repairs and renewals. The number
of these structures has been greatly reduced since the line
was opened for traffic.
The extensive works which were commenced three
years ago, for the protection of the railway in the mountains from snow, were completed during the past year in a
most thorough and substantial manner, and the Directors
are confident that no serious detention to trains in winter
is now likely to occur. During the past winter, the
transcontinental trains arrived at both ends of ihe line
practically on time ; one detention of 13 hours occurred,
but this did not result from snow or stress of weather.
A large part of the expenditure charged to construjH
tion and improvements on the Pacific Division, was made
on the section built by the G-overnment, and this, it is
expected, will be recovered as one of the results of the
arbitration now going on between the G-overnment and
the Company respecting that section, which will probably
reach a conclusion before the end of the present year. 1 15
A second grain elevator of 1,500,000 bushels capacity
lias been erected at Fort William, and a third of like
capacity has been commenced, and will be completed in
time to meet the requirements of the coming- season's
v
rop.
The improvement of the various lines worked by the
Oompany, the increased facilities provided, and the large
number of very heavy locomotives that were added to
the equipment during the year, have favourably affected
the working expenses of the past seven months. On
some sections of the line the number of freight cars to
a locomotive has been fully doubled.
A detailed statement of expenditures on construction
and improvements is appended.
The leased portion of the Atlantic and North-West
Railway (constituting the "Short Line" to the Maritime Provinces) which at the date of the last annual
report was under construction, is practically completed and ready for traffic. Its cost, owing to unexpected difficulties in construction, and to an extremely
unfavourable season, was much larger than was anticipated, and the proceeds of the bonds issued for its
construction proved inadequate. This work was carried
on by the Atlantic and North-West Railway Company,
for the account of the Canadian Pacific, and the deficit
had therefore to be provided for from the general funds
of your Company. It is proposed, therefore, to recover
to the Treasury of the Company the amount advanced
for this purpose, together with the over-expenditure on
the Montreal new entrance and station (also built under
the powers of the A. & N. W. Ry. Co.) by the issue of
4 per cent, consolidated, debenture stock in lieu of the
$3,240,000 Atlantic and North-west guaranteed preferred
11 B ii
16
stock, as authorized by the Act of the Dominion Parliament appended hereto.
An agreement has been reached with the G-overnment, subject to the ratification of Parliament, respecting that section of the Atlantic and North-West Rail-
way from Harvey to Moncton, New Brunswick (about
115 miles), whereby the G-overnment agreed to construct
the line, and the Company to Work it for 20 years
without rental, and to pay thereafter a rental of $73,400
per annum. This agreement is coupled with a traffic
agreement covering business to and from the Intercolonial
Railway which will make it of value to your Company,
and has been executed by the Government, and on behalf of the Company under the authority of the Directors.
But it has not been ratified by Parliament, nor has the
necessary appropriation been made for the expenditure on construction. The matter is therefore in abeyance at present, but your approbation of the action of
the Board will be asked for.
The western entrance to Montreal and the Central
Passenger station in that city are practically completed, and have been in partial use for the past two
months; and the eastern entrance to Toronto and the line
along the lake front of that city are well advanced, and
are expected to be ready for use before the end of the
coming summer. The Company has been harshly treated
at Montreal in the matter of land damages, and the cost
of its work in that city has, in consequence, exceeded the
original estimates. At Toronto, however, it is expected
that the original estimates will fully cover the cost of
the work.
The extension of the Ontario & Quebec Railway (under perpetual lease to this Company) from London,
Ontario, to the Detroit River is advancing rapidly, and f-
17
the line will be ready for traffic before another winter.
This line will connect at Detroit with a number of important railways extending to Chicago, St. Louis, etc., and
will at once enable the Eastern lines of the Company to
command a large and profitable traffic from which they
have hitherto been debarred. An attempt was made to
secure the use of one of the existing railways for the purpose of reaching the Detroit River, but this could not be
done except under conditions to which your directors felt
it would be most unwise to submit.
Aside from the Detroit extension, and the eastern entrance to Toronto, the only new work now in hand is
a branch of 10 miles from Mission, in British Columbia,
43 miles east of Vancouver, to the International boundary,
to connect with a railway that is being made by an independent company extending southward to the important city of Seattle, on Puget Sound. This short
branch is the last link in the chain of railway connections along the Pacific coast from the Canadian Pacific
Railway to the G-ulf of California. The construction of
this line will add largely to the through business of your
railway, which has heretofore been unable to reach the
cities of the Pacific Coast except by water from Vancouver.
The growth of traffic between Ontario and the Northwest and the Pacific coast, and the disadvantage u nder
which the Company has been labouring in carrying this
traffic over its very round-about line by the way of Smith's
Falls,—a disadvantage in time as well as in expense of
transportation, led your Directors early last year to cause
surveys to be made for a direct line between Sudbury
Junction and Toronto, which would answer not alone for
the main line traffic, but for that of the lines by the way
of Sault Ste. Marie as well.     A  favourable route was
2
mm found from a point five miles east of Sudbury to Klein-
burg, on the Toronto Grey and Bruce section, near
Toronto, over which a railway with easy gradients and
good alignment could be made at moderate expense, and
upon which by the construction of 212 miles of new line,
the distance could be reduced between Toronto and
Sudbury to 238 miles, as against 528 miles by the way of
Smith's Falls, saving no less than 290 miles.
The Grand Trunk Company, through its purchase of
the Northern and North-western railways, had acquired a
line from Toronto to a point on the Canadian Pacific, by
the use of which the distance between Sudbury and
Toronto would be 309 miles, and although its use would
require traffic to be carried 71 miles farther than by the
surveyed line before mentioned, and your Company
would have to bear all or nearly all of the expense due to
the longer distance, it was deemed expedient to arrange,
if possible, with the Grand Trunk Company for handling
the traffic between Toronto and North Bay over its line,
and thus to avoid any additional expenditure of capital.
Such an arrangement is nearly completed, and has been
anticipated by sending the traffic that way for the past
two months. It is hoped, that the arrangement may be
found so satisfactory to both Companies as to prevent the
construction of a new line for a long time to come.
The connections necessary to the full completion of
your railway system are now few in number. The most
important are between Toronto (or Cooksville) and
Hamilton, Hamilton and Niagara Falls, and Hamilton
and Woodstock, and will require short lines of 30, 43,
and 47 miles respectively. The South Ontario Pacific
Railway Company, a friendly organization, is likely
soon to provide these connections. The construction of
these short lines will give your Company independent
1 ~ "l 19
access to Hamilton—the third city in importance in
Canada—and to the important manufacturing towns of
Brantford, Dundas, St. Catharines, Thorold, &c, and at
the same time afford a much desired connection between
the independent American railways centering at the
Niagara frontier and those west of Detroit, and an
urgently needed connection between your lines and those
leading to New York from Niagara Falls and Buffalo.
The only other connection that remains to be established is one from the south end of your St. Lawrence
Bridge, near Montreal, south-westerly to a junction with
the Rome Watertown and Ogdensburg Railway near
Dundee. This line, 55 miles in length, is proposed to be
constructed by the South-Western Railway Company,
another friendly organization, and will extend through
a chain of towns on the south bank of the St. Lawrence
River, and afford to your Company's lines east of Montreal
a direct connection with central and western New York.
It is highly desirable that a branch line of about 100
miles should be made, as soon as practicable, from
Brandon, Manitoba, south-westerly to the Souris Coal
Fields. The country along the Souris River is already well
settled, and is^ suffering for want of railway facilities;
and the early construction of the line is necessary, besides, for the protection of your interests in southwestern Manitoba. This would have to be made by your
Company under its general powers in respect of branch
lines.
In order to effectually secure the Company's interests
west of Sault Ste. Marie, certain advances have been made
in connection with the system of railways extending
from that point. These are included in the Accounts
Receivable and Miscellaneous Securities, as shewn in the
Balance Sheet, and represent the major portion of the increase under that head.
Ill 20
At the last Session of the Dominion Parliament, an
Act was passed providing for the consolidation of the
various obligations of the Company into a perpetual
debenture stock, bearing a rate of interest not exceeding four per cent ; and it is hoped that arrangements
will be made for the conversion of a considerable portion
of the existing securities on terms that will be advan.
tageous to the Company. It was deemed wise, at the
same time, to obtain power to provide, to a reasonable
extent, for future requirements in the way of improvements, equipment and facilities, not alone for the lines
owned by the Company, but for those leased to it; but
the authority to issue debentures at the rate of .£500 per
mile for these purposes will not have to be used at
present.
The land sales for the past year were 138,001 acres for
$443,526, as against 53,803 acres for $179,813 in 1887—an
increase of 156 per cent in the number of acres sold, and
146 per cent in the amount realized.
Old sales to the extent of 11,300 acres were cancelled
in 1888 for reasons stated in former reports. Of the
lands recovered by the Company by such cancellations
during the past four years, 91,840 acres have been re-sold
at a profit of $83,960.
The free G-overnment lands in the vicinity of the railway are so far absorbed as to encourage your Directors
to believe that the time is at hand when the lands of the
Company will not only be readily saleable, but will bring
higher prices than in the past. Notwithstanding the
large increase in the number of acres sold in 1888 over
1887 (156 %), the increase for the first four months of
the present year over the corresponding four months in
1888 has been 162 per cent.
The movement of emigrants to the North-West during 21
iihl
the past four months has increased in even greater proportion.
The following was the position of the Land Grant at
December 31st:—
Acres-
Original Grant     25,000,000
Surrendered to Government under agreement of March
30th,1886       6,793,014
Sales to Dec. 31st, 1888     3,410,750
Less cancelled in 1888         11,300
Quantity of land unsold      Acres.
18,206,986
3,399,450
14,807,536
In addition to the lands embraced in the foregoing
statement, the Company holds 1,309,424 acres of lands
in Southern Manitoba, which came to it through the
purchase of the Manitoba South-western Railway. These
lands are among the best and most available in the
North-West, and at the average of the sales last year,
$4.54 per acre, their value is $5,944,785. They are
subject only to a lien of $884,873 in favor of the
Province of Manitoba. Your Directors believe that they
will yield at least $5,000,000 over and above the amount
due to the Province, and as they are not covered by any
other mortgage or lien, the surplus will be* available for
the general purposes of the Company.
These lands have not as yet appeared in the accounts
of the Company. The net proceeds have been applied to
the principal and interest of the lien of the Province, and
will continue to be so applied until it is paid off.
The sales of these Manitoba South-Western Railway
lands last year were 24,309 acres for $110,384, as against
6,190 acres for $23,869 in 1887 ; and for the first four
months of the present year there have been sold 17,493
acres for $78,471, as compared with 3,982 acres for $17,604
during the same four months of last year.
as
\m
m 22
Taking the Canadian Pacific and Manitoba South-
Western lands together, the sales for 1888 were 162,310
acres for $553,910, as against 59,993 acres for $203,682 in
1887, and for the first four months of the present year
72,441 acres for $259,922 as against 24,970 acres for
$89,860 during the same four months of last year. It
will readily be seen that at such a rate of increase the
expectations which have been based upon the value of
the Company's lands must very quickly be realized.
In comparing the Canadian Pacific with other railways in Canada and the United States, the great and
increasing value of its lands should not be overlooked.
These lands have been selected with especial reference
to their agricultural value, and at the average of last
year's sales, and including the Manitoba South-Western
lands, will yield more than $55,000,000, an amount sufficient to pay off the Land G-rant Mortgages, as well as the
whole of the First Mortgage Bonds of the Company.
Nor in such a comparison should it be forgotten that the
profits from the telegraph, sleeping cars, express, grain
elevators, Lake steamers, and other similar adjuncts of
the railway service, which on nearly all other lines are
given over to private parties or corporations, are, in the
case of the Canadian'Pacific, preserved to its shareholders ;
and their value is shown by the fact that the profits from
them last year amounted to about one-third of the interest
on the First Mortgage bonds of the Company, notwithstanding that it was only the second year of full
operation.
For the Directors,
WM. C. VAN HORNE,
President. APPENDIX.
BALANCE   SHEET,
STATISTICS,
ETC.
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Freight and Cattle Cars, all kinds  11,020
Conductors' Vans  202
Boarding, Tool, and Auxiliary Cars  .... 86
Lake Steamers—''Alberta," and "Athabasca."
i-i$!   25
Statement of Earnings for the year 1888.
From Passengers  $3,800,883 18
"     Freight     8,017,313 66
"    Mails        263,344 46
"    Express  •    244,247 18
"     Parlor and Sleeping Cars        187,694 13
"    Telegraph and Miscellaneous        682,052 99
Total earnings $13,195,535 60
DJ,.".-
Statement of Working Expenses for the year 1888.
Conducting Transportation $2,154,684 26
Maintenance of Way and Structures     2,233,764 60
Motive Power	
Maintenance of Cars	
Parlor and Sleeping Car Expenses	
Expenses of Lake Steamers	
General Expenses	
Commercial Telegraph	
3,224,922 69
584,229 27
59,451 74
96,579 87
763,175 49
207,952 76
Total Expenses $ 9,324,760 68
Wm
ii
Statement of Equipment at December 31st, 1888.
Locomotives »  408
First and Second-class Passenger Cars, Baggage
Cars and Colonist Sleeping Cars  354
First-class Sleeping and Dining Cars •*•• 56
Parlor Cars, Official and Paymasters' Cars  24
Freight and Cattle Cars, all kinds  11,020
Conductors' Vans  202
Boarding, Tool, and Auxiliary Cars  .... 86
Lake Steamers—-'Alberta," and ''Athabasca."
liiti 26
SCHEDULE "A."
Details of Expenditure on Construction and
Improvements During 1888.
main line.
Quebec to Callander.   503 Miles.
Grain Elevators at Montreal  $   2,798.75
Additions to Stock'yards Hotel, Montreal. 970.00
Additional   stables   in    Stock    yards,
Montreal  2,236.77
Electric light plant for Shops at Montreal 346.96
Extension and improvement to yard at
Montreal, and paving of approaches to
Freight Station  13,698.79
Additional land for enlargement of yard
at Ottawa I 850.47
Filling and widening roadway and additional ditches  1,830.71
Improving water supply between Quebec
and Callander  3,203.26
Additional fencing  3,213.76
Additional sidings between Quebec and
Callander  1,124.66
Iron   bridges    between   Quebec     and
Callander  12,271.71
Real estate at Quebec and Montreal. • • • 26,504.05
         $69,049.89
Callander to Poet Aethue.   649 Miles.
Additional stations and buildings  $   3,112.47
Additional sidings and semaphores  4,413.88
Right of way settlements  1,143.84
Additional fences  5,553.21
Widening cuttings,   embankments, surfacing and ballasting, filling trestles.. 81,673.82
Expenses and settlements  of disputed
claims, original construction  52,083.69
 $147,980.91
Poet Aethtje to Donald.   1454.2 Miles.
Additional buildings,stations and yards 30,943.38
Additional fencing  19,239.26
Improvement of water supply  37,348.62
Permanent Bridges  106,646.42
Widening embankments and ballasting 156,047.30
Elevators at Fort William  340,851.21
Enlargement and improvement of vards
at Port Arthur and Fort William"  7,323.44
Additional sidings  17,822.52
Prospecting for coal i  11,802.38
Cattle Yards  1,051.86
Right of way and perfection of title  24,156.74
 $753,233. IS
Carried forward     $ 970,263.9a 2-7
Brought forward     $ 970,263.93
Donald to Pacific Coast.   461 Miles.
Additional stations and buildings....... 4,783.30
Round-Houses and Shops  32,057.53
Additional snow sheds  136,400.95
Additional-fencing   250.45
Permanent bridges  35,919.27
Tieson Government Section  39,283.10
Additional sidings  757 14
Cattle Yards  151.06
Right of way and perfection of title  21,600.41
Yard and wharves at Vancouver     50,605.09
Widening embankments, sloping   cuts,
ballasting, and removing earth slides 307,525.30
Permanent water supply  920.48
Depreciation   in   value of  construction
stores sold  .. 14,926.24
Expenses of arbitration with Dominion
Government   40,808.88
 685,989.20
Total on Main Line  $1,656,253.13
Bkanch Lines.
Sudbury Copper Mines Branches  416.54
Claremont Branch  4,421.26
Selkirk Branch :  739.70
South-western Branch  8,292.92
Telegraph, additions and extensions all sections....
$13,870.42
$1,670,123.55
$134,535.74
$1,804,659.29
if  fl
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Si! PI 28
Description of Freight carried.
Description.
Flour 	
Grain	
Live stock	
Lumber	
Firewood	
Manufactured Articles.
All other Articles	
Barrels.
Bushels.
Head.
Feet.
Cords.
Tons.
Tons.
1886.
1,000,044
10,960,582
244,257
327,700,432
75,625
476,698
498,940
1887.
1,010,157
15,01.3,957
205,572
310,180,542
97,541
470,699
534,976
1888.
1,667,584
15,965,682
251,297
351,466,992
107,654
600,521
586,396
Freight Traffic.
Number of Tons carried	
Number of Tons carried one mile
Earnings per Ton per mile	
1886.
2,046,195
555,438,159
1887.
2,144,327
687,786,049
1.10 cents.   1.006 cents.
1888.
2,496,557
784,972,511
1.02 cents.
Passenger Traffic.
1886.
1887.
Number of Passengers carried... 1,899,319 2,057,089
Number of Passengers carried one
mile  150,466,149 174,687,802
Earnings per Pass, per mile... 2.10 cents. 1.98 cents.
1888.
2,280,049
212,766,865
1.79 cents.
mmmmu 29
MILEAGE OF ALL THE COMPANY'S LINES.
Main Line. Miles
Montreal to Vancouver  2,906.5
Other Lines Owned.
Eastern Division.
Quebec Section—Quebec to St. Martin's Junction..... 159.8
Piles    Branch—Piles Junction to Grand Piles     27.5
Joliette " —Joliette Junction to St. Felix     16.8
Berthier      " —Berthier Junction to Berthier       2.0
Aylmer        " —Hull to Aylmer       7.5
St Jer6me   " —St. Lin Junction to St. Jer6me     11.0
St. Lin " —Ste Therese to St. Lin     15.0
St. Eustache" —Ste. Th6r$se to St. Eustache       8.0
Brockville    " —Carleton Junction to Brockville     45.5
Algoma        " —Sudbury to Sault Ste. Marie  182.5
Buckingham Branch—Buckingham Station to Village     4.2
Copper Mines Branches—Sudbury       5.0
      484.8
Western Division.
Emerson Branch—Emerson to Winnipeg Junction...    64.8
Selkirk "     —Winnipeg to West Selkirk     22.5
Stonewall     "     —Air Line Junction to Stonewall...    18.1
Gretna "     —Rosenfeld to Gretna     13.7
Pembina Mountain Branch—Winnipeg Junction to
Manitou   100.6
Manitoba South-Western—Manitou to Deloraine   101.0
" " "       —Winnipeg to Glenboro   104.2
" " "       —Maryland Branch      6.0
Pacific Division.
New Westminster Branch  9.2
Vancouver to Coal Harbour  1.2
Leased Lines.
Ontario and Quebec Section.
Mile End Junction to south end Lachine Bridge  9.1
Montreal (Windsor St.) to Toronto Junction  339.0
Toronto Junction to Strachan Avenue  3.2
Toronto Junction to St Thomas  116.1
Toronto Junction to Owen Sound  116.6
Don Junction to Union Station (Don Branch, under
construction)  5.0
Woodstock to London       26.6
London to Windsor (under construction)  112.0
Orangeville Branch—Streetsville Jet to Melville Jet.. 31.6
Elora               "     —Cataract to Elora  27.5
Teeswater       ''     —Orangeville Jet to Teeswater... 67.1
Wingham       "     —Glenannan to Wingham  5.0
AUantic and North- West Section. 858.8
Lachine Bridge (south end) to Mattawamkeag...  327.0
(" Short line " to Maritime Provinces.)
St. Lawrence and Ottawa Section.
Ottawa to Prescott  51.8
Chaudiere Junction to Sussex street, Ottawa  4.7
Total Leased Lines	
Total Mileage of the Company's Lines	
430.9
10.4
1,242.3
5,074.9
li!
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■ar "*a 30
The Report having been read, the President in moving
its adoption made the following remarks :—
In submitting the annual report I beg your permission
to step for a moment aside from our custom at these
meetings to speak of a matter which has been a source
of much annoyance to your Directors, and possibly of
loss to some of the shareholders of the Company, and in
doing so I wish in the first place to express the hope
that unfriendly remarks or impertinent comments upon
the affairs of our neighbours will never characterize
the meetings of the shareholders of this Company.
For my own part I would prefer not to refer to their
affairs at all; but lest continued silence should be
misconstrued I feel that I should, on this occasion,
say a few words about the attitude of the G-rand Trunk
Company, as indicated by its acts in Canada and by
the utterances of its President in. England ; and as to the
latter especially, I feel that I am more than justified in
what I have to say by the increasing freedom of his remarks concerning this Company, with which his shareholders are entertained at their half-yearly meetings, and
which clearly indicate that he lacks that first requisite
of good neighbourhood, the faculty of minding his own
business.
We have, as you know, scrupulously refrained from
interference with any of the projects of the G-rand
Trunk Company, or with its legislation or financial
operations ; and in our every day relations we have as
scrupulously avoided rate-cutting and unfair competition
in any form. But almost every project and measure of
your Company, from the time of its organization up to
^HgHHjaaaa 31
this day, has met with the active hostility of the G-rand
Trunk Company at every turn—in the Dominion and
Provincial Parliaments, in the money markets and in
the public press. It is hardly necessary to go beyond
the reports of the half-yearly meetings of the G-rand
Trunk Company for proof of this. At these meetings
the most mendacious and absurd statements concerning
the Canadian Pacific Railway seem to be received without question, and insinuations against the credit of your
Company are greeted with cheers. At the last meeting
of the G-rand Trunk shareholders, only a few days ago,
their President boasted of the successful interference of
their officers in Canada with some of our recent legislation,— unwarranted interference with legislation relating to our internal affairs and in no way concerning
the G-rand Trunk ; and on the same occasion he indulged
again in his often repeated hints about impending disaster to your Company. Our offence is that in the necessary development of our railway system—in securing
that independence which you know to be absolutely
necessary to the success of the enterprise, we have come
into competition with the G-rand Trunk in certain districts, and that we have been obliged to go and get what
the G-rand Trunk would not bring to us. But when
your representatives signed the contract with the
Dominion G-overnment for the construction and future
working of the Canadian Pacific Railway, they bound
you, without knowing it, perhaps, to an unwritten obligation, but one from which there was no escape, to do
practically all that has been done since, and to do some
things which have yet to be done. The interests of the
G-rand Trunk were already firmly established in the
direction of Chicago, and they could not be reversed and
made to fit in with yours. What is not to their interest
the G-rand Trunk people will not do, if they know it.
i iill
■;? -t fijfem
lii
til
;ii 32
They saw, perhaps as soon as any, what the building of
the Canadian Pacific Railway implied, and they fought
against it from the very beginning ; and with a Bourbonlike disregard for the logic of events, they are fighting
against it yet. They say a great deal about the aggressiveness of the Canadia Pacific, about its extensions and
acquisitions in Ontario, regardless of the fact that since
the Canadian Pacific came into existence, the G-rand
Trunk has absorbed in that province more than two miles
of railway for every one made or acquired by the Canadian
Pacific, aside from its main line. They would have it
believed that the G-reat Western, the Midland, the North
Shore, the Grand Junction and other railways were
acquired in frantic haste and without higgling about
prices, because they would be profitable to their shareholders, and not for the purpose of depriving the Canadian
Pacific of connections. They would have it believed that
the Northern and North-western Railways were acquired
for the same reason, and with the friendly desire, at the
same time, to secure a connection with tbe Canadian
Pacific, and not for the purpose of preventing the Canadian Pacific from reaching Ontario from the North-West
to advantage.
They also say a great deal about the assistance the
Canadian Pacific has received in the way of subsidies,
forgetting that the G-rand Trunk and the lines amalera-
mated with or held by it have received many times the
amount in subsidies in Ontario and Quebec that the
Canadian Pacific has received for its lines in these provinces ; and they forget to say that the Ontario and
Quebec railway, between Montreal and Toronto, about
which so much complaint has been made, was built
without any subsidies whatever.
Every line made or acquired by the Canadian Pacific 33
in Ontario was made or acquired with especial reference
to its necessity to the general system of the Canadian
Pacific Company—in no case because of mere profit in
itself, but in no case, either, without the certainty that
it would be profitable. Whether or not the extensive
acquisitions of the G-rand Trunk Company in Ontario
bring profit or loss to that Company does not concern us
any more than does the fate of the Canadian Pacific
shareholders concern the President of the G-rand Trunk,
according to his latest half-yearly speech.
I should feel proud of the entire responsibility for the
present geography of the Canadian Pacific railway
system if it all rested upon me, for I believe that no
mistakes of any consequence have been made, and that
the results have more than proved the wisdom of all
that has been done; and I am confident that, with a
knowledge of the reasons which have actuated your
Directors and with the results before you, there is little
that you would wish undone, or that you could afford to
have undone.
Had you stopped at the completion of your main-line
across the continent your enterprise would have come to
ruin long ago, or at best it would have existed only as a
sickly appendage of the G-rand Trunk. Like a body
without arms it would have been dependent upon
charity—upon the charity of a neighbour whose interest
would be to starve it. But to-day you have neither the
G-rand Trunk nor any other Company to fear, and the
monthly returns of net profit may be confidently
depended upon to furnish a conclusive answer to all of
the misrepresentations which have been so industriously
showered upon us for the past eight years. *
I do not intend to refer again to such matters at these
meetings, and I only do so now for the purpose of putting
i
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Iff
ii
11
v. la 34
our shareholders on their guard against unfavourable
reports about our affairs coming from G-rand Trunk
sources.
I now move that the report of the affairs of the Company for the year ended December 31st, 1888, now submitted, be adopted; and that the same be printed and
forwarded to the shareholders and others interested in
the Company.
Sir G-eorge Stephen, Bart., in seconding the motion,
said:—
I wish to express my concurrence in every word our
President has said about the senseless hostility of the
G-rand Trunk Company, as manifested by its President
and some of its chief officers towards our enterprise from
its inception to the .present time. I was in London in
October last when Sir Henry Tyler, fresh from Canada and
posing before his shareholders as a well informed railway
expert, spoke of the position and prospects of the Canadian Pacific Company in most unwarrantable and unneighbourly terms, and for no other purpose, so far as I
could see, than to discredit this Company, in the hope of
preventing our getting the necessary capital to build the
line from London to Detroit, the construction of which
had been forced upon us by the failure of our earnest
efforts to lease one of Sir Henry's spare lines. The parti-
zans of the G-rand Trunk, following Sir Henry's lead,
made an organized attack of the most unscrupulous character upon the credit of the Canadian Pacific, which however failed of its object—the Company having, as you
know, secured the capital required on much more favorable terms than ever before in its history. The flood of
false and damaging statements which were put before
the   public   in   one   form  or another,  day  after  day, 60
frightened, no doubt, a good many holders of our shares
and bonds into selling out at prices far below the value
of their securities.    This, I am sure, you regret as much
ias I do.
I am happy to believe that the results of the current
I year will so completely establish the  ability of your
[ Company to pay dividends on its ordinary shares out of
I the net profits of the working, that Sir Henry Tyler will
have no need in future to concern himself about the
welfare of its shareholders.    We have seen nothing in
Grand Trunk methods that would justify us in asking
I Sir Henry's advice as to how we should manage our
I property,  or how   we  should shape our legislation  or
I finances.    When the results prove that his methods are
[right and ours are wrong, we may ask' his advice; but
I until then, I, for one, will not thank-hini for it.
I have always been most anxious to see the two Com-
ipanies acting together in harmony and good-will, for in
[this way only can they properly serve the interests of
■ their shareholders. I know that this has been the feeling*-.
I of every one of your Directors, and I believe that no
■opportunity has been neglected to give evidence of it.-
■But we are not likely to be frankly and fairly met by the
IG-rand Trunk officials on this side of the Atlantic so long
las their President continues to exhibit such a feeling of
■animosity as is evidenced by his half-yearly speeches to
I his shareholders, nor until he is willing to accept the
■situation and recognize in the Canadian Pacific an in-
jdependent but well-disposed neighbour—a neighbour
■who has come to stay and is abundantly able to hold his
■own.
On one point I am happy to be able to agree with Sir
■Henry, and that is as to Grovernment subsidies to com-
II9
ifi 36
J peting lines in districts already provided with railway
facilities. The only grounds on which railway subsidies
can be justified, according to my views, are the entire
absence of railway facilities and the impossibility of
providing them by private and unaided enterprise;
and I will promise Sir Henry my hearty co-operation in
any effort to induce the Dominion and Provincial Governments to put a stop to the subsidising of competing lines,
most of which, if built, will only bring disaster to those
who may be induced to invest in them.
I earnestly concur in the hope of the President that it
will not again be necessary at the annual meetings of the
Shareholders of this Company to say anything about our
neighbours or to go outside of the body of our formal
report.
And the Report was unanimously adopted.
The following By-laws, passed by the Directors, since
the last annual general meeting of Shareholders, were
read, viz. :—
By-Law No. 1.
" The Board of Directors shall meet without notice on
" the second Monday of each month, at 12 o'clock noon,
** at the principal Office of the Company; but if such
" day should be a public holiday, such meeting shall be
" held on the following day, and at any such meeting business may be transacted by a quorum of the Board in
" the same manner, and with the same validity, as if such
" meeting had been specially called and notice thereof
" duly given."
By-Law No. 55.
" The Board may appoint and authorize any one of the
" Directors or Officials of the Company to sign certificates 3-7
" of stock in lieu of the President, and in such cases the
| form of the certificates shall be altered accordingly, such
" Director or Official using the following words above
| his signature, that is to say:
" For the  President,  by authority of the  Board of
I Directors."
(Signature.)
Whereupon it was moved by Mr. R. J. Cross, seconded
by Mr. G-eo. R. Harris, and unanimously
Resolved,
That By-laws Nos. 1 and 55, now submitted, be and
the same are hereby approved.
It was further moved by Mr. R. J. Cross, seconded by
Mr. G-eo. R. Harris, and unanimously
Resolved,
That By-laws Nos. 5*7 and 58, respecting Consolidated
Debenture Stock, be and the same are hereby approved
as passed by the Directors.
By-law "A" respecting Consolidated Debenture Stock
was read to the meeting in the words and figures following, that'is to say:—
By-Law A.
Respecting Consolidated Debenture Stock.
Whereas " The Canadian Pacific Railway Act, 1889 "
enacted, amongst other things, that the Company (being
first authorized as is therein specified) might from time
to time issue for the purposes and to the extent therein
mentioned, Consolidated Debenture Stock, payable either
in Canadian currency or in sterling money of G-reat
Britain, and bearing interest at a rate not exceeding four
per cent, per annum.
«? ■m
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And further, that previous to the issue of any such
stock, the Company should make By-laws prescribing
the amounts in which, or in multiples of which, the
stock should be issued, and the rate or respective rates of
interest thereon, and whether different issues should
bear different rates of interest, if deemed expedient, and
the dates and places at which such interest should be
payable, containing also provisions for the convenient
transfer and registration of such stock, and the due exercise of the remedies of the holders thereof, and for all
other matters incidental to the said issue, its protection
and general management; and that such By-laws should
form the basis of the issue of such Consolidated Debenture Stock, and should not be altered in any manner
affecting the interests of the holders of such stock otherwise than as is therein provided.
And Whereas, it is expedient now to make such By^
laws,
Therefore the Canadian Pacific Railway Company
hereby enacts as follows,—that is to say :
1. In this By-law, the word "Stock "means Consolidated Debenture Stock, authorized to be issued by the
Company under the provisions of the said Act; and any
word in the singular number means also the plural,
unless that be inconsistent with the context.
2. The stock shall be issued in amounts of one pound
sterling each, or in multiples of that sum, and different
issues may bear different rates of interest, but all stock
shall bear interest at the rate of four per cent, per annum,
payable half-yearly on the first day of the months of
January and July in each year, at some place in the
city of London, England, except such stock, if any, as 39
shall be issued bearing interest at a lower rate, or payable at other dates or places in pursuance of some future
By-law or By-laws which may be passed as hereinafter
mentioned.
3. From time to time any future By-law may direct
that any proposed issue of stock shall bear a rate of interest lower than four per cent, per annum, and may fix
dates or places for the payment of interest other than
those above mentioned, in which case such proposed issue
shall be made according to the terms of such By-law.
4. Each twenty pounds sterling of stock shall entitle
the holder of it to vote as and when one hundred dollars of stock would have entitled the holder of it to vote
under sub-sections 2 and 3 of section 1 of the said Act, if
the issue had been in Canadian currency instead of in
sterling money ; the said sum of twenty pounds sterling
being hereby declared to be equivalent to one hundred
dollars for the purposes of the said sub-sections.
5. All holders of stock shall rank pari passu, and without priority or preference amongst themselves for any
cause whatever.
6. This By-law shall come into force as soon as the
Company is authorized to issue stock by at least two-
thirds of the votes of the Shareholders present or represented at a special general meeting duly called for the
purpose.
Dated this eighth day of May, A. D. 1889.
And it was moved by Mr. H. S. Macdougall, seconded
by Mr. G-eorge R. Harris, and
Resolved,
That By-law A as read, be, and the same is hereby
■m
1111
I'S 40
passed, the seal of the Company and the signature of the
Secretary to be affixed thereto.
By-]aw "B," respecting Consolidated Debenture Stock,
was read to the meeting in the words and figures following, that is to say :—
By-law B.
Respecting Consolidated Debenture Stock.
In order to provide for the convenient transfer and
registration of Consolidated Debenture Stock to be issued
under " The Canadian Pacific Railway Act, 1889," arid
for other matters incidental to the issue of such stock,
the Canadian Pacific Railway Company hereby enacts
as follows, that is to say :—
1. In this By-law, the word " Stock " means Consolidated Debenture Stock, authorized to be issued by the
Company under the provisions of the said Act, and any
word in the singular number means also the plural,
unless that be inconsistent with the context.
2. The Company shall keep at the Office of the Canadian Pacific Railway Company in London, in England, a
written Register of the Stock issued, and shall cause to
be entered in such register the name and address of every
holder of such stock, as well as the amount of stock from
time to time belonging to him, and the date at which he
became the holder.
3. The Company shall also keep at the said Office a
transfer book, in which every transfer or transmission of
stock"shall be recorded; and shall provide a competent
Transfer Agent, who shall take charge of such book and sin
41
perform such other duties, and be subject to such orders,
rules and regulations as shall be from time to time prescribed by the Board of Directors.
4. Every transfer shall be made by an instrument in writing in such form as shall from time to time be directed by
the Board of Directors, signed by the Transferor, and an
acceptance of it shall be signed by the Transferee ; in
each case the signature to be by the party himself or his
Attorney appointed as hereinafter mentioned, and the
said transfer and acceptance shall be delivered to the
transfer agent, together with the then outstanding certificate of the stock intended to be transferred, which outstanding certificate, when so delivered, shall be treated as
surrendered and shall be cancelled, and thereupon the
transfer shall be recorded in the said transfer book; but
no transfer shall be valid until it be recorded in the said
Transfer book, and it shall take effect as against the Company only at and from that time; provided, however, that
upon proof to the satisfaction of the Board of Directors that
any outstanding certificate of stock has been destroyed
or irretrievably lost, its production and surrender may be
dispensed with by an order of the Board upon such conditions as shall be prescribed in such order, in which case
such order shall (if such conditions be complied with)
have the same effect as the surrender and cancellation of
the certificate.
5. The appointment of any attorney to transfer or
accept the transfer of stock shall be by a writing under
the hand of the principal, and witnessed by a subscribing
witness, and it shall be deposited with the Company
before the transfer is recorded.
6. If any stock, or interest in stock, be by force of law
transmitted from a holder by virtue of his last will, or
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II
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because of his bankruptcy, insolvency or intestacy, or by
the marriage of a female shareholder, or by any other means
instead of by a transfer as above mentioned, such transmission shall be evidenced by a declaration in writing, made
by such person or persons as the Directors shall from time
to time reasonably require, distinctly stating the facts
which are relied on as effecting the transmission, and the
name and address of the person or persons to whom it is
claimed such stock, or interest in stock shall have been
transmitted, such declaration to be acknowledged by the
party making the same 'before a Judge of a Court of
Record, or the Mayor, Provost or Chief Magistrate of a
city, town, borough or other place, or before a Public
Notary or British Consul having authority in the place
where the same shall be made and signed; and every
declaration so made and acknowledged shall be delivered
to the Transfer Agent and left with him, together with the
outstanding certificate of the stock in question, and with
duly certified copies of such documents, if any, as shew
any of the facts relied on as effecting the transmission, or
of sufficient extracts from such documents. And if the
stock or interest in stock, shall have been transmitted as
is claimed, the said certificate so delivered shall be cancelled, and the name of the person entitled under such
transmission shall thereupon be recorded in the proper
register as the holder of the stock, or interest in stock so
transmitted; but until such transmission shall have
been so authenticated and recorded as aforesaid, no
person claiming under it shall be entitled to be treated
as interested in such stock: provided always that
nothing herein contained shall be held to debar the
Directors, or the Transfer Agent, from requiring corroborative evidence of any fact or facts alleged in any such
declaration: and provided also that upon proof to the
satisfaction  of  the   Board  of  Directors   that  any  out 43
standing certificate of stock has been destroyed or irretrievably lost, its production and surrender may be dispensed with by an order of the Board, upon such
conditions as shall be prescribed in such order; in which
case such order shall (if such conditions be complied
with) have the same effect as the surrender and cancellation of the certificate.
1. Upon" the issue of any stock, or upon its transfer or
transmission being recorded as aforesaid, a certificate
shall be issued to the person entitled to be registered as
holder thereof, stating that it has been registered in his
name.
8. If a holder of stock transfers a portion only of the
stock covered by any one certificate, he shall, on the surrender of such certificate, be entitled to a new certificate
for the residue not transferred.
9. If any stock be registered in t\ne names of more than
one person, the Company may, on the death of any one
or more of such persons, deal with the survivor or survivors of them as if such survivor or survivors had been
the only person or persons interested in such stock, and
any receipt, transfer or other instrument respecting such
stock, signed or executed by such survivor or survivors,
shall be as valid and effectual as if it were signed or
executed by all the persons in whose names such stock
stood before such death.
10. The Company shall not be bound to see to the execution of any trust, whether expressed, implied or con-
structivei to which any stock is subject; and the receipt
of the person in whose name it stands in the books of
the Company, or if it stands in the name of more than
one person, the receipt of one of the persons named in the
.; !;H
'f. 4.
MI 44
register of holders of stock in respect thereof, shall, from
time to time, be a sufficient discharge to the Company
for any dividend or other sum of money which shall be
paid in respect of such stock, notwithstanding any trust
to which it is then subject, and whether or not the Company has had notice of the Trust; and the Company
shall not be bound to see to the application of any money
paid upon such receipt.
11. Each certificate of stock shall be in such form as the
Board shall from time to time determine, and shall be
valid without being under the corporate seal of the
Company. It shall be signed by the President, Vice-
President or Secretary of the Company, or by such other
official as the Board may from time to time appoint for
that purpose, and shall be countersigned by the Registrar and by the Financial Agents in London, England, of
the Company, for the time being.
12. The Board of Directors may from time to time close
any register or transfer book, and may refuse to register-
any transfer of stock for a period to be from time to time
fixed by them, or by any by-law of the Company, whenever they shall deem it expedient so to do, preparatory
to the payment of any instalments of interest or to any
meeting of the'holders of stock, or to any meeting of
Shareholders at which such holders may have the right
to vote.
13. This By-law may from time to time be altered by
a By.law, adding any place or places to that above
mentioned, or to any theretofore established, for the issue
or registry or transfer of stock, and providing for matters
incidental to the issue, registry and transfer of stock at
the place or places so added.
14. This by-law shall come into force as soon as the
Company is authorized to issue stock by at least two-thirds 45
of the votes of the Shareholders present, or represented, at
a special general meeting duly called for the purpose.
Dated this eighth day of May A.D., 1889.
And it was moved by Mr. H. S. Macdougall, seconded
by Mr. G-eorge R. Harris, and
Resolved,
That By-law B, as read, be and the same is hereby
passed, the seal of the Company, and the signature of the
Secretary to be affixed thereto.
The following resolution, also relating to Consolidated
Debenture Stock was submitted, and on motion of Mr.
Wm. Mackenzie, seconded by Mr. R. B. Angus, it was
unanimously
Resolved,
That any Consolidated Debenture Stock which may be
issued in pursuance of the provisions of "The Canadian
Pacific Railway Act 1889," may be disposed of from time
to time under order of the Board of Directors, for the purpose of satisfying outstanding existing obligations of
the Company, or for any other of the purposes mentioned
in the said Act, on such terms as to them shall seem fit
and proper.
The President laid upon the table the agreement between the G-overnment of Canada and the Company,
dated 5th April 1889, respecting the construction and
leasing of that portion of the Short Line extending from
Harvey to Salisbury.
Whereupon it was
Moved by Mr. L. J. Forget, seconded  by Mr. Wm.
Mackenzie, and unanimously
Resolved,
That the Shareholders do hereby adopt and confirm an
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Indenture of Agreement dated the fifth day of April last
between Her Majesty the Queen of the one part, and the
Company of the other part, and executed by the President on behalf of the Company, whereby the G-overn- ■
ment of Canada undertook to construct a Railway
between Harvey and Salisbury in New Brunswick, as is
therein specified, and to lease the same in perpetuity to
the Company at a rental for the first twenty years of one
dollar a year and taxes, and thereafter of seventy-three
thousand four hundred dollars a year and taxes ; and the
Company undertook, amongst other things, to lease the
said Railway on those terms and to equip and operate it
forever; which said agreement provides also for the
interchange of traffic between the said line and the
Intercolonial Railway, and for the running of through
cars to and from Halifax, and for other usual and necessary traffic facilities, the said agreement being identified
by the signature of the Secretary endorsed thereon.
An agreement between the Company, and the Atlantic
and North-West Railway Company, dated 2*7th March
1889, for the payment, as additional rental of the latter
Railway, of the interest on the $3,240,000 guaranteed
preferred stock of the Atlantic and North-West Railway,
issued to provide for the additional cost of construction
of the said Railway, over and above the amount realized
from its First Mortgage Bonds, was laid on the table.
Whereupon it was
Moved by Hon. G-eo. A. Kirkpatrick, seconded by Mr.
J. Alexander Strathy, and unanimously
Resolved,
That the Shareholders do hereby adopt and confirm an
Indenture of Agreement dated the twenty-seventh day
of March last between the Company and the Atlantic 1
and North-West Railway Company, and executed by the
President and Secretary on behalf of the Company, pursuant to a resolution of the Board of Directors, whereby
the Company undertook to pay an additional rent for the
Railway of the Atlantic and North-West Railway Company, equal to the interest at five per cent, on $3,240,000
of guaranteed preferred stock issued by that Company ;
the said Agreement being identified by the signature of
the Secretary endorsed thereon.
On motion of Mr. R. J. Cross, seconded by Mr. G-eorge
R. Harris, it was
Resolved,
That the speech of the President in moving the adoption of the Annual Report submitted to this meeting, and
of Sir G-eorge Stephen in seconding the motion, be printed
in the report of the proceedings of this meeting and transmitted to the Shareholders.
It was further moved by Mr. G-eorge R. Harris, seconded by the The Hon. J. J. C. Abbott, and unanimously
Resolved,
That the action of the Board and of the Executive
Committee since the last Annual Meeting of the Shareholders, as shown by the minutes of their proceedings
now laid on the table, be and the same is hereby
approved, ratified and confirmed.
The President having named Mr. H. S. Macdougall and
Mr. L. J. Forget as Scrutineers, a ballot was taken for
the election of Directors for the ensuing year, and on
their report the following gentlemen were declared
elected by the unanimous vote of the meeting:—
i "'Hi
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GEORGE STEPHEN, Bart,
WM. C. VAN HORNE,
DONALD A. SMITH, K.C.M.G., M.P.,
RICHARD B. ANGUS,
EDMUND B. OSLER,
SANDFORD FLEMING, C.E., C.M.G.,
| J. J. C. ABBOTT, Senator,      -
GEO. A. KIRKPATRICK, M.P.,    -
R V. MARTI NSEN,
. W. L. SCOTT, ..-----
GEORGE R. HARRIS (of Messrs. Blake Bros. & Co.),
RICHARD J. CROSS (of Messrs. Morton, Bliss & Co.),
WILMOT D. MATTHEWS,	
. DONALD MaoINNES, Senator,       ....
THOMAS SKINNER,	
Amsterdam and
Montreal.
do.
do.
do.
Toronto.
Ottawa.
Montreal.
Kingston.
New York.
Erie, Pa.
Boston.
New York.
Toronto.
Hamilton.
London.
This ended the proceedings of the Annual G-eneral
Meeting.
The meeting was thereupon made special for the consideration of the special business mentioned in the notice
convening the same.
The President submitted the following resolution
relating to the issue of Consolidated Debenture Stock
under " The Canadian Pacific Railway Act 1889," and
the same having been considered, it was moved by Sir
Geo. Stephen, Bart., and  seconded by Mr. R. J. Cross,
That whereas an Act of the Parliament of Canada
passed at its last session, and which may be cited as
"The Canadian Pacific Railway Act 1889," enacted
amongst other things, that the Company being first
authorized so to do by at least two-thirds of the votes of
the shareholders present or represented at a Special
G-eneral Meeting duly * called for the purpose, might
from time to time issue Consolidated Debenture Stock,
payable either in Canadian currency or in sterling
money of G-reat Britain, and bearing interest at a rate not
exceeding four per cent, per annum.    The  amount to 49
which, and the respective purposes for which it might
be issued being specified in the said Act;
And whereas it is expedient that the Company
should avail itself of the power to issue Consolidated
Debenture Stock in the manner, for the purposes, and to
the extent below mentioned;
It is therefore resolved by the Shareholders (present
personally or represented by proxy) at this meeting, that
the Company is hereby authorized to create and issue
from time to time Consolidated Debenture Stock, payable in sterling money of G-reat Britain, and bearing
interest not exceeding four per cent, per annum, for the
respective purposes and to the respective amounts specified in the said Act, and according to the provisions
thereof, provided that such stock shall be issued only in
such manner and in such portions as shall from time to
time be determined by the Board of Directors; and the
Directors are hereby empowered to do or cause to be
done every act, matter or thing which may become expedient or necessary in order to give effect to this resolution, and to have such stock duly issued according to
the provisions of the said Act.
Which resolution was carried by the unanimous vote of
all the Shareholders present or represented at the meeting.
And the proceedings ended.
Wm. C. Van Horne,
C. Drinkwater, President.
Secretary.
Note.—At a meeting of the new Board subsequently
held, Mr. Wm. C. Van Horne was re-elected President of
the Company, and the following were appointed the
Executive Committee:—
Mr. Wm. C. Tan Horne (ex-officid),       Sir G-eorge Stephen, Bart.,
Sir Donald A. Smith, K.C.M.G., M.P.,   Mr. Eichard B. Angus.
4 50
An Act respecting the Canadian Pacific Railway Company.
{Passed at the Session of Parliament held in h2nd Victoria, 1889)
VX7HEREAS the Canadian Pacific Railway Company
has by its petition, represented that its railway
system is composed of various railways, having an aggregate mileage of five thousand and ninety-seven and one-
half miles, principally lying within the Dominion of
Canada, each of which it now holds either as owner or
lessee; that it has entered into obligations in respect
thereof, in some cases for debts and securities created by
other parties upon such railways and assumed by it as
part of the price of acquisition thereof, in some cases for
the rental of leased railways, payable to the holders of
shares and securities issued by the lessors, and in other
cases for charges created by itself upon the railways
owned by it, such obligations bearing different rates of
interest, being payable at different periods respectively,
and being described in detail in the schedules A and B,
to this Act appended; that for the purpose of consolidating its said obligations, and for the other purposes in its
said petition and hereinafter described, it desires to
issue consolidated debenture stock, bearing interest at a
rate not exceeding four per cent per annum, and constituting a charge upon its entire railway system; and
whereas it has prayed for authority to consolidate its*said
indebtedness and to make the said issues of consolidated
debenture stock upon such conditions and with such
powers as Parliament deems fit, and it is expedient to
grant the prayer of the said petition : Therefore, Her
Majesty, by and with the advice and consent of the
Senate and House of Commons of Canada, enacts as follows :—
1. This Act may be cited as " Tfie Canadian Pacific Railway Act, 1889."
i    i 51
2. The expression " the Company " when used in this
Act means the Canadian Pacific^Railway Company, as
now constituted.
3. The Company, being first authorized so to do by at
least two-thirds of the votes of the shareholders present
or represented at a special general meeting duly called for
the purpose, may, from time to time, issue consolidated
debenture stock, payable either in Canadian currency or
in sterling money of Great Britain, and bearing interest
at a rate not exceeding four per cent, per annum, which
consolidated debenture stock shall, subject to the priorities
created in respect of charges existing at the time of such
issue and to the payment of any penalty imposed for noncompliance with the requirements of the " The RaUway
Act" respecting returns to be made to the Minister of
Railways and Canals, and to the payment of working expenses as at present defined by law, become a first charge
upon and over the whole of the undertaking, railways,
works, rolling stock, plant, property and effects of the
Company, including all the rights of the Company in the
several railways held by it under lease and all branches
or extensions of the said railways now held by the Company, either as lessees or proprietors thereof, including the
branch from Mission hereinafter mentioned ; but the
charge created by such consolidated debenture stock on
any branch or extension of any railway, or any part
thereof, held or operated by the Company and lying in
whole or in part beyond the international boundaries of
Canada, shall be according to the law of the State in
which such branch or extension or portion thereof is
situate: Provided always, that nothing in this Act shall
take from any of the securities mentioned in the said
schedules any right or priority which it now has, or give
it any new right.
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4. The amount of consolidated debenture stock which
may be so issued by the Company shall be composed of,—
{a.) Such amounts as are issued for the purpose of
satisfying the said existing obligations or of acquiring
the stock or other security in respect of which they exist,
upon such, terms as are from time to time agreed on between the Company and the holders thereof;.
(&.) Such further amounts for the general purposes of
the Company, the annual interest upon which, in
addition to the annual interest upon the consolidated
debenture stock issued under the next preceding paragraph, together with the annual interest, dividends and
rentals, as the case may be, payable in respect of so
much of the said existing obligations as are still outstanding, shall never exceed the annual charges on the
Company set out in the* schedules to this Act, namely
the sum oi^Iour million three hundred and sixty-five"
thousand and twenty-nine dollars, or its equivalent in
sterling money;
(c.) A further amount to be issued for the improvement of the said railways held by the Company either
as owner or lessee, including double tracks, sidings,
permanent bridges, grain elevators, warehouses, workshops, wharves and grounds, and for additions to its
plant and equipment, not exceeding in the aggregate five
hundred pounds sterling per mile of such railways ;
(d.) And a further amount not exceeding three hundred
and thirty thousand dollars for the completion of a
branch line of eleven miles, now under construction
from Mission in British Columbia to a point south thereof on the International boundary,
5. The consolidated debenture stock authorized to be
issued under paragraphs {a), {b), (c) and {d) of the next 53
preceding section of this Act respectively, and the proceeds thereof, if sold, shall be used exclusively for the
purposes mentioned in the said several paragraphs respectively and for no other purposes whatever.
6. So long as any portion of any one of the said obligations set out in the schedules to this Act is not satisfied, or the stock or other security in respect of which
such obligation exists is not acquired, under the provisions hereof, the portion of such obligation, if any, which
has been satisfied and the portion of such stock or other
security which has been acquired, shall be held by the
Company as still subsisting and continuing as a security
pro tanto for the benefit of the holders of the said consolidated debenture stock, in the same way in all respects
as if the portion so satisfied or acquired had been duly
transferred to and was held by trustees for the benefit
of the holders of the said consolidated debenture stock ;
and when the whole of any one of such obligations shall
be satisfied, or the stock or other security in respect of
which it exists shall be acquired, then it may be either
cancelled or continued in force in the way above mentioned, whichever shall be most for the advantage of the
holders of the debenture stock so to be issued under this
Act as aforesaid and of the shareholders of the Company;
but unless and until default is made in payment of any
interest -on such stock, the revenue derived from the portion so redeemed, acquired or converted, shall be considered as part of and included in the general revenue of
the Company.
7. The holders of the said consolidated debenture
stock shall not have the right of voting thereon, unless
and until the Company makes default in the payment
of a portion of an instalment of the interest due thereon,
constituting not less than ten per cent, of such instalment of interest on the outstanding consolidated deben-
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ture stock, nor unless and until such default has continued for the space of ninety days.
2. But if such default occurs, and as often as it occurs
and continues for ninety days, all holders of debenture
stock issued and outstanding shall ipso facto have the
right to vote thereon as shareholders, at all meetings of
the shareholders of the Company, in the proportion of
one vote for every one hundred dollars thereof (not including fractions of such sum) and shall have all the
rights and powers of ordinary shareholders; and from
and after the period at which holders of the said consolidated debenture stock acquire such right, the ordinary
shareholders or holders of the common stock shall cease
to have the right to vote or act as shareholders of the
Company.
3. But if at the end of any calendar year which elapses
after such default, the net earnings up to that date are
sufficient to satisfy all interest in arrears, including the
interest matured for and during that year, or, if not sufficient, if the shareholders pay the deficiency, then in either
of such cases and thereafter, the right of the holders of
consolidated debenture stock to vote as aforesaid shall
cease, and the right of ordinary shareholders or holders
of common stock to vote and act as shareholders shall
revive and shall thereafter have full force and effect, but
subject from time to time to all the provisions hereof in
the event of a subsequent default in the payment of interest as aforesaid for ninety days.
8. Previous to the issue of any of the consolidated
debenture stock hereby authorized, the Company shall
make by-laws prescribing the amounts in which, or
in multiples of which, the said stock shall be issued,
and the rate or respective rates of interest thereon,
and whether different issues shall bear different rates
of interest,  if deemed  expedient,   and   the  dates and 55
places at which such iuterest shall be payable, containing also provisions for the convenient transfer and
registration of such consolidated debenture stock, which
registration may be in classes if such stock is issued
at different rates of interest (each class comprising only
stock bearing one and the same rate of interest,) and
the due exercise of the remedies of the holders
thereof, and for all other matters incidental to the said
issue, its protection and general management; and such
by-laws shall form the basis of the issue of such consolidated debenture stock, and shall not be altered in any
matter affecting the interests of the holders of such stock
otherwise than as is therein provided; and a certified
copy of such by-laws, authenticated by the seal of the
Company, shall be deposited for reference in the office of
the Secretary of State of Canada.
9. The amount of the debenture stock to be issued
under this Act in respect of the Atlantic and North-West
first mortgage bonds shall be governed by the annual
charge thereon specified in Schedule A, until the subsidy
in respect of that railway specified in Schedule B shall
cease to be paid, after which time the Company may
make a further issue of debenture stock in respect of
those bonds, on which further issue the interest shall not
exceed one hundred and eighty-six thousand, six hundred dollars per annum; and no debenture stock shall
be issued under this Act in respect of the North Shore
Railway bonds mentioned in Schedule B until the
liability of the Company to pay interest thereon shall
have become positive.
10. This Act shall not apply to any of the lands to
which the Company is or may become entitled by way
of subsidy under the terms of the Act which authorized
its incorporation, nor shall this Act affect any present
incumbrance on such lands or any part thereof or any
agreement in respect of the same.
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I     I. TO THE SHAREHOLDERS OF THE
I    CANADIAN PACIFIC RAILWAY
For your information I am directed to send you a copy
of the official reply made by your Directors to the joint memorial
! addressed by certain shareholders of the Canadian Pacific and
Grand Trunk Companies to the Boards of the two Companies,
i in favour of friendly traffic arrangements and " greater har-
' mony in working than at present exists " being established and
maintained between them.
I In order that you may the more readily understand Mr. Van
Home's letter, a sketch map of the Province of Ontario is
attached, which shows at a glance the wide-spread network
of local lines which the Grand Trunk Railway Company has
absorbed and loaded itself down with since the incorporation of
the Canadian Pacific Railway Company in 1881, in the vain
attempt to secure such a complete monopoly of the traffic of
Ontario as would effectually shut out and prevent the Canadian
Pacific Railway from reaching the business centres of that
Province and from handling the traffic between it, the Eastern
Provinces, and the North West and British Columbia.
I am further to point out that, but for its Ontario lines, the
Canadian Pacific Railway would, as regards Ontario traffic, be completely at the mercy of the Grand Trunk Railway, whose
policy it has been to send all the traffic originating on then
system and destined for the North West of Canada through th<
United States, by way either of Chicago or Duluth ; whereas, ai
you are well aware, the Canadian Pacific Railway was createc
by Canada for the express purpose of providing an inter!
provincial route by which Canadian traffic could be carrie<
throughout, from the Atlantic to the Pacific, over Canadia*
territory.
Haekt Moody.
88, Cannon Street,  E.C.,
February, 5th, 1889. Gband T.
Lines a<
8UBSEQ
Canadia:
C. P. R. E
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Montreal, January 14th, 1889.
Sir,
In accordance with the wishes of the Directors of this
iOompany at their meeting to-day, I beg to make the following
ireply to your favour of December 19th, covering a memorial
■signed by a large number of the Shareholders of the Grand Trunk
■Railway Company of Canada and the Canadian Pacific Railway
■Company, drawing attention to the hostility apparently existing
Ibetween these Companies, and urging the importance of more
lharmonious working.
At the outset, the Directors desire to disclaim any feeling of
[hostility on their own part, or on the part of the Officers of
[the Company, towards the Grand Trunk Railway. They fully
[concur in all that is set forth in the memorial of the Srjare-
[holders as to the desirability and importance of the most
lharmonious relations ; and it has been their wish all along to
cultivate such relations.
The  policy of the  Canadian Pacific Company, as  regards
(the extension of its lines to various parts of the Provinces of
I Ontario and Quebec, has been made use of to create the im-
I pression that a feeling of hostility exists.    There can be nothing
ielse to indicate anything of the kind, because the Canadian
Pacific Company has carefully refrained from any opposition
to any of the projects of the Grand Trunk Company, or interference with its legislation or its financial operations ; and it
cannot be charged that it has, where competing with the Grand
Alex. L. Secretan, Esq.,
Acting Secretary for Shareholders' Committee,
London.
-.•■•■■
/ Trunk for traffic, acted in any but the most neighbourly and
honourable manner, or that it has not at all times shown a
strong desire to co-operate in the maintenance of proper rates,
and to guard against the abuses which have elsewhere resulted
from competition. Indeed, since the beginning of the competition between the two Companies, disturbances in their rates,
other than those resulting from outside causes beyond their
control, have been exceedingly rare. The wholesale cutting
of rates and the other evils growing out of fierce competition,
which have brought many of the neighbouring American Lines
to the verge of bankruptcy, have been almost unknown between
these two Companies ; and ■ it is safe to say that nowhere else
in America are rates more uniformly maintained, and nowhere
is the public better satisfied.
It can only be, therefore, the territorial policy of the CanaduM
Pacific Oompany that can be pointed to as indicating a feeling
of hostility on its part; and, in order that its policy in that
respect may be better understood, I am desired by the Directors
to say that from the inception of their enterprise it was apparent
that the main line of their railway must depend largely upon the
traffic between the great Province of Ontario and the Canadian
North-West and the Pacific Coast for its support, Ontario being,
in point of traffic, equal to all the rest of the Dominion ; that,
in fact, this traffic was absolutely necessary to the success of the
enterprise ; that the Grand Trunk Railway could not be depended
upon to bring this traffic to the Canadian Pacific, because its
interests would bear heavily in the direction of its much longer
haul to Chicago : that nothing* short of an exclusive arrangement
with the Grand Trunk covering this traffic would be of any
practical use ; that even if the Grand Trunk were to ignore its
many important connections at Chicago, and enter into an ex^
elusive arrangement with the Canadian Pacific, the power of!
these connections to divert from the Grand Trunk a vastly
greater traffic would not admit of the hope of the long continue
ance of such an arrangement; thai* at best, as experience every-j
where has proved, mutual interest only could be depended uponi i for the satisfactory working and permanency of such traffic
| arrangements, and the mutual interest did not, and could not,
I exist in this case ; that, even with the strongest agreement that
I could be made, the vast capital to be invested in the main line of
[the Canadian Pacific must remain at the mercy of the Grand
[Trunk Company, for without the Ontario Traffic the Canadian
[Pacific could not have existed during its earlier years ; that the
[most carefully-drawn agreement could not afford adequate pro-
itection, because in case of the wilful diversion of this traffic from
[the Canadian Pacific, it might be seriously crippled before it
[ could secure its rights through the slow processes of law.
It would have been unwise in the extreme to have left the
enormous interests   of   its  Shareholders   in  such   a   perilous
I position, and, therefore, impelled by the force of circumstances,
and not in the slightest degree by hostility towards the Grand
I Trunk Company, the Canadian Pacific turned its attention to
the provision of such lines and connections in Ontario as
would effectually make these interests secure by the time the
main trans-continental line should be completed.
The unfriendly and even hostile spirit displayed by the Grand
Trunk Company from the very beginning gave additional force
| to the reasons which actuated the Canadian Pacific CompanyJn
deciding upon this course.
A connection with the Great Western Railway of Canada
! whose lines reached nearly every important place in the Ontario
: peninsula, naturally became the first object of the Company,
! but the first step in that direction was met by the absorption
of the Great Western by the Grand Trunk. The Midland
I system and other independent railways were also absorbed as
j quickly as possible. Whether any of these lines were absorbed
'■ for the profit of the Grand Trunk, or only for the purpose of
! heading off the Canadian Pacific at any cost, may possibly be
i determined by an examination of the subsequent results of
; their working ; and the result of such examination will probably be found to apply equally well to the more recent absorption
of the'Northern and North-Western Railways.
One step on the part of the Canadian Pacific towards independence involved another, until, in 1882, its present Ontario
system was planned. It may easily be seen that, in planning
such a system, it was most important, while keeping the main
object in view, to so arrange the lines that they might draw
to their support the traffic from as many sources as possible,
because, as feeders only of the main line, they could not in
themselves be profitable.
The local lines west of Toronto, in order to be worked with
advantage and profit, had to be connected with Montreal;   and
with the additional object of  bringing  an important district
within reach of the Canadian Pacific, the line from Toronto to
Smith's Falls was made ; and subsequently the rapid growth of
traffic made necessary the extension of this  line  directly to
Montreal, to avoid the great loss in distance in the detour by the
way of Ottawa.    The Canadian Pacific, quite early in its history,
and in order to ensure its connections with the Atlantic seaboard,
had acquired the  control of certain lines  south  of the  St.
Lawrence River and east of Montreal.    This involved the construction of a bridge across the St. Lawrence—the Grand Trunk
bridge being difficult of access and insufficient for the additional
traffic.    In establishing "its connections with the seaboard, connections were incidentally made with the great manufacturing
cities of Northern and Central New England.
Recently, but pursuant to a long-matured plan, the Canadian!
Pacific has been extended across the State of Maine to a connection with the railway system of the Maritime Provinces of'
Canada—an extension demanded in the public interest as well
as in the interest of this Company. There is a large traffic
between these provinces and Western Ontario, making local
connections in Ontario doubly important. The traffic between
the New England States and Chicago and farther west is very
large and profitable ; but while reaching it most advantageously at the east, the Canadian Pacific has been unable to carry it for
want of independent connections at the west. The only break
in connections is between London, Ontario, and the Detroit
River—110 miles—and on the closing of this gap the full use
of no less than eighteen hundred miles of the Company's lines
east of it depends. Whether or not the comparatively short
line necessary to the closing of this gap must be made in the
vicinity of two existing lines, the gap must be closed. Its
importance can hardly be over estimated. It will enable the
Canadian Pacific at once to share in a traffic almost as important
as any in America and from which it is now effectually debarred.
In the hope of avoiding the construction of a new line,
attempts were made to secure rights of user or equivalent
rights over that of the Grand Trunk ; but these efforts were
unsuccessful—conditions in nowise relating to the question
having been named by the Grand Trunk at a time when the
Canadian Pacific had already delayed its work to the utmost
limit of prudence and could delay it no longer without the loss
of another season. It is difficult, if not impossible, for any one
at a distance and not familiar with all tbe conditions surrounding
such a complicated question as that of the joint use of a section
of 110 miles of railway, by two companies in active competition for the same traffic, to judge of the reasonableness
or unreasonableness of either party ; but the Directors of this
Company are convinced that every reasonable effort was made
on its part; and, in their opinion, a careful reading of the
recently-published correspondence between the officers of the
two Companies, clearly proves that only the question of rental
stood in the way of agreement up to the time the negotiations
were brought to an end by the introduction of the foreign
conditions before mentioned.
One of these conditions was that the Canadian Pacific
should discontinue the carriage by its own line of its through
freight traffic between Toronto and other Western Ontario
points and all the territory reached by its main line west of
North Bay, and yield all of this traffic to the Grand Trunk for
ill 3
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/ carriage over its shorter line between Toronto and North Bay,
on terms to be settled by arbitration. The Canadian Pacific
had offered, independently of any other question and in a
neighbourly spirit, to permit the Grand Trunk to carry this
traffic over its short line at the estimated cost of its carriage
over its own longer line. Whether or not this offer was based
on a correct estimate of the cost, it should be remembered that
the Grand Trunk had no claim whatever upon the traffic, and
that the Canadian Pacific was satisfied to continue its carriage
at the rates proposed. A proposal to submit a question to
arbitration usually carries with it an impression of fairness;
but there are questions which are not proper subjects for
arbitration. One party in the legitimate enjoyment of a
business cannot reasonably be asked to submit to arbitration the
terms upon which it shall be surrendered to a competitor.
This Company has not been unwilling at any time to arrange
this traffic matter with the Grand Trunk, independently of other
questions.    Indeed, it has been so arranged quite recently.
The other condition was that the Grand Trunk should have
the right of user over the Sault Ste. Marie branch of the
Canadian Pacific; but while, without a knowledge of all the
circumstances, a proposal to exchange tights of user seems fair
and proper, there is a wide difference between the question of
the joint use of the Grand Trunk line between London and
Detroit, and the Canadian Pacific Line between Sudbury and
Sault Ste. Marie. In the one case the line has a double track, in
greater part, and its use to the owner is certain to be largely
diminished upon the completion of the Sarnia Tunnel. In the
other, the line is a new one, with but a single track, and
promises to have almost immediately all the traffic it can conveniently carry. The Canadian Pacific was in a position to
make immediate use of the Grand Trunk line and to commence
at once the payment of the rental and its proportion of the cost
of maintenance, and of the other expenses to be borne jointly.
The Grand Trunk, on the other hand, was 100 miles away from m
9
the nearest point of connection with the Sault Ste. Marie line,
[had taken no steps towards covering the intervening space,
[would have to go hundreds of miles beyond Sault Ste. Marie to
(find a railway free to interchange traffic with it, and wanted,
ii practically, an option as to the right of user, to be exercised or
mot as it might see fit in the indefinite future.
The action of the Canadian Pacific Company in extending its
[line to Detroit has been pointed to as indicating a hostile and
(aggressive policy ;  but it should not be overlooked that  the
[extension of the Canadian Pacific to the Detroit River is a direct
[consequence of the absorption of the Great Western Railway by
[the Grand Trunk.    And it may not be out of place, as illustrating
[this policy of absorption so industriously pursued by the Grand
Trunk for the past seven years, to refer to the purchase by that
I Company of the  North Shore Railway between Montreal and
Quebec for no other possible purpose than to keep the Canadian
Pacific out  of Quebec—the  Grand  Trunk  Company having
already a line of its own between the two cities—a purchase
f which was only relinquished after provision had been made by
the Government, upon the demand of the public, for
struction of a third line.
Whether or not the recent absorption of the Northern and
North-Western railways by the Grand Trunk will involve the
construction by the Canadian Pacific of a line of its own between
Toronto and Sudbury will depend entirely upon the policy of
the Grand Trunk in regard to Ontario traffic to and from the
Canadian North-West. The Canadian Pacific Company has no
desire to make this line, and will not do so unless it should
become absolutely necessary to the protection of its interests.
The Directors of this Company feel that the results have
fully justified the policy they have pursued in reference to
auxiliary lines, and they believe that without tbese lines the
Canadian Pacific could not possibly have reached its present
strong position. They believe, too, that, in but one case, where
the Companv has  already acquired lines or undertaken the
con- 10
construction of lines of its own, could the lines of the Grand
Trunk Company have been made use of without great disadvantage. The only case in which the joint use of a section of
the Grand Trunk Railway seemed either expedient or practicable was that of the line between London and Detroit.
The Company has in no important particular deviated from
the policy and plans decided upon in 1882. These plans lack
but little of completion. How soon they shall be completed,
and whether they shall be completed in full, must depend upon
circumstances ; but in carrying them out the Directors will be
happy, as they would have been in the past, to utilize, as far as
possible, the lines or other facilities of existing railways, if that
can be done without the sacrifice of efficiency or independence.
They have no desire to injure the property of their neighbours
or to incur any avoidable capital expenditure.
Th9 Directors beg leave to point out that so much as may
have been unsatisfactory in the experience of the Grand Trunk
Company in the past three or four years must be attributed to
other causes than Canadian Pacific competition, for they
have reason to believe that at nearly all competing points the
earnings of the Grand Trunk have been larger than before this
competition began, excluding, of course, the accident of bad
crops. The impetus given to trade and manufactures by the
advent of the Canadian Pacific has resulted in a profitable
traffic for itself and an increased traffic for its neighbour.
The Directors wish further to say that, next to the pros
perity of their own railway, there is nothing that intelligent i
self-interest would lead them so earnestly to desire as the prosperity of the Grand Trunk.
I have the honour to be,
Sir,
Your obedient Servant,
WM. C. VAN HORNE,
President..
Charles Skipper & East, Printers, St, Dunstan's Hill, E.C, r
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" zJ~r~~-Lgr^   CANADIAN PACIFIC RAILWAY.
ANNUAL REPORT FOR THE YEAR
-13 83 —
AND
REPORT   OK   PROCEEDINGS
AT  THE
Ninth Annual Meeting
si\
OF   SHAEEHOLDEES,
HELD   AT   THE   GENERAL  OFFICES   OF  THE  COMPANY,
MOUTBEAL,
ON
WEDNESDAY,   14th   MAY,   1890. GAZETTE  PRINTING CO.,  MONTREAL. BOARD  OF   DIRECTORS.
Sir GEOEGE STEPHEN, Bart.,	
Mr. WM. C. VAN HORNE,	
Sir DONALD A. SMITH, K.C.M.G., M.P.,
Mr. RICHARD B. ANGUS,	
I   EDMUND B, OSLER -	
1   SANDFORD FLEMING, C.E., C.M.G.,
Hon. W. L. SCOTT   Bp       -	
Mr. GEORGE R. HARRIS, of Messrs. Blake Bros. & Co.,
Hon. J. J. C. ABBOTT, Q.C., Senator,
I   GEO. A. KIRKPATRICK, M.P.,    ....
Mr, RICHARD J. CROSS, of Messrs. Morton, Bliss & Co.,
"   WILMOT D. MATTHEWS,	
Hon. DONALD MacINNES, Senator,        ....
Mr. THOMAS SKINNER,	
Gen. SAMUEL THOMAS,	
OFFICERS.
Mr
. WM. C. VAN HORNE, President,     -
T. G. SHAUGHNESSY, Assistant President   -
CHAS. DRINKWATER, Secretary,    -      -   .   -
GEO. M. CLARK, Chief Solicitor,    .       -      -       -       -
GEORGE OLDS, General Traffic Manager, -
T. A. MACKINNON, Manager of Transportation,   -
HY. BEATTY, Manager Steamship Lines and Lake Traffic,
Montreal.
do.
do.
do.
Toronto.
Ottawa.
Erie, Pa.
Boston.
Montreal.
Kingston.
New York.
Toronto.
Hamilton.
London,
New York.
Montreal.
do.
do.
d