The creation of the CNR
- July 1917; the war was going on, major number of Canadian casualties, English Canadians were pro
conscription (forcing to join the army) and French Canadians were totally against it.
Summer 1917; the railway mess
-The royal commissions recommended that the government take over the Canadian northern
railway to save it from its financial problems.
- There were many problems at that time. The introduction of the military services act in 1917 led to riots
and demands for money as well as manpower to support the war. A temporary income tax was put in
place. Pressure was mounting for a federal election with widespread support growing for a union
government, a coalition of conservative and English speaking liberals.
-Of the issues that were facing the Canadian government (ex. controlling the sale of alcohol, election
rights to women, inflation,) there was a complete separate mess called the railway mess. There were
three transcontinental railways built for a population of almost 8 million. There was excessive capacity for
- According to Robert Borden, who was the PM in 1917, the solution as for the government to take over
the Canadian northern and consolidate several other railway lines, which would eventually result in the
creation of the largest crown corporation in Canadian history; the Canadian National railways. The CN.
Sir Wilfrid Laurier’s railway policy
- 1896, the liberal party was led by Laurier, a French Canadian, and it won the elections and formed the
government of Canada.
-He supported the national policy of McDonald. (Spreading the country from sea to sea, settlement in
- In 1903, Laurier pronounced that the 20 century belonged to Canada and authorized the construction
of a second transcontinental railway.
- East was full of railways and the west was undergoing major changes and railway construction was
-Laurier could accept the idea of governments constructing railways but was against governments
-His policy led to a proliferation of railways and mush waste of the publics money. It invited a flood tide of
railway construction. A flood tide of railway construction
- The government officially recognized the Canadian northern railway to be the country’s third national
- The Canadian northern continually asked for money from the government and handouts were given in
great amounts numerous times.
- At first, it was doing well, transporting millions of customers and millions of goods.
-For their capital, it was split among stocks, funded debt and government assistance.
-With the break of the war in 1914, the problems- capital cost overruns, overcapacity, inadequate rolling
stock, all became more evident.
-“The problems were exacerbated by the fact that the British government banned the export of
capital, and the London market had been the main source of Canadian railway funding.”
The penalty stage of the railway development
- Nationalized- making it public owned, by the government.
- Continuing war causing more and more problems. At this point, freight traffic was reducing
greatly, passenger numbers were still high but the decrease in shipments resulted in a decrease
of 20% in their net earnings.
-The grand trunk railway and the Canadian northern (the new ones) were suffering more than the CPR.
Weren’t even covering costs. Government bought the national transcontinental from the grand trunk
pacific in 1915. The grand trunk, the parent company, could not afford to run it anymore.
-Canadian railway and the grand trunk, if collapsed financially, would cause huge problems (loans,
notes). They needed a lot of money and to be in a good position for credits to be able to fund the ongoing
war. The government formed a royal commission to help decide on the issue composed of three people.
They each delivered a split decision in 1917.