RAILROADED ACROSS THE LAND

Railroad-building in the 19th century was an orgy of corruption. But hey, it built a country

A young Canada was knitted into a nation by an explosion of late-19th-century railroad-building. But the part that never makes it into Gordon Lightfoot ballads is just how incredibly sleazy the whole thing was.

“The level of corruption in the Canadian political process of the period, especially under the auspices of John A. Macdonald, is truly astounding even to the cynic,” wrote the historian R.T. Naylor in The History of Canadian Business, 1867-1914.

Railroad projects of the era generally followed a fairly simple formula: Someone would dream up a railway project, promoters would use crooked political influence to secure government largesse and a handful of guys in top hats would proceed to get very, very rich on public debt.

When coal baron Robert Dunsmuir proposed to build a railroad to his B.C. mines, the federal government not only kicked in $750,000 — but handed him one fifth of Vancouver Island.

The founders of the Canadian Northern Railway rode a tide of government guarantees, subsidies and land grants so exorbitant that the venture was almost completely shielded from anything resembling risk or investment.

In the 1890s, Kennedy F. Burns saw no problem with being an MP while also pocketing vast subsidies to build a New Brunswick railroad. Burns underpaid his employees, cut corners on safety and was accused of pocketing most of his government cash.

The builders of the Canadian Pacific Railway essentially won the lottery. They were given the modern equivalent of $1.5 billion in cash and infrastructure, handed a land grant the size of Ireland and assured a 20-year monopoly.

One key ingredient to the corruption of this era was that many of Canada’s railroads were acts of political bargaining rather than financial ventures.

To entice Nova Scotia into becoming a founding member of Canada, the Queen Victoriasigned British North America Act vowed to build a railroad to Halifax “with all practicable Speed.”

Four years later, B.C. joined Canada with the similar Parliament- approved guarantee that Ottawa would build a Pacific railway “within ten years.”

To builders, there could have been no clearer sign that the new Dominion of Canada was looking for railroads at any cost.

Even as late as 1913, nearly half of total federal government expenditures were spent on “transport and communications.”

However, nobody can argue that the payoff wasn’t enormous.

In less than a generation, railroads had opened up new land and set the stage for mass migration, resource rushes and blossoming metropolises like Calgary and Winnipeg.

Canada had become a place where development got done by handing generous subsidies to private companies — and where business success depended on holding the ear of government. Kickbacks were endemic, as evidenced most famously by the Pacific Scandal, in which prime minister John A. Macdonald was found to be brazenly trading railroad contracts for campaign cash. Amazingly, Macdonald’s political career recovered almost immediately. Even in the most hideously corrupt corners of the Gilded Age United States, Canada was still known as the land where graft reigned supreme.

“Public officials in Canada, so far as my experience goes, do not have that suspicious hesitancy in accepting money that characterizes some officials in (the United States),” Owen Murray, an American- born veteran of Canadian public works contracting, told the New York Times in 1891.

It’s an uncomfortable paradox that Canada’s greatest-ever orgy of political corruption is also routinely celebrated as one of its most storied accomplishments.