History of railways in Canada

Philosophy of Railroading in Canada[edit]

Andrew Albert den Otter (1997) noted that, like most western civilizations following the Enlightenment, Canadians believed that technologies were a symbol of their economic and moral progress. As such, expanding technologies, such as railroads, into the "wilderness" was part of their "civilizing mission."

Canadian entrepreneurs sought to exploit, or at least participate in, the growing U.S. market to its south. The adoption of U.S. railway standards allowed Canadians to avoid some aspects of British financial and military control. But at the same time, because they continued their political relationship with Great Britain, they continued some of Britain's elite social and political institutions. This unique blend of British and American institutions and philosophies led Canadians to think about their own uniquely Canadian railway system.

With U.S. connections and British money, and entrepot rivalies among Montreal, Halifax, and Saint John led Canada to build more mileage per capita than any other industrializing nation. This was more than building ahead of demand, as Canada had neither the population, markets, nor the capital to support the large network it was building. This competition drove companies to bankruptcy and led Canadians to demand nationalization as the means to support these networks and expand them continentally.

Creating Lines[edit]

The Champlain and Saint Lawrence Railroad opened in 1836 was the first Canadian railway.

In 1849, the colonial government passed the Guarantee Act which provided government guarantees of railroad bonds for every railroad in excess of 75 miles in length. This act prompted a rapid expansion railways. But as many of these lines did not have developed markets, many went under forcing the government to honor the bonds. Several provinces' finances were severely strained by the experiment.

One exception to this predicament was the construction of the Grand Trunk Railway between Montreal and Sarnia, Ontario. Completed by 1860, it was burdened by debt and threatening bankruptcy. Guaranteeing the bonds of the GT, however, could well have bankrupted the Ontario government. The government worked out a deal with the GT whereby it bailed out the company in exchange for relinquishing the role of guarantor of its bonds.

The railways of Canada also facilitated Canadian confederation. As a result of the guarantee act which nearly bankrupted all the provinces, the government was looking for a new and more stable method of finance. Many Canadians also believed that a transcontinental railway would bind the confederation together. This was true for the Maritimes, which joined the confederation, in part, on promises from the government to build the Intercolonial Railway.

Subsequent governments avoided the problems of guarantees and funded no other railways with them. Instead, the confederation government fully controlled the construction of the Intercolonial, placing Sir Sanford Fleming in charge.

To help build the Canadian Pacific (CP), the transcontinental line to the Pacific, the government tried new finance methods. The CP was built mostly with private capital, but the confederation government offered massive land grants, $25 million in cash, and a guaranteed monopoly on the Pacific transportation. The CP was an engineering marvel because it was, at the time of its completion in 1885, the longest railway in the world.

As the Canadian economy prospered after 1900, new plans to build transcontinental railways started. The first was the Canadian Northern Railway, which was a successful system in the northern prairies and began making plans for a Pacific extension. The second was the Grand Trunk which created a subsidiary called Grand Trunk Pacific to expand to the coast. The dominion government rightly felt that western Canada could not support three transcontinentals and urged the two to cooperate or otherwise figure out to build only one line. But neither railroad was willing to share a line and ultimately both lines were built. The dominion government also built an eastern transcontinental, the National Transcontinental, which ran from Moncton, New Brunswick, through Quebec City to Winnipeg, Manitoba. Most of the territory through which it ran was sparsely populated.

During the time that the Canadian economy was growing through immigration and investment, this aggressive expansion may have made sense. But at the outbreak of World War One, immigration and investment stopped and these expansive systems quickly began to suffer. The Canadian Northern Railway, Grand Trunk Pacific, and Grand Trunk were nationalized by the federal government. The dominion absorbed over two billion dollars in the debt of these carriers. Earlier the dominion had formed the Canadian Government Railways which was nationalized from the Intercolonial, National Transcontinental, and several smaller lines. Between 1918 and 1923, the dominion merged all of these lines into the Canadian National Railways.

20th Century[edit]

After the First World War, only limited expansion of the Canadian rail network occurred. As in the U.S., new transportation competition from cars and trucks, and then airlines after the Second World War, sapped more and more of the railroad market. But despite these declining fundamentals, new lines were constructed in Quebec, Labrador, and British Columbia to tap natural resources. Few of these new lines, though, were directly connected to the main North American rail network.

Also with the advent of jet airlines, Canadian passenger rail service face a similar crisis as did the U.S. carriers. The Canadian government reacted similarly to the U.S. response and nationalized passenger service. In 1978, VIA Rail, a crown corporation, took over all passenger service from the freight railroads.

The government partially deregulated its rail industry with the National Transportation Act in 1987. This allowed railroads to more easily abandon non-remunerative lines without having regulatory hearings. However, many railroads used the law to jettison lines that were just barely remunerative but perhaps otherwise administratively burdensome leaving many Canadian towns without rail service for the first time in generations. The law was intended to have been a last resort for the railroads, allowing them to abandon when they could not find a buyer. Most railroads though, simply just abandoned without looking for buyers. This was corrected in 1996, with the Canadian Transportation Act which also more fully deregulated the Canadian railway industry.

The Canadian government privatized Canadian National in 1995, ending its nearly seventy-five years in the railroad business.

System in 21st century[edit]

Canada has two major transcontinental freight railway systems. Both are privately-owned: the Canadian National and Canadian Pacific Railway. A federal crown corporation called VIA Rail provides passenger services. Montreal, Toronto, and Vancouver provide municipal commuter service. In remote rural regions of upper Ontario, Ontario Northland and Algoma Central also run passenger trains

Canada today has 49,422 km total trackage. One-hundred-twenty-nine kilometers are electrified.