The National Dream• Macdonald had a dream of

creating a British North American Nation that would rival that of the United States. The only way of realizing this dream was by building a transportation and communication link that would join all the parts.

• British Columbia’s entrance into Confederation in 1871 was in large part due to the promise of a transcontinental railroad. This railroad had to be quickly to halt American expansionism and risk of assimilation of Canada by the US.

• Macdonald had to find backers (pg. 183) for the project and people who would underwrite (pg. 183) the project in return for financial benefits from the government once the railway had been built.

• Many prominent businessmen saw Canada as a natural market for American goods. One such prominent industrialist (pg. 183) was Jay Cooke.

• The only major industrialist in Canada who had enough money to finance a railway was Sir Hugh Allan, who made his fortune in shipping and manufacturing, and in railway building in Eastern Canada. Allan decided that it made economic sense to build the railway.

• He created the CPR, which seemed to be Canadian but was largely controlled by Jay Cooke’s Northern Pacific Railway. Allan and his American backers didn’t want to build a transcontinental railway; rather they hoped to build a branch line to the Northern Pacific.

• In 1872, Macdonald called the first general election since Confederation. His Conservatives managed to stay in power, but they lost many seats.

• The Conservatives didn’t have enough money to woo voters.

• Macdonald appealed to George Étienne Cartier, his associate in Quebec, to get Hugh Allan to finance the election in return for a guaranteed railway contract.

• Cartier wrote two memos (p. 184), one promising the CPR contract to Allan, the other listing the contributions Allan was to make to the Conservative Party. (Primary Source on p. 184). This memo indicated that Macdonald was on Allan’s payroll.

• This episode is known as the “Pacific Scandal,” and it led to the resignation of Macdonald’s government in 1873.

Mackenzie and that “Damned Railway”• In 1873 Alexander Mackenzie and his

Liberals didn’t want to take on the huge undertaking of building a transcontinental railway, as a major economic depression was sweeping North America.

• Railway construction was halted, but Mackenzie did allow the Canadian Pacific Survey to continue under the direction of Sandford Fleming.

• This survey would investigate the possible routes that they railway could take. It also provided a brand new picture of the geography of the nation.

• In British Columbia, people reacted negatively to Mackenzie’s “do nothing” attitude. Politicians lobbied the federal government, protested to Lord Dufferin, the Governor General, and even talked about seceding (pg. 186) from Confederation if the promised railway did not get built.

The National Policy: Formula for Nation Building • Macdonald’s party began to recover from

the effects of the Pacific Scandal as the 1870s progressed. Macdonald believed strongly that the CPR was the only way Canada would survive. In 1876, he developed the National Policy, which became the basis of the Conservative election platform during the 1878 election. The Conservatives returned to office with a substantial majority.

The National Policy dealt with key issues outlined below.

1) A system of Protective Tariffs• American companies could produce goods

more cheaply than Canadian companies could, and they often dumped goods on the Canadian market to increase their profit.

• Macdonald devised a system of tariffs that would protect Canadian manufacturing, mining and agriculture from American dumping (p. 186) by making US goods too expensive for the Canadian market.

2) Western Settlement• Macdonald wanted to settle the

west with farmers who would produce grain crops, primarily for export abroad. The goods produced in eastern Canada could then be sold to these farmers. Macdonald and succeeding governments discouraged the development of manufacturing in the West so that western farmers could become a captive market for the industrial east.

3) CPR• Construction of the CPR was the

cornerstone of the National Policy. The railway would transport good in and out of Western Canada, but would also be part of the British Empire’s trading network by providing the means to ship goods to and form Asia.

The CPR Syndicate• Private investors George Stephen of the

Bank of Montreal, Donald Smith of the HBC, and James J. Hill, an expatriate Canadian investing in the United States railways, had bought the floundering St.Paul and Pacific railway in 1877 for just $100,000 and had turned in a profit of $17 million within four years.

• In 1880, Macdonald offered terms the trio could not refuse for building the CPR.

• The government would hand over $25 million, along with a land grant of 25 million acres [10.11 million hectares], most of it in the prairies. T

• he CPR syndicate, also received a monopoly on all rail traffic west of Lake Superior for the next 20 years, and an exemption from tax on all lands until they were sold. In return the syndicate had to complete the railway within ten years. This contract was approved by Parliament on February 1, 1881.

• The CPR Syndicate changed the route of they railway moving it about 300 miles south, into the southern prairies—an area not yet occupied by homesteaders and speculators.

• This would give the CPR more control over the location of new towns and railway stations. Even though the southern prairies were not as fertile, the syndicate had heard that they were suitable for agriculture.

• The CPR intended to build branch lines to the fertile belt making up even more profit from these lines. (Look at fig. 5-15 to see the change in the route)

• The change made the information collected by the Canadian Pacific Survey irrelevant. The syndicate also had to find a pass through the Rockies, along with possible entry points in two more mountain ranges—the Monashees and the Selkirks.

• The building commenced (began) in 1881, did not go well at first. Construction was limited to the line running between Winnipeg and Brandon, but by the time winter had set in, only 230 km of track had been laid.

• James Hill began looking for an energetic general manager who could complete the railway within the specified time.

Van Horne and the CPR

• Hill’s choice was William Van Horne, an intelligent man whose vocabulary did not include the word “cannot” (much like the Social Studies students in this classroom!!)

• His talents included operating any locomotive and understood Morse code as though it were a second language.

• The arrival of Van Horne galvanized (p. 189) the CPR. One-thousand miles of railway tract were laid during the 1882-1883 period.

• The CPR would complete the railway in the contracted period, if the money held out.

• One problem was that the government financial support was paid out only as each section of work was completed. Most of the money had been spent in the Prairie section of the line.

• The laying of tracks would be even more expensive in the mountainous terrain of eastern British Columbia and the rocky shores of Lake Superior.

• Funds dried up, so did workers’ salaries, and they were forced to strike. Macdonald passed a bill that gave the CPR $22.5 million to finish the railway.

• Van Horne tried to save as much money as he could by laying temporary railway trestle (fig. 5-17), which would later be replaced by permanent structures. The CPR was once again strapped for cash at the end of 1884.

• The CPR was build entirely by hand, and thousands of workers were needed to finish the job. 35,000 workers were involved between 1882 and mid-1885—15,000 working north of Lake Superior, 10,000 working inland from the BC coast, and another 10,000 working on the prairies.

• They lived and worked in terrible conditions—dust from the dynamite blasts, insects overcrowding, and filth in the bunk houses, leaky roofs, and no plumbing. Their diet was boring and often unhealthy, lacking fresh fruit and vegetables. There were no medical facilities, and workers’ compensation did not exist. Those injured were discharged, with no compensation.

• The CPR main line eventually crossed the Rockies at Kicking Horse Pass. The grade was extremely steep and it took four miles of track to cover a straight-line distance of one mile.

The CPR “Saves the Nation”

• The CPR was needed to transport troops to the Northwest to stifle the Northwest Rebellion that broke out in March of 1885.

• Van Horne managed to get the troops to Winnipeg in just five days. Thanks to the CPR, it looked as though the federal government could react quickly to the crisis.

• This event saved the CPR from financial ruin, as people realized the necessity of having a railway. George Stephens, the beleaguered (stressed) CPR president, was able to receive enough cash to finish the railway.

• The transcontinental link was actually completed by the fall of 1885—five years ahead of its original schedule (fig. 5-20 “The Last Spike”—read the Did You Know sectionwhy do you think there were two photographs taken?)

CPR Last Spike - November 7, 1885

- Craigellachie, B.C.

Spike maul swung by CPR Syndicate member Donald

Smith.Immediately left of him with dark beard: W.C. Van Horne, General

Manager.Between them, tall with white beard, Sandford

Fleming.(All 3 men died 1914-1915)