R 18 Paciric Grear Eastern Ratway. 1922

tractors were paid some $700,000 more than they were entitled to by the original agreement is
not a fact. The increase in unit prices in 1920 for percentage purposes had this effect: Under
that schedule the work estimated by the engineers’ figures at the increased prices increased the
total on which a percentage of 5% per cent. was calculated by $644,335.44, thus increasing the
amount the company paid the contractors by $35,434.45, and up to date the cost of the werk
to the contractors has been some $300,000 greater than the engineers’ estimate of the work
computed at the revised unit prices; therefore, to date, the question of bonus has not entered
into the question. Another criticism was that the head contractors let the work to stationmen
and small contractors at prices less than the schedule in force at the time. This practice was
perfectly justified and a most economical method. In the spring of 1919, when prices began to
drop, it certainly looked like good business to reduce the schedule prices on which a bonus would
be calculated, and the company had an opportunity of doing this when they were ordering more
work under the original agreement; however, having made this reduction in 1919, when prices
rose in 1920 the only logical action the company could take was to follow the precedent they had
themselves established. The results so far are as follows: The lowering of the schedule in 1919
lowered the amount on which percentage was calculated by $16,924.46, making a saving to the
company of $930.85. The net loss to the Government to date on account of change in schedule
is $34,503.60. How these changes in schedule will affect the bonus is yet to be determined,
while the cost of work performed to December 31st, 1921, is some $300,000 greater than the
amount of the engineers’ estimates. Multiplied by the schedule prices, the crediting of stores on
hand and the final estimate may very materially affect these figures. The present information
at hand is not sufficient to warrant my passing an opinion as to whether or not there should be
any bonus under the terms of the agreement. I may suggest that on account of the nature of
some of the work, cleaning out mud-slides, ete., where the cost is out of all proportion to
quantities handled at usual unit prices. The cost in such cases might be the controlling factor
rather than measurements in estimating amount of material moved; the Government would be
well advised to carefully look into these features before paying any bonus on this contract.

P—ADVISABILITY OF GETTING ONE OF THE LARGER RAILWAY COMPANIES TO
OPERATE THE LINE.

It has been suggested that one of the larger connecting lines might be induced to take
over the Pacific Great Eastern Railway on account of the advantage of having it as a feeder
to their main lines. The reason given to the people of British Columbia for the Government
aiding and guaranteeing the bonds, both as to principal and interest, of the Pacifie Great
astern Railway is contained in the first paragraph of Schedule A, attached to chapter 34,
February 27th, 1912, and ratified by said Statute: ‘“‘ Whereas the Government of the Province
of British Columbia deems it in the public interest to aid in the construction of the line of
railway hereinafter mentioned, for the purpose of securing to the people of British Columbia
reasonable passenger and. freight rates and to assist in the opening-up and development of the
Province.’ It is very doubtful if this was the real reason. One would not expect a city with
three or four first-class hotels, with business not sufficient to keep one busy, to guarantee bonds
for the purpose of building a second-rate hotel in order to improve hotel service or rates. It
would appear more logical to suppose that business interests in Vancouver and Victoria for
selfish reasons, aided by the Grand Trunk Pacific influence, was the real force that brought about
the Pacific Great Eastern Railway. The Grand Trunk Pacifie Railway Company might be
expected to favour a rail connection with Vancouver, providing the same was constructed at
the expense of some other party and such a connection would have some value to that company,
but now that the Grand Trunk Pacific Railway and one of its chief competitors, the Canadian
Northern Railway, have been made one under the management of the Canadian National Railway,
the Pacific Great Eastern Railway is of no value to the system, other than a feeder to the extent
that it may collect traffic from local inland points. The road has no strategic advantages,
excepting the possibility that if the craze for building railways should ever demand an Alaskan
rail connection, and the possibility of the Pacific Great Bastern Railway becoming a link in the
system, therefore it cannot hope to get from a larger road more than the yalue of the Pacific
Great Eastern Railway as a collector of traffic. A railway company that would investigate this
matter will find that in 1921 about 86,000 tons of freight was the total of inward and forwarded
from Vancouver for this road. They would naturally investigate and say, how much of this can