Royal Commission to Inquire into Railways and Transportation in Canada (1916-1917) : The Royal Commission to Inquire into Railways and Transportation in Canada was established under Order in Council P.C. 1680, 13 July 1916, under Part I of the Inquiries Act (R.S.C., c.104, 1906) and on the recommendation of the Prime Minister. The Commission was mandated to inquire into: (a) the general problem of transportation in Canada; (b) the status of each of the three transcontinental railway systems, the Canadian Pacific Railway system, the Grand Trunk Railway system (including the Grand Trunk Pacific Railway and the Grand Trunk Railway and their several branches) and the Canadian Northern Railway system, with special reference to the following considerations: (i) the territories served by each system and the service it provides; (ii) physical conditions, equipment and capacity for handling business; (iii) methods of operation; (iv) branch lines, feeders and connections in Canada; (v) connections in the United States; (vi) steamship connections on both oceans; and (vii) capitalization, fixed charges and net earnings with regard to present conditions and probable future development with increase of population; and (c) the reorganization of any of the railway systems, or the acquisition thereof by the State and in the latter case the most effective system of operation whether in connection with the Intercolonial Railway or otherwise. The original commissioners were: Alfred Holland Smith, Chairman, Henry Lumley Drayton and George Paish. Paish resigned, due to ill health, and was replaced by William Mitchell Acworth as Commissioner (see Order in Council PC 2567, 21 October 1916)..
During World War 1 Canadian railways faced severe economic pressures. The rise in the cost of labour and materials, the virtual cessation of immigration, the closing of international money markets, and the technical problems of operation combined to create a very difficult situation. With a well-equipped and coordinated service, and with ample resources to meet any strain that had been thrown upon it by fresh construction in the northern prairies, the Canadian Pacific was able to sustain the increased physical burden of wartime transportation. For the Canadian Northern Railway and the Grand Trunk Railway, already severely crippled financially, the war imposed an insupportable strain. The war threw upon their incomplete transcontinental services an increase in traffic which they were unable to handle. The resulting congestion created in its turn a necessity for immediate and heavy expenditure on connecting lines, terminals and equipment, for which neither of them was able to find the funds to cope. In these circumstances, the two incomplete systems, already supported by government guarantees, found themselves entirely dependent upon the Treasury. The Grand Trunk declared that it was in danger of financial ruin in the West, and that the only alternative to further assistance was to go into receivership. Apart from guarantees, the Government of Canada had advanced 4 million to a subsidiary of Grand Trunk and had acquired a portion of the stock of the Canadian Northern in consideration of subsidies and guarantees. The Minister of Finance, Thomas White, expressed concern about the financial situation of the railways and thought it was time to review the position of the government in regard to them. In the meantime temporary financial assistance was granted by the government to enable the two railway companies to continue their operations. This was extremely important because the government wanted to prevent a serious disruption of transportation services, especially in time of war, and was fearful of the effect upon public credit if the railways were allowed to go into bankruptcy. In order to establish a policy with regard to the financially troubled railways, the federal government appointed a royal commission to investigate railways and transportation in Canada. (See Report of the Royal Commission to Inquire into Railways and Transportation in Canada, (Ottawa, King's Printer, 1932), p. 82).
Hearings on the Canadian Northern Railway Company were held in Toronto on 26-27 January 1917 and hearings on the Grand Trunk Pacific Railway Companies were held in Montreal on 23-24 February 1917. The commissioners also travelled throughout Canada, in September and October 1916, inspecting railways and meeting with various citizens about problems concerning transportation in Canada. RG33-12 General Inventory