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Grand Trunk Railway Reporting mark: GT

From the mid 1800s to the 1920s, the British-owned Grand Trunk Railway (GTR) reigned supreme in Ontario.

The first tracks were laid in the 1850s with the construction of a line between Montreal and Toronto. By 1859 the GTR stretched from Sarnia in the west to Portland, Maine in the east. Initially revenue was poor and the railway was beset with financial difficulties. A government bailout in 1861 helped it back on its feet and by 1869 (according to some sources) it had grown to become the largest railway in the world.

Photo
Sir Joseph Hickson
GTR Manager, 1874-90
National Archives, R231-2272-X-E

The GTR was owned by a group of British shareholders and managed in England. Canadian politics and the needs of a young country figured little in the railway's planning. When they were approached by Prime Minister Macdonald to build a transcontinental railway to BC, they turned the offer down. In 1881 the government passed legislation that led to the creation of the Canadian Pacific Railway (CPR). The GTR's neglect of the west would return to haunt them many years later.

The GTR had no interest in nation building. Acquisition was name of the game. In 1880 they scored a major coup by gaining control of Chicago. From 1880-90 another 15 railways were added to its Ontario network. However despite its growing importance, the GTR was not profitable. In 1896 the directors decided to shake things up by recruiting Charles Melville Hays, an American from the Wabash Railroad, as general manager.

Under Hays, the GTR enjoyed its best years ever - at least at first. He invested in major infrastructure improvements which lowered costs and improved the bottom line. He built a new head office and laid plans for five luxurious hotels. But Hays desperately wanted to expand into western Canada. He wanted it so badly that any deal - even a bad one - was better than nothing.

Picture of travel brochure
Travel brochure for Algonquin Park, 1917
Source: www.archive.org

Hays' determination finally led him to Ottawa. Despite the GTR's sketchy financial history, and longstanding ambivalence towards the government's priorities, the two parties were able to hammer out a deal. It called for the government to finance the construction of the Grand Trunk Pacific Railway (GTP) which would operate from Winnipeg to Prince Rupert BC. The GTP was to connect with the government-owned National Transcontinental Railway (NTR) in Winnipeg which would be leased back to the GTR. Loan guarantees would be provided by the GTR.

The deal offered little strategic advantage to the GTR. There was no direct connection between the GTP and the GTR's network in Ontario. All ocean bound shipping had to depart from Canadian ports, not the GTR's ports in Maine. There were no safeguards in place to keep competitors away from the GTP's turf. Plus the project ran into severe cost overruns, largely due to Hays' dictum of building to the highest standards possible.

By 1912 the GTR was running out of money. In March of that year, Hays took off to London to meet with the board of directors. Tragically he booked return passage home on the ill-fated Titanic and was never seen alive again.

By 1915 the GTR was in serious financial trouble. Citing costs as a factor, the railway reneged on the deal to lease back the NTR, which infuriated the government to no end. The GTR had just played its final hand.

In 1916 a Royal Commission recommended nationalizing the Canadian Northern Railway (CNoR) and the GTR. The commission took the position that due to their massive debt loads, both railways were rightfully owned by the Canadian people.

The government swooped into action. After taking control of the CNoR, they forced the GTP into receivership. In 1920 the GTR was placed under government management.

The company fought like tigers. After their stock was declared "worthless" by an arbitration board, the shareholders hauled the government into court, demanding compensation. The battle went on until all legal avenues were exhausted. In the end the shareholders walked away with nothing. In 1923 the GTR was absorbed into the Canadian National Railway (CN).

Today the name Grand Trunk Corporation is still owned by CN and remains in use as a holding company for CN's operations in the US.