Canadian Northern Railway System : The Canadian Northern Railway Company was to be the largest single component of the Canadian National Railway. Starting as a single Manitoba line of 84 miles in 1896 it had expanded to more than nine thousand miles of track in seven provinces by 1917, comprising both a major railway net over the prairie provinces and a transcontinental line as well as many supporting enterprises.
The history of the Canadian National system is inseparable from that of its creators, William Mackenzie and Donald Mann (Sir William and Sir Donald as of 1 January 1911). They were two railroad contractors who formed the partnership of Mackenzie, Mann and Company (RG30-III-B) in 1896. Starting with the Lake Manitoba Railway and Canal Company (RG30-III-C-1) the partners set out to construct a railway system in the three prairie provinces, with particular emphasis on the hitherto undeveloped area north of the region served by the Canadian Pacific Railway. This system was created by construction under existing charters granted to or obtained by Mackenzie and Mann, by the acquisition of rail lines already constructed from provincial governments of private interests and by construction under new charters. A description of these companies and their records is contained in the Canadian Northern Railways on the prairies sub-series (RG30-III-C). Most were absorbed into what was to become the parent company, The Canadian Northern Railway Company (RG30-III-A) soon after their incorporation or acquisition. The successful creation of this prairie system was due to cooperation by the partners and their railway with both the residents of the area they served and with the various provincial governments that supported them with subsidies, guarantees and land grants. In return, Mackenzie and Mann accepted a measure of provincial control over freight rates.
In addition to the growing prairie network, the Canadian Northern reached the lakehead at Port Arthur in 1902. This was done via various lines in northern Minnesota and Ontario (see RG30-III-D and RG30-III-E). Quite early in the development of their system, Mackenzie and Mann had long term plans for a 'transcontinental line'. However, action on these plans was precipitated by the decision of the management of the Grand Trunk System (RG30-I) to expand westward. In 1902, overtures by the Grand Trunk with an aim to obtaining control of the Canadian Northern were unsuccessful and the Canadian Northern obtained federal government support for expansion to Edmonton the next year. However, the approval of the Grand Trunk Pacific/National Transcontinental scheme in 1903/1904 forced the Canadian Northern, faced with the prospect of competition in the West and the loss of Grand Trunk traffic in the east, to make the decision to build its own eastern and Pacific lines in order to remain competitive.
Expansion eastward through Ontario, when attempts to obtain the Canada Atlantic Railway (RG30-I-I) failed, necessitated the construction between Port Arthur and Ottawa, Sudbury and Toronto and Toronto and Ottawa of entirely new railway lines between 1908 and 1916. While Mackenzie and Mann owned various railway lines in southeastern Ontario and suburban and electric lines in the Toronto/Niagara area, they played little part in the transcontinental expansion. The Ontario lines, old and new, are found in the Canadian Northern systems in Ontario sub-series (RG30-III-E). Little new construction was undertaken in Quebec, the Ontario to Quebec City lines being made up of various existing lines obtained by the Canadian Northern (see RG30-III-F). Lines had also been obtained in Nova Scotia (RG 30-III-H) with a view to possible expansion to the Atlantic, either through new construction or by obtaining the Intercolonial Railway (RG30-IV-A). Westward expansion was to be accomplished by the Canadian Northern Pacific Railway (RG30-III-G) which was to build through the Yellowhead Pass in the Rockies to a terminal in or near Vancouver.
In order to support this system, it was necessary for the Canadian Northern to incorporate companies designed to provide ancillary facilities (RG30-III-I). These included terminal, dock, express, bridge, elevator and telegraph companies. The telegraph companies included those formerly operated in Canada by Western Union. Shipping companies were incorporated to provide water transport both on the Great Lakes and on the Atlantic (RG30-III-J).
One of the most important activities of the company related to land. Large quantities of prairie land was acquired in the way of grants which was to be sold to assist the railway's finances. In addition, the Canadian Northern policy was to encourage and actively promote settlement in order to provide current and future traffic. Besides this type of land dealing, which was carried out both by the Canadian Northern and associated and non-associated companies, there were incorporations designed to administer property acquired by or required for the railway. As a result, there are records of many land companies in Canadian Northern land and real estate companies sub-series (RG30-III-K), some with very tenuous connections with the railway.
The large sums of money required to finance construction of the transcontinental line of the Canadian Northern, as well as the earlier prairie lines, was largely obtained by the sale of various forms of securities many guaranteed by provincial governments or the federal government. In addition, Mackenzie and Mann, who, besides their railway interests were entrepreneurs on a world-wide scale, threw their personal resources behind the project. After 1912, international money markets tightened and it became increasingly difficult to dispose of securities, particularly unguaranteed issues.
In 1913, subsidy assistance was obtained from the federal government at the price of transferring a certain amount of capital stock to the Crown. In April, 1914 further stock was demanded as the price of bond guarantees. In addition, effective 14 July 1914, the capital stock of some thirty subsidiary companies previously held by Mackenzie and Mann, were transferred to the Canadian Northern Railway Company. Thus, the federal government owned 40% of the stock of the consolidated company and had a mortgage on the property.
With the commencement of the First World War, costs rose and financing became still more difficult. The transcontinental line was opened in January 1915, but the company's financial difficulties increased. As with the Grand Trunk the Canadian Northern's appeals for aid inspired the appointment of a Royal Commission to investigate the Canadian railway situation. The majority Drayton-Acworth report recommended that the Government acquire the Canadian Northern system. Under an agreement, signed 1 October 1917, authorized by Dominion Act 7-8 Geo. Cap. 24 of 20 September 1917, the Dominion Government obtained additional shares of Canadian Northern capital stock, amounting to nearly 60% of the total, at a price to be determined by arbitration. A Board of Arbitration sat from 28 January 1917 to 5 May 1917 to determine the value of the share. With the acquisition of these shares by the Government, the railway was nationalized and most of the Board of Directors resigned on 6 September 1918. The new Board, headed by D.B. Hanna, former General Manager, took over operation of all Government owned railways.
