Canadian Transport Sourcebook

33

THE RAILWAY AS CITIZEN

SPEAKING at the Guildhall, in London, on May 3, 1908, the Prince of Wales, later to become King George V, said:

"We have seen how the Canadian Pacific Railway has helped to make a Nation."

Canada proved herself a nation by her contribution to the cause of the Allies in the Great War, and her status is now beyond question. In 1881, the problem faced by the promoters of the Canadian Pacific was that of throwing steel tracks through the barrier of great mountain ranges. In 1935 the barriers to be overcome are economic. The problem which E. W. Beatty as head of the Canadian Pacific had to tackle was that of saving the taxpayers of the Canadian nation from breaking under the terrific load of debt following on nine years of extravagant government railway construction incurred in boom days which sensible people hope will never return. The debt of the state-owned system known as the Canadian National Railways now approximates $3,000,000,000 and is being added to each year, the net deficit for 1934 together with the interest due to the government amounting to $85,501,000. In the same year, in spite of still disturbed conditions, the surplus of the Canadian Pacific after payment of all interest charges was $6,470,000.

There was duplication and to spare in the conglomeration of lines taken over by the Canadian Government from the bankrupt Canadian Northern, Grand Trunk Pacific and Grand Trunk, not to mention that economic absurdity the National Transcontinental from Winnipeg to Moncton. The Canadian Pacific had endeavoured to avert duplication of lines through unproductive territory by offering running rights in the rock and muskeg country north of Lake Superior, between Sudbury and Port Arthur, and this had originally been accepted by Mackenzie and Mann, the promoters of the Canadian Northern. Unfortunately, the ambition of operating a complete transcontinental line of their own went to their heads, and in 1911 they commenced to construct a duplicate track through this unprofitable territory. When the grandiose Grand Trunk Pacific-National Transcontinental scheme was mooted, Shaughnessy advised the government that it would be more economical for the country to have a running rights agreement with the Canadian Pacific between North Bay and the head of Lake Superior and the acquisition by the Grand Trunk of the Canadian Northern lines in the West. The advice was disregarded and disaster inevitably followed.

Untaught by this experience, the Dominion Government was persuaded by its advisers from 1923 to 1931 to endorse the construction of what the Royal Commissioners in their report of September 13, 1932 call

"Capital and maintenance expenditures for unwarranted branch lines, for deluxe services, for unrequired hotels, for the building of ships in competitive services to be shortly abandoned; and, generally, for costly adventures in competitive railways out of proportion to the needs of the country."

Commenting on this report, E. W. Beatty said in an address to the Canadian Political Science Association:

"After a survey of the whole field, the Commission came to the conclusion that conditions, as they were, could not continue if the Nation was to remain solvent."

The Act that followed the report of this Royal Commission imposed upon the two companies the duty to consider and put into effect any measures of co-operation which could be adopted without sacrifice of the vital interests of either.

In the course of his address to the York Bible Class, from which extracts have already been quoted, E. W. Beatty outlined the general policy that he decided to adopt when he was appointed president: "It struck me that I might make an earnest effort to convince the people of Canada that while the Canadian Pacific was a very successful railway, steamship, colonization, hotel and development company, it was and would continue to be one of the best citizens of Canada."

While he maintained the tradition of keeping the railway free from political entanglements, the president encouraged his staff to take a public-spirited part in every worth-while community effort, and himself set the example by serving on innumerable committees and boards formulated for community effort, whether local to Montreal or nation wide. His interest in the welfare of boys, for instance, led to his becoming president of the Boy Scouts Association of Canada. Desiring to further the cause of higher education, he accepted the position of chancellor of Queen' s University at Kingston, and later that of chancellor of McGill, in which he has been no mere figurehead. There is always a wide demand for reprints of his public addresses, but none greater than that for the Baccalaureate address which he delivered in May, 1934, to McGill men and women who were taking their degrees. The text for his sermon was Play the Game, and the fine points of the game which he recommended them to observe were Courtesy, Dignity, Plain Honesty and Faith. Those who have followed E. W. Beatty's career know that he has practised what he preached to these young graduates, and attribute the loyalty of his railway organisation in the face of severe depression and fierce onslaughts from the cohorts of state ownership to admiration for the personal courtesy, dignity, integrity and faith of their leader.

This honesty of intention has also been generally recognised throughout Canada by those even who are opposed to his policies, though there are, of course, dyed-in-the-wool partisans to whom a corporation is a crime. On that account, unusual attention has been given to the remedy that E. W. Beatty proposed to reduce the burden of taxation incidental to the railway situation, more particularly as this situation is apparently one which the party leaders at Ottawa are afraid to deal with, hoping like Micawber that something will turn up after the next election.

The remedy suggested by E. W. Beatty was a system of unified management of rail lines of the two systems, which would eliminate duplication of services and provide the owners of the Canadian National, namely the government, with more money to satisfy their obligations and to relieve the overburdened taxpayer, and would protect the Canadian Pacific from a recurrence of the conditions which prevailed during the nine years of extravagance previous to the recent depression, while it would enable that company to save money from wasteful competitive expenditures and devote more to constructive development of the country's resources in still untapped fields. His argument was not so much that Canada is overbuilt with railways, but that the mileage is badly distributed and should be overhauled. The antagonism between the personnel of the two systems which was partly an inheritance from the old Grand Trunk days has lost its bitterness, owing to the experience of mutual co-operation already accomplished. The economy of union stations had been accepted before the Royal Commission sat, and is practiced successfully at Halifax, Saint John, Quebec, Ottawa, Toronto, and Regina. The agreement for joint control of the Northern Alberta Railways has been implemented with satisfactory results. An agreement was made in October, 193I, under which Canadian National ticket offices acted as Agents for Canadian Pacific Steamships with equitable division of traffic or earnings and arrangement that Halifax should be a port of call in winter, thus giving the Canadian National a share in the connecting rail haul. Pool trains are now run over lines where there was admittedly unremunerative competitive service.

So far as railway lines are concerned, those interests are becoming more and more identical, owing to changing economic conditions, which are forcing all railways in North America to stand together against the competition of free inland waterways and motor-trucking on public highways. The competition of unregulated motor-trucking in Canada has taken most of the profit from short haul freight transport by rail, and free canals have cut into long haul summer freight transport half way across the continent. With its through traffic between Europe and the Orient, the Canadian Pacific is in a better position to face the future than the land lines of the Canadian National, but even if the two land systems were unified for operating purposes, they would by no means create the Big Bad Wolf of monopoly over local Canadian traffic, although both would benefit by the economy of working together for this local business.

Windsor Station, Montreal

Here then is where the idea of good citizenship adds its contribution to the tide of Canadian Pacific history, the idea which as we have seen was set out by E. W. Beatty as his conception of what he could best contribute to the company when he was first appointed president. Owing to the careful husbanding of its resources and skilful financing, the Canadian Pacific has weathered the storm of the depression which swept over not only North America but the whole world in t93x, although at the cost of considerable sacrifices by officers, employees and shareholders of the company. The profit of r93y is not being distributed as dividend, but in accordance with traditional conservative policy is held to strengthen the cash position of the company.

Courtesy of the Winnipeg Free Press.

The Coming Feast

From a cartoon by Arch Dale.

If the practical railway officials had been allowed to work to­gether without political pressure, much more might have been accomplished, but until the working out and enforcement of co-ordination is left to a management free to settle matters on a strictly economic basis, duplication and wasteful services will continue, the National Railways deficits will weigh still more heavily on the Canadian taxpayer, and the credit of the country will be still more endangered. Fortunately for the Canadian Pacific, it does not live by rail alone. The dictum of George Stephen, at the inception of the company, that the railway must have steamship outlets on both Atlantic and Pacific, otherwise it would break of its own weight, was never so true as today. That policy has relieved the company from dependence on purely Canadian conditions, while it has increased the contribution made by the Canadian Pacific to Canadian progress and prosperity. What it is offering to Canada just now is blood transfusion to an anaemic patient. The unified operation proposed would not be put into effect overnight, but would take probably five years, so as to avoid displacement of labour with the resultant loss of employment. Actuaries have calculated that within this period, according to normal processes, all existing employees still capable of work would be absorbed into the combined but reduced mileage, while the money released for construction and development in new productive territory would create new openings for employment.

Although acknowledgment is generally given to Sir John Macdonald as the statesman without whose aid and inspiration the railway would never have been built, the Canadian Pacific looks to the future rather than to the past, and today is neither a Little Liberal nor else a Little Conservative. Here are two pertinent quotations from E. W. Beatty's statements:

"Political intrigue and machination of any kind is not our policy. We live by the sale of transportation."

"The usefulness of a railway only continues as long as the people believe in the Company, in its honesty and fair play to the people it serves."

Courtesy of the Winnipeg Free Press.

Cartoon on the Unification Question by Arch Dale

In spite of the burden of debt under which Canada is labouring, he is convinced that there will be a solution, because he believes in the Canadian people:

"If I were asked what is the greatest asset that the Canadian Nation possess, I would answer that it is probably not its gold reserves, its mineral wealth, its raw materials, its rich soil or other such natural resources, but the courageous spirit of the people, a spirit which breathes an unquenchable faith in the country' s future."

Whether or not the remedy suggested will be eventually accepted, the Canadian Pacific cannot rest. As these pages have endeavoured to show, it is the practical consummation of a world desire, originating centuries ago, to establish a short commercial route from Europe to the Orient, a route in which the geographical position of Canada has enabled that Dominion to participate. Its development as a combination of railway and steamship services was accomplished only by enormous and continuing effort in the face of physical obstacles, financial droughts and political opposition, and its success was achieved only because it enjoyed the leadership of men of vision, of integrity and of outstanding ability. The Canadian Pacific has its traditions of service to maintain and considers itself as trustee of its obligations to those who had faith in its mission to the extent of giving it the financial support without which no railway or steamship enterprise can exist. In St. Paul's Cathedral there is no monument to Sir Christopher Wren, its great architect, but on a tablet over the inner north doorway is engraved the phrase that the architect used of his own work: "Si monumentum requires, circamspice," of which the English is: "If you are seeking a monument, look around." The Canadian Pacific has no desire for a tombstone just at present but asks Canadians, its fellow-citizens, to look around for evidence of what it has accomplished.

The Public Archives of Canada at Ottawa hold a letter written on February 7, 1877, by George Stephen, then President of the Bank of Montreal, to Sir John A. Macdonald, then Prime Minister of the Dominion of Canada:

"At present there is d——d little encouragement to risk anything in Canadian enterprises, which are nearly all equally bad."

The construction of a transcontinental railway through Canada as part of a highway to the Orient changed all that. It gave Canadians confidence in their own country, and brought investment, industries and population which have enabled Canadians to realise and develop their own now apparently unlimited resources. There is no question now of investment opportunities in Canada, provided the credit of the country is not endangered by tinkering with state socialism or continued extravagance in government expenditure. By its untiring enterprise, and paying its own way, the Canadian Pacific is in the forefront of Canadian development. Through the exercise of economy and efficiency in operation, and through its conservative financing, it has enabled Canada to enjoy a lower scale of freight rates on primary export- able products than exists in any other country. Its organisation is recognised in the world of transportation as second to none efficient, honest and based on sound business principles. Its directorate is recruited from the leaders of Canadian industry and commerce. Its statesman-like and forceful chairman and president today is a Canadian of Canadians, whom many consider Canada's outstanding private citizen, and whose reputation as head of the world's greatest transportation system, a system which he himself raised to its preeminence, is justly international. In the Kings jubilee Honour List issued on June First, 1935 the title of Knight Grand Cross of the Order of the British Empire was conferred on him in recognition of his "philanthropic, charitable and community services." This is the highest grade in an Order of Chivalry established during the Great War, and the general expression of approval on the announcement of the honour indicates that Sir Edward Beatty, G.B.E., has fully earned the distinction conferred.