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Published online by Cambridge University Press: 07 November 2014
This report naturally falls into two separate and almost completely unrelated parts. The final chapter, “Proposals and Remedies”, is wholly admirable. For the judgments expressed in it the writer has the greatest respect. The first four chapters are another matter. They contain some useful information, a great deal of banal comment on facts already known, some statements which are plainly false, and others which, while not altogether wrong, are likely to give a wholly distorted impression of the facts which they are supposed to report. It is the purpose of this article to cite some of these statements, to give the facts which they are supposed to summarize, to show that these facts were brought to the attention of the Commission, and thus to prove that this condemnation is justified.
All of the statements to which exception is taken are, with one exception, concerned with the relative operating efficiency of the Canadian National and Canadian Pacific Railways. (The exception charges, by implication, the Canadian National with extravagance in branch-line construction costs.) The form of railway operating accounts has been worked out in the very greatest detail by the Interstate Commerce Commission of the United States. They are designed to show the costs of performing particular functions, maintenance of way and structures, maintenance of equipment, conducting transportation, etc. Every general rate case and many of the cases involving rates on particular commodities have turned on the question of costs, and on the significance of such factors as density of traffic and length of haul in causing variations in unit costs.
Report of the Royal Commission to Inquire into Railways and Transportation in Canada, 1931-2 (Ottawa, King's Printer, 1932), dated September 13, 1932. The first meeting of the Commission was held on December 4, 1931; the last one of which record is given in the Proceedings of the Royal Commission was February 20, 1932. The discussion in this paper is based on a copy of the Proceedings in the Parliamentary Library, Ottawa.
2 Mr. Parker had had a very wide experience before his acceptance of this appointment. He began by working with several different railways and railway construction companies for a practical grounding in operation, maintenance, and traffic problems as well as in accounting. In 1912 he became assistant vice-president (and shortly thereafter vice-president) of the Delaware and Hudson Company. In 1918 he was made comptroller of the Philadelphia and Reading Railroad and later in the same year, assistant to the assistant director-general of the United States Railroad Administration. In 1919 he became financial assistant to the director-general, and in 1920, comptroller of the Administration. He returned to the Philadelphia and Reading, but left it shortly after to engage in private practice. In the ensuing years he acted as counsel or as expert witness (or in both capacities) for the Short Line Railroads, for the Pullman Company, the Southeastern Railroads, the Norfolk and Western, for Virginia-West Virginia-Kentucky coal operators in the Lake Cargo Coal cases, for the City of Boston Port Authority, etc., etc. (personal letter from Mr. Parker, November 19, 1934). He was, therefore, fully qualified by his past experience for the preparation of such a study.
3 It is evidence of the speed with which the Commission expected to work that Mr. Parker was instructed, about mid-January, to complete his work without waiting for the final figures for the year 1931 which would be available about March 15. (See appendix A, sheet 1, of the first report.)
The second report to which reference is made hereunder as “Parker report” is in two volumes. The first volume contains the report proper and is of 249 pages: the second contains statistical appendices only. The full title is Report for the Royal Commission on Railways and Transportation on the Transportation Situation in the Dominion of Canada with Particular Reference to the Canadian National Railway System and Canadian Pacific System from Data Supplied by the Railway Staffs, prepared by George H. Parker (of the Bar of the District of Columbia, U.S.A.) with whom were associated B. J. Roberts, comptroller of guarantees, Department of Finance and A. V. Franklin, railway auditor, Department of Railways and Canals, under the general direction of the Secretariat.
The differences between the first and second reports are well worthy of study, but cannot be set out here.
4 The Intercolonial, the National Transcontinental, the Canadian Northern, the Grand Trunk, and the Grand Trunk Pacific. The last two are classed as completely separate, because no necessary connection between them as physical properties can be seen.
5 See Jackman, W. T., Economics of Transportation (Toronto, University of Toronto Press, 1926), chap. iii.Google Scholar
6 Keynes, J. M., Treatise on Money (London, Macmillan, 1930), vol. II, p. 361.Google Scholar
7 Report of the Royal Commission to Inquire into Railways and Transportation in Canada, 1931-2, pars. 115-8; 126-41.
8 Ibid., pars. 127-8.
9 Ibid., par. 137. See a note by the writer which quotes some of the authorities on such a use of the operating ratio ( Papers and Proceedings of the Canadian Political Science Association, vol. VI, 1934, pp. 128–33Google Scholar). Mr.Ripley, W. Z., in appendix 2 of his Railroads: Finance and Organization (New York, Longmans Green, 1915)Google Scholar states that the classic refutation of the idea presented in the quotation above was made by Albert Fink in the annual report of the Louisville and Nashville Railroad for the year 1873-4.
10 As was done in table I, see supra, p. 82.
11 Parker report, vol. I, pp. 91-178.
12 Ibid., vol. I, p. 166.
13 Ibid., pp. 166-7.
14 Report of the Royal Commission to Inquire into Railways and Transportation in Canada, 1931-32, pars. 133-4.
15 Parker report, vol. I, pp. 131-8.
16 Ibid., pp. 136-7.
17 Report of the Royal Commission to Inquire into Railways and Transportation in Canada, 1931-32, pars. 131-2.
18 Parker report, vol. I, pp. 165-8.
19 Nor does the comparison really end here. The territory between Windsor and Montreal has a very much heavier traffic than the rest of the system. Certain facts are available on the volume of business done on the Southern Ontario District of the Canadian National, covering the territory between Brockville and Windsor ( Canadian National Railways Magazine, vol. XX, no. 7, 07, 1934 Google Scholar). With 2,522 miles of line (or 10.8 per cent, of the system total) it handled in the last six months of 1933, 22 per cent, of system revenue car loadings, 23.6 per cent, of the important passenger trains, and 27.6 per cent, of the cars handled in the yards. In other words, 15.2 per cent, of total system mileage lying between Brockville and Chicago handles more than 40 per cent of the total traffic of the Canadian National.
20 Report of the Royal Commission to Inquire into Railways and Transportation in Canada, 1931-2, p. 49.
21 Parker report, vol. I, pp. 153-9.
22 Ibid., vol. I, pp. 156-7.
23 Ibid., vol. I, p. 157.
24 Ibid., vol. I, pp. 158-9.
25 Ibid., vol. I, pp. 122-4.
26 Ibid., vol. I, p. 122.
27 Ibid., vol. I, p. 124.
28 Ibid., vol. I, p. 124.
29 Ibid., vol. I, pp. 121-7.
30 Ibid. vol. I, p. 121.
31 Ibid., vol. I, pp. 125-6.
32 Ibid. vol. I, p. 171.
33 Ibid., vol. I, p. 172.
34 Ibid. vol. I, p. 121. 7.
35 Report of the Royal Commission to Inquire into Railways and Transportation in Canada, 1931-2, par. 54, p. 21. It is of interest to note that while the figures in the table are drawn from Mr. Parker's report (vol. I, pp. 53-4), he gives each road separately. The Canadian Pacific Railway drew these figures together into the comparative table which, with one minor correction, appears above ( Canadian Pacific Railway Comment on Report, dated June, 1932, prepared by George H. Parker for Royal Commission on Railways and Transportation, Montreal, 06 27, 1932, folder I, pp. 4–5 Google Scholar). At the foot of the table there appears a note readihg “Excess Canadian National cost 1,895.33 miles at $15,867 per mile…$31,073,201”. The table is followed by a paragraph which reads: “It will be noted Canadian National costs have been rising, while Canadian Pacific costs have been declining. The comparison is of value as the majority of the lines were built in like territory for like purposes. The difference in costs represents an annual interest charge of almost $800 per mile per annum.”
36 P.C., 2910, November 20, 1932.
37 Address to the Commission by Dr. R. J. Manion, minister of railways and canals ( Proceedings of the Commission, vol. I, pp. 21–2, 12 4, 1931).Google Scholar
38 Ibid., vol. II, pp. 640-3 (December 19, 1931).
39 “We should then desire to investigate the situation and to see what steps could be taken at once to effect some substantial improvement in the financial position of the Canadian National Railway and we might find it necessary to make some recommendation immediately to the Government on the point…” (ibid., vol. V, pp. 352-5, December 16, 1931).
40 The list is by no means exhaustive.
41 It is not to be inferred that what is at issue is a difference between the Commission and its consultant over the interpretation of a complex set of facts; it is the Commission against its own expert applying clearly recognized principles to get conclusions from which any other trained worker would vary only to a very minor degree, if at all.