Railroads and Lotteries.
An Early Canadian Prospectus
With these local roads under way or actively promoted, still larger projects loomed up. A line from Montreal to Toronto, paralleling the St Lawrence, and thus for the first time competing with water transport instead of merely supplementing it, began to be talked of as possible. The need of bringing the Maritime Provinces into closer touch with the Canadas lent support to plans of a road from Halifax to Quebec. But for these extensive schemes public aid was even more indispensable.
Hitherto the government of British North America had framed no definite or continuous railway policy. There had been general agreement that railway building should be left to private enterprise. In 1832, when the charter of the Champlain and St Lawrence was under discussion in the legislature of Lower Canada, some members advocated government ownership, but Papineau, the French-Canadian leader, protested against the jobbery that would follow. In the forties the government of Canada was selling its highways to toll-companies, and was not likely to embark on railway construction. In several later charters provision was made for state purchase, after a term of years, at cost plus twenty or twenty-five per cent. Control of private companies in the interest of the shipper was sometimes sought. In the charter of the Champlain and St Lawrence a maximum rate was prescribed at 3d. a mile for passengers and 9 3/4d. a mile per ton of freight, subject to reduction when profits exceeded twelve per cent. In Upper Canada the earlier charters set no maximum, though the governor in council was given power to approve rates. It appeared to be held that different forwarding companies would make use of the iron way, and afford sufficient competition to protect shippers and passengers against extortion. New Brunswick in 1836 revealed the not modest expectations of profit which prevailed. It provided, in the St Andrews and Quebec charter, that after ten years tolls, if excessive, might be reduced to yield only twenty-five per cent profit. The same sanguine expectations were reflected in the provision made in eight charters issued by Lower Canada between 1845 and 1850, that half the profits over a minimum varying from ten to twenty-four per cent were to go to the state.
The prevalent belief in the great profits to be obtained influenced public opinion against any grant of government aid, except during a brief period before the Rebellion of 1837, when the lavish policy of state construction and state bonuses adopted by the neighbouring republic proved contagious in Upper Canada. Under the influence of that example the Cobourg Railroad was to be granted a loan of £10,000 as soon as an equal sum was privately subscribed and one-third was paid up. The Toronto and Lake Huron was promised £3 for every £1 of private capital expended, up to £100,000, while the London and Gore was offered a loan of twice that sum; in both these cases the loan was to be secured not only by a lien on the road, but by the liability of the communities benefited to a special tax. None of these generous offers was taken up, and they were not renewed. But a growing realization of the importance of railways and of the evident difficulty of building them in Canada solely by private funds compelled the formation of a new policy of state assistance. This new policy ushered in the first great period of railway construction.
CHAPTER V
THE GRAND TRUNK ERA
The New State Policy—The Canadas: First Phase—The Maritime Provinces—Halifax to Quebec—European and North American—Howe's Negotiations—Hincks to the Rescue—The Maritime Provinces—The Canadas: Second Phase—Struggle for the Contract—Floating the Grand Trunk—Construction Under Way—The Grand Trunk in Straits—Causes of Failure—Speculation and Jobbery—Great Western and Northern—The Canadas: Third Phase—Municipal Enterprise
It has been seen that by the close of the forties British North America was realizing both the need of railway expansion and the difficulty of financing it. Other factors combined to bring about the intervention of the state on a large scale. Both in the Canadas and in the Maritime Provinces political disputes were giving place to economic activities. The battle of responsible government had been fought and won. Men's energies were no longer absorbed by constitutional strife. Baldwin and LaFontaine were making way for Hincks and Morin; Howe had turned to constructive tasks. Responsibility was bringing new confidence and new initiative, though colonial dependence still continued to hamper enterprise. British and American contractors discovered the virgin field awaiting them, and local politicians discovered the cash value of votes and influence. The example set in the United States was powerful. Massachusetts had guaranteed bonds of local roads to the extent of eight millions, without ever having to pay a cent of the interest; and though New York's experience had been more chequered, the successes were stressed and the failures were plausibly explained away.