The Railway Builders Part 3

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 a.s.sembled 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 not {80} in permanent fashion. In 1854 the Quebec and Richmond section was opened; in 1855, the road from Montreal to Brockville and from Levis 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 Riviere 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 embarra.s.sed 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 experience {81} again 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 pa.s.sed without a bill to amend the terms {82} of 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 a.s.set on the Dominion government's books. Incidentally, the embarra.s.sing 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 of {83} unprofitable 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 antic.i.p.ated. 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 compet.i.tion 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 and {84} ocean 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 a.s.sociates 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 munic.i.p.al rivalry. Their building brought unwonted activity in every {85} branch 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 a.s.sured 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. Munic.i.p.al officials were bribed to help bonuses {86} through. 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 a.s.sured 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 came {87} chiefly from compet.i.tion, 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 Sh.o.r.e 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 embarra.s.sment.

The Northern Railway, whose promoters, as we have seen, navely recognized that railways and lotteries were close akin, was opened as far as Allandale in 1853, and to Collingwood {88} in 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 c.u.mberland, 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 munic.i.p.alities rather than to the provinces for aid. The Munic.i.p.al Loan Fund of 1854 was the third and last phase of Hincks's railway policy. This was an ingenious attempt to give the munic.i.p.alities the prestige of provincial connection without accepting any legal responsibility. Munic.i.p.alities 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 munic.i.p.alities which wished money to aid railways or other local improvements might practically pool their credit and share in the credit of the province. Provincial {89} debentures were issued against the munic.i.p.al obligations pooled in the Fund, and the proceeds of their sale given to the munic.i.p.alities. A sinking fund was to be maintained, and, if need be, the province could levy through the sheriff on any defaulting town.

The munic.i.p.alities 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 munic.i.p.alities 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 had {90} not the political courage to send in the sheriff, and accordingly it was forced at last to a.s.sume the whole burden. Prudent munic.i.p.alities 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 G.o.derich, 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 Middles.e.x 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, {91} the projector of the Welland Ca.n.a.l. 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 Ca.n.a.l to Perth. By 1859 it had reached Almonte, and six years later struggled as far as Sand Point on the Ottawa, when it {92} halted, 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 munic.i.p.al 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 Bra.s.sey firm were paid about 9000 sterling a mile for the line from Toronto to Montreal, 8000 for the section from Quebec to Riviere 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, Bra.s.sey 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 munic.i.p.alities $578,000, and so on throughout the province.

[Ill.u.s.tration: Railways of British North America, 1860]

{93}

CHAPTER VI

THE INTERCOLONIAL

The Battle of the Gauges--Expansion and Compet.i.tion--Local Bonusing--The Intercolonial

The first 'age of iron--and of bra.s.s' 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 Riviere 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 ocean {94} ports 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 a.s.surance 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 princ.i.p.al advanced and in over thirteen millions for interest. Other roads were indebted to Canadian munic.i.p.alities in nearly ten millions for princ.i.p.al 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 had {95} equalled 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 compet.i.tion in the fertile areas, heavy fixed charges on inflated capital or leased roads, water compet.i.tion, 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 ago {96} still 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 local {97} interests, 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 still {98} narrower 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 Nip.i.s.sing, 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, opposite {99} Buffalo, 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 be {100} called 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 Nip.i.s.sing 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 to {101} Ottawa, 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 sh.o.r.e of the St Lawrence, and of further connections between Montreal and Quebec and United States roads. The North Sh.o.r.e 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 sh.o.r.e the Eastern Townships triangle was interlaced by a series of smaller roads.

From Levis, opposite Quebec, the Levis and Kennebec ran south to the Maine border, and the Quebec Central to Sherbrooke. From Sherbrooke and Lennoxville the Ma.s.sawappi Valley gave connection with the Connecticut and Pa.s.sumpsic, 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 from {102} Quebec 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.