Canadian Pacific Railway - History

History

Creation of the Canadian Pacific Railway was a task originally undertaken for a combination of reasons by the Conservative government of Prime Minister Sir John A. Macdonald. British Columbia had insisted upon a transport link to the east as a condition for joining the Confederation of Canada (initially requesting a wagon road). The government however, proposed to build a railway linking the Pacific province to the eastern provinces within 10 years of 20 July 1871. Macdonald also saw it as essential to the creation of a unified Canadian nation that would stretch across the continent. Moreover, manufacturing interests in Quebec and Ontario desired access to sources of raw materials and markets in Canada's west.

The first obstacle to its construction was economic. The logical route went through the American Midwest and the city of Chicago, Illinois. In addition to this was the difficulty of building a railroad through the Canadian Rockies, an entirely Canadian route would require crossing 1,600 km (990 mi) of rugged terrain of the barren Canadian Shield and muskeg of Northern Ontario. To ensure this routing, the government offered huge incentives including vast grants of land in Western Canada.

In 1873, Sir John A. Macdonald and other high-ranking politicians, bribed in the Pacific Scandal, granted federal contracts to Hugh Allan's "Canada Pacific Railway Company" (which was unrelated to the current company) and to the Inter-Ocean Railway Company. Because of this scandal, the Conservative party was removed from office in 1873. The new Liberal prime minister, Alexander Mackenzie, began construction of segments of the railway as a public enterprise under the supervision of the Department of Public Works. The Thunder Bay branch linking Lake Superior to Winnipeg, was commenced in 1875. Progress was discouragingly slow because of the lack of public money. With Macdonald's return to power on 16 October 1878, a more aggressive construction policy was adopted. Macdonald confirmed that Port Moody would be the terminus of the transcontinental railway, and announced that the railway would follow the Fraser and Thompson rivers between Port Moody and Kamloops. In 1879, the federal government floated bonds in London and called for tenders to construct the 206 km (128 mi) section of the railway from Yale, British Columbia, to Savona's Ferry, on Kamloops Lake. The contract was awarded to Andrew Onderdonk, whose men started work on 15 May 1880. After the completion of that section, Onderdonk received contracts to build between Yale and Port Moody, and between Savona's Ferry and Eagle Pass.

On 21 October 1880, a new syndicate, unrelated to Hugh Allan's, signed a contract with the Macdonald government. They agreed to build the railway in exchange for $25 million (approximately $625 million in modern Canadian dollars) in credit from the Canadian government and a grant of 25 million acres (100,000 km2) of land. The government transferred to the new company those sections of the railway it had constructed under government ownership. The government also defrayed surveying costs and exempted the railway from property taxes for 20 years. The Montreal-based syndicate officially comprised five men: George Stephen, James J. Hill, Duncan McIntyre, Richard B. Angus and John Stewart Kennedy. Donald A. Smith and Norman Kittson were unofficial silent partners with a significant financial interest. On 15 February 1881, legislation confirming the contract received royal assent, and the Canadian Pacific Railway Company was formally incorporated the next day.