Mr. Wharton to Sir Julian Pauncefote.

Sir: I have the honor to apprise you of the receipt of a memorial from the Lake Carriers’ Association of Buffalo, N. Y., under date of the 18th ultimo, in which they complain of the discrimination by the Canadian government against citizens of the United States in the use of the Wetland Canal in contravention of article 27 of the treaty of 1871. In view of its statements I have thought it proper to furnish you with a copy, which I now have the honor to do, and request such explanation of the facts in the case as you may desire to make.

As the matter is one of special importance to our people at this season of the year, may I ask that you will kindly give it your early consideration.

I have, etc.,

William F. Wharton,
Acting Secretary.
[Page 251]

Mr. Keep to Mr. Blaine.

Sir: I inclose herewith a copy of a resolution unanimously adopted at a meeting of the board of managers of the Lake Carriers’ Association, held in this city on this 18th day of September, 1891; also a copy of the statement or brief addressed to you, to which said resolution refers.

I also send under separate cover a copy of Supplement No. 1 to the last annual report of the Canadian department of railway and canals, which is frequently referred to in the statement or brief.

Respectfully calling the attention of your Department to the gross injustice to our citizens, as shown by the accompanying documents,

I remain, etc.,

C. H. Keep, Secretary.

At a meeting of the board of managers of the Lake Carriers’ Association, held at Buffalo, N. Y., on this 18th day of September, 1891, the following resolution was unanimously adopted:

Resolved, That the secretary forward to the Department of State, at Washington, the annexed statement or brief relating to tolls on the Welland Canal discriminating against American vessels, ports, and citizens, and respectfully urge the Government of the United States to take prompt and energetic measures in the direction therein indicated to secure to our vessels, ports, and citizens their full rights under the treaty of May 8, 1871.

S. D. Caldwell, President.

A true copy.

C. H. Keep, Secretary.

Mr. Keep to Mr. Blaine.

Sir: The following is a brief statement of the facts showing a violation of this article on the part of the Canadian government by the imposition of tolls and the institution of a system of rebates on the Welland Canal which discriminates against citizens of the United States and in favor of the inhabitants of the Dominion of Canada.

The Canadian government imposes cargo tolls on traffic passing through the Welland Canal. In the case of grain, flour, feed, etc., these tolls are 20 cents per ton. For some years past, however, the Canadian government has, just before the opening of lake navigation, issued an order in council granting a rebate of 18 cents per ton of the tolls on grain traffic passing through the Welland Canal, provided the grain was carried through to Montreal or some point east of Montreal. As the class of boats engaged in carrying grain from the upper lakes through the Welland Canal is unable to pass through the St. Lawrence Canals, it has been customary to transfer their grain cargoes when destined to Montreal to lighter-draft vessels. This transfer up to the season of 1890 was made at the Canadian port of Kingston. During the season of 1890 about 16,000 tons of grain which passed through the Welland Canal and was destined for Montreal was transferred from lake vessels to river barges at the port of Ogdensburg, N. Y. At Kingston grain is transferred directly from the vessel to the river barges, but at Ogdensburg, where there are large elevators and storage capacity, the grain was transferred through an elevator.

As this grain was chiefly destined for ocean export from Montreal, the process of transfer at Ogdensburg has decided advantages over that at Kingston. The grain having been taken from the lake vessel into the elevator at Ogdensburg could be stored there until the ocean steamer on which it was to be shipped was about ready to load in Montreal. It could then be transferred to barges and reach Montreal just when it was needed for loading. By this means a considerable expense was avoided and a decided advantage gained over the system of transfer practiced at Kingston, where the river barges often arrived in Montreal a considerable period of time before the ocean steamer at that port was ready to load, in which case the grain was held [Page 252] to await the steamer at considerable expense. Although the order in council granting rebate on Montreal grain for the season of 1890 was absolute in terms and contained no provision confining the payment of such rebate to grain transshipped at one port rather than another, the Canadian government at first declined to pay the rebate on the grain transshipped at Ogdensburg, but took the matter under consideration and made no decision until about the close of navigation for the season. It was then decided that the rebate must be paid on the grain transferred at Ogdensburg, and such payment was made. The effect, however, of the government’s action in withholding its decision until the close of navigation was to put an end almost entirely to the transshipment of grain at Ogdensburg, because the forwarders were uncertain as to whether they would get their rebate or not, and did not care to assume the risk of an unfavorable decision by the Canadian authorities.

On March 25, 1891, the Canadian government issued a new order in council providing for the usual rebate of 18 cents per ton on Montreal grain during the season of 1891. This order, however, differed from orders made in former years, and the conditions of the rebate are stated in the order as follows: “First, the products aforesaid on which the refund may be claimed should be shown to have been originally shipped for Montreal or some port east of Montreal before entering the Welland Canal. Second, they shall be shown to have been actually carried to Montreal or some port east of Montreal. Third, transshipment, if at a Canadian intermediate port, shall not prevent the refund aforesaid being made.”

While the third condition does not state unequivocally that transshipment at an American intermediate port will prevent the refund, it is generally so interpreted. There can be no doubt that the intention in wording this condition was to carry the impression that on Montreal grain transferred at Ogdensburg the refund would not be paid. As a matter of fact a few cargoes of Montreal grain have been transferred at Ogdensburg during the present year for the purpose of testing this order in council, and in each case a demand for a refund has been refused. Shortly after the first of these cargoes was transferred at Ogdensburg the Canadian government issued an order that no rebated tolls under the order in council would be paid until the close of navigation.

Supplement No. 1 to the annual report of the Canadian minister of railways and canals (a copy of which is sent herewith) contains the canal statistics for the season of navigation of 1890. In it will be found a verification of all the facts hereinbefore set forth relating to the year 1890.

It may be well to point out certain other facts, drawn from the official report, of the operations of the Welland Canal for the season of navigation of 1890, as contained in the supplement above referred to. From that report it appears that in the year 1890 there passed down the Welland Canal to Canadian ports 363,839 tons of freight, of which 212,080 obtained a rebate of nine-tenths of the canal tolls. During the same season there passed down the canal to United States ports 327,833 tons of freight, of which only 16,433 tons obtained any rebate whatever. It also appears that in the year 1890 there passed down the Welland Canal in Canadian vessels 326,149 tons of freight, of which 184,275 tons obtained a rebate of nine-tenths of the tolls exacted at the canal. During the same season there passed down the canal in United States vessels 362,477 tons of freight, of which only 52,459 tons obtained any rebate whatever. On traffic up the canal no rebates or tolls were paid; but of such traffic up the canal in the year 1890, 251,342 tons were bound to American ports and only 38,724 tons to Canadian ports. Of this traffic 217,726 tons were carried in American vessels and only 72,340 tons in Canadian vessels. It also appears in the report that during the year 1890, 178,988 tons of coal were carried up and 23,396 tons of coal were carried down the Welland Canal. Of the coal carried up 161,616 tons were carried between ports of the United States, 92 tons were carried between Canadian ports, and 17,280 tons from a United States to a Canadian port. It will thus be seen that the uptraffic in coal through the canal consisted almost entirely of a movement in the United States coastwise trade, and was therefore necessarily carried in United States vessels. On this up movement of coal full tolls of 20 cents per ton were exacted. On the down movement of coal, however, 22,781 tons were carried to Canadian ports, and all of this was carried in Canadian vessels. Only 615 tons of coal were carried down through the canal, in an American vessel, or to an American port. On the 11th of April, 1890, the Dominion Government issued an order reducing the toll on coal passing down the canal from 20 to 10 cents per ton, but leaving the full toll of 20 cents on coal bound up the canal.

It also appears from this official report that of the Montreal grain transferred at Kingston during the season of 1890, 184,275 tons was carried to Kingston in Canadian vessels and 35,560 tons in vessels of the United States.

The Lake Carrier’s Association believes that the facts hereinbefore set forth, show very plainly a violation by the Dominion Government both of the spirit and letter of the twenty-seventh article of the treaty of Washington, for the following reasons:

First. The effect of the rebate on Montreal grain is to allow practically all the grain which passes through the Welland Canal bound for Canadian ports to go [Page 253] through at a toll of only 2 cents per ton, while the grain which passes the canal hound for United States ports is obliged to pay a toll ten times as great. It is understood that the Dominion Government claims that the treaty is not hereby violated because the grain carried to Canadian ports is shipped from ports of the United States; that therefore the carriage of such grain is open both to American and Canadian vessels; and that the rebate is paid alike to the vessels of both countries. Therefore, they claim that the use of the Welland Canal is given to Canadian and United States vessels on equal terms. It is to be noted, however, that the twenty-seventh article of the treaty of Washington secures the equal use of the canal not only to American and Canadian vessels but to the citizens of the two countries. The purpose and intent of that article is clearly to prevent the Canadian Government, by the use of vexatious canal regulations, or by any device of discriminating tolls, rebates or refunds, from giving to their own vessels or to their own ports or to their own consumers or citizens, any advantage over American vessels or American ports or American consumers or citizens. If the intent of the treaty had been simply to secure to vessels of the two countries equal rights in the canal, such intention would have found its natural expression by using the word “vessels” in the article. It is clear that the intent of the article is to cover a broader ground, and to secure the use of the canal on equal terms not only for American vessels but for American ports, consumers and business interests. The grain rebates are, therefore, in clear violation of the treaty.

When an American vessel loaded with grain for an American port passes the Welland Canal, by what citizen of the United States is the canal used? Is it not used as well by the owners or consignees of the cargo, as by the owners or charterers of the vessel? Manifestly it is used by both, and the Canadian Government distinctly recognizes this fact by exacting tolls from both. On every steam vessel passing the canal a toll of 1½ cents per registered ton, and on every sailing vessel a toll of 2¼ cents per registered ton, is collected. In addition to these vessel tolls, tolls are exacted on the cargo, and it is on these cargo tolls that discrimination is made. When two vessels loaded with grain arrive at the canal together, one cargo destined for Ogdensburg or Oswego, and the other destined for Montreal, and the Candian Government exacts a toll ten times as great on the cargo destined for the United States port as on the cargo destined for the Canadian port, it is clear that the use of the canal is not secured on equal terms for the citizens of both countries. On the principal commodity passing the canal there is an audacious discrimination against American forwarders, ports, consumers and routes of export and in favor of Canadian forwarders, ports, consumers and routes of export. In the year 1890 on 228,513 tons of grain carried through the Welland Canal to Montreal, only $4,570 tolls was exacted, whily on 245,932 tons of grain which passed down the canal to Ogdensburg, Oswego, aud other United States ports $49,186 was exacted. Surely this is not giving the use of the canal on equal terms to inhabitants of the Dominion and citizens of the United States. A careful study of the official canal statistics for the year 1890 shows that the Dominion Government collected on the Welland Canal over and above all refunds cargo tolls to the amount of $134,000, and that of these tolls cargo destined for American ports paid $97,000, and cargo destined for Canadian ports only $37,000. Of the total cargo tonnage of the canal 57 per cent destined for American ports paid more than 72 per cent of the tolls, 43 per cent destined for Canadian ports paid less than 28 per cent of the tolls. With only one-third more cargo than Canada, we paid nearly three times as much in cargo tolls.

Mention has already been made of the difference in the rates of toll on west-bound and east-bound coal, and in the statement of facts above given it is shown that on this article as well as on grain there is a clear discrimination against citizens of the United States. The west-bound coal is nearly all carried between United States ports, and therefore necessarily on American vessels. Twenty cents a ton is exacted on this traffic. The same commodity when carried through the canal east-bound is nearly all carried to Canadian ports and on Canadian vessels. By an order in council made last year only 10 cents a ton is exacted thereon.

Second. There is the clearest possible case of discrimination against citizens of the United States in the third condition attached to the refund of grain tolls, as such condition appears in the order in council granting such refunds for the year 1891. That condition implies in the plainest possible manner that nine-tenths of the grain tolls will be refunded on Montreal grain in case such grain is transferred at Kingston, but that no such refund will be made if such transfer is made at Ogdensburg. If the Canadian Gonernment claims that no refunds whatever are now being made, that the whole subject will be taken up at the close of the season of navigation, and that refunds on grain transferred at Ogdensburg have not yet been definitely refused, it is sufficient to say that the clear and necessary effect of this condition in the order in council is to drive the business away from the Ogdensburg route. So long as a condition thus expressed appears in the order in council granting grain refunds, no forwarder of grain can prudently transship it at Ogdensburg.

Third. The system of tolls now in use in the Welland Canal is a discrimination [Page 254] against American vessels as well as against American ports, consumers, routes of export and forwarders. By confining the granting of grain refunds to grain transshipped at Kingston, the Canadian Government thus excludes from the operation of the refund order the regularly-organized lines of American vessels running to Ogdensburg. It confines the benefits of the order in council to American vessels which may run to a certain Canadian port, and while this Montreal grain shipped from ports of the United States and for that reason its carriage from such ports to Kingston is often to vessels of the United States, as a matter of fact this line of the carrying trade is in the hands of Canadian vessels. We have seen also that in the east-bound coal traffic through the canal, where such traffic is almost entirely carried in Canadian vessels, a toll is exacted only one-half as great as in the case of the west-bound traffic in the same commodity, such west-bound traffic being almost entirely United States coastwise trade, and therefore necessarily in the hands of American vessels. We submit that it is not giving the use of the Welland Canal to United States vessels on terms of equality with those of the Dominion to select lines of trade which are in the hands of United States vessels, and in such cases to exact full cargo tolls while granting greatly reduced rates of cargo toll in lines of trade which are, as a matter of fact, in the hands of Canadian vessels. Should the Canadian Government not grant redress, and should it continue to hold that the regulations now in force are no violation of the treaty, then the United States Government would certainly be free to place upon the treaty the same construction placed upon it by the Canadian Government. It could, therefore, place in force upon the St. Clair Flats Canal and the St. Mary’s Falls Canal a system of tolls which would operate against Canadian, vessels and ports just as the Welland Canal tolls operate against our own.

Suppose the United States should put in force regulations whereby all vessels passing the St. Clair Flats Canal or St. Mary’s Falls Canal bound for any port of the United States should be allowed to pass without paying tolls, while high cargo tolls were exacted from all vessels passing these canals bound for any Canadian port. Such regulations could certainly not be complained of by the Canadian Government. If it were found as a matter of fact that any particular commodity carried to any Canadian ports through these canals was usually carried in American vessels, or was a trade from which the business interests of the United States were deriving benefit, then such commodity might be exempted from the payment of tolls just as Montreal grain and east-bound coal are partly exempted on the Welland Canal, leaving, however, all Canadian coastwise business through these canals and all business through these canals bound to Canadian ports and usually carried in Canadian vessels subject to such heavy tolls.

Simple justice to American forwarders and vessel owners requires that on grain bound for Montreal the same tolls should be exacted at the St. Clair Flats Canal that are now exacted at the Welland Canal on grain destined for ports of the United States.

Very respectfully, yours,

Lake Carriers’ Association,
Per C. H. Keep, Secretary.