The City with the Railway Link

Arthur Conrad June 1 1910

The City with the Railway Link

Arthur Conrad June 1 1910

The City with the Railway Link

Arthur Conrad

"MARK my words,” once said Sir William Van Horne to a deputation of the citizens of Guelph, “the day will come when that little railway of yours will just about pay all your taxes.”

The big railroad magnate referred to the Guelph Junction Railway, a short line some fifteen or sixteen miles in length, extending from the centre of the city to Guelph Junction, a point near Campbellsville on the main line of the Canadian Pacific Railway. Built by the people of Guelph awa}' back in 1887, it seems destined to fulfill Sir William’s 72

prophecy, for last year it earned the City of Guelph over $27,500, and year by year its earnings are increasing by leaps and bounds.

It is by no means the first or only example of a municipally-owned steam railway. The unique feature about this little railway is not that it is owned by a municipality, but that in process of time it has become a link in what is destined to become a most important feeder of a transcontinental road, viz., the Guelph and Goderich branch of the C.P.R., with all its existant and projected auxiliary lines, traversing a

rich and fertile section of old Ontario. Furthermore, when, as is not improbable, the Guelph and Goderich line is pushed eatward to Hamilton and Buffalo, its importance will be still more enhanced, for it will then become part of a through line, over which coal and other American merchandise will be carried cheaply to a large section of Western Ontario.' At the present time, under the terms of its agreement with the C.P.R. every ton of freight originating on the Guelph and Goderich division, or its branches and billed to any point beyond Guelph, must pass over the Guelph Junction Railway Company’s line and pay its toll to the people of Guelph.

As an inspiring example of what loyalty to the home town can accomplish, this little railway project will ever stand as a monument to the disinterested services of a grouo of Guelph’s public-spirited sons. Possibly from this viewpoint rather than from the money-making one, the real value of the undertaking should be estimated. It required a great deal of faith, much hope and not a little charity to overcome the obstacles reared up by the opponents of the scheme in the days of its inception.

Back in the eighties, Guelph’s business men conceived the idea that they would be better off with two railways in their town than with one. They already had the Grand Trunk, but they figured out, that if they could only induce the Canadian Pacific to come in, they would secure better rates and more courteous treatment all round. The latter railway had recently come into control of the Credit Valley Railway, which lay eleven miles to the south.

Before this time the Credit Valley had made overtures to the city, and, if Guelph had given them a reasonable bonus, they would undoubtedly have constructed a spur line to connect Guelph with their road, but the people of Guelph were indifferent

and let the opportunity pass by. In their very indifference at that time lay their future good fortune. Had the Credit Valley built into Guelph, there wrould have been no municipal railway and no fat profits for the people.

Negotiations . were opened with the Canadian Pacific with the idea of securing the construction of as short a road as possible to make the connection. The projected junction point wras to be Leslie’s Corners (now Schaw Station), eleven miles from the city. Guelph’s business men interviewed Sir William Van florae and his associates, pointing out what an extraordinary amount of freight drifted into Guelph from points north and w^est and was shipped over the Grand Trunk. The C. P.R. financiers were impressed, but pointed out that, owdng to the tremendous Outlay in the Northwest, they had no money to spend in Ontario.

In the end a telegram from Sir William reached Colonel Macdonald, then mayor of the city, promising that, if the city would construct a branch from or near Campbellsville to Guelph, the C.P.R. wrould extend the line to Goderich. The idea was immediately taken up.

The proposal to build wras placed before the citizens of Guelph in the form of a by-law to raise $175,000 for the purpose. There w^as a strenuous fight, as the opposition was strong, but the supporters of the by-law wrere victorious and the measure carried b}*a fair majority.

The Guelph Junction Railway Company’s charter which had been secured in 1884 wras amended in 1886 and the capital placed at $30,000. Of this the city agreed to subscribe tw'o-thirds, while the balance wras to be taken up by ten individual shareholders, each of whom paid up ten per cent, of the amount, leaving the balance in the treasury.

To finance the construction of the road, the usual appeal was made to

the Government at Ottawa. William Bell and Thomas Gowdy, a local lumber merchant interviewed Sir John A. Macdonald, and were able to secure a bonus of $3,000 a mile or $46,000 in all. The City of Guelph issued debentures for $155,000, in addition to the $20,000 for the stock and the shareholders advanced $1,000 among themselves. As the work of construction progressed, it was found that there was not enough money to cover the cost and a second by-law was submitted to the citizens. To the consternation of the men behind the railway, this by-law was defeated, but by urging a recount and weeding out ineligible voters, a majority was obtained and the necessary funds w“ere secured. The railway was finally completed at a cost of $245,133.61.

On September 11, 1888, the Canadian Pacific Railway . Company leased the road for 99 years, agreeing to pay as rental 40 per cent, of the gross earnings and to keep thé line in repair in every respect. They further agreed to extend the road to Goderich.

If a visitor to Guelph were desirous of interviewing the management of the road, he would be directed to a building standing just to the rear of the Post Office. Here in a small room off the entrance he would find a pleasant, soldier-likè old gentleman, seated at a desk. This is Colonel Macdonald, who combines, in his person, all the duties of secretary, treasurer, solicitor, general-manager, engineer, etc., of the railway. In fact, he is the company’s sole employee.

From this it will be quite apparent that it does not cost Guelph verv much to run its fifteen-mile railway. The average railroad accountant estimates the cost of operation of a railway at about seventy-five per cent, of the gross earnings. On the Guelph Junction Railway one per cent, would be an outside figure.

The balance, after deducting interest charges, is sheer profit.

Last year for the first time, in its history, the Guelph Junction Railway paid a dividend. - Up to that time all the profits had gone towards clearing up arrears of interest. But these were all wiped off in 1909, and in addition to paying a six per cent, dividend on all paid-up stock, $6,250 was available for. reducing the debenture debt of the city. If the road continues to earn in 1910, as much proportionally as it did in the last quarter of 1909, there will be enough money received from it to pay all debenture interest and a 115 per cent, dividend on the stock besides. No wonder Guelph’s tax rate is getting smaller and smaller every year. It was 14 mills in 1909, and sanguine citizens are prophesying 12 mills this year.

President F. W. Lyon, who has been the official head of the railroad for the past two years figures out that if the fifteen miles of road earn as much as the average C.P.R. mileage, viz., $8,000 per mile, the company’s share will be $49,600. Or if, as is not improbable, earnings should reach the average of Michigan roads, $11,000, the company would come in for $64,000. From which it is evident that the people of Guelph have been blessed with a wonderful piece of good fortune.

Or course, a large proportion of this success has been coincident with the completion a few years ago of the Guelph to Goderich Railway. The people of Guelph had always banked on this, but the C.P.R. were dilatory. Relations with the Grand Trunk were too friendly to warrant invading a territory in which the latter were supreme. However, thé advent of the Grand Trunk Pacific into the west, changed all this, and the C.P.R. struck back promptly by proceeding rapidly with the construction of the Goderich extension. On its completion the earnings of the Guelph Junction Railway began

to increase rapidly. While in 1903, they stood at only $11,342.80, in 1907 they had advanced to $20,544.24 and they are still rising. Goderich seems destined to become a still more important lake port, and with improved harbor facilities and new elevators, it will attract a considerable proportion of the grain traffic. Then, when the Hamilton and Buffalo extension is built, and the new grain route is established, Guelph can afford to shut down all its industries, close up all its shops and sit and watch the trains going up and down its little railway.

After all is said and done, the C. P R. made a shrewd move in going into partnership with the Royal City. Guelph factories and business houses know that when they ship by C.P.R. there is something in it for the city —and ultimately reduced taxes. Guelph citizens, when they travel to Toronto or the east, realize that 27 cents of their fare comes back to the

city. It is even recorded that a Guelph business man once returned a car-load of goods to Woodstock, because they had not come as specified by the C.P.R., and insisted that they should be re-shipped by that route.

The way in which the business men of Guelph took hold of the railway project with energy and enthusiasm, and carried it through successfully, is worth emphasizing. It was a Guelph venture in the first place, it was fathered by Guelph business men, and no outsider had any hand in it. At the head of the first Board of Directors sat William Bell, a hard-headed, shrewd far-seeing Scotchman. Around him were grouped John M. Bond, a hardware merchant, well versed .in the iron and steel business ; William Husband, a dry goods merchant ; Thomas Gowdy, a lumberman; Col. McCrae, a prominent manufacturer; Henry Hatch, a real estate man and

Col. Macdonald, a lawyer. This was a little group, representing diverse trades and professions, but here uniting their brains and abilities for the advantage of their city.

The earlier boards were made up of the mayor of the city, two aidermen and five individual shareholders and this was the composition of the board until the year 1901, when the city began to open its eyes to the increasing value of the road. Before that time the corporation had been content to let the individual shareholders bear the brunt of the struggle. Now, when it looked as if the road would make money, it desired larger representation on the board. The act of 1901 increased the city’s representation to the mayor and five aldermen and reduced the individual shareholders on the board to three.

The act also gave power to consolidate the stock, so that each share-

holder would have one fully paid-up share, instead of merely a share, onetenth paid up. This was for the purpose of securing the transfer of the stock more readily.

The city has gradually acquired the holdings of five of the individual shareholders, giving each $400, or four times the amount originally invested. Five shares are still outstanding and legislation is now being put through to enable the city to acquire this stock. One holder is said to be asking $3,000 for 'his share, which shows how valuable the railway has become.

In many other respects Guelph occupies a unique position among Canadian cities, but it is doubtful if any of her other projects are as novel and interesting as her venture into railway building.