The sun., 1919-07-29
CANADA Is FACING
RAILROAD PROBLEM
Acquisition Of the ! Grand
Trunk by the Government
q Big Question.
MAY BUY OR LEASE LINE
Management Of System and
Cutting Down Of Deficit
Task for New Cabinet.
MAY BUY OR LEASE LINE
by J. A. AKIN.


by J. A. AKIN.
TORONTO, July 2S.--The railway prob
lem is assuming large proportions in
Canada. Premier Sir Robert Borden Is
spending his vacation I'm Quebec on a
fishing trip. His chief associate angler
lie Sir Henry L. Drayton, chairman Of
the Railway Commission. Sir Robert.
It Is believed. Is angling for ideas and
men TO help carry burdens and solve
problems. Cabinet reorganization Is a
task not far ahead. There has not been
anything said SO far that might indicate
a new Minister of Railways Cor Hon. ].
d. Reid is healthy specimen.
The Government wants to round on
the Canadian National Railways system
with the Grand Trunk. which would
complete a strong self-contained system
OF almost 20, 900 miles. There will be
deficit Of $2s,000,00O on the Canadian
National this year, plus interest on cap
ital investment of s3oo.oeo.o0o in the
Intercolonial and Transcontlnental roads
which would make the total cost to the
country $4,000, 900 over and above reg
ular freight and passenger revenue.
How to manage and develop that system
and cut down the deficit is the biggest
and most pressing question in Canadian
politics Sir Henry Drayton is The most
promising man in sight to help. and It
is not surprising that the Premier looks
to him.
As president Of the Canadian National
Railways, Sir Henry could perform valu-
able service. He Is trained in railway
information, having had ten years on
the Railway Commission, dealing with
railway problems in manifold form. He
is still in the forties, and Is Canadian
of democratic notions.
The Canadian National is still in the
formative stage of organization. Ad-
ministration rests with board of d.
rectors of fifteen men. Once the Grand
Trunk is acquired some new blood will
be injected. But the seeds of Govern
ment ownership and checks on men OF
energy are here and will prove obstacles
to any board or to any president
smithers to Resume Negotiations.
A. w. Smithers. chairman OF the
Grand Trunk board, is on his way from
England to Canada, to resume negotia-.
lions with the Government to dispose of
the Grand Trunk. by sale or lease. So
far 1t looks like a long term lease. In
a recent address in London to the share
holders Mr.. Smithers calculated to quiet
ordinary stock. 1t could not be for the
honor or interest of Canada to keep
these anxious people longer in suspense.
An appeal to the imperial Parliament"
was not advisable. Canadians being jeal-
Gus of their independence.
The Grand Trunk went into the prof.
ect of q transcontinental in 1908 with
high hopes; now 1t expects the Govern
ment of Canada to shoulder all the bur-
den. The Crank Trunk has been re-
leased from the duty of operating the
transcontinental between Winnipeg and
Moncton, n. B. 1t also asks to be re-
relieved of the Grand Trunk Pacific.
The assets Of the Grand Trunk Pacific
are estimated at 5000. 600, 900: the La
bilities at about the same amount being
divided almost equally on the shoulders
Of the Federal Government Of Canada
and the Grand Trunk. The annual de-
felt on operation and overhead Is six or
seven millions a year Left TO itself the
Grand Trunk would have to 60 into the
hands of a receiver.
In 1916, after It became manifest that
the Canadian Northern and Grand Trunk
transcontinental lines were going to be
costly to the country, a royal commits
sion Of inquiry was appointed to deal
with the railway issue. A. II. Smith,
president OF the New York Central; -.
l.. Drayton, chairman of the railway
commission, and w. NJ. Acworth. an
English expert, were selected. In a re-
port next year they dealt widely with
the question. In a minority report Mr.
Snsth advised uniting tle Canadian
Northern lines in the east with the Grand
Trunk. and ALL Grand Trunk Pacific lines
west Of Winnipeg with the Canadian
Northern company, thus providing for
tuvn MI httt Al init In
tive cost in east and west. Such neces-
sary aid as would have to be given dur
ing the war period and after to the COM
panies by the Government could be given.
But there was no place In Canada nor
any call for a Government owned and
operated railway system. President
Smith was bred and trained in the school
OF experience and private initiative. He
was emphatically against any interfer-
ence with the Canadian Pacific. The skill
and enterprise OF its builders and man
ayers had kept the charges against earn
ings of borrowed capital down to the
minimum, and President Smith we'll
knew what reckless Government direc-
ton meant
The majority report was for one big
Canadian railway. Tho plan was to unite
the Canadian Northern and Grand
Trunk the former with a fine branch
line system in the West, and the latter
like prize in the East along with the
Intercolopiai the Grand Trunk Pacific
the National Transcontlnental, all into
one system. That is what is being at
tempted now. The Grand Trunk Pacific
is in the hands OF a Government re-
ceiver and the Grand Trunk is the sub
ject Of negotiations. All the others are
in the Canadian National.
Canada's Costly Experience.
When It came about that something
had to be done in the case of the C. n.
r. in e17, the Government appointed an
arbiter to judge the value of the c. N r.
common stock. The outcome was that
S12,000,000 was paid for that common
stock of a bankrupt railway company.
But the stock had been held as collateral
by the Canadian Bank of Commerce. and
It was important to have that looked at
ter. Whether the same fraternal spirit will
prevail in the case of the Grand Trunk
remains TO be seen. This company has
been paying $500. 900 year in pre-
ferred dividends, nothing on ordinary
stock. But IL is estimated that II will
require $30.000,000 for betterment OF
roadbed, rolling stock, motive power. ter
minals and accommodation to put the
company in a position to take care OF
its business. In other words dividends
were a luxury.
Canada has paid large sums for rail-
ways. A total OF $66.905,4Sl was paid