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RAILWAY nn r ESTMENTS IN CANADA*
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Note: This text has been automatically extracted via Optical Character Recognition (OCR) software. The text has not been manually corrected and should not be relied on to be an accurate representation of the item.
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rpHB subject of colonial and foreign railway management is _ eijr J- soon to become one of great interest to a Jarg-e number of persons in this country . Those oil the American continent . seem first to claiih our attention . The aggregate amount of British capital invested in the bonds and shares of railways in the United States and Canada must be something very formidable—probably not less than , one hundred millions sterling-. How much ot this amount consists of share , and how much of bonded or-preference capital , we are unable to estimate , except in particular cases . In respect to the Canadian railways , we have more accurate data to g-o upon . Both classes of securities are mainly held here , and the lines themselves are under English management . This circumstance , however , can scarcely be regarded as a recommendation to British investors . There has been too much mismanagement of this description of property at home to afford guarantees that greater , judgment and economy , or more honesty , can be supposed to exist where the same class of men are sent to manage similar undertakings abroad . If suspicion can arise respecting the acts and policy of directors when the property to be managed lies , as it were , under the immediate supervision of its owners , imd Laving the everwatehrul eye of the independent press of this country upon them , what grounds for apprehension must there be where none of these considerations can be brought to bear ! iNFearly thirty years of railway management at home have served in souiedegree to accumulate a stock of experience which we are only just learning , how to apply j but who can estimate in pounds , shillings , and pence the cost of such experience ? How many thousands of the less Cautious or- more confiding members of society have been partially > or wholly ruined by . trusting to the specious reports of directors , stockbrokers , and other interested parties ! Although the bulk of the proprietors may travel daily over the lines in which . their money has become locked up , how next to impossible has it . been found to get anything like a correct insight into the details of their management ! With regard to railway direction abroad , it is only natural to expect from it a complication of the same evils ConipUiiued of at home . Our great province of Canada is likely to afford us the first exemplification of the correctness of this assumption . We have , besides lending the Province about twelve millions , which we consider a good investment , advanced near twenty millions to build an unrivalled systeni of railways from one end of Canada to the other . Whether " any considerable portion of this . latter sum will ever afford any return to those who have supplied it , seems almost problematical . At aiiy rate , it behoves the proprietors in Canadian railwaj r s ' ¦ x > k sharp after their property . We learn _ ¦ that the _ process ¦ of Aoruciosui'e is very active at the present time iu the neighbouring States . The failure of companies to meet the interest on their bonded debt is affording active employment to courts and lawyers . Scarcely a week passes without decrees wiping- out , us if with-a spcinge , millions of dollars of shai'e capital . There is the Erie with its twelve millions , the Michigan Soutlienx , with its six or seven millions , the Marietta and Cincinnati with five millions , and -numerous others just undergoing- the last ngouies of extinction . Unless there is a great amendment in business—a material change in management and policy , the inexorable band or preference shareholder will soon demand his pound of flesh in Canada ; < 0 n the present occasion the Great Western of Canada calls for our attention . This line forms a short cut across the western peninsula of the province , extending- from the Fulls of Niagara to Windsor , opposite Detroit . A move particular description is not deemed requisite , ap afc is to be presumed that each proprietor has informed lumself of the locus in quo of his property . The future business of the lino , when it was introduced into this market , was predicated niainly upon its being a link in a great chain of railway communication between Nqw York and Boston , on the Atlantic seaboard , imd the teeming and almost fabulously growing West . It was aln <> represented as certain to become a Jink in tl ) o . then projected Grsiud Trunk , which was to run from Hamilton to Portland and Qi \ ebec , communicating with Lake Onfcp-io at the former place . , ; ' As a linlc in the great American chain , it was claimed to be—and correctly , no doubt *—fifty or sixty miles shorter than the linos south of Lake Eric . Those railways , which were to form its immediate allies and connections—the New York and Michigan Central Lines —were , of easier gradients , and both passengers and freight could thus be transported cheaper and more , rapidly than by any other route . Add to these striking features the reprenontation made that the line ( vonx the Fulls of Niagara- —two hundred and twenty-eight miles long- —was not to cost over a million and a half of pounds , quid no one need be surprised that the capital was forthcoming to carry it into effect . We cannot stop to trace the history of jts envly manngemeiifc , nor would it be read at this time . The question for inquiry now is , how lias a Work , possessing such transcendent merita in points of location and connections , failed to realize the hopes and predictions of its firflt patrons P It is not our province to enter into details . A Committee of Inquiry has been doroimded by a portion of the shareholder * , and has been conceded by the directors for appointment at
the semi-annual meeting , to be held at the London Tavern on Wednesday next . To them will belong the task of entering into all the acts and policy of those who are responsible for the present state of things . The making up a dividend , partly Out ; of the remission by the Canadian Government of the interest on its loan to the Company , and partly by economizing the construction account , until the wooden bridges and permanent wa } ' have become unsafe , can scarcely be regarded by the proprietors as sati .-factor }' . * . From the information we have before us , and which challenges inquiry , it would seem that the chief cause of the depreciation of the Canada Great Western property is to be found in the amplification of the same policy that lias so greatly diluted nearly sill English railway investments , namely , the expenditure of large sums in the construction of non-paying branches and extensions , under the mistaken notion that they were ro become important " feeders . " In the case of this line , the proprietors , it would seem , have not only thrown away in this manner nearly a million sterling-, or thirty per cent , of . ; their share capital , upon wholly unproductive undertakinrvs . but they have excited the hostility of their best allies , the Michigan and New York Central llailroad Companies . At the inception of the Great . Western of Canada , these Companies , regarding their own success and prosperity- to . be closely identified with . the Canadian line , subscribed for and paid up eight hundred thousand "dollars of its capital . Three seats were provided for the American directors at the Hamilton Board , two of which were filled by the presidents of the two . Central Companies . This circumstance gave additional confidence to the English public , who were shortly afterwards appealed to , and whose subscriptions soon led to the sending out of a managing director . As each English contrilmtion of money to the concern added fresh ' strength , to this gentleman ' s position , he very quickly engrossed to himself-the entire management of the lino . The American gentlemen became aUnned at his extravagance and Want of discretion , to say nothing- of his inexperience , for he had never held a positi :. n at home above an assistant secretaryship in a London office . . They therefore came , to the conclusion to sell out the investment which , they had induced their companies to make . in the undertaking , so soon as an opportunity pivsfcnteu itself . This occurred shortly after the opening of the line in 185-1 . . From the retirement of the ^ e ^ entlern&n up to the present time , each year lias added more or loss to the capital account , until it has risen " from its original estimate of a million and a hull' to five , millinns—of which two millions is bonded debt . Meantime , a grovying hostility has been the result of the withdrawal of the American directors . This was caused by the manifests policy of the Great Western . manager to do all in . his power to divert bn ^ iiies . s from the two great connecting lines , which , it is asserted , give the Canadian Company fully one lull /" , and that , too , the best paying- ' half of its business . . o The building"of the . Snrnia branch , which terminates iit the foot of Lake Huron , was the first grand blunder'in this way . . That mifrht have passed without exciting any jealou .-sy on the part of the Michigan Ceulral Company , because the managers of thsit Companysaw that a line levminating- on Lake Huron , which is . closed-up half , the year by ice , and which during navigation could not be expected to draw away business from its own western sources of traffic , would only injure those who supplied the . money to-build , it . ' . ' . In fact , they simply regarded the expenditure of . four or-five- hundred thousand pounds upon it as so lnnch money thrown away , and which onlyconcerned those who found , it . Even when the Detroit and Milw . aukie line , which runs across the State of Michigan in a parallel course with the Central limv ' of that State , was firot ' projected , ' 1 he directors of the Central Company wero favourably disposed towards the enterprise . They considered it a * calculated' to Ucvelope the material resources of the State ; and relyiivg upon the strength of their own position , as forming the shortest railway route , unbroken by Juke navigation , to the west , they were plens ' ed to see the Detroit and MilwauUie line undertaken by English capitalists . It could not at this time have onlored any sane man ' s head thftt the' Great Western Company would ever attempt , " as they have since done , to ( issiuriu . the proprietorship of this Detroit an ' d Milwaiikib lino . The elr ' ect of this state of things U thus narrated in one of the pamphlets before us .: — " Tho cause of thia want'of harmony will bo found in thg unfortunate policy of the directors , Which lias led to tho . taking up and working of the botroit und Milwiiukio , as jmrt and parcel of tlio . Great Western Hue . The more thoroughly to identify tlu » two tjompnuiea , the directors , or a portion of them , both in England uud Canada , Wave acceptedsuats at the Detroit Hoard , and the Great Western nuuiuKing director has beoomu its president . In furtherance of thia plan , tho two iJngllsli directors in Canada , o-a already stated , . hnvo become noraonully interested , ( it is to bo assumed with the approbation pfthoir co-diroctorg ) , in the steumera forming the connection across Lake Michigan between Grand Haven anil Mihvuulclc . " It will thus bo soon that whilst it w « , s the true policy of fch <» Great Western Company to do nothing to tlamiitfo tho intoreats of tHoir great American allioa ( the Now York and Mi « i % nn Central OoiNminiisa ) , it hn , s become the direct . interest of the O-madlun managera to divert from tlie aHqhigon Central Lino an < lovor the D -troit and Milwa . ukte , nl j tho trafllo in the&r power , in order to give employment to their Btoiunqvs . This very oleavly oxpkinfl how « o promising 1 ft property has been reduced to tho brink of ruin by want of juJgmont in the innriugomont . If the proprietors tthould lind , upon i » quiry » that tlie foots which we have laid before them nro well foundoJ , it Beems obvious that the sooner thoy retrace their steps the better . A return to the ,. orig inal policy will , to some extent , retrieve tho value of their investment , though it cau never briny back the hundreds of thouaiindi * ao reok-
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March 31 , 1 S 60 . 1 The Leader and Saturday Analyst . 305
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* Groat Western Railway of Canada > A fetv JPavts relative to its JProfont jPoalfiQH and Management . jEfflngham Wilaop . Groat Wtstorv MaiUom qf Canada t Thing * not goncrally known in M % gl < an& j or tha true Policy of tho Company . By W . Bowwnif ¦ Yiivu * eow , Esq [ ., of Hamilton , Canada .
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* See Engiiwor ' a lteport on the " Geu « ro , l Condition of Worka , " page 2 iS of blvooion * Report ,
Railway Nn R Estments In Canada*
KAILWAY Iin ESTMENTS IN CANADA *
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Citation
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Leader (1850-1860), March 31, 1860, page 305, in the Nineteenth-Century Serials Edition (2008; 2018) ncse.ac.uk/periodicals/l/issues/vm2-ncseproduct2340/page/13/
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