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Canadian Pacific Railway History
The Canadian Pacific Railway was formed to physically unite Canada from coast to coast. Canada's
confederation on 1 July 1867, united four eastern British North American provinces into a new country. Nova Scotia and New Brunswick were promised the
Intercolonial Railway to link them with Central Canada - Quebec and Ontario. Manitoba, around the Prairies Red River settlement, joined confederation in 1870.
And British Columbia, on the west coast, was enticed into confederation in 1871. But only with the promise of a transcontinental railway being built within 10
years to physically link it with eastern Canada.
This was the reason for the Canadian Pacific Railway.
But the railway got off to
a rough start. John A. Macdonald's Conservative government needed a private company to build the railway. So it set aside $30 million and 50 million acres to
get the job done through a private syndicate. But the private financiers who set out to build the railway and capture the government subsidy crossed the line
of political impropriety. The federal Liberals found that Hugh Allan, an industrialist and shipping magnate, and already the richest man in Canada, had
subscribed some $360,000 to various Conservatives during the 1872 election campaign, including substantial sums to Macdonald's Quebec lieutenant: George
Etienne Cartier. Allan wanted to secure the railway-building contract, become president of the transcontinental railway, and get a virtual lock on a
transportation monopoly over Canada's lands and seas. The resulting scandal, called the Pacific Scandal, toppled the Conservative government making it resign
in 1873 and call an election. The federal Liberals under Alexander Mackenzie won the new election. The Liberals were far less committed to building the
transcontinental railway. The Liberal government thought it could be done as a public works program. By the end of their tenure in 1878 they had only made a
few transcontinental railway construction starts in Eastern and Western Ontario and in Manitoba.
Judge Van Norman presided at the groundbreaking
ceremony near Fort William (Thunder Bay), 1 Jun 1875, signaling the beginning of construction of the Canadian Pacific Railway. Joseph Whitehead got the contract to build railway lines out of Winnipeg. His six flatcars, a conductor's van, and a locomotive - which he named Countess of Dufferin, after the Governor-General's wife - was the first train to arrive on the Canadian Prairies. Although the railway equipment made the trip down the Red River by steamer and barge, 9 Oct 1877, marked the arrival of the railway on the Canadian Prairies.
Meanwhile, the province of British Columbia saw the 10-year deadline fast approaching. And political leaders rightly concluded the transcontinental railway would not be built within the promised time frame. So the province threatened to secede. With the Conservatives back in power, Prime Minister John A. Macdonald had to do something tangible to show British Columbian's the railway was coming to their province. So the government contracted with Andrew Onderdonk, who began building the railway up river from the Pacific Coast, 14 May 1880, at Yale on the Fraser River. Onderdonk, an American, favored the U.S. method of railway building - get as much done as cheaply as possible. Quality and safety were secondary to profit and progress. So Onderdonk emulated the American construction method of employing Chinese laborers. Chinese entrepreneurs set up manpower agencies in British Columbia and contracted their fellow countrymen as railway construction workers. The section of railway along the steep and treacherous walls of the Fraser Valley was especially difficult to build. The entire 615 km (382 miles) between Port Moody and Eagle Pass took 15,000 men seven years to build. Nine thousand were of Chinese origin. Not only was the geography treacherous, but the construction methods were dangerous too. To keep costs down, instead of using dynamite, construction crews used nitro-glycerin - a less expensive but less stable explosive - to do the blasting. Many lost their lives. Some reports greatly exaggerate the death toll. Clear-cut, concise casualty reports are virtually non-existent. But eyewitness and newspaper accounts paint a horrific picture. Some 700 to 800 men lost their lives building this government-contracted section of the transcontinental railway. Most were Chinese. By any reckoning this amounts to five percent of the total labor force or nine percent of the Asian railway builders - a catastrophic number of humans.
With construction underway in British Columbia and on the Prairies, the Prime Minister was busy trying to get a private syndicate interested in taking on and completing the task.
Finally, a group of Canadians of Scottish origin formed a viable syndicate to build the Canadian Pacific Railway - 21 Oct 1880. The syndicate was a reputable one with solid financial backing in Canada, the U.S., and overseas. The syndicate had a solid reputation, good credentials, and a proven track record in railway rebuilding/rehabilitating in the United States. Ironically the syndicate's most significant yet silent partner, Donald A. Smith, was instrumental in toppling the Conservative government in the Pacific Scandal's 1872 non-confidence vote. George Stephen headed the syndicate with much trepidation. "My friends and my enemies agree in affecting to think (this) will be the ruin of us all". And it nearly was.
The Canadian Pacific Railway Company was incorporated 16 Feb 1881. George Stephen became its first president. The railway company received only half the $100-million-worth of subsidies set aside earlier to build the transcontinental: $25 million and 25 million acres. The 1881 construction season was abysmal. CPR chief engineer T.L. Rosser and general superintendent A.B. Stickney seemed more interested in land speculation than railway construction. Inside information made it easy for them to turn a tidy profit on land, since they knew exactly where the next station along the railway line would end up. Both were fired at the end of the season after building only 211 km (131 miles) of track. But CPR did grow considerably in size that year with its amalgamation, 9 Jun 1881, with the Canada Central Railway. This 409 km (254 mile) addition gave the CPR a presence in Eastern Ontario and access to the nation's capital: Ottawa. Canada Central's president was also CPR's vice-president: Duncan McIntyre. But the railway would not be built without a man of action. That man was William Cornelius Van Horne.
Syndicate member and director James Jerome Hill suggested Van Horne as the man who could get the job done. He was a rising star in the U.S. To lure him away from a promising job on the Milwaukee Road, CPR offered him $15,000 a year to become CPR general manager and oversee construction of the transcontinental railway over the Prairies and through the mountains. This was such a huge salary that two-thirds were hidden as "construction costs". Van Horne boasted he would build 800 km (500 miles) of main line railway in his first year: 1882. Floods delayed the start of the construction season. But at season's end 673 km (418 miles) of main line and 177 km (110 miles) of branch line track-laying made CPR much more of a reality.
In the meantime CPR sought permission to change the articles of incorporation and go through a more southerly pass. Sandford Fleming's carefully planned Yellowhead Pass route got the axe and Major A.B. Rogers finished surveying the Kicking Horse Pass. With the promise of a $5,000 bonus, he was valiantly looking for a way through the next mountain range west of the Rockies - the Selkirks. In 1882, Rogers found the eastern approach to a pass that would bear his name - Rogers Pass. Walter Moberly's assistant Albert Perry discovered the western approach to the pass when Moberly discovered the pass through the third mountain range - the Gold Range - that impedes the potential passage of a transcontinental railway through to the Pacific Coast. Moberly called this pass Eagle Pass. He was acknowledging the eagles that took flight and auspiciously showed him a possible way through these mountains. Moberly discovered his pass in 1865. Rogers got his $5,000 bonus in 1882, but did not cash the cheque. Instead he framed it and hung it on his wall. Van Horne had to entice him with a gold watch before he would cash the cheque and balance CPR's ledgers.
Cashflow was a problem for CPR in the early days. Construction cost a lot and there was little traffic in return. Van Horne called on a purchasing and financial juggler from Milwaukee to help him get the job done. Thomas G. Shaughnessy, hired on in 1882 as general purchasing agent and would follow Van Horne to the top spot in the company, presiding over what is arguably CPR's biggest growth period - investing $600 million in upgrading and expanding the company before World War I.
But before growing into the "World's Greatest Travel System" as early 20th century CPR slogans and logos would boast, the company went through some difficult times.
A section east of Calgary nearly kicked off a conflict between CPR and the Blackfoot natives when track-laying in 1883 crossed the northern portion of their reserve at Gleichen. But Chief Crowfoot and local missionary Father Albert Lacombe smoothed things over with news that the federal government would add land to the reserve to compensate for the land the railway used.
Before east met west and Donald A. Smith drove the last spike at Craigellachie, B.C., 7 Nov 1885, things seemed the bleakest for the railway. The north shore of Lake Superior, the Rockies, and the Selkirks were the most difficult to build sections of the privately funded part of the railway. Some small sections cost almost half a million dollars a mile. And it almost ruined the railway. At the beginning of 1885 the railway teetered on the brink of bankruptcy. Dividends on preferred shares were already suspended. And the railway couldn't pay its creditors, buy new supplies, or even meet its payroll. Two men emerged to save the day - an exiled Metis and a British lord.
Louis Riel came out of exile in the United States after the first Northwest Rebellion to lead the second insurrection in 1885. His actions inadvertently demonstrated the national security benefit of the CPR. Militia and troops from the east mobilized and traveled west - all within Canada over a nearly completed CPR main line - to quell the 1885 rebellion in a matter of weeks. The 1869 rebellion took months and a circuitous trip through the U.S. to do the same. The federal government then agreed to secure CPR's outstanding loans.
Lord Revelstoke, managing director of Baring Brothers, a renowned financial house in London, agreed to carry a CPR bond issue at 92.5 cents on the dollar.
Within three years of the first transcontinental train leaving Montreal and Toronto for Port Moody, 28 Jun 1886, all was right with the world again. And CPR began paying dividends again.
Van Horne, with Shaughnessy's help, got the railway built, extended it from coast to coast in 1889 - right through Maine to Saint John, N.B. - and expanded the CPR into more than just a railway. CPR got involved in land settlement and land sales as early as September 1881. CPR erected telegraph lines right along side the main transcontinental line, transmitting its first commercial telegram in 1882. 1882 also marked the year it got into express shipments, acquiring the Dominion Express Company. CPR started building some of its own steam locomotives as early as 1883. And it would later build its own passenger cars, making it second only on the continent to the Pullman Company of Chicago, Illinois. CPR had steamships on the Great Lakes in 1883, chartered ships on the Pacific Ocean in 1886, launching its own Pacific ships in 1891. CPR got into paddle wheelers in British Columbia's interior in 1893, the B.C. coast in 1901, and the Atlantic Ocean in 1903. It got into the hotel and tourist trade as early as 1886, after Van Horne suggested setting up a national park system in the Canadian Rockies. CPR even discovered natural gas on the Prairies, although quite by accident. In 1886, while digging an artesian well to get water for its steam locomotives, CPR crews stumbled across natural gas in what is now Alderson, Alberta. The railway would later use the natural gas to heat and power the station and ancillary buildings.
Along the way CPR got into numerous other ventures including abattoirs, animal husbandry, bus transportation, china and crockery, containers and pallets, courier service, forestry, foundries, immigration and colonization, insurance, irrigation, manufacturing, milling and foodstuff, mines and minerals, newsreels, oil, pulp and paper, radio broadcasts, stockyards, supply farms, trucking, waste management - and even bottling spring water. In 1942 CPR even took to the skies, amalgamating 10 bush plane companies into Canadian Pacific Airlines.
Edward W. Beatty presided over a difficult period in CPR's history competing head-to-head with the newly formed Canadian National Railways (CNR). CNR's formation between 1917 and 1923 amalgamated Canada's overextended and bankrupt rail infrastructure into one national railway. CNR's principal component railways: Grand Trunk, Grand Trunk Pacific, Canadian Northern, National Transcontinental, and the Intercolonial. And when the Great Depression arrived matters worsened. And with the outbreak of World War II, Beatty put the entire Canadian Pacific network at the disposal of the war effort. On land CPR moved 307 million tons of freight and 86 million passengers, including 150,000 soldiers, nearly 130,000 army and air force repatriots, and thousands of sailors. At sea 22 CPR ships went to war with 12 of them being sunk. In the air CPR pioneered the "Atlantic Bridge" - the transatlantic ferrying of bombers to Britain. It opened Canada's strategic far north and set up pilot training schools. By 1945, three years after Beatty had passed on, some 33,127 Canadian Pacific employees had served in the two world wars alone. Sadly, 1,774 sacrificed their lives.
In the 1950s CPR chief Norris R. Crump repatriated the company getting it largely in the hands of Canadian stockholders, presided over complete dieselization of the company's fleet of locomotives, and managed the a huge expansion into non-transportation sectors, setting up Canadian Pacific Investments in 1962.
CPR was first in North America to offer piggyback service with its 1 Dec 1952, inaugural run between Montreal and Toronto. This beat out CNR by a year and Pennsylvania Railroad by two. CPR was the first railway in North America to pioneer the use of AC-traction locomotives, 7 Nov 1984.
By 1986 Canadian Pacific was Canada's second largest company with $15 billion in revenue and ranking fourth in assets with $17.7 billion and nearly 100,000 employees. But under the guidance of its chairman and C.E.O. William Stinson, a fourth-generation CPR railroader, the company got back to basics. The huge conglomerate started divesting itself of its non-core companies, a move continued by Stinson's successor, David O'Brien.
Paring down to its core activities, CPR nevertheless expanded its rail network in 1990, taking full control of the Soo Line in the U.S. Midwest - a company it had a controlling interest in since the 1890s. The Soo Line had already absorbed the Milwaukee Road in 1985. Three years before, in 1982, the Soo Line bought the Minneapolis, Northfield and Southern (MNS). MNS's claim to fame: in 1913 it was the first railway in the world to operate its freight and passenger exclusively with internal-combustion power. And in 1991 CPR bought the bankrupt Delaware and Hudson Railway (D&H) giving it access to ports in the U.S. Northeast - maintaining its true transcontinental status. D&H boasted a long and proud history of its own, including being the first to operate a steam locomotive in North America, 8 Aug 1829.
On 3 Oct 2001, Canadian Pacific spun out into five separate companies - Canadian Pacific Railway, CP Ships, Fairmont Hotels, Fording Coal, and
PanCanadian Energy. PanCanadian has since merged with Alberta Energy Corporation to form the EnCana Corporation.
On 30 Sep 2008 Canadian
Pacific's purchase of the Dakota, Minnesota & Eastern Railroad (DM&E) and the Iowa, Chicago & Eastern Railroad (IC&E) was approved. With this
purchase CP received a strategic end-to-end addition to its rail system and a more solid presence in the US Midwest than ever before. "The DM&E is a
high-quality", growing regional railroad, that complements our existing franchise", said Fred Green, CP's current president and chief executive
officer. "This investment also presents us with the opportunity for future growth through further expansion of our network".
The addition of the DM&E and IC&E extends the reach of CP's network, adding new customers and expanding the service available to customers on both
sides of the border. The DM&E system is the largest regional railroad in the US and the only Class II that connects and interchanges traffic with all
seven Class I railroads, connecting with CP at Minneapolis, Winona, and Chicago.
Jonathan B. Hanna - Corporate Historian Canadian Pacific Railway