British government nationalized railways for the

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disaster, since London Market has been the main source of Canadian railway financing. British government nationalized railways for the duration of the war which established a precedent for Canada The Penalty Stage of Railway Development During the war, GTR and CNR’s earning dropped and was unable to cover the operating costs. 1915 Government of Canada took over National Transcontinental from the GTP. And GTR could not afford to operate the new line from Winnipeg to Moncton in spite the government spent 250 million to build it. Finance Minister concerned the possibility of railways may go bankrupt and Canada will not be able to finance the war. 1915 Sir Joseph Flavelle suggested the government take ownership of railways
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1916 CNR and GTR demanded additional financial assistance, in fear of railway company failure the PM Borden established a royal commission in July 1916 1917 the commission chairman A.H Smith delivered a minority report and recommended three approaches: 1. CNR takes over GTPacific’s line in the west and competes with CPR 2. GTR take over CNR’s eastern lines 3. Government takes over and operates the uneconomic (unprofitable) route (across the Canadian Shield from Quebec to Manitoba) for both CNR and GTR. The Majority Report by Drayton and Acworth recommended that all railways in Canada except CPR and American lines to be nationalized and to be transferred to Dominion Railway Company- a broad of trustees. The CPR president Sir Thomas Shaughnessy fearing of competition from publicly owned system and proposed all railways including CPR to be taken over by the government but managed by CPR, however it was rejected because of idea of railway monopoly. The government was already holding 40% of the railways capital and in 1917 the finance minister introduced bills to acquire CNR stocks and placing all government railways (includes Intercolonial -built in confederation, National Transcontinental-from Moncton to Winnipeg) under the Broad of Railway Commissioners. The Best Choice in unfortunate circumstances The Borden government priority was to acquire both Grant Trunk Railway and its subsidiary Grant Trunk Pacific. Prior to the War, US UK and Canada government did not have intention to operate railway, however, the war has changed the situation. (Britain immediately nationalized railways for the duration of the war, even in the free-enterprise US, government temporarily took over the railway for a period in the spring of 1918) The federal government has intended to obtain the GTR’s well-established feeder(branch) systems in Ontario and Quebec to complement the various systems took over in 1917 The GTR was persuading the government to take the GTP since it has been a major drain on its parent (GTP ran from Winnipeg to Prince Rupert in BC which had limited traffic because of an absence of feeder lines that both CNR and CPR has).
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