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Northern Railway of Canada Reporting mark: NRC
In the early 1850s railway fever was in the air. It was widely recognized that Canada lagged far behind the US when it came to railway building and also that the country's economic health was dependent on the rapid construction of railways. Most railway plans never developed beyond dreams and fantasies. A few actually made it to the paper stage where they languished due to lack of funding. The Northern Railway of Canada (Northern) was one of the few success stories. It began operating in 1853 with a line from Toronto to present-day Aurora. Over the next three decades it was gradually extended northwards where it played in important role in opening up the north to industrial development.
The Northern got off to a slow start. It was first proposed back in the 1830s with a series of discussions over a portage railway, but put on the backburner during the rebellion of 1837. In 1845 the project was revived but once again got bogged down. Then it resurfaced in 1847 after the community of Barrie forwarded a resolution to the Government of Canada asking for a subvention of two thirds of the estimated costs in exchange for a lien on its earnings.
The Barrie resolution succeeded and the Northern came to life in 1848 with the announcement that Frederick Chase Capreol was going to build a line from Toronto to an unknown location, which turned out to be present-day Collingwood. First known as the Toronto, Simcoe and Huron Railroad Union Company, the company was chartered in 1849. An early proposal to raise funds using a lottery was kiboshed by the city of Toronto, leaving Capreol with the unenviable task of finding money to build the first 75 miles (121 km) by more conventional means.
In 1850 the company was re-chartered as the Ontario, Simcoe and Huron Union Railroad. By September 1851 Capreol had raised enough money to qualify for government funding. A ceremonial sod-turning event was held on October 15th, the day construction was scheduled to begin. Conspicuously absent was Frederick Capreol who had been fired by the board two days earlier. Personal differences, not performance, were believed to be at the root of his dismissal.
Capreol was later replaced by Frederic Cumberland, an engineer, architect and future politician. Cumberland adopted a no-nonsense approach making a thorough evaluation of traffic patterns along Yonge Street from Toronto to Holland Landing. It did not escape his notice that there were 72 taverns over a 42-mile (67.5-km) stretch. The opening of the line to Aurora in May 1853 was followed by an 11-mile (17-km) extension to Bradford in June and a further 22-mile (35.4-km) extension to Allandale in October. The extension to the new community of Collingwood (largely bush at the time) was completed in 1855.
Nonetheless the picture wasn't as pretty as it seemed. The community of Barrie, which actually kick-started the railway, somehow got left out in the cold. The "Barrie switch" as it became known, rerouted the railway one mile (1.6 km) south-east to Allandale, which infuriated the townspeople to no end. Barrie battled the railway through the courts and ended up with a cash settlement and construction of a spur in 1859.
Cumberland in the meantime had resigned to return to his architectural practice. He was replaced by J.C. Morrison, a politician, Alfred Brunel as Superintendent and Sanford Fleming as Chief Engineer. Despite their eminent reputations, none of these individuals had any operational experience in running a railway. The results were a costly series of blunders that almost finished the Northern.
Inconsistent and arbitrary rates for freight were at the root of much of the company's financial woes. These included poor deals on freight rates, poor quality contracts and special deals for directors. Lake service and shipping, which had never made a profit, was bleeding cash. A change of name to the Northern Railway of Canada didn't help. In 1859 the company was taken over by the government, also the railway's major creditor. The government authorized a £250,000 bond sale to provide short term assistance. Then they obtained a lien of £475,000 which hung like a noose around the company's neck for many years to come.
In desperation the company associates called on Cumberland, who was responsible for the railway's earlier success. Upon his return, he quickly switched the focus of the railway to profitable runs only. Any venture or contract that was unprofitable was dumped as quickly as possible. Expansion plans were out of the question. By 1860 the financial picture was beginning to look brighter. The support of John Beverley Robinson, the highly respected Mayor of Toronto, offered additional assurance to the bondholders. By 1863, the Northern Railway was considered one of the best-managed railways in Canada.
The Northern was fortunate in not having to contend with competition during its early days. To its detriment, it gained a reputation for being unresponsive to local needs. In 1864 the Northern was approached with a request from Grey County to build a railway. Cumberland refused unless the county was willing to put up the money for construction. He was thoroughly chastised by both the newspapers and the federal politicians for his intransigence. Cumberland finally met his match in 1869 with the construction of the Toronto, Grey and Bruce Railway.
Now under considerable pressure, the Northern finally took the plunge with the construction of two new railways, one in Grey and the other in Simcoe Counties. The 22-mile (35.4-km) North Grey Railway, which ran between Collingwood and Meaford, opened in 1872. Half the costs were covered by Grey County. The original plans included an extension to Owen Sound, later scrapped.
The Northern was also feeling the heat from groups in Simcoe County who were less than pleased with the railway's slow pace of progress. To make amends, the Northern began building the Toronto, Simcoe and Muskoka Junction Railway which ran north-east to Orillia and onward. The Barrie - Orillia section opened in 1872. It was followed by a 12-mile (19-km) section to Washago in 1873 and a further 2-mile extension (3.2-km) to Severn River in 1874. The final nine miles (14.4 km) to Gravenhurst were completed in August 1875 ending with a 2-mile (3.2 km) extension to Muskoka Wharf in November. These companies were all amalgamated under Northern Extension Railways Company, which was absorbed by the Northern Railway in 1875.
The company's reluctance to expand may have been partly due to difficulties raising cash, which stemmed from the restrictive terms of the government lien. Both the management and shareholders decided to approach the government to arrange a settlement. They were hoping for a waiver of the lien, forgiveness of arrears of interest in exchange for raising enough money to pay off the company's floating debt.
Despite difficult economic times, partisan-political differences, and a general aversion to providing money for railways, Prime Minister Alexander Mackenzie came through in 1875 with a generous settlement. The government agreed to accept 22 cents on the dollar for the Northern's debt and reconstitute the company's capital with sufficient ability to raise cash as needed. The shareholders were thrilled. With the albatross finally gone, many believed the company should avoid further dealings with the government in the future. It was a sentiment that proved to be prophetic.
The Northern's refusal to expand had already taken a severe toll on its reputation. Communities were more than willing to back any venture that brought more rail traffic to their area. This opened the doors to a group from Hamilton who proposed building a line from Hamilton to North Bay. In 1876 the first section of the Hamilton and North Western Railway (H&NW) opened from Hamilton to Georgetown. Located west of the Northern, the H&NW had two branches. An eastern branch to Allandale was completed in 1877, followed by a western branch to Collingwood in 1879. The Northern countered with the North Simcoe Railway, which ran from Barrie north to Penetanguishene. They also took over operation of a lumbering spur, the Flos Tramway.
Although both companies planned to expand north, they came to the realization that it would be suicide for them to expand separately. Neither company had sufficient capital or revenue to undertake such a venture. Rather than killing each other as competitors, in 1879 the Northern and H&NW decided to pool their resources and form a joint management agreement. What followed was the creation of the Northern and North Western Railway with plans to expand northward and connect with the Canadian Pacific Railway, the new transcontinental then under construction.
The next step was the creation of the Northern and North Western and Sault Ste. Marie Railway which was supposed to build to Callander and then swing west to Sault Ste. Marie. Sponsors included the usual figures from the period such as Cumberland, D'Arcy Boulton from Cobourg, lumberman E.B. Osler, as well as 15 politicians one of whom was D'Alton McCarthy from Barrie. In 1883 it was renamed the Northern Pacific Junction Railway. In 1884 J.M. Hendrie of Hamilton was contracted to build 111 miles of railway at a price not exceeding $20,000 per mile, the railway's maximum borrowing capacity. The line opened to Callander and North Bay in 1886.
The marriage between the Northern and the H&NW was never particularly happy. The two railways had vastly different corporate cultures which led to mistrust and mutual suspicion. It's also been suggested that the Northern officials behaved in a domineering and possessive manner. In addition to their corporate differences, the Northern also had to undertake a costly conversion from broad to standard gauge in order to maintain competitiveness. The expansion over the difficult northern terrain had been expensive, adding to the company's financial woes.
The presence of McCarthy, who had a lot of clout with Prime Minister Macdonald, left a sour taste in everyone's mouth from the get-go. The railway was receiving subsidies of $12,000 per mile. In 1886 they agreed to reduce their authority to issue bonds by the amount of the subsidy, which allowed them a maximum of $8,000 per mile. The bonds, which had been turned over to the contractors as part payment, had depreciated and the contractors were refusing to turn the railway over to the owners. McCarthy then initiated a measure allowing the company to sell preferential debenture stock up to $20,000 a mile. This permitted the company to maximize its level of indebtedness to $32,000 per mile, which was unacceptably high.
A political scandal followed. Opposition Leader William Mulock focused on the scale of the proposition. It made no sense for the government to underwrite a private company to the tune of $3,520,000 when its principals only owned $28,300 in capital stock. Macdonald was said to be furious but supported it out of loyalty to his lieutenant. The bill passed leaving the railway in a precarious financial position and vulnerable for takeover.
In the midst of all this drama, Joseph Hickson from the Grand Trunk Railway (GTR), quietly watched and waited. Over the years Hickson had been buying up small blocks of shares from both railways, often at discounted prices. Whenever possible he took the opportunity to nurture the enmity between the Northern and H&NW. By the fall of 1887, the wily master of the takeover had acquired a sufficient number of proxies to swoop in and take control.
On January 24, 1888, the Northern & North Western Railways officially became part of the GTR. Following the bankruptcy of the GTR in 1923, it became part of Canadian National Railways (CN).
More than 150 years after it was built, large portions of the Northern continue to play an integral role in Ontario's transportation network. The section north of Barrie to North Bay remains in use by CN. The section from Barrie to Toronto was sold to Metrolinx, a provincial agency responsible for public transportation in the Greater Toronto Area. The "Barrie Line," as it's now known, is a busy commuter line operated by GO Transit. There are currently 10 stations on the line, which includes four original stations built by the GTR in the early 1900s. As of 2012, GO was transporting about 7,500 passengers per day. Since that number is expected to grow, the government is currently conducting studies on expansion and electrification of the entire system.