CAN WE SALVAGE our RAILWAYS?
FRANK S. CAHILL, M. P.
I BELIEVE that all the people of Canada, of all shades of political thought, are firmly agreed on one subject that the railway situation, so far as government-owned or controlled roads are concerned is in a position which can only he described as a serious muddle. 1 do not say a hopeless muddle; because the history of our people shows that more difficult problems have been solved. In theOld Country, from which we have derived most of our political ideals and, directly or indirectly, quite a number of our political problems, the common formula for solving big problems, even those of a world war, is to “muddle through.” This has never appealed to me as an ideal way of handling state or other problems.
The better way is to keep out of muddies; but once in them, there is at least more virtue and courage in trying to seek a way out than in pursuing a policy of masterly inactivity, sinking deeper and deeper.
While we are all agreed on the seriousness of the situation, however, has it come home to the average Candían as to just what it means to him personally? Has the magnitude of the financing to which his mind became accustomed during the war given him a sort of mental inoculation which renders him immune from realizing when he is on the way to financial disaster? There are financial peaks, you know, which the average mind has never been called upon to scale, and consequently makes no attempt to do so. It is not so very many years ago when a million dollars was a mere phrase which connoted enormous wealth, but when applied to a railway or other magnate did not necessarily mean that he actually had that much money, or any more than a very large sum, which was beyond the ambition of the ordinary individual’s conception. Now, of course, the million and the millionaire are, even in Canada, rapidly getting in the class of financial pikers. We may rub against them familiarly every day in parliament and elsewhere. Where once they stood out, prominent as “a peak in Darien, they now have to be ticketed with a knighthood or a senatorship for the world to recognize them.
Talking Billions Now
TpHE billion is the figure to which we now have to adjust x our mental periscopes, but we have not yet altogether succeeded in doing so. We know that our national debt, which individually and collectively we owe and individually and collectively must pay,'has gone well in excess of two billions; we know that our railway obligations are rapidly approaching tnG same exalted class; but what we have not yet recognized is just what it means to each of us. Just now we seem to be in the amazed and even whimsical state of mind of the man at the circus who looked at the giraffe and declared: There aint no such animile!” Never in its national life has Canada encountered a billion before, and she does not know just how to solve it.
Still, there it is. And there, too, is that other national curiosity, the Railway White Elephant, acquired at fabulous expense, and costing nearly a quarter of a million daily to feed. The war, you will recollect, cost us a million a day while we were in it; but we saw that there must be an end to that within a reasonable time. While the daily railway tax is only one quarter as great, the chances appear to be that it will last at least four times as long.
. This, some one may possibly say, is exaggeration. Well, in his budget speech for 1920, in speaking of railway finances, the Minister of Finance considered that the money advanced to the railways could not be reckoned as an asset; and since the railways were taken over by the Government in 1917—that is, a period of five years, including this year s estimates, the amount of money put into
Frank S. Cahill
^ j lí. CA IIILL is Liberal member for /'online, in the lions, of Commons, and is one of tin' Govern mentis keenest critics when any question arises appertaining to the railways. As a critic, he admits that he is more destructive than constructive—as long as he is in the shades of Opposition, President 1). II. Hanna, of the Canadian Rational Railways, has brought against Mr. Cahill an action-for libel, asking $60,000 damages, on account of certain statements he is alleged, to have made (criticizing the C. N. R. management) in a speech delivered in the Montreal Reform Club about a year ago. Previous statements of a similar nature were made by the member for Pontiac in the House of Commons, but there, of course, were privileged.
the proposition by the Canadian people has been In excess of $400,000,000. This money has all gone in as operating deficits, fixed charges, expenditures for betterments and rolling stock, and it represents a loss to the treasury (the
Canadian people) of nearly a quarter of a million a day since we became the owners and operators of these systems.
Our Ever-Amazing Deficits
OINCE 1917 we have expended on our Yz railways an amount greater than we had done in all the previous years since Confed-
eration, including the cost to the country of the Intercolonial, the National Transcontinental, the Hudson’s Bay, and the Canadian Government railways, with this important distinction: the expenditures since 1917 have been exclusively for the purpose of meeting deficits and for such betterments as were absolutely necessary. This was the investment which the Minister of Finance could not consider an asset. In other words, our investment averaging from two hundred thousand to a quarter of a million a day has resulted in no permanent value to the people of Canada. The service is admittedly worse than it was before the railways were taken over as a Government-owned and managed proposition. The freight rates are higher, and there has been no compensating benefit.
It is interesting to trace briefly how we got into the muddle. The first railway in Canada was built in 1836. It was only sixteen miles in length, and ran from Laprairie, opposite Montreal, to St. John’s, on the Richelieu. It was, in all respects, a “onehorse railway,” as during the first year of its operation the horse wathe motive power. Railway development came quickly in Canada. Just fifty years later, to a day, the Canadian Pacific was opened through to the Pacific coast.
The early ideal of the Canadian people was towards government ownership, and was for a transcontinental system from the Atlantic to the Pacific; but in practice this worked out as it has done everywhere. So instead of proceeding with the scheme on the colossal Rhodesian plan of laying a ruler across the map and saying: “Build from here to here,” there has been a series of detached lines serving local needs. Even when the Canadian Pacific was built from coast to coast, more than half a century after it was first mooted, there was no lack of critics who called the plan chimerical and doomed to financial failure.
How the different systems were evolved, beginning with the Grand Trunk, is a matter of history, even the written portion of which is sufficiently discouraging to the idealist. Could Joseph Howe, the first protagonist of a transcontinental government-owned railway, have looked as far into the future with regard to government ownership in Canada as he did in many other respects, it is more than
doubtful if he would ever have advocated the principle.
Perhaps the public life of Canada was higher and party politics less dominating in those days.
At all events, it was not long before the era of “Railroad Chivalry” in Canada set in, with the advent on the scene of three men, the first of that considerable line of knights who have been rewarded by a grateful sovereign or somebody for operations performed on the body politic of Canada.
It is sufficient to say of these men—Sir Allan McNab (who said: “Railways are my politics”), Sir Francis Hincks, and Sir A. T. Galt—that they were no better and no worse than their successors, and were among the leading moving spirits in connection with the formation of the Grand Trunk Railway embryo. It is worth while reading the history of the promotion and expansion of the Grand
Trunk enterprise because it set the pace and the fashion for the promotion of railway schemes in Canada. It estab-
lished precedents of jobbery and manipulation which in some respects have never been excelled by those better known experts who came after.
The incidents in connection with the development of the Canadian Pacific, Canadian Northern and other systems are better known, but do not reflect any more credit on the judgment and public morality of either the Governments of Canada or the recipients of their favors. In the case of the Canadian Pacific—although it has been a recipient of enormously valuable privileges and grants—it has at least been marked by a spirit of great enterprise and sound business judgment in its operation, which induces the reflection that if the people are to choose a master it is always wise to choose an efficient one.
It would take too long to trace the particulars of how the situation now confronting Canada came about; and the most important part of it is current history, anyway. It is obvious that no party has been free from mistakes. Some initiated mistakes of their own, others carried along and accentuated those of their predecessors, with the result that to-day we have the muddle whose financial menace was indicated briefly at the beginning of this article.
Is There a Solution?
TTAVING stated the problem at considerable length, it JAI will naturally be asked: “What is the remedy?” Has the Government, or has anyone else, a real railway policy, or is it just a state of “muddling through?” The Minister of Railways, in presenting his latest recital of horrors to the House, asked somewhat plaintively for help and guidance; but whether he really meant this, or whether he was pleading for immunity from criticism is a question on which there is a difference of opinion.
A very expert physician may be able to prescribe with occasional success for a patient who has some serious internal ailment, but will not proffer any information on his symptoms; but the average physician would hesitate to prescribe in such a case. The Opposition has been called in consultation, but Doctor Reid has even refused them access to the patient. A good many of the members of the Opposition, however, have been studying the case privately, and believe they know what is wrong. Many of them believe that it would be both unwise and impolitic to interfere. They simply say-to the patient’s family: “If you are not satisfied with the treatment this patient has been getting, and want our advice, you will have to dismiss those who are now in charge of the case, and formally call us in. We believe we can cure him or at least alleviate his most serious symptoms.”
Just recently there has come a suggestion from one whom I hesitate to call an eminent practitioner. In fact, I am afraid he should be called a member of the empirical school of railway medicine, and will prove to be merely another experimenter. I refer to the suggestion of the Hon. A. K. McLean, which the Government showed itself very ready to adopt, that a special select standing committee on railways and shipping owned, operated or controlled by the Government be appointed. The danger of such a committee is that it will itself be “owned, operated and controlled by the Government,” and such particulars only will be referred to it as will make it merely a camouflage to conceal
Take It From the Government!
IVJlv. CA HILL says: "I believe this is the solution to which we must ultimately come: get a group of
business men, who would be able to form a company with adequate capital—say, not less than $100,000,-
000—to take the system over on some basis which would be satisfactory to the Canadian people. This group should completely divorce the road from political or other influence which might militate against its success. They, 1 think, might be able to reduce, the deficits to the extent of the operating losses and a portion of the interest charges—perhaps eventu ally putting the railways on a paying basis.”
the information which it is most desirable, for the success of the railroads under government ownership, should be given to parliament. Indeed,the Prime Minister himself, when questioned regarding the functions of this committee, was extremely non-committal.
There are, however, some fairly obvious suggestions of a constructive character regarding the policy which should be
followed in connection with this problem of government management which, unhappily, has been thrust on the Canadian people. To get at the most important and basic principle, in my opinion private ownership with public control is the system we should apply to the railways of Canada. Broadly speaking, public ownership—and especially public ownership of railways—is not a proper function
of the government. By the very nature of things, Government ownership cannot be divorced from politics. All the activities of any government are necessarily carried on by politicial machinery, and that machinery is wholly unsuited to the economic field. The fields of politics and economics are dissimilar and separate. The field of politics —meaning thereby the art of government is largely the regulation of conduct and the protection of rights. The economic field is the production and utilization of material things. The principles, methods, and machinery of political administration are wholly different from those of economic activities and not adapted nor adaptable to the latter. These differences are fundamental and cannot be reconciled. When, therefore, the machinery of political action is applied to economic undertaking it works badly and makes impossible the perfect co-ordination which can alone, in the economic field, produce efficiency and economy of opera-
This being the case, public ownership of railways in the first instance was a mistake, but now that we have it, and bearing in mind the circumstance that the Government, who admit their inability to solve the problem and who also intimate their intention to retain office as long as possible (which in all probability will be for twoyears more), and in view of the present deficits amounting to more than $200,000 per day, it becomes incumbent upon every Canadian citizen to assist in any way that he can towards a solution of this problem.
A Committee With Real Power
TT WILL be apparent to everyone that an intelligent dis-
cussion of the subject would be impossible without the fullest possible information pertaining to the policy, management, and operation of the railway system. If the Government, therefore, is sincere in asking for assistance from parliament as a whole—and remember that this is a proposition which concerns all the people, on all sides of politics—they should appoint such a special parliamentary committee as would have power to send for persons, papers and records, and to examine witnesses under oath. This committee would have the authority of parliament to call in the services not only of expert railway men, but of successful business men in any walk of life throughout Canada. Such men, having the fullest facts before them, should be able to evolve a plan whereby our present railway difficulties could at least be remedied, if not completely overcome.
As one simple example of the working out of this procedure, let us take a case which happens to occur to me at the moment. It is not of the highest importance; but it Is a detail of operation which shows the need of co-ordination. Is it not obvious that two first-class passenger trains, from Winnipeg to Biggar, Saskatchewan, starting within three hours of each other and arriving at a point five hundred miles west from Winnipeg at practically the same hour constitute an economic stupidity? It is also possible that the expensive first-class passenger trains operating between Montreal and Vancouver are being run at a loss; and it might be better for the management had they invested the original cost of such trains in freight instead of passenger equipment, as it is well known that the farmers of the West have been complaining bitterly that the Canadian National Railways have not been providing an adequate freight service.
In referring to some of the wider aspects of railway policy, let us take the subject of immigration and colonization. There appears to be a pretty widely held idea that Canada has overbuilt in railways. With this view' I do not entirely agree. We are in the very throes of nation-building in Canada at the present time. A proper system of transportation is necessary to the development of our national resources, and vice versa. In Canada’s case, one branch of the undertaking has been accomplished; we have advanced with our railway construction ahead of our other development. The energies of the Government should be turned in the most active manner to immigration, colonization, and the development of our natural resources.
Colonization the Real Cure
I OBSERVE with pleasure that this view has recently been advocated in public addresses by Hon. T. A. Crerar, leader of the Agrarian party, and has been warmly approved of by President E. W. Beattie of the Canadian Pacific Railway. Before Parliament in 191!) and again last year, I urged this very policy upon the Government. At the present time the Government would appear to be confining its immigration policy mainly to devising the most effective regulations for keeping immigrants out of the country. Traffic on our railways can only be increased by a further increase of production, which means more population for the further development of our resources.
The full attention of the Government should be turned to the business of colonizing the territory adjacent to our present railw'ay lines; and there should be a policy of consolidation rather than further expansion in railway building. During the period up to the year 1911, according to the Drayton-Acworth report, Canada had a mile of railway for every 284 inhabitants. The report goes on to note that, since 1911, the population has not much increased (and this is largely true in 1921 ) but the railway mileage open or under construction had nearly doubled; so that, when
that report appeared, there were only 185 people to support each mile of railway.
One of the greatest troubles in connection with the railway situation to-day is the land question. The Canadian Northern, for example, runs through millions of acres of vacant lands in Western Canada, held by speculators or by competing railway companies. If our railways run through vacant lands and produce no traffic, necessarily we must lose money as a consequence. Until this land question is satisfactorily settled, the roads which run through such unoccupied areas cannot possibly make money.
One way, therefore, to salvage our railways, is to inaugurate a sane land policy, causing the land held by speculators in the West to be put into use, and to create traffic for our roads. We have too much railway mileage, and too little population.
Deficits That are Staggering
ONE of the most important things regarding which the people of Canada desire to be satisfied in connecwith this question is whether it is under good management or not. The prima facie evidence is that the management is bad because it is producing deficits which are simply staggering. The only way in which the people of Canada can be satisfied as to whether the management is good or bad is for their representatives in Parliament to be permitted the right to find out. As already mentioned; the proposal which the Government adopted with such alacrity is, as it stands, only an inert thing. It must have specific cases referred to it by the House, and this will never be done except with the consent of the Government.
We are now saddled with the railways under government ownership, and for the present we must do the best we can with them. Let us leave the Canadian Pacific Railway alone—as I think everyone is inclined to do—and see that the properties we now own are properly managed. Personally, I cannot see why we should increase our burden by taking over the Grand Trunk, as all the benefits to be derived from its possession could accrue from co-operation under separate ownership.
We should establish the capitalization of our railway properties. We have the Intercolonial without capitalization, and the Canadian Northern with an exceedingly heavy capitalization. Let us find out what the different roads require in the way of cash to put them in good shape,
NEXT MONTH’S FICTION
A strong: short fiction number May 1, including::
“THE GATE OF WU”—The first of L. H.
Gordon’s five thrilling: detective stories.
“THE CAGE OF IRON”—A dramatic gem by
H. Mcrriman Rouse, who wrote “As a Man to His
Friend,” in the April 1 issue.
“THE LAW’S VINDICATION”—By C. W.
Stephens, MacLean’s readers’ old favorite, —and others.
and how long they are likely to have to operate before getting profits. If we have a losing business, we want to cut our losses as fine as possible.
At the present time the management of the system is at least open to criticism. The Minister of Railways is responsible for the selection of the directors of the property, and among all those he chose he, apparently, could not find one who knew anything about railways. He selected men who are, individually and within their limitations, no doubt eminently respectable citizens. Beyond the fact that they run to the private car habit a little I have no criticism to make of them personally; but it does seem that, with a little effort, the government might have been able to secure for its railroad directorate men who knew something about railways. A common, though possibly unfounded, criticism is that “the management is too close to Mackenzie and Mann.” This is not necessarily a reflection on either the president of the system, nor his old associates; but it was a criticism which was sure to arise, so that it would have been far wiser had the government forestalled it by doing at that time what it is now well understood to be endeavoring to effect—secure a new head for the sys-
A Fabulous Salary for a “Winner”
TT IS well known that the heads of the Canadian Northem system when it was taken over by the government had the reputation of being good construction mén, and nothing more. It was as such they built up the property. There was not a great operating genius among them.
Hints have been let drop from fairly good sources that the Government has successively approached three of the leading railway men in the country with offers of an almost fabulous salary to assume the management of the system; the names commonly mentioned are those of Messrs. Grant Hall, Gutelius and Coleman. One of these has already denied that he is considering the proposition. Personally, I may say that I do not know that any of those mentioned have been approached, though it is entirely likely. Anyway f it looks as though some genius would have to be found to extricate us from our difficulties. * At all events, some solution must be found without delay for the enormous deficits which are piling up; and if it is the public wish that public ownership should be maintained then it is for the government to secure a management which will immediately decrease the deficits. In this connection it may be noted that it is just possible that the deficits would be no greater if the freight rates were considerably reduced, thereby stimulating traffic in the lower grade commodities. For instance, in the Abitibi district of Quebec, with a population of 20,000 people dependent very largely on the pulp wood industry, industry has been almost at a standstill since the increase in rates. If they are not reduced within a short time, there is nothing surer than that this population will find it necessary to leave the district, thereby further increasing the deficits on that portion of the system.
It is impossible to get along without political control; under our system we must have political control or no control at all; but whht would be desirable would be to eliminate party patronage and party politics as far as possible. Thebest—indeed the only means—of accomplishing this is to give the fullest publicity to every phase of the undertaking; and if this were done, the possibilities for an operating genius who might take over the system at tfie present time would be very great.
Could Private Company Take it Over?
FINALLY, there is another suggestion; and to my mind it is the best of all, and the one to which we must ultimately come. This would be to get a group of business men who would be able to form a company with ample capital, say not less than a hundred million dollars, to take the system over on some basis which should be satisfactory to the Canadian people. This group should completely divorce the road from political or other influence which might militate against its success. They, I think, might be able to reduce the deficits to the extent of the operating losses and a portion of the interest charges—perhaps eventually putting it on an actual paying basis.
However, the position I take personally with regard to the management of the Government railways is that it is not the business of the Opposition, but of the Government of the day, to furnish a solution of the Government’s problems. If they are not able to do so, they should resign and give their critics a chance to make good. No government should lay the blame for any problem on their hands upon their predecessors or opponents. A government should be held responsible for the solution of whatever problem it assumes. It is not fair to ask a man to submit a plan which he is to have no part in working out.
Moreover, it must be recalled that the Government refuses flatly to give information which is absolutely necessary before one can hope to approach a solution of the problem, and without which it is hard to even discuss it intelligibly.
“Ah, but,” they say, “you are asking us to give away all the secrets of our business to the opposition.”
The only secret is the secret of success, which the system under its present management apparently does not possess.