By the turn of the century the Grand Trunk had become interested in expanding into Western Canada to obtain a share of the traffic now being enjoyed by the Canadian Pacific and Canadian Northern and to participate in the growth and development of the part of the country. The original concept was to build from the most northerly point of the Grand Trunk's Ontario system at Callender, Ontario to the Pacific coast. However, when the Grand Trunk applied for government aid this scheme was drastically altered. The negotiations between the Grand Trunk and the Government were complicated by political as well as commercial factors. In the end, under Dominion Act 3 Ed. VII Cap. 122 of 24 October 1903 The Grand Trunk Pacific Railway Company was incorporated. On the same date under Dominion Cap. 71 provision was made for a National Transcontinental Railway from Moncton, New Brunswick to the Pacific Ocean. The line from Moncton to Winnipeg (referred to as the Eastern Division and also as the National Transcontinental (see RG30-IV) was to be built by the Dominion Government, while the Winnipeg to the Pacific portion (known both as the Western Division and the Grand Trunk Pacific) was to be constructed by the Grand Trunk Pacific at its own cost. Upon completion the Eastern Division was to be leased to the Grand Trunk Pacific which was to operate the entire line. Construction of the Grand Trunk Pacific commenced in 1905. The Pacific terminal selected was on an uninhabited part of the northern British Columbia coast which became Prince Rupert. The first section of the line was completed in 1907 and the entire 1,940.46 miles was opened to traffic on 24 August 1914.
As this was a completely new enterprise with no western business or connections it was necessary to create a number of ancillary companies to support the parent corporation. The National Construction Company (RG30-I-E-12) was created to assist construction financing while The Grand Trunk Pacific Branch Lines Company (RG30-I-E-2), The Grand Trunk Pacific Saskatchewan Railway Company (RG30-I-E-3) and The Pacific Northern and Omineca Railway Company (RG30-I-E-4) were to provide the branch lines so essential to the traffic of the main line.
Trade along the Pacific seaboard was to be the responsibility of The Grand Trunk Pacific Coast Steamship Company (RG30-I-E-5), The Grand Trunk Pacific Dock Company of Seattle (RG30-I-E-6) and The Grand Trunk Pacific Alaska Steamship Company (RG30-I-E-7). Communications and storage facilities were provided by the Grand Trunk Pacific Telegraph Company (RG30-I-E-11) and The Grand Trunk Pacific Terminal Elevator Company (RG30-I-E-10). There were several enterprises at Prince Rupert (RG30-I-E-9) while the Grand Trunk Pacific Development Company (RG30-I-E-8) was responsible for land sales, hotels, docks and similar physical property. One Company, The Saskatchewan Bridge Company (RG30-I-E-13) proved unnecessary. Certain coal mining properties were also acquired by the Grand Trunk Pacific, among them The Bulkley and Telkwa Valley Coal Company (RG30-I-E-14) and the Rail and River Coal Company (RG30-I-E-16).
The railway was constructed to a very high standard. However, it was not the success that had been anticipated. Increasing construction costs and fierce competition from the Canadian Pacific and the Canadian Northern (the latter had also become a transcontinental line) were factors as was the failure of Prince Rupert to become a major port.
The Government built Eastern Division was completed in November 1913. However, as the cost of construction was far greater than had been anticipated and as the Grand Trunk Pacific was already experiencing financial problems the lease was not taken up and the Government was forced to undertake its operation.
With the outbreak of World War I the Grand Trunk Pacific's financial situation deteriorated even further, despite government assistance. On 4 March 1919 the company announced that it would not be able to continue operations after 10 March, if further funds were not forthcoming. The parent Grand Trunk Railroad company was also in difficulties and could not furnish assistance, though it was the Grand Trunk Pacific's guarantor. Therefore, in order to continue the essential railway operations, the Government under Dominion Orders in Council P.C. 517 of 7 March 1919 and P.C. 547 of 13 March 1919 appointed the Minister of Railways and Canals as Receiver to take possession and operate the entire Grand Trunk Pacific System. On 12 June 1920 the operation and management of the system was entrusted to the Board of the Canadian Northern Railway which was operating both the former Canadian Northern and Government owned lines under the title of Canadian National Railways. Thus, the Grand Trunk Pacific effectively became part of Canadian National Railways though its corporate existence continued until 11 June 1956 when it amalgamated with and took the name of the Canadian National Railway Company
