In the matter of the application of the Canadian National Railways under Section 168 of the Railway Act and subsection 3, Section 2 of the Canadian National-Canadian Pacific Act, for an Order approving the abandonment of a portion of their Algonquin Subdivision, Province of Ontario, between Falding, mileage 0.00, and Scotia, mileage 39.95, a total distance of 39.95 miles.

39310.17

Before:

Hugh Wardrope, Assistant Chief Commissioner.

F. M. MacPherson, Commissioner.

H. B. Chase, C.B.E., Commissioner.

Heard at:

Huntsville, Ontario, on December 6, 1954.

Appearances:

J. W. G. Macdougall and D. W. Gillmour for the Canadian National Railways.

J. Hannon, Reeve, Township of Perry.

Hugh Forbes and E. H. Elliott, for Committee opposed to Application.

Judgment

Wardrope, Assistant Chief Commissioner:

This is an application by the Canadian National Railways under Section 168 of the Railway Act and subsection 3, Section 2 of the Canadian National-Canadian Pacific Act and all other relevant Statutory provisions for an Order granting it leave to abandon a portion of the Algonquin Subdivision in the Province of Ontario between Falding, a point on the Bala Subdivision some nine miles southeast of Parry Sound, and Scotia, a point on the Huntsville Subdivision, a total distance of 39.95 miles.

The application was heard at Huntsville, Ontario, on December 6, 1954.

Mr. Macdougall, Counsel for the Applicant, in opening his case gave to the Board the following historical summary of the line of railway of which the portion sought to be abandoned forms a part. Although not entirely essential to reaching a decision on the facts, I insert it here rather as illustrative of how changing conditions and circumstances in the course of time can cause the decline and fall of a branch of a Railway System.

This portion of the Algonquin Subdivision which we are considering today between Falding and Scotia was a part of the old line between Ottawa and Depot Harbour which was constructed shortly before the turn of the century by the Ottawa, Arnprior and Renfrew Railway Company and the Ottawa and Parry Sound Railway Company, to enable them to tap the virgin timber resources lying between the upper reaches of the Ottawa River and Georgian Bay. These companies amalgamated under the name of the Ottawa, Arnprior and Parry Sound Railway Company which was acquired and became merged with the Canada Atlantic Railway Company in 1899. The Canada Atlantic acquired the line for the purpose of establishing a rail-lake-and-rail route for non-perishable package freight moving from the American East Coast to the Mid-western States, and as a route for grain and other traffic moving from Chicago, Milwaukee and Duluth through Canada to the New England and other Atlantic Coast states. The Canada Atlantic erected grain elevators and large storage sheds at Depot Harbour, and through its American Subsidiary, the Canada Atlantic Transit Company, operated three first class ships between the aforementioned ports on the Great Lakes.

In 1904 the Grand Trunk Railway Company of Canada acquired control of the Canada Atlantic and its subsidiaries by virtue of an agreement with J. R. Booth, and in 1914 the Canada Atlantic was formally amalgamated with the Grand Trunk under the name of the latter company.

When the Canadian National Railway Company absorbed the Grand Trunk in 1923 it found itself with many functionally duplicate and intercompetitive railway lines, continued operation of which could not be justified either on the grounds of public necessity or sound business economics. Studies were accordingly undertaken to determine the possibility of concentrating traffic on the lowest cost lines. One of the studies in question related to the cost of handling export grain over the former Canada Atlantic route via Depot Harbour and Ottawa compared to the expense involved in moving the traffic via the Grand Trunk line from Midland.

This study indicated that even before the Canada Atlantic overhead route was established, several competing rail-lake-and-rail routes had come into existence and that in later years more followed. Overhead traffic moved via Midland, Collingwood, Meaford, Owen Sound, Goderich and Sarnia, to name but the major gateways. The result was that the share of the traffic accruing to the Canada Atlantic on its Depot Harbour route was less than had originally been anticipated. In addition, greater traffic density on the more southerly routes which were located in highly industrialized territory enabled competing lines to carry their share of overhead traffic at a lower out-of-pocket cost, and hence placed the Canada Atlantic in an unfavourable competitive position.

It was obvious to the Canadian National Management that retention of the overhead route via Depot Harbour could not be justified from an economic point of view, and therefore in 1924 its use was discontinued and the grain elevator at Depot Harbour was leased to private interests. Grain traffic which continued to move by lake into Depot Harbour was thereafter routed via Falding, Atherly, Belleville and Coteau to the International boundary as this route assured a much lower ton mile cost due to the stronger roadbed and the ability to use heavier power and achieve heavier train loading. The Falding-Atherly-Belleville-Coteau route continued to be used until 1946 when the Canada Atlantic Transit Company ceased operations.

With the very substantial falling off of overhead traffic and the diversion of what remained to the Falding-Atherly-Belleville-Coteau route, the line between Depot Harbour and Ottawa became entirely dependent upon local traffic tributary to the line. To a large degree the lumber and forest products, for which the line had originally been constructed, had been removed and reforestation offered little prospect of potential traffic volume for the immediate future. The railway accordingly became a very thin traffic line. In the meantime the original bridge and track structures would not permit of the use of heavier and more modern type of motive power, and enormous capital expenditures would have been necessary to rehabilitate the track structure and bridges to acceptable standards.
(Pages 6243-6245 of the Transcript).

Incidentally, this is the second application for leave to abandon a portion of this same line of railway between Depot Harbour and Ottawa. The first was made in 1951 to abandon 20.87 miles between Whitney and Cache Lake (Algonquin Subdivision) and was granted by the Board's Order No. 78548 of the 22nd of March, 1952. (File 39310.60).

Starting at Falding, the 39.95 miles in question runs approximately in an easterly direction through the Townships of Foley, Christie, Monteith, McMurrich and Perry in which are the following centres, west to east, with stations. The numbers after the names represent populations in 1951 census. Swords (100); Edgington (188); Seguin Falls (100); Bear Lake (35); Whitehall (45); Sprucedale (266); Walls (50). The immediate area served by the line between Falding and Scotia is a sparsely settled but well wooded area, although not of primary growth. While a certain amount of mixed farming is carried on, forest products are the predominant commodities produced.

The line is roughly paralleled by a secondary provincial road with gravel surface. It joins Highway No. 69 between Parry Sound and Falding on the west and Highway No. 11 at Emsdale just north of Scotia to the east.

Train service at present consists of Mixed Trains Nos. 263 and 264 which run eastward from Falding through Scotia to Algonquin Park on Mondays and Fridays, returning Tuesdays and Saturdays. During July and August this service is increased eastward to Mondays, Wednesdays and Fridays, and westward Tuesdays, Thursdays and Saturdays.

This line is a Class E line, which is the lowest category consistent with safety of operation of five classes of line. Its maintenance is geared to the traffic offered and the light equipment necessary to haul it. Two bridges built in 1901 will shortly require extensive expenditures to maintain safety of operation over them. In addition, there will be further substantial expenditures required if the line continues to operate even under present traffic volume and conditions. There is a speed restriction of twenty-five miles per hour for all traffic.

Evidence was given and exhibits filed to show in detail traffic (passenger, freight, express and miscellaneous) on the line and by stations for the years 1949-1953 inclusive. Generally speaking, it is very thin with a pronounced falling off of carload traffic in 1953, being only some 53 per cent of that in 1949.

Further evidence presented for the first nine months of 1954 shows a continued decline in overall revenues, exclusive of mail, of some 20 per cent over the same period in 1953. While revenues continued in this unsatisfactory state, expenses increased considerably. However, in the revenue picture will be reflected the several recent increases in freight rates authorized by the Board. On the other hand, those in opposition to the application were of the opinion that the increases in rates had driven some of the traffic to the trucks, which had the effect of reducing the volume of freight traffic which would otherwise have been retained by the Railway.

The following (Exhibit No. 9) is a condensed statement of revenues and expenses reflecting system losses incurred in connection with the operation of this line:

CANADIAN NATIONAL RAILWAYS
Loss incurred on Algonquin Subdivision, Scotia to Falding, Ont. 1949-1953, both inclusive.
System Revenues	1949	1950	1951	1952	1953
Passenger	1,841	1,010	1,263	1,028	1,135
Freight	29,147	38,401	36,100	51,423	30,379
Express	4,106	3,456	3,952	3,751	4,015
Miscellaneous 831 848 1,079 1,028 1,107
	35,925	43,715	42,394	57,230	36,636
Expenses (out-of-pocket)
Branch Line
Mtce. of Way and Structures	46,582	47,105	45,242	65,373	74,993
Train Service	19,008	15,929	20,758	22,351	26,380
Mtce. of Equipment	2,995	3,119	4,079	6,349	7,125
Station Services	6,636	6,735	7,424	9,222	10,359
Taxes	228	210	228	250	250
Off-Line Expenses
50% Op. Ratio on Freight and Express	14,153	17,807	17,042	23,468	14,638
Total	89,602	90,905	94,773	127,013	133,745
SYSTEM LOSS	53,677	47,190	52,379	69,783	97,109

A representative committee appointed to represent the residents of the Townships of Perry, McMurrich, Monteith, Spence, Christie and Foley appeared in opposition to the application. Their Brief was read into the record. It placed strong emphasis on the fact that the area served by this portion of line was dependent to a large degree upon the sale of forest products. It was strongly urged upon the Board that if the line were abandoned it would not only create a great hardship but that those who depend on this industry would be deprived of their principal means of livelihood. It was pointed out that the road paralleling the railway, particularly in the present condition, was inadequate to serve the area if the line were taken up. It was also felt that if the railway would provide better service its revenue position would be greatly improved. There did seem, however, to be an underlying opinion that even should the railway go, what was required more than anything else was to have the road improved. There is no doubt, due to whatever causes they may be, that a considerable amount of traffic in this area is being or can be trucked, notwithstanding the indifference of and the difficulties on the road.

But there was also no doubt left in the Board's mind that improvements to the road were strongly desired by those opposing the application. But this is a matter beyond the jurisdiction of this Board to deal with.In conclusion, bearing in mind all that was stated in opposition and also the inconvenience and loss the abandonment will entail, I think the application must be considered favourably.

The Board is guided in these matters by a principle that has often been stated before, i.e.,

The issue in each case where abandonment is sought resolves itself into a question of whether the loss and inconvenience to the public consequent upon the abandonment outweigh the burden that continued operation of the railway line involved would impose upon the railway company
.

That there will be inconvenience and some loss to those affected is regrettably inevitable. But in this case, in my opinion, the burden of continued operation which would be placed upon the railway outweighs the detrimental results to the public. Exhibit No. 9, supra, shows the substantial losses to the railway: The traffic thereon is diminishing; there is no evidence that any particular expansion, industrially or otherwise, is anticipated in this area; nor is there any evidence of increased rail traffic in prospect.

I would therefore grant the application. An Order to go accordingly.

January 17, 1955.

Hugh Wardrope.

I concur:

F. M. MacPherson.

I concur:

H. B. Chase.