History of the North-West

Front matter

Lord Mount-Stephen. Sir William C. Van Home, K.C.n.Q. HISTORY OF THE NORTH-WEST. BY ALEXANDER BEGG, AUTHOR of " dot it down," " the creation OF MANITOBA," " the great CANADIAN NORTH-WEST," ETC, ETC, ETC. VOLUME ' III. ©oronto: HUNTER, ROSE & COMPANY. 1895. Entered according to Acl of the Parliament of Canada, in the year one thousand eight hundred and ninetyfour, by Alexander Begg, at the Department of Agriculture. printed and bound by Hunter, Robe & Company TORONTO. CONTENTS.

. PAGE 1. — CANADIAN PACIFIC RAILWAY CONTRACT AND AGREE- MENT - - - - iii 2. — THE MANITOBA SCHOOL CASE - - - - Cl^ i^' Ss3^ "^rÆf HISTORY OF THE NORTH-WEST.

Chapter I. The Canadian Pacific Railway And Its Opponents

As will be seen by reference to the charter of the Canadian Pacific Railway Company, to be found in the appendix, the names of men prominently connected with the success of the St. Paul, Minneapolis and Manitoba Railway, are among the signers. Two names only are not to be found there, those of Hon. Donald A. Smith, and Mr. Norman W. Kittson. The former, although his name does not appear in the charter, was from the first one of the chief moving spirits in the patriotic effort to give Canada a national highway across the continent, but the latter, being well up in years, declined to take part in the Canadian road The presentation of the contract to Parliament by Sir Charles Tupper, on the 10th December, 1880, was the signal for an immediate and most determined opposition on the part of the opponents of the Government.

Not content with con demning the project in the Commons, a systematic campaign was carried on against it throughout the country. Numerous petitions flowed into the House from all parts of the country, some in favor of the contract, but most of them against it. Step by step did the Opposition members fight the measure, and instead of uniting with the Government for the purpose of obtaining the best bargain possible from the syndicate of capitalists who offered to build the road, they endeavored to kill the scheme altogether. Although both Mr. Mackenzie and Sir John A. Macdonald had been unsuccessful in securing capitalists to undertake the work, no sooner did Mr. George Stephen and his colleagues appear with their offer than over tures were received by the Government from other parties to build the road for less money and on terms more favorable to the country.

These offers were not generally regarded as genuine, but made for the purpose of giving the Opposition a political weapon with which to fight the Government. During the Christmas recess, a determined attempt was made to raise the people against the Syndicate bargain, in the hope that it would result in the Governor-General insisting upon a dissolution and an appeal to the country on the subject. Had the attempt succeeded, it would have meant an abandonment of the contract, as Mr. George Stephen and his colleagues would never have consented to such a tedious ratification of the bargain. Fortunately, however, the people did not respond as the Opposition hoped they would, and the agitation against the charter assumed a purely partizan character. A systematic course of obstruction was then commenced in the Commons, and consistently carried out.

The Government, however, ably defended their scheme and shewed very plainly the necessity for building the road right through from ocean to ocean. In this connection it may be well to quote the words of that eminent American statesman, Hon Mr. Seward, in relation to the importance of a transcontinental railway through Canadian territory, Mr. Seward spoke as follows: — The route through British America is in some respects preferable to that through our own territory. By the former, the distance from Europe to Asia is some thousand miles shorter than by the latter. Passing close to Lake Su perior, traversing the water-shed which divides the streams flowing towards the Arctic Sea from those which have their exit southward, crossing the Rocky Mountains at an elevation of over 3,000 feet less than at the south pass, the road could be here constructed with comparative cheapness, and would open up a region abounding in valuable timber and other natural products, and admirably suited to the growth of grain and grazing.

Having its Atlantic seaboard at Halifax and its Pacific near Vancouver Island, it would undoubtedly draw to it the commerce of Europe, Asia and the United States. Thus, British America, from a mere colonial dependency, would assume a controlling rank in the world. To her, other nations would be tributary, and in vain would the United States attempt to be her rival, for she never could dispute with her the possession of the Asia tic commerce, nor the power which that commerce confers. How true were these words, anyone who views the position of Canada to-day may judge. Yet while outsiders saw the importance to the Dominion of a transcontinental line, we had men in our midst who did their utmost to destroy every chance of obtaining it. The Toronto Globe of 3rd February, 1871, contains the following estimate of the importance of an all-rail route from ocean to ocean through Canada : — Our rulers will be traitors to their country and to British connection, if they lose a single season in making it practicable and convenient for settlers to go to Fort Garry through our own territory, and in putting things in a fair way for the Canadian Pacific Railway.

It is a question not merely of convenience but of natural existence. It must be pushed through at whatever expense. We believe it can be pushed through not only without being a burden pecuniarily upon Canada, but with an abso lute profit in every point of view. Without such a line, a great British North America would turn out an unsubstantial dream ; with it and with ordinary prudence and wisdom on the part of her statesmen, it will be a great, glorious and inevitable reality. In strange contrast to the above, we find the same newspaper, in 1880, condemning the construction of the line north of Lake Superior as a useless expenditure of public money. It seemed indeed as if politics had more to do with the ob struction of the Canadian Pacific contract than a real desire to improve the conditions under which the road was to be built.

On the 18th January, 1881, Hon. Edward Blake moved an amendment to the question, " That the resolutions from the whole House granting and appropriating twenty-five millions of dollars and twenty-five millions of acres of land, according to the contract relating to the Canadian Pacific Railway, be now read a second time." Mr. Blake's amendment was, " That all the words after ' that ' to the end of the question, be left out, and the following substituted therefor : — The late Government invited tenders for the construction and work ing of the Canadian Pacific Railway under the Act of 1874. That no tenders were received in answer to these invitations. That the policy of the present Government, approved by this House in the session of 1879, was to obtain Imperial aid towards the work. That the policy of the present Government, approved by this House in the session of 1880, was to construct the railway as a Government work.

That it appears that during the recess the Government determined to attempt to make a contract for the construction and working of the rail way on wholly new conditions. That the Canadian Pacific Railway Act provides that the works on any section or sub-section of the railway shall not be given out to any con tractor except after tenders have been obtained therefor. That the Government did not invite tenders on the basis of the said new conditions, or at all. That such new conditions were not made known by the Government at any time prior to the making of the contract, nor until the night of the 10th December last, when the contract was laid on the table. That the said new conditions, not authorized nor contemplated by the Canadian Pacific Railway Act, are of the most vital importance, and amongst the same are the following : — 1.

By the act, no power is given to the Government to agree with the contractors to construct, for the benefit of the contractors, sections of the work, to be handed over to the contractors. By the contract, the Government binds itself to complete the unfinished sections, to begin and finish the heaviest section now unlet, and to hand over to the contractors for their own benefit the works, including those now in operation and comprising over 700 miles of railway, of which the Pembina branch alone is yielding $70,000 a year net revenue. 2. By the act, the cash expenditure of the Government, as principal money to be paid to the contractors, is to be $10,000 a mile, or about $27,000 000 for the whole line, apart from the cost of surveys which might or might not form part thereof. 3. By the act, the land grant is to be taken, so far as obtainable, along or in the immediate vicinity of the whole line of railway to the Pacific Ocean, and is to be of fair average quality, thus embracing a large propor tion of land not fit for settlement.

By the contract, the land is all to be taken in the North-West Terri tories, between Selkirk and Jasper, and is not to include any land not fairly fit for settlement. 4. By the act, the land not to be found near the railway is to be appropriated at other places to be determined by the Government. By the contract, the contractors are given large powers of selection of the land. 5. By the act, the Government is to have control of the sales of two thirds of the land grant. By the contract, this power is taken away. 6. By the act, the subsidy and land grant are to be payable in proportion to the value of the work done, as compared with the estimated value of the whole work contracted for. By the contract, the subsidy and land grant are to be payable in amounts wholly disproportionate on the prairie 'section, which is the easiest and most profitable, and is intended to be earliest completed. 7.

Under the act, the property and capital stock of the company remain liable to Dominion, Provincial and Municipal taxation. By the contract, such property and capital stock are perpetually exempt ed from taxation by the Dominion, new Provinces, or Municipalities therein. 8. Under the act, the land grant of the company remains subject to tax ation. By the contract, the land grant is exempted from the Dominion, Pro vincial and Municipal taxation before mentioned, until sold . ir i iccupied, for twenty years from the date of the grant. 9. Under the act, all the materials required by the contractors remain subject to import duties. By the contract, a large part of such materials is exempted from import duties. 10. Under the act, Parliament and any new Provinces are in no wise hindered from authorizing the construction of other railways, as the public interest may require.

By the contract, it is agreed that Parliament and any new Provinces shall not for twenty years authorize the construction of any railways run ning in certain directions, which might interfere with the Canadian Pacific Railway. 11. By the act, the Government has unrestricted power to regulate from time to time the tariff of tolls. By the contract, the power of the Government to reduce an established tariff is limited to the case in which the company is making a net revenue exceeding ten per cent, on the capital invested in the construction of the railway. 12. Under the act, the Government would have power to prescribe from time to time the accommodation and the trains to be provided by the company. By the contract, such power is not given to the Government. 13. Under the act, the Government would have the power to acquire the railway at any time the public interest might demand.

By the contract, the Government has no such power 1 4. By the act, the grades of the railway and the materials and manner of construction and the mode of working, including the description and capacity of the rolling stock, are to be such as may be determined by the Governor in Council ; and it was formerly the declared policy of Govern ments and Parliaments that the grades should be very low. By the contract, the Union Pacific Railway, as first constructed, is fixed as the approximate standard, and its grades are very high. 15. By the act, no power is given to the company to build branch railways, save one to Georgian Bay and one to Pembina. By the contract, power is given to the company forever to build branch lines in various parts of the Dominion. 16. By the contract, divers other important privileges and powers are given the company, not authorized or contemplated by the act.

That such new conditions wholly alter the basis for tendering. That no opportunity was given to Canadian capitalists or to the public to tender tor the work on the basis of any such new conditions. That by the Canadian Pacific Railway Act, it is provided that no con tract made under the authority of that Act for the construction of any portion of the main line of the railway, shall be binding until it shall have been laid before the House of Commons for one month without being disapproved, unless sooner approved by a resolution of the House. That the contract now on the table does not come within the provisions of the said act, and is of no force unless legalized by Parliament. That the said contract expressly provides that the same shall be binding only in the event of an Act of Incorporation being granted to the pro jected company, as set out in Schedule A to the contract.

That Parliament is free to reject such a bill. That it is now proposed that Parliament shall legalize the contract. That this House is under no obligation to do so, and it is its duty to re fuse to do so unless satisfied that the public interest requires such a step. That the conditions of the contract are extremely onerous and disad vantageous to the country. 1 hat it now appears that terms much more favorable to the country can be obtained. That on the 14th day of January instant, only five weeks after the said new conditions were made public, an offer, which is now on the Table, was made to the Government by Canadian capitalists of high standing and ample means, credit and business ability, comprising Sir W. P. Howland, H. H. Cook, A. R McMaster, Wm. Hendrie, John Stuart, John Proctor, P. S. Stephenson, John Walker, D. Macfie, Peleg Howland, A. T. Wood, Allan Gilmour, J. Carruthers, K. Chisholm, A. W. Ross, Geo. A. Cox, P. Larkin, W. D. Lovitt, Barnett & McKay, James McLaren and Alex ander Gibson, to complete those parts of the railway to be built by the contractors, and to equip and maintain and work the whole railway from Lake Nipissing to the Pacific Ocean, and to perform all the obligations undertaken by the contractors on terms far less onerous to the country in the following respects : — 1.

The contract provides for a cash subsidy of $25,000,000 and a land grant of 25,000,000 acres. The offer proposes to accept $22,00n,000 and 22,000,000 acres, making a saving of $3,000,000 in cash and 3,000,000 acres, equal at the Govern ment estimate of $3.18 per acre, to $9,540,000, or a total saving of $12, 540,000 on this head. 2. The contract provides as a standard the Union Pacific Rai way as first constructed. The offer proposes that railway as in 1873. 3. The contract provides for the giving of $9,000,000 and 11,250,100 acres for the prairie 900 miles. The offer proposes to accept $6,600,000 cash and 9,000,000 acres for the same work, making a saving on that part of $2,400,000 and 2,250,000 acres, or a total saving on that part at the Government estimate of $9, 550,000. 4. The contract provides for the giving of -$6,000 000 cash and 7,E00, 000 acres for the western four hundred and fifty miles to Kamloops.

The offer proposes to accept $5,400,000 cash and 6,750,000 acres for the same work, making a saving on that part of $600,000 cash and 750,000 acres, or a total saving on that part, at the Government estimate, of $2, 985,000. 5. The contract provides that the Government shall permit the admis sion free of duty of all steel rails, fish plates and other fastenings, spikes, bolts and nuts, wire, timber and all material for bridges to be used in the original construction of the railway, and of a telegrap'. line in connection therewith, and all telegraphic apparatus required for the first equipment of such telegraph line. The offer proposes to undertake the obligations without any exemptions from duty, thus effecting a further large gain to the country. 6. The contract provides that for twenty years from the date thereof no line of railway shall be authorized by the Dominion Parliament to be con structed south of the Canadian Pacific Railway from any point at or near the Canadian Pacific Railway, except such line as shall run south west or to the westward of south-west ; nor to within fifteen miles of latitude 49 ; and that in the establishment of any new province in the North-West Territories', provision shall be made for continuing such prohibition after such establishment until the expiration of the said period.

The offer proposes to undertake the obligations without any such re strictions, thus preventing the creation of the legislative monopoly in favor of the company provided by the contract, and preserving to Parliament and the new provinces, unfettered by the contract, their freedom to char ter railways and to create competitive routes as the public interest may requi'e, and by this means blotting out one of the most objectionable fea tures of the contract. 7. The contract provides that the Canadian Pacific Railway, and all stations and station grounds, workshops, buildings, yards, and other property, rolling stock and appurtenances required and used for the con struction and working thereof, and the capital stock of the company, shall be forever free from taxation by the Dominion or by any province here after to be established, or by any municipal corporation therein.

The offer proposes to undertake the obligations without any such ex emption thereby effecting a great further public gain. 8. The contract provides that the lands of the company in the North- West Territories, until they are either sold or occupied, shall also be free from such taxation for twenty years after the grant from the Crown. The offer proposes to undertake the obligations without any such ex emption, thereby effecting a great further public gain, aud removing a most serious hindrance to the development of the North-West. 9. The contract contains no provision giving to the Government power to acquire the railway. The offer proposes that the Government shall be entitled at any time after completion to acquire the railway on terms to be settled by agreement or arbitration, thus enabling the Government, in case the public in terest shall be found at any time to demand that step, to acquire the railway with a view to its being dealt with as those interests may then require. 10.

The contract provides for the passing of an act which would limit the power of the Governor-in-Council to reduce tolls once established to the case in which the company's net profit shall exceed ten per cent on the capital invested in the construction of the railway. The offer proposes that there shall be no such limitation, and that the provisions of the General Railway Act shall apply giving the Governor-in- Council unrestricted power to regulate established tolls from time to time, as the public interests may require. 11. The contract makes no provision for the allotment of stock in tin company in the several provinces. The offer proposes that the act to be passed shall provide for the opening of stock books in the principal cities of each Province with a view to such allotment. That the said offer, besides its proposal for the whole line, contains cer tain alternative proposals, in case the Government should desire to with draw from or postpone the construction of certain \ arts of the lintby tin contractors.

That the conditions of those alternative proposals are not such as should be accepted, but the refusal to accept the same, leaves un touched the offer for the whole line which stands independent of the said alternatives. That it appears that the said tenderers have deposited in chartered banks of Cunada, over $1,400,000, which is held by such banks as security that if the tender is accepted and the charter granted the million of dol lars to be deposited with the Government as security for construction, will be deposited as proposed by the tender. That it is not in the public interest that the contract, according to the terms of which the $25,000,000 and 25,000,000 acres are proposed to be granted, should be legalized. The offer of the Howland Syndicate, however, was not generally regarded as genuine, and the Government resolved to stand by the contract made with Mr. Geo. Stephen and his colleagues.

Mr. Blake's amendment being therefore defeated, no less than twenty-three further amendments were offered by the following gentlemen, as follows : — Sir Albert Smith : — That in the opinion of this house, tenders should be invited for the con struction and operation of the railway, before Parliament is asked to ratify any contract fur the same. Mr. Bechard : — That prior to and during the last general election, it was the policy of all parties that the arrangements for the construction of the Canadian Pacific Railway should be such as the resources of the country would per mit without increasing the former rates of taxation, and that the work if it be constructed by a company, should be let only after tenders had been obtained therefor, and should be subjected to purchase by the Govern ment at ten per cent over cost, after deducting the public expenditure, and that the property, and stock, and land grant of the company should be subject to taxation, and that the Governor-in-Council should have the unrestricted right from time to time, to regulate the tolls to be taken and to prescribe the accommodation to be given, and that the Parliament should be free to charter such other railways as the public interest might require.

That the contract respecting the Canadian Pacific Railway, laid on the Table, involves violations in the above and other particulars of the settled policy in reference to the Canadian Pacific Railway, and should not be ratified till after the people have had the opportunity ot expressing their opinions through the medium of a general election. Sir Richard J. Cartwright : — That the contract respecting the Canadian Pacific Railway involves a total expenditure by the country in connection with that work of about 60 millions of dollars, exclusive of interest, and the cession of 15 millions of acres of choice lands, worth at the estimate of the Government last year at least $79,£00,000, making a total consideration of about $140, 000,000, while the railroad itself is estimated by the Government to cost not more than $84,000,000, and that the consideration proposed to be given is excessive, and that the contract is in this respect objectionable.

Mr. Burpee (Sunbury): — That the present construction of the Canadian Pacific Railway in Brit ish Columbia is premature, and will involve the country m an expense beyond its reasonable capacity, and will result in the maintenance of too high a rate of taxation, while the postponement of that part of the under taking till after the completion of the prairie section will enable it to be constructed at much less cost, and within a reasonable time.

Hon. W. Laurier: — That the contract respecting the Canadian Pacific Railway provides for the construction of between six and seven hundred miles of railway to the north of Lake Superior, between Lake Nipissing and the junction with the road from Thunder Bay, through a difficult and uninha1 ited country, and at vast expense ; that a mere fraction of the cost of this road would, if applied as a base of credit, secure the construction of those sixty-three miles common to the through line, and to the Sault Ste. Marie Railway, and also of the remainder of the line to Sault Ste. Marie within three years ; that the line by Sault Ste. Marie would give Ontario, Quebec, and the East, railway connections with the North-West of nearly the same length and of better quality than the proposed North Shore line ; that it would also give Canada a great trade from an enormous area of the West ern States, extending from the boundary to a point south of St. Paul, and even now inhabited by about 1,200,000 souls ; that it would secure a way traffic ; that it would thus give within three years, and at a fraction of the cost of the other line, greater benefit than can be secured by that line in ten years, which is the period stipulated for its construction ; that it would bring both the Western States and the Canadian North-West into connection by rail with the ocean steamers at Montreal and Quebec, on a route shorter by about 300 miles than the existing route to New York ; that this advantage, together with the further gain of about 250 miles in the ocean voyage to Liverpool, would give this route a commanding posi tion, and secure great benefit to the country at large ; that the construction of the line to the Sault or Goulais Bay would also give a first-class rail and water route via Sault Ste. Marie and Thunder Bay, within our own limits, by the shortest possible line, for the transport of emigrants, goods and produce ; that the construction of the line from Sturgeon River to or beyond Thunder Bay, to the north of Lake Superior, is, under the circumstances, premature, and should not now be undertaken.

Hon. David Mills: — That the contract for the construction of the Canadian Pacific Railway, while it gives to the company the absolute and perpetual right to build branch lines of railway from any point or points along their line to any point or points within the Territories of the Dominion, and cedes to the company free all Government lands required in connection with such branches, provides that for twenty years no line of railway shall be au thorized by the Dominion Parliament, or by any new Province, to be con structed south of the Canadian Pacific Railway, from any point at or near that railway, except such as shall run south-west, or to the westward of south-west, nor to within fifteen miles of the boundary between the United States and Canada ; the same contract cedes to the company the only existing outlets to the North-West, namely, the Pembina branch be ing the outlet southward, and the Thunder Bay line being the outlet eastward ; the company embraces the chief proprietors of the St. Paul and Manitoba Railway, the only present means of railway communication with the North-West, and thus not only is there no provision for securing com petition, but there is provision securing the company against competition, and they are secured in a monopoly of the trade and traffic of the North- West for at least twenty years ; and that the said contract is in this respect objectionable.

Mr. Borden : — That the contract respecting the Canadian Pacific Railway provides, that the company shall not be obliged to receive any section of laud con sisting, in any material degree, of land not fairly fit for settlement, and that lakes and water stretches shall not be computed in the acreage of the company's sections, and gives to the company the right of selecting in alternate blocks anywhere in the fertile belt or elsewhere, the amount of the large deficiency in the acreage to be found in alternate blocks within twenty-four miles of the main line, thus including coal, mineral, timber, stone quarry petroleum and salt producing lands in their choice, and gives to the company, with the consent of the Government, the right to select in the North-West Territories any tracts of land not taken up, in order to supply the deficiency ; and provides no proper means of deciding whether the alternate sections on the main line and branches should be accepted by the company ; and that the said contract is, in these particulars unjust and impolitic.

Hon. Mr. Anglin : — Tint the contract respecting the Canadian Pacific Railway, provides for a distribution of the money and land to be given for the work, wholly ar bitrary and disproportionate ; that land and money, far in excess of pro portionate cost, is assigned to the prairie part, the easiest and most pro ductive of the railway, which it is alleged will be constructed within, three years, by which time the company will be entitled, in cash and lands, to a surplus amounting, according to the Government estimate of the lands at $8. 18 an acre, to over thirty -four millions, which surplus should have been reserved and applied towards the construction and working of the eastern and western ends, and that the said contract is in this respect objectionable. Mr. Trow :— That the contract respecting the Canadian Pacific Railway exempts twenty-five millions of acres of choice lands of the company from Dominion, Provincial and Municipal taxation, until such lands are either sold or occupied, for twenty years after the grant thereof from the Crown ; that such exemption is unjust and will impose undue burdens on the settlers on the alternate sections, who will be obliged to make improvements and incur expenses, enhancing the value of the company's lands without re ct iving their fair share of the cost of such improvements and expenses ; that such exemption, by freeing the company from the burdens of taxation, will reduce the inducements to the company to sell their lands earlj and will enable the company, free of expense, to hold their lands till their value has been greatly enhanced by the labors of the adjoining settlers, and that the said contract is in this respect objectionable.