THE GRAND TRUNK RAILWAY COMPANY OF CANADA
THE Session of the Parliament of the Province of Canada held in the sixteenth year of the reign of Her Majesty Queen Victoria was a most momentous one for the Province, for in that Session were passed a number of Acts with regard to the construction of railways, the principal of which were ” An Act to incorporate the Grand Trunk Railway of Canada,” and ” An Act to empower any Railway Company whose Railway forms part of the Main Trunk Line of Railway throughout this province to unite with any other such Company,” and from these two Acts arose the great corporation now known as the Grand Trunk Railway Company of Canada. Acts had been passed in previous Sessions as far back as 1832 authorising the construction of various sections of the line, but it was only under the powers of the Acts above quoted that the whole became welded into one undertaking.
On the 12th April, 1853, an agreement was entered into for the amalgamation of the Grand Trunk Railway Company of Canada East, the Quebec and Richmond Railroad Company, the Grand Junction Railway Company, the Toronto and Guelph Railway Company, and the Grand Trunk Railway Company of Canada, forming a main line through Canada from Sarnia at the foot of Lake Huron, through Toronto, Belleville, Kingston, Brockville, Montreal, and Richmond, to Quebec, with a branch from Richmond, to the United States boundary, a total distance, including the Victoria Bridge across the St. Lawrence at Montreal, of 964 miles. It was absolutely necessary for the purposes of Canada to reach the Atlantic Ocean, and a lease was entered into of the Atlantic and St. Lawrence Railway, from the United States boundary to Portland, Maine, a distance of 148 miles, making a total length of line of 1,112 miles, and forming the longest railway in existence at that time under one control.
As showing the immense importance attached by the Government of the Province of Canada to the construction of this railway, no less than five members of the Government appear in the original prospectus as Directors of the Company, as well as the Speaker of the Legislative Council. The names also appear of Thomas Baring, Esq., M.P., and George Carr Glyn, Esq., M.P., as ” Agents of the Province of Canada and Directors of the Company on behalf of the Canadian Government.”
The prospectus estimated the cost of the construction of the consolidated railways, including the Victoria Bridge, at £9,500,000, of which it was proposed to raise practically one-half, £4,635,200 by debentures, and the remainder, £4,864,800, by share capital, on which it was estimated a dividend of 11 f- per cent. would be earned. It was soon apparent, however, that the sum mentioned was insufficient to carry out the work, and in May, 1855, an Act was passed authorising the Provincial Government to aid the Company by way of loan to the extent of £900,000, and again in July, 1856, a further Act was passed giving aid to the Company to the extent of £2,000,000 again by way of loan on the security of preferential bonds.
With the opening of the Victoria Bridge in 1859 the undertaking was completed from Rivière du Loup to Point Edward (Sarnia), and in the following year the line from Port Huron, opposite Point Edward, to Detroit was leased by the Company, thereby giving access, by way of the Michigan Central Railway, to Chicago and the West.
The result of the opening of the line was not in accordance with the original estimates, and the financial position of the Company soon became seriously involved. A Commission was appointed by the Government, and a Committee by the Share and Bondholders, to inquire into the past working and present position of the under-taking, and the result was ” The Grand Trunk Arrangements Act, 1862.” That Act provided inter alia for the capitalization of all accrued interest on bonds or debentures already in arrear, the conversion of bonds and debentures into various preference stocks, and for the capitalization of the interest and dividend thereon when not earned for ten years from the end of 1862, and for postponing the payment of interest on the Provincial Debentures until after the payment of a dividend of 3 per cent. on the Ordinary Stock for ten years, and 5 per cent. afterwards. It also provided for the payment of the existing indebtedness by the mortgaging of the Postal and Military Revenue to be received from the Government, and the creditors received Postal and Military Bonds for £1,200,000 in payment of 50 per cent. of their claims the balance being paid in Fourth Preference Stock, and power was also given to issue £500,000 of Equipment Mortgage Bonds for the provision and improvement of the line. Another important provision was included in the Act, and that was one transferring the Board to, and the holding of the General Meetings of the Company in London, they having previously been held in Canada; the Shareholders’ Committee being of opinion that the proprietors were not, under the existing circumstances, in a position to protect their interests sufficiently. The Canadian Directors retired and the Board was reconstructed in London under the presidency of Mr., afterwards Sir, Edward W. Watkin, who had been called in by London Directors as expert adviser.
For the ten years after the passing of the Arrangements Act, 1862, the only matters of importance were the leasing by the Company of the Buffalo and Lake Huron Railway, extending from Goderich on Lake Huron, through Stratford to Fort Erie on the Niagara River opposite Buffalo, a distance of 160 miles, and the inception of the project for the construction of the International Bridge across the Niagara river between Fort Erie and Buffalo, which was begun in 1870, and completed in 1873 at a cost of over 2,000,000 dollars.
The earnings of the Company during this period were, from various causes, insufficient to provide the interest on the various preference bonds and stocks of the Company, except to a slight extent in one year, with the result that under the powers conferred by the Act, practically the whole of the interest had to be paid by the issue of stock, and added to the capital of the Company, which has since formed a serious burden on the undertaking.
Not only could the Company earn no interest on its capital, but the road and equipment had also considerably deteriorated.
One of the causes of lack of success of the Company was that the line was originally constructed on a gauge of 5 feet 6 inches, which prevented a free interchange of traffic with other railways, particularly those of the United States, which were constructed on the ordinary gauge of 4 feet 81 inches, and it was felt that in any arrangements which might be made for improving the Company’s position, it was absolutely necessary that the gauge should be changed to conform to that of the other railways. This was a stupendous undertaking, considering the financial position of the Company, involving as it did not only the changing of the gauge of 1,380 miles of railway, but also the provision of new rolling stock of the altered gauge, and the conversion of such of the old stock as was deemed worthy of it, as well as practically relaying the whole of the track with steel rails. The task was, however, boldly undertaken, and it is impossible not to admire the courage and resource of those who at that time had the direction of the Company’s affairs. To carry out the work it was, of course, necessary that further capital should be raised, but before this could be done it was essential that the preference bond and stockholders should abandon their right to the capitalization of their unearned interests. This was agreed to, and an Act was passed in 1873 authorising the issue of £10,000,000 of Ordinary Stock at a ” discount not exceeding eighty-one pounds in the hundred pounds.” The Act also contained provisions abrogating the power to debit interest to capital. The necessary capital was raised and the work carried out in the years 1873 and 1874.
The next important change in the affairs of the Company took place in 1879, when, owing to the action of the United States Companies, it became necessary for the Company to provide an independent access to Chicago, and this was accomplished by acquiring the control of various separate railways in the States of Michigan, Indiana, and Illinois, and uniting them under the name of the Chicago and Grand Trunk Railway, now known as the Grand Trunk Western Railway. To enable the Company to carry out this undertaking, the Company sold to the Dominion Government that portion of their system between Hadlow, near Point Levis, and Chaudiere Junction, and Chaudiere Junction and Riviere du Loup for 1,500,000 dollars, and that line now forms part of the Intercolonial Railway.
On the 12th August, 1882, there took place the amalgamation with the Great Western Railway of Canada, thereby adding over 800 miles of railway to the system in Canada, and, in addition, giving the Company the control of the Detroit Grand Haven and Milwaukee Railway (189 miles) in the State of Michigan. The terms of the amalgamation provided that after the payment of the preference charges of both Companies the remaining profits of the undertaking should be divided in the proportions of 70 per cent. to the holders of the Share Capital of the Grand Trunk Railway Company, and 30 per cent. to the holders of the Share Capital of the Great Western Company, with a guarantee of a minimum of 3 percent. to the holders of the Great Western shares the capital of the two Companies being, of course, kept distinct but in the year 1884 an Act was passed under which the capital of the two Companies was merged, the holders of the Great Western shares receiving in exchange for their 3 per cent. guarantee a stock ranking before the First Preference Stock of the Grand Trunk Company.
In 1883 an arrangement was concluded for leasing the Grand Trunk Georgian Bay and Lake Erie Railway, extending from Port Dover, on Lake Erie, through Simcoe, Woodstock, Stratford, Listowel, and Palmerston, to Wiarton on Georgian Bay, a total length of line of 168 miles.
In the year 1882 an Act of the Dominion Parliament was passed to consolidate the Toronto and Nipissing Railway, the Whitby Port Perry and Lindsay Railway, the Victoria Railway, the Toronto and Ottawa Railway, the Grand Junction Railway, and the Midland Railway of Canada, into one Company, under the name of the Midland Railway of Canada. These lines, with a mileage of about 450 miles, are all in the province of Ontario, north of the main line of the Grand Trunk Railway, and the united lines were leased to that Company on the 1st January, 1884.
On the 24th February, 1888, a further important amalgamation took place when the Northern, and Hamilton and North-Western Railways were incorporated into the system. These railways extended from Port Dover, through Hamilton, to Collingwood, Toronto to Meaford, Colwell to Penetanguishene, and Beeton to Nipissing Junction, with a mileage of 482 miles.
In 1893 fourteen subsidiary companies, with upwards of 900 miles of line, which had been previously worked by the Grand Trunk Company under varied agreements, were amalgamated with the Company, thereby forming the Grand Trunk Railway Company of Canada, practically as it exists to-day.
In addition to the Controlled Lines already referred to, the Company by an agreement dated 1st May, 1899, acquired the control of the Central Vermont Railway, extending from St. John’s, Quebec, to New London, in the State of Connecticut, with a mileage, including branches, of 536 miles, and on the 1st October, 1895, control was acquired of the Canadian Atlantic Railway, extending from Swanton, in the State of Vermont, through Coteau and Ottawa, of Depot Harbour on the Georgian Bay, a total mileage of 463 miles.
The railway was originally constructed as a single-track line, and continued as such, with the exception of a few small sections, until the year 1888, when the increase of traffic rendered it necessary that the main line between Montreal and Toronto should be doubled. The first section, from St. Henri to Dorval was opened September 17th, 1888, and the work was gradually continued until 1893, by which time it had been extended to Port Hope, a distance of 270 miles. The remaining distance between Port Hope and Port Union was completed in the years 1901-2-3—-the distance from Port Union to Toronto having been previously double-tracked. This policy of doubling the track has been continued, the principal portions so doubled being from Toronto to Hamilton, 1890-1892 Hamilton to Suspension Bridge, 1901-3, and between Hamilton and Sarnia, 1903-4-5, and in the years 1901-2-3 the Grand Trunk Western Line from Port Huron in Michigan, to Chicago, was also double tracked. The total of the double-track mileage of the whole system, now in operation, is practically 1,000 miles, including one continuous track from Ste. Rosalie in the province of Quebec, through Montreal, Toronto, Hamilton, Sarnia, to Chicago, which constitutes the longest double-track railway in the world under one management.
The foregoing is a brief history of this first great railway undertaking in Canada from its inception as a line of railway 964 miles in length with an estimated capital required of £8,500,000, to a line of railway, including controlled lines, of 5,230 miles, with a capital of over £92,000,000. As showing the enormous increase in the trade and population of Canada in the interval, it may be stated that the receipts of the Company for the year 1860 the first year after completion of the railway as originally contemplated were L 682,658, whereas the receipts of the year ended 30th June, 1910, amounted to about £10,000,000. The number of passengers carried over the line during the year 1860 amounted to 739,498, compared with approximately 16,500,000 for the year ended 30th June, 1910, the number of tons of freight moved for the two periods being respectively 685,625 tons, and nearly 30,000,000 tons, which shows the vast benefits which must have been derived by the people of the Dominion from this, the earliest projected great railway in the Province of Canada.