CHAPTER IX
THE ERA OF AMALGAMATION
Subsidy and Control—Canadian Pacific Expansion—The Monopoly Clause—The Grand Trunk
With the building of the Intercolonial, the Grand Trunk, and the Canadian Pacific, the main lines of communication from ocean to ocean were completed. In the decade which followed, the marked features were: the adoption by the Dominion government of a policy of aid to purely local roads, and the expansion of the two great private companies, partly by new construction and partly by acquisition of the smaller lines.
It has been seen that the policy of Canada after 1851 and of the Dominion after Confederation was to give assistance only to lines of more than local and usually more than provincial importance. During the first ten or fifteen years after Confederation promoters looked to province and municipality for aid, and did not look in vain. Soon the provinces outran their resources, and began to clamour for increased federal subsidies to meet the pressing charges. But the Dominion government concluded that, if it had to provide the money needed, it might as well give it direct, and secure whatever political credit the grants would entail. In 1882 it decided to embark on a new subsidy policy.
In that year Sir Charles Tupper, minister of Railways, introduced a resolution to grant a subsidy of $3200 per mile—sufficient to provide the hundred tons of steel rails required for each mile at the existing price of $32 a ton—to each of four carefully selected roads, one in each of the four original provinces. During the next year eleven subsidies were voted, chiefly to Quebec and New Brunswick roads; in 1885 twenty-five were voted, and fresh votes were made every year thereafter. Many of the subsidies lapsed through failure to begin construction, but usually they were revoted. The payments made averaged a million dollars a year. The practice did not make for pure politics, and it often led to the construction of lines for which there was no economic justification whatever. Trusting shareholders were induced to invest on the unfortunately wrong assumption that the government had assured itself of the need and the potential profit of the line before endorsing it by a subsidy.[[1]] In the western provinces a parallel policy of aiding local lines was adopted in 1884, except that land instead of cash was offered, a policy maintained until 1894.
He who paid the piper then stood on his rights to call the tune. Acting upon the wide power conferred by the British North America Act, the Dominion government in 1883 sweepingly designated as 'works for the general advantage of Canada,' and therefore subject to federal control, not only the main lines of railways, but the branch lines then or thereafter connecting with or crossing these lines or any of them. The power thus claimed was not effectively exercised for some time. D'Alton M'Carthy repeatedly urged in parliament from 1880 onward the creation of a Dominion Railway Commission, but the opposition of the railways proved too strong for him. When in 1886 the United States set up its Interstate Commerce Commission, the government moved and appointed a royal commission, with Sir A. T. Galt as chairman, to consider the general question. Their report noted the existence of many grievances and suggested specific remedies, but considered that until further experience of the workings of the English and American commissions was available, Canada's needs could best be met by an extension of the powers of the Railway Committee of the Cabinet.
It may be noted that in 1882 the selling of railway tickets by private persons, a practice known as 'ticket scalping,' was prohibited in Canada, though the railways were forced to buy the exclusive privilege of selling their own tickets by agreeing to redeem unused portions.
The original contract with the Canadian Pacific had provided for an eastern terminus near Lake Nipissing, in order to show preference neither to Montreal nor Toronto, either of which could make connections by independent roads. Similarly, we shall see, thirty years later, Moncton was chosen as a terminus of the National Transcontinental, to hold the balance even between Halifax and St John. It was, however, impossible for the Canadian Pacific to accept as permanent an arrangement which left it halting in the wilderness, and depending upon possibly rival railways for outlet to the great cities and ports of the east. It had, in fact, been empowered in its charter to acquire the Canada Central and 'to obtain, hold, and operate a line or lines of railway from Ottawa to any point at navigable water on the Atlantic seaboard, or to any intermediate point'—terms sufficiently sweeping. Few were surprised, therefore, when the directors began a policy of eastward expansion, though many were surprised at the boldness and extent of the plans and the speed and masterful strategy of the execution.