Rail Decisions in Canada – Part 2 of 3

October 22, 2014 - If one transcontinental railway is good, two are better and three divine.

That was the belief of some political and business leaders at the turn of the 20th century. Such thinking fuelled decisions with an impact as powerful as those that triggered the building of the Canadian Pacific Railway (CPR).  It remains a cautionary tale as we confront emerging transportation and economic development challenges today.

A truism of early railway building was that the clamour for a railway was inevitably followed by an equally-noisy clamour against it after completion.  That was the CPR’s case.  As a monopoly across large swaths of Canada, the power it wielded through its services and rates was resented, and its revenue potential envied.  In that era, the belief was you curbed such power and expanded your economy with even more steel rails.

So it was with Liberal Prime Minister Sir Wilfrid Laurier, who wanted a CPR alternative to open up northern Quebec, Ontario’s Clay Belt and additional sections of the “Last Best West.” Some were eager to profit from that political strategy, especially if public funds greased its wheels.

After building a web of prairie lines and breaking the CPR monopoly on grain moving to the Lakehead, the Canadian Northern Railway (CNoR) wanted to fully challenge the CPR from Atlantic to Pacific.

Laurier’s government added to this train mania with its own plan for a National Transcontinental Railway (NTR), linking Moncton and a proposed new Asian trade gateway at Prince Rupert, B.C. It would arc through northern Quebec and Ontario to “colonize” those regions and then strike out across the northern prairies through Edmonton.

Central Canada’s well-established Grand Trunk Railway (GTR) wanted to tap the West’s bounty, too, but wasn’t keen on building through northern Ontario. It had passed on building our first transcontinental line because of Sir John A. Macdonald’s demand for an all-Canadian route.

Respected voices told Laurier to force the two privately-owned railways to jointly build one new transcontinental line. Even CPR president Sir William Cornelius Van Horne foresaw enough profitable traffic for one additional railway, but not two.

Instead, the two separate projects proceeded, stuffed with public grants and guarantees. The government paid the NTR’s full cost east of Winnipeg, contracting with the GTR to operate it in conjunction with its own line from Winnipeg to Prince Rupert.

When these railways failed, economic, social and political reality decreed they be fused together into the Canadian National Railways (CN). The new Crown corporation preserved a sane level of competition with the CPR while continuing service to hundreds of communities that had sprung up along the bankrupt lines.  These included Hornepayne, Longlac, Nakina, Armstrong and Sioux Lookout.  Without the railway, those towns likely wouldn’t have survived.

The formation of CN was one of the wisest policy decisions Canada ever made and a credit to publicly-spirited Conservative Prime Minister Sir Robert Borden. From the start, CN operated on a commercial basis where feasible and acted as a national policy and development instrument elsewhere, providing uneconomic services the CPR and others wouldn’t or couldn’t.

One CN “fix” demonstrates the original corporation’s ability to live up to its twin-pronged mandate. Under its visionary, American-born president, Sir Henry Thornton, CN sorted out the tangle of duplicate rails by streamlining the system to one transcontinental trunk line, stitching together the best of its predecessors.  This included the construction of the cutoff from the CNoR at Longlac to the NTR at Nakina.  The remaining pieces of the former competitors were recast as traffic-gathering CN feeders.

Were the public policy decisions that spawned the two additional transcontinental lines and the ensuing CN system good or bad?

Chunks of these railways were unnecessary and ultimately abandoned. In total, they cost about $1 billion – more than half of it public – and almost bankrupted some provincial governments and major banks that had hopped aboard.  By those measures, bad decisions were made.

But those rail policy decisions also played a role in founding those remote railway communities that remain regional centres today. They also stimulated resource development north of the CPR main line.  Although highways and aviation have diminished the train’s supremacy, the best lines are still doing yeoman work as part of the privatized CN system.

Therefore, the decisions that gave us more railways than required, but also much justifiable mileage, were mixed blessings. They validated one rule today’s policy makers should heed:  Railways are expensive tools for economic and social development that must be applied wisely.  And there are good reasons to once again seek opportunities to apply them.

Authored by Greg Gormick, a Toronto transportation writer and policy adviser. His clients have included CN, CP, VIA and numerous elected officials and government transportation agencies.

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