One must be aware of the time period when using the name Canadian Pacific Railway because there was the Canadian
Pacific Railway and then there is the Canadian Pacific Railway. The name was originally generic, meaning a railway
to be constructed across Canada to the Pacific ocean. Possibly first appearing around the time of Sandford Fleming and
the Canadian Pacific Survey. The Canadian Pacific Railway we know today is the Canadian Pacific Railway Limited, a
company with stock sold on the Toronto and New York Stock Exchanges. It was incorporated in 16 Feb 1881 to construct a
standard gauge railway from Montreal to Port Moody on the Pacific Coast.
A Canadian railway to the Pacific Coast was formed to physically unite Canada from coast to coast. Canada's
confederation on 1 July 1867, united four eastern British North America provinces into a new country. Nova Scotia and New
Brunswick were promised the Intercolonial Railway to link them with Central Canada or Quebec and Ontario. Manitoba, around
the Prairie Red River settlement, joined confederation in 1870. And British Columbia, on the west coast, was enticed into
confederation in 1871. But only with the promise of a transcontinental railway being built within 10 years to physically
link it with eastern Canada. This was the reason for the construction of a railway to the Pacific Coast.
Construction of a railway got off to a rough start. John A. Macdonald's Conservative government needed a private
company to build the railway. So it set aside $30 million and 50 million acres to get the job done through a private
syndicate. But the private financiers who set out to build the railway and capture the government subsidy crossed the line
of political impropriety. The federal Liberals found that Hugh Allan, an industrialist and shipping magnate, and already
the richest man in Canada, had subscribed some $360,000 to various Conservatives during the 1872 election campaign,
including substantial sums to Macdonald's Quebec lieutenant, George Etienne Cartier. Allan wanted to secure the railway
building contract, become president of the transcontinental railway, and get a virtual lock on a transportation monopoly
over Canada's lands and seas. The resulting scandal, called the Pacific Scandal, toppled the Conservative government
making it resign in 1873 and call an election. The federal Liberals under Alexander Mackenzie won the new election. The
Liberals were far less committed to building the transcontinental railway. The Liberal government thought it could be done
as a public works program. By the end of their tenure in 1878 they had only made a few transcontinental railway
construction starts in Eastern and Western Ontario and in Manitoba.
Judge Van Norman presided at a ground breaking ceremony near Fort William (Thunder Bay), 1 Jun 1875, signaling the
beginning of construction of a Pacific railway. Joseph Whitehead got the contract to build railway lines out of Winnipeg.
His six flat cars, a conductor's van, and a locomotive, which he named Countess of Dufferin, after the Governor-General's
wife, was the first train to arrive on the Canadian Prairies. Although the railway equipment made the trip down the Red
River by steamer and barge, 9 Oct 1877, marked the arrival of the railway on the Canadian Prairies.
Meanwhile, the province of British Columbia saw the 10-year deadline fast approaching. And political leaders rightly
concluded the transcontinental railway would not be built within the promised time frame. So the province threatened to
secede. With the Conservatives back in power, Prime Minister John A. Macdonald had to do something tangible to show
British Columbian's a railway was coming to their province. So on 14 May 1880 the government contracted with Andrew
Onderdonk who began building the railway up river from the Pacific Coast at Yale on the Fraser River. Onderdonk, an
American, favored the U.S. method of railway building, get as much done as cheaply as possible. Quality and safety were
secondary to profit and progress. So Onderdonk emulated the American construction method of employing Chinese laborers.
Chinese entrepreneurs set up manpower agencies in British Columbia and contracted their fellow countrymen as railway
construction workers. The section of railway along the steep and treacherous walls of the Fraser Valley was especially
difficult to build. The entire 615 kilometres (382 miles) between Port Moody and Eagle Pass took 15,000 men five years to
build. Nine thousand were of Chinese origin. Not only was the geography treacherous, but the construction methods were
dangerous too. To keep costs down, instead of using dynamite, construction crews used nitro-glycerin, a less expensive but
less stable explosive, to do the blasting. Many lost their lives. Some reports greatly exaggerate the death toll.
Clear-cut, concise casualty reports are virtually non-existent. But eyewitness and newspaper accounts paint a horrific
picture. Some 700 to 800 men lost their lives building this government-contracted section of the transcontinental railway.
Most were Chinese. By any reckoning this amounts to five percent of the total labor force or nine percent of the Asian
railway builders, a catastrophic number of humans. With construction underway in British Columbia and on the Prairies, the
Prime Minister was busy trying to get a private syndicate interested in taking on and completing the task. Finally, a
group of Canadians of Scottish origin formed a viable syndicate to build the Canadian Pacific Railway. The syndicate was a
reputable one with solid financial backing in Canada, the U.S., and overseas. The syndicate had a solid reputation, good
credentials, and a proven track record in railway rebuilding and rehabilitating in the United States. Ironically the
syndicate's most significant yet silent partner, Donald A. Smith, was instrumental in toppling the Conservative government
in the Pacific Scandal's 1872 non-confidence vote. George Stephen headed the syndicate with much trepidation. "My
friends and my enemies agree in affecting to think this will be the ruin of us all". And it nearly was.
Canadian Pacific Railway Incorporated
The Canadian Pacific Railway Company (CPR) was incorporated 16 Feb 1881. George Stephen became its first president. The
railway company received only half the $100 million worth of subsidies set aside earlier to build the transcontinental,
25 million dollars and 25 million acres. The 1881 construction season was abysmal. CPR chief engineer T.L. Rosser and
general superintendent A.B. Stickney seemed more interested in land speculation than railway construction. Inside
information made it easy for them to turn a tidy profit on land, since they knew exactly where the next station along the
railway line would end up. Both were fired at the end of the season after building only 211 kilometres (131 miles) of
track. But CPR did grow considerably in size that year with its amalgamation, 9 Jun 1881, with the Canada Central Railway.
This 409 kilometre (254 mile) addition gave the CPR a presence in Eastern Ontario and access to the nation's capital,
Ottawa. Canada Central's president was also CPR's vice-president, Duncan McIntyre. But the railway would not be built
without a man of action. That man was William Cornelius Van Horne.
Syndicate member and director James Jerome Hill suggested Van Horne as the man who could get the job done. He was a
rising star in the U.S. To lure him away from a promising job on the Milwaukee Road, CPR offered him $15,000 a year to
become CPR general manager and oversee construction of the transcontinental railway over the Prairies and through the
mountains. This was such a huge salary that two-thirds were hidden as "construction costs". Van Horne boasted he
would build 800 kilometres (500 miles) of main line railway in his first year, 1882. Floods delayed the start of the
construction season. But at season's end 673 kilometres (418 miles) of main line and 177 kilometres (110 miles) of branch
line track-laying made CPR much more of a reality.
In the meantime CPR sought permission to change the articles of incorporation and go through a more southerly pass.
Sandford Fleming's carefully planned Yellowhead Pass route got the axe and Major A.B. Rogers finished surveying the
Kicking Horse Pass. With the promise of a $5,000 bonus, he was valiantly looking for a way through the next mountain range
west of the Rockies, the Selkirks. In 1882, Rogers found the eastern approach to a pass that would bear his name, Rogers
Pass. Walter Moberly's assistant Albert Perry discovered the western approach to the pass when Moberly discovered the pass
through the third mountain range, the Gold Range, that impedes the potential passage of a transcontinental railway through
to the Pacific Coast. Moberly called this pass Eagle Pass. He was acknowledging the eagles that took flight and
auspiciously showed him a possible way through these mountains. Moberly discovered his pass in 1865. Rogers got his $5,000
bonus in 1882, but did not cash the cheque. Instead he framed it and hung it on his wall. Van Horne had to entice him with
a gold watch before he would cash the cheque and balance CPR's ledgers.
Cash flow was a problem for CPR in the early days. Construction cost a lot and there was little traffic in return. Van
Horne called on a purchasing and financial juggler from Milwaukee to help him get the job done. Thomas G. Shaughnessy,
hired on in 1882 as general purchasing agent and would follow Van Horne to the top spot in the company, presiding over
what is arguably CPR's biggest growth period, investing $600 million in upgrading and expanding the company before World
War I. But before growing into the "World's Greatest Travel System" as early 20th century CPR slogans and logos
would boast, the company went through some difficult times.
A section east of Calgary nearly kicked off a conflict between CPR and the Blackfoot natives when track-laying in 1883
crossed the northern portion of their reserve at Gleichen. But Chief Crowfoot and local missionary Father Albert Lacombe
smoothed things over with news that the federal government would add land to the reserve to compensate for the land the
Before east met west and Donald A. Smith drove the Last Spike at Craigellachie, B.C., 7 Nov 1885, things seemed the
bleakest for the railway. The north shore of Lake Superior, the Rockies, and the Selkirks were the most difficult to build
sections of the privately funded part of the railway. Some small sections cost almost half a million dollars a mile. And
it almost ruined the railway. At the beginning of 1885 the railway teetered on the brink of bankruptcy. Dividends on
preferred shares were already suspended. And the railway couldn't pay its creditors, buy new supplies, or even meet its
payroll. Two men emerged to save the day, an exiled Metis and a British lord.
Louis Riel came out of exile in the United States after the first Northwest Rebellion to lead the second insurrection
in 1885. His actions inadvertently demonstrated the national security benefit of the CPR. Militia and troops from the east
mobilized and traveled west, all within Canada over a nearly completed CPR main line, to quell the 1885 rebellion in a
matter of weeks. The 1869 rebellion took months and a circuitous trip through the U.S. to do the same. The federal
government then agreed to secure CPR's outstanding loans.
Lord Revelstoke, managing director of Baring Brothers, a renowned financial house in London, agreed to carry a CPR bond
issue at 92.5 cents on the dollar.
First Transcontinental Train
Within three years of the first transcontinental train leaving Montreal and Toronto for Port Moody, 28 Jun 1886, all
was right with the world again. And CPR began paying dividends again. Van Horne, with Shaughnessy's help, got the railway
built, extended it from coast to coast in 1889, right through Maine to Saint John, N.B., and expanded the CPR into more
than just a railway. CPR got involved in land settlement and land sales as early as September 1881. CPR erected telegraph
lines right along side the main transcontinental line, transmitting its first commercial telegram in 1882. 1882 also
marked the year it got into express shipments, acquiring the Dominion Express Company. CPR started building some of its
own steam locomotives as early as 1883. And it would later build its own passenger cars, making it second only on the
continent to the Pullman Company of Chicago, Illinois. CPR had steamships on the Great Lakes in 1883, chartered ships on
the Pacific Ocean in 1886, launching its own Pacific ships in 1891. CPR got into paddle wheelers in British Columbia's
interior in 1893, the B.C. coast in 1901, and the Atlantic Ocean in 1903. It got into the hotel and tourist trade as early
as 1886, after Van Horne suggested setting up a national park system in the Canadian Rockies. CPR even discovered natural
gas on the Prairies, although quite by accident. In 1886, while digging an artesian well to get water for its steam
locomotives, CPR crews stumbled across natural gas in what is now Alderson, Alberta. The railway would later use the
natural gas to heat and power the station and ancillary buildings.
Along the way CPR got into numerous other ventures including abattoirs, animal husbandry, bus transportation, china
and crockery, containers and pallets, courier service, forestry, foundries, immigration and colonization, insurance,
irrigation, manufacturing, milling and foodstuff, mines and minerals, newsreels, oil, pulp and paper, radio broadcasts,
stockyards, supply farms, trucking, waste management, and even bottling spring water. In 1942 CPR even took to the skies,
amalgamating 10 bush plane companies into Canadian Pacific Airlines.
Edward W. Beatty
Edward W. Beatty presided over a difficult period in CPR's history competing head-to-head with the newly formed
Canadian National Railways (CNR). CNR's formation between 1917 and 1923 amalgamated Canada's overextended and bankrupt
rail infrastructure into one national railway. CNR's principal component railways, Grand Trunk, Grand Trunk Pacific,
Canadian Northern, National Transcontinental, and the Intercolonial. And when the Great Depression arrived matters
worsened. And with the outbreak of World War II, Beatty put the entire Canadian Pacific network at the disposal of the war
effort. On land CPR moved 307 million tons of freight and 86 million passengers, including 150,000 soldiers, nearly
130,000 army and air force re-patriots, and thousands of sailors. At sea 22 CPR ships went to war with 12 of them being
sunk. In the air CPR pioneered the "Atlantic Bridge", the transatlantic ferrying of bombers to Britain. It
opened Canada's strategic far north and set up pilot training schools. By 1945, three years after Beatty had passed on,
some 33,127 Canadian Pacific employees had served in the two world wars alone. Sadly, 1,774 sacrificed their lives.
In the 1950s CPR chief Norris R. Crump repatriated the company getting it largely in the hands of Canadian
stockholders, presided over complete dieselization of the company's fleet of locomotives, and managed the a huge expansion
into non-transportation sectors, setting up Canadian Pacific Investments in 1962.
CPR was first in North America to offer piggyback service with its 1 Dec 1952, inaugural run between Montreal and
Toronto. This beat out CNR by a year and Pennsylvania Railroad by two. CPR was the first railway in North America to
pioneer the use of AC-traction locomotives on 7 Nov 1984.
By 1986 Canadian Pacific was Canada's second largest company with $15 billion in revenue and ranking fourth in assets
with $17.7 billion and nearly 100,000 employees. But under the guidance of its chairman and C.E.O. William Stinson, a
fourth-generation CPR railroader, the company got back to basics. The huge conglomerate started divesting itself of its
non-core companies, a move continued by Stinson's successor, David O'Brien.
Paring down to its core activities, CPR nevertheless expanded its rail network in 1990, taking full control of the Soo
Line in the U.S. Midwest, a company it had a controlling interest in since the 1890s. The Soo Line had already absorbed
the Milwaukee Road in 1985. Three years before, in 1982, the Soo Line bought the Minneapolis Northfield & Southern
(MNS). MNS's claim to fame: in 1913 it was the first railway in the world to operate its freight and passenger
exclusively with internal-combustion power. And in 1991 CPR bought the bankrupt Delaware & Hudson Railway (D&H)
giving it access to ports in the U.S. Northeast, maintaining its true transcontinental status. D&H boasted a long and
proud history of its own, including being the first to operate a steam locomotive in North America on 8 Aug 1829.
On 3 Oct 2001, Canadian Pacific spun out into five separate companies, Canadian Pacific Railway, CP Ships, Fairmont
Hotels, Fording Coal, and PanCanadian Energy. PanCanadian has since merged with Alberta Energy Corporation to form the
Jonathan B. Hanna - Corporate Historian Canadian Pacific Railway.
On 30 Sep 2008 Canadian Pacific's purchase of the Dakota Minnesota & Eastern Railroad (DM&E) and the Iowa
Chicago & Eastern Railroad (IC&E) was approved. With this purchase CP received a strategic end-to-end addition to
its rail system and a more solid presence in the US Midwest than ever before. "The DM&E is a high-quality
growing regional railroad, that complements our existing franchise", said Fred Green, CPR's then president and
chief executive officer. "This investment also presents us with the opportunity for future growth through further
expansion of our network".
The addition of the DM&E and IC&E extends the reach of CP's network, adding new customers and expanding the
service available to customers on both sides of the border. The DM&E system is the largest regional railroad in the US
and the only Class II that connects and interchanges traffic with all seven Class I railroads, connecting with CP at
Minneapolis, Winona, and Chicago.
In late 2011 William Ackman, the founder of New York-based Pershing Square Capital Management, who invests in companies
he deems undervalued and seeks changes to improve shareholder returns disclosed his stake in Canadian Pacific and launched
a proxy battle to shake up the management of the under performing railway. The resulting unprecedented battle for a
Canadian company ended 17 May 2012 with Ackman winning nearly 90 percent of the boardroom proxy vote. Consequently Fred
Green, Canadian Pacific President and Chief Executive Officer, departed after 34 years of service while six directors
declared their intention not to stand for re-election.
On 29 Jun 2012 Hunter Harrison was appointed as President and CEO of Canadian Pacific Railway.
With his past experience at Illinois Central and Canadian National his intent was to install his brand of
"precision railroading" whereby he focused on running shipments and carloads on fixed timetables to ensure
He revamped intermodal and merchandise train service resulting in faster transit times for customers, closed
hump-switching yards in Toronto, Winnipeg, Calgary, and Chicago producing significant cost savings and more efficient
operating practices, closed intermodal terminals in Milwaukee, Obico (Toronto), and Schiller Park (Chicago), reducing
footprint and operating expenses while also facilitating efficient operating practices and reduced end-to-end transit
times, improved train service and network velocity resulting in the need for 195 fewer locomotives and 3,200 fewer leased
rail cars, year-to-date lease returned, and declared surplus, 460 locomotives, instigated a new longer sidings program to
improve asset utilization by increasing train length and velocity, offered the 660-mile portion of the former Dakota
Minnesota & Eastern (DM&E), west of Tracy, Minnesota, for sale, relocated CPR's downtown Calgary headquarters to
Ogden Yard in a purpose built structure, and reduced employee strength by about 5,500 mostly through attrition.
In October 2014 Harrison instigated a merger proposal with CSX Corporation to create a railway stretching from
Vancouver to South Florida. When news that talks had broken down with CSX that fueled speculation that Norfolk Southern
Corporation, another major eastern railroad, would be next, which it was but by April 2016 the bid to buy Norfolk Southern
In the fall of 2016 Ackman started selling his CP Shares Worth $1.9 Billion then announced his resignation from the
board in September.
With Kieth Creel as second in command, and prepared to takeover the Canadian Pacific CEO position, Hunter Harrison
suddenly announced his departure would be the end of January 2017 to pursue the top job at Florida-based CSX railroad.
Mr. Harrison's style, at its simplest, meant running fewer, longer, and faster trains on a schedule, get rid of
unprofitable customers, slash the head count, rip out unneeded track switches and sidings, and make the assets sweat. He
mothballed hundreds of locomotives and thousands of rail cars, cut the amount of time trains spent in the yards by 19
percent and improved network speed by 40 percent, according to CP documents. The operating ratio was improved to 58
percent from an industry worst of 83 percent. About 5,500 jobs were lost, most through attrition. His reputation as a
cost-cutter had worked for him, and against him.
Harrison sold 178,617 CP shares owned by he and his wife for a total $35.3 million, according to a filing with the U.S.
Securities and Exchange Commission. Meanwhile, Kieth Creel stepped into the CEO job on 31 Jan 2017.
3 May 2017
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