supplemented by a very large investment in new plant, of about $25,000,000, for the production of munitions and war supplies, had not only "enabled Canada to render assistance of immeasurable value to the Allied cause, but it also enabled her to keep her workmen fully employed at high wages." S. R. Parsons of Toronto, the new President, spoke briefly at the banquet which closed the Convention, but did not treat of the War. Resolutions touching war conditions were passed as follows: 1. Urging that "immediate steps be taken to assist in overcoming the desperate need for Railway equipment, which at present exists, by providing an ample supply of cars and locomotives and turning them over to the Companies under lease or contract of purchase." 2. Recording "the keen satisfaction it feels at the courage displayed by the Prime Minister in providing for the conscription of Canada's manhood, and pledges him its unqualified support in whatever application of the principle of Conscription he, with his intimate knowledge of the needs of the situation, may deem it wise to bring into operation." 3. Suggesting that the Government's Advisory Board on Industrial Research should: (1) organize Industrial Bureaux to inform manufacturers as to new processes and technique, and (2) institute Laboratories for solution of industrial problems in substitutes, waste, etc. 4. Urging Government inquiry "into the best methods for conserving and increasing our domestic and overseas trade, to the end that our present prosperity may not unduly suffer when the stimulus resulting from orders for munitions and other war supplies is removed." The Legislation Committee, through Lloyd Harris, reported objections to the Excess Profits tax as: (1) danger to future investment of capital for extension of old industries or establishment of new ones; (2) removal of incentives to enterprise and discouragement of production; (3) injury to after-the-war business and prospects and a tax on present efficiency in war production. The Tariff Committee, through G.H. Douglas, reported that "what the fiscal policy needed for the upbuilding and welding of Empire countries is the general adoption by all British countries of tariff preferences for Empire products corresponding to the preferences which are granted to Empire products under the tariff of Canada." Besides Mr. Parsons the officers elected for 1917-18 included W. J. Bulman, Winnipeg, and T. P. Howard, Montreal, as Vice-Presidents, and J. F. Ellis, Toronto, as Treasurer. The following were the Chairmen of Branches in 1917: A Manufacturers' delegation waited on the Premier at Ottawa on Sept. 12 and submitted Resolutions (1) pledging loyal support to the Military Service Act, "even at the cost of much inconvenience and loss arising from present labour conditions, and to do everything in our power to make possible the complete carrying out of the provisions of the Act"; (2) suggesting a National Cabinet with business, industry, agriculture and labour represented; (3) urging the election of non-partisan supporters of the Government; (4) favouring "reasonable taxation of the enterprises and wealthproducing power of the country" and, incidentally, a fair Income tax. The following table shows the progress of two basic products in export during the War-years ending Mar. 31: 1915 Minerals, Metals and Manufactures of.. $68,407,080 Transportation and the War: Nationalization of Railways. The Railways constituted a vital war problem for Canada in its Government policy, financial interests and general welfare. There was, during much of 1917, a severe shortage in rolling stock, great difficulty and prolonged delays in obtaining renewals of equipment, serious increases in the price of all railway material, large advances and demands as to wages and heavy reductions in labour supply, a natural impairment of credit and difficulty in obtaining money, considerable congestion in traffic owing to war requirements and production and no adequate increase of rates to meet increasing costs, or inadequate facilities, or deficiencies in equipment. Construction projects were eliminated or reduced to a minimum-the new track construction of 1916 was 297 miles compared with 719 in 1915. At the same time, as the year 1917 passed and a record volume of traffic was carried over Canadian lines, it was found that record difficulties had been met in many directions. Earnings had mounted higher with increasing costs and splendid work by the management of the four great systems of Canada prevented any such break-down in operation as characterized the United States. Economy became a habit, efficiency was largely developed. The chief statistics of the four War-years (June 30) were as follows: 30,795 35,578 37,434 38,604 $1,808,820,761 $1,875,810,888 $1,893,877,819 $1,985,119,991 101,393,989 87,204,838 109,659,088 121,916,272 46,702,280 $243,083,539 $178,975,258 46,322,035 49,027,671 53,749,680 $64,108,280 $52,111,972 $81,346,394 A combination of problems brought combined action and on Oct. 24, as a result of war conditions and of Government suggestion, the Canadian Railway Association for National Defence was formed at Montreal with the object of formulating in detail a policy of operation for all or any of the railways, for the co-ordinating of industrial activities toward the prosecution of the War, and for rendering the most efficient possible service to the national cause. It was hoped that through heavier loading of cars, elimination of unnecessary train service, the co-operative use of all facilities to the best advantage, the country's needs might be better servedand, of course, the convenience of the Railways also. The Execu tive Committee was composed of the Presidents of the C.P.R., C.N.R., G.T.R., and the N.Y. Central as representing American railway interests in Canada-Lord Shaughnessy, Sir. Wm. Mackenzie, Howard G. Kelley and Alfred Smith, respectively. The two chief Committees were as follows: Administrative Board U. E. Gillen..... Grand Trunk C. A. Hayes. .Government Railways D. B. Hanna.. Canadian Northern Car Service Committee W. A. Kingsland..Canadian Northern J. E. Duval.. Grand Trunk Arthur Hatton... Canadian Pacific Mr. Gillen was Chairman of the Board and Mr. Hatton of the Car Service Committee. One of the first problems dealt with was the recovery of about 20,000 cars, or 10% of the 211,900 Canadian freight cars, which were held for various reasons by American railways in the United States. Under the constant interchange of cars between the two countries this number had accumulated in the United States over and above the American cars similarly held in Canada. Immediate steps were taken in this connection -with a Conference at New York on Dec. 5—and, also, in the matter of cars making their long journey from point to point in Canada with only two-thirds, or three-quarters, of their proper load-the consequent delay in handling thousands of tons of freight, and the holding up of perhaps 25% of the total haulage capacity. Other things were done. The speed of all trains was regulated so as to use a minimum quantity of coal for a maximum effort; passenger trains were reduced by a total of 2,000,000 train miles per year; traffic difficulties were supervised as a whole and conditions coordinated; economy in the use and movement of cars was cultivated with effect. Meanwhile, efforts had been made to establish an increase in freight rates and, on Mar. 26, the Canadian Freight Associationacting for the Railways-announced for operation on Apr. 23 an addition of about 15% to the average existing rates in Western Canada. The Canadian Manufacturers' Association at once protested to the Dominion Railway Commission, though it was understood that they objected more to details than to the general average of increase while vigorous protests, as to both details and principle, came from the Western Grain-Growers and the matter was held up by the Government Railway Commission to consider and investigate. The Vancouver Board of Trade claimed before this body at a sitting there on June 6 that such an increase would add to the high cost of living and, in any case, should not apply to local transportation in British Columbia; D. B. Hanna of the C.N.R. told the Commission at Toronto on June 12 that the growing cost of operating expenses-in coal, wages, locomotives, cars, and materials of all sorts-made the increase imperative; the Toronto Board of Trade did not oppose this action but suggested to the Commission that it be an emergency measure only; the United Farmers of Ontario denounced the proposal and declared that such an increase would mean, practically, a gift of $18,500,000 to the C.P.R., while the C.N.R. would get $5,321,000 and the G.T.R. $5,873,256; R. McKenzie, Secretary of the Canadian Council of Agriculture, presented an elaborate Memorandum opposing the increase as an added burden to the primary industries of agriculture, lumber, etc., and enlarging upon the profits of the C.P.R.; J. B. Musselman, of the Saskatchewan Grain Growers, claimed that $40,000,000 directly, and as much more indirectly, would be added to the consumer's burdens. Finally, on Dec. 27, the Railway Commission gave judgment permitting an increase of from 10 to 15% in freight and passenger rates with an estimated additional revenue of $13,682,100 to the C.P.R., $6,068,802 to the G.T.R., and $3,791,150 to the C.N.R. The manufacturers approved the action as a War measure, the farmers and shippers of the West continued an active propaganda against it.* Meanwhile, in July, an increased rate on grain products passing by lake and rail from Fort William to Toronto and Montreal was allowed despite the protests of millers and others. The question of Railway nationalization or public ownership on a large scale was made possible by the War and its application in respect to certain Canadian railways was made inevitable by the war-created conditions. The action of the Government in saving the railway and financial situation in 1916 by special aid to the Grand Trunk Pacific and Canadian Northern Railways for the purpose of meeting current obligations and interest payments precipitated the appointment (July 13, 1916) of a Royal Commission to inquire into Railways and Transportation-including territories served by the three great systems of Canada, physical conditions, operative methods, branch lines, connections in the United States, steamship connections and financial conditions, together with problems of re-organization, or state acquisition. The Commissioners appointed were Alfred H. Smith, President of the N.Y. Central, Sir Henry L. Drayton, Chairman of the Railway Commission, and Sir George Paish of London-the latter being unable to act was replaced by Wm. M. Acworth of London. The Report was presented to Parliament on May 3, with one Section signed by Sir H. L. Drayton and Mr. Acworth and the other by Mr. Smith. The majority report was ambitious in treatment and analyzed at length the condition of the three chief railways; deprecated the control of the G.T.R. and C.N.R. passing entirely into the hands of the Canadian Pacific or the control of all three into the hands of the Government; opposed the management of these railways as a whole being vested in any new private corporation; recommended that the Canadian Northern, Grand Trunk, Grand Trunk Pacific, Intercolonial and National Transcontinental be transferred by Act of Parliament to an independent Board of Trustees, which should be incorporated and specifically constituted as the Dominion Railway Company with (1) ownership of the Lines to be vested in it absolutely, (2) Government responsibility to the Company to be assumed for the interest on existing securities of these railways; (3) constitution of the Early in 1918 the Government, as a matter of policy, suspended the increased rates. Board to be non-political, permanent, self-perpetuating and not subject to direct Government or Parliamentary control. The statement was made that existing fixed charges of these five railways were $34,000,000 per annum and to this was added $6,000,000 for interest on new capital required; on the basis of actual net earnings in 1916 it was assumed by the Commissioners that the shortage at the inception of the proposed plan would be about $12,500,000, making an additional gross income of $50,000,000 necessary and this they regarded as possible. It was pointed out that the operated mileage of Canada was far greater per capita than that of Britain or France and roughly equal to that of the German Empire or India; that this mileage had far outstripped the growth of the population and the available traffic; that the 8 systems involved in this Report had received from Government subsidies $157,294,329, from the sale of lands $158,189,933, from Loans outstanding, or investment, $396,924,483, from Guarantees outstanding $256,042,992-a total of $968,451,737. The Commissioners declared that Canadian Railways were in excess of existing requirements, that highways should be improved to help the farmers in bringing grain to market, that Hudson Bay Railway construction should not be re-commenced, that the natural tendency of railway rates in Canada, as in the United States, was to rise, that the Guarantee policy in railway building was dangerous. It was recommended, in addition to the main points already specified, that the Railway Commission be given jurisdiction over all Dominion railways and report to Parliament as to all proposed grants of charters, subsidies and guarantees; that there should be a continuous public audit of Dominion Railway accounts; that Railway Councils should be established so as to bring together railway management and public interests. Mr. Smith in his Report took definite ground in approval of past Government aid to railways in money, credit and legislation, but supplemented this with regret that there had not been some official supervision of policy and expenditure; eulogized the C.P.R., alleged that the Grand Trunk, standing alone with better operating conditions, could become profitable, and declared that with a return to normal conditions "and provided with the capital necessary for equipment and for additional local facilities, this road could work its way out in a reasonable time." He urged this strong argument against the policy proposed by the Majority report: "The three great Canadian companies amongst them either own, lease, or control no less than 7,000 miles of railway situated in the United States. And some at least of these lines are necessary economic complements of the Canadian systems. It is clearly impossible that the Dominion Government should be subjected, not only to the regulating authority of the Interstate Commerce Commission and the several State Railway Commissions of the United States, but also to the police regulations of all the States which these lines enter. Technically, no doubt, the difficulty could be got over by vesting the legal ownership in Government officials under their own names as trustees for the Government. But the practical |