The Allan Company gave up its charter, unable to raise capital in face of financial depression and political upheaval. The Liberal party, led by Alexander Mackenzie, and swept into power by a wave of popular indignation, first endeavoured to induce other capitalists to take up the work. But the government's offers of $10,000 in cash and of 20,000 acres of land for each mile, plus an undetermined guarantee, had no takers in the years of depression that followed. Mackenzie then decided that the government should itself build the road. He planned to build at first only the indispensable sections, using the waterways wherever possible, and hoped, but in vain, to secure British Columbia's consent to an extension of the time set for completion. His first step was to subsidize the Canada Central, which ran from Ottawa via Carleton Place to Pembroke, to extend its line as far as Lake Nipissing, in order to connect with the proposed eastern terminus of the Pacific road, and to award a contract (it was afterwards cancelled) for a branch from this junction point to Georgian Bay. Passing by for the time the country north of Lake Superior, he next let contracts for the greater part of the distance between Fort William and Selkirk and for a road from Selkirk to Emerson, on the Manitoba border. Here connection was to be made with an American line, the St Paul and Pacific, of which more will be heard presently.
When Mackenzie left office in 1878 the work of location or construction was well advanced in all three sections. For two years the new administration of Sir John Macdonald carried on the same policy of government construction at a moderate pace. The work in hand was continued and the gaps in the road between Port Arthur and Selkirk were put under contract. The line was made to pass through Winnipeg—instead of striking west from Selkirk, as the engineers had previously advised, and thus side-tracking the ambitious city growing up around old Fort Garry. Contracts were let for two hundred miles of the extension westward from Winnipeg. Two seasons passed before the new government could make up its mind as to the British Columbia section. Late in 1879 it decided to adhere to the route chosen under the Mackenzie administration, through the Yellowhead Pass, down the Thompson and the Fraser to Port Moody on Burrard Inlet. The difficult section from Yale, the head of navigation on the Fraser, to Savona's Ferry, near Kamloops, was shortly afterwards placed under contract.
The ten years' time allotted for the construction of the Canadian Pacific was nearly gone and there was little completed work to show. Hard times, depression in the railway world, changes of government and political upheavals, disputes as to route and terminus, had delayed construction. The building of the link north of Lake Superior, necessary for all-rail connection between East and West on Canadian territory, had been indefinitely postponed. Something had been done, it is true. Manitoba was being linked up with the East by a road south to Minnesota and by another line to the head of Lake Superior, and a start had been made in British Columbia. Some day, under some administration, the gaps would be filled up and the promise to British Columbia would be redeemed.
Suddenly, in June 1880, Sir John Macdonald, speaking at Bath, made the announcement that a group of capitalists had offered to build the road, on terms which would ensure that in the end it would not cost Canada a single farthing. Four months later a contract was signed in Ottawa by which the Canadian Pacific Syndicate undertook to build and operate the whole road. An entirely new turn had been given to the situation, and the most important chapter in Canada's railway annals, if not in her national life, had been begun.
[[1]] 'Lord Strathcona may still remember the man who came into his office at Winnipeg and said: "Look at me; ain't I a healthy sight? I've come by the government water route from Thunder Bay, and it's taken me twenty-five days to do it. During that time I've been half-starved on victuals I wouldn't give a swampy Indian. The water used to pour into my bunk at nights, and the boat was so leaky that every bit of baggage I've got is water-logged and ruined. I've broke my arm and sprained my ankle helping to carry half a dozen trunks over a dozen portages, and when I refused to take a paddle on one of the boats, an Ottawa Irishman told me to go to hell, and said that if I gave him any more of my damned chat he'd let me get off and walk to Winnipeg."'—W. L. Grant in Geographical Journal, October 1911, p. 365.
[[2]] The Northern Pacific was at many stages in its history closely connected with Canadian affairs. It had originally been projected in New England: the first proposal was to use the Central Vermont and a Canadian road to be built or acquired as the eastern links, then, crossing into Michigan, the railway was to strike northwestward to the Pacific. When control fell into the hands of New York and Philadelphia interests, these plans were dropped, but later the new management negotiated with Governor Archibald of Manitoba, as well as with Sir John Macdonald, to endeavour to put through an international road, the first section running through Canada to Sault Ste Marie, the second through Michigan and Minnesota, the third through the Canadian plains, and the fourth through the Rockies to the sea on American territory. Nothing came of the negotiations, though it may be noted that the Canadian Pacific to-day has carried out precisely this plan, in addition to its all-Canadian line.
[[3]] This correspondence will be found in the Journals of the House of Commons, vol. vii, 1873. In no other documents available to the public has the connection between politics and railway promoting in Canada been made so evident. The following are a few brief extracts from letters addressed by Sir Hugh Allan to various American associates during 1872: