Sir Francis Hincks. From a portrait in the Dominion ArchivesSir Francis Hincks.From a portrait in the Dominion Archives
Sir Francis Hincks. From a portrait in the Dominion ArchivesSir Francis Hincks.From a portrait in the Dominion Archives
Howe steadily maintained the policy of state ownership, but had unusual difficulty in carrying Nova Scotia with him. The great English contracting firm of Peto, Brassey, Betts and Jackson, whose operations in the other provinces will be discussed at greater length, offered to find the necessary capital if given the contracts on their own terms. Many Nova Scotians were dazzled by the promises of the agents of this firm, and Howe in 1853 was forced to agree to their proposals. The contractors found themselves unable to makegood their promises, in face of panics on the stock market in England, and in the following year Howe's original policy was sanctioned. He himself retired from political life for a time in order to carry through, as one of the railway commissioners, the policy he had steadfastly urged.
It was on June 13, 1854, that the first sod was turned for the construction of the Nova Scotia Railway, and a beginning made at last. The road was to run from Halifax to Truro, with a branch to Windsor. Progress was slow, but by 1858 the ninety-three miles planned had been completed. Then came a halt, when reality succeeded the glowing visions of the prospectus, the service proved poor, and the returns low. Nine years later an extension from Truro to Pictou was constructed. This gave Nova Scotia at Confederation in 1867 145 miles of railroad in all, built at a cost of $44,000 a mile, and connecting Halifax with the Bay of Fundy and the Gulf of St Lawrence. The gauge adopted was five feet six, and the Nova Scotia road led the way in Canada in using coal for fuel.
New Brunswick had a more chequered experience. After the collapse of the Halifax and Quebec project, her efforts were confinedto the road running north from St Andrews and to the European and North American.
The possibilities of St Andrews as an ocean terminus had been severely hampered by the thrusting in of the Maine-wedge between New Brunswick and Quebec, but still the town struggled on. In 1847 shares in the railway had been placed both in England and in the province, and the legislature guaranteed the interest on debentures and also granted a land subsidy. Still, the money came in slowly. Operations were time and again suspended, contract after contract was made, and reorganizations were effected. In 1858 the road had reached Canterbury, and four years later its temporary terminus at Richmond; in 1866 a branch to St Stephen was opened, and in 1868 an extension to Woodstock, making 126 miles all told, costing about $20,000 a mile. At Confederation only a third of the distance between St Andrews and Rivière du Loup on the St Lawrence had been completed, and the road was in a receiver's hands.
The European and North American also had its troubles. Maine proved unable to build its section. In 1852 the New Brunswick government made a contract with the Englishfirm already referred to, under the style of Peto, Betts, Jackson and Brassey, for the construction of a line from Maine to Nova Scotia, at $32,500 a mile. The province agreed to subscribe $6000 stock and lend $9400 in bonds per mile; the contractors were to find the rest of the money in England. This they failed to do. The firm was dissolved in 1856, and the government took over the road, completing it from St John to Shediac, 108 miles, in 1860. The western half was not begun until August 1867.
To return to the upper provinces. By 1851 the St Lawrence, the Great Western, and the Northern were under way, and more ambitious schemes proposed. The Guarantee Act of 1849, which was the first phase of Hincks's policy, assuring public aid for the second half of any road at least seventy-five miles in length, was proving inadequate, and the government was considering an extension of its policy. At this juncture the golden news arrived of Howe's success in securing the £7,000,000 loan at bargain rates. All hesitation was removed. No doubt was felt that the roads would pay, once they were built; the only difficulty had been to find the money to build them. And now £7,000,000 wasavailable—£4,000,000 of it for Canada, at probably 3 1/2 per cent. Paper computations soon proved that £4,000,000 would suffice not only to build Canada's third of the Quebec-Halifax route, but to build a trunk line from Quebec or Montreal through to Hamilton, whence the Great Western ran to Windsor on the frontier opposite Detroit.
At once a struggle began for the control of this fund. The Montreal merchants who had bought experience in building the St Lawrence and Atlantic, John Young, Luther Holton, and D. L. Macpherson, with A. T. Galt of Sherbrooke, were first in the field, and pressed for a charter to build from Montreal to Kingston, intending later to extend this road to Toronto. Then the most noted firm of contractors in railway history, Peto, Brassey, Betts and Jackson (the forms of the firm name varied), who had built one-third of the railways of Britain, and also roads in France and Spain and Italy and Prussia and India, were attracted to this fresh field by Howe's campaign in England. They sent an agent to Toronto in 1851 to offer to construct all the roads needed, and to find all the capital required, with partial government guarantees. Hincks, with whom the decision lay, waseminently an opportunist. In 1849 he had argued against government ownership; now he argued for it. Yet he did not close the door against retreat. The new Act, passed in April 1852, marked the second or Grand Trunk phase of his gradually shaping policy. Besides providing for the Canadian share of the Halifax to Quebec road, the Act contemplated three alternative methods of continuing this Trunk line westward. The province was to build it if the guaranteed loan could be stretched far enough; failing this, the province, together with such municipalities as wished, could undertake the extension; should both modes fail, private companies might be given the privilege, with a provincial guarantee of half the cost, covering both principal and interest. No roads except those forming part of the Trunk line and the three already under way were to be aided. The Montreal and Kingston Railway, in which Holton, Galt, and Macpherson were prime movers, was chartered, and also the Kingston and Toronto, but in both charters a suspending clause was included preventing the charters from taking effect until special proclamation was made—after the other plans had failed.
The next move was to arrange terms withthe other provinces and secure the promised Imperial guarantee. How Hincks and Chandler's mission failed has already been told. Hincks then made another sharp curve and decided for company control. Before leaving Canada he had made up his mind that the construction should be entrusted to British contractors, and was authorized to negotiate with the Brassey firm. Now that the Imperial guarantee had faded away, capital was needed more than contractors. The Brasseys promised both, offering, if given the contract, to organize a company in England which would provide all the capital not guaranteed by the province.
This seductive offer was to prove the main cause of the financial embarrassment of the Grand Trunk. It involved at the outset a dubious connection between company and contractor, and also for two generations an attempt to manage a great railway at a range of three thousand miles. So fatal did it prove that in later years each party to it endeavoured to throw the responsibility for the initiative on the other, and enemies of Hincks declared that he, as well as Lord Elgin, the governor-general, had been bribed to wreck the negotiations with the British governmentin order to take up with Brassey. Whether or not Hincks was first to resume negotiations in London, it was the contractors who had already taken the initiative in America, sending a representative to Toronto, and taking part in the elections of 1851 in Nova Scotia against Howe. It is clear also that the British government was unwilling to consider anything but the unacceptable Major Robinson line. Hincks was justified in looking elsewhere for capital, but he was not justified in binding himself to one firm of contractors, however eminent.
Hincks returned to Canada with a tentative contract in his pocket. To Canada, too, came Henry Jackson, a partner in the Brassey firm for this enterprise, and one of the most skilful and domineering of the railway lobbyists in Canada's annals, rich in such methods. At once a battle royal began in parliament. On August 7, 1852, the Montreal and Kingston and the Kingston and Toronto charters were proclaimed in force; apparently the supposition of the government was that the English contractors would simply subscribe for the bulk of the stock in these companies. But the Canadian promoters were not willing to give up their rights so easily; a week after thebooks were opened, Galt, Holton, and Macpherson subscribed between them £596,500 and seven of their associates took up the nominal balance of the capital of £600,000 which was authorized. Hincks met this move by bringing down a bill to incorporate a new company, the Grand Trunk Railway Company of Canada, and the rights of the rival claimants came before parliament for decision.
On behalf of the English promoters it was urged that the Canadian promoters could not raise the necessary capital, that the Galt-Holton-Macpherson subscription was a fake, that the English contractors could induce capitalists to invest freely at low rates, and that their superior methods would result in a road of more solid construction and lower working expenses than the ordinary American railway. Holton and Galt, on the other hand, contended that their subscription was in good faith, that tenders were in, and that with provincial guarantee and municipal aid, and by paying the contractors partly in stock, they could finance the road. It would be better, they urged, to have the control in the hands of men who knew the province rather than in the hands of outsiders. The Grand Trunk Company, seeking incorporation, was only asham company, under the thumb of the contractors, formed to ratify a foregone contract with them. If the Montreal and Kingston Company was given control, it would invite the Brassey firm to tender on the same basis as other contractors: no more could honestly be asked.
Galt and Holton had the best of the argument, but Hincks had the votes, and rumours which Jackson spread of the Brassey millions and the firm's open door to all the money markets of Europe brought conviction or afforded excuse. The railway committee reported in favour of the English promoters, though the competition had compelled them to reduce their price by a thousand pounds a mile, and to accept a guarantee of £3000 per mile instead of half the cost. At the same time the Brassey firm secured a charter for the Grand Trunk of Canada East, to run from Quebec to Trois Pistoles—Canada's first section of the Halifax to Quebec route. The same aggressive firm had already secured a contract for the Quebec and Richmond, which was to join the St Lawrence and Atlantic at Richmond, and, as has been seen, for New Brunswick and Nova Scotia roads. With these contracts seemingly secure, Jackson sailed forhome. But Canadian promoters were quick to learn. Galt had another card to play. As president of the St Lawrence and Atlantic he proposed to amalgamate this road with the Montreal and Kingston, and to build a bridge at Montreal, thus securing an essential part of the trunk line. Hincks became alarmed at the Montreal interests thus arrayed against him, and proposed as a compromise that the Grand Trunk should absorb the St Lawrence road and build the bridge at Montreal on the condition that the opposition to its westward plans should be abandoned. Upon this all parties agreed, and the English and Canadian promoters joined forces.
Negotiations were completed in England early in 1853. As yet the Grand Trunk Company was but a name. The real parties to the bargain were many. First came John Ross, a member of the Canadian Cabinet, but representing the future Grand Trunk, of which he was elected president. The Barings and Glyns, eminent banking houses, had a twofold part to play, as they were closely connected with the contractors and were also the London agents of the Canadian government. The contractors themselves, Peto, Brassey, Betts and Jackson, of whom Jackson, accompaniedby the company's engineer, A. M. Ross, had spent a year studying the Canadian situation, put in anxious weeks hammering out the details of the agreement and the prospectus to follow it. Galt represented the St Lawrence and Atlantic and the Atlantic and St Lawrence, while Rhodes and Forsythe of Quebec had charge of the interests of the Quebec and Richmond. An agreement was reached to amalgamate all the Canadian roads and to lease the Maine road for 999 years. This left Toronto the western terminus. An attempt to absorb the Great Western and thus secure an extension to Windsor came to nothing. This failure gave Galt an opening for another brilliant stroke of railway strategy. A company had recently been chartered to build a road from Toronto to Guelph and Sarnia, and the firm of Gzowski and Co., of which Galt was a member, had secured the contract. Galt, acting with Alexander Gillespie, a prominent London financier who was the agent of the Toronto, Guelph and Sarnia Railway, now proposed to substitute this line as the westward extension. Everybody was in an amalgamating mood, and the bargain went through. All contracts previously made were taken over by the amalgamated company, and theinvesting public was told that all uncertainty as to the total amount was thus removed—as it emphatically was, for the time.
A glowing prospectus was drawn up. The amalgamated road would be the most comprehensive railway system in the world, comprising 1112 miles, stretching from Portland and eventually from Halifax (by both the northern and the southern route) to Lake Huron. The whole future traffic between west and east must therefore pass over the Grand Trunk, as both geographical conditions and legislative enactment prevented it from injurious competition. 'Commencing at the debouchere [sic] of the three longest lakes in the world,' the prospectus continued, 'it pours the accumulating traffic in one unbroken line throughout the entire length of Canada into the St Lawrence at Montreal and Quebec, on which it rests on the north, while on the south it reaches the magnificent harbours of Portland and St John on the ocean.' It was backed by government guarantee and Canadian investment, and its execution was in the hands of the most eminent contractors. The total capital was fixed at £9,500,000 sterling. The revenue was estimated at nearly £1,500,000 a year, which, with working expenses at fortyper cent of revenue, and debenture interest and £60,000 for lease of the Atlantic and St Lawrence Railway deducted, would leave £550,000 or 11 1/2 per cent on the share capital.
On the advice of Baring and Glyn only half the capital was issued at first. This decision proved a serious mistake. In 1853, when the company was floated, money was abundant and cheap; the shares and bonds issued were over-subscribed twenty times, and were quoted at a premium before allotment. Scarcely was the issue made when war with Russia loomed up, and money rose from three to seven or eight per cent. Never again was it possible for the Grand Trunk to secure capital in such abundance.
But this was for the future to disclose. At once construction began in Canada. A. M. Ross was appointed chief engineer, and S. P. Bidder general manager, both on the nomination of the English bankers and contractors. Plant was assembled in Canada, orders for rails and equipment were placed in England, and navvies came out by the thousand. At one time 14,000 men were directly employed upon the railways in Upper Canada alone. In July 1853 the last gaps in the St Lawrence and Atlantic had been filled up, though notin permanent fashion. In 1854 the Quebec and Richmond section was opened; in 1855, the road from Montreal to Brockville and from Lévis to St Thomas, Quebec; in 1856, the Brockville to Toronto and Toronto to Stratford sections. Not until 1858 was the western road completed as far as London. The year 1859 saw the completion of the Victoria Bridge, the extension from St Mary's to Sarnia, and a new road in Michigan, running from Port Huron to Detroit. By 1860 the eastern section extended to Rivière du Loup, where a halt was made.
From the outset difficulties undreamed of had developed. Money was hard to get and early traffic returns were disappointing, so that the company found it almost impossible to secure the balance of the capital required. The road from Montreal to Portland was found to require heavy expenditure to bring it up to the standard. The contractors, for their part, were embarrassed by the company's shortage of funds and by the great rise in the prices of land, materials, and labour. Their own activities, the Reciprocity Treaty of 1854 with the United States, the Crimean War, had combined to bring on a period of inflated prices such as Canada was not to experienceagain for half a century. With wheat at two dollars a bushel, and 'land selling by the inch,' even liberal margins of profit on contracts vanished.[2]
In these straits the company turned to the government for aid. It had many supporters in the House. No one could deny the benefits which its operations had conferred upon the province. The government guarantee of interest and the government nomination of a part of the board of directors were plausibly held to involve responsibility for the solvency of the company. It was not surprising, therefore, that for a decade after 1855 scarcely a year passed without a bill to amend the termsof the Grand Trunk agreement. One year it was an additional guarantee, another a temporary loan, again a postponement, and again a still further postponement of the government's lien. It soon came to be recognized that the money which had been advanced under the guarantee provisions must be considered a gift, not a loan, though to this day the amount nominally due still figures as an asset on the Dominion government's books. Incidentally, the embarrassing government directors were dispensed with in 1857.
The Grand Trunk was complete from Lake Huron to the Atlantic in 1860. In the ten years that followed, working expenses varied from fifty-eight to eighty-five per cent of the gross receipts, instead of the forty per cent which the prospectus had foreshadowed; not a cent of dividend was paid on ordinary shares—nor has been to this day.
What were the reasons for this disappointing result? The root of the trouble was that the road was not built solely or even mainly with a view to operating efficiency and earning power. It was the politicians' road, the promoters' road, the contractors' road, at least as much as the shareholders' road. The government had encouraged the building ofunprofitable sections, such as that east of Quebec, for local or patriotic reasons. Promoters had unloaded the Portland road and later the Detroit and Port Huron road at excessive prices. The contractors, east of Toronto, had had an eye mainly to construction profits in planning the route, and heavy grades, bad rails, and poor ballast increased maintenance charges beyond all expectations. The prophecy that operating expenses would not exceed forty per cent of earnings, based on English experience, failed partly because earnings were lower, but more because operating expenses were higher, than anticipated. The company had more than its share of hard luck from commercial depression, and from loss on American paper money in the Civil War. Water competition proved serious in the east, while other railways waged traffic wars in Upper Canada. The trade of the far west, which had been the most attractive lure, did not come in any great amount for the first twenty years. Differences of gauge, lack of permanent connections at Chicago, lack of return freight, rate wars with the American roads which had been built west at the same time or later, the inferiority of Montreal to New York as of old in harbour facilities andocean service, the failure of Portland to become a great commercial centre—all meant hope and dividends deferred. Finally, the management was working at long range: the road did not enjoy the vigilant inspection or the public support that would have attended control by Canadian interests.
The Grand Trunk did Canada good service, well worth all the public aid that was given. It would probably have given better service, and its shareholders could not have fared worse, had the plans of Galt and his associates not been interfered with, and the line been built gradually under local control.
While the building of the Grand Trunk was the main achievement of the period, it was by no means the only one. The fifties were the busiest years in the railway annals of older Canada. In 1850 there were only 66 miles of road in all the provinces. In 1860 there were 2065, of which over 1700 had been added in the Canadas alone. The Great Western and the Northern were pushed forward under the provisions of the earlier Guarantee Act; roads of more local interest were fostered by municipal rivalry. Their building brought unwonted activity in everybranch of commerce. A speculative fever ran through the whole community; fortunes were made and lost in the provision trade, and land prices soared to heights undreamed of. This mood was the promoter's happy chance, and still more charters were sought. The pace quickened till exhaustion, contagious American panics, poor harvests, and the Crimean War—which first raised the price of the wheat Canada had to sell, but later raised the price of the money she had to borrow—brought collapse in 1857.
In this boom period jobbery and lobbying reigned to an extent which we rarely realize in our memory of the good old times. Railway contractors were all-powerful in the legislature, and levied toll at will. The most notable 'contractor-boss' of the day was able, dealing with the Great Western, to hold up a bill for double-tracking until assured of the contract himself; dealing with the Grand Trunk, to force from the English contractors a share in the enterprise before consenting to help their schemes through; with the Northern, to collect $100,000 as a condition of securing from the government the guarantee bonds before they had been rightly earned. Municipal officials were bribed to help bonusesthrough. Existing roads were blackmailed by pedlars of rival charters. Glaringly fraudulent prospectuses were issued. On a smaller scale, the excitement and the rascality which had marked the beginning of the great railway eras in the United Kingdom and the United States were reproduced in Canada.
Of the other roads completed in this period, the two which had been aided by Hincks's first Guarantee Act were most important.
The Great Western had a promising outlook. It ran through a rich country and had assured prospects of through western traffic. The road was completed from Suspension Bridge to Windsor in January 1854. An extension from Hamilton to Toronto was built in 1856, and a semi-independent line from Galt to Guelph absorbed in 1860. The Great Western came nearest of any early road to being a financial success; alone of the guaranteed roads it repaid the government loan, nearly in full. But after a brief burst of prosperity, from 1854 to 1856, it, too, was continually in difficulties. In 1856 it paid a dividend of 8 1/2 per cent, but three years later it paid nothing, and in the next decade averaged less than three per cent.
The troubles of the Great Western camechiefly from competition, actual and threatened, and uncertain traffic connections. To the north, the chartering of the Toronto, Guelph and Sarnia, amalgamated later with the Grand Trunk, cut into its best territory. An endeavour was made in 1854 to divide the remaining area, but two years later the battle was renewed, the Great Western building to Sarnia and the Grand Trunk tapping London and Detroit. Between the Great Western and Lake Erie a rival road direct from Buffalo to Detroit was threatened time and again, but was not built until after Confederation. South of Lake Erie the Lake Shore and Michigan Southern was built shortly afterwards by interests connected with the New York Central, thus threatening the traffic connections of the Great Western both east and west. To avert loss of its western trade, the Great Western sunk large sums in aiding the construction of a road from Detroit to Grand Haven, with ferry connections to Milwaukee; but this experiment did not prove a success and caused serious embarrassment.
The Northern Railway, whose promoters, as we have seen, naïvely recognized that railways and lotteries were close akin, was opened as far as Allandale in 1853, and to Collingwoodin 1855. It was scamped by the contractors, poorly built, and overloaded with debt. The sanguine policy of building up a through traffic from the American West, by water to Collingwood and rail to Toronto, proved a will-o'-the-wisp. In turn the company relied on independent steamers, and set up a fleet of its own, but equally in vain so far as profit went. By 1859 the road was bankrupt. A new general manager, Frederick Cumberland, brought in a change of policy. Local traffic was sedulously cultivated, and a fair degree of prosperity followed.
Most of the lesser roads constructed looked to the municipalities rather than to the provinces for aid. The Municipal Loan Fund of 1854 was the third and last phase of Hincks's railway policy. This was an ingenious attempt to give the municipalities the prestige of provincial connection without accepting any legal responsibility. Municipalities had previously been permitted to bonus or take stock in railways and toll-roads, but their securities were unknown in the world's markets. Hincks now provided that municipalities which wished money to aid railways or other local improvements might practically pool their credit and share in the credit of the province. Provincialdebentures were issued against the municipal obligations pooled in the Fund, and the proceeds of their sale given to the municipalities. A sinking fund was to be maintained, and, if need be, the province could levy through the sheriff on any defaulting town.
The municipalities made full use of their privileges. It was believed that railway investments would yield high dividends, and the more optimistic expected to see all taxes made unnecessary by the profits earned. Town vied with town in extravagant enterprises.[3] Not a cent brought a dividend; instead, the municipalities found themselves saddled with heavy interest payments. One after another declined to pay; Port Hope was $312,000 in arrears by 1861 and Cobourg $313,000. The provincial government hadnot the political courage to send in the sheriff, and accordingly it was forced at last to assume the whole burden. Prudent municipalities which had declined to borrow at eight per cent found themselves compelled to share the burdens of their reckless neighbours. Demoralization was widespread.
The railways constructed by such aid may be briefly noted. The Buffalo and Lake Huron, extending from Fort Erie to Goderich, was completed in 1858. It had its origin in the ambition of Buffalo to have more immediate connection with the rich western peninsula of Upper Canada and the Lake trade beyond than was afforded by the Great Western. The London and Port Stanley, built in 1854-56, mainly by the city of London, with smaller contributions from Middlesex and Elgin counties and the city of St Thomas, failed to realize the expectations that it would become the main artery of trade between Canada and the states across the lake, but it developed a fair excursion trade and coal traffic, and indirectly justified its construction. The Erie and Ontario portage road, rebuilt in 1854, has already been noted. Another portage road round Niagara Falls was the Welland Railway, planned by W. Hamilton Merritt,the projector of the Welland Canal. It ran from Port Colborne on Lake Erie to Port Dalhousie on Lake Ontario, twenty-five miles, and was completed in 1859, only to add one more to the list of unprofitable roads, and eventually to be absorbed by the Great Western.
Farther east the rivalry of Port Hope and Cobourg led to the construction of two roads, the Cobourg and Peterborough and the Port Hope, Lindsay and Beaverton. Both relied chiefly on timber traffic and aimed to develop the farming country in the rear. The Cobourg line, begun in 1853, suffered disaster from the start: the contractor's extras absorbed all the cash available; the three-mile bridge built on piles across Rice Lake gave way, and after $1,000,000 had been expended the road was sold for $100,000. The Port Hope line, which absorbed a branch from Millbrook to Peterborough in 1867, fared somewhat better. The Brockville and Ottawa was a lumber road, carrying supplies up and timber down. It was chartered to run from Brockville to Pembroke, with a branch from Smith's Falls on the Rideau Canal to Perth. By 1859 it had reached Almonte, and six years later struggled as far as Sand Point on the Ottawa, when ithalted, till the Canadian Pacific project gave it new life. After failing to make ends meet for some years the company went through repeated reorganizations in the early sixties. The Bytown and Prescott, later the St Lawrence and Ottawa, built in 1854, was also a lumber road, promoted by interests connected with the Ogdensburg Railway, whose terminus was opposite Prescott. It suffered the same financial fate, and was sold to the English company which had supplied the rails, at a total sacrifice of municipal and other creditors' interests. Around the Long Sault rapids in the Ottawa there was built in 1854 the thirteen-mile Carillon and Grenville, a summer portage road, an early enterprise which retained its independence and its old five-foot-six-inch gauge until 1912, when it was absorbed by the Canadian Northern. In Lower Canada the only minor road built which has not been referred to was the Stanstead, Shefford and Chambly, opened in 1859 from St Johns to Granby, and forming practically an extension of the Champlain and St Lawrence from the former point.
[1] As a matter of fact, discussion of this scheme began in St Andrews in 1827, and in 1828 John Wilson convened a meeting of the citizens to further it.
[2] The Brassey firm were paid about £9000 sterling a mile for the line from Toronto to Montreal, £8000 for the section from Quebec to Rivière du Loup, £6500 for the Quebec and Richmond road, and £1,400,000 for the Victoria Bridge. Gzowski and Co., consisting of Messrs Gzowski, Holton, Macpherson, and Galt, secured the Toronto to Sarnia contract at £8000 a mile. In both cases these prices included equipment. The English contractors were required to take a large portion of their pay in depreciated bonds and stock, whereas the Canadian contractors were given cash; on the other hand, Brassey had a higher price and less difficult country to work in. The English firm, with all their experience, were not familiar with building roads in countries where labour was dear, and the plant they sent out was antiquated compared with the labour-saving equipment familiar to American and Canadian contractors. They claimed to have lost a million pounds on their enterprise, while Galt, Holton, Macpherson, and Gzowski all made fortunes.
[3] Port Hope borrowed for railway investment $740,000, Cobourg and Brantford $500,000 each, and Brockville $400,000—all towns of less than 5000 people. The counties of Lanark and Renfrew borrowed $800,000, and villages borrowed in proportion. In all some $6,500,000 was borrowed through the Loan Fund for railway purposes alone, the bulk of it in Upper Canada, while another three million was invested by towns that borrowed on their own responsibility. To aid the Brockville and Ottawa Railway, for example, Lanark and Renfrew advanced $800,000, Brockville $415,000, and the township of Elizabethtown $150,000, or over half the cost of the road. Huron and Bruce invested $300,000 in the Buffalo and Lake Huron, and other municipalities $578,000, and so on throughout the province.
Railways of British North America, 1860Railways of British North America, 1860
Railways of British North America, 1860Railways of British North America, 1860
The Battle of the Gauges--Expansion and Competition--Local Bonusing--The Intercolonial
The first 'age of iron—and of brass' came to an end before 1860. Between 1850 and 1860, it has been seen, the mileage of all the provinces grew from 66 to 2065. By 1867 it had increased only 213 miles. In two of the intervening years not a mile was built. A halt had come, for stock-taking and heart-searching.
This first era of activity had given as its most obvious result over two thousand miles of railway. In Nova Scotia, Halifax was linked with the Bay of Fundy and the Gulf of St Lawrence; in New Brunswick, St John was connected with the Gulf, and a road was struggling Canadaward from St Andrews. In the Canadas a 'Grant Trunk,' so nicknamed, ran from Rivière du Loup the whole length of the province to Sarnia, while lesser roads opened up new districts to the north or gave connection with the grain-fields and the oceanports of the United States. The western province, at all events, was well served for a pioneer country, and the shipper and consumer had no great cause for complaint.
To the taxpayer it seemed otherwise. He had been induced to embark on a lavish policy of financial aid on the assurance that the roads would at worst be no burden, and at best might yield large profits to the state. As a matter of fact, nine out of every ten dollars advanced might be written off as lost. The Grand Trunk, Great Western, and Northern roads were indebted to the old province of Canada on July 1, 1867, in over twenty million dollars for principal advanced and in over thirteen millions for interest. Other roads were indebted to Canadian municipalities in nearly ten millions for principal alone. Yet the taxpayer was not wholly justified in his grumbling. There had been waste and mismanagement, it is true, but the railways had brought indirect gain that more than offset the direct loss. Farming districts were opened up rapidly, freights were reduced in many sections, intercourse was facilitated, and land values were raised. The contribution to the railways was bread well cast upon the waters. It would have been better, if foresight hadequalled hindsight, to have given the money out and out.
For the shareholder, English or Canadian, there was little but disappointment. Grand Trunk ordinary stock in 1865 was selling at 22, and even Great Western at 65. The securities of several of the minor roads had been almost entirely wiped out by reorganizations. In 1866 some $4,180,000 was paid in dividends and leases, representing only 2.7 per cent on the $158,000,000 which the roads had cost or were alleged to have cost. Premature extension into unremunerative territory, for political or contracting reasons, excessive competition in the fertile areas, heavy fixed charges on inflated capital or leased roads, water competition, absentee proprietorship, all played their part. Whatever the causes, the results were clear, and capitalists long fought shy of Canadian railway projects.
In the first thirty years of Canadian railway development no question aroused more interest than that of the gauge to be adopted. The cows of the good Dutch burghers of New Amsterdam fixed the windings of Broadway as they remain to this day. The width of the carts used in English coal-mines centuries agostill determines the gauge of railway track and railway cars over nearly all the world. 'Before every engine,' declares Mr H. G. Wells, 'trots the ghost of a superseded horse.' When the steam locomotive was invented, and used upon the coal-mine tramways, it was made of the same four-foot-eight-and-a-half-inch gauge. In England, in spite of the preferences of Brunel, Stephenson's great rival, for a seven-foot gauge, the narrower width soon triumphed, though the Great Western did not entirely abandon its wider track until 1892. In Canada the struggle was longer and more complicated.
It was a question on which engineers differed. Speed, steadiness, cost of track construction, and cost of maintenance were all to be considered, and were all diversely estimated. In early years, before the need of standardizing equipment was felt, many experiments were made, especially in the United States. In the southern states five feet was the usual width, and the Erie was built on a gauge of six feet, to fit an engine bought at a bargain. But in the United States, as in England, the four-foot-eight-and-a-half-inch width was dominant, and would have been adopted in Canada without question, had not localinterests, appealing, as often, to patriotic prejudice, succeeded in clouding the issue.
When the road from Portland to Montreal was being planned, the astute Portland promoters insisted upon a gauge of five feet six inches, to prevent the switching of traffic to Boston. Montreal, in its turn, insisted on the same gauge for the Grand Trunk line, to ensure that all east-bound traffic should be brought through Canada to Montreal. It carried its point, and the wider or 'provincial' gauge became the standard in the Canadas, and later in the Maritime Provinces.
Experience proved that it was impossible to maintain different gauges in countries so closely connected as Canada and the United States. As roads became consolidated into larger systems, the inconvenience of transhipping at break of gauge became more intolerable. The expedients of lifting cars bodily to other trucks, of making axles adjustable, and even of laying a third rail, proved unsatisfactory. Late in the sixties and early in the seventies the Great Western and the Grand Trunk had to adopt the four-foot-eight-and-a-half-inch gauge solely, and other lines gradually followed.
Meanwhile, the cry was going up for a stillnarrower gauge. In pioneer districts, at least, it was contended, a road three feet six inches wide, such as had recently been adopted in Norway, would suffice, and would be much cheaper both to build and to operate. Between 1868 and 1873 two experimental narrow-gauge lines were built running north from Toronto—the Toronto and Nipissing, and the Toronto, Grey and Bruce. This proved only a temporary diversion, however, and the decision of the Dominion government in 1874 to change the gauge of the Intercolonial to four feet eight and a half inches, and the adoption of the same standard by the Ontario government, ended the controversy.
Memory is short and hope eternal. Soon after Confederation another burst of activity began in all the provinces of the new Dominion. It was distinctly the period of local development.
In Ontario the opportunity which the fertile western peninsula, jutting down between New York and Michigan, offered for both local and through traffic, led to many projects, much parliamentary jockeying, and at last construction. The Canada Southern was built in 1873, running between Fort Erie, oppositeBuffalo, and Amherstburg on the Detroit river. It was controlled by the Vanderbilt interests and operated in close co-operation with their other roads, the Michigan Southern, Michigan Central, and New York Central. The Great Western met this attack upon its preserves by building in the same year the Canada Air Line, from Glencoe near St Thomas, to Fort Erie, giving more direct connection with Buffalo. Both roads made use of the magnificent International Bridge, built across the Niagara in 1873, under Grand Trunk control.
The marked feature of this period, so far as Ontario was concerned, was the rivalry of the cities along the lake and river front in building new roads to tap the north country. From London there was built in 1875 the London, Huron and Bruce, halting at Wingham. From Hamilton, or rather from Guelph, with connections to Hamilton, the Wellington, Grey and Bruce reached Southampton on Lake Huron in 1873 and Kincardine in 1874. Both roads were virtually branches of the Great Western, and were expected to bring to London and to Hamilton respectively the trade of the rich northwestern counties. The Ambitious City, as Hamilton came to becalled at this period, a few years later invaded the Northern Railway's territory by a line from Hamilton to Collingwood, also extended southerly to Port Dover, but control of this road was immediately acquired by the Northern interests. From still more ambitious Toronto two narrow-gauge routes were built between 1869 and 1874—the Toronto, Grey and Bruce running northwest to Owen Sound and Teeswater, and the Toronto and Nipissing northeast to Coboconk and Sutton. Whitby also had its visions of terminal greatness, when the Whitby and Port Perry was built in the later seventies. The Port Hope, Beaverton and Lindsay, renamed the Midland, was pushed northeast to Orillia in 1872 and to Midland in 1875. Cobourg's unfortunate northern line was continued to the iron mines of Marmora. Belleville was linked with Peterborough in 1878-79 by the Grand Junction. Kingston, with the co-operation of interests in New York state, planned the Kingston and Pembroke, which reached Mississippi in 1878, and five years later compromised on Renfrew as a terminus. The bankruptcy of the Brockville and Ottawa did not prevent its extension through an allied company, the Canada Central, to Pembroke in 1869 and toOttawa, by a branch from Carleton Place, in 1876.
In Quebec the chief developments were the building of a line connecting Quebec, Montreal, and Ottawa along the north shore of the St Lawrence, and of further connections between Montreal and Quebec and United States roads. The North Shore route had been projected early in the fifties, but, in spite of lavish cash and land bonuses, it was not until the Quebec government took it up as a provincial road, in the seventies, that it was pushed to completion. On the south shore the Eastern Townships triangle was interlaced by a series of smaller roads. From Lévis, opposite Quebec, the Lévis and Kennebec ran south to the Maine border, and the Quebec Central to Sherbrooke. From Sherbrooke and Lennoxville the Massawappi Valley gave connection with the Connecticut and Passumpsic, to which it was leased for 999 years, while branches of the Central Vermont and minor roads opened up new sections and gave further connection with Montreal.
An interesting experiment, motived by the same desire for cheap pioneer construction which in Ontario brought in the narrow gauge, was the wooden railway built in 1870 fromQuebec to Gosford. The rails were simply strips of seasoned maple, 14'x7"x4", notched into the sleepers and wedged in without the use of a single iron spike. The engine and car wheels were made wide to fit the rail. In spite of its cheap construction the road did not pay, and the hope of extending it as far as Lake St John was deferred for a generation. A similar wooden railway was built from Drummondville to L'Avenir.
In Nova Scotia the chief local development was the opening in 1869 of a road through the Annapolis Valley, the Windsor and Annapolis. This formed an extension of the government road from Halifax to Windsor, but the province preferred to entrust it to a private company, giving a liberal bonus. In New Brunswick there was much activity, all by private companies. The western section of the European and North American, from St John to the Maine boundary, was completed in 1869, though it was not until 1871 that the road was opened through to Portland—by a more circuitous route than Poor had originally planned. From Fredericton a branch was built to meet this road, and a line to Woodstock, which in turn was connected with the old New Brunswick and Canada, stillpushing slowly north. In the meantime Prince Edward Island was building a narrow-gauge railway nearly two hundred miles long; in 1873 she was forced into Confederation to find aid in paying for it.
All this varied activity was made possible by a revival of the policy of provincial and municipal assistance. Whether from reasoned conviction as to the indirect benefits of more roads, or because of the log-rolling activities of rival towns and wily promoters, a systematic and generous policy of aid was adopted. This aid came chiefly from the provinces and municipalities, the Dominion as yet confining itself to works of inter-provincial concern. Outright gifts for the most part took the place of loans, since experience had proved that direct returns upon the money invested were not to be looked for. Curiously meandering were the routes which promoters mapped out in the endeavour to follow the shortest line between two bonuses.[1]