Grand Trunk Railway

The Grand Trunk Railway was a Canadian railway system based primarily in Ontario and Quebec with operations over much of Canada and neighboring parts of the United States. Its early growth was stimulated by the enormous growth of U.S. trade after 1854 caused by Canadian-American reciprocity, which meant free trade between Canada and the U.S.

Chartered in 1852, it quickly purchased five local railways to link Toronto with Sarnia on the west and Montreal on the east. It also acquired a 999-year lease on the Atlantic & St. Lawrence Railroad that provided access to the ice-free port at Portland, Maine. As these arrangements were being put together, the Grand Trunk published a prospectus in London. According to the prospectus, the amalgamated railway would be the most comprehensive system of railway in the world, comprising 1,112 miles from Portland to Lake Huron, and would be built to as high a standard as any in England.

Construction on the line between Montreal and Toronto started in 1853. By 1855, the section from Montreal to Brockville was complete. In 1856, the sections of the line from Brockville to Toronto and from Toronto to Stratford were complete. By 1859 the line had been extended to Sarnia.

London financiers funded the Grand Trunk's purchase or lease of 50 other railways, making it by 1869 the world's longest railroad. By the 1880s, it reached most major cities in Quebec, crossed into Maine to provide a links to the ice-free American port of Portland, and stretched into the fast-growing Detroit-Chicago corridor inside the U.S. Apart from a 5-day strike in 1876, it avoided the labor violence that characterized most railways in the late 19th century.

Even though the Grand Trunk was a private company headquartered in England, it received heavy Canadian government subsidies. Nonetheless it was never profitable because of competition from shipping and American railways. In 1880, for instance, 40% of the Grand Trunk traffic was bridge traffic across the southern tier of Ontario between Port Huron and Buffalo and not bound for any Canadian destination. Inflated construction costs, overestimated revenues, and an inadequate initial capitalization threatened bankruptcy for the Grand Trunk. Sir Joseph Hickson was a key executive from 1874 to 1890 based in Montreal who kept it afloat financially by allying it with the Conservative Party. Carlos and Lewis (1995) showed that the Grand Trunk managed to survive because its British investors accurately assessed the corporation's value and prospects, which included the likelihood that the Canadian government would bail out the railway should it ever default on its bonds. The government had guaranteed a very large loan and had enacted legislation authorizing debt restructuring. Such arrangements allowed the company to float new bond issues to replace existing debt and to issue securities in lieu of interest.

system map 1891

American executive Charles Melville Hays (1856–1912) joined the Grand Trunk in 1895 as general manager (and in 1909, president, based in Montreal). Hays was the architect of the great expansion during a colorful and free-spending era. He upgraded the tracks, bridges, shops, and rolling stock, but was best known for building huge grain elevators and elaborate tourist hotels such as the Chateau Laurier in Ottawa. Hays blundered in 1903 by building a subsidiary the Grand Trunk Pacific Railway Company some 4800 km long; it reached Prince Rupert, British Columbia in 1914. The government built and the Grand Trunk operated the National Transcontinental to link the main Grand Trunk with its Pacific subsidiary. The very expensive subsidiary was far north of major population centers and had too little traffic. Nearing bankruptcy in 1919, the entire system was nationalized. In 1923 the government merged the Grand Trunk, the Grand Trunk Pacific, the Canadian Northern, and the National Transcontinental lines into the new Canadian National Railways.

The Grand Trunk name survived on Grand Trunk's former United States lines. In 1928, Canadian National Railways consolidated its lines in Michigan, Indiana, and Illinois into the Grand Trunk Western Railroad, a separate company owned by the CNR. The Portland line also kept the Grand Trunk name until acquired by a shortline operator in 1989.

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