128 PROCEEDINGS OF THE CANADIAN INSTITUTE. 



or controlled through Governmental ownership. The danger is that the country 

 will drift into an answer of this question without an appreciation of its tremendous 

 significance." 



XI. 



The public regulation of railway rates in Canada is not beset with some of the 

 most formidable difficulties that have embarrassed and crippled the commissions 

 in the United States. We have practically only two great through railways, in the 

 main they operate under very similar territorial conditions, and by the Federal 

 Acts declaring most of the Provincial branch railways to be roads for the general 

 advantage of Canada the Federal Parliament would seem to have authority over the 

 entire railway system of the country. We may be sure, however, that the validity 

 of the laws which have authorized the summary seizure of the Provincial railways 

 will be tested when we come to establish and attempt to operate a Federal railway 

 commission. There are three possible courses open to the Canadian people : (i) 

 The present system of spasmodic railway competition, and enduring and unregulated 

 railway combination; (2) regulation and control by a strong Federal commission; 

 (3) public ownership and operation. The third is no doubt the final solution, but 

 it is probably remote in Canada. I do not believe that it would be sound policy 

 to attempt to regulate great through systems by building patches of Government 

 road in various parts of the Dominion. There is^ however, much to be said in favor 

 of natural extensions of the Intercolonial and the acquirement of natural and pro- 

 fitable branches of the Government railway. But in the main one must have either 

 a system of public railways or a system of private railways. For the Government 

 to go into the business of competition with private railways would be unwise, and 

 would mean the adoption of a policy discredited by the experience of Germany and 

 other countries. The result would be either the ruin of the private railways and 

 enormous deficits at Ottawa, or the public roads would simply fetch and carry for 

 the private corporations. In the end we would have to take over the private roads 

 or hand our Government roads over to the private concerns, and in either case we 

 would then find the country burdened with hundreds of miles of unnecessary rail- 

 way. Our best and soundest policy for the time is to create a strong railway com- 

 mission, vested with power to abolish discriminations as between particular indivi- 

 duals and rival communities, to force a fair interchange of traffic between rival lines, 

 and to establish some reasonable relation between local and through charges. If 

 we can regulate by commission we can regulate without Government railways. To 

 adopt the double method would be costly and absurd. If we can make regulation 

 effective over the Grand Trunk and the Canadian Pacific it would be folly to create 

 a new great through line in order to divide the traffic and increase railway charges 

 to the farmers and traders of the country. For every mile of new railway you con- 

 struct an additional charge is laid on the people for railway support, and at least 

 in a sparsely settled country it is only by increase of traffic that material reduction 

 of rates can be secured. 



XII. 



There are grave objections to the policy of subsidizing railways out of the 

 Federal Treasury. Most of us are convinced that the system of Provincial subsidies 

 was a mistake, although if we look far enough we shall probably agree that upon 

 no other condition could we have induced the eastern Provinces to come into the 

 Confederation and surrender their control over customs revenue. But the subsidies 

 to Provinces are arbitrarily determined by growth of population and the terms of 

 union. While in the case of Federal subsidies to local railways there is no fixed 

 basis of distribution, localities and Provinces are not unlikely to engage in a com- 

 petition for Federal favors, and in too many cases party considerations rather than 



