Canadian Northern RailwayReporting mark: CNR
The CNoR first came to life in Manitoba during the late 1880s. The provincial government was particularly incensed at the Canadian Pacific Railway (CPR) for what they considered anti-competitive behaviour. In fact they were so furious that they dug deep into their pockets, offering sponsorships and grants to anyone who could challenge the supremacy of the CPR.
The government's rage centred around a clause in the CPR's charter that prevented the construction of any competing lines to the south or southwest for the next 20 years. It also exempted the railway from regulation of its rates until its profitability had increased to 10 per cent. As well, the CPR had promised to build additional branch lines. During its early years, the railway was severely cash-strapped and the branch lines were not forthcoming.
This infuriated the provincial government who believed that farmers were being cheated and growth was being stifled due to the CPR's cash shortages and the federal government's intransigence. The province was determined to challenge both the CPR's monopoly and ultimately the federal government.
After battling it out for several years, the provincial and federal governments finally reached an agreement that rescinded the CPR's monopoly in exchange for $15 million in federal funds. But Manitoba wasn't through with the CPR yet. The province then began offering loans and guarantees for the construction of numerous branch lines throughout the province. Ontario-born William Mackenzie and Donald Mann quickly rose to the challenge. The two men picked up the charter for the Lake Manitoba Railway and Canal Company and were on a roll.
With generous assistance from the Manitoba government, the two partners began acquiring bankrupt lines and stringing them together. The basic constituents of the CNoR consisted of five bankrupt lines in Manitoba and Ontario. Within a few years, Mackenzie and Mann had pieced together a sizeable network throughout the province.
The road travelled north of the CPR lines through the rich agricultural fields of Manitoba and then onward into Saskatchewan. It was well planned and economically built which resulted in an exceedingly profitable venture. The CNoR's auspicious debut consisted of two used engines, two used passenger cars, and 50 freight wagons.
The Canadian Northern Railway (CNoR) was officially formed in 1899. By 1902 it boasted over 1,200 miles of line extending from Port Arthur, Ontario to Erwood in northern Saskatchewan. A magnificent terminal was constructed in Port Arthur to take advantage of the Great Lakes shipping.
Geographically, the CNoR was at a distinct disadvantage. The railway, based in Manitoba, was being squeezed on both sides by the CPR which left little room for growth and expansion. Cutting a deal was not an option. After the CNoR reduced shipping rates, forcing the CPR to follow suit, they had very few friends left at the CPR. The larger railway made it quite clear that their only interest in the CNoR was to buy the little pest out.
In 1903 the federal government approached the CNoR seeking their "cooperation" in building a second transcontinental railway in conjunction with the Grand Trunk Railway (GTR). Like the CPR, the GTR was not interested in any joint ventures with this prairie-born upstart. They simply wanted to buy it out. The CNoR rejected the offer, which infuriated their rival to no end.
Luckily the CNoR's timing was perfect. Railway fever was in the air and both the federal and provincial governments were eager to provide generous subsidies and loan guarantees whenever it came to railway expansion. Anxious to extend their reach, Mackenzie and Mann began purchasing or leasing a number of regional lines in Ontario. By 1902 they had obtained authorization to build as far east as Montreal.
Part of the CNoR's success, particularly in the west, came from the failway's ability to capitalize on its "little guy" status. The railway was able to market itself to the farmers as "one of their own." Even though it was less reliable than the CPR, reduced rates made it worthwhile for farmers to choose the cheaper alternative.
In 1903 the federal government and the GTR negotiated a deal to build the Grand Trunk Pacific Railway (GTP). Smelling trouble, the CNoR began to move quickly in order to protect its lucrative markets in the west and growing markets in the east. That translated into a rapid acceleration of its expansion plans. The CNoR was running in overdrive. It was now a race to the finish line.
The CNoR hastily revised its plans so it could extend to Edmonton by 1905. By 1906 it was providing service from Toronto to James Bay Junction on the Georgian Bay. Other ventures included interurban electric railways, where Mackenzie had considerable expertise. In 1910, after receiving guarantees from the BC government, there was little doubt the CNoR was well on its way to establishing a second transcontinental railway.
The CNoR's luck ran out with the start of World War I. Heavily capitalized, almost entirely by government funding, it turned out much of the investment actually originated in London. Once the war started, the money dried up. Although the railway was near completion, lack of funding led to delays, which translated into declining revenues.
The railway was finally completed coast to coast in 1916. It was a bittersweet moment. By then the company was in serious financial trouble. Although the prairie runs remained profitable revenue, also down during the war, was insufficient to cover both debts and operating expenses.
A 1916 Royal Commission focusing on the financial woes of both the CNoR and GTR recommended nationalization of both railways. The CNoR was about to become the first casualty.
In 1917 the CNoR, which had been funded primarily by government loans and a $25 million loan from the Canadian Bank of Commerce, approached the government looking for yet another loan to cover operating costs. Instead they were turned down flat. The government jumped in, snatched up the railway, and nationalized it.
Although the railway was still a going concern, it needed additional investment to complete its expansion and time to build its business and customer base. In 1918 the CNoR became part of the Canadian National Railways. It disappeared forever in 1923 when it became part of the newly formed Canadian National Railway (CN).
There's little doubt that Mackenzie and Mann were superb railway builders. They began with a single railway - 100 miles long - and within 20 years had a system that stretched over 10,000 miles and covered seven provinces. The inquiry lauded their planning skills and economical methods of construction. Both men were knighted for their efforts in 1911.
Mackenzie and Mann had attempted to do the impossible and might have pulled it off, had it not been for their high level of indebtedness, the unfortunate timing of the war and the government's involvement with the GTR. A major testament to their ability is that today, large portions of the CNoR's network remain in use by CN.