Application of the Canadian National Railways for an Order granting leave to abandon operation of its North Lake Subdivision in the Province of Ontario, between Twin City Junction (Mileage 0.0) and Mackies (Mileage 36.4), a total distance of 35.4 miles.

39310.32

Heard at Fort William, Ont., August 10, 1938

Judgment

Stone, Commissioner:

This Railway was built under Statutory authority granted in Ontario Act 46 Vic; Chap. 56, 1883, to the Corporation known as the Thunder Bay Colonization Railway Company. In 1887 the name was changed to The Port Arthur, Duluth and Western Railway; it was originally intended to go as far as Duluth, but the applicant's records do not show that the railway line was constructed beyond a short distance south of the International Border.

In 1888 the railway was incorporated under a Dominion Charter, Canadian Statute 51 Vic, Chap. 84, and was opened for operation in 1893. In 1899 the Port Arthur, Duluth and Western Railway Company was amalgamated with the Ontario and Rainy River Railroad Company, which in 1900 was amalgamated with the Canadian Northern Railway Company, now part of the Canadian National Railways.

In 1915 the track between Gun Lake (mileage 74) and North Lake Station (mileage 59.64) was removed, and in 1923 the service between North Lake Station (mileage 59.64) and Mackies (mileage 35.4) was discontinued by permission of the Board.

Under a document dated the 1st day of May, 1929, the Thunder Bay Lumber Company leased for a period of ten years, a portion of this segment of the line from Thunder Bay (mileage 44.5) to Mackies (mileage 35.4). The lease was surrendered on the 27th day of August, 1937, and the Lumber Company transported its lumber by truck to the different cities.

As permission had been granted to the Railway Company in 1923 to discontinue service south of Mackies (mileage 35.4), the track between Thunder Bay (mileage 44.5) and Mackies (mileage 35.4) was removed, and the only portion of this line which remains at present is that between Mackies (mileage 35.4), and Twin City Junction (mileage 0.0), the subject matter of this application.

The train service in effect since 1932 consisted of a mixed way-freight train in each direction twice a week between Port Arthur and Mackies. On March 23, 1938, engineers of the Railway Company discovered three truss span bridges to be unsafe for continued operation, and all train service was discontinued the following day.

On the 4th day of April last, the Canadian National Railways made application under the Railway Act; the Canadian National-Canadian Pacific Act and all other statutory provisions, for an Order granting it leave to abandon further operation.

Officers of the Engineering and Operating Departments of the Board were assigned to inspect and report on the physical characteristics of the said line, and the public and business interests that would be affected by the discontinuance of train operation.

The case was heard by the Board at Fort William, Ont., on the 10th day of August, 1938. D. C. Owens, K.C., appeared for the Canadian National Railways; Rev'd Daniel Mclvor, M.P., appeared for the Municipalities; Mr. W. F. Lough appeared for the Post Office Department; together with several witnesses, who represented various interests opposed to the application.

Counsel for the applicant gave a lengthy description of the line, its special industrial relationships, its revenue and expenses during recent years, an analysis of its freight traffic, a description of the territory served and the highway facilities, together with a summary of the population along the line.

Reverend Daniel Mclvor, M.P., presented several witnesses who gave evidence in regard to mineral deposits, farming, condition of highways, etc. Mr. Mclvor, in conclusion of the presentations made by these witnesses, stated that during the last seven or eight years there had been a great many people who have moved into these communities. He knew the railway did not pay, but, having regard to unemployment and the necessity of the railway as a public convenience and for postal service, together with the great possibilities for development in the area, he considered some kind of rail service should be continued.

Questioned by Mr. Owens, Counsel for the Railway Company, as to whether the Thunder Bay Lumber Company operate their trucks from their mill to Fort William or Port Arthur, Mr. Mclvor stated,—I know they do in winter, but I would not say that they operate every day. (Evidence Vol. 654, p. 1742.)

Mr. W. F Lough contended that the Post Office Department paid the Railway Company $341.00 a year to carry mail serving seven post offices; since the rail service ceased on May 24, 1938, the mail was carried by truck. He stated,—

Finally an agreement was made with a transportation company to carry the mail from Fort William to Suomi every Monday of each week, leaving Fort William and arriving at Suomi at 11.52, that is practically the same running time as the train; returning, leaving Suomi at 12.38, they have almost an hour at Suomi, and they get back here (Fort William), at about 3.25 in the afternoon. That gives the public in the territory practicallv the same service as they were enjoying when the train was running.

(Evidence; Vol. 654; p. 1738.)

From the evidence presented at the Hearing, and from the contents of the Board's file, it develops that the line was constructed primarily as a logging road, and conforms to the usual conception of a lumbering railway. It has heavy grades, high curvatures, and bridges unsuited for modern railway equipment. Five and one half miles are laid with sixty pound rails and the balance with fifty-six pound rails. The bridges are poor, and only permit the use of a maximum locomotive capacity of 25 per cent.

Since the construction of the railway, practically all the lumber has been removed and some pulpwood taken out in small quantities. Some attempt has been made at agricultural development, principally between Mackies and Hymers, a distance of about 18 miles, and consists for the most part of small areas carved out of the woods. The soil it is alleged, is not suitable for high-class agriculture, the main products being hay and feed.

The railway line between Mackies and Twin City Junction traverses an area in which, some forty years ago, there were several producing silver mines; from 1931 to 1935 some exploratory development work was carried on in this area, but this work, which did not lead to production, was discontinued in 1935.

South of Mackies there are several large deposits of iron ore, but to date it has not proved economic to make use of these mineral resources. The minerals along this line of railway are considered to be of low grade, and not comparable with ore bodies south of the International Boundary.

This latter view, set forth by the Applicant at the Hearing, is substantiated by a reference to the reports of the Geological Survey of Canada (see Summary Report, 1924; Part C, pp. 28 to 88), in which Mr. J. E. Gill states,—

No single bed or group of beds has been found which is sufficiently rich in iron to be utilized as an ore, without preliminary concentration.

In a memorandum referring to this area, prepared by a member of the staff of the Dominion Geological Survey early in 1938, and forwarded to the Board by the Director of Mines and Geology under date of September 22, 1938, the statement is made that no developments of importance have been reported to the Department of Mines and Geology since 1935.

No station agents are employed. There are eleven flag stations, with the following stated populations,—

Station	Population	Additional tributary population
Slate River	50	150
Stanley	40	300
Flint	10	240
Hymers	65	400
Leeper	15	260
Nolalu	12	200
Hillside	10	110
Silver Mountain	20	170
Whitefish	14	90
Wolfe	.	70
Mackies	12	160
Total	248	2,150

At Slate River the station building, erected in 1913 at a cost of $790.00, is at present rented to the Provincial Government, for use as a Seed Cleaning Warehouse, the product of which is shipped by truck to Fort William and Port Arthur. There are two or three other small station buildings, built in 1901 and 1906, located at different stopping places, while at others only shelters, or old box cars have been in use.

The only industry served on the line is the Superior Brick and Tile Company, Limited, 1.74 miles from Twin City Junction. This industry the Railway has signified its willingness to continue to serve, the track to be classified as an industrial track out of Port Arthur Terminal.

The Railway Company's submission that revenues on this line have, in recent years, considerably decreased, is substantiated by the following summarized statement covering the past three years,—

Summary of railway statement furnished with the application

Year	Total car loadings			Total revenue	Out of pocket expenses	Loss from operation
	In	Out	Total
1935	23	264	287	18,268	41,943	23,675
1936	8	206	214	13,673	43,545	29,872
1937	31	129	160	14,073	40,246	26,172

In a recent submission made by the Railway Company, it was stated that in a re-check of the above amounts, it was discovered that the total expense for the year 1935 is $300 less than that recorded above, while in 1937 the total expense is $1,881 greater, which makes the actual loss from operation in 1935, $23,375, and in 1937, $28,053.

For the five years 1933-1937 inclusive, there were 55,855 ties placed in the track on this Subdivision and the cost for maintenance alone in the same period is shown as $104,035, of which amount $12,517 was spent on the bridges. This expenditure only provided for very light maintenance, attributed to lack of revenue. The result was deterioration, developed to a point where it became necessary to close the line to traffic.

The statement of the Railway Company shows the immediate necessity of replacing three How^e truss bridges at an estimated cost of $31,200, and the reconstruction or repairing of a number of pile trestles at an estimated cost of $14,640, or a total estimated cost of $45,840 for bridges.

In addition there is a further amount of $9,130 required to replace two culverts at an estimated cost of $5,380 and to install 5,000 track ties at a cost of $3,750, making a total of $54,970. It is estimated that there are seventeen pile trestle bridges and two Howe truss bridges, not included in this statement, ten of which will require replacement or considerable repairs within the next two years; also ten culverts which will have to be replaced in 1939, at an estimated cost of $34,550, or a total of $89,520. This amount does not include the costs involved for annual maintenance, neither does it cover costs for rail renewals or operating expenses which entail considerable additional expenditure.

Maps on file confirm the evidence submitted at the Hearing, that the main highway in the territory is parallel to the railway nearly all the way from Mackies to Twin City Junction, and connects with the paved highway into Fort William and Port Arthur. At points where the main highway does not connect with the railway, there are side roads which divert into the main highway.

The Thunder Bay Lumber Company, located beyond Mackies, abandoned rail service for trucks and use the highway all winter from their mills into Port Arthur. Milk has been handled for some years by trucks and the Provincial Government's Seed Cleaning plant at Slate River station ships by trucks. Various business concerns in Port Arthur deliver their goods direct over the highways in this district, by their own or hired trucks. In 1936 or 1937 a Bus Franchise was granted to the International Transportation Company which operated intermittently on account of lack of revenue. The Farmers' Mercantile Association, centred at Nolalu, it was alleged has received authority from the Public Municipal Board in Fort William to operate trucks, and, since the train service was discontinued, the Post Office Department has contracted for highway service, which now serves the travelling public as conveniently as the former train service.

Branch line passenger earnings dropped from $1,800 in 1935, to $900 in 1937. Total freight car loadings, inward and outward, dropped from 287 to 160 in the same period, regardless of the fact that the same regular way-freight train service was rendered twice weekly in each direction between Port Arthur and Mackies from 1932. The statement of expenditures furnished the Board were Out of Pocket only, and did not include superintendence and office expenditure.

There is no substantial prospective business in sight, or a possibility of regaining business lost that would guarantee better operating revenues; the cost for rehabilitation is large, therefore continued operation does not appear justified.

Some persons will be inconvenienced if the discontinued rail service is not restored, particularly during the winter months. However, the highways are open practically all winter, and the evidence shows that much of the freight now moves by truck.

I would grant that portion of the application that applies for the portion of the line between mileage 1.74 to Mackies, mileage 35.4, and would provide that the line between the Superior Brick and Tile Company's plant and Twin City Junction be reconditioned as an industrial track, and service continued to this Company by the Railway Company.

Ottawa, September 26, 1938.

Concurred in by Commissioner Stoneman.

The Deputy Chief Commissioner:

The operation of this line was discontinued months ago. I agree.

Railways: C.N.Rys.

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