Great Northern Railway, 1914
As a matter of fact, in 1914 Canadian railways controlled four miles in the United States for every mile in Canada controlled by railways of the United States. The Canadian Pacific alone owned or leased over five thousand miles in the United States, chiefly in the northwest, while it had close working agreements with the Wabash and the New York, New Haven and Hartford. The Grand Trunk controlled over seventeen hundred miles, two-thirds in the Michigan peninsula and the remainder in New England, while the Canadian Northern ran for some forty miles through the United States, south of the Lake of the Woods. The American interests in Canada were more scattered, but the Great Northern, the Michigan Central, the Père Marquette, and the New York Central all developed important Canadian extensions.
In short, the interrelations were certainly no more extensive than would have been expected in the case of two friendly nations lying side by side for three thousand miles, connected by ties of speech and by common commercial and social customs. The only difficulty which arose out of the situation was the division of jurisdiction between the Railway Commission of Canada and the Interstate Commerce Commission of the United States. The heads of the two commissions, Mr Justice Mabee for Canada and Mr Knapp for the United States, endeavoured in 1910 to work out a plan for joint control, but without final success.
In the past half-century government ownership of railways has been much discussed in Canada, dividing attention with the allied question of railway ownership of the government. It cannot be said that any decisive public opinion or policy has resulted. Important steps toward government ownership have been taken in the last twenty years. The Intercolonial and Prince Edward Island Railways have been retained by the government and extended, a federal line has been built in Manitoba and a provincial one in Northern Ontario, and the National Trans-continental has been constructed by the government for lease to a private company. Yet, at the same time, the main railway projects continued to be entrusted to private companies, and the proportion of the whole mileage under private operation increased.
The most important incident in the Intercolonial's later history was its extension from Quebec to Montreal in 1898, by the purchase of the Drummond County Railway and the lease of a stretch of forty miles in length from the Grand Trunk. Six years later the Canada Eastern, running from Gibson to Loggieville, was purchased. Many bankrupt lines in the Maritime Provinces and Quebec were offered to the Intercolonial as valuable feeders. In the later years of the government of Sir Wilfrid Laurier and in the first years of Sir Robert Borden's administration, authority was sought to acquire such of these roads as might be desired, but restrictions due to the action of the Canadian Senate or the political difficulty of discriminating between the railways prevented any rapid acquisition. Changes in administration were tried. As a half-concession to the demand that the Intercolonial should be operated by an independent commission, a board of management was established in 1909, consisting of the chief officials of the road. In 1913 this board was dissolved and the management vested in a single commissioner, F. P. Gutelius, formerly of the Canadian Pacific.
Financial returns showed little improvement. True, the record, unbroken since 1873, of annual failure to meet even operating expenses, was varied after 1898 by small surpluses in two years out of three, but the net deficits since Confederation rose to over eleven millions by 1913; and while there was no question that the administration had been improved, there was room for belief that the surpluses had been in part book-keeping ones, obtained by including in the large capital expenditure items properly chargeable to revenue.
At first sight this failure to meet operating expenses, much less to pay interest on the investment, together with constantly increasing capital outlay, seemed to warrant strong condemnation of government methods. And, in truth, a serious indictment could be framed. Efficient government ownership is more difficult in a democratic country where shippers, employees, would-be employees, supply dealers, all have influence over the administration, than it is in a bureaucratic state. Intercolonial employees were given their posts and kept in them by political influence, and their numbers were often as excessive as energy was lacking. Supplies of coal and new land as required were usually purchased from political friends, with an additional margin for campaign contributions;[[1]] at election times the road became a vast political machine. Under the administration of the governments of Laurier and Borden the grosser scandals ceased, but in one form or other political influence continued to be exerted.
Yet this was not the whole story. If the Intercolonial did not earn dividends, there were other reasons at work than government inefficiency. The road ran for long stretches through barren country where little local traffic originated. In competing for through traffic it was handicapped by the roundabout length of its route: it ran along two sides of a triangle, while the Canadian Pacific, subsidized by one political party, was built along the base, and the National Transcontinental, built by the other party, came in between; in summer it had to face the competition of the St Lawrence route as well. Nor was dividend-earning the sole standard of success to be applied. The Intercolonial was built originally for political and military ends, not merely for commercial gain. It had given shippers the lowest rates in the world: 'the surplus is in the pockets of the people,' one of the political heads declared. If, it was often urged, the canals of Ontario and Quebec were operated by the government at a dead loss, without a cent of tolls, why grudge the Maritime Provinces, to whom Confederation had been less kind, the benefit of operating at bare cost the government railways! The Intercolonial had undoubtedly done much to weld the eastern and central provinces together, and this was worth more than a million dollars or two in interest charges.
The desire for rates at cost, or lower, which has made the people in Eastern Canada oppose all suggestions to turn over the Intercolonial to the Canadian Pacific or Canadian Northern, led those of Western Canada to urge government ownership of the other federal venture, the Hudson Bay Railway. Owing to its far northern position, Manitoba possesses ocean ports, Nelson and Churchill, which are nearer Liverpool than New York is. Why, then, carry the grain of the prairie fifteen hundred or two thousand miles to an Atlantic port before loading it on the ocean freighter? Proposals to build a railway to a Hudson Bay port and to establish a steamship line to carry the traffic at sea seemed plausible and won much western support. Investigation soon made the difficulties clear. Hudson Bay was fairly free from ice, but Hudson Straits were studded with icebergs far into the summer. Ships of special construction would be needed for the dangerous passage, and, in any event, grain could not be shipped until the spring after it was harvested and would have to be stored in elevators during the winter. And in the meantime the three transcontinental railways were enlarging the eastern funnels, while the Panama Canal made an outlet by Vancouver feasible. Still, there was a gambling chance that something would come of a railway to Hudson Bay, and if the stroke succeeded, Canada would be given a new coast, and would front the sea at the north as well as at the east and the west. The territory between Le Pas, a terminus of the Canadian Northern, and Port Nelson, selected as the better port on Hudson Bay, had some mineral and agricultural promise. So, in the prosperous days of 1911, it was decided to attempt the work. As it was largely an experiment, the government's plan of state construction and possibly operation found wide support. The line was still under construction in 1914.