Sandford Fleming's Reconnaisance—Sir Hugh
Allan Organizes Company—The Pacific Scandal—Mackenzie's Railway Policy
—Railway Reserves—Tupper's Announcement of New Railway Policy (1879)
—Futile Mission to England (1879)—Successful Mission (1880)—Blake's
Criticism of C. P. R. Charter—Counter-Proposition of Canadian
Capitalists—Why Rejected— Services of Van Horn and Stephen—Bankruptcy
Narrowly Averted—Unprecedented Speed of Construction.
The building of the Canadian Pacific
Railway has exercised, and will for long continue to exercise, an
extraordinary influence on the history of Saskatchewan. To this great
enterprise we shall therefore devote the present chapter.
An exploratory reconnaisance was made
for railway purposes in 1871 by Mr. Sand ford Fleming, acting for the
Dominion Government. The task set Mr. Fleming and his associates was
stupendous. From Ottawa to the Red River the line passed through a
country hitherto all but impenetrated. The vast prairies presented
relatively few engineering difficulties, but any previous accurate
knowledge of the geographical details regarding the Territories was
meagre in the extreme, and it was necessary to prospect the line to
avoid the most formidable river crossings, to serve the best
agricultural country, and to follow the shortest possible route to the
mountain passes through the Rocky Mountains. The difficulties of the
survey are beyond all description. The cost of these preliminary
operations ran well over three million dollars up to December 31, 1879.
and they were unavoidably marked by much hardship, and even by many
tragedies. Fleming and his colleagues favored a route much to the north
of that finally adopted in the North West, and in consequence much of
the fruit of their labors was lost; but their investigations rendered
available a wealth of information regarding the country and did much to
facilitate its settlement.
It is to be remembered that by the
terms upon which British Columbia entered Confederation in 1871. the
Federal Government promised the immediate construction of a railway from
the Pacific toward the Rocky Mountains and thence eastward to connect
with the railway systems of Canada, and that the Dominion agreed to
complete this transcontinental railway by 1881. During the session of
1871 a bill was introduced to charter a Pacific Railway Company.
However, most of the prominent members of the proposed company were
American capitalists, and the terms they offered were unsatisfactory to
the Government. Consequently this bill was dropped. Next year an act was
passed to provide for the required railway. The Government was given
power to arrange terms with any railway company and to subsidize it to
the extent of thirty million dollars of money in addition to a vast land
grant. Two companies presented themselves for incorporation in
competition for the charter—The Canadian Pacific Company, organized and
under the presidency of Sir Hugh Allan, and the Inter-Oceanic, under
Senator D. S. McPherson. An attempt was made to amalgamate these
concerns, and on its failure Sir Hugh organized a new company, composed
exclusively of Canadians. Its board of directors included a group of men
widely known and trusted.
In the session of 1872 the charter of
this company was duly ratified, but hi the following year matters came
to a standstill as a result of the charge that Sir Hugh Allan had
obtained the favor of the Government by corruptly furnishing money for
election purposes. A committee of the House commenced an investigation
which was ultimately transferred to a special royal commission. The
evidence adduced proved that Allan had contributed largely to the
political funds of the dominant party, and, though no personal
appropriation of any of the money by any of the cabinet was proved,
public indignation over this so-called "Pacific Scandal" obliged Sir
John A. Macdonald to announce his resignation in November, 1873.
The new premier, the Hon. Alexander
Mackenzie, declared that, while the speedy construction of the
transcontinental railway was essential, it should be consummated at the
minimum expense; consequently use should be made of all possible natural
links in the way of navigable waters and the building of the line
through regions unsuited for settlement should be postponed and obviated
for the time being by establishing communication with American lines. He
considered that the original bargain with British Columbia was incapable
of fulfillment, and proposed to treat with that province for some
modification of its terms. The road, moreover, was to be built by the
Canadian Government itself. Mackenzie's railway policy was
unsatisfactory to the West, and to the people of British Columbia in
particular; and, indeed, for a time it endangered the unity of the
Dominion. In 1876 the Government published an advertisement calling for
tenders for the building of sections of the Canadian Pacific Railway
between Lake Supcrior and the Pacific Ocean. This proposed departure
from the cabinet's policy of building the road as a Government work met
with a discouraging reception, as capitalists could not be induced to
undertake the contract. Accordingly the building of the road under the
Government supervision continued.
The Pacific Railway Act, under which
provision was made for its building, had provided for the reservation of
large areas along the line, the sale of which would ultimately reimburse
the Government. The Territories had no representatives in the House of
Commons, but the members from Manitoba vigorously protested against the
locking up of these reserves, and in 1877 the law was slightly changed,
and the purchase of such land by actual settlers was rendered possible.
Even yet, however, in the settlement belt, there was left a tract of
about a hundred and fifty thousand acres of public lands, upon which
numerous pioneers were already living, but which was officially declared
to be withdrawn from sale 01* settlement. The Honorable Mr. Mills,
however, after visiting the country, opened these lands also for
purchase at $5.00 in scrip per acre, which really meant $2.50 per acre.
The disputes over these land regulations of course delayed the building
of the railway, and relatively little had been accomplished, when in
October, 1878, the Mackenzie Government was defeated and Sir John
Macdonald returned to power.
In .May of the following year the lion.
Charles Tupper, Minister of Public Works, announced the new Pacific
Railway policy. It provided for the appropriation of ten million acres
of land for the purposes of constructing the road. This again filled the
West with alarm, and the first land regulations were so objectionable
that the Government was forced to amend them a few months later. Into
these we cannot enter. Those ultimately adopted by the then Government
were some improvement upon those introduced by Mr. Mackenzie, but they
entailed upon the West the loss of many thousand of desirable
immigrants, who turned to the western States, where the laws relating to
the settlement and the acquirement of public lands were less onerous.
In this same year Messrs. Macdonald and
Tupper visited England in an effort to raise capital for the railway,
but the mission failed, and the Government was obliged to fall back on
the policy of its predecessors, conducting the building of the road as a
Government work. A resolution was now passed to increase the
appropriation of land for construction purposes, in Manitoba and the
Territories, to the stupendous area of a hundred million acres. In other
words, the West was to pay for the railway.
By the end of 1879, 833 miles of the
road had been completed. By June 30, the close of the fiscal year, the
total expenditure on the work to date amounted to about twelve and a
half million dollars.
In July, 1880, the Premier and Sir
Charles Tupper, together with Lieutenant-Colonel Dennis and the Hon. J.
C. Pope, again went to England to secure the aid of capitalists, and on
their return Sir John announced the successful formation of a great
syndicate. On December 10, when Parliament assembled, the contract was
laid before the House. The historic debate upon the terms of the charter
commenced three days later and closed on January 28, 1881.
The terms of the new charter were
bitterly resisted by the Hon. Edward Blake, now leader of the
opposition. He pointed out that the Act of 1874 provided for the
submission of tenders, and that the Government, while materially
altering the conditions under which the work was to be performed, had
departed from the Act by failing to invite tenders under the new terms.
Under the Act the land grant to the company would have been taxable,
while under the contract it was exempted from all taxation, Dominion,
Provincial or Municipal, for a period of twenty years, unless previously
sold. By the Act, Parliament had reserved to the Government unrestricted
power in the regulation of tariffs; but by the contract this right was
to be in abeyance unless and until the company should be making a net
revenue exceeding ten per centum on the capital invested. The Government
had also forfeited its control over the accommodation to be provided and
its right to acquire the railway at any time that public interest might
demand. In many other important respects the proposed charter violated
the provisions previously laid down by Parliament, and in every instance
to the company's immense advantage.
Mr. Blake pointed out that five weeks
after the new conditions had been made public Canadian capitalists of
high standing, including Sir William P. Howland, William Hendry, John
Walker, George A. Cox and many other men of ample means, credit and
business ability, had caused to be laid on the table of the House an
offer in terms much more favorable to the country. While the proposed
charter called for a cash subsidy of $25,000,000 and a land grant of
25.000,000 acres, these gentlemen offered to undertake the work for
three million dollars less in cash, and three million acres less in
land. The new tenderers proposed to accept $6,600,000 and 1,000,000
acres instead of $9,000,000 and 11,250,000 acres for the prairie section
of nine hundred miles. A similar reduction was offered upon the western
section to Kamloops. While the contract exempted the company from
customs duties on construction material, the new offer involved no such
exemptions, and even surrendered the proposed immunity from ordinary
taxation. The tenderers were furthermore willing to leave with the
Governor-in-Council unrestricted powers for the regulation of their
tolls, and had placed on deposit, as security for the fulfillment of the
contract if their tender were accepted, the sum of $1,400,000.
To present-day westerners familiar with
the grievances resulting from the Canadian Pacific Railway Company's
immunity from taxation and from Government supervision regarding
accommodation and rates, it is rather bewildering to find a Government
rejecting the offer of the Howland Syndicate on the plea that it was not
genuine, and confirming the contract as introduced by the Government.
However, Sir John believed that the proposed agreement embodied the only
chance of having the road built within a reasonable time, and on January
28, 18S1, he introduced a bill for the incorporation of the Canadian
Pacific Railway Company. Resistance to his policy now entered on a new
stage and the opposition fought the bill persistently; nevertheless, it
became law on the 15th of February.
Air. William C. Van Home (who was
subsequently knighted) was presently appointed general manager of the
new company (upon the recommendation of Mr. James J. Hill), and Air.
George Stephen, better known by his later title of Lord Mount Stephen,
was chiefly entrusted with the charge of financing the company in
England. The difficulties surmounted by these two remarkable men were
enormous. Incidentally, by persistently advertising Canada, and
especially the North West to facilitate the sale of their lands, they
unquestionably performed an indirect public service to the Dominion, the
value of which can never be calculated.
By the fall of 1883 only $65,000,000 of
the $100,000,000 capital stock had been sold, and the company's lands
failed to provide as yet any considerable revenue. Nearly all their
funds had already been expended, and for a time the company was face to
face with bankruptcy. Even the action of the Dominion Government in now
guaranteeing three per cent dividends on C. P. R. stock failed to
reassure the investing public, and in 18S4 it was necessary to apply to
the Government for a loan which raised the indebtedness of the company
to the Government to the stun of $29,880,000. Furthermore, Mr. Stephen
and Mr. Donald A. Smith (Lord Strathcona), in order to tide over the
crisis, pledged their own personal means. But for the heroic faith of
these two men and their immediate colleagues, the enterprise would have
collapsed in general failure and ruin. Nor must we of today, who enjoy
the results of western development that the building of the Canadian
Pacific Railway rendered possible, fail to accord the gratitude justly
due to the Government of the hour. When the public realized that the
Dominion Authorities were determined to ensure the immediate and
successful performance of the work, no matter what the odds against it.
the company's position in the money market commenced to improve, and by
1887 it had freed itself from all indebtedness to the Government. Had
the company failed, it would not only have brought about the defeat of
the Government, but would have overwhelmed Canada in financial disaster.
While Messrs. Stephen, Smith, R. B.
Angus and their co-directors were fighting the financial battles of the
company, Air. Van Home was pressing forward its construction with a
speed unexpected, and, indeed, unprecedented. The contract had allowed
ten years for the work, but on November 7, 18S5, Mr. Donald A. Smith was
called upon to drive the last spike. Two thousand four hundred miles of
new railway had been built, equipped and put in operation in five years.
More than three hundred miles of the road consisted of cuttings through
the solid rock, and space would fail us to detail the engineering
difficulties that had been overcome.