The Last Spike: The Great Railway, 1881-1885 (24 page)

On October 26, Scarth announced a sale of Regina lots near the station set for October 31. Two days later, his rivals announced that their lots would be sold on October 29. Scarth moved his sale ahead and warned prospective buyers: “Do not be led astray by advertisements of lots falsely represented to be in the new Capital … at least two miles from the permanent Railway Station.” The Dewdney syndicate replied with sales figures designed to show that theirs was the more popular subdivision. The lack of water was a strong factor against the railway land and Scarth was forced to promise that “a large reservoir is now being constructed … which eminent engineers are satisfied will supply a great city.…”

The railway won. Scarth sold some half-million dollars worth of Regina real estate that winter; the rival sales were negligible. A further struggle, however, developed over the location of government buildings. Dewdney wanted them on the river, where, as he pointed out, the drainage was good (and also where they would be next door to his syndicate’s land); Stephen and Scarth wanted them near the station where, they contended, the
government as well as the railway would profit. In the compromise that followed Macdonald tried to placate all his Conservative friends by scattering the locations of the public buildings. The police barracks and the Lieutenant-Governor’s residence were on the river. Dewdney had made these selections himself and it was probably no coincidence that they were right next to the property in which he had an interest. Certainly his fellow syndicate member Frederick White, the Mounted Police comptroller, went to great lengths to try to hide the compromising fact that the site was chosen by Dewdney himself and not by Irvine, the commissioner. Irvine pointedly denied that he had anything to do with it.

The customs office, land office and, eventually, the post office were placed in the station area some two miles away, partly as a result of George Stephen’s complaint to the Prime Minister that Dewdney had an interest in the Hudson’s Bay section and was trying to place all the public buildings adjacent to it. As a kind of compromise between the two warring factions, the offices of the Indian Commissioner and North West Council were placed half-way between the station and the river. Later, when the registry office went up, it was on a block of its own. The queer community straggled for two and a half miles across the prairies, the various clusters of official buildings standing like islands in the prairie sea. Regina was a city without a centre.

In all the wheeling and dealing over land profits no public or corporate leader ever bothered to consider the interests of the people who would build the Queen City of the Plains and make it their home. Ottawa ignored the settlers who pleaded that the public buildings be concentrated in one area. The
CPR
and the land company were equally culpable; together they had contrived to split the community in two. The settlers had an awkward town plan imposed upon them by men from eastern Canada, few of whom had any intention of making Regina their home.

Traditionally, squatters in the North West had been protected on any land where they settled. Even when they were found to have squatted on lands reserved for the Hudson’s Bay Company, their rights were generally respected, the Company accepting equivalent land elsewhere. But after 1880, the government, in effect, did away with squatters’ rights where railway lands were concerned.

Bona fide settlers who had arrived on the scene early, taken up land, and built homes found that they were given no special consideration. Arbitrary prices were placed on such parcels by the land officials not only in Regina but also elsewhere. This led to bitter recriminations against “the East,” the echoes of which lingered for decades. “It makes a fellow’s
blood fairly boil with rage to know of the treatment squatters are subject to in this country by a rotten Dominion Govt.,” one newcomer, Edwin Brooks, wrote home to his wife from Indian Head. “Conservatives here are just as bitter as they can be, and denounce their actions in more forcible than polite language.”

It was typical of eastern indifference to local North West interests (an indifference that would have bloody results in 1885) that when the first train arrived on August 23 with a carload of officials to christen the town, the settlers themselves were given no part in the ceremony. They had trekked across the prairie by ox cart, buckboard, horseback, and construction train; one, at least, had walked all the way from Rapid City, two hundred miles to the east. But no one thought to ask any of them to participate in the official beginning of the new town; in fact, when Regina’s lots went on sale, these first settlers were forced to pay exactly the same rate as everybody else for the property they had vainly tried to appropriate as their own. W. H. Duncan, who was present and who, like many others, watched the scene from behind a tent flap, wrote half a century later that since most of them had been living under canvas for two or three months, “our work clothes were not considered in good enough condition to appear among the well-dressed people from the East.”

The ceremony took place in Van Horne’s private car. The assemblage was a glittering one, representative of the most powerful interests in the Dominion. Van Horne, Donald Smith, Duncan McIntyre, and John McTavish of the
CPR
were all present along with the company’s solicitor, J. J. C. Abbott, a future prime minister. (Stephen, who had come as far as Winnipeg, had returned to Montreal.) Both the Hudson’s Bay Company and the Bank of Montreal were represented on the highest level. Judge Francis Johnson of Quebec, a former territorial official, proposed the toast to Mr. and Mrs. Dewdney and “Success to Regina, the Queen City of the Plains.”

It makes, in retrospect, an ironic little scene: there are the eastern dignitaries in their dark suits, wing collars, and striped trousers, lounging on the rear platform of the private car with their well-bustled wives; and there are the first families of Regina in their shapeless clothing, peering curiously out from behind the protection of the canvas flaps. Among the onlookers that day were at least three future mayors and one future chief justice; in the years that followed they and their fellows would help to shape the destinies of Saskatchewan and perhaps to nurture the seeds of dissidence sown in those formative months. But none of this occurred to the gentlemen on the train, sipping their French champagne and squinting across
the parched prairie, flat as a deal board, where the little tents stretched of! in ragged clusters to the distant river.

5
The Grand Trunk declares war

From his vantage point at Winnipeg, George Stephen must have contemplated the astonishing progress of the railway with mixed feelings. Certainly his strategy, and Van Horne’s, was working; but the company itself was in a desperate cash position.

The strategy had been to get the prairie section of the
CPR
operating as swiftly as possible. In that way a great chunk of the subsidy, which was paid to the company on the completion of each twenty-mile section, could be gained. Equally important, the paying portion of the line could go into operation and begin to show a profit at once.

Critics might carp that the company was building the easy part of the railway first, but Stephen’s strategy was dictated as much by necessity as by guile. The mountains could not be tackled until there was a line of steel to bring supplies to the passes. As for the Lake Superior section, there were new surveys to be completed before the roadbed could be graded. The Opposition press – and some government newspapers, too – charged the company with dragging its feet on the section between Callander and Fort William. The Prime Minister, pushed by some of his cabinet colleagues, was uneasy about the lack of progress in the East for political reasons. After all, he had staked his career on an all-Canadian route. He urged that an immediate start be made that summer of 1882 at Thunder Bay. Later that fall, he wanted to hold back payments unless the company complied. John Henry Pope balked at this. He had already “talked very sharp” to Stephen and his colleagues and believed they were doing all they could. Pope felt strongly enough about the matter to offer his resignation. He knew the
CPR’S
precarious financial position and urged the Prime Minister not to delay payments. “It really would amount to destroying their summers work to throw this Bomb Shell into their camp in the middle of the working season their expenses are now enormous. Men scattered over hundreds of miles. I really do not see how this can be done without breaking everything down.”

Macdonald wrote Stephen a mollifying letter: “All I want is to be able to brag a little next Session as to the progress of the Eastern Section.” Obviously,
a start would have to be made by 1883; the Opposition had predicted all along that the Lake Superior section would never be built. Neither Macdonald nor Stephen could afford to allow Blake to cry: “I told you so!” Any lingering hopes by Syndicate members that the project could be postponed until the
CPR
began to make money were dashed. Somehow the money would have to be found.

All that year the climate in the money markets of London and New York had been bad for railway stocks and bonds in general and Canadian Pacific bonds in particular. As far as English investors were concerned, Canadian railways were the most disappointing foreign investment of all; they earned only a quarter as much, on an average, as other overseas investments. Since the British had already sunk two hundred million dollars into various Canadian railroad schemes, the arrival of the Canadian Pacific on the financial scene was not propitious. That was one reason why Stephen made no effort to place
CPR
securities on the London market, though he hoped to intrigue British investors into ordering land grant bonds from Montreal and New York.

There was a kind of lassitude in England as far as Canada was concerned – an indifference that maddened a man like Stephen who, in February, 1882, noted with disgust that P. T. Barnum’s most recent acquisition, the huge elephant Jumbo, was “a matter of ten times more interest to London than twenty colonies.” The emigrants might be flocking towards the new land but this did not make those at home feel any happier: “… the genuine insular Britisher hates all emigration efforts and would rather have people remain to struggle and sometimes starve than emigrate.”

The market was so bad that when the
CPR
was driven to issue the remainder of its authorized stock in May, 1882 – about 190,000 shares with a par value of $19 million – the best price it could get was twenty-five cents on the dollar. Stephen was loath to issue any stock at all; from the outset he had tried to desist from the normal practice of floating large issues of shares and bonds, a technique employed over and over again – usually with lamentable results – by North American railways, ostensibly to raise money for construction. As often as not the proceeds were siphoned off into the pockets of promoters through such devices as dummy construction companies. Stephen was no longer a promoter. He had already made an immense fortune out of watered stock on the St. Paul railway. In Canada he was not as interested in personal profit as he was in the adventure of actually building a transcontinental line and making it run.

He had promised Macdonald that there would be “no financial fire works.” Before issuing stock to the public he wanted to prove, by land sales and by earnings, that the
CPR
was a paying proposition. For that reason the company had issued only sixty-one thousand shares of its stock at par value in 1881 – almost all of it to members of the original syndicate. But in 1882 Stephen was faced with an unexpected expenditure: he had to find $4,300,000 to buy up the western section of the Quebec government railroad (the Quebec, Montreal, Ottawa and Occidental) and its branch lines in order to give the
CPR
access to Montreal. To raise the money he was forced to sell four times as much stock as he originally reckoned on.

He received a second financial blow that May of 1882: he had fully expected to lay his hands on an additional million dollars in cash to help with the work that Van Horne was planning for the season. The million was deposited with the government as security for the construction of the road. Stephen had believed that he could replace the deposit with gilt-edged securities and release the cash; it did not occur to him that the government would balk, but the government did. He did not get his million until December and only when he put up his personal property – debentures of the Credit Valley Railway, a company he had bailed out of a financial muddle in 1880.

There were other problems on which no one had reckoned in those first intoxicating days. There were the extra costs brought about by the unexpected influx of settlers: more rolling stock to buy and grain elevators to erect. Further, there was the expensive decision to build the road to better specifications than called for (a policy that quickly had to be abandoned). In doing this, Stephen and Van Horne were looking far into the future; but in the summer of 1882 cash was very short. In July Stephen went down to Macdonald’s summer home at Rivière du Loup to warn him that the
CPR’S
cash requirements had exceeded all calculations. The cost of the prairie section was “enormously in excess of our estimate.” On the other hand, “we cannot afford to build a cheap road” – the Canadian climate conspired against it.

One of the unforeseen problems lay in the manner in which the twin subsidies – cash and land – were paid by the government to the railway. The money was advanced in equal instalments after each twenty-mile section was completed and approved by government engineers. This worked very well on the prairie section, where the track was advancing at the rate of twenty miles a week. But Stephen realized that he would shortly be faced with the two mountain barriers and the Canadian Shield. Here,
men would have to struggle for months to complete twenty miles of track. Cash from the subsidy would not be available to the company until long after the actual outlay. The
CPR
had already spent more than the subsidy on the prairie section. Where would it get the money to pay for labour and materials on the more difficult stretches of the road?