Part 2 (1/2)

The prevalent belief in the great profits to be obtained influenced public opinion against any grant of government aid, except during a brief period before the Rebellion of 1837, when the lavish policy of state construction and state bonuses adopted by the neighbouring republic proved contagious in Upper Canada. {51} Under the influence of that example the Cobourg Railroad was to be granted a loan of 10,000 as soon as an equal sum was privately subscribed and one-third was paid up. The Toronto and Lake Huron was promised 3 for every 1 of private capital expended, up to 100,000, while the London and Gore was offered a loan of twice that sum; in both these cases the loan was to be secured not only by a lien on the road, but by the liability of the communities benefited to a special tax. None of these generous offers was taken up, and they were not renewed. But a growing realization of the importance of railways and of the evident difficulty of building them in Canada solely by private funds compelled the formation of a new policy of state a.s.sistance. This new policy ushered in the first great period of railway construction.

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CHAPTER V

THE GRAND TRUNK ERA

The New State Policy--The Canadas: First Phase--The Maritime Provinces--Halifax to Quebec--European and North American--Howe's Negotiations--Hincks to the Rescue--The Maritime Provinces--The Canadas: Second Phase--Struggle for the Contract--Floating the Grand Trunk--Construction Under Way--The Grand Trunk in Straits--Causes of Failure--Speculation and Jobbery--Great Western and Northern--The Canadas: Third Phase--Munic.i.p.al Enterprise

It has been seen that by the close of the forties British North America was realizing both the need of railway expansion and the difficulty of financing it. Other factors combined to bring about the intervention of the state on a large scale. Both in the Canadas and in the Maritime Provinces political disputes were giving place to economic activities.

The battle of responsible government had been fought and won. Men's energies were no longer absorbed by const.i.tutional strife. Baldwin and LaFontaine were making way for Hincks and Morin; Howe had turned to constructive tasks. Responsibility was bringing new confidence and new initiative, though colonial dependence still continued to hamper enterprise. British and American contractors discovered the virgin field awaiting them, and local politicians discovered the cash value of votes and influence. The example set in the United States was powerful. Ma.s.sachusetts {53} had guaranteed bonds of local roads to the extent of eight millions, without ever having to pay a cent of the interest; and though New York's experience had been more chequered, the successes were stressed and the failures were plausibly explained away.

The eight or ten years which followed 1849 are notable not only for a sudden outburst of railway construction and speculative activity throughout the provinces, but for the beginning of that close connection between politics and railways which is distinctively Canadian. In this era parliament became the field of railway debate.

Political motives came to the front: 'statesmen' began to talk of links of Empire and 'politicians' began to press the claims of their const.i.tuencies for needed railway communications. Cabinets realized the value of the charters they could grant or the country's credit they could pledge, and contractors swarmed to the feast. 'Railways are my politics,' was the frank avowal of the Conservative leader, Sir Allan MacNab.

Three names are closely linked with this new policy--those of Howe in Nova Scotia, Chandler in New Brunswick, and Hincks in Canada.

Francis Hincks, merchant, journalist, and {54} politician, moderate reformer, and Canada's first notable finance minister, took the initiative. As inspector-general in the second Baldwin-LaFontaine Cabinet, he brought down the first instalment of his railway policy in 1849. In the previous session a committee of the House had considered the demand of the Great Western and of the St Lawrence and Atlantic for a.s.sistance, and had discussed the less advanced proposals for railways from Montreal to Toronto and from Quebec to Halifax. Allan MacNab, as chairman of the committee, had listened sympathetically to the plea of Allan MacNab, president of the Great Western, and the committee had reported in favour of guaranteeing the stock of the two companies to the extent of a million sterling. No action was taken at this session.

Meanwhile Hincks, by instruction of his colleagues, had drawn up two memoranda--one suggesting that the crown lands in the province might be offered as security for the capital necessary to build the road within the province, and the other urging the Imperial government to undertake the road from Halifax to Quebec. Capitalists gave no encouragement to the first suggestion, and the British government had not replied to the {55} second by the end of the session of 1848-49. Accordingly, in April 1849 Hincks brought down a new policy, based upon a suggestion of the directors of the St Lawrence and Atlantic. The proposal was, to guarantee the interest, not exceeding six per cent, on half the bonds of any railway over seventy-five miles long, whenever half the road had been constructed, the province to be protected by a first charge after the bondholders' lien. MacNab seconded the resolution; voices from Bytown and the Saguenay mildly questioned the policy, but the resolution pa.s.sed unanimously.

Even with this aid construction did not proceed apace. It was still necessary for the companies to complete half the road before qualifying for government a.s.sistance. This the St Lawrence road effected slowly, in face of quarrels with contractors, repudiation of calls by shareholders, and hesitancy of banks to make advances. The Great Western did not get under way until 1851, when American capitalists, connected with the New York Central, took shares and a place on the directorate. In the same year the Toronto, Simcoe and Huron, later known as the Northern, began construction.

Meanwhile suggestions from the Maritime {56} Provinces had brought still more ambitious schemes within practical range, and these led Hincks to take the second step in his policy of aid to railways.

In the Maritime Provinces, from 1835 to 1850, many railways had been projected, but, with the exception of a small coal tramway in Nova Scotia, built in 1839 from the Albion coal-mines to tide-water, not a mile was built before 1847. There, as elsewhere, the pamphleteer and the promoter acted as pioneers, and the capitalist and the politician took up their projects later. The plans which chiefly appealed to public attention looked to the linking up of St Andrews, St John, and Halifax with Quebec and Montreal and with the railways of Maine. From the outset the projects in these provinces were much more ambitious than the local beginnings in the Canadas. They were more markedly political and military in aim, and in consequence depended in greater measure upon the aid of the British government. When at last construction was begun, the policy of provincial owners.h.i.+p was more widely adopted.

When in 1876 Sandford Fleming drew up a record of the great work just completed under his direction, the Intercolonial Railway, he {57} called attention to the first proposal for such a road, found in an article contributed to the _United Service Journal_ in 1832 by Henry Fairbairn.[1] The author proposed the two chief projects which for half a century were to engross the attention of the Maritime Provinces: a road from St Andrews to Quebec, which should 'convey the whole trade of the St Lawrence, in a single day, to Atlantic waters,' and another line from Halifax through St John to the border of Maine, which should command for Halifax 'the whole stream of pa.s.sengers, mails, and light articles of commerce pa.s.sing into the British possessions and to the United States and every part of the continent of America.'

St Andrews was the winter port in British territory nearest to the upper provinces. If the territory in dispute on the Maine boundary fell to New Brunswick and Quebec, a road not more than 250 or 300 miles long could be built from this port to the city of Quebec. In 1835 a Railway a.s.sociation was formed in St Andrews, an exploratory survey was made, and the interest of Lower Canada was enlisted. {58} In the following year New Brunswick gave a charter to the St Andrews and Quebec Railroad, and the Imperial government agreed to bear the cost of a survey. But the survey was speedily halted because of protests from Maine; in 1842 the Ashburton Treaty a.s.signed to the United States a great part of the territory through which the line was projected, and the promoters gave up. Then in 1845 the railway mania in England brought a revival of all colonial schemes. Sir Richard Broun took up the plan for a line from Halifax to Quebec, along with other grandiose projects connected with his endeavour to revive the lost glories of the baronetage of Nova Scotia, but did not get past the stage of forming a provisional committee. This discussion revived the flagging hopes of St Andrews, and, as will be seen in detail later, a beginning was made by a railway from St Andrews to Woodstock, the New Brunswick and Canada, for which ground was broken in November 1847.

The provincial legislature early concluded that it would be impossible to induce private capitalists to build an intercolonial road unaided.

They were unanimous also, not yet having emerged from the stage of colonial dependence, in desiring to throw the burden {59} of such aid as far as possible on the British government. In the absence of a colonial federation the United Kingdom was the main connecting-link between the colonies in British North America, and was presumably most interested in matters affecting more than a single colony. The British government, however, had by this time about decided that the old policy of treating the colonies as an estate or plantation of the mother country, protecting or developing them in return for the monopoly of their trade, did not pay. It had reluctantly conceded them political home rule; it was soon to thrust upon them freedom of trade; and it was not inclined to retain burdens when it had given up privileges. Mr Gladstone, secretary for the Colonies, agreed, however, in 1846, to have a survey made at the expense of the three colonies concerned.

This survey, the starting-point for the controversies and the proposals of a generation, was completed in 1848, under Major Robinson and Lieutenant Henderson of the Royal Engineers. 'Major Robinson's Line,'

as it came to be known, ran roughly in the direction eventually followed by the Intercolonial--from Halifax to Truro, and thence north to Miramichi and the Chaleur Bay, and up the {60} Metapedia valley to the St Lawrence. The distance from Halifax to Quebec was computed at 635 miles, and the cost at 7000 sterling a mile or about 5,000,000.

Acting on the a.s.surance of engineers that the route was feasible, each of the three colonial governments offered in 1849 to set aside for the work a belt of crown lands ten miles wide on each side of the railway, and to pledge 20,000 a year to meet interest or expenses, if the British government would undertake the project. Downing Street, however, replied politely but emphatically that no aid could be given.

After the plan of a northern route to Quebec was thus apparently given its quietus, interest s.h.i.+fted to the Portland connections. The building of the road from Montreal to Portland added further strength to the claims of this route. On paper, at least, it seemed possible to make the connection between Montreal and Halifax by following either the northern or the southern sides of the great square. One of the southern sides was now under way, and by building the other, from Portland to St John and Halifax, connection with the Canadas would be completed. Under the leaders.h.i.+p once more of John A. Poor, Portland took up the latter project. The name of {61} the proposed road, the European and North American, showed the influence of the same hope which Fairbairn had expressed--that the road from Portland to Halifax would become the channel of communication between the United States and Europe, at least for pa.s.sengers, mails, and express traffic. With a line of steamers from Halifax to Galway in Ireland, it was held that the journey from New York to London could be cut to six or seven days.

In July 1850 a great convention a.s.sembled in Portland, attended by delegates from New Brunswick and Nova Scotia as well as from Maine and other New England states. Intertwined flags and fraternal unity, local development and highways to Europe, prospective profits and ways and means of construction, were the themes of the fervent orators and promoters. The convention was enthusiastically in favour of the project. The 550 miles from Portland to Halifax--222 in Maine, 204 in New Brunswick, and 124 in Nova Scotia--would cost, it was estimated, $12,000,000, half of which might be raised by private subscription and the rest by state and provincial guarantee.

The delegates from the Maritime Provinces {62} returned home full of enthusiasm, but increasingly uncertain about the securing of the necessary capital. At this stage Joseph Howe came to the front. He had much earlier, in 1835, before entering parliament, taken the lead in advocating a local railway from Halifax to Windsor, but had not been prominent in recent discussions. He now urged strongly that the province of Nova Scotia should itself construct the section of the European and North American which lay within its borders. He proposed further to seek from the Imperial government a guarantee of the necessary loan, in order that the province might borrow on lower terms.

The Colonial Office, while expressing its approval of the Portland scheme, declined to give a guarantee any more than a cash contribution.

Nothing daunted, Howe sailed for England in November 1850, and by persistent interviews, eloquent public addresses and exhaustive pamphlets, caught public favour, and in spite of Cabinet changes in London secured the pledge he desired.

In the official reply of the Colonial Office Howe was informed that aid would not be given except for an object of importance to the Empire as a whole, and that accordingly {63} aid was contingent upon securing help from New Brunswick and Canada to build the whole road from Halifax to Quebec. Major Robinson's line need not be followed if a shorter and better could be secured; any change, however, should be subject to the approval of the British government. 'The British Government would by no means object to its forming part of the plan that it should include provision for establis.h.i.+ng a communication between the projected railway and the railways of the United States.' The colonies were to bear the whole cost of the loan, and were to impose taxes sufficient to provide interest and sinking fund, and thus ensure against any risk of loss to the United Kingdom.

Howe returned triumphant. The British government would guarantee a loan of 7,000,000, which would build the roads to Portland and to Quebec and perhaps still farther west. He hastened to New Brunswick, and won the consent of its government to the larger plan, went on to Portland and allayed its murmurs, and with E. B. Chandler of New Brunswick reached Toronto, then the seat of government of the province of Canada, in June 1851. His eloquence and the dazzling {64} offer of cheap and seemingly unlimited capital soon won consent. The representatives of the three provinces agreed to construct the road from Halifax to Quebec on joint account, while Canada would build the extension from Quebec to Montreal, and New Brunswick the extension to the Maine border, each at its own risk, but in all cases out of the 7,000,000 guaranteed loan.