Building the Canadian Pacific
In the months and years that followed, no men were so much in the mind and speech of the Canadian public as the members of the new syndicate. The leading members were a remarkable group of men. Probably never in the history of railway building, not even in the case of the 'Big Four' who built the Central Pacific—Huntingdon, Standord, Crocker, and Hopkins—had the call of the railway brought together in a single enterprise men of such outstanding individuality, of such ability and persistence, and destined for success so notable.
The Canadian Pacific was not their first joint enterprise. It was the direct outcome of a daring venture in connection with a bankrupt Minnesota railway, which had brought them wealth beyond their wildest dreams, and had definitely turned their thoughts to railway work.
Early in the settlement of the northwestern states the need of railways, and of state aid to railways, was widely realized. In 1857 Congress gave the territory of Minnesota a large grant of public lands to use in bonusing railway building, and in the same year the legislature of the territory incorporated a company, the Minnesota and Pacific, to build from Stillwater through St Paul and St Anthony's Falls (Minneapolis) to Red River points. The state gave the new company millions of acres of bonuses, and a small amount of stock was subscribed locally. Five years passed, and not a mile had been completed. The company, looted into insolvency by fraudulent construction company contracts, was reorganized as the St Paul and Pacific, heir to the old company's assets but not to its liabilities, and a beginning was made once more. Trusting Dutch bondholders lent over twenty millions, and by 1871 the road reached Breckenridge on the Red River, two hundred and seventeen miles from St Paul. Again a halt came. Russell Sage and his associates in control had once more looted the treasury. The Dutch bondholders, through their agent, John S. Kennedy, a New York banker, applied for a receiver, and in 1873 one Jesse P. Farley was appointed by the court. It seemed that the angry settlers might whistle in vain for their road.
In St Paul at that time there lived two Canadians who saw the opportunity. The elder, Norman W. Kittson, had been Hudson Bay agent and head of a transportation company on the Red River. The younger, James J. Hill, an Ontario farm-boy who had gone west while still in his teens, owned a coal and wood yard in St Paul, and had a share in the transportation company. Neither had the capital or the financial connection required to take hold of the bankrupt company, but they kept on thinking of it day and night. Soon a third man joined their ranks, Donald A. Smith. A Highland lad who had come to Canada at eighteen, Donald Smith had spent a generation in the service of the Hudson's Bay Company, mainly in the dreary wilds of Labrador and on the shores of Hudson Bay. When in 1871 he became chief commissioner of the organization he had served so long and so well, it seemed to most men that he was definitely settled in his life work and probably near the height of his career. But Fate knew, and Donald Smith knew, that his career was only beginning. Coming down from the north each year by the Red River to St Paul, on his way east, he talked over the railway situation with Hill and Kittson. The more they talked the greater grew their faith in the country and the railroad. It was a faith, however, that few in the moneyed East shared with them. It had been the smashing of the rival road, the Northern Pacific in 1873, that had given the signal for the brief panic and the long depression of the seventies. The Minnesota road itself had twice become bankrupt. The legislature would undoubtedly soon declare the land-grant forfeited, unless the construction promised was completed. To fill the cup, in the middle seventies Minnesota and the neighbouring lands were visited by unprecedented swarms of grasshoppers or Rocky Mountain locusts. Swarming down from the plateau lands of the Rockies in columns miles high, covering the ground from horizon to horizon, they swept resistlessly forward, devouring every green thing in their way. When they had passed, hundreds of deserted shacks stood silent witnesses to the settlers' despair.
It was in 1876 that the further allies needed came from the East. Thirty years earlier George Stephen, a younger cousin of Donald Smith, had left his Highland hills to seek his fortune in London, and after a short apprenticeship there had gone still farther afield, joining an uncle in Montreal. He rose rapidly to a foremost place in the wholesale trade of Montreal; selling led him into manufacturing, and manufacturing into financial activities. In 1876 he became president of the Bank of Montreal. Associated with him in the same bank was still another shrewd, forth-faring Scot, Richard B. Angus, who had risen steadily in its service until appointed to succeed E. H. King as general manager in 1869.
A lawsuit in connection with the bank's affairs took both Stephen and Angus to Chicago in 1876. A week's adjournment left them with unwonted leisure. A toss of a coin sent them to St Paul rather than St Louis to spend the week. Smith had already spoken of the project while in Montreal, but at that distance caution had prevailed. Now Stephen, who had never before seen the prairie, was immensely taken with the rich, deep soil he saw before him. He knew from reading and experience that grasshopper plagues did not last for ever. He decided, therefore, to join in the attempt to get control of the Minnesota road and its land-grant, and the famous group was complete.
Once George Stephen made up his mind, little time was ever lost. He sailed for Europe and interviewed the Amsterdam committee in charge of the Dutch bondholders' interests, Messrs Chouet, Weetjin and Kirkhoven. They despaired of ever seeing their money back, and were weary of being assessed by the receiver for funds to keep the road together. Stephen left Amsterdam with an option in his pocket, given for the sum of one guilder, agreeing to sell him the Dutch bonds for something like the amount of the unpaid interest, and agreeing, further, to wait until six months after reorganization for part of the payment. The next step was to provide the cash required for immediate necessities. About $300,000 was put up by the members of the group.1 Money was borrowed from the Bank of Montreal, $280,000 in the first advance, and something under $700,000 in all, as Stephen stated to inquiring shareholders at the bank's annual meeting in 1880. Money was advanced to the receiver to complete the most necessary extensions, those required to save the land-grant and that necessary to reach the Canadian border to join the government road being built south from Winnipeg. The threatened forfeiture of the land-grant was thus averted for a time. Then the bonds were purchased for $6,780,000, the floating obligations and part of the stock were brought up, and the mortgage which secured the bonds was foreclosed. The assets were bought by the new company organized for the purpose, the St Paul, Minneapolis and Manitoba, of which George Stephen was president, R. B. Angus vice-president, and James J. Hill general manager. Thus in June 1879 the whole system, comprising six hundred and sixty-seven miles of railway, of which five hundred and sixty-five were completed, and the land-grant of two and a half million acres, came into the possession of the little group.2
The after fortunes of the road, which ten years later expanded into the Great Northern of to-day, do not concern us here. It is only necessary to recount that the harvest reaped by the adventurers 3 put the tales of El Dorado to shame. A few days after control of the railway had been assured, the grasshoppers had risen in flight, and Minnesota knew them no more. Settlers swarmed in, the railroad platforms were jammed with land-seekers, and between the land-buyers of to-day and the wheat-shippers of to-morrow the owners of the once discredited railway saw their coffers fill to overflowing. In 1879 they divided among themselves the whole fifteen millions of stock issued, floating sixteen millions of bonds for extension and equipment. For three years they took no dividends, letting the profits go to further building. Then in 1882 another $2,000,000 of stock was issued, and in 1883 a deferred dividend came in the shape of a $9,000,000 issue of bonds, or, rather, the stockholders sold to themselves a $10,000,000 issue for ten cents on the dollar. Aside entirely from interest and dividends, the stockholders of the Great Northern in the seventeen years following 1889 were presented with over $300,000,000 of interest-bearing securities. All the railway annals of the United States cannot present a duplicate of the startling success attained by these four or five Canadians and their associates.4
These were the men to whom the Canadian government turned when the minister of Railways, Sir Charles Tupper, urged them to unload upon a private company the burden of completing the road to the Pacific. 'Catch them before they invest their profits,' was the advice of Sir John's most intimate adviser, that shrewd Eastern Townships politician, John Henry Pope. Probably they came half-way. They knew the West as well as any men, and with their road built to the Canadian boundary and with a traffic arrangement beyond to Winnipeg, they were already in the field. Of all the group Stephen was most reluctant to undertake the new enterprise, but he was assured by his associates that the burdens of management would be shared by all. The government had also approached Duncan M'Intyre, a Montreal capitalist who controlled the Canada Central, running from Brockville by way of Ottawa to Pembroke, and under construction from that point to Callender, the eastern end of the Canadian Pacific main line. He was more than willing to link up this railway with the larger project, and the group was formed.
They debated the question with the government early in 1880. It was felt, however, that negotiations could not be concluded in Canada. More capital would be needed than even these new-fledged millionaires could or would furnish, and nowhere was capital so abundant as in London. In July, therefore, Sir John Macdonald, Sir Charles Tupper, and John Henry Pope sailed for London, accompanied by George Stephen and Duncan M'Intyre. London capitalists did not bite as freely as anticipated. Barings and Rothschilds alike were chary about the enterprise. Sir Henry Tyler, president of the Grand Trunk, was approached, and agreed to build it if the link north of Lake Superior were omitted in favour of a line through the United States, south of the lake, a condition which Sir John, strongly urged on by Tupper, would not accept. An arrangement might have been made with a London group, but only on condition of a four per cent guarantee for twelve years, another condition which, less wisely, was also rejected. In the end the quest proved unavailing. It is true that the Paris firm of Cohen, Reinach and Co. entered the syndicate, and that the London house of Morton, Rose and Co. also joined. It was really, however, the New York end of that firm, Morton, Bliss and Co., which was interested. Contrary to the general impression, the fact is, that though most of the shares when issued eventually drifted into English hands, no English financiers shared in the building of the Canadian Pacific until it was within one hundred days of completion. Perhaps, in view of the Grand Trunk's record, it was as well that the men on this side of the Atlantic were to be thrown on their own resources from the start, and given the chance for bigness which responsibility brings.
Back to Ottawa the pilgrims came, and there on October 21, 1880, the contract was signed by Charles Tupper for the government and by George Stephen, Duncan M'Intyre, James J. Hill, John S. Kennedy, Morton, Rose, and Co. of London, and Cohen, Reinach and Co. of Paris. Donald A. Smith's name was not there. It was only two years since he and Sir John, on the floor of the House of Commons, had called each other 'liar' and 'coward' and any other sufficiently strong epithet they could put their tongues to, and it was to be a few years more before the two Highlanders could cover their private feud with a coating of elaborate cordiality. So, to preserve appearances, Smith's interest was kept a secret—but a very open one.
When parliament met in December 1880 the contract was laid before it. The terms were princely. For constructing some nineteen hundred miles the syndicate were to be given free and complete the seven hundred and ten miles under construction by the government,5 $25,000,000 in cash, and 25,000,000 acres of selected land in the Fertile Belt. They were promised exemptions from import duties on construction materials, from taxes on land for twenty years after the patents were issued and on stock and other property for ever, and exemption from regulation of rates until ten per cent per annum was earned on the capital. Assurance was given that for twenty years no competitive roads connecting with the western states would be chartered: 'no line of railway south of the Canadian Pacific, except such line as shall run southwest or to the westward of southwest, nor to be within fifteen miles of latitude 49°.' Ten years were given to complete the task, and a million dollars were deposited as security.
The contract was received by Blake, then leader of the Opposition, and his followers with a unanimous shout of disapproval. During the Christmas recess Blake endeavoured to raise the country against it. A rival syndicate was hastily organized, with Sir William Howland, A. R. M'Master, William Hendrie, A. T. Wood, Allan Gilmour, George A. Cox, P. Larkin, James M'Laren, Alexander Gibson, and other well known capitalists at its head. After depositing $1,400,000 in chartered banks as evidence of good faith, they offered to build the road for $3,000,000 and 3,000,000 acres less, to pay duty on all supplies imported, and to abandon the monopoly clause, the exemptions from taxation, and the exemption from rate regulation. With this weapon to brandish Blake gave the government proposal no respite, but on a straight party vote the contract was ratified by parliament and received the formal royal assent in February 1881.
It was in many ways unfortunate that from the outset the Canadian Pacific project was made the football of party politics, but it was perhaps inevitable. The first duty of an Opposition is to oppose, and even if some good measures are factitiously resisted, many a 'job' is prevented by this relentless criticism. The government proposal, it would now seem, was on the whole in the country's interest, but it had weak points. In attacking these the Opposition was led on to take up a position of hostility to the whole project, while the government was equally indiscriminate in defending every jot and tittle of the bargain. In any event, with the bitter rivalry of the Grand Trunk and the Canadian Pacific looming up, it is doubtful if it could have been possible to prevent this antagonism being reflected in the politics of a country where the issues are so largely economic issues.
That the government was right in deciding for private construction and operation, there has since been little question. To build and operate a pioneer road, to make the inevitable United States connections or extensions, to undertake the subsidiary enterprises and to enter into the flexible, intimate relations with producers and shippers necessary for success, were tasks for which government departments were not well fitted. With the traditions which has unfortunately become established in Canadian politics, there would probably be campaign contributions in the one case and graft in the other, but in the one case, also, there would probably be efficiency and in the other red tape and stagnation.
As to what private company should be given the contract, there seemed more room for discussion. The members of the Howland syndicate were successful and substantial business men and their offer appeared to be much better than the offer accepted. It was, however, denounced as a sham by the government forces, on the ground that its signers knew that there was not the faintest likelihood of the ministry failing to carry through the contract it had signed. How successful the Howland group would have proved we can only conjecture; it is certainly not likely that they would have developed more courage, persistence or enterprise than the men who actually carried out the project; nor could they have fulfilled their obligations more fully and more honourably.
The parties differed, again, on the question of the Lake Superior link. The government urged the necessity of building at once an all-Canadian route, regardless of the added expense. The Opposition favoured such a route eventually, but urged that it was better for the present to make use of a road running from the Sault through Northern Michigan and Minnesota. Such a road would bring to Montreal the traffic of the American as well as the Canadian West. Then, when our west had been settled and traffic warranted, the task of cutting a road through the wilderness north of the lake could be faced, and meantime it would not be necessary to offer any company the extravagant terms necessary to induce it to assume this burden from the start. There was much weight in this argument, which Sir Charles Tupper himself had strongly urged only a few months before, and in the light of the later Canadian Pacific extension through precisely this American territory as well as through Maine, there was much buncombe in the flag-waving answer made. Yet, on the whole, so necessary to national unity was an unbroken road, so hard a country was this to make into one, that it was best to err on the side of safety. The political interests at stake warranted some risk of money loss.
It was, however, on the question of the form and amount of the aid offered that most controversy arose. Sir John Macdonald had lightly prophesied that in the end the road would not cost Canada a single farthing. He doubtless meant that land sales would repay the expenditure; even this did not prove true, and the statement awoke unreasonable expectations as to the bargain to be made. When the contract was made public it was denounced as meaning nothing more or less than that the country was to build the road and present it gratis to the company. To anticipate a few years, we may note the actual results at the end of 1885, when the last rail had been laid. The cost of the main line only, including the government sections, and of equipment, to that date, was approximately $150,000,000. From private sources some $50,000,000 net had been secured: the $65,000,000 stock had been sold for varying prices, realizing slightly over $30,000,000 for the treasury, and first mortgage bonds, land-grant bonds less amount redeemed, and outstanding accounts made up the balance. The government, on its part, had given, by the final arrangements, $35,000,000 cash, and completed road costing another $35,000,000; three and a half million acres of the land-grant had been sold for about $11,000,000, and at only two dollars per acre the fourteen odd million acres left were worth over $29,000,000.
On the other hand, it was urged that the aid given was not so great as it seemed. The value of the government sections was particularly questioned.6 Whatever its value, it was not more than enough to induce capitalists to run the great risks involved. The road had to be operated as well as built, and few believed that for years to come there would be sufficient traffic to make ends meet. Its future depended on the future of the West, and it needed a robust optimism at times to believe that the West would overcome frost and drought and other plagues. The fact that in 1885 Canadian Pacific stock sold as low as 33¾ in London, and a shade lower on this side of the water, shows the estimate the world of finance put upon the bargain it had made. Nor was the road completed in 1886. It was then only begun. Grades had to be bettered, trestle-work filled up, extensions flung out, terminals secured, and a new road built every few years.
Looking back now, after the lapse of thirty years, it would seem that the government would have done better if it had given less of the land which was to prove so valuable, and had, instead, guaranteed the dividend on the stock for a term of years. In the eighties, however, western acres were held in little esteem and money guarantees, with Grand Trunk memories fresh, looked dangerous—and it was in the eighties that the decision had to be made.
More valid was the criticism of the remaining terms. The exemption from duties was wise, if inconsistent in a protectionist government, and the exemption from regulation of rates until ten per cent was earned had a precedent in a clause in the General Railway Act, not repealed until 1888, exempting all roads from such regulation until fifteen per cent on the capital invested had been earned. The exemption from taxation, however, was an unwarranted privilege, throwing undue burdens on homesteading settlers; and the interpretation afterwards given that the exemption on lands extended until twenty years after the patent had been issued further increased the difficulty. Objectionable, also, was the monopoly clause, barring United States connections for ten years. It was claimed that this exemption was essential if traffic was to be secured for the Lake Superior link, and essential also if capital was to be secured from England. The Englishmen, one of the heads of the road declared, hated a monopoly at home as he hated the devil, but he looked with favour on monopolies abroad. The monopoly clause, as will be seen later, for a time did more to split East and West than the Lake Superior link did to bind them together in spirit.
But enough of discussion. Action came quick. Not a day was lost in organizing and beginning work.
George Stephen was chosen president, and held the post until 1888. To him more than to any other man the ultimate success of the Canadian Pacific was due. Indomitable persistence, unquenchable faith, unyielding honour stamped his character. He was one of the greatest of Empire builders. He never despaired in the tightest corner, and never rested while a single expedient remained untried. Duncan M'Intyre became one of the two vice-presidents, and took an active part in the company's affairs until he dropped out in 1884. Richard B. Angus came back from St Paul to become vice-president and a member of the executive committee. His long banking experience and his shrewd, straightforward judgement proved a tower of strength in days of trial.
Donald A. Smith, while after 1883 a director and a member of the executive committee, took little part in the railway's affairs, through at Stephen's urging he more than once joined in going security when help was most needed. James J. Hill left the directorate and unloaded his stock at the close of 1882, because the company refused to accept his advice to omit the Lake Superior section, and because of the growing divergence of interests between the St Paul, Minneapolis and Manitoba and the Canadian Pacific. With him retired John S. Kennedy. The Baron de Reinach also withdrew at an early stage. The English directors, representing Morton, Rose and Co. of London, retired as soon as the road was completed, being replaced by representatives of Morton, Bliss and Co. of New York. E. B. Osler came in with the Ontario and Quebec in 1884. The board became more and more distinctively Canadian.
One of the first steps taken by the directors was to open offices in Winnipeg, and put two men with United States experience in charge—A. B. Stickney, later president of the Chicago Great Western, as general superintendent, and General Rosser as chief engineer. The rate of progress was not satisfactory, and early in 1882 a fortunate change was made. William C. Van Horne, at that time general superintendent of the Chicago, Milwaukee and St Paul, and still under forty, was appointed general manager with wide powers. Some years earlier, when he was president of the Southern Minnesota, the leading members of the St Paul syndicate had had an opportunity of learning his skill. He had been in railroading since fourteen, beginning as a telegraph operator on the Illinois Central, and had risen rapidly in the service of one Middle West road after another. His tireless driving force was precisely the asset the company now needed.
The first task was to find the money necessary to build the nineteen hundred miles remaining of the main line, to build or acquire necessary branches and extensions, and to provide equipment.
The government subsidies were the first resource. The $25,000,000 cash and the 25,000,000-acre land-grant were to be paid as construction advanced. If the land-grant were put on the market all at once, for sale to settlers, it would bring relatively little, in face of the competition of the free homestead land in adjoining sections. Three expedients were devised to make it available as soon as possible. An extensive campaign was begun to advertise the government free land and thus exhaust the supply along the railway line, and at the same time provide producers of freight. Bonds based on the security of the land-grant were issued to the amount of $25,000,000; $10,000,000 of this issue was sold in 1881 at 92, and varying proportions of the remainder were used as pledge for the government loans or execution of the contract. These bonds were redeemed and cancelled as the lands on which they were based were sold. Further, the Canada North-West Land Company was organized to buy five million acres for a long hold. The company included several members of the syndicate as well as some English investors to whom land appealed more than railway stocks. It found itself unable to handle this amount and the purchase was reduced to 2,200,000 acres. Sales to other companies and to individuals brought the total amount received or due from land by the end of 1885 up to $11,000,000.
Next came the contributions of the members of the syndicate and other private investors. The capital stock authorized as $100,000,000. In 1881 the members of the syndicate subscribed $5,000,000 at par. In May 1882 they allotted themselves $10,000,000 at 25. In December of the same year $30,000,000 was issued at 52½ to a syndicate of New York bankers organized by W. L. Scott; this stock was eventually sold largely in Holland and in England. A final ten millions were pledged in New York and Montreal for a loan of half that sum, and later sold for about the amount of the loan. All told, sixty-five millions of stock had been issued and some thirty-one million dollars had been brought into the treasury.
Then the flow ceased. The brief gleam of prosperity which had shone over North America after the gloom of the later seventies vanished. Never had railway building been carried on so vigorously in the United States as in the years 1881-83, and the reaction was correspondingly severe. The collapse of the boom which had accompanied the first operations in Manitoba, the failure of harvest after harvest, the fading away of settlers and speculators alike, robbed all but a persistent few of faith in the Canadian North-West and in the railway whose fortunes rose or fell with it. The way of the Canadian Pacific was made particularly hard by the manœuvres of rival companies. Some of the United States Pacific roads, awake to the seriousness of the competition threatened, attacked it in the New York market. The Grand Trunk, naturally alarmed by the incursion of the new road into its best paying territory in the East, used all of the power of its influential directors and its army of shareholders in England to bar the London market.
The financial policy adopted by the Canadian Pacific was unique in the records of great railway enterprises on the continent. It was simply to rely entirely on stock issues, to endeavour to build the road without incurring any bonded debt. Not until the last year of construction, 1885, were bonds based upon the security of the road itself issued for sale. It was doubtless desirable, if possible, to avoid the reckless methods by which so many American roads had been hopelessly waterlogged by excessive bond issues. The memory of the St Paul and Pacific's six-million share capital as against its twenty-eight-million bonded indebtedness was fresh in the minds of the members of the syndicate. By keeping fixed charges low, while earning power was still uncertain, they lessened the risk of having the road pass out of the stockholders' control into a receiver's hands. Yet as bonds could have been sold more easily than stock, it increased the difficulty of finding the necessary capital. Even so, it came within an ace of succeeding.
In pursuance of this policy the management, faced with a hesitating market, decided upon a bold step. Late in 1883, acting in accordance with the advice of New York and London financiers, they decided to endeavour to make a market for the unissued stock by giving assurance of a dividend for a term of years. They offered to deposit with the government as trustees a sum sufficient to provide for ten years a dividend of three per cent on the $65,000,000 stock already issued, to be supplemented, if possible, by a further dividend out of current revenues, and they arranged to make similar provision for the remaining $35,000,000 as it was sold. Over half the $16,000,000 necessary to purchase the annuity was deposited with the government at once and security given for the early payment of the balance. Only success could have justified such a locking up of the funds urgently needed for construction, and success did not come, though for a time it seemed probable. The sudden smash of the Northern Pacific, just completed by Villard, brought the stock down lower than before the fillip had been given. With sixteen millions locked up or pledged the company was in a worse state than before.7
In this emergency Stephen and Smith and M'Intyre pledged their St Paul or other stock for loans in New York and Montreal, but still the gap was unfilled. They turned to the government, requesting a loan of $22,500,000, to be secured by a first charge on the main line. In return, they agreed to complete the road by May 1886, five years earlier than the contract required. The request at first was scouted by Sir John Macdonald. Parliament would not consent, and if parliament consented the country would revolt. Bankruptcy stared the company in the face when John Henry Pope came to the rescue. He soon convinced Sir John that if the Canadian Pacific smashed, the Conservative party would smash the day after, and the aid was promised. The Cabinet was won over, and Sir Charles Tupper, hastily summoned by cable from London, stormed it through caucus, and the loan was made.
The funds thus secured were soon exhausted in rapid and costly construction in the mountain and Lake Superior sections. The government's blanket mortgage on the road made it impossible to borrow elsewhere. So, after the Riel episode, to be noted later, a new arrangement was made with the government by which the $35,000,000 stock unsold was cancelled and an equal amount of first mortgage bonds issued. Twenty millions of this issue and the unsold lands were substituted for the government's security, and the remainder of the bonds sold at 95. This put the company once more in funds. The relief came none too soon. In one fateful day in July, when the final passing of the bill was being tensely awaited, the Canadian Pacific, which now borrows fifty millions each day before breakfast, was within three hours of bankruptcy for lack of a few hundred thousand dollars. But by March 1886 every cent of the company's obligations to the government was paid off, twenty millions in cash and the remainder in land at $1.50 an acre.
The men behind the Canadian Pacific proved themselves possessed of courage and determination such as will always win them honour. At more than one critical stage they staked their all to keep the work going. But the fact remains that the bulk of the resources utilized in the original building of the road were provided or advanced by the people of Canada. The Canadian Pacific is as truly a monument of public as of private faith.
Meanwhile, the work of construction had been going ahead. Under William Van Horne's masterful methods the leisurely pace of government construction quickened into the most rapid achievement on record. A time-schedule, carefully made out in advance, was adhered to with remarkably little variation.
Work was begun at the east end of the line, from the point of junction with the Canada Central, but at first energy was devoted chiefly to the portion crossing the plains. Important changes in route were made. The main line had already been deflected to pass through Winnipeg. Now a much more southerly line across the plains was adopted, making for Calgary rather than Edmonton. The new route was shorter by a hundred miles, and more likely to prevent the construction of a rival road south of it later. For many years after the Palliser-Dawson-Hinds reports of the late fifties it had been assumed that the tillable lands of the West lay in a 'Fertile Belt' or rainbow, following roughly the Saskatchewan valley and curving round a big wedge of the American desert projecting north. Certainly the short, withered, russet-coloured grass lands of the border country looked forbidding beside the green herbage of the North Saskatchewan. But in 1879 Professor Macoun's investigations had shown that the southern lands had been belied by rumour, and that only a very small section was hopelessly arid. With this objection removed, the only drawback to the southern route was the difficulty of finding as good a route through the mountains as the northerly Yellowhead Pass route afforded, but on this the company decided to take its chances.
Work on the plains was begun in May 1881, and by the end of the year 161 miles had been completed. This progress was counted too slow, and under Van Horne's management a contract was made in 1882, with Langdon and Shepard of St Paul, to complete the line to Calgary. Later in the year a construction company was organized, the North American Railway Contracting Company, to build all the uncompleted sections of the main line for $32,000,000 cash and $45,000,000 common stock. This was really a financing rather than a construction expedient, and was abandoned within a year.
In this section the engineering difficulties were not serious, but the pace of construction which was demanded, and the fact that every stick of timber and every pound of food, as well as every rail and spike, had to be brought a great distance, required remarkable organization. Three hundred sub-contractors were employed on the portion of the line crossing the plains. Bridge-gangs and track-layers followed close on the graders' heels. In 1882 over two and a half miles of track a day were laid. In the following year, for weeks in succession, the average ran three and a half miles a day, and in one record-smashing three days twenty miles were covered. By the end of this year the track was within four miles of the summit of the Rockies.
The change of route across the plains had made it essential to pierce the Rockies by a more southerly pass than the Yellowhead. The Kicking Horse or Hector Pass, short but steep, was finally chosen, but here, as at the Yellowhead, to cross the first range did not mean victory. The towering Selkirk range faced the pass, as the Cariboo Mountains flanked the Rockies farther north. Until the rails reached the hills the engineers had found no way through them, and had contemplated a long detour to the north, following the winding Columbia. Then Major Rogers, the engineer whom James J. Hill had suggested to take charge of the location of the mountain section, following up a hint of Moberly, an earlier explorer, found a route, steep but practicable, across the Selkirks, following the Beaver river valley and Bear Creek, and then through Rogers Pass into the valley of the Illecillewaet, and so through Eagle Pass to the settled location at Kamloops. Both in the Kicking Horse and in the Rogers Pass gradients of 116 feet to the mile were found necessary, but these difficult stretches were concentrated within one operating section of a hundred and twenty miles, and could easily be overcome by the use of additional engines. Unique provision was made against the mountain avalanches by erecting diverting timbers hear the summits and building mile upon mile of snow-sheds, over which the avalanches passed harmless. As a result of these expedients and of raising the road-bed across the prairies unusually high, the Canadian Pacific lost less time through snow blockades than the great railways of the eastern United States.
It was not until 1884 that the wilderness north of Lake Superior was attacked in strong force. Nine thousand men were employed here alone. Rock and muskeg, hill and hollow, made this section more difficult to face than even the Fraser Canyon. In one muskeg area to-day seven layers of Canadian Pacific rails are buried, one below the other. The stretch along the shore of the lake was particularly difficult. The Laurential rocks were the oldest known to geologists, and, what was more to the purpose the toughest known to engineers. A dynamite factory was built on the spot and a road blasted through. One mile cost $700,000 to build and several cost half a million. The time required and the total expenditure would have been prohibitive had not the management decided to make extensive use of trestle-work. It would have cost over two dollars a cubic yard to cut through the hills and fill up the hollows by team-haul; it cost only one-tenth of that to build timber trestles, carrying the line high, and to fill up later by train-haul.
An unexpected test of the need of this section came before it was completed. Early in 1885 the government realized too late that serious trouble was brewing among the half-breeds and Indians of the North-West. Unless troops could be sent in before the grass grew, Riel would have thousands of Indians on the war-path, and a long and bloody contest and a serious setback to the West would be inevitable. The railway was far from complete, with a hundred and twenty miles of gaps unfilled, and the government considered it impossible to get the troops in time. But Van Horne, who had had much experience in handling troops in the Civil War, did not have that word in his vocabulary, and astonished the authorities by offering to take men from Kingston or Quebec to Qu'Appelle in ten days. Part of the gaps were bridged by temporary rails laid on ice and snow, only ninety miles being uncompleted by spring. In one stretch the men were marched across the ice to save a long detour. Through the rest they were carried, covered with furs and straw, in contractors' sleighs along the tote-roads from one camp to the next. In four days from leaving Kingston the first troops landed at Winnipeg; and though the revolt was not prevented, it was speedily crushed. There was no longer any question about the value of the north shore link, and the opposition to the Canadian Pacific fell from that hour. It was even suggested that the company should build a statue to Louis Riel. As for the government, it could well claim that its persistence in pushing through this part of the road nearly offset its red-tape carelessness in permitting the rebellion to come to a head.
Meanwhile, the government section between Port Arthur, or rather Fort William, and Winnipeg had been taken over by the company in 1883, though not entirely completed. Two years later the thousands of Chinese navvies working on the difficult Kamloops-Port Moody section finished their task, and the government work was done. The only gap remaining lay in the Gold Range, and here in the Eagle Pass, at Craigellachie, on November 7, 1885, the eastward and westward track-layers met. It was only a year or so before that the Northern Pacific had celebrated the driving of the last golden spike by an excursion which cost the company a third of a million, and heralded the bankruptcy of the road. There was no banquet and no golden spike for the last rail in the Canadian Pacific. William Van Horne had announced that 'the last spike would be just as good an iron spike as any on the road,' and had it not been that Donald A. Smith happened along in time to drive the spike home, it would have been hammered in by the navvy on the job. Six months later the first passenger train went through from Montreal to Vancouver. The longest railway in the world was open from coast to coast, five years before the end of the time required by the original contract.
To realize how great a work had been accomplished requires to-day some effort of the imagination. The Canada the present generation knows is a united Canada, an optimistic, self-confident Canada, with rapidly rounding-out industries and occupations which give scope for the most ambitious of her sons as well as for tens of thousands from overseas. It is a Canada whose nine provinces stretch almost unbroken from ocean to ocean. But the Canada of a generation earlier was far other. On the map it covered half a continent, but in reality it stopped at the Great Lakes. There was little national spirit, little diversity of commercial enterprise. Hundreds of thousands of our best-born had been drawn by the greater attraction of the United States cities and farms, until one-fourth of the whole Canadian people were living in the Republic.
It was the opening up of the West that changed the whole face of Canadian life, that gave a basis for industrial expansion, that quickened national sentiment and created business optimism. And it was the building of the Canadian Pacific that opened up the West and bound it fast to the distant East. Certainly not least among the makers of Canada were the men who undertook that doubtful enterprise and carried it through every obstacle to success; and not least among the generations whose toil and faith have made possible the nation of to-day were the four millions of the Canada of the eighties who flung a great railway across the vast unpeopled spaces of a continent to the far Pacific.
- 1Stephen, Smith, Hill, and Kennedy each took one share, and Kittson half a share; and later Angus, after leaving the service of the bank to go with the railway, took the remaining half-share.
- 2 Not all were willing to attribute to courage and luck alone the full success of this stroke. Some Dutch bondholders, independently of the committee, asserted that Kennedy had not played fair, and Farley, the receiver of the road, sued Hill for a share of the profits which he alleged had been promised for his collusion. In repeated trials Farley was unable to produce evidence satisfactory to the courts, which held that in any case his claim must be rejected because 'based on inherent turpitude.'
- 3'Most men who have really lived have had, in some shape, their great adventure. This railway is mine' (James J. Hill, in Valedictory to the Shareholders of the Great Northern, July 1, 1912).
- 4It was from their St Paul investment that the leading men in the group secured the basis and bulk of their great fortunes; the Canadian Pacific added little to their coffers.
- 5Including the Yale-Port Moody section, not yet formally under contract.
- 6Giving evidence before the Senate Committee on Interstate Commerce in New York in 1889, President Van Horne stated that the company was obliged to abandon part of the surveys on which the government had spent millions, and make new ones; that the government sections were unwisely located, especially in British Columbia; that the cost of the remainder was increased by having to join it to the unwisely located sections, and that, allowing for the saving which could have been made in location, he could have duplicated the latter for twelve or fifteen millions.
- 7'The payment to the government of $8,710,240, in advance, of secured dividends, has deprived the company for the moment of the means for continuous, vigorous exertion in construction, without enabling it to recoup itself by the sale of its stock, as was confidently and reasonably expected' (Letter of George Stephen to the government, January 15, 1884).
Speaking in parliament in 1885, Edward Blake declared that, omitting the last ten millions issued, the company had raised on stock $24,500,000, and, counting the next two dividend payments, they would have paid or provided for dividends $25,875,000. Already $7,000,000 had been paid out in dividends, members of the syndicate receiving $3,610,000 on their $10,000,000 investment. In other words, before the road was opened for traffic, every cent paid in by the shareholders would have been paid back or set aside for dividends, leaving not a dollar for building the road.