Ontario and Its Railways

PRESIDENT STAPELLS: Ask the business and professional

men of Toronto why our distinguished guest was elected Chancellor of Queen's University and President of the C.P.R., and I venture to suggest that ninety per cent. of them would say, "Oh, because he is Eddie Beatty." (Hear, hear and laughter.) Evidently he has impressed them so with his dominating, magnetic personality that long ago they were convinced he was destined to occupy such exalted positions. Ask the authorities that be at Queen's why, and they would say, "Because he is a young Canadian with energy, enthusiasm, great constructive ability and vision. (Hear, hear.) Ask the Montrealer, and you will receive the same laconic reply, "Oh, well, he is a Toronto man." (Laughter.) And that reminds me of a conversation I overheard last Tuesday after the great Victory Loan results had been announced. A Toronto man was twitting the Montrealer over the fact that Toronto had subscribed twenty millions more than Montreal. The Montrealer shot back at him, "Well, you haven't got the C.P.R. in Toronto, that can contribute twenty millions to that loan." "No," said the Toronto man, "but you would not have contributed the twenty millions if you hadn't had a Toronto man at the head of your organization." (Laughter.) Now, gentlemen we are all proud of the C.P.R.-the greatest organization of its kind in the world. (Hear, hear.) Outside of the army and navy themselves, it did more in the war than

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"Eddie" Beatty, as he is familiarly spoken of by his Toronto friends, is an old Toronto boy. He is the Chancellor of Queen's University and the President of the Canadian Pacific Railway.

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certainly any other privately-owned organization. (Hear, hear.) Just a moment-nearly 100,000 employees; 18,000 miles trackage; 100,000 miles of telegraph system -all placed at the disposal of the allies at the commencement of the war. Carried two million troops during the war; carried four million tons of cargo; the C.P.R. Angus shops the first factory in Canada to make shells for the Allies. Lent Arthur Harris-now Sir Arthur Harrisand 36 experts to look after shipping, and under their direction 12,239,763 tons, excluding horses, were cleared at Canadian ports. (Hear, hear and applause.) Sent 10,187 men to the front; 1,000, unfortunately, never to return. Have given employment to 9,159 returned soldiers. (Applause.) Since the war started the C.P.R. has loaned and guaranteed to Allied nations $100,000,000, probably the largest contribution made by any industrial enterprise in the British Empire. (Applause.) No wonder we are proud of the C.P.R., and justifiably so, too, I think, and of the fact that the executive head of that great industrial organization is a young Canadian, born and bred in the city of Toronto, (Applause.) referred to affectionately by thousands of our citizens as "Eddie" Beatty; referred to in terms of respect and admiration and loyalty by Canadians from one end of this country to the other. It is unnecessary for me to introduce Edward Wentworth Beatty, King's Counsellor, Queen's Chancellor, C.P.R. President, staunch Britisher, outstanding Canadian, Toronto citizen, to deliver the first speech he has delivered in Toronto since his elevation.

MR. BEATTY was received with loud applause, and cheers, the audience rising. He said: I find it very difficult to express my deep appreciation of the kindness and courtesy of the invitation of your President that I should attend and speak at this luncheon.

It is peculiarly gratifying in that this is the first time I have been in Toronto, except on the business of the company, since I assumed the duties of my present office, and that the invitation comes from the executive of a Club of such outstanding importance, formed in the city in which I formerly lived, and during fourteen years enjoyed what most of us regard as the most pleasant years of our lives.

It is over eighteen years since I left Toronto to live in Montreal, and during those eighteen years, particularly during the lifetime of my late father and mother, I do not think that any one month passed without a visit to your city, of a day or two days. Many of my friends are here, the old associations have not entirely disappeared, and my affection for my former home city remains unimpaired. These circumstances alone would afford ample justification for a feeling of pride in the invitation of your executive, but there is another reason why I have embraced, with such pleasure, the opportunity which has been afforded me, and that is the large and common interest which the company I have the honor to represent has with the city of Toronto and with the province of Ontario.

The Canadian Pacific operates within the limits of your province 3,400 miles of railway, being I think at present the largest mileage under any single system within the province. The possession of this extensive mileage gives, in itself, a reason why the company's interests and those of the development of the province are closely co-related and interdependent. That interest is shared by the other systems which are to be consolidated in one unified operating organization, the mileage of the Grand Trunk in Ontario being 3,035 and of the National Railways 1,852.

Ontario offers perhaps the greatest variety of railway traffic possibilities of any of the Canadian provinces. You will appreciate that this is so when you recall the extent of the productions of the province which contribute to the support of the railway systems operating within it. In manufactured products it, of course, leads the whole of Canada; in agricultural products it is prolific, and the products of the forests and mines are extraordinarily extensive.

In manufactured products alone the province produced over thirteen hundred million tons in 1917, or over 5170 of the aggregate production of Canada. Of the products of the mine, Ontario produced ores to the value of eighty eight million dollars, or 46% of the total production of Canada, while the value of the agricultural production was one billion, one hundred and forty-four million dollars, or about 22% of the whole production of Canada. In pulpwood Ontario produced 33% of the total production of Canada, and in paper 43%, while in dairy products it produced in value and in tonnage in excess of 62% of the whole Canadian production. In live stock production the figures are equally impressive, being 26% of horses, 34% of milch cows and 25% of sheep.

That is the past, and the future holds still more in the way of traffic and railway possibilities.

The total railway mileage in Ontario is slightly in excess of 11,000, or a little less than that of the State of Pennsylvania, while its area is five times as great. Ontario is likewise over five times as large as Ohio, and its railway mileage only 1,900 miles greater. With the increasing population and commercial expansion more mileage must be constructed and existing facilities increased. The Canadian Pacific has not reached the limit of its development within the province of Ontario, nor has any other railway company, if the future possibilities are as we have every ground for believing them to be.

The National Railway System will, in due course, develop into one of the largest single organizations in the world. It will possess-when the consolidations now in contemplation are completed--a system aggregating over nineteen thousand miles in Canada and two thousand odd miles in the United States, while lines embraced in the Canadian Pacific System in the United States and Canada amount to more than nineteen thousand four hundred miles. Whatever divergence there may be in the views as to the advisability of the policies which have led to the acquisition of this extensive mileage and its operation under the aegis of government, there can be but one view as to the desirability of its success. I can, I think, say with perfect candor and honesty that no one desires its success more than I, and this is a hope which I think can fairly be re-echoed by anyone who desires the burdens of this country to be as light as possible, and the freight and passenger rates as low as possible.

In addition to the federally incorporated companies, you have in Ontario local projects which are designed to accelerate development and, while they are not yet in being, you may be fairly well assured that if carried out to a successful conclusion, none of the existing transcontinental railway systems can help but be benefited by them. It is true that in local competition existing business may be more or less divided, but there will be new business attracted and developed because of them, and the advantage to the transcontinental systems secured. from the haulage of additional tonnage over long distances will much more than offset any diminution of local earnings through the introduction of a new competitor.

I make no comment on the advisability or inadvisability of proceeding with those projects now. I may conceivably have views on the economic expediency of them which do not conform with the views of others, but my great desire would be that, if carried out, they should be successful, because nothing-all suggestions to the contrary notwithstanding-is more discouraging than financially embarrassed competitors.

The fact that competition is carried on with prosperity to all those engaged in it is the surest sign that general business conditions are healthy, whereas the failure of any large enterprise, especially one operated by the government, must of necessity mean heavier taxation on corporations and individuals to meet annual deficits. The burdens of the country are heavy as it is, and no one, no matter in what system of operation of public utilities he believes, can possibly welcome the advent of unsuccessful enterprises.

I mention this because it has seemed to me that the impression is sometimes current in parts of the province that the activities of the Canadian Pacific are more widespread than is the case, and that opposition has been shown when not the faintest semblance of any has been indicated through any act of the company itself.

I can imagine no issue of a transportation character being raised in Canada in which the attitude and position of the Canadian Pacific cannot be candidly and frankly stated. The company's first and principal interest must always be its ability to perform efficient transportation service, and its own resultant transportation prosperity. While the political future of Canada is a matter which concerns all companies and individuals, the Canadian Pacific's activities are so unimportant a factor that I am almost ashamed to mention them when so much which is flatteringly untrue has been said about them.

In fact when you appreciate that in the Canadian Pacific Railway alone, quite apart from its subsidiary enterprises, a sum in excess of $827,000,000 in cash has already been invested, of which more than $758,000,000 has been contributed directly or indirectly by the share and security holders, you will realize the magnitude of the company's stake in the prosperity of Canada and every province in Canada. I can imagine no corporation of its size, with its numerous ramifications more aloof from political activities than the Canadian Pacific. Its business and its interests it is the duty of its directors and officers to jealously guard and actively further, and in every commercial and economic issue the company is to some extent affected. Political machinations and intrigue, I am glad to say it is free from, because its directors and officers appreciate that the measure of support which is given to it will be that which it gains through the character of the service it renders and the honesty and the integrity of the officers to whom its interests are confided.

There is, as you know, a railway situation existing in Canada, and to a greater degree in the United States, which is without parallel in the history of either country. It would take too long for me to trace for you some of the history which has led up to the present condition, but it is sufficient for me to say that in the evolution of the United States railways, the railways themselves were not free from blame and in fact were initially responsible for the public attitude towards them, which led to their failing to receive support when public and judicial support was sadly needed. This attitude had resulted in the United States in a system of restrictive and too inelastic regulation, absolutely cramping in its effect upon the development of the companies and subversive of the interests of the public. The failure of the United States railways in 1917, and what we now know to have been their physical and financial breakdown, was a breakdown under the too rigid system of regulation to which during prior years they had been subject. In the conduct of these railway operations we are, as others, confronted with an extraordinary high cost ratio due to high wages and costs of material of every description.

To what extent the question of increased remuneration to railway employees in Canada is important is indicated most vividly by the enormous total of the wage increases granted during 1918 and 1919. The amount of those increases, which aggregated the enormous sum of $77,000,000 exceeds the interest on the whole war debt of Canada, exclusive of course of the loan just completed. In other words, even though the war expenses, due to the emergency of the situation were extraordinarily heavy and extended over a long period, the interest on this debt to be paid by the Canadian people does not equal the increases granted in a single year to the employees in one branch of commercial activity, and additional requests are being made. It is axiomatic that these increases in operating expenses must be paid, and they can only be met in one way, namely, by increasing the rates to the shipping public, unless the natural increase in traffic is such as to equal the increased operating costs.

Unfortunately for the railways of Canada the rate increases granted last year fell far short of equalling the increases in wages granted under what is known as the "McAdoo Award" and amendments. The increases in revenues due to increases in rates amounted approximately to $43,000,000 which means that $34,000,000 was spent in increased operating costs due to increases in wages alone, which the railways have not been able to get back.

If additional wage increases are granted in the United States, then by reason of the parity of conditions which exists there as compared with Canada, similar increases will follow here, and, if to meet those increases, rates are again increased in the United States, rates must again be increased in Canada. It must be obvious to you that this vicious circle with the pyramiding of expenses and increasing costs to the ultimate consumer (the latter in many cases out of proportion to those directly resulting from the increases in wages and rates) must stop. Otherwise the burden will become too great for any community to bear and prosper. The basis for all applications for wage increases has been the increased cost of living, and, while these increases have been great, the actual increases in the wages is, generally speaking, greater than the increases in the essential and staple commodities. The reason why the wage increases, even to the extent granted, do not place the recipients in a more favorable position is that the increased cost of necessities has been accompanied by a higher standard of living, and these extra and new expenses which are the voluntary act of the individual and his family have increased his general living expenses to such an extent that the increased wages have not offered sufficient compensation.

This is not to be wondered at, because perhaps one of the last things any individual learns is how to spend money properly, once he reaches the point where there is a margin which can be spent as and when and in what way he wills. It is easy enough to be economical and sane in expenditures when one has no considerable monies to disburse beyond what he requires for necessary expenses of living. But while this may be all true and can only be corrected by education, there is an inflated cost of all staple commodities in Canada and the United States today which is not warranted.

The history of the last few weeks in Great Britain and the United States is indicative of what can be done when it becomes apparent that the sentiment of the people as a whole demands action and expects remedies. I am of the conviction that once the results to the community of these increasingly high costs are brought home to those who produce and distribute, backed by the weight of accurate publicity, much will be accomplished in reducing or at least checking the increasing cost of living, which is rapidly getting beyond the point of endurance to the man of fixed income or moderate means.

It has been suggested by able financiers and others that tinkering with these questions is futile, and that the solution depends upon, and should be left to the operation of, inexorable laws of supply and demand. No doubt under normal conditions we could afford to rely upon the corrective influence of these almost immutable economic laws, but the world is sadly out of balance, and the demand now for necessities, particularly foodstuffs, is beyond the supply, and the prices have been forced higher than the purchaser can afford to pay.

As this is a purely artificial condition due to five yeas of war, it requires artificial means to correct. In other words, with the demand so much greater than the supply unreasonable costs cannot be exacted if the world is to pay for what it buys.

The necessity for the moment, of course, is more production, which means more work and greater thrift. It means that the individual must produce in order that the supply may be increased, and he must save in order to bear safely his individual burdens.

Never, too, perhaps was the need of individual efficiency more apparent than it is today. Efficiency in itself is one means of increasing production and lowering costs. Inefficiency is responsible for much waste, and how great it is and how lamentable its results, can be indicated in the case of any large corporation.

I am familiar with the figures of my own company and therefore I maybe pardoned for using them as an example. The pay-roll of the Canadian Pacific aggregates seven million five hundred thousand dollars a month, or roughly ninety million dollars a year, and inefficiency of as little as 1070 means a loss in labor production of nine million dollars per annum. One hundred percent efficiency is a high mark to aim at, and 10% under par would be considered a high average, but yet in the case of one company alone what I think would be considered much better than an average showing would mean in the result, a wastage of effort valued at nine million dollars.

When you consider these facts it is not to be wondered at that the paramount consideration in all organizations today is the obtaining of this efficiency the lack of which is so costly. It cannot be obtained through theories, or fancy experiments in different methods of organization. To my mind it is only capable of accomplishment in one way, namely, through the everlasting struggle for results, because with them comes reward. With this knowledge and a high sense of duty coupled with the maximum of effort and eternal vigilance efficiency is secured.

In concluding these remarks, which are intended to be only suggestive, I cannot refrain from mentioning the duty which your transportation companies, whether government owned and operated or privately owned and operated, owe to the people of this country. I say "owe" because I know of no individual agency which can contribute to or mar prosperity to a greater extent than these huge transcontinental or semi-transcontinental systems.

The time was when your railway superintendent was a man of rough exterior, crude methods, and indifferent not only to the whims but the rights of the public. Public sentiment and the necessities of the situation have changed all that and now one essential ingredient in traffic operation or executive railway activities is the appreciation of the exacting nature of the service which the public demands, and the everlasting ambition to inspire confidence in the service given for the business rewards that follow from its successful accomplishment.

Intelligent and serious discussion of all phases of transportation activity in connection with Canada's development are essential. Support of the railways is necessary if they are to be able to do their full part in Canada's trade expansion, because no other single agency contributes to the same extent to and reflects the general commercial prosperity of the country.

In the course of these remarks I have mentioned at times matters which were peculiarly within my knowledge concerning the Canadian Pacific. I did so intentionally, knowing that you would not disassociate me from the company I represent. If you think the references have been somewhat more frequent than is necessary, I would ask you to remember that there were many things I might have said, which I did not say.

Horn. WALLACE NESBITT expressed the thanks of the Club to President Beatty.