The Churchill Controversy

June 15 1932

The Churchill Controversy

June 15 1932

The Churchill Controversy

DON’T CONDEMN ROUTE IN ADVANCE, SAYS SHIPPING MAN

MY ATTENTION has been drawn to an article which appeared in your issue of May 1, dealing with the question of the Hudson Bay Railroad and the Port of Churchill. I should like to correct several statements made, and particularly those regarding the cost of loading the two trial cargoes of grain shipped in September, 1931, by the steamers Farnworth and Warkworhth, as well as the circumstances of their engagement. As my firm actually negotiated the charter of these vessels to the Department of Railways, and as I personally supervised their loading at Churchill and acted as agent for the vessels and their owners, I sígale with authority and am not obliged to guess at figures.

(1) The writer of your article remarks in an early paragraph: “When the near completion . . . This is where bureaucratic ineptitude stepped in again.” This I consider an extravagant remark without knowledge of what actually took place. There was no semblance of ineptitude on the part of the Government—quite the contrary.

(2) Again he says: “These two vessels were secured with considerable effort ...” Not the slightest difficulty was experienced in securing these vessels. There was the keenest possible competition among shipowners to secure these cargoes. Upwards of a dozen steamers were offered our firm and i these two were selected out of a great number available. I happen to know that certain other owners were keenly disappointed. Also no financial assistance was offered with a view to lowering freight and insurance charges except an undertaking to absorb loading and jx>rt charges, the expense of which was, as I shall show later, negligible. Insurance premiums were paid by the shipowners and by the shippers of the grain respectively. Not a penny of these were paid by the Government.

(3) Again he says: “There was Canada’s newest and most expensive elevator per bushel of capacity fully staffed and idle.” Your writer is in error. The elevator was still in the contractor’s hands and the contractor's own men operated the machinery j during these experimental shipments.

(4) Again your writer quotes what he supposes was the cost of insurance premiums on the hulls of the Farnworth and Warkj worth. His figures are excessive. I speak from definite knowledge of what the owners paid to their underwriters but, of course, without authority 1 cannot divulge the actual costs.

(5) Your writer states that the grain loaded at Churchill in September last “cost J the taxpayers of Canada over SI per bushel for the Churchill grain elevator alone,” and he attempts to establish this arbitrary figure by assessing, against what was purely a test shipment, theoretical figures purporting to represent interest, depreciation, maintenance, etc., on the whole cost of the elevator for a year. He also includes S10.000 i for operating staff and power. As I have I already said, no operating staff was engaged.

(6) Your writer attempts, at the close of I his article, to prepare a statement of comparative costs to the exporter on this particular shipment via Churchill or via Montreal. Having knowledge of the facts, I can only say that these figures are quite inaccurate. The shippers of the grain have told mo that their costs were less than they would have been via Montreal. This is probably the best refutation of these figures. I may refer, however, to the item of $5.000 which the Government is alleged to have spent at Churchill for ships’ disbursements, etc. The vessels arrived completely fitted at owners’ expense with grain bags, separation cloths, etc., on board. The agency fee was paid by the owners and the only cost to the Government was the cost of loading and bagging, which with travelling expenses and supervision did not amount to more

than $1,500, and the major portion of this was refunded in cash by the shippers.

To sum up, this trial shipment which your writer so bitterly criticizes, cost the Government of the country very little indeed. They were not in any way concerned with the sale of the grain; they did not absorb or guarantee insurance premiums in whole or in part, and the shippers of the grain were entirely satisfied with the result.

I do not at all agree with his condemnation of the Hudson Bay route. Most of us older men remember the struggle for the recognition of the St. Lawrence route, when all the arguments he now advances against the Hudson Bay were then put forward against the St. Lawrence, when insurance rates and premiums were a source of difficulty. All of these were in time overcome and the St. Lawrence route is now an accepted fact. It was not always the case.

It is not many years ago that Vancouver was thought an impossible outlet for Canadian grain. It was said that it could not be carried through the tropics via the Panama Canal, etc., ad nauseam; but this route is now established and is unquestionably of the greatest advantage to our Alberta farmers and the future of that port is definitely assured.

Would it not be better for your writer, and indeed all others interested, to try and help rather than hinder this new route, which, when it becomes established—as in time I firmly believe it will—will be of very great benefit to all grain growers in the northern sections of the West? It is my opinion, despite its comparatively short season of navigation, that the Hudson Bay route will carry a very considerable trade both eastbound and westbound, and will result in a great saving in transportation costs to the large area of country which is directly tributary to it.

I may add that the owners of the Famworlh and Warkivorlh were entirely satisfied with their experiences in the Hudson Bay last season, and they stand ready to send these steamers again and to supply whatever tonnage can be made use of from Port Churchill during the coming season, and this at rates not exceeding what was paid last season. These owners are quite satisfied with the safety of the route and are anxious to do business in the Hudson Bay trade.— Thos. Harling, President, Thos. Harling & Son, Ltd., Montreal.

MR. KIRKWOOD’S REBUTTAL

BECAUSE Mr. Harling thought it advisable to spare some of his time, just at the opening of the Montreal shipping season, to criticize part of my article, “Churchill A Mistake?” I should perhaps feel a bit (lattered. Had my argument been wholly unsound he would doubtless have ignored it. I am sorry, however, that he gave no attention to the stronger points instead of quibbling about things of lesser importance.

Mr. Harling takes exception to my estimate of the cost of loading the two steamers, as well as to the circumstances of their engagement. He then indicates that his own firm “actually negotiated the charter of these vessels to the Department of Railways,” and that he “personally supervised their loading at Churchill and acted as agent for the vessels and their owners.” This acknowledgment seems to lessen the value of the support given the 1 ludson Bay route by a practical and long experienced shipping agent, since it could be reasoned that selfinterest might be a motivating consideration.

Some of the paragraphs in Mr. Harling’s letter are numbered, and I shall use the same numbers in rehutting his criticism.

(1 ) "There was no semblance of ineptitude on the part of the Government,” says my critic, when the railway was near completion. Does he justify the expenditure of more than $4,250,000 on a most elaborately

equipped grain elevator, plus more than $7,000,000 on other "terminal facilities” at Churchill, when it was not even known by the Government officials whether grain exporters would patronize the new outlet? Will he not admit that much money could have been saved had the grain been forwarded in bags for the experimental shipments, as is regular practice in Argentina?

(2) Mr. Harling would not intentionally misrepresent me, so it is obvious that he did not read the article very carefully. I did not state, as he indicates: “These two vessels were secured with considerable effort ...” The sentence reads: “These two vessels, whose cargoes were secured with considerable effort on the part of the federal authorities, sailed ...” It is common knowledge that owners will make profitable charters for their ships to any destination or on any voyage, provided satisfactorymarine insurance can be arranged.

Since the article was written, but before it was published, Hon. R. J. Manion, speaking in the House of Commons, April 15, supported my contention when he said :

‘‘We had considerable difficulty obtaining anything in the shape of grain cargoes. In fact I will tell now what I did not state publicly last year, namely, that we communicated with various organizations, both public and private, in Western Canada, and we had no success whatever so far as securing grain shipments was concerned. We took considerable abuse because we had not obtained grain shipments, despite the fact that we had done everything in our power to get them. Finally, after the solicitation of the Prime Minister and myself—I might say the pleading—we got Mr. McFarland to supply us with two cargoes of grain to be shipped via Churchill.”

(3) The Churchill elevator, “Canada’s newest and most expensive, per bushel of capacity,” was, in fact, “fully staffed and idle’’ upon the departure of the second steamer. Mr. Harling says: “Your writer is in error; the elevator was still in contractor’s hands and contractor’s own men operated the machinery during these experimental shipments.”

My friend may be quite right about the contractor’s men operating the machinery. I had only the statement of the Minister of Railways on which to base my estimate of operating cost, and this was quoted in the article. If Mr. Harling will look at it he will see that Dr. Manion was quoted as saying: “The reason the time must be limited to November 1st is that by the middle of October our complete staff at Churchill, including the elevator staff, is being withdrawn until next season, and naturally we do not wish to add to our already heavy expense by having to keep the elevator staff on beyond November 1st.”

(4) With respect to the cost of insurance premiums on the hulls of the Farnworth and the Warkivorlh, my estimate may have been high, and it might have been low. Obviously, a fair value for insurance purposes had to be set on these vessels so that I might estimate the cost. Although the market value of vessel tonnage today is extremely low, it does not follow that such a condition will exist indefinitely.

If, as Mr. Harling now suggests, the owners actually paid less than the estimate I made, then the valuation declared in the policies was placed at a figure lower than what might have been considered a fair average for vessels of the size and type of the two under discussion. In any event, a small difference between my estimate and the actual amount of premium paid on these hulls does not in any way weaken my case. If anything, a lesser cost of insurance on these vessels than I estimated would definitely indicate a wider spread between the freight rate earned via Churchill, 3/9d per

quarter, and that which obtained from Montreal at the same time of the year, namely, l;6d per quarter.

(5) It a fact that grain loaded through the Churchill elevator last September cost the taxpayers of Canada more than $1 j)er bushel, whether operating charges, estimated at $10,000. are included or not.

(6) Mr. Marling disagrees with the statement of comparative costs via Churchill and via Montreal. He says: “These ligures are quite inaccurate.” But his only specific objection is to the estimate of $5,000 for ship’s disbursements, agent’s fee. travelling expenses, etc. He is of the opinion that “the only cost to the Government was the cost of loading and bagging, which with travelling expenses and supervision did not amount to more than $1,500.” I will not dispute the point with him. My figure was stated to be an estimate. I wrote to the Department of Railways last February for the actual expenditure. but the reply ignored this part of my question and no answer was given. However, the letter confirmed my figures as to freight and cargo insurance.

It would be very interesting to many Canadians if Mr. Marling couid induce the Minister to publish a statement covering all expenditures made by the Government in connection with the test shipments. If these were known I feel sure that $5,000 would indeed be a low estimate.

However, if we accept for the time being Mr. Harling’s estimate of $1,500, there would need to be made a deduction of $3,500 from my total of $39,763.50 for the Fartiworlh's cargo. This would still leave an amount nearly $6,000 in excess of the cost of shipping the same quantity of grain via Montreal at the same time last year.

I should like to point out to Mr. Marling and others who may be interested that whereas my table of comparative costs shows an actual lake freight rate, Fort William to Montreal, of six cents per bushel last September, the going rate today, at the very opening of navigation, is 5*4 cents per bushel; and it will probably go as low as five cents in a short time.

I emphatically do not agree with Mr. Harling’s statement that “all the arguments now advanced against the Hudson Bay” were once put forward against the St. Lawrence route, “when insurance rates and premiums were a source of difficulty.” And, ; further, that “all of these were in time overcome and the St. Lawrence route is now an accepted fact.”

Mr. Marling should know better than to suggest that all of these (insurance) diffi! culties have been overcome. There is still additional premium for one voyage to Montreal (or other B. N. A. ports, excluding Halifax and Saint John—the latter provided ! vessels are fitted with direction finder) during the summer season, May 15 to October 31, of five shillings per cent on the ¡ hull valuation, plus sixpence jx:r ton on the ¡ gross register tonnage. For three or more voyages during one season the additional is : fifteen shillings and l/6d, respectively.

It has just been announced that the Saskatchewan Wheat Pool has made an agreement with the Department of Railways and Canals to ship 2,(XX),000 bushels of grain forthwith to the Churchill elevator, out of which at least one-half must be exported during the coming navigation season. One of the conditions of the agreement, according to the Minister, is that “the Government is not to make any charge for elevation or storage,” and. I I presume, wharfage.

Because of this waiving of legitimate charges, which essentially amounts to Government subsidy on traffic via the Hudson Bay route, the owners of the grain are put in a position of carrying it for more than two months without the normal cost of elevation and storage charges which must be paid by other merchants using other routes, and they are enabled thus to offset other real disadvantages of a route so close to the Arctic Circle.—T. R. Kirkwood.