The romance of the Canadian Pacific Railway

by R. G. MacBeth

It was to this group of men, who were doubtless ready to be approached, that Sir John A. Macdonald, after having tried in vain in Europe, turned, when even Sir Charles Tupper, who was never disposed to be afraid of anybody or anything, called the Premier’s attention to the prodigious task ahead if the Government itself attempted to build and operate a railway across Canada from sea to sea. By these financial men and a few more, as we shall see, the project that had terrified Governments of both political shades was undertaken, and by them it was ultimately, and after terrific struggle, carried to completion. Even Mr. J. J. Hill came in at the outset, but, differing from the rest on the policy of building over the North Shore of Lake Superior and thus having an all-Canadian route, and finding it impossible to serve two masters in two railways that would clash somewhat, he retired soon after the Canadian Pacific Board was organized. But we are not to forget “Jim” Hill, a Canadian abroad, for it was through him that the great triumvirate, Stephen, Smith and Angus, got a taste for railroading and a certain training therein which stood them and Canada in good stead in the stormy days that lay ahead.

It was, in a sense, natural that the men we have mentioned should take hold of the Canadian Pacific undertaking. Some of them, at least, knew the great West-land by actual observation. The others would bank on the statements of those who knew the country. Stephen was the most cautious and so the least inclined to take risks in regard to such a colossal enterprise. But once he entered upon it, we are probably safe in saying that, though he had his hours of depression, he became the mainstay of the Board in the dark storms of difficulty that were at times to settle down on the project during the desperate days that were ahead. All three, Stephen, Smith and Angus, hailed from the land where there is a saying, “A stout heart to a stey bræ.” And these men and their associates were to face, in every sense of the word, “steep hills” in the financial world as well as in actual rock-ribbed obstacles to railway building, greater than any contemplated by the originator of the inspiring saying quoted above. There was to be a time, as we shall see later, when Stephen’s famous cablegram to Smith, in the single Gælic word “Craigellachie” (stand fast), would be needed as a ringing admonition to men in Canada whose resources became so completely exhausted that failure seemed practically inevitable.

In the meantime we have only reached the stage in our story where these men, Stephen, Smith and Angus, reinforced by another highly capable, careful and successful Montreal man, Mr. Duncan McIntyre, at the threshold of the gigantic undertaking, were in consultation with the Macdonald-Tupper administration at Ottawa on the subject. They all sensed the almost overwhelming bigness of the task and, although they were attracted by the challenge of its immensity, and were prepared to accept that challenge, they all realized that they should try to secure the co-operation of the world’s financial centres before they could even hope for success. Hence we find, in the summer of 1880, Sir John Macdonald, Sir Charles Tupper and John Henry Pope sailing for London, in company with Stephen and McIntyre, to interest British capitalists. Englishmen are generally willing to take a “sporting chance” and plunge into an adventurous scheme. But this project of building a railway across the continent through Canada’s far stretches of thinly populated country, with the gigantic engineering problems of the rock region on the North Shore of Lake Superior and the apparently impenetrable barrier of the mountains in British Columbia, was too large an order for the most courageous of London’s money magnates. It is doubtless a good thing for Canada that the delegation had to return from London empty-handed. Projects and business concerns owned and operated by long-range directors and shareholders have never been a huge success in Canada, unless practically conducted by local advisory boards, and railways are no exception to that rule. More important still, this fruitless search for financial assistance put Canadians on their mettle by throwing them back on their own resources at the outset, and thus developing the strength and the endeavour which a big undertaking always brings if bravely attempted. It was a good training in national athleticism, and the young Dominion that had to wrestle with difficulties at the beginning developed astonishing strength and initiative power. Later on, when, within a few months of the last spike on the road, the youthful giant had reached the limit of resource, and was in danger of falling short, British capital was to come in to help to a triumphant finish. But the time was not yet.

The delegation to London returned to Ottawa in 1880, and the Government signed a contract with George Stephen, Duncan McIntyre, of Montreal; James J. Hill, of St. Paul; John S. Kennedy, of New York, and four outside this continent, Cohen, Renach & Company, of Paris, and Morton, Rose & Company, of London, though in the latter case it was really the New York firm of Morton, Bliss & Company that went into the organization. It is interesting from a psychological standpoint to find that the name of Donald A. Smith, one of the big three, was not in this original contract. Ever since the day when Mr. Smith had cast his vote in the House of Commons, in 1873, against Sir John Macdonald in the matter of the “Pacific Scandal,” as Macdonald’s opponents called it, or the “Pacific Slander,” as Sir Charles Tupper designated the affair, there was, to put it mildly, a coolness between Smith and Sir John. For these two to be in the conferences that would often arise between the Canadian Pacific directors and the Government, would throw a wet blanket on the meetings. Later on these two became punctiliously friendly, and even though Mr. Smith’s name was not visibly in this original Canadian Pacific Railway Company, every one knew (including the keen-minded Sir John) that he was actually in it for all he was worth.

The contract terms sound generous enough if we could only keep out of our minds the tremendous extent of the undertaking and the endless risks taken by the new company, in view of the fact that the real cost of the railway from ocean to ocean was almost a haphazard conjecture. Up to the date of the signing of the contract the way through the mountains of British Columbia was unsettled, and the character of the work on the North Shore of Lake Superior was practically unknown. That North Shore problem had frightened Sir Henry Tyler, President of the Grand Trunk, in London, from going into the Canadian Pacific scheme, partly because that eternal wilderness had no prospect of local traffic compared with a line south of the Boundary, but partly also because the interminable miles of rock to be built through looked too formidable to be attacked. Take it all round, the terms of the contract signed in Ottawa may have looked too generous to the man on the street. But only men of courage who visioned the far future would have set their names to a covenant to build thousands of miles of a railway which not only some public men, but some experts also openly declared would “never pay for the axle grease.”

Briefly stated, the Government agreed to give the new syndicate the seven hundred miles of railway already built or under contract to be built by the Government, together with twenty-five millions in money and twenty-five millions of acres of selected land in the West. In addition, the syndicate was promised exemption from import duties on all material brought in for construction, from taxes on land for twenty years after Crown patents were issued, as well as freedom from taxes on stock and other property for all time, together with exemption from regulation of rates till ten per cent. had been earned on capital invested. To guard against premature competition by roads connecting with the States, the Government agreed that for twenty years no charter would be granted to any railway south of the Canadian Pacific Railway from any point at or near the Canadian Pacific Railway except such as should run south-west or westward of south-west; nor to within fifteen miles of the Boundary-Line.

In Winnipeg, in my student days in the 80’s, I recall hearing many rather stormy discussions over this contract at public meetings, because the West was particularly affected. The two things most strenuously opposed, as being too generous to the Canadian Pacific Railway Company, were the grant of land, which was said to be too large, and the section which prevented competing lines being built to the south. Neither of these objections ever seemed to me very reasonable. The land grant looked large; but land was worth very little before the railway came in to make it valuable. In my boyhood I knew that some of the land along the Red and Assiniboine Rivers (and there is no better land anywhere) was sold for fifty cents an acre. If the twenty-five millions of acres given to the railway were valued at pre-railway prices the amount would not be great. When the railway was built the price of land went up with a rush, but it must be borne in mind that it cost the Company millions to bring the railway in, to make the land worth while. And it should also be remembered that the railway made other people’s land as valuable as its own, although the increase to the other people did not cost them anything beyond their ordinary taxes. In any case the land went up when the railway came in, but the railway did not come in by magic. It is interesting to recall in this connection that Sumner, a famous statesman in the American Republic, once advocated giving half of one of the great agricultural States in the West to any one who would build a railway through it, as it was of little use till a railway would enter. What some people in Canada, who denounced the Government for giving twenty-five millions of acres, might have said if the Canadian Pacific Railway had been offered one-half of the Middle West, would probably be too incoherent to print.

We may read later something of the cyclonic protests made in my native Province of Manitoba against the section of the contract which denied to any others the right to build railways south of the Canadian Pacific into the States; but, like many other movements, the one against this temporary monopolistic clause was, to say the least, lacking in proper perspective. The Canadian Pacific Railway Company, to enable Canada to keep faith with British Columbia and thus hold Confederation together, was struggling to build two thousand miles of road over a territory where there was little prospect for years of a paying traffic. It is hard to see that it would have been just, without adequate compensation to the Canadian Pacific, to allow other railways to hamstring the transcontinental by building in the only region where there was population enough to give a railway some reasonably remunerative business.

A rather peculiar thing was that no one objected to the cash subsidy except those who attacked the whole business from end to end, as ruinous to the young Dominion. Reasonable onlookers, however, who knew something of the tremendous cost of construction over certain sections, thought the syndicate was mad to tackle it at almost any price. Later on these reasonable people found justification for their view in the fact that construction was costing in some sections half-a-million a mile—though even they would have gasped if they knew that in after years a single tunnel in the mountains was to cost over eight millions to construct. There were some who considered that the free gift to the company of several hundred miles of railway, built by the Government over a term of years, was too generous. But Canadian Pacific Railway experts in 1889 testified before an Interstate Commerce Inquiry, and said that parts of the Government sections were unwisely located, and the cost of joining up with these unwisely located sections was so great that the amount the sections were supposed to represent should be heavily discounted. It is possible that experts will always differ over this big contract of 1880 which, for years, furnished offensive and defensive political orators with abundant ammunition in party conflicts.

As I write these paragraphs regarding the famous contract between the Canadian Government and the pioneer railway across Canada, I have before me the Dominion Statute of 1881 in which the contract is incorporated. It has some rather illuminating clauses, of which I here quote a few. In the section of the Act in which the Company is required to complete the work by the year 1891, and the section in which the Government is required to complete and hand over certain portions of the railway then under contract, both parties are safeguarded by the words “unless prevented by the act of God, the Queen’s enemies, intestine disturbances, epidemics, floods or other causes beyond control.” That was sufficiently comprehensive to guard against any contingency. There is a very interesting statement at the conclusion of section 7 of the Act, where, after saying that the road built by the company and the portions built by the Government when completed, shall become the absolute property of the Company, the Act goes on to say: And the Company shall thereafter and for ever efficiently maintain, work and run the Canadian Pacific Railway. I think the testimony of all is that the Company is living up to that contract, since its amazing efficiency is the admiration of the world. But the words “for ever” indicate with unconscious frankness that the Government had grown weary of Government construction, ownership and operation of such an immense project, and was devoutly thankful to hand it over for all time to a responsible private organization.