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Submission of the Canadian Pacific Railway Company Canadian Pacific Railway Company. Office of the General Freight Traffic Manager Dec 2, 1924

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 JN RE APPLICATION GOVERNMENT OF BRITISH
COLUMBIA FOR AN ORDER REDUCING RATES
ON GRAIN MOVING WESTWARD FOR EXPORT
TO THE SAME RATES PROPORTIONED TO THE
DISTANCE AS THE SAME GRAIN WOULD CARRY
IF MOVING EASTWARD FOR EXPORT.
APPLICATION OF THE PROVINCE OF BRITISH
COLUMBIA FOR REDUCTION IN RATES ON GRAIN
FROM PRAIRIE SHIPPING POINTS TO BRITISH
COLUMBIA FOR DOMESTIC CONSUMPTION TO
THE SAME BASIS AS NOW PUBLISHED FOR
EXPORT.
SUBMISSION OF THE
CANADIAN PACIFIC
RAILWAY   COMPANY
Office of the General Freight Traffic Manager,
Montreal, Que., 2nd December, 1924 ERRATA:—
Page 4:—First line,  second last paragraph—"Mr. McGreer" should
read   "Mr.   McGeer."
Page 8:—Second example—1918—Return on Investment now reads
"41.72%"—Should read "4.172%."
Page 29:—Twentieth line—Now reads "123% additional miles"—
Should read "123 additional miles." IN RE APPLICATION GOVERNMENT OF BRITISH COLUMBIA FOR AN ORDER
REDUCING RATES ON GRAIN MOVING WESTWARD FOR EXPORT TO THE
SAME RATES PROPORTIONED TO THE DISTANCE AS THE SAME GRAIN
WOULD CARRY IF MOVING EASTWARD FOR EXPORT.
APPLICATION OF THE PROVINCE OF BRITISH COLUMBIA FOR REDUCTION IN
RATES ON GRAIN FROM PRAIRIE SHIPPING POINTS TO BRITISH COLUMBIA FOR
DOMESTIC CONSUMPTION TO THE SAME BASIS AS NOW PUBLISHED FOR EXPORT.
It is necessary at the outset to review previous applications and judgments of the Board
relating thereto.
The first case of a similar character was that of the Coast Cities, heard at Ottawa, March
6th, 7th and 8th, 1906, and reported in Canadian Railway Cases, Vol. 7, pages 142-143. The
late Chief Commissioner, Mr. Justice Killam, in*dismissing the complaint said:—
"It appears to me that no inference can be drawn from a mere comparison of distances
upon different portions of railways, and that it does not constitute discrimination—much
less unjust discrimination—for a railway company to charge higher rates for shorter distances
over a line having small business or expensive in construction, maintenance, or operation,
than over a line having large business or comparatively inexpensive in construetion, maintenance, and operation.
"In my opinion a party raising such a complaint upon a mere comparison of distances
should show the nature of the particular lines referred to and that there is a material disproportion of rates as against the shorter line after due allowance is made for the circumstances
just mentioned."
The second complaint was an application made by the Board of Trade of Vancouver, dated
on October 8th, 1909. The application practically called in question the decision in the Coast
Cities Case and was for an order directing the Canadian Pacific Railway Company to:—
"(a) Cease from making and charging discriminating rates on goods transported by such
railway from Vancouver, B.C., to points located in British Columbia, Alberta, Saskatchewan,
and Manitoba, on the main line, and on the Crow's Nest Branch Line, as compared with
the rates charged by such railway to the same territory (for the greater distance), from
Montreal, Quebec, and other points on the Atlantic seaboard.
"(b) Cease from making and charging discriminating freight rates on wheat and oats
consigned from Alberta to the Pacific Coast, as compared with the charges on wheat and oats
(for the greater distance), from points in the Prairie Provinces to Lake Superior.
"(c) Cease from making and charging discriminating passenger rates to passengers in
British Columbia, and especially commercial travellers, as compared with the passenger
rates charged by such railway in other portions of Canada."
This complaint was incorporated with what was subsequently known as the Western Rate
Case, reported in 17 Canadian Railway Cases, pages 123 to 230, and a unanimous decision
leached by the Board was issued on April 6th, 1914.
With regard to the possibility of rate equalization the judgment recites the decision in the
Stamford Junction case, 3 C.R.C., 256 at pp. 259 and 260, as follows:
"It is not in the nature of things possible to secure anything like absolute equality of
treatment to all persons who use the railways, or even like treatment to all who are using the
same railway. The general public have theoretically a right to complain if the people in
one or more sections of the country served by a particular railway are given a better service
than the people of other sections, but with every desire on the part of the railway company to
accord equally fair treatment to all patrons over its entire system, circumstances and conditions are too controlling, oftentimes, to be resisted or overcome."
The judgment deals specifically with grain rates both domestic and export, as follows:—
"A tariff, designated lSpecial proportionate' is on file containing the rates charged from
Alberta and Saskatchewan to Vancouver on grain and grain products for export to all countries
except the United States and Alaska. These rates are lower than those to Vancouver on the
same commodities for domestic consumption referred to above as having been disproportionately depressed by the stress of competition. Comparatively, then this export schedule
cannot be criticised as being excessive. Counsel for the Province attempted to show that
unjust discrimination existed to the extent that the local rates exceeded the export. But this
Board, as well as the Interstate Commerce Commission, has frequently ruled that a lower
rate on export traffic is, in itself, no evidence of unjust discrimination, provided that the local
rate is a reasonable one. It is quite conceivable that a carrier would prefer to withdraw from
co-operation in seeking the foreign market rather than sacrifice its legitimate revenue on the
local traffic to the port of exportation, and, perhaps, to its intermediate interior points also. "Counsel sought to show that the comparison of the export rates to Vancouver should be
with the Company's rates to the Lake Superior ports; but, if any comparison be useful it
should be between the Pacific port on the one hand and the Atlantic ports on the other. Fort
William is an Intermediate transfer point on the way to the eastern destination; and the rates
to that port are, as described in the tariffs, proportionals of through rates from the grain
fields to the eastern consumer. It is true that a negligible fraction of the entire crop may find
its way into the local Fort William or Port Arthur market; but an exceptional tariff for this
fraction is hardly possible, seeing that the railway company loses control once the grain is
delivered to the terminal elevators."
Dealing with the question of operating costs in the mountains the judgment, page 51,proceeds:
"Beyond all question both the initial construction and railway operation through the
mountains, are much more expensive than operation on the prairies. Some differences in
rates at the present time are not only justifiable but necessary. It is not contended on behalf
of British Columbia that operation through the mountains is not much more expensive. The
extended calculations made by the Canadian Pacific are not challenged. As a matter of fact,
it would not appear that they could be."
No appeal was entered by any of the complainants and the rates ordered by the Board were
duly published and filed on September 1st, 1914.
Following the Western rate case investigation, which was before the Board from October, 1907,
to April, 1914, judgment in the Eastern rate case, covering territory east of the head of the lakes to
the Atlantic, was heard and judgment rendered on June 16, 1916, 22, C.R.C., pages 5 to 49.
Beginning with the year 1917 the carriers' tariffs east and west were published on the bases
laid down by the Board in these two major investigations. The primary object of the Western
Rate Case was the equalization of freight rates. This was the very essence of the complaints the
Board were called upon to investigate. After, perhaps, the most exhaustive enquiry ever held,
covering the period from 1907 to 1914, in which every interest was represented, the Board delivered
an equally exhaustive judgment dealing with every phase of western rates and with each section of
Western Canada. The enquiry was naturally largely confined to the Canadian Pacific Railway
An order reducing rates could hardly be directed against either the Canadian Northern Railway
or the Grand Trunk Pacific Railway as the operations of these lines showed no profit. The
Canadian National Railways, who are obliged to keep separate accounts owing to the character of
their bond issue for each separate railway composing their system, in a statement issued by their
Accounting Department on Feb. 15th, 1924, show net profits and losses as follows:—
Atlantic Region Operating Loss $5,222,145.85
Central Region         "        Profit 18,687,610.22
Grand   Trunk-Western   Lines,   U.S.
lines west of the Detroit River         V            " 8,791,808.04
Western Lines (includes D.W. & P.Ry.)      "          Loss 2,020,709.52
Lines East Lines West
Operating Profit Operating Loss
(includes D.W. & P. Rlv.)
$13,465,464.37 $2,020,709.52
Add operating profit D. W. & P....... 279,795.26
Total Operating loss Canadian Western Lines  $2,300,504.78
Much was said by Mr. McGreer with reference to the sub-division of operating expenses and
earnings per division and that the Canadian Pacific had abandoned that system of accounting.
The Canadian Pacific never had, as has been repeatedly shown in evidence, any such accounting
system. The Chief Commissioner, on page 16, Chapter VI, Western Rate Case Judgment, deals
with the obvious inaccuracy of attempting any such method.
"A more striking instance of the manner in which the application of the prorating principle
works out is shown by the Lake Superior Division, which is in Eastern Canada. This division
running as it does in great part through a wild and practically unsettled country, accompanied
with great operating difficulties, and with, of course, the lowest production of local tonnage per
mile of line of any part of the C.P.R., nevertheless is shown to make good returns. It has
been called by all Counsel engaged in this enquiry a bridge over which commerce is compelled
to move, the simile of a bridge, of course, being employed by reason of the fact that practically
no more local traffic is obtained than would be found in running over a bridge, which, of course
is nothing. Yet as a result of the manner in which the railway's accounts have been divided,
and which have been adopted by counsel for the different complainants, the Lake Superior
Division is shown to be highly productive, the returns for example of 1911 crediting that
division with a net operating revenue of $4,731,287.44, only exceeded by that of Manitoba and
Alberta, while Saskatchewan's net operating revenue is shown as $3,745,071.12, a division producing a very large proportion of Western traffic. On its face, of course, these figures
would show the Lake Superior Division to be profitable, and one on which a comparatively,
low local freight rate should be enjoyed, leading, of course, to an absurd conclusion.
"As a matter of strict accuracy, it is almost impossible to divide one company into eight
divisions in such a manner as to really make those divisions in effect eight companies, which
would, of course, insure a proper svstem of credits being granted, and which would undoubtedly
give proper credit to districts originating freight."
Again on page 19, Chapter VIII:—
"The rates in the Maritime Provinces are low, not onlv as a result of water competition
but also as a result of rates obtaining on the Intercolonial, whose operations have largely
resulted in deficits.
"If there were no other factors in the rate situation, the West might well suggest, as the
Company is making a loss in the actual operation of the road, that the service should be
abandoned, rather than that the West should he called uoon to nav any share of the result of
operating deficit. As a matter of fact, however, the interests of the Western Provinces instead
of being injured by the rate situation which brings about the resultant deficit, are on the other
hand, advantaged.
"The benefit of railway operation in any one province cannot be considered as advantaging that province alone. In every province the line is performing the functions of a National
not a Provincial undertaking, and its continued activities are necessary in the interests of the
country as a whole."
The decision in the Western Rate Case remains the foundation and basic factor in Western
rate making, unless some radical change in circumstances and conditions intervenes.
Subsequent to the Western rate hearing wage and material costs advanced and certain rate
advances were allowed and as these conditions modified rate decreases were ordered by the Board.
Before the Privy Council, Mr. F. H. Chrysler, K.C., representing the Railway Association of Canada, on page E. 54, said:—
"Now these rates have been altered, it has been said, by the Orders increasing rates.
The Orders increasing the rates are before Council. These percentage increases it. was urged
in some quarters, had the effect of breeding disparity. Well, I am not sure whether or not
that i> so, but at all events, if equal increases increase disnaiity it would not increase the per
cent of disparity. It is a rather difficult question to say whether it is worse to have 150 raised
by 20 per cent., or 125 bv 20 per cent.—the amount k different, but the per cent, is the same.
What has happened is this: Increases were made and made on the basis of each man paying
one dollar. Disregarding the rates for the moment—in British Columbia in 1917, it is assumed
fome one paid one dollar for railwav toll, and the same amount is paid on the Prairie. The
first increase is the Western Rate Case, March 17, increase British Columbia 10 per cent.;
the Prairie, 15 per cent.; so that the British Columbia dollar became $1.10 and the Prairie
dollar $1.15 and in Eastern Canada $1.15. Aug. 12, 1918, a further increase was made which
made them each $1.25—British Columbia and the Prairies $1.25. Under that Order they
were put on a parity, and the dollar in Eastern Canada became $1.40. In November, 1920,
the increase in British Columbia was $1.69 for each dollar previously paid, and in the Prairie
also. That is the highest point reached. Then reductions were made. On January 1, 1921,
the reduction brought British Columbia to $1.62}—in Dec, 1921, to $1.50 and $1.50 on the
Prairie; and in August, 1922, an additional amount reduced in British Columbia, bringing it
down to $1.32 as against $1.50 on the Prairie—while in Eastern Canada it was $1.89. The
rates between Eastern Canada and British Columbia, the rate is very much lower to-day
because of these decreases—that is correspondingly as in Ontario and Quebec. The dollar
which each originally started with before the increase still remains $1.89 in Quebec and
Ontario, and has gone down to $1.32 in British Columbia and $1.50 on the Prairies. And that
shows Ontario and Quebec are paying a very high rate upon the basis of rates over the rates
previously existing."
t For the greater convenience of the Board it is tabulated as below with the reference to the
various Privy Council Orders together with those of the Board:—
British Eastern
Columbia        Prairies Canada
1914..       $1.00 $1.00 $1.00       Western Rate Case
Dec.      1,1916         1.00 1.00 1.05       Gen. Order 167
Mar.   15,1918         1.10 1.15 1.21 "       "    213
Aug.    12, 1918         1.25 1.25 1.51}     P.C. 1863
Sept.   13,1920         1.69 1.69 2.12       Gen. Order 308
Jan.      1,1921         1.62} 1.62} 2.04} "        "    308
Dec.      1,1921         1.50 1.50 1.89 "        "    350
Aug.      1,1922         1.32 1.50 1.89 *        "    366
This, in brief, brings the record to date. It is necessary, however, to quote from Order in
Council P.C. 2434 of Oct. 6, 1920, which provoked the enquiry as to equalization of freight rates
throughout the Dominion.
5 "In the case under consideration, the terms of the Order disclose, on pages 286 and 287
of the Judgments, Orders, Regulations and Rulings of the Board, that in determining what
would be a fair and reasonable rate, the Board took into account as one element for consideration, the requirements of the Canadian National Railway system. The Canadian National
Railway System as constituted now includes within its mileage railways of great extent and
involving heavy cost of operation, which must be held to have been built not as purely railway
enterprises of a business character but in a substantial degree for colonization and other
purposes. The reorganization of this system looking to the better utilizing of these lines is,,
moreover, now only under way. Railways so constructed cannot under the best of operation
on any practicable scale of rates be made for some time at least a financial success. A system
largely composed of such roads and in such state of reorganization would not, therefore,
appear to your Excellency's advisers to be properly at the present time a factor for consideration in the solution of a rate-making problem. What constitutes a fair and reasonable
rate should now be arrived at without reference to the requirements of the Canadian
National Railway System, and your Committee recommends that the Order in this case
be referred back to the Board to be corrected in its findings in such a manner as to.determine
what are fair and reasonable rates without taking into account at all, for the time the Order
shall be in effect, the requirements of the Canadian National System."
The Canadian National requirements were to be ignored. The enquiry, therefore, was limited
to what was a fair and reasonable rate basis as far as the Canadian Pacific was concerned. There
were no instructions that the shorter distances of the Canadian Pacific from the grain fields to
Vancouver were to be combined with the alleged lower gradients or estimated operating costs of
flie Canadian National. The Board immediately proceeded to the investigation ordered, beginning on Dec. 14, 1920, and continuing until March 15, 1922, resulting in General Order 366,
June 30, 1922. The evidence and argument covens ten large volumes, apart from a volume of
102 exhibits.
The Attorney-General of British Columbia took an appeal to the Privy Council which was
heard on Aug. 9, 1923, and covers another large volume of exhibits, argument and evidence.
The result is embodied in Privy Council Order No. P.C. 2007, Oct, 2,1923, instructing the Board to
deal with export grain rates to Vancouver which was done by General Order No. 384, reducing
export grain rates by 10%, and in Privy Council Order No. 2166, Oct. 24, 1923, recommending:—
"... that all other subjects of complaint referred to in the said Petition be also remitted to
the Board of Railway Commissioners for Canada to be dealt with as it may deem proper upon
the evidence already adduced and the arguments presented before the Board and before
Your Excellency in Council.
"The Committee observes, however, that in view of the vital importance of facilitating:
the interchange of commodities between the various sections of Canada, railway rates should
be maintained at as low a basis as possible having regard to all proper considerations.
Accordingly the Committee is of the opinion that in the future, should transportation and
traffic conditions so change as to render practicable a nearer approach to equalization of
rates as between Prairie and Pacific Territory, the Board should in the exercise of its discretion take such action as may be necessary to bring about this result."
The recommendation to the Board in short was to, first, review the evidence and argument
contained in the twelve volumes of evidence and exhibits already referred to, and secondly, expressed
the opinion:—
".' . . that in the future should traffic conditions so change as to render it practical to
exercise its discretion in equalizing rates as between Prairie and Pacific Territory."
No reference was made to rates in Eastern Canada, but as these have been made a subject of
comparison it is pertinent to quote the Judgment of the Board in the Western Rate Case, Chapter
VII, page 17:—
"In so far as the eastward movement of freight is concerned within a territory extending
from Windsor and Sarnia on the West to ocean ports, there undoubtedly is a real and effective
railway competition afforded by American lines. In the first instance, this competition was
effective only from points in close proximity to the border. Its effect was lost just as soon as
the short haul on the Canadian line plus the rate on the American line to destination equalled
what would have been the direct prevailing rate on the Canadian line. The competitive
zone was enlarged by the operations of the Michigan Central and the Wabash Railroads,
through Ontario to Buffalo, with the result that a large proportion of the traffic of Ontario
became affected by and subject to the competition of the American Railways. Anomalies
existed and direct discriminations were practised by the railways in connection with tluV
situation. These were rectified by the Judgment of the Board delivered by the late Chief
Commissioner, the Honourable Mr. Killam, in the International Rate Case. The competition was then recognized by the Board. It still exists and to-day justifies low rates in the
territory subject to it.
"In the matter of water competition there can be no doubt at all as to the efficiency of the
water-ways spread through Eastern Canada from its Easterly coast and terminating with the
western limit of the most westerly division of the East—at Port Arthur and Fort William.
"It should, however, be borne in mind that while water competition is urged as being a
reason for a low rate standard in the East, the water rate with resultant low freight has
probably played a greater part thaji any other factor in the prosperity of the West.   The
6 additions to water facilities which from time to time have been made are largely demanded
by the necessities of providing the cheapest and quickest outlet for the ever-increasing productions of Western Canada. This affords but an additional instance of the fact that the
interests of Eastern and Western Canada are closely interwoven, and that an enforced lower
rate structure in the East is not as much productive of injury to the West as has been ciaimed."
There can be no question that the rates in Eastern Canada are so controlled. Quoting from
Counsel for the Provinces of Manitoba and Saskatchewan, the Judgment of the Board, dated
June 30, 1922, re General Order No. 366, recites:—
"Counsel for the Provinces of Manitoba and Saskatchewan very frankly and fairly
stated, c. . . I have never at any time said otherwise than that I did not think that of necessity
the rate for the same distance for the same commodity should necessarily be the same East as
West or West as East. In my opinion, the equal treatment of unequal things is just as bad as
the unequal treatment of equal things. I have never advanced, either in argument before this
Board or before any other tribunal, or by evidence adduced, anything which would lend itself
to the suggestion that I have advocated that any particular rate must of necessity be the same
for any particular distance East as West. There are many other factors besides mere
distance/ Counsel continued that longer hauls were important in the West; shorter hauls in
the East.
"Counsel in thus defining the issue emphasized that conditions peculiar to each of the
rate areas compared must be given weight in determining whether the low rate existing for a
given distance in one section is to be taken as the criterion of discrimination in another. In so
presenting the matter, he was but following the position so clearly laid down by the late Chief
Commissioner Killam in the early decisions of the Board, namely, that more mileage comparisons do not afford criteria of discrimination, but that all facts material must be given
weight. In other word?, under the body of regulation which is developed under the Railway
ijiet, mileage is not a rigid yard-stick of discrimination; discrimination, in the sense in which it
is forbidden by the Railway Act, is a matter of fact to be determined by the Board."
Further reference is made in the same judgment to the remarks of Counsel for the Provinces
of Manitoba, Saskatchewan and Alberta before the Special Parliamentary Committee to consider
Railway Transportation Costs, as follows:—•
"First, there is the Eastern scale which, as I will develop later, is held down by maximums
created by water competition, potential and otherwise, and by American rail competition."
and further;
"The railways, when we replied that we were discriminated against in respect of Eastern
rates, answered, and the Board has held it to be a good answer. True, there is a disparity,
a discrimination, and I propose to give you the four or five decisions in all the rate cases to
that effect that there is discrimination, a disparity against us, but the railways have satisfied
the onus of showing that it is not unjust or undue, because railway rates in the east are held
down by water competition and American rail competition, something they cannot control,
>      and, therefore, that excuses that discrimination."
It is axiomatic that a reduction in tolls must be followed by a reduction in the carriers earnings
without a corresponding decrease in operating expenses. The position of the Canadian National
Western Line: in Canada has already been indicated. It is substantiated by the returns of that
Company to the Board and in the Annual Statements of the Federal Bureau of Statistics. In any
event the Order in Council No. P.C. 2434, Oct. 6, 1920, clearly states:—
". . . what constitutes a reasonable rate should not be arrived at without reference to the
requirements of the Canadian National."
The enquiry must, therefore, be based on the requirements of the Canadian Pacific Railway.
On page 35, Western Rate Case, Chapter XII, the Board itself outlines the reasonable requirement;- a carrier is entitled to:—
"The whole question is or should be what rates are fair? In considering this question,
of course, surpluses earned by past operations may be evidence to the fact that the rates
under which they were earned were exorbitant. Any industrial enterprise has the right to
a reasonable surplus over and above its fixed charges and dividends. A railway is also entitled
to a reasonable surplus. The only evidence given on the subject as to what a reasonable
surplus would be is that of Mr. Muller, who required 2%, and the opinion of the Board is that
this is not unreasonable."
On pages 798 to 824, Vol. 385, Equalization of Rates Cases, evidence was submitted as to
the Canadian Pacific Railways investment, earnings, operating expenses, operating ratio and return
on investment from the years 1917 to 1921, inclusive. The figures for 1921, as they were given on
Feb. 15, 1922, were submitted as possibly subject to some slight change with the annual audit.
For the convenience of the Board this evidence has been tabulated and similar figures for 1922 and
1923 added. 1917
Total Investment  $814,393,395.00
Gross   Earnings,   exclusive   of   Commercial   Telegraph,   B.C.   Coast
Steamships and News Department transferred to Special Income. . 148,650,203.00
Expenses, exclusive of Commercial Telegraph.  104,072,867.00
Net Revenue         $ 44,577,336.00
Less: Fixed Charges  $10,229,143.00
Dividends  21,427,277.00
Pension Fund  -      500,000.00
 32,156,420.00
Surplus  $12,420,916.00
Ratio of expense to earnings   70.01%
Return on investment     5.473%
The surplus represents 1.525% on the cash investment on the property.
1918
Total Investment, . ."  $822,397,933.00
Gross Earnings .  157,058,480.00
Operating Expenses.  122,750,069.00
Net Revenue.  $ 34,308,411 00
(A decrease from 1917 of $10,267,925.00)
Less: Fixed Charges  $10,177,513.00
Dividends  21,427,277.00
Pension Fund  500,000.00
 _ 32,104,790.00
Surplus  $    2,203,621.00
Operating Ratio      78.16%
Return on investment     41.72%
The surplus, which was subject to still further reduction by reason of Dominion Government
taxation, amounted to only 27/100 of 1% on the cash investment.
1919
Total Investment.  $828,221,727.00
Gross Earnings  . .  $176,929,060.00
Operating Expenses  143,996,024.00
Net Revenue   $ 32,933,036.00
Less: Fixed Charges  . $10,161,510.00
Dividends  21,427,277.00
Pension Fund  500,000.00
  32,088,787.00
Surplus  $     844,249.00
Operating ratio   81.39%
Return on investment     4.078%
The surplus, which is subject to further reduction by Dominion Government taxation, is but
one-tenth of one per cent, on the investment. 1920
Total Investment  $858,464,921.00
Grots Earnings.   $216,641,349.00
Operating Expenses, including all taxes.  183,488,305.00
Net Revenue.   $ 33,153,044.00
Less: Fixed Charges  $10,776,409.00
Dividends  21,427,277.00
Pension Fund  500,000.00
32,702,686.00
Surplus  -r ....*.. $     450,358.00
Operating ratio.   84.70%
Return on investment     3.862%
The surplus represents a return of 5/100 of 1% on the property investment.
1921
Total Investment.  . .  $894,807,714.00
Gross Earnings  193,021,854.00
Operating Expenses, including all taxes   158,820,114.00
Net Revenue.  $ 34,201,740.00
Less: Fixed Charges  $11,575,000.00
Dividends  21,427,277.00
Pension Fund  500,000.00
  33,502,277.00
Surplus. ' $     699,463.00
Operating ratio   82.30%
Return on investment     3.822%
The surplus represents a return of 8/100 of 1% on the property investment.
.                                                       1922
Investment in Railway Property   $897,469,099.00
Gross Earnings  186,675,036.00
Operating Expenses 150,373,345.00
Net Revenue       $ 36,301,691.00
Less Fixed Charges and Dividends  35,276,182.00
Surplus  . .         $    1,025,509.00
Operating Ratio   80.55%
Return on investment     4.045% '
Surplus.... -.,..-  .. .       .114%
1923
Investment in Railway Property   $919,965,706.00
Gross Earnings      .         195,837,090.00
Operating Expenses  158,358,080.00
NetRevenue    $ 37,479,010.00
Less Fixed Charges and Dividends  35,845,663.00
Surplus  $   1,633,347.00
Operating ratio   80.86%
Return on investment .      4.073%
Surplus 178%
9 It is apparent that in no year has the Company earned the surplus the Board itself considered
was a proper margin for development or contingencies. The Board's attention is also directed to
the return on investment. A dividend of 7% is paid only on a capitalization of $260,000,000.00,
and an interest return of 4% on preference shares to the amount of $93,335,000. (See the Company's
Annual Report? on file with the Board.) The actual return on the shareholders actual cash
investment in the railway is shown in the preceding table.
Mr. McGeer directs his argument on the allc ged net earnings of Western Lines and on compilations submitted by Mr. Symington. In other words, he attempts to support the argument for
British Columbia and Alberta by combining with these provinces the traffic of Saskatchewan and
Manitoba. Mr. McGeer has no brief for either Manitoba or Saskatchewan. Counsel for these
provinces, in the person of Mr. Symington, appeared before the Board. Counsel for the Winnipeg
Board of Trade, Mr, Pitblado, also appeared. In no way directly or indirectly did these gentlemen associate themselves with the complaint of the Attorney-General of British Columbia, (See
Vol. 386, Equalization Case, page 1315):—■
"Mr. Symington: 'To my mind, Mr. McGeer's case has nothing whatever to do with
mine.    The findings in my case may affect him, or the findings in his case may change the
ultimate finding in mine; but in so far as the application is concerned, that I am making, so
far as the results I get—if I get any—they do not depend at all upon British Columbia's case;
they have nothing to do with it, as I see it.' "
Again in Vol. 387, page 2021, Mr. Symington m the discussion on gross ton costs, said:—
"The prairie sections should be dealt with separately."
Let us take Mr. Pitblado's cross-examination of Mr. Lewis, Vol. 387, page 2158:—
"Mr. Pitblado: 'First you gave a comparison of British Columbia as against all lines of
originating tonnage/ "
"Mr. Lewis: 'Yes.'"
Q. "Then you took all lines and grouped Alberta and British Columbia together;
why did you do that ?"
A. "It would appear to me that these two Provinces, instead of being divided by a
barrier as they are now, should be worked as one country, as far as Canmore."
"Q.—So that you had in your mind when you did that, when you made that comparison,
that you thought Alberta and British Columbia should be groupi d together ?
"A.-1—That is not correct.
Q.—Or should be grouped together ?
A.—Well, generally in business I think they should.
"Q.—And that is why you made this Exhibit in this way ?
"A.—I don't know that that was it,
"Q.—Have you heard anybody saying they should ?"
"A.—I don't know that that had all to do with it.
"Q.—I am going to give you another reason; I am going to suggest that the reason you did
that was that it made a better showing for you; is that not so ?
"A.—It did not make it any worse, anyway.
"The Chief Commissioner: T think you have accomplished your object. Mr.
Pitblado.' "
Take again Mr. Symington's cross-examination of Mr. Lewis (Vol. 387, pages 2204 to 2218.
A very definite expression is again given for a separation of interests between Prairie and Pacific
territory as far as operating costs were concerned.
On page 2205:—
"Mr. Symington: You know, I take it from the perusal of your figures, that up to 1916—■
up to which time we had divisional figures in all departments ?'
"Mr. Lewis: 'Yes.'
"Q.—That B. C. in the matter of net earnings was away below the Prairie Divisions, in
divisional nets, you know that?
"A.—I don't know.    I would assume so.
"Q.—And throughout the balance from '16 to '20 where we had the figures of operating
expenses, that they showed that to that period in any event, the operating expenses is B.C.
as compared with the Prairies are very much higher, that is the C.P.R. figures.
"A.—Yes, on that system of comparison."
On page 2206:—
"Mr. Symington: 'Now train mile, Mr. Lewis, is a factor, whatever it may be worth.'
"Mr. Lewis: 'It is a factor.'
"Q.—It is a negative factor.
"A.—It is a factor.
"Q.—And from the objections you have been offering, you have in any event studied the
train mile figures, have you not ?
"A.—Well, I suppose I have in a sense.
"Q.—And you know that the train mile expense figures in British Columbia far exceed
the train mile figures in each of the Prairie Provinces ?
"A.—Apparently so.
"Q.—And when you come to train miles, and the operating expenses per train mile
over a five-year period differing from 240 to 331, it is some considerable difference, isn't it in
train mile expenses?
"A.—Yes, there is quite a difference.
10 "Q.—It is a very very large difference, when you consider the number of train miles in
five years.
"A.—Yes.
"Q.—Then your gross ton miles—another factor for whatever it may be worth—if you
refer to your Exhibit 55, shows that in all periods the Prairie Provinces are very much below
British Columbia in cost per gross ton mile; your own Exhibit shows that,
"A.—That must be on account of the cumulative volume.
"Q.—We will say they are.
"A.—They are, yes.
"Q.—And if you refer also to that same Exhibit you will find, I think, that the gross ton
miles handled in the three Prairie Provinces exceed in most cases, and in one or two equal,
the whole of the balance of Canada.    That is right, isn't it, if you look at 55 ?
"A.—Oh no, it does not exceed the whole of Canada, does it ?
"Q.—Equal or exceed.    Take 1917 for instance, Manitoba, Saskatchewan and Alberta
have about 20,020,000 ton miles.
"A.—What year?
"Q.—1917 I was looking at,
"A.—Yes, it would be about 19.    If we take the first two figures it will be enough.
"Q.—It would be 20 wouldn't it, and the whole of the balance of Canada had 18 taking
your method.
"A.—It would be about the same anvway, not very much difference, 1,001,000 that is all.
Yes.
"Q.—So that we can take it for what it is worth in any event from your own Exhibit that
insofar as gross ton miles is a factor—and I am not very fond cf gross ton miles myself—but
apparently it is a new feature that has been brought in at this time—that the Prairie Provinces
from your own Exhibit and from the C.P.R. Exhibit on the same subject far exceed in business
and in lower cost British Columbia or the other parts of Canada ?
"A.—Yes.
"Q.—Now then on density of traffic you admit, don't you, that the advantage is all with
the Prairie Provinces as opposed to British Columbia ?
"A.—Absolutely.
On page 2211—also 2212 :—
"Q.—What about the average number of tons per freight train; have you looked into
that?
"A.—I have not paid very much attention to it.
"Q.—It is rather an important factor, isn't it ?
"A.—It would be.    It would be lower on the mountain portion of British Columbia, no
doubt.
"Q.—But in the Province of British Columbia—I don't care anything about dividing it—■
you will admit that the average number of revenue tons hauled per freight train is actually
lower in British Columbia than upon the Prairies ?
"A.—It must be.
"Q.—And that is a factor in the costs and in the profits of railway operation?
"A.—Yes, it does not mean that it costs twice as much to haul 40 cars than 20, but it
does cost more to haul 40 than 20.
And again on page 2212 and 2213:—
"Q.—You dwelt at some length upon originating tonnage, and you dealt with it in Exhibit
No. 53, if you will look at it, the originating tonnage, I take it, from the time you spent on it, is
an important factor, in your judgment; is that not so ?
"A.—It was a factor.
"Q.—Would you say it was an important factor or not; just say whether it was or not ?
"A.—These exhibits were put forward with a certain object in view, to controvert the
exhibits made by Mr. Lanigan, in considering the whole subject.
"Q.—You can say whether you can answer it or not, that you consider originating tonnago
an important factor in the matter of rate making ?
"A.—I think it is.
"Q.—If you will turn to Exhibit 53, looking at your first one, 1917, in the third column,
you will find that the Prairie Provinces produced in originating tonnage four times what
British Columbia produced ?
"A.—Yes.
On pages 2214-2213:—
"Q.—So that the volume of traffic, if I gather correctly what you are trying to tell us, is
of very great importance in the matter of reducing operating expenses relatively to earnings ?
"A.—In the matter of reducing the unit costs, yes.
"Q.—In producing the financial results to the Railways.
"A.—Yes.
"Q.—If you do a normal business, relativelv speaking, then you can do less business ?
"A.—Yes.
On pages 2215-2216:—
"Q.—Mr. Lewis, I take it from your answer to Mr. Pitblado that you would not submit
to this Board that upon any basis that you desire yourself to take, that operating a railroad
11 through the Province of British Columbia, on the C.P.R., over the mountains, is as cheap as
operating a railroad on the prairies, I want to be frank with the Board about that.
"A.—I could not answer such a definite question."
Under these circumstances, can Mr. McGeer rightfully claim a community of interest and
quote Mr. Symington's exhibits to any purpose as showing a larger net earnings on Western Lines
than on Eastern Lines. Mr. Sj^mington claims that these net earnings were the result of prairie
operations and in no place did he claim there was any contribution from British Columbia, but
he did show and show most conclusively that operating expenses were substantially higher in
British Columbia than on the Prairies, and he proved it by Mr. McGeer's exhibits and Mr.
McGeer's witness. Now Mr. McGeer argues on alleged net profits on Western Lines versus Eastern Lines, and to prove his case includes the alleged net profits in the provinces of Manitoba and
Saskatchewan shown by a compilation submitted by the Counsel of these provinces to show that the
Canadian Pacific net profits were largely due to the movement of grain to Fort William and
Port Arthur. There is not one jot or tittle of evidence filed by Mr. Symington or argued by
Mr. Symington in filing his compilations that there were any undue or in fact any profits in the movement of grain to British Columbia. In fact taking Mr. Symington's exhibit 37, page 1, he submits
the operating ratio for the five years 1907 to 1911, inclusive of Western Lines except British Columbia at 56% and that of British Columbia at 81.84%. The operating revenues of Western Lines,
exclusive of British Columbia $194,900,000.00, operating expenses at $110,000,000.00, while he
computes British Columbia's revenue at $33,000,000.00 with operating expenses of $29,300,000.00.
For the five year period 1912 to 1916, inclusive, Exhibit 37, page 3, he places the operating revenue
of all Western Lines, except British Columbia at $304,500,000.00, with operating expenses of
$166,000,000.00—an operating ratio of 54.5%, while he puts British Columbia operating revenue
at $52,000,000.00, with operating expenses at $37,500,000.00, showing an operating ratio of 72%.
Why did not Mr. McGeer refer to page 6 of the same exhibit, showing that train mile expenses
had increased since 1916 in Manitoba 105%; in Saskatchewan 99%; in Alberta 102% and in British
Columbia 110%, or the average expenses per train mile for the five-year period, 1916 to 1920:—
Manitoba   $2.67
Saskatchewan         2.40
Alberta     2.46
British Columbia     3.31
or for all Western Lines, exclusive of British Columbia $2.53, while for British Columbia it would
be $3.31; an increase over the Prairie lines costs of 30.83%.
We are not endorsing Mr. Symington's compilations. They were dealt with, but we are
objecting to Mr. McGeer's production thereof in part only as tending in any way to endorse his
conclusions that grain can be moved to Vancouver as cheaply as to Fort William. We had,
however, further evidence substantiating increased costs of operation in British Columbia versus
Prairie Provinces movement in Exhibits 7, 8 and 9. Exhibit 7 shows operating costs for 1920 in
British Columbia to be 22.68% higher than in Western Prairie territory; 34.67% higher per train
mile; 50.35% higher per car mile, and 48.03% higher per gross ton mile. It shows British Columbia's expenses per mile of line to be higher than any other section and her business substantially
less. In 1921, Exhibit 8 again reflects the same conditions. In order that the Board's information
will be brought up to date we attach the same compilations from the records of the Company for
the calendar years 1922 and 1923. This is also fulfilling the request of Mr. McGeer made at
Vancouver.
British Columbia's operations in 1922:—
Per mile of line 16.04% higher
"    train mile 31.33%
"    car mile 61.67%      "
"    gross ton mile. 57.34%      "
1923
Per mile of line    9.92% higher
"    train mile 22.36%
"    car mile  .58.18%      "
"    gross ton mile 47.62%      *
Costs per mile of line are, of course, a varying factor dependent upon the amount of tonnage
handled. This is indicated by the gross ton miles handled in each section. For instance in 1923
(and the comparison is made with Manitoba and Saskatchewan advisedly as will hereafter appear).
Manitoba had 11,803,210,000 gross ton miles; British Columbia 3,365,929,000. In Manitoba
eosts per mile of line were $11,904.00, in Saskatchewan, $6,900.00; in British Columbia $9,806.00.
In other words Manitoba mileage handled 250.70% more tonnage at an expense per mile of line of
only 21.4% higher than British Columbia. Saskatchewan with a gross tonnage 51.5% greater
than British Columbia had an expense per mile of line 29.64% less than British Columbia. Still
Mr. McGeer argues that rates on grain should be the same to Vancouver as for equivalent distances
from Fort William, but Mr. McGeer argues that the relation of empty to loaded movement has
changed with the increase in grain movement to Vancouver.
Exhibit 97 shows the relation of empty to loaded cars in 1921. Saskatchewan, 53.85%;
Alberta 51.90%, British Columbia, 36.30%, and Manitoba is shown in Exhibit 93c as 49.83%. In
order to bring the Exhibit up to date we submit the figures for the years 1922 and 1923. Mr.
McGeer asked for these figures. I have compiled the figures for the convenience of the
Board for 1921, 1922 and 1923:—
12 British
Manitoba Saskatchewan Alberta Columbia
1921  49.83% 53.85% 51.90% 36.30%
1922  55.54%0 51.88% 45.30% 34.84%
1923 65.60% 63.86% 55.06% 35.15%
Let us refer to the figures submitted at Vancouver and filed by request of Mr. McGeer of the
empty car movement to and from British Columbia.
1922—Empty cars to British Columbia District—13,413
1923—        " " " " "      —15,994
1922—Empty cars from British Columbia District—4,123
1923— " " " "      '    "      —5,950
Grain and Grain Products, in tons, to Vancouver, domestic and export.
1922  . .393,314 tons
1923 675,524    "
These figures substantiate the evidence already given by Mr. Lanigan in the Equalization Case
(Vol. 385, page 961):—
"We have those cars to carry as the result of this movement to Vancouver for export, and
there is the fact that there is no return loading. We have had to carry all those cars that way;
we have brought them over there, and will have to bring them back empty, over the mountains.
"Unfortunately the export season for grain via Vancouver does not meet, and we will not
need this season those cars for lumber and other shipments eastbound. That, of course, is an
unfortunate condition, for which no person is responsible."
For the information of the Board figures showing grain cars in terminals at Vancouver, en route
between Field and Coquitlam—Oct. 10th to Nov. 10th, 1924, are submitted:—
MEMORANDUM OF CANADIAN PACIFIC CARS WITH EXPORT GRAIN UNDER
LOAD IN CANADIAN PACIFIC VANCOUVER TERMINALS AND IN TRANSIT
BETWEEN   FIELD  AND  COQUITLAM—OCT.   10th  to   NOVEMBER
10th, 1924, INCLUSIVE
Between Field and
In Terminals                  Coquitlam Total
Oct. 10th  597 337 934
" 11th.....  524 303 827
" 12th  581 367 948
" 13th  699 283 982
" 14th    713 326 1,039
" 15th  691 244 935
" 16th.....  672 322 994
" 17th  584 315 890
" 18th  454 339 793
" 19th  593 288 881
" 20th  578 300 878
" 21st.  598 336 934
" 22nd  559 470 1,029
" 23rd  516 539 1,055
" 24th  535 559 1,094
" 25th  482 642 1,124
" 26th  575 579 1,154
" 27th  602 545 1,147
" 28th  564 661 1,225
" 29th  527 769 1,296
" 30th  524 678 1,202
" 31st  493 615           - 1,108
Nov. 1st  544 657 1,201
" 2nd  540 687 1,227
" 3rd  550 649 1,199
" 4th  708 540 1,248
" 5th  781 448 1,229
" 6th  828 489 1,317
" 7th     855 455 1,310
" 8th..  786 377 1,163
" 9th  717 368 1,085
u 10th  602 279 881
Totals  19,572 14,766 34,338
Daily Averages.... 611.6 461.4 1,073.0
13 According to the evidence of Mr. Guy Hamilton Kirkpatrick at Vancouver, Nov. 5th, 1924,
page 7352, the unloading capacity of the Vancouver Harbour elevators was during this period
somewhat in excess of 200 cars per day. In other words to the date of the hearing the Vancouver
terminal elevators did not have sufficient unloading capacity to take care of cars arriving via
Canadian Pacific alone, to say nothing of those arriving via Canadian National. The increased
terminal expense and cost for undue car delays for which the railways received no remuneration
are obvious.
MEMORANDUM   OF  CARS  UNLOADED  BY  VANCOUVER  HARBOUR
COMMISSIONERS ELEVATOR FOR PERIOD OCTOBER 10th TO
NOVEMBER 10th, 1924, INCLUSIVE
Can. Pac. Cars             Can. Nat. Cars Total
Oct.   10th  83 31 114
"    11th  95 7 102
"    12th  Nil Nil Nil
"    13th......:.  39 40 79
"    14th  42 29 71
"    15th  81 74 155
"    16th       * 37 22 59
"    17th  116 28 144
"    18th  135 13 148
"    19th....  54 20 74
"    20th  36 18 54
"    21st  55 19 74
"    22nd  57 31 88
"    23rd...  .... 50 2 52
"    24th  58 21 79
"    25th  62 23 85
"    26th....  Nil Nil Nil
"    27th  58 21 79
"    28th..;  66 19 85
"    29th  73 32 105
"    30th  ... 70 9 79
"    31st,...  80 Nil 80
Nov.   1st  60 15 75
"      2nd  60 32 92
u      3rd  62 34 96
"      4th  60 28 88
"      5th  60 36 96
"      6th.......  35 64 99
"      7th  62 28 90
"      8th  192 24 216
"      9th.....  151 5 156
"    10th  204 Nil 204
Totals  . 2,293 725 3,018
Daily Averages.... 71.7 22.6 „      94.3
The above shows the actual performance of the Harbour Board elevators for the same
period, Oct. 10th to Nov. 10th, 1924. Only twice during that period did they unload over 200 cars,
Nov. 8th, 216 cars and Nov. 10th, 204 cars. The average for both lines was 94.3 cars per day, but
the Canadian Pacific alone had a daily average of grain cars ready for unloading in Vancouver
terminals of 611.6 cars. Under these circumstances, we submit that Mr. Kirkpatrick's evidence
was, to say the least, of very little value.
Mr. McGeer's application and argument was directed towards procuring for export to Vancouver the same rates on grain as applied to Fort William for similar distances.
Exhibits in the Equalization Enquiry showing relative costs of moving grain to Fort William
and Vancouver were submitted. Exhibit 98 in the Equalization Enquiry, for year 1920, Grain,
Calgary to Fort William showed a revenue of $324.00 per car and operating cost of $280.73, or
an operating net of $43.27, and an operating ratio of 86.6%. The rate from Calgary to Fort
William at that time was 40|c. per 100 lbs.
In 1921, the rate being reduced to 39c. per 100 lbs., the net operating revenue per car became
$15.11 and the operating ratio rose to 95.16%.
Exhibit 97 (Equalization Enquiry) for year 1921, Grain, Calgary to Vancouver, rate 34c.
per 100 lbs., showed a net operating profit of $58.14 per car and an operating ratio of 78.64%. An
example was also given for the same year from Moose Jaw, showing an operating net of $5.68 per
car. Examples were also shown of net profits or looses in all examples of 1922 rates with 1921 costs.
At that time the 1922 costs were not obtainable.    At Mr. McGeer's request, however, we have
14 filed herewith the figures as to gross ton costs for 1922 and 1923 and also the relative relationship
between empty and loaded movement so that the exhibits can be brought up to date. (See pages
35, 36, 37 and 38).
The current rates are, of course, on file with the Board and are matters of record.
Grain rates to Fort William (C.P.R.—C.R.C. W-2641).
Grain rates to Vancouver (Export, C.P.R., C.R.C, W-2733).
Local Mileage, prairie grain rates (C.P.R., C.R.C. W-2641).
Domestic rates to Vancouver (C.P.R., C.R.C. W-2656).
Local Mileage, B.C. grain rates (C.P.R., C.R.C, W-2656).
The Board's attention is directed to the fact that the grain territory if on the Canadian Pacific, a
minimum distance of 642 miles from Vancouver and via the Canadian National 765 miles. That
from Fort William the grain fields are reached within a minimum distance of 419 miles via the
Canadian Pacific and 437.6 miles via the Canadian National. Relatively, therefore, at 642 miles
from the lake front on the Canadian Pacific Railway the Saskatchewan border i*. reached, and at
765 miles from Port Arthur on the Canadian National is well within the Province of Saskatchewan.
For instance 645 miles from Fort William is Red Jacket, Sask., on the main line of the Canadian Pacific Railway, the rate from that point on grain to Fort William is 18c. per 100 lbs. (C.R.C
W-2641). Take 765 miles from Port Arthur on th.e Canadian National Railways' main line,
Keilher, Sask., is reached (exact distance 763.5), the rate from that point to Fort William is
21c. per 100 lbs. (C.N.R., C.R.C W-251).
In Mr. McGeer's contention the rate for export from Edmonton to Vancouver should, therefore, be 21c. per 100 lbs., via the Canadian National Railways, and from Calgary, 642
miles to Vancouver via Canadian Pacific 18c. per 100 lbs. The present rate to Vancouver
from Calgary and Edmonton is 22Jc. per 100 lbs. From Edmonton to Vancouver via the
Canadian National the mountain mileage (Edson to Vancouver) is 646 miles or 83.1% of the
total. From Calgary the distance via Canadian Pacific is 642 miles to Vancouver. The mountain
haul is represented by the distance, Canmore to Vancouver, 574.6 miles or 89.5% of the total
mileage.
Taking Mr. Bingham's submission and map (page 7492, Vancouver evidence, Nov. 6th)
cross-examination by Mr. Lanigan:—
"Mr. Lanigan: Certainly, but when you come into your wheat field, as you show yourself
on your map, and you get at a point 1,065 miles from Fort William, and approximately the
same distance from Vancouver, that is where the rates will split.
"Mr. Bingham: Yes.
"Q.—That is where they do split to the lake head there, therefore, every mile you go
beyond that point you are getting nearer the other chap's territory ?
"A.—We do not want to compete with him."
The record shows "1,065" miles.    This should read "1,006" miles.
We have already shown the effect of applying the Fort William rates to Vancouver from the
minimum distances representing Edmonton and Calgary. We will now take the maximum distance represented by even mileage. The following table shows the difference in rates on both
lines from typical snipping points:—
GRAIN RATES
C. N. Rys.
To Vancouver To Fort William
Miles              Rate Miles Rate
Highgate Sask.       1,005                 26c. 1,010 26c.
Reford      "             992                 26 997 26
Cavell      "             999                 26 990 26
Alsask      "          1,065                 26 1,070 26
McGee      "          1,150                 26 986 26
Tariffs—C.R.C. W-251 and C.R.C W-357.
C.P.R.
Stranraer Sask.       1,011                 26 1,006 26
Herschel      "          1,018                 26 999 26
Cantaur          "           "943                 25 940 23
Shackleton      "             907                 25 977 24
Webb      "             944                 25 948 23
Beverly      "             953                 25 936 23
South Fork      "             979                 26 979 24J
Ravenscrag      "             957                 26 1,000 25|
Tariffs—C.R.C W-2641 and C.R.C W-2733.
Take Mr. Bingham's evidence at Vancouver, Nov. 6, 1924, page 7490, cross-examined by
Mr. Lanigan:—
"Mr. Lanigan: What would you think was the average distance from which grain would
come to Vancouver ?
"Mr. Bingham: I think Regina would be a fair distribution of the grain water shed."
15 The distance from Regina to Vancouver is 1,109 miles, while Regina to Fort William is 776 miles.
The rate Regina to Fort William is 20c. per 100 lbs., equivalent to .515 cents per ton per mile;
rate Regina to Vancouver, 28^c. per 100 lbs., equivalent to .514 cents per ton per mile. There
can, therefore, be no complaint at Regina even disregarding the mountain costs.
Again taking Mr. Bingham's cross-examination by Mr. Lanigan at pages 7486 to 7489, in re
the effect of ocean rates:—
"Mr. Lanigan: Now, then, Mr. Bingham, you know a good deal about the ocean rates
out of here, and the variation in the ocean rates.
"Mr. Bingham: I have had six months' experience, Mr. Lanigan, and some of it has been
pleasant and some painful.
"Q.—You have only been here six months, so that you could not speak of last year's
ocean rates.
"A.—No, sir, except that I kept tab of it as a competitor.
"Q.—Now, the rail rates up to October 10th, when they were reduced 10 per cent, since
October 10th, 1923, are stable.
"A.—Yes.
"Q.—But the ocean rates since October, 1923, have you any track of these.
"A.—Not here. I have a record in my office. I know how rates moved last fall out to
the east and how they moved here in a general way.
"Q.—What would you say about the variation, say in the month of October last year?
"A.—The variation in the east and the west?
"Q.—No, the variation in the ocean rates out of here.
"A.—Vancouver, I should say they probably rose four or five shillings a ton.
"Q.—For October clearances ?
"A.—Oh, October and November, the active shipping season.
"Q.—Well, that is about according to my information.
"A.—I am only speaking from recollection.    I have not studied it at all.
"Q.—Four or five shillings a ton. Four shillings a ton, say, would be about 4c. a hundred,
would it not ? •
"A.—I am hopeless away from a piece of paper. I will have to work it out. If you say
it, I will take it, but not otherwise.
"Mr. McGeer: I will let you put that evidence in.
"Mr. Lanigan: I have seen some of your figures before, Mr. McGeer, that did not strike,
me as even mathematically correct.
"Mr. Bingham: I could not pull down $40 a month in the office as a clerk, Mr. Lanigan.
"Mr. Lanigan: It is easily worked out.. Take four shillings at the exchange of 4.58. One
shilling at 4.55 is .63 a bushel. So four shillings a ton would be four times .63 or 2|c. a bushel,
so that the variation of the ocean rates in the month of October was sufficient to use up the
10 per cent, reduction that would be made from Alberta.
"A.—Easily, I should say.
"Q.—Now take this year. In the month of October this year what did the October
clearances start at ? .
"A.—Japanese boats came on the market here at about 31 shillings a ton for October 25th.
"Q.—I think at a little less than that.    That would be for November clearings.
"A.—October 25th to November 10th I tried to get that and failed.
"Q.—What are they to-day for December clearings?
"A.—The lowest price I had was 36/3d.
"Q.—So there would be a difference of 5 shillings there ?
"A.—5 shillings there.
"Q.—And there would be a spread of from 5 shillings to 9 shillings between the October
and December clearings?
"A.—5 to 9 shillings ? 31 shillings, and I think the freight went as high as 40 shillings,
and is now down or was when I left the exchange, to 36 shillings and three pence for December.
"Q.—36/3d to-day?
"A.—Yes.    A December boat was fixed the day before yesterday.
"Q.—There was a difference of 5 shillings.
"A.—Yes.
"Q.—Did these ocean rates fluctuate on both oceans.
"A.—Yes, both sides.
"Q.—So that the reduction last year was promptly, eaten up by the advance in the
ocean rates, whether purposely or not there was an advance in the ocean rates following the
reduction in the rail rate ?
"A.—That is correct.
"Q.—And there is an advance in ocean rates this year again ?
"A.—There has been a stiff advance and a fall.
"Q.—So that a reduction of 1.2 cents a bushel as a minimum reduction, and 2.7 cents a
hushel as a maximum reduction would be very easily eaten up by any advance that might
take place in ocean rates ?
"A.—That is perfectly correct.
16 "Q.—So that all your figuring was done on the combination of a rail rate and an ocean
rate?
"A.—Yes.
"Q.—As against a combination of rail and ocean via the east ?
"A.—Yes."
This simply confirms the opinion expressed by Assistant Chief Commissioner McLean,
on page 2055, Vol. 387, Equalization Case, March 13, 1922, reading as follows:—
"The Assistant Chief Commissioner: You are getting into the realm of speculation
when you say that a substantial volume of wheat will move via Pacific Coast ports.    That
depends a great deal on the ocean rates, the combination you get between moving east and
going through the canal, which will react again on the movement straight east by rail."
We now submit the application of gross ton costs to revenue from Calgary to Fort William
(See Exhibit 93, Equalization Case) bringing the expense figures up to date as per gross ton costs
per division and empty car mileage per division for 1923 as related to revenue, as per amended
tariffs on grain in both directions, i.e., to Vancouver and Fort William.    The latter was made subject to the provisions of the Crow's Nest Act; in other words, the grain rates to Fort William of
1897, regardless of the costs of 1923.
The amending legislation of 1922, Chapter 41, said:—■
"... rates on grain and flour shall on and from the 6th day of July, 1922, be governed by
•the provisions of the agreement made pursuant to Chapter 5, of the Statutes of Canada in
1897."
Mr. McGeer to the contrary notwithstanding cannot read into Chapter 5 of the Statutes of Canada,
1897, any reference to the grain rates to Vancouver, either export or domestic. The Act reads
distinctly to Fort William and points east thereof.
GRAIN—1923
Calgary to Vancouver, 80,000 lbs. at 22|c—$180.00
(Gross tons 40 net, plus 17| tare of car—57J)
District % Empty     Miles Gross Gross Gross
Car Miles Tons       Ton Miles  Ton Mile
Costs Mills
Alberta,  137     x       57f   —   7878   x     306     —   $ 24.11
British Columbia  505     x        57^    — 29037    x     403      —      117.02
$141.13
EMPTY MOVEMENT
Alberta.     55.06%        137     x        17i    —    1320    x     306      —   $    4.04
British   Columbia.     35.15 505      x        17£    —   3106    x     403      —        12.52
$ 16.56
1923
Operating revenue       $180.00
costs  157.69
• 	
u       net         $22.31
ratio  87'. 61%    Operating ratio in 1921—78.64%
Calgary to Fort William, 80,000 lbs. at 26c per 100 lbs.—$208.00
District % Empty      Miles Gross     Gross Ton Gross Ton
Car Miles '      Tons Miles Miles
Costs Mills
Alberta  315      x        57i    — 18112.5 x    306
Saskatchewan  245     x       57i   — 14087.5 x   287
Manitoba  .  683      x       57i    — 39272.5 x   251
EMPTY MOVEMENT
Alberta   55.06% of     315      x        17*    —    3035.2 x   306
Saskatchewan   63.36% of     245     x       17*   —   2716.6 x   287
Manitoba   65.60% of     683     x       17§    —   7840.8 x   251
1923 $    36.77
Operating revenue     $ 208.00
costs...         231.19
loss....  23.19
u       ratio         Ill. 15%)    Operating ratio in 1921—95.16%
17
$
55.42
40.43
98.57
$
194.42
$
9.29
7.80
19.68 The results in 1921 from Calgary to Vancouver (Exhibit 97, Equalization Case) showed an
operating ratio of 78.64%, which by the subsequent rate reductions was raised in 1923 to 87.61%.
To Fort William, Exhibit 97 showed an operating ratio of 95.16%, which by the application of the
Crow's Nest rates became 111.15%. If an 18c. rate was applied from Calgary to Vancouver the
revenue would be $144.00 per car and the costs $157.69; a net loss of $13.69 per car, or an operating
ratio of 109.51%. The proper comparison, however, on. Mr. McGeer's theory of equal rates for
equal distances would be the costs and revenue to Fort William from a distance of 642 miles.
Harrowby, Man., to Fort William, 642.5 miles will give the comparison.
GRAIN—1923
Harrowby, Man., to Fort William, 80,000 lbs. at 18c. per 100 lbs.—$144.00
(Gross tons 40 net, plus 17| tare—57J gross tons)
Gross Ton
% Empty Gross      Gross Ton      Mile
District Car   "       Miles Tons Miles      Costs Mills
Miles
Manitoba  642     x       57|   —   36915 x     251     —     $92.66
EMPTY MOVEMENT
Manitoba     65.60% of 642     x        17|    —    11235 x     251    —       $18.50
1923
Operating revenue  $144.00
"        costs  111.16
"        net  32.84
ratio  77.20%
In other words, Mr. McGeer's application, is to apply the same rate from Calgary to Vancouver which would produce an operating loss of $13.69 per car as applies from Harrowby, Man.,
to Fort William, where an operating profit of $32.84 is produced. If conditions are the same as
contended by Mr. McGeer and Mr. Lewis the same net revenue returns should result.
We will take the figures from Regina, the limit suggested by Mr. Bingham, and we will take
Mr. Bingham's evidence as to distance by water, Fort William to Liverpool, 4,000 miles; Vancouver
to Liverpool 9,000 miles. Distance, Regina to Vancouver by rail is 1,109 miles; Regina to Fort
William 776 miles; therefore:—
To Liverpool
Rail Water Total
Regina to Vancouver.        1,106 9,000        10,106
Fort William  776 4,000 4,776
Difference        5,330
The shipper at Regina, after landing his consignment of grain at Vancouver, finds his shipment further away from Liverpool by 4,224 miles than it was at Regina, the shipping point. Let
us compare the two routes. From Regina to Liverpool, via Fort William and water, has a rail
haul of 776 miles or 16.25% of the total distance, and a water haul of 4,000 miles or 83.75%, while
from Regina to Liverpool via Vancouver there is a rail haul of 1,106 miles (330 miles more than to **
water at Fort William) representing 10.95% of the distance, and 9,000 miles water, or 89.05% of
the total; the distance by water from Vancouver being 5,000 miles greater than from Fort William.
Yet, according to Mr. Bingham and Mr. McGeer, rates should be so arranged that at Regina
Vancouver should be in a position to compete on export grain with the Fort William route. The
rates, as have been shown, from Regina to Fort William and to Vancouver are about on an equal
scale mile for mile with a shade in favor of Vancouver. We will show, however, the comparative
operating costs and revenue in the following table:—
GRAIN—1923
Begina to Vancouver, 80,000 lbs. at 28|c. per 100 lbs.—$228.00 per car.
% Empty Gross
District Car Miles      Miles Tons
Saskatchewan  153     x       57i
Alberta  451     x       57|
British Columbia.   * 505     x       57^
Gross Ton Gl°»Ton
Mil              Mile
Mlles     Costs Mills
— 8798   x     287     —
— 25933   x     306     —
— 29037    x      403
$25.25
79.35
117.02
$221.62
18 EMPTY MOVEMENT
Saskatchewan     63.36% of  153     x       17J    —    1696   x     287     —     $4.87
Alberta     55.06     of 451     x       17*   —   4346   x     306     —       13.30
British Columbia     35.15     of 505     x       17*    —   3106   x     403     —       12.52
1923 $30.69
Operating revenue       $228.00
"        costs             252.31
loss  24.31
"        ratio         110.66%
Regina to Fort William, 80,000 lbs. at 20c. per 100 lbs.—$160.00 per car.
Saskatchewan  93     x       57|   —   5348   x     287     —   $ 15.35
Manitoba.... ,. . . 683     x       57|    —39273   x     251     —       98.58
EMPTY MOVEMENT
$113.93
Saskatchewan     63.36% of    93     x       17J   —    1031    x     287   —       $ 2.96
Manitoba.     65.60% of 683     x       17|   —   7840   x     251    — 19.68
1923 $22.64
Operating revenue  $160.00
"        costs  136.57
"        net  23.43
"        ratio   . 85.36%
We submit respectfully that while it is undoubtedly within the province of the Board to
decide whether a rate is in itself unreasonable or discriminatory, the office of the Board does not
extend to establishing rates outside of this field for the purpose of developing either the business or
any particular port, route, industry or occupation, and this is in fact what the Board has been
asked to do by Mr. McGeer and others who presented themselves at Vancouver in support of the
application, notably the poultry interests. The Board,, in. the Western Rate Case as has already
been quoted, said that the proper comparison of grain rates for export was to tide water on the
Pacific as compared with tide water on the Atlantic. Take Mr. McKee's evidence on Nov. 6th
at Vancouver, page 7430:—
"Mr. Lanigan: Mr. McKee, grain that is shipped to Fort William does not stay in
Fort William, does it ?
"Mr. McKee: Not indefinitely.
"Q.—Grain that goes to Fort William is for forwardance beyond that point.
"A.—Yes, that is true.
"Q.—So that it is a question between the Atlantic ports and the Pacific ports so far as the
grain is concerned.
"A.—Yes.
"Q.—-That is the question whether you ship, we will say, to Fort William and via the
Great Lakes to Montreal, or to the Coast via the Panama to the LTnited Kingdom.
"A.—Yes, that is so.
"Q.—Further it is a question of the cost of carrying this wheat via one route or the other ?
"A.—Yes, that is true." ■
And this evidence is endorsed by another of Mr. McGeer's witnesses, Mayor Owen, page
7348, in direct evidence:—
"... The Alberta Wheat Belt is within 600 miles of the Pacific Coast, the Manitoba Wheat
Belt is more than 1,600 miles from the Atlantic Seaboard; it is unnatural to expect trade
between Alberta and the Atlantic Seaboard to develop when the Pacific Ocean offers with the
Panama Canal, a highway to the markets of the world."
On page 7431, Mr. McKee admits that Alberta farmers were being paid on the basis of Fort
William freights. He further admits a large margin in favor of Vancouver as against the rail
and water route to the Atlantic.    Then again on page 7419, Mr. McKee says:—
". .". There is one thing that has hampered, retarded, restricted and prevented the normal
growth and development of the grain trade through Pacific Canadian ports, and that is, the
rate discrimination that has existed in the past and still exists."
What reliance can be placed upon such a statement when it is a well-established fact, not only
that export grain has increased via Vancouver from year to year, but increased beyond the facilities
of the port to take care of it, and the fact that at the very moment witness was giving his evidence
(Nov. 6th, 1924) there were 828 cars of export grain in the Canadian Pacific terminals at Van-
19 couver, and 489 cars in transit, while the same day the Vancouver Harbor unloaded only 35 cars
from the C.P.R. and 64 brought in by the C.N.R. The witness says he is in the grain business
and knew the increase in forwardings via Vancouver. Take the record of the Canadian Pacific
since 1921.
GRAIN TO VANCOUVER
1921    ...  91,000 tons
1922. 393,000    "
1923 675,524    "
an increase in two years of 642.4%.
The witness on page 7415 describes himself as a grain exporter of 14 years' experience. He can
hardly plead ignorance of facts.
Reverting to the Statistical Report filed in evidence by Mr. Hamilton, Secretary and Manager
of the Vancouver Merchants Exchange (Exhibit No. 5, filed by Mr. McGeer), showing comparative statement of grain exported from Vancouver, 1920 to 1924:—
Crop Year Bushels
1920-1921 :  . 501,221
1921-1922         7,935,833
1922-1923       19,155,066
1923-1924 to July 31st       54,619,188
Is this the record of a port that has been hampered, retarded, restricted and prevented in the grain
movement ? Either Mr. McKee made a deliberate misstatement or is in ignorance of the facts ano!
either conclusion destroys any value that might be attached to his statements.
It will be pertinent at this stage to deal with freight rates to the Pacific and to the Atlantic
for export. To the Atlantic the rates are built up of the proportionate rate to Fort William plus,
the water routes to Buffalo, or the Canadian Bay Port, plus rail beyond to the Atlantic. The
rail propcrtionate rate to Fort William and the rail rate from Port McNicoll to Montreal and St.
John, N.B., are subject to the control of the Board. The lake rate from Fort William to either
Canadian Bay ports or Buffalo are not so controlled. The rail rate from Buffalo to the Atlantic
is subject to the Interstate Commerce Commission. There is also the factor, as pointed out by
Mr. Bingham, of an all-water rate from Fort William to Montreal. There is the third factor of an
all-rail rate from Fort William to Montreal. This rate is subject to the jurisdiction of the Board.
Another matter is that mill products (flour and mill feed) do not travel via the through water
route or via grain vessels to either Buffalo or Canadian Bay ports. These vessels are not equipped
to carry package freight, not having what is known as between deck space. Flour and mill feed
shipments are, therefore, confined to what is known as the lake and rail route on the regular sailings
from Fort William to Port McNicoll via the Canadian Pacific lake package steamers, or those of
the Northern Navigation Company to Sarnia. Rates from Fort William to Montreal via the lake
and rail routes so described are on file with the Board.
TARIFF REFERENCES: Fort William to Montreal:—
For Export, All-Rail C.P., C.R.C. No. E. 4119.
Lake and Rail, via Port McNicoll, C.P., C.R.C. No. E. 4117.
Via Port Huron, C.N., C.R.C. No. W. 596.
Port McNicoll to Montreal:—
For Export, C.P., C.R.C. No. E. 4119.
The attached table will indicate the advantage Vancouver enjoys, as against the Atlantic, to
nearest tidewater Montreal. The service to Vancouver is an all-rail operation. We will consequently compare first the all-rail rates on grain, flour and mill feed to Montreal and to Vancouver
for export. The water route is available only during the season of navigation but is a potential
factor as has been found by the Board throughout the year. Grain all-rail to the Atlantic is also
subject to Fort William elevation en route to establish official grading and weights. Export
rates are published to Vancouver from points east as far as Fleming, Sask., 146 miles east of
Regina, which Mr. Bingham considers the easterly limit of exportation via Vancouver.
WHEAT RATES FOR EXPORT
Rate per        Rate per ton
Miles 100 lbs. per mile
Fleming to Montreal, All-Rail     1627 52 £ . 645
" Vancouver      "     1253 30 .479
Advantage, Vancouver over Montreal.. 22J .166
Or equal to 13£c. per bushel.
The longer route rate to Montreal carrying a higher rate per ton per mile of .166.
20 Rate per Rate per ton
Miles          100 lbs. per mile
Regina to Montreal, all-rail    1,773               54J .615
Vancouver        "     ...   1,109               28^ .514
Advantage, Vancouver over Montreal.... 26 ■   .101
Or equal to, per bushel, 15.60c.
The longer route to Montreal carrying a higher rate per ton per mile of .101.
Rate per        Rate per ton
Miles 100 lbs. per mile
Calgary to Montreal, all-rail. ...   2,240 60i .540
Vancouver,    "    ....      642 22 i .701
Advantage, Vancouver over Montreal.... 38
Or equal to, per bushel, 22.80c.
The route from Calgary to Vancouver is 89.5% mountainous. From all prairie points to
Fort William the rates are those imposed on the carriers by the legislation of 1897, while from Fort
William to Montreal they are competitive with waterways and have been so found by the Board.
Surely, in comparing the two rail routes no claim of discrimination against Vancouver can be
sustained or with rates running from 7^c. to 22.80c. per bushel in favor of the Pacific Seaboard no
<elaim can be based that export grain is handicapped in favor of the Atlantic Seaboard. Still these
are the two all-rail routes in each direction and both subject to the Board.
Let us take the lake and rail to Montreal versus all-rail to Vancouver.    That is all-rail to Fort
William.
Fleming, Sask., to Fort William, rail        630 miles
Fort William to Port McNicoll by water       500      "
Port McNicoll to Montreal by rail        371
Total    1,501
Kate, Fleming to Montreal, rail, water and rail  .    43c. per 100 lbs.
Vancouver, all-rail (1,255)     30c.
-Advantage, Vancouver over Montreal '      13c.        "
Hail portion per ton per mile to Montreal 646
" "        "      "    "      " Vancouver 479
Less to Vancouver by 167
Miles
Regina to Fort William, rail        776
Fort William to Port McNicoll, water , .      500
Port McNicoll to Montreal, rail       371
1,647
Hate, Regina to Montreal, rail and water     45c.     per 100 lbs.
Vancouver, all rail (1,109)     28.5c.
Advantage, Vancouver over Montreal       16.5c. "
Hail portion per ton per mile to Montreal 599
" "        "      "■-'■■*      " Vancouver.;..-..     .514
Less to Vancouver by.      . 085
In this example it will be noted that from Regina it is 1,109 miles to Vancouver, and the combined rail mileage of the lake and rail route to Montreal is 990 miles.
Miles
Calgary to Fort William, rail    1,243
Fort William to Port McNicoll, by water       500
Port McNicoll to Montreal, rail       371
2,114
21 Rate per
100 lbs.
Calgary to Montreal, rail, water and rail.         51c.
Calgary to Vancouver, all rail.         22.5c.
Advantage, Vancouver over Montreal         28.5c.
Rail portion per ton per mile to Montreal, 1,614 miles. 500
" "        "      "    "      " Vancouver, 642    " 701
The rate per ton per mile being properly higher for the shorter than the longer distance.
Now as all bagged flour and mill feed travels via the lake and rail route, surely the milling
interests at Calgary and Vancouver represented by Mr. Gale can hardly claim either disadvantage
or discrimination.    We will deal with Mr. Gale's evidence later.
Let us see how the Pacific versus the Atlantic works out by water:—
Miles Rate      Per Bushel
Fleming to Fort William         630 18c. 10.80c.
Fort William elevation  .        1.25c.
Fort William to Montreal, all water.  .      10.50c.
22.55c.
N.B.—Normal water rates are about 12.50c. per bushel, but in Sept. rates dropped to 10.50c,
No current all-water rates quoted to-day.
Fort William to Montreal, all water       1,000 miles
Fleming to Fort William, rail         630
Rate per
Bushel
1,630    " 22.55c.
Fleming to Vancouver.      1,253    "        18c.
Advantage, Vancouver over water route to Montreal        4.55c.
Regina on same basis:
Regina to Fort William  776 miles      12c.
Fort William elevation  1.25c.
Fort William to Montreal, water  1,000    "          10.50c.
1,776 23.75c.
Regina to Vancouver, all raif     1,109 14.70c.
Advantage Vancouver over water route to Montreal       9.05c.
Calgary on same basis:
Calgary to Fort William, rail    1,243 miles
Fort William to Montreal, water    1,000    "
Fort William elevation.	
2,243    "
Calgary to Vancouver, all rail        642    "
Advantage, Vancouver over water route to Montreal.      13.85c.
15
6c.
10.50c.
1,
25c.
27.
.35c.
13
50c.
Yet Mr. McGeer alleges in face of the increase via Vancouver of export grain shown by his
own witness, Mr. Hamilton, and the advantage Vancouver has over the cheapest water route to
the Atlantic, as shown above, that there is an injurious discrimination against Vancouver preventing its development as a port. Did his own witness develop any evidence that the prairie farmer
reaped in his price any premium from this advantage. On the contrary Mr. Bingham was quite
frank.
On page 7499:—
"Mr. Mothersill: In your opinion, would he benefit to the extent of the reduction in
cents per bushel ?
"Mr. Bingham: No, but he would benefit by half of it anyway.    He might benefit by
the whole of it, but I don't think so.    I think he would benefit by a portion of it."
and on page 7431:—■
"Mr. Lanigan: However, I think I am quite right in asking you this question first, is
the grain that is bought to-day in the country elevators of Alberta, bought on the Fort William
price, less freight and brokerage, or on the Vancouver price, less freight or brokerage?
22 "Mr. McKee: Up until, I think, about six weeks ago, purchases in the country were
largely made by the elevator companies on the basis of the Fort William prices less freight,
but owing to the competition on the part of the farmers and probably owing to the fact that
the grain companies felt they would be safe in buying on the Vancouver basis and would be
able to ship here regularly, they felt it would be safe for them to pay the Vancouver price,
less freight to Vancouver.    But when I was in Calgary last week I found that that new
departure—and, I think, a correct departure—-of paying the farmers in Alberta prices less
freight could only be put into effect at times, in that it was not possible for Vancouver to take
care of the wheat that was offering into territories that we would naturally claim as our own."
We will now consider Mr. Bingham's evidence in re why he cannot recommend his principals
to build a terminal elevator at Vancouver, and we will take this evidence as a reply to Mr. McKee's
assertion that the lack of private elevator construction, owing to rail rates, was seriously handicapping Vancouver.    (Page 7489.)
"Mr. Lanigan: So that if you were making a recommendation to your superiors as to
building a terminal elevator here, for a private interest, any private interest outside of your
own, or going to build an elevator here for the purpose of dealing in export grain, the important
point it seems to me would be what the ocean rate was going to be, the rail rate being stable.
"Mr. Bingham: That is perfectly correct, Mr. Lanigan."
The answer is perfectly frank and clear.
Now the geographical conditions are quite clear. We will take the three points used in the
foregoing illustrations:—
Miles
Fleming, Sask., to Liverpool:
Rail mileage to Fort William  630
Water mileage Fort William to Liverpool.  4,000
4,630
Fleming, Sask., to Vancouver, rail.   1,255
Water, Vancouver to Liverpool  9,000
10,255
Regina, Sask., to Liverpool:
Rail, Regina to Fort William.  776
Water, Fort William to Liverpool  4,000
4,776
Rail, Regina to Vancouver    '       1,109
Water, Vancouver to Liverpool  .  9,000
10,109
Calgary, Alta., to Liverpool:
Rail, Calgary to Fort William  1,243
Water, Fort William to Liverpool ■.....'  4,000
5,243
Rail, Calgary to Vancouver  642
Water, Vancouver to Liverpool  0.000
9,642
Even the shipper at Calgary finds himself at that point 4,399 miles nearer the Liverpool
market via Fort William than via Vancouver. Is there any question that Assistant Chief Commissioner McLean's remarks already quoted as to the ocean rate from Vancouver being the crux of
the situation?
Mr. Gale now presents himself. Mr. Gale's principal qualifications as a witness appears to
be founded on a residence of some years in Vancouver and the fact that for a time he was mayor,
and that he undertook to show the Spillers concern the advantages of Vancouver (see pages 7521
to 7522) and on page 7522 he says: "That the matter of freight rates to the Coast was discussed,
and he assured them 'we will have an equalization of rates.' " On page 7534, he says: "He was
in England in October, 1923, when the matter of export rates was before the Board, and left in
March, 1924, after the Board had given its decision in October, 1923, as to export rates to Vancouver."    The facts given by Mr. Gale can, therefore, be enumerated as follows:—
"1. He has never exported any grain.
"2. He knows nothing about freight rates.
"3. He has not been in the milling or flour export business.
23 "4. After export rates had been reduced in Oct., 1923, and the Board's judgment giving
reasons for same had become public property on his assurance (without any experience or
expert knowledge) he induced Spillers. described as the largest millers in the United Kingdom
(page 7518) to invest $15,000,000 in Vancouver, Calgary and Alberta."
On pages 7534 and 7535, Mr. Lanigan's cross-examination:—
"Mr. Lanigan: The Board has given its decision on the export rates to Vancouver?
"Mr. Gale: That is right.
"Q.—And vou consummated vour arrangement with Spillers subsequent to that decision t
"A.—Right.
"Q.—And on the strength of the conditions as they were, not only traffic conditions but
every other condition that you would consider in investigating a case of that Kind, they
invested something like $15,000,00, but, of course, you were aware, I presume, and so were
they, that the question of rail rates was a question entirely for the Board of Railway Commissioners to deal with ?
"A.—Oh, yes.
"Q.—And they did not invest, and you would not say that they invested $15,000,000 on
any chance ?   There were other factors in that investment ?
"A.—Oh, undoubtedly, but they believed, as I believe, that the day will comp when there
would be an equalization of freight rates.
"Q.—You may be a good prophet as far as that is concerned, but they know and you
know that these rates are in the hands of the Board.
"A.—That is right; oh, quite.
"Q.—And when they invested $15,000,000 the question of the freight rates was, perhaps,
one factor out of a probable dozen others ?
"A.—The question of freight rates was a factor, and that is why I am interested and why
I am here to-day, and I sincerely hope the freight rates will be adjusted to the satisfaction of
British Columbia along that line."
We will leave the Board to draw its own conclusions as to whether the export freight rates on
grain, as per the Board's decision of October, 1923, prevented an investment of $15,000,000 on
their part.    Mr. McGeer says these rates are and were preventing Vancouver's port development.
Now comes Mr. Buckerfield. n grain exporter and merchant.    On page 7537:—
"Mr. McGeer: How long have you been in business in Vancouver ?
"Mr. Buckerfield: Fifteen years.
"Q.—Have you any knowledge of the export grain trade ?
"A.—Yes.
"Q.—You heard Mr. Bingham and Mr. Whitmore's evidence to-day, did you not?
"A. Yes.
"Q.—Do you agree with that evidence or not ?
"A.—Yes.
"Q.—What would you say of the possibility of developing a substantial grain trade
without an adjustment of freight rates to the Fort William level?
"A.—I would say that it is very dangerous at the present time.
"Q.—You do not think it can be done ?
"A.—No, except, perhaps, with exceptional crop conditions in Alberta.    That would
be the only year that it would be safe in operating through Vancouver.    That is about once in
seven years."
Mr. Buckerfield is evidently unaware of Mr. Hamilton's submission as to the abnormal increase
in grain exports via Vancouver.
On page 7539, he says that high prices of feed has ruined the poultry industry. He neglects
to compare prices for grain in 1923, as against 1922, or that freight rates locally were reduced in
August, 1922, while prices for all grain have materially augmented.
Mr. Blatchford, who describes himself as Mayor of Edmonton and an insurance agent with
some money invested in a lease of an elevator belonging to the Vancouver Harbor Board also
appeared before the Board on Nov. 7th. Outside of generalities this gentleman supplied the
Court with nothing definite except on pages 7580-7581, where he presents some figures (unsubstantiated it is true) of a tremendous increase in grain to Vancouver via the Canadian National.
The gentleman confined himself to opinions which may be taken for what they are worth, as
expressed by an insurance agent.    On pages 7583 and 7584.
"Mr. McGeer: You spoke of one thing that I am interested in, and I am quite sure the
people of Vancouver are, that there is a possibility of Alberta's wheat moving to tidewater
from Spokane and Portland ?
"Mr. Blatchford: There is a movement on foot. The Americans are looking things over
to that effect.
"Q.—The Alberta farmer I do not suppose cares which route his wheat goes by so long as
it goes by the cheapest?
"A.—Yes.
24 "Q.—As a matter of fact that proposal of moving wheat to Portland, Oregon, reached a
fairly substantial proportion?
"A.—Yes, it has been routed that way for some length of time in small quantities compared with other ports, but nevertheless it is a start.
"Mr.   Lanigan: From   Canada?
"A.—Yes, "from Southern Alberta.
"Q.—From Southern Alberta to Portland, Oregon.
"A.—Yes." ■      .
But under cross-examination on pages 7596 and 7597 he admits he knows nothing about it.
Under cross-examination Mr. Blatchford becomes still more uncertain.    On page 7577, speaking
of the Canadian National, he says: "... with a grade that is with any greater grade going west than
it is going east yet the cost per bushel is almost double."    On page 7590:—
"Mr. Lanigan: Mr. Blatchford, you may remember at the beginning of this testimony
you made the remark that the rates were almost double what they would be under a revision,
of rates.
"Mr. Blatchford: No, I did not make that remark.
"Q.—I took your words down and, I think, the reporter would confirm me.
"A.—I will have to correct that then."
On page 7578, Mr. Blatchford said:—
"The Canadian National was completed about ten years ago.    The Panama Canal was
completed about that time also, yet there has been no revision in any way, shape or form, in
transportation rates."
We submit changes that have taken place since 1914 in export rates from Edmonton.    The tariffs
are on file with the Board.
Effective Date Rate Tariff Reference
Dec.    23, 1913 23c. per 100 lbs. C.P.R. W. 3051—C.R.C. W. 1880-
Mar.   15, 1918 25c. " " Sup. 7 to C.P.R. W. 3311—C.R.C.
W. 1999
Aug. 12, 1918 29c.   "    "       Sup.'l to C.P.R. W. 4085. C.R.C.
W. 2333
May   19, 1920 26c. " " C.P.R. W. 4548, C.R.C. W. 2519
Sept.   13,1920 35c.      ." "     Sup.    2
Jam      1, 1921 34c. " a -        "3
Dec.      1, 1921.. .      31c. " u "     3 "      4733 * 2585
Aug.      1, 1922.. .    25c. " " C.P.R. W. 4934—C.R.C. W. 2660
Oct.    22, 1923. 22±c.       " u C.P.R. W. 5210—C.R.C. W. 2733
On pages 7590 and 7591:—
"Mr. Lanigan: Another remark that you made was that there had been no revision in
any way, shape or form.    Did you mean that exactly ?.
"Mr. Blatchford: Well, you might call it a revision, ljc, but it did not amount to very
much as far as we are concerned.    We did not consider it a revision.
"Q.—You did not consider it a revision, but I presume that you krow that since 1920
there have been several revisions.
"A.—Yes, I know you are slashing away all the time, taking it off one line and putting it
on another.    Something like that or to that effect.   What about the Crow's Nest Pass rate ?
"Q.—You said that there had been no revisions in any way, shape or manner.
"A.—Well, I cannot say that this year.
"Q.—I will go back four years to 1920 until to-day. Now what changes have there
been ?
"A.—I am talking of the present moment, and I am also talking about the future.
"Q.—I am talking about the assertion that you made, and the court stenographer
will correct me if I am wrong.    The exact words were 'no revision in any way, shape or
manner/
"A.—Well, there has not been in the last month or two.    The last revision that I know
anything about was the ten per cent, reduction that was made by the Board when Mr. Oliver
got on the job."
Go all through his evidence and cross-examination and not one single definite fact stands on the
record.    What value is the evidence of a witness of this character, who makes assertions and then
admits on cross-examination a dense ignorance of facts.
Colonel Cornwall's evidence added nothing but the Colonel's optimism to the proceedings*
Now comes Mr. C. E. Hope, who says he don't know why there should be a difference in export
and domestic grain rates. A thorough search of our files fails to reveal any enquiry on the subject
of rates on the part of this gentleman. He talks of consulting experts but fails to name them.
His remarks as to rates per ton per mile on page 7545 of 13c. and 6Jc. are unintelligible. A
summary of his evidence is that the Fraser River Valley is about 80 miles long and 20 miles wide
(page 7543) has 4,500 farmers engaged largely in the dairying and poultry trade with one-sixth
of the territory under cultivation. The area, therefore, covers 1,024,000 acres, and one-sixth
or 170,666 acres are under cultivation, which would represent an average of 37.9 acres per farm.
Mr. Buckerfield places (page 7545) the importance of grain for these farmers at 12,000 tons per
25 month, which would be 144,000 tons per annum, which would represent 32 tons per annum per
farmer, or an importation of feed grain equivalent to approximately 84/100 of a ton per acre per
annum. Mr. Hope estimates that the lower Fraser Valley farmer is paying $150,000 to $600,000
a year for charges on feed grain. If this feed was all imported from the nearest point of production at Calgary, which is giving the movement the minimum rate, the freight charges alone
would be $1,195,200, which is another example of the inaccuracy of the estimates submitted by
Mr. McGeer's witnesses. 84/100 of a ton of feed per acre represents 1,688 pounds, and as the
average farm, taking Mr. Hope's figures, is 37.9 acres the average consumption of Alberta feed
in the Fraser Valley would be 63,975 lbs. per farm, or less than one minimum carload of 80,000 lbs.
per annum. If the export rate was applied the average farmer would, therefore, profit to the
extent of $121.55 per annum or exactly $3.21 per acre, and this Mr. Hope represents is the reason
the other five-sixths of the Valley is not under cultivation, and the reason dairy farming is not
prosperous or paying on a $15,000,000 investment ? If this is the case, and we are accepting Mr.
Hope's calculations, however exaggerated, for what they are worth, not one complaint from these
people has ever been sent to the carriers that the industry represented by Mr. Hope was not in a
prosperous condition and some amelioration of freight charges would be of assistance.
As we have already pointed out, the Board, before whom this complaint is preferred, can and
will, no doubt, decide on the evidence whether any rate is reasonable or discriminatory, but cannot
make rates for the encouragement or development of any particular industry or occupation.
Here is a dairying industry 642 miles away from the source of food product for its herds; a
situation not duplicated in any other portion of America in any dairy district. A farming district
that either cannot or will not raise sufficient feed for its own animals, not because of drought, misfortune or lack of land to cultivate or any lack of fertility of soil. Belgium supports one cow per acre.
Allowing the Fraser Valley 10 cows per 37.9 acres, the excess freight charges claimed per cow per
annum amounts to exactly 84.7c. per annum. The Labor Gazette for October, 1924, page 893,
puts the price of milk at 10c. per quart at Edmonton and Calgary, and at 11.1c. per quart at
Westminster and Vancouver and at 12.5c. at Victoria. There is certainly no lack of feed at
Calgary and Edmonton. There are climatic disadvantages at both points compared with the
Fraser delta. The lc. per quart additional paid by the Vancouver and Westminster consumer
woald with 84 quarts of milk per annum per cow pay the freight charges. By the same authority
prime dairy butter sells at 32.9c. per pound at Edmonton and at Calgary at 32.8c. per pound; at
New Westminster in the Fraser Valley at 40c. a pound and at Vancouver 37.2c. Creamery
prints at Edmonton sell at 40.2c. per pound; at Calgary 41.5c; at Westminster and Vancouver,
44.8c.    We file the Labor Gazette for October, 1924 as a document of record.
This is not advanced as a defence for an unreasonable, discriminatory or improper rate. It is
an indication of what little effect the freight rate structure plays in either what the producer
receives or the consumer pays. The Provincial tax bill of the average British Columbia farmer is
higher than the total freight charges against which Mr. Hope's complaint is directed.
Mr. M. H, Routledge appears and says he consumes 150 torn- of feed per annum on his poultry
farm and pays he says a tax of $600 per year in freight charges. On page 7628, Professor Lloyd
says that the cost of feeding has increased in the last three years from $2.25 to $3.00 per bird;
an increase of 12.5%. Let us examine the freight rate record on domestic grain from Edmonton
to Vancouver for the same period:—
GRAIN (Carloads)
From EDMONTON, Alta., to Vancouver, B.C. (Domestic)
Effective Date Rate Tariff References
Jan.     1, 1921  50c. per 100 lbs. Sup. 13 to W. 4255, C.R.C. W. 2449
Dec.    1, 1921 46c. " Sup. 5 to W. 4732, C.R.C. W. 2584
Aug.    1, 1922 41|c.       " C.P.R. W. 4961, C.R.C. W. 2656
or a reduction in two years in freight rates of 17% against an increased cost of feeding as per Professor Lloyd of 12.5%. Was the freight rate the cause of the increased cost of raising poultry?
Mr, Routledge frankly admits on page 7550 that they are not farmers and are buying all
their feed. Are there any farmers elsewhere in any agricultural section of America feeding horses,
cattle, hogs, raising poultry and buying all their feed and anticipating any success in so foolish
an enterprise ? Let us consult the Labor Gazette again. Fresh eggs in October at Edmonton,
37.8c. per dozen; Calgary, 44c. a dozen; Westminster, 43.5c; Vancouver, 44.2c. and Victoria,
45.9c. per dozen.
On page 7552, Mr. Routledge says the Washington poultry man survived because his cost of
feed "was from $3 to $4 a ton less than ours." In cross-examination by Mr. Lanigan, on page
7642; Professor Lloyd.:—
"Mr. Lanigan: You were speaking of the conditions of poultry raising in Washington
and British Columbia, comparing them, and you said the poultry raisers in Washington were
much more prosperous than those in British Columbia ?
"Prof. Lloyd: Yes.
"Q.—How far do they have to go for their feed ?
"A.—They purchase their feed largely from wheat grown in Washington and wheat-
growing areas in Oregon.
26 aQ.—Those areas are quite close.
"A.—Yes.
"Q.—Have you any knowledge of how far they go back, 640 pr 700 miles to get feed for
their poultry, take for instance in any of the other provinces, in the Prairie Provinces or
Ontario,
"A.—No, most of the feed used there for poultry is produced locally and they have not
any commercial poultry industry in Ontario."
We are not dealing with the evidence in regard to the rates from the Peace River Valley for
the simple reasons that the facts in connection with the operation of the E.D. &B.C.Ry. by the
Canadian Pacific and the losses incidental to that operation are in record before the Board.
We come to Mr. Chard's evidence. On page 7659, Mr. McGeer files Exhibit 8 as Mr.
Symington's production of net earnings, east and west, on the Canadian Pacific. Exhibit 8, as
the Board will see by Vol. 377, page 143 (Equalization Case), was an exhibit filed by the Canadian
Pacific. Mr. Symington's compilations, referred to by Mr. McGeer, of these net returns occur as
Exhibit 37, page 217, Vol. 377. Mr. Lanigan protested those compilations as deductions of Mr.
Symington's from figures supplied by the Canadian Pacific and objected to their productions
without supporting witnesses as to the original productions upon which these compilations were
founded. In this he was supported by the Chief Commissioner. Mr. Chard, the witness under
examination had nothing to do with the exhibits, either in compilation or submission, nor was Mr.
Symington, who filed the original exhibit representing either the Provinces of Alberta or British
Columbia.
Mr. Chard, under cross-examination by Mr. Lanigan on pages 7680-7681, admits that he was
at no time experienced as either an operating, accountant or traffic man, nor analyzed the traffic
of any railway, nor had he any knowledge of the density of the traffic dealt with. He admits that
expressing an opinion of operating costs east or west of Edmonton (page 7681) he gave it as his
impression that costs were no greater in one direction than the other. An impression according
to his own testimony based upon a sublime ignorance of material factors. He admits on page
7682 he knows nothing of the costs of maintenance, no idea of the total empty or loaded car miles
in either direction.    He is equally ignorant of conditions on the E.D. & B.C. (page 7685).
On page 7649, Mr. Chard:—
", . . All I have to say about it is that the differential has worked adversely against the
movement of grain to the Pacific Coast in a general way."
This after having seen Mr. Hamilton's Exhibit No. 5.
What weight can possibly be attached to the evidence of Mr. Chard ?
On page 7687, Mr. McGeer calls Mr. Geo. Stephen, Assistant Freight Traffic Manager of the
Canadian Pacific. He had already examined Mr. Stephen on Nov. 5th, as he ingeniously explains
on page 7415, Nov. 6th, "to fill in the time." Already the entire day at Victoria on Nov. 4th
had been wasted although the case had been put down for hearing in that city.
What does the whole examination of Mr. Stephen amount to ? It turns out on cross-examination that he had entered the service of the Canadian Pacific after the 1920 to 1922 hearing had
been decided; that he had nothing to do with the rates either in the way of compilation or authority.
From page 7703 to 7711 he examines Mr. Stephen on an exhibit produced by Mr. Lanigan in
1921 in the Equalization Case; over a year before Mr. Stephen came into the employ and in a case
in which he was not a witness, and then files exhibit 15, which is Exhibit 7, 8 and 9, pages 142 and
143, Vol. 377, Equalization Case, with Eastern Provinces added and the addition of the year 1917.
These figures for 1922 and 1923, as already advised have been attached hereto. On Nov. 11th,
Mr. Stephen is cross-examined by Mr. Lanigan, and testified that the Company's traffic on Western
Lines in grain and grain products constitutes 54.9% of the traffic; that 63.35% of the grain traffic
moved to the lake head; 7.28% went to Vancouver, the balance moving for seed and domestic
use on the Prairies. That on the percentage moving to Fort William the average miles hauled
was 817 miles, and to Vancouver the average was 721 miles. The average return per ton per mile
for the 817 niles average haul to Fort William produced a revenue of 49/100 of a cent per ton per
mile. Translating this into rate per 100 lbs., it means that the Company's return on grain and
grain products to Fort William for 817 miles averaged 20.01 cents per 100 lbs. To Vancouver, with
an average haul of 721 miles and an earning of 55/100 of a cent per ton per mile, translated into
cents per 100 lbs. means an average earning to Vancouver of 19.83 cents per 100 lbs. In both
directions this is the actual gross return to the Company for the movement of grain and grain
products. Now of the average haul to Vancouver of 721 miles, 574.6 miles or 79.7% are in the
mountains where the costs of operation as against the prairie movement has alraadybeen shown in
Exhibits 7, 8 and 9, pages 142-143, Vol. 377, and in the supplementary exhibits attached hereto.
For this movement the Company's return per ton per mile is 6/100 of a cent per ton per mile to
Vancouver higher than to Fort William, or 12.25% more. Six-tenths of one cent per ton per mile
on 721 miles represent an average of 2.16 csnts par 100 lbs. To that extent and that extent only
does the earning to Vancouver exceed that to Fort William and that is by taking in every element
considering the movement for domestic use, milling, cleaning or treating in transit for export or
re-forwardance. These factors are not controlled by the carriers, but by the consignors or consignees or by the various necessities or circumstances the grain and grain products is moved under.
The Company maintains the difference of 6/100 of one cent in the two movements is justified by
the additional costs of operation of 79.75% of mountain mileage to Vancouver as compared to
the prairie movement to Fort William.    On the Canadian National the operation from Edmonton
27 entails the maintenance and operation of 123 miles as compared with the movement from Calgary
via the Canadian Pacific and this factor, as that railway must meet the competition of the Canadian
Pacific, must be taken into consideration.
Although the Eastern rates of the Canadian Pacific Railway are controlled, as has been held
repeatedly by the Board, and admitted by Mr. Symington, by water competition and by American
Railways, Mr. Stephen's evidence of greater density of traffic and higher earning per ton per
mile is interesting, merely to take the comparisons submitted by Mr. McGeer out of the picture.
The late Chief Commissioner (Mr. Carvell), in his judgment, General Order 308 of Sept., 1920,
on page 13, in making a comparison of grain rates east and west uses Windsor, Ont., to Montreal
as an illustration. We have on page 7684, Mr. Chard's cross-examination which brought out that
export rates on grain, Windsor to Montreal were 23Jc. per 100 lbs., as compared with Calgary to
Vancouver, 642 miles, 22Jc. giving practically the same return per ton per mile. The first is a
movement competitive with water and the second a movement over the mountains. (See also
Mr. Stephen's evidence at pages 7751 and 7752.
Mr. McGeer, in his cross-examination, questions Mr. Stephen on previous exhibits in cases
where he was not a witness, and on assumptions only.
Mr. McGeer then proceeds to read from Mr. Crombie's evidence (page 7796) before the
Select Standing Committee of the House of Commons on Mines and Minerals, which is not a
document of record before the Board of Railway Commissioners. Mr. Lanigan already cited
objections to using portions of evidence from the hearing on Railway Transportation Costs before
the Parliamentary Committee being included as evidence, and was sustained by the Chief Commissioner. Pages 7796 to 7800 are subject to the same objection. We will mention, however,
the extract from Vol. 410, page 4736, read by Mr. McGeer on page 7801 of the Vancouver Proceedings:—
"Q.—Now, in regard to operating expenses how do you find the Pacific Division compares
with the balance, that is the Jasper to Vancouver or Edmonton to Vancouver, take the two ?
"A.—Well, we have not sufficient density of traffic in this Western country to work out
what ycu might call a fair test; but with the traffic we have out here, since the time that the
divisional statistics have been put inr I would say that the British Columbia operating costs,
insofar as these selected accounts only are concerned, and excluding our maintenance of track,
they are about the same as the Saskatchewan."
In other words, Mr. Mallory says, ignoring density of traffic, which did not exist, and ignoring
maintenance of track their expenses of operating in British Columbia were about the same as
Saskatchewan. We will consider what element these two factors represent. First regarding
comparative density of traffic, in British Columbia and Saskatchewan. Even Mr. Chard, Mr.
McGeer's witness, whose knowledge from his own evidence does not appear to be very definite.
On page 7681 he admits in the question of costs that density of traffic is an important factor.
We have not the figures of the Canadian National, but those of the Canadian Pacific are available
in Exhibits 7 and 8 (Equalization Case), Vol. 377, pages 142-143, years 1920 and 1921), which at
Mr. McGeer's request have been brought up to date for the years 1922 and 1923, and are attached
hereto. The Annual Report for 1923 of the Canadian Pacific Railway is on file with the Board.
The Canadian Pacific Railway operates in Saskatchewan, 2,227 miles of railway (deducting
mileage under construction) and in British Columbia 1,963 miles (with same deductions). Gross
ton miles handled in Saskatchewan for 1923 were 5,099,263,000 or 2,289,745 per mile of railwav.
In British Columbia in 1923 3,365,929,000 gross ton miles were handled, or 1,714,686 per mile of
railway. In other words the density of traffic on British Columbia lines is 575,059 tons per mile of
line less than that of Saskatchewan, or 25.16%.
Let us take the figures for traffic originating in each province, all railways. The railway
mileage in each province is shown in Exhibit 23, Vol. 377, at page 174, and the originating tonnage
for 1923 is shown for 1923 in the returns of the Department of Statistics:—
Saskatchewan mileage.      6,221
British Columbia mileage *      4,325
Saskatchewan originating tonnage         8,043,665
British Columbia originating tonnage         4,713,453
Difference in favor of Saskatchewan         3,330,212
British Columbia less by 41.40%.
Taking it by the mile of line:—
Saskatchewan  1,293 tons per mile.
British Columbia  1,090        " "
Difference in favor of Saskatchewan.    203        " "
British Columbia less by 15%..
Then there is the question of maintenance. According to the evidence the mileage from
Edmonton (the nearest point to the grain fields) via the Canadian National is 765 miles, and from
Calgary via the Canadian Pacific 642 miles.    It is evident that the Canadian National have  to
28 operate and maintain 123 additional miles of railway as compared with the Canadian Pacific from
the grain fields to Vancouver. The cost of operation on the Canadian Pacific per mile of line has
been shown in 1923 as 12.05% greater in British Columbia than in the Prairies.
That is, of course, disregarding the comparative amount of business done per mile in each
territory. The Canadian National, however, have to operate and maintain from Edmonton
19.16% more mileage from the grain fields to Vancouver than the Canadian Pacific. The returns
of the Canadian National for 1923 are on file with the Board. The operating expenses of the
Canadian National are divided as follows for 1923:—
Maintenance of way   19.39%
Maintenance of equipment   22.25%
Traffic     2.47%
Transportation   50.95%
Miscellaneous      1.94%
General........     3.34%
100.34%
Less Transportation for Investment C.R        .34%
100%
It is clear, therefore, that 49.39% of the operating expense, entirely outside of transportation
costs, must rest on the line regardless of the volume of business and the whole 100% must be
charged up to the 123% additional miles. Disregarding density of traffic, the operating expenses
of the Canadian National for 1923 per mile of line is easily ascertained.
Total mileage operated  20,461.83
Cost of operation   $204,921,713.26
Less Transportation for Investment Cr 698,794.97
Operating Expenses.   $204,222,918.29
Operating cost per mile of line  $9,981.00
So that this average operating cost for 123 additional miles would be along $1,227,663.00
on the presumption that density of tonnage is the equal on Canadian National B.C. lines of that
on other portions of its system, and costs are no greater. Mr. McGeer, in quoting Mr. Mallory,
and basing his argument on Canadian National alleged costs, ignores some pretty important
factors—density of tonnage—cost of maintenance—and additional haulage. Without these
factors, Mr. Mallory's submission in the Express Case does not afford the Board any even approximate data with which to make an estimate of comparative costs. The play of "Hamlet" with the
character of Hamlet left out would be equally edifying. On these factors and on evidence submitted in the Coal Case before the Parliamentary Committee, and not before the Board Mr. Lewis
guided by Mr. McGeer, proceeds to base his cost calculations. Mr. McGeer argues from Exhibit
34, on pages 7810 and 7811, on the question of east versus west. The exhibit has no bearing in
the matter of the operation of British Columbia lines, and it is futile to argue that assumed net
profits of Western Lines are in any way connected with the movement in British Columbia.
Exhibit 67 was filed by Mr. McGeer himself. If I understand his submission it was for equal
rates on grain to Vancouver as to Fort William. What the costs were on Eastern Lines, such as
New Brunswick on which he lays particular emphasis, has to do with this question I don't know,
but his comparisons in this exhibit, Vol. 377, page 297, show that 1920 operating costs per mile of
line B.C. were higher than Prairie line by 22.68% per mile of line, and in 1921, 16.49% higher per
train mile. 1920 was 34.67% higher and 1921, 29.27% higher than prairie lines. That car miles
were in 1920, Manitoba 216,517,237; Saskatchewan, 112,900,581; Alberta, 144,790,882; while
B.C. had only 80,578,597. In 1921, Manitoba, 197,617,177; Saskatchewan, 92,023,490; Alberta,
104,867,903, while British Columbia had only 60,390,402. That B.C. cost per train mile was in
1920, 50.35% higher than prairie lines, and in 1921, 56.77% higher. That in gross ton miles in
1920, B.C. had a substantially less density. On page 3 of the same exhibit (67) B.C. cost per gross
ton mile was in 1915, 50% higher than prairie operation; in 1917, 41.71% higher; in 1920, 48.03%,
and in 1921, 52.07%. Exhibit 67 was filed in the Equalization Rates Case by Mr. McGeer himself,
and on the strength of this exhibit argues that British Columbia grain rates should be the same as
those to Fort William. Exhibit 67 is now filed as Exhibit 15. He files, from a production in the
Express Case by Mr. Mallory, Exhibit 17, and it is headed "Totals of selected items of locomotive
and train costs," a percentage only of transportation costs, and the latter as has been shown
represents only 50.95% of the operating costs, and even at that is not as favorable to British Columbia as he would leave us to believe.
Costs per gross ton mile:—
Manitoba  69.2
Saskatchewan  .  83.6
Alberta  104.9
British Columbia.  88.3
29 And this production is made to substantiate an argument for the same rate from Alberta to
Vancouver as applies to Fort William from Saskatchewan and Manitoba points of equal distance.
Can absurdity be carried to greater lengths?
Exhibit 18, page 7817, "Operating costs per train mile submitted by Mr. Mallory in evidence
before the House of Commons." This evidence was submitted not to the House, but to a Committee of the House to consider the question of Canadian fuel supply, and mainly the possibility
of marketing Alberta coal in Ontario. The evidence has never been before the Board., It has no
relation to the movement of grain to Vancouver versus Fort William. It was based on a purely
imaginary train of fifty cars per locomotive. There is no comparison between coal to Toronto
and grain to Vancouver, neither in service, percentage of empties to load, character of traffic or
direction.
Page 7823-4:—
"Mr. Hately: Mr. Chairman, before the next witness is called, I would like to make a statement in regard to the evidence Mr. McGeer has filed from Mr. Mallory, regarding the cost of
handling coal. I want to draw the attention of the Board to the fact that the statement of
those costs was simply the bare, out of pocket cost of hauling a train load of 50 cars of coal
from one shipping point of Eastern Canada in the most favourable operating months of the
year; the summer months only. And also it is shown in the evidence as submitted that there
are many costs that are chargeable against the traffic which were not included in that. It is
just the bare, out of pocket costs.
"Mr. McGeer: I am very glad to have that from my friend.
"Mr. Lanigan: And so Mr. Mallory states.
"Mr. Hately: I wanted to stress that.
"Mr. McGeer: I do not think you will want to stress it so much after we have discussed
it.
"Mr. Lanigan: I ma^ say, Mr. Chief Commissioner, that that case is before the Board on
an application of the Province of Ontario on the coal rates from Alberta.
"Mr. McGeer: I did not get that.
"Mr. Lanigan: There is a case on the complaint of the Province of Ontario on the question
of coal rates from Alberta to Ontario.
"Mr. McGeer: We are not in the least concerned about coal."
Mr. McGeer's Exhibit 4 of pverage ocean rates is of no use. He admits on page 7820 that
"the exhibit may mean anything," and as a matter of simple fact means nothing at all. He then
files Mr. Symington's compilation Exhibit 42 (page 222, Vol. 377, filed by counsel for Manitoba
and Saskatchewan) without any reference whatever to the supporting productions. This exhibit,
in any event, had nothing to do with operations in B.C. H
Now he calls Mr. Lewis, who produces Exhibit 21. The same exhibit was filed in the Equalization Case as Exhibit 60 and dealt with. The same remarks apply to Exhibit 22. On page 7840,
Mr. Lewis remarks: "Maintenance of way and structures is really only a small proportionjof
total costs." The Dominion Bureau of Statistics gives it for all steam railways in Canada, as
follows:—
1920 1921 1922 1923
20.90% 20.57% 19.70% 19.95%
and this is represented by an alleged authority as a small proportion.
On page 7841:— *
"Mr. McGeer: Then am I correct in this that you say as far as any increase in maintenance of way and structure goes, in the mountains it is not as great as through winter
difficulties encountered on the Prairies.
"A.—That is my opinion."
Letais refer to Exhibit 34 in the Equalization Case, to which Mr. McGeer so frequently refers:
MAINTENANCE OF WAY AND STRUCTURE (per mile of line)
Year
1916	
1917	
1918	
1920	
Consider these in connection with the greater traffic on the prairies; what is the value of Mr.
Lewis' opinion?
Then on page 7846:—
"Mr. McGeer: Do you say that on that 15c. rate there is a sufficient margin of profit to
take care of the empty movement and leave a reasonable profit besides ?
"Mr. Lewis: Apparently there is. Of course, as another consideration there is an
operating ratio. That is, if you are going to permit a railway to make anything over and
above their operating ratio that would be, I understand—I am referring to Mr. Lanigan now
30
Manitoba
Saskatchewan
Alberta
British
Columbia
$1,260.00
$679.00
$ 756.00
$1,492.00
1,268.00
740.00
856.00
1,186.00
2,340.00
1,176.00
1,423.00
2,428.00
2,078.00
1,390.00
1,644.00
2,707.00 as he knows all these things—the operating ratio now, I understand, is about 80, is it riot ?"
After giving what he says is the cost and revenue then he talks of another consideration—■
the operating ratio.    If operating ratio means anything it h the relation of corts to revenue.
On page 7847, question b^y Mr. McGeer:—
"... Now supposing you take the operating ratio of your costs and add your rate of
15c, what will the operating ratio be to your $4,325 ?
"A,—-You mean what proportion of $4,325 is the operating ratio.
"Q,—Yes.
"A.—Of course, it must be 20%."
Now $4,325.00 is the alleged operating expense given by the witness on pag<  7847.    Mr.
Lewis, on page 7842, using Mr. Mallory's evidence in the Coal Enquiry (Exhibit 17), which has
already been commented on, proceeds to base operating costs on. grain via the Canadian National
to Vancouver, and in reply to Mr. McGeer gives the operating costs at $3.02 per train mile.
"Mr. McGeer: Now that includes evervthing?
"Mr. Lewis: Yes.
"Q.—That is not based on any theory that you have left off anything that is properly
chargeable to a grain train ?
"A.—No."
Mr. Lewis then proceed, to put the cost at $2,307.00 for a train on the Canadian National
Railways, Edmonton to Vancouver, and the revenue at 15c. per 100 lbs. at $5,850.00, or a net
earning of $3,543.00. Can anybody make head or tail of this or base any conclusion thereon?
Mr. Lewis admits on cross-examination that he knows nothing of rates; has no operating, mechanical, traffic or accounting experience. He does not know the purpose of filing Exhibit 21 in so far
as it relates to comparative rates, and there can be no other purpose for filing it. His fifty car
train, he admits to be a myth, and consequently all figures based thereon fail of any purpose.
His operating ratio a reductio ad absurdum.
We will now deal with the domestic rates. Cost comparisons of prairie and mountain
operation have been shown to date. The Board's judgment in the Equalization Case was delivered with the unanimous concurrence of all Commissioners on June 30th, 1922. Re grain
rates, it reads:—
"Rates on grain and grain products from 'Prairie' points to stations in British Columbia,
for domestic consumption, where now based on 'Prairie' mileage scale, but using constructive
mileage of 1| miles for 1 mile for the mountain haul, to be reduced by figuring on 1J miles for
1 mile for the mountain haul."
Have circumstances changed? To October 31, 1924, there has been a decrease in earnings
as compared with 1923 on the Canadian National Railways of $11,070,000.00 and on the Canadian
Pacific, $5,654,000.00 The 1923 results are before the Board. Nothing in the financial position
of either line can justify a decrease in tolls.
Dismissing this factor we will consider the prairie versus the mountain scale of grain rates
in the light of operating costs in both districts as already shown. Domestic rates on. grain are
printed to Vancouver specifically from prairie points as a matter of convenience. They are on the
mileage scale authorized by the Board. A comparison of Prairie and Pacific mileage scales, therefore, is pertinent, given for mileages up to 1,000 miles:—
Percentage Difference
over prairie scale
Miles Pacific Prairie of rates
100 17                          •        15 13.33%
200 23 20 15.00%
400 32 29 10.34%
600 39| 36 9.72%
650 411 36J 13.7 %
700 42 38| 9.09%o
800 45J 41 10.98%
900 46J 42 10.71%
1,000 49 44| 10.11%)
We submit this difference is amply justified by, first, the character of the haul, the smaller
density of traffic, the higher operating costs, and the unanimous decision of the Board after two
years' investigation on June 30, 1922—General Order 366.
Mr, Commissioner Oliver enquired with reference to various export and domestic grain and
flour rates to the Atlantic Seaboard. They are shown on page 34 with the tariff authorities for same.
It is to be remembered that these rates are not governed by the same conditions as govern westward.
First, they are competitive with tne water rates. Second, with rates from Duluth at which point
considerable Canadian grain is stored in bond available for Canadian destinations. Third, the
volume for milling and domestic consumption in Eastern Canada and fourth, the competition of
American Railways.
There lias been since 1911 to date several major rate investigations by the Board. The
Western Rate Case—-decided in 1914; the Eastern Rate Case—decided in 1916 and the Equalization Case—decided in 1922 (on export grain rates to Vancouver, 1923). The productions of the
carriersJn all these cases entailed a vast amount of labor and expense.    The extra work upon the
31 accounting, statistical and traffic staffs resulted for long periods in serious delay in the current work.
Experienced outside assistance is not available. The carriers' business has been seriously handicapped in this manner and through the prolonged absence at the enquiries of their general officers.
Business appointments and regular duties necessary not only in the conduct of the companies'
affairs but in the public interests have been perforce laid aside.
We have already shown the increase in the dollar spent for transportation in each major
section of the Dominion—namely in Eastern Canada, the Prairie Section and in British Columbia.
Fixed expenses are increasing on both railways with additional capital invested from year to year
for branch lines and betterments in the public service. Traffic is not keeping pace with capital
expenditure. Expenses and fixed charges on the Canadian Pacific have increased since 1916,
190%; traffic units, 104%. (Canadian National figures not available for 1916.) We submit the
comparison :>f all pertinent figures.
OPERATING REVENUE
(Taking year 1916 as 100%)
Year Amount Percentage
1921       $193,021,854 151%
1922.         186,675,036 146%
1923         195,837,090 153%
EXPENSES AND FIXED CHARGES
1921       $170,839,186 188%
1922         164,222,251 181%
1923         172,328,733 190%
TOTAL WAGES
1921  .   $85,510,000 187%
1922     82,902,000 182%
1923     89,116,000 195%
MATERIAL AND OTHER OPERATING EXPENSES
1921  .        $73,310,000 212%
1922  . . .  67,471,000 195%
1923  69,242,000 200%
WAGE PER EMPLOYEE
1921.  $1,361 179%
1922  1,307 172%
1923  1,325 174%
TRAFFIC UNITS
1921  14,722,254,150 84%
1922  16,535,822,547 94%
1923  18,281,963,687 104%
WAGES PER TRAFFIC UNIT
1921..       0.581c. 223%
1922        0.501c. 193%
1923         0.488c. 188%
TONS FREIGHT PER TRAIN MILE
1921  520 100%
1922  534 103%
1923  535 103%
TONS FREIGHT PER LOADED CAR MILE
1921 ]  24.2 106%
1922  24.5 107%
1923  24.8 108%
TON MILES FREIGHT PER CAR PER ANNUM
1921       118,000 74%
1922       141,200 .     89%c
1923       157,200 99%
32 The freight schedules of the various sections of Canada have not been arrived at in any
haphazard manner. They are the result of the Board's investigations, already referred to, and
the resulting judgments. We cannot admit that these unanimous judgments have been arrived
at without very thorough and painstaking investigation and consideration by the Board. In this
case a complaint is investigated and decided in July, 1922 and Oct., 1923, and is again advanced
in 1924 without any change in conditions. Surely the carriers are entitled to some degree of
stability upon which to base their calculations, otherwise the resulting uncertainty as to revenue
must inevitably affect both appropriations for service betterments and service demanded by their
patrons. Should the Board consider, as has been intimated in some quarters, that an entirely new
freight schedule is necessary throughout Canada, the carriers resulting revenue must be considered,
otherwise an increase in taxation must result on the one hand, and on the other the eventual disintegration of a property in which millions of capital has been invested by the British people, inspired
by confidence in its management, a belief in Canada's future, and a faith in Canadian laws and
their administration.    All of which is respectfully submitted.
33 3
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