Extract from a report of the Committee of the hon. the Privy Council, approved by His Excellency on the 9th October, 1900.
On a memorandum dated 26th September, 1900, from the Minister of Railways and Canals, representing that under date the 8th June, 1900, the Lake Superior Power Company submitted a proposal in connection with a project of great importance, and one affecting the interests of Canada in a direction so far undeveloped, namely, the establishment of an extensive rolling mill plant adjacent to their hydraulic power at Sault Ste. Marie.
The minister states that the company represented that as the result of their mining and drilling operations on the Canadian side of Lake Superior, they had established the existence of many millions of tons of high grade Bessemer ore; that they had constructed a railway to bring this ore from tho mines to the lake, and had brought out a fleet of large ore-carrying ships, and were in readiness to commence, immediately, the erection of a steel plant for the production of rails, plate and bridge material, on the most modern principles, and on a scale of magnitude equal to any similar manufactories. In order, however, to justify the great cost which such works would entail, the company desired to obtain the assurance, to some extent, of a market before proceeding to incur further expenditure, and they submitted a proposal that the government should give them a contract for the supply to the government i ail ways of 50,000 tons of steel rails in the year 1901, and 25,000 tons annually for four years thereafter.
The minister further states that owing to the pressure of other matters and his own absence from Canada, he has been unable to bring this proposition formally before Your Excellency in Council until now. It was, however, discussed informally by the council towards the close of August, 1900, being favourably considered, and it was understood that a recommendation wrould be made and submitted by the Minister of Railways and Canals on the basis of a contract for 25,000 tons to be supplied in 1901, at $32.60 a ton (the price then being paid by the Department of Railways and Canals under its rail contract for the current year), and for a similar quantity for the five years following.
The minister, recognizing the benefits which the creation of an industry of such extent and
importance in Canada would necessarily bring directly, in the employment of labour, the expansion of mining operations and the transportation of crude materials and finished products, and indirectly, in the development of numerous other industries by which this would be served
considers that the project is one which should receive all encouragement at the hands of the government, and he recommends that authority be given for entry into an agreement with the company for the supply to the government railways of 25,000 tons (2,240 pounds to the ton) of first quality steel rails of eighty pounds to the yard, and of section prescribed by the Department of Railways and Canals, such supply to commence in the month of June, 1901, and to be completed in the month of September following; delivery to be made either at Levis or at Montreal (c.i.f), as the department may direct, and so far as practicable, in equal quantities monthly ; the price to be paid for j the said rails so delivered to be fixed, as agreed upon, at $32.60 per ton, which, as above stated, is the price now being paid by the Department of Railways and Canals.
The minister further recommends that he be authorized to contract yearly hereafter for the supply of a similar quantity of such rails during each succeeding year, for a term of five years, to be delivered either at Halifax, Port Mulgrave, Levis or St. John, as may be required by the Department of Railways and Canals, the price for the said rails to be the price for the same quality of rails in the open market in Great Britain at the time when the order therefor is given by the Department of Railways and Canals.
The committee submit the same for Your Excellency's approval.
(Sgd.) J. J. McGEE,
Clerk of the Privy Council.
Now, the committee will observe that the recommendation to council was not a recommendation to enter into a five years' contract, but it was a recommendation to enter into a contract for one year, and to be followed according to the order by subsequent contracts year by year as the years would come around. The reason that this order was presented in that way was twofold ; in the first place the government did not desire to make it. They doubted the propriety of our passing an order in council for a contract for five years ; and, moreover, the objection or difficulty was pointed out to Mr. Clergue, and Mr. Clergue, to the knowledge of the members of the council, was willing that so far as the succeeding years were concerned, the understanding should exist that the government would make these contracts year by year, and that he did not require a contract, or would not expect that a contract, would be entered into more than for the term of one year. It was with that clear
in my mind that I made the statement to the committee, that we had only contracted explicitly for one year and had not made any permanent or fixed arrangement for the following years, further than to have an understanding with him that we would do so, and he was content to accept the order in council as being a sufficient assurance that if everything was all right he would get his contract year by year, as the time would arrive, and upon the basis and terms which were mentioned here. Well, when the matter came up the other day, I was under the impression clearly and strongly that that was the nature of the contract. I thought in my own mind that the contract had been made, and t believed that it was of that nature, and I confess that when the contract, or the draft of the proposed contract, was read here, It was a surprise to me, because it was an express and clear contract for a term of five years. But the difficulty about that contract was this ; That it had never been executed and has not been executed to this day, and never came under my observation. My deputy thought the contract was made; I supposed in the course of the numerous documents presented to me that I had executed it. I did not suppose that it would have laid over all this time, but it happened to be drawn by the law officers of the department, was sent to Mr. Clergue. and it had not been returned by Mr. Clergue at the time the question came up the other day. So that when the document was handed in the following day by the deputy minister, I think gentlemen who had it in their hands observed it was an unsigned document, and the deputy minister made a memorandum on the statement to the effect that the agreement as drawn up was drawn up in this way, and that he found it was sent to the company, but he found it had not yet been returned by the company duly executed, and he had wired that it should be done. Now, the contract as it happened had never passed under my observation. I do not know that if it had been submitted to me for signature that I would have scrutinized it closely enough to have discovered the difference between the authority which the order in council gave us and what the contract proposed to do. It might have escaped my notice or I might have carefully read it ; perhaps I would have carefully read it. At all events it did not come under my observation, and it was not read and it has not been executed, and down to this moment it has not been executed. I am quite prepared to say that Mr. Clergue will be prepared to execute the contract-I have no doubt at all upon that point-will be prepared to execute the contract when I have had an opportunity of looking into it and preparing it in accordance with the order in council which authorized me to make a contract of this limited character. I have no doubt that so far as is in Mr. Clergue's power, he will be prepared to carry out the understanding that has been arrived at and the arrangement as we have detailed it here in our order in council. It' I had a fear or a doubt I would tell the committee frankly now, that possibly Mr. Clergue may not find-though he is quite confident even to