SUNDRY DEVELOPMENTS
The Canadian Pacific--The Great Northern--International
Connections--Government Roads--The Intercolonial--On to Hudson
Bay--Opening up New Ontario
All the restless activity upon the part of its older and its younger
rival did not rob the Canadian Pacific of the place it had held in the
life and interest of the Canadian people. With a confident assurance
based on the extent and the strategic location of its lines, the
imperial richness of its endowment, and the proved efficiency of its
management, it pressed steadily forward until it became the world's
foremost transportation system.
The unbroken success and the magnitude of the operations of the
Canadian Pacific in this period are almost without precedent in railway
annals. By 1914 it had under its control more than eighteen thousand
miles of railway, or more than six times the length of the original
transcontinental line. It gave employment directly to ninety thousand
men, whose monthly pay-roll reached five million dollars, and
indirectly maintained many more, {221} justifying the boast of its
president in 1907 that directly or indirectly one-twelfth of the people
of Canada received their income from the Canadian Pacific. In 1913
alone, the supreme year of Canadian railway expansion, the Canadian
Pacific appropriated for new construction and betterments, equipment,
terminal facilities, steamships and hotels, shops and elevators, nearly
one hundred million dollars, or more than the original cost of the
road. It touched the life of the nation at every conceivable point.
From Atlantic to Pacific there was scarcely a town of any importance
that was not reached by its lines. But its position was not merely
national. It controlled over five thousand miles of railways in the
United States, taking rank amongst the foremost systems of the
Republic. Its steamship lines stretched more than half-way round the
world, and in Liverpool and Trieste, Hong-Kong and Yokohama and Sydney,
the red-and-white house flag of the Canadian Pacific made the company
and the country known.
The management of the Canadian Pacific showed stability and continuity.
It trained up in its own ranks the men for its highest posts. Sir
George Stephen, later Lord Mount {222} Stephen, on resigning the
presidency in 1888, had been succeeded by Mr, afterwards Sir, William
C. Van Horne. As general manager, and then for eleven years as
president, Van Horne carried the road through its most difficult
period. In spite of failure of crops, low prices, and the slow
trickling in of settlers, he kept aglow his own faith in the West and
communicated it to others. Indomitable courage, tenacity of purpose,
breadth of vision, mastery of organization and detail marked him as one
of the great railroad builders of the century. Even when he retired
from the presidency, becoming for another twelve years chairman of the
board of directors, it was only to find new outlets for his energy in
building pulp and paper mills in Quebec and railways in Cuba; for
though, unlike many millionaires, he had not narrowed into his own
business groove, and could paint a picture as well as buy one, the call
to action never failed to stir him.
When Van Horne came to the Canadian Pacific in 1882, he brought with
him the man destined to be his successor, Thomas G. Shaughnessy, a
young Irish-American still under thirty, who had been engaged in
railway work since he was sixteen. Appointed {223} general purchasing
agent, he rose rapidly, becoming president in 1899 and chairman of the
board in 1911. Sir Thomas Shaughnessy maintained the progressive
policy and the honourable record of straightforward management which
has distinguished the Canadian Pacific--a railway singularly free from
the questionable manipulations which have brought so many great
American systems to bankruptcy. Other men left their impress on the
road: men like Sir William Whyte, for over twenty years in charge of
the western lines, David M'Nicoll, and George M. Bosworth and many
others, gave most effective service.
After the first hurried staking out of the claim was over, by 1890, the
Canadian Pacific refrained from further expansion until about 1898:
between these years only three hundred miles were added to the system.
Then reviving prosperity and the activity of rival roads led to a new
period of expansion. The additions made in this time can best be
realized by a glance at the map (opposite next page). The most
important may be noted briefly, beginning at the Pacific coast.
On Vancouver Island, the Esquimalt and Nanaimo Railway, which had been
projected {224} originally when it was hoped that Canada's first
transcontinental would find its terminus at Victoria by crossing the
straits from Bute Inlet, was acquired from the Dunsmuir interests. On
the mainland of British Columbia activity was concentrated in the
southern section. The rich mineral discoveries in the Boundary country
led to the extension of the Canadian Pacific westward from Lethbridge,
through the Crow's Nest Pass. The company was given a Dominion
subsidy, and in return a general reduction of rates was secured. After
years of contention with the Hill roads which were crowding into the
same territory, and in face of immense engineering difficulties, a
continuation of this line by way of Penticton gave promise of a second
through route. Meanwhile, entrance was secured to Spokane and Portland
in the United States. In the plains and prairie section a close
network of lines developed. The narrow-gauge line of the Alberta
Railway and Irrigation Company, which had done good pioneer service,
under the guidance of Elliott Galt, in developing Alberta's
possibilities in coal and irrigated land, was absorbed in 1911. The
northern country was traversed by two new east and west lines. The
Qu'Appelle, Long Lake and {225} Saskatchewan, extending from Regina to
Prince Albert, lost to the Canadian Northern in 1906, was replaced by a
new line and 'cutoffs' and extensions built in every quarter. South of
the border equal activity was displayed in throwing out feeders for the
Soo and Duluth lines. The acquisition of the Wisconsin Central in 1909
gave the Canadian Pacific entrance into Chicago, while an agreement
with the Wabash made it possible to link up its western United States
lines with its southern Ontario road at Detroit. In Ontario, a branch
from Toronto to Sudbury made the Canadian Pacific independent of the
Grand Trunk's North Bay link, an extension from Guelph to Goderich
tapped a fertile country, a line from Port M'Nicoll on Georgian Bay to
Bethany near Peterborough gave a short through route for grain, a lake
shore route eastward from Toronto provided access to the towns which
the Grand Trunk, in its promoters' concern for through traffic or in
its contractors' desire for low land charges, had side-tracked, while
stock purchase and later a lease of the Kingston and Pembroke gave
entrance into Kingston. In Quebec, short tentacles were pushed up into
the Laurentian hills north of Ottawa; south of the St Lawrence the
chief step taken {226} was the 999-year lease of the Quebec Central,
sanctioned in 1912. In the Maritime Provinces the New Brunswick
Southern or Shore line and the Dominion Atlantic, successor to the
Windsor and Annapolis, were leased in 1911, and running rights secured
over the Intercolonial into Halifax.
[Illustration: Canadian Pacific Railway, 1914]
A marked feature of the Canadian Pacific policy from the beginning was
the endeavour to control subsidiary or allied activities, and thus gain
well-rounded independence. Its steamship lines came to girdle half the
world. On the Pacific, service to Hong-Kong and Yokohama had begun in
1892 and to Australia in 1893, while a service on the coast from
Seattle to the far north, and on the lakes of central British Columbia,
followed. The Great Lakes fleet was still earlier in being. In 1903
the purchase of fourteen Elder-Dempster vessels ranging from five to
eight thousand tons gave a whole North Atlantic fleet for seven
millions, or the cost of a single _Lusitania_. It was soon increased
by larger and faster boats. A line to Trieste, to secure a share of
the immigration traffic from Eastern Europe, led to prolonged
complications with the Austrian government early in 1914, on account of
the hostility of German rivals. {227} Hotels followed steamships, some
eight or ten being erected at strategic points from St Andrews to
Victoria. Departing from the usual American practice, the company
owned and operated its own sleeping-cars, and maintained its own
express and telegraph companies. Its car-shops provided much of its
rolling stock. Grain elevators were built at terminal points. In the
later years a systematic policy of developing its western lands was
adopted. A special department of Natural Resources was established,
irrigation works were begun on a huge scale in the tract of three
million acres between Calgary and Medicine Hat, and ready-made farms
were provided or loans made to selected settlers.
The method of financing these countless enterprises was equally
striking. Instead of increasing the proportion of bonded indebtedness,
as was customary, the company sought additional capital chiefly by the
sale of common stock. This procedure was possible because of the
speculative value of the stock, based primarily on the growth of
traffic, and of the value of the western lands still unsold: the
dividend rose steadily to ten per cent in 1912, and the practice which
prevailed until 1909 of issuing the stock at par gave holders {228}
valuable rights. In the latter year 125 was charged for the shares
allotted, in 1912 150, and in 1913 175. As a result of the earlier
policy an unnecessarily high price was paid for new capital, but fixed
charges were kept low, and no great system was as safe from
foreclosure. In 1914 the total assets of the company were valued at
over $800,000,000.
Fifth in mileage among the railway systems of Canada is the group of
fragments connected with the Great Northern Railway of the United
States. James J. Hill had not been least among the members of the
original Canadian Pacific Syndicate, but differences with his
colleagues led to his retirement in 1883. Thenceforward he devoted
himself entirely to the building up of the St Paul, Minneapolis and
Manitoba, the railway acquired from the Dutch bondholders. Under the
name of the Great Northern it had been extended by 1893 from Lake
Superior to Puget Sound, and continued to grow steadily until, twenty
years later, it controlled nearly eight thousand miles. The Great
Northern was remarkable in at least three respects. Except for the
original grants for the Minnesota lines, it was built through to the
coast {229} without a dollar or an acre of subsidy from the state. Its
capitalization was kept close to the actual cost of the road and its
fixed charges were low. It took the lead among American roads in an
aggressive and enlightened endeavour to build up the country through
which it ran, not only by flexible rate charges, but by a direct
campaign of education among the farmers and other shippers on its route.
The mineral wealth of southern British Columbia and the farming wealth
of the western plains turned Hill's attention toward Canada once more
about the beginning of the twentieth century. In British Columbia the
progress of the Great Northern invasion was slow. The character of the
country made construction difficult, and the Canadian Pacific,
appealing to national prejudices, fought every inch of the way. But Mr
Hill pressed on. The coal-fields of the Crow's Nest Pass, in which he
acquired a controlling interest, were made accessible by a road from
the south, and a series of lines branching from Spokane entered the
Boundary mining region. Winding in and out across the border the road
continued westward to Vancouver. Fortunately duplication was in large
part avoided; by arrangements with the Canadian Pacific, the {230}
Canadian Northern, and the Northern Pacific, the difficult country
south of the Fraser was pierced by common lines, and common terminal
facilities were secured. Meanwhile, in 1906 and 1907, more ambitious
schemes were announced--the building of north and south lines through
Brandon and Regina, and the construction of an east and west line from
Winnipeg to the Pacific. In ten years, it was officially forecasted,
the Great Northern would have as extensive a system in Canada as in the
United States. What was more startling, Mr Hill denounced
'spoon-feeding,' and did not ask for a cent of subsidy. The building
of the Grand Trunk Pacific and the Canadian Northern postponed
indefinitely these larger plans. Actual operations were confined to
the construction of branches running northward in Manitoba, to Brandon,
Morden, and Portage la Prairie, and the acquisition, jointly with the
Northern Pacific, of a lease of the Canadian Northern line from Pembina
to Winnipeg, under the name of the Midland, and of terminals in
Winnipeg. Meanwhile, as the map shows, branches from the main Great
Northern line nosed up to the border at nearly a dozen other places.
The activities, real and projected, of the {231} Great Northern in
Canada brought up acutely the question of the interrelations of
Canadian and American roads. To some these activities appeared
evidences of an infamous plot to drain Canadian traffic southward to
United States ports and roads: to others they seemed to be
philanthropic endeavours to rescue Western Canada from the clutches of
monopoly. They were not, however, due to either political intrigue or
knight-errantry, but to the same desire for profit which had led the
Canadian Pacific to build up its great system in the western states.
Other things being at all equal, it was of course desirable that
Canadian traffic should follow Canadian territory to Canadian ports; it
was to this end that uncounted millions had been spent. Yet patriotism
had a seamy reverse side of political buncombe. Every hint of outside
competition in the preserves of railway or industrial corporations in
Canada was denounced in interested quarters as dangerous and
empire-smashing, while the counter-incursions into the territory of the
United States were ignored or regarded as merely normal business
enterprise.
[Illustration: Great Northern Railway, 1914]
As a matter of fact, in 1914 Canadian railways controlled four miles in
the United {232} States for every mile in Canada controlled by railways
of the United States. The Canadian Pacific alone owned or leased over
five thousand miles in the United States, chiefly in the northwest,
while it had close working agreements with the Wabash and the New York,
New Haven and Hartford. The Grand Trunk controlled over seventeen
hundred miles, two-thirds in the Michigan peninsula and the remainder
in New England, while the Canadian Northern ran for some forty miles
through the United States, south of the Lake of the Woods. The
American interests in Canada were more scattered, but the Great
Northern, the Michigan Central, the Pere Marquette, and the New York
Central all developed important Canadian extensions.
In short, the interrelations were certainly no more extensive than
would have been expected in the case of two friendly nations lying side
by side for three thousand miles, connected by ties of speech and by
common commercial and social customs. The only difficulty which arose
out of the situation was the division of jurisdiction between the
Railway Commission of Canada and the Interstate Commerce Commission of
the United States. The heads of the two commissions, Mr Justice {233}
Mabee for Canada and Mr Knapp for the United States, endeavoured in
1910 to work out a plan for joint control, but without final success.
In the past half-century government ownership of railways has been much
discussed in Canada, dividing attention with the allied question of
railway ownership of the government. It cannot be said that any
decisive public opinion or policy has resulted. Important steps toward
government ownership have been taken in the last twenty years. The
Intercolonial and Prince Edward Island Railways have been retained by
the government and extended, a federal line has been built in Manitoba
and a provincial one in Northern Ontario, and the National
Trans-continental has been constructed by the government for lease to a
private company. Yet, at the same time, the main railway projects
continued to be entrusted to private companies, and the proportion of
the whole mileage under private operation increased.
The most important incident in the Intercolonial's later history was
its extension from Quebec to Montreal in 1898, by the purchase of the
Drummond County Railway and the lease of a stretch of forty miles in
length from {234} the Grand Trunk. Six years later the Canada Eastern,
running from Gibson to Loggieville, was purchased. Many bankrupt lines
in the Maritime Provinces and Quebec were offered to the Intercolonial
as valuable feeders. In the later years of the government of Sir
Wilfrid Laurier and in the first years of Sir Robert Borden's
administration, authority was sought to acquire such of these roads as
might be desired, but restrictions due to the action of the Canadian
Senate or the political difficulty of discriminating between the
railways prevented any rapid acquisition. Changes in administration
were tried. As a half-concession to the demand that the Intercolonial
should be operated by an independent commission, a board of management
was established in 1909, consisting of the chief officials of the road.
In 1913 this board was dissolved and the management vested in a single
commissioner, F. P. Gutelius, formerly of the Canadian Pacific.
Financial returns showed little improvement. True, the record,
unbroken since 1873, of annual failure to meet even operating expenses,
was varied after 1898 by small surpluses in two years out of three, but
the net deficits since Confederation rose to over eleven {235} millions
by 1913; and while there was no question that the administration had
been improved, there was room for belief that the surpluses had been in
part book-keeping ones, obtained by including in the large capital
expenditure items properly chargeable to revenue.
At first sight this failure to meet operating expenses, much less to
pay interest on the investment, together with constantly increasing
capital outlay, seemed to warrant strong condemnation of government
methods. And, in truth, a serious indictment could be framed.
Efficient government ownership is more difficult in a democratic
country where shippers, employees, would-be employees, supply dealers,
all have influence over the administration, than it is in a
bureaucratic state. Intercolonial employees were given their posts and
kept in them by political influence, and their numbers were often as
excessive as energy was lacking. Supplies of coal and new land as
required were usually purchased from political friends, with an
additional margin for campaign contributions;[1] at election times the
{236} road became a vast political machine. Under the administration
of the governments of Laurier and Borden the grosser scandals ceased,
but in one form or other political influence continued to be exerted.
Yet this was not the whole story. If the Intercolonial did not earn
dividends, there were other reasons at work than government
inefficiency. The road ran for long stretches through barren country
where little local traffic originated. In competing for through
traffic it was handicapped by the roundabout length of its route: it
ran along two sides of a triangle, while the Canadian Pacific,
subsidized by one political party, was built along the base, and the
National Transcontinental, built by the other party, came in between;
in summer it had to face the competition of the St Lawrence route as
well. Nor was dividend-earning the sole standard of success to be
applied. The Intercolonial was built originally for political and
military ends, not merely for commercial gain. It had given shippers
the lowest rates in the world: 'the surplus is in the pockets of the
people,' one of the political heads declared. If, it was often urged,
the canals of Ontario and Quebec were operated by the government at a
dead {237} loss, without a cent of tolls, why grudge the Maritime
Provinces, to whom Confederation had been less kind, the benefit of
operating at bare cost the government railways! The Intercolonial had
undoubtedly done much to weld the eastern and central provinces
together, and this was worth more than a million dollars or two in
interest charges.
The desire for rates at cost, or lower, which has made the people in
Eastern Canada oppose all suggestions to turn over the Intercolonial to
the Canadian Pacific or Canadian Northern, led those of Western Canada
to urge government ownership of the other federal venture, the Hudson
Bay Railway. Owing to its far northern position, Manitoba possesses
ocean ports, Nelson and Churchill, which are nearer Liverpool than New
York is. Why, then, carry the grain of the prairie fifteen hundred or
two thousand miles to an Atlantic port before loading it on the ocean
freighter? Proposals to build a railway to a Hudson Bay port and to
establish a steamship line to carry the traffic at sea seemed plausible
and won much western support. Investigation soon made the difficulties
clear. Hudson Bay was fairly free from ice, but Hudson Straits were
studded with icebergs far into the summer. {238} Ships of special
construction would be needed for the dangerous passage, and, in any
event, grain could not be shipped until the spring after it was
harvested and would have to be stored in elevators during the winter.
And in the meantime the three transcontinental railways were enlarging
the eastern funnels, while the Panama Canal made an outlet by Vancouver
feasible. Still, there was a gambling chance that something would come
of a railway to Hudson Bay, and if the stroke succeeded, Canada would
be given a new coast, and would front the sea at the north as well as
at the east and the west. The territory between Le Pas, a terminus of
the Canadian Northern, and Port Nelson, selected as the better port on
Hudson Bay, had some mineral and agricultural promise. So, in the
prosperous days of 1911, it was decided to attempt the work. As it was
largely an experiment, the government's plan of state construction and
possibly operation found wide support. The line was still under
construction in 1914.
[Illustration: Railways of Canada, 1914]
Another exploration road which amply justified the faith of its
promoters was the Timiskaming and Northern Ontario. This railway,
striking up from North Bay into the mineral region and clay belt beyond
the {239} height-of-land, was begun by the Ontario government in 1902
as a colonization road. It was fortunate enough to uncover the riches
of Cobalt's silver-camp in its construction; later, mining development
at Gowganda and Porcupine brought it traffic; and the building of the
Grand Trunk Pacific made it an important connecting link. It was able,
then, from the outset to show favourable results, direct as well as
indirect. It was built and controlled by a government commission,
efficient and more or less free from politics.
[1] The deputy-minister, Mr Collingwood Schreiber, instanced in 1882 an
attempt of a farmer, whose claim was nursed by influential politicians,
to collect $70,000 for a gravel-pit liberally estimated to be worth $5.
{240}