The Road to Charlottetown III: The Debt

(Editor’s Note: Retired UPEI political science professor David M. Bulger has written a series of articles about the 1864 Charlottetown Conference which attempt to show why the "Canadians" took the Road to Charlottetown. This is the third and final article.)

On September 1st, 1864, the steamship, S.S. Queen Victoria, entered Charlottetown harbour carrying a cargo of champagne, brandy and desperate men.

The men were desperate because their government was in a state of collapse, and because the “two nations” which Durham wrote of in his report, were so different that each feared the other. The French feared that “Rep by Pop” would put the English in the driver’s seat in the single legislature of the United Province, thus at last bringing about the assimilation Durham had intended, whereas the English feared that the French might unite, produce a solid voting block and then dictate to the west, as they had done in the case of separate schools.

The solution? Clearly a divorce. “Put asunder” what the Act of Union had “married” in 1841. But it was not that simple.

One of the watershed moments of human history was the coming of the railway. It had an effect on Victorian culture not unlike that which information technology has had on ours. For example, it changed the perception of time. Previously, time had been a relatively leisurely thing, the slow movement from place to place brought about by the muscle power of human beings and animals. A fast stage coach might cover 15 miles in an hour, but people ordinarily travelled at far slower rates of progress.

The railway changed all that. William Hume Blake, former Chancellor of Canada West and later a railway commissioner, was astonished to find himself carried by train in less than a day from Toronto to Montreal in 1864, where a little more than 30 years earlier, it had taken him more than three to cover the same distance by a combination of coach and steamship.

While there had been instances of horse-drawn vehicles mounted on rails as early as the 17th century, George Stephenson’s creation of the Liverpool to Manchester steam driven railway in 1830, set off a flurry of railway building in all the industrialized — or would be industrialized — world.

And the United Province was no exception. While the railway came later there than, say, to the United States, in the year 1853 alone, the London and Port Stanley, Vaudreuill, Cataraqui and Peterborough, Port Dalhousie and Thorold, Bytown and Pembroke, Two Mountains and Terrebone lines were incorporated. Not that they were all built, and some, like the London and Port Stanley, eventually became part of the two large railway companies, the Great Western (Niagara to Windsor) and the Grand Trunk (Quebec to Sarnia, and south, via its subsidiary, the St. Lawrence and Atlantic, to Portland, Maine).

But even if a line was not actually built, just starting the business would require financing. And then, as now, financing could come through investment, government assistance (grants and loan guarantees) or outright borrowing. Railroads were risky business. Not only did they involve huge construction costs, but in Canada lines were going to have to be much longer than in England. Even though, during the UK railroad blitz of the 1840s, 5,000 miles of track were laid down, actual distances were small (Liverpool to Manchester, 35 miles; London to Oxford, 60 miles). In Canada the distance from Toronto to Montreal is 336 miles, or just under half of the entire distance (775 miles) from Dover, on the English channel, to John O’Groats, the last landfall in northern Scotland. Finding investors willing to commit to such huge undertakings was not going to be easy.

On the other side of the coin, getting commercial lenders to come up with outright loans, was going to be equally difficult. So, the answer lay in the middle, namely government assistance. And the most common form was actual borrowing by a government — through the issuing of municipal and provincial debentures — with the money received turned over to the railway. Municipalities justified this on the basis of the hopes for an economic boom resulting from railway connections with other municipalities.

So it was that, by 1864, the United Province was heavily in debt — public debt. And if there were going to be a “divorce” for cultural and political reasons, as in any “divorce” there was almost certainly going to be squabbling over finances — including the debt. If Canada West and Canada East broke up the Union and went their separate ways there was going to be intense squabbling by two groups having difficulty getting along at the best of times.

That was “the problem.” But the problem was complex in this way: most of the railway financing had taken place in Canada West. So, if there was a squabble, Canada East was certainly going to try to get out of the marriage with a minimal acceptance of the public debt.

However, there was a possible solution. The Upper Canadian half of the United Province had been faced with huge public debt before. In a very short period of time, and influenced heavily by the opening of the Erie Canal in New York, Upper Canada had gone on a binge of canal building, with an eye toward opening up the upper Great Lakes to commerce. As with railways, much of this had been underwritten by the government. Lower Canada, by contrast, had constructed only the Lachine canal and kept its money in the bank, so to speak.

The Act of Union had the effect of merging Upper Canadian debt with Lower Canadian assets, and the Upper Canadians got off scot free. Now, if the United Province could pull off the same trick again, then the debt would be merged with someone else’s assets, would become the common obligation of all parties, and Canada West and Canada East could split up without squabbling over who owed what.

And so, the SS Queen Victoria set forth from Quebec City on August 27th, 1864, loaded with booze and desperate men. If they could just get those Maritime Provinces on board with a larger Union of all the British North American colonies, then the debt of the United Province would be merged with the considerable assets of the seaboard provinces. Canada West could separate from Canada East, leaving the French with the illusion of a kind of independence, with their intermixing of church and state and with a lowering of their fear of assimilation. Canada West could separate from Canada East and establish its legislature on the basis of “rep by pop”— and deliver itself from the “tyranny of the French.” If a larger Union of some kind could be formed, the United Province would, in theory at least, be delivered from all its troubles.

So, the desperate men brought their champagne and brandy to Charlottetown harbour on Sept. 1, 1864, and the rest, as they say, is history.