commission that implicated Macdonald and his Quebec lieutenant, Sir George-Étienne Cartier, forced Macdonald to resign in late 1873.
Surveys of potential routes and piecemeal construction continued, however, under the Liberal government of Alexander Mackenzie (1873–78). Although his administration adopted a more cautious fiscal policy, it nevertheless spent 25 percent of its budget on surveys and construction in one year alone, 1875.
By the time that Macdonald and the Conservatives returned to power in 1878, British Columbia was threatening to secede from Confederation if all the terms of its admission to Canada were not met. As if to underscore the seriousness of its threat, it sent a provincial delegation to London in the spring of 1881 to seek a repeal of the union. Macdonald wasted no time in swinging into action, realizing full well that the province might leave the union. Even if it did not, an American railway near the international border could siphon off western Canada’s commerce by constructing spur lines northward. Hill’s St. Paul, Minneapolis & Manitoba Railway, which linked St. Paul with St. Vincent, Minnesota, at the Manitoba border, was a case in point. The possible invasion of the southern prairies by an American railway was not the only factor that had to be considered. There was also Canadians’ pride, their nationalism, their determination not to become Americans. Macdonald knew that any future transcontinental line between Montreal and the Pacific had to be an all-Canadian railway and not simply a connection with a line bending north from the mid-western United States.
To construct the transcontinental, Macdonald and the Conservatives decided to have a private company build and operate the railway, but with some government assistance. Their choice was the one group that appeared to have the necessary resources and credentials to carry out such an intimidating undertaking — James Hill and his St. Paul associates. Eager to snare the CPR contract, they had formed a syndicate in October 1880 for that very purpose.
Heading the consortium was George Stephen, who resigned as president of the Bank of Montreal to lead the new company. This self-confident financier and shrewd negotiator would handle the CPR’s budget and governmental relations, assisted by Richard (R.B.) Angus, general manager of the Bank of Montreal. Another prominent syndicate member was Stephen’s cousin, Donald Smith, a newly defeated Conservative member of parliament and a senior Hudson’s Bay Company official. The company also included James Hill, who would focus on construction and operations; the ineffectual vice-president Duncan McIntyre, who controlled the Canada Central Railway; and a number of bankers from New York and Europe.
Although Macdonald detested Donald Smith and knew that westerners reviled the monopoly held by the Canadian Pacific Railway, he pressed ahead with the “Pacific Bill,” believing that only this syndicate could get the job done. The legislation that passed in the House of Commons on January 27, 1881, required the Canadian Pacific Railway to build a railway within ten years and to operate it “in perpetuity” from Callander, Ontario, to Port Moody on Vancouver Island. In return, the Canadian government would grant the company $25 million, twenty-five million acres of land, the lines already under construction (including the Pembina line and railway sections in the Fraser Canyon built by the American contractor Andrew Onderdonk), a twenty-five-year monopoly over running rights in western Canada to the United States, and generous tax and customs concessions.
Van Horne could be impetuous at times, but, before accepting the syndicate’s offer, he first made a reconnaissance trip north of the border in October 1881. Evidently he was impressed by what he saw, particularly by the quality of the grain on the gently rolling prairie and the abundance of the crops grown by the Red River settlers in their lush, green fields. All this augured well, he thought, for the future of traffic carried by a transcontinental train. On his return home, he wrote to Hill and accepted the CPR’s offer. He knew that his prospects for advancement in the United States were excellent — that he probably could have had the pick of any choice railway position when it became vacant. He also realized, however, that in joining the CPR he was taking on an enormous risk.
The CPR had launched itself on a giant gamble. Its main line was to follow a southern route that required it to penetrate the Rockies and the Selkirk Mountains, located in southeastern British Columbia just west of the Rockies. As yet, however, nobody knew how this feat could be done or even if the track could be pushed through the Selkirks. In addition to these formidable obstacles, there were rivers to be crossed and, in the east, marshy muskegs to be conquered. And, of course, there was the enormous distance that had to be traversed. But Van Horne also knew that an extremely attractive offer was being dangled before him: an annual salary of $15,000, a princely sum for those days. In fact, it would be the largest salary ever paid up to that point to a railway general manager in North America. Still, in accepting the offer Van Horne was probably swayed more by the prospect of a major challenge and his love of adventure than by financial considerations.
Shortly after accepting the CPR’s offer, Van Horne moved from Milwaukee to Winnipeg, which would be his home until he relocated to Montreal nine months later. He left his family behind in Milwaukee, where they remained until April 1883, when they joined him in Montreal. This separation was difficult for them all, though he did find time for a few visits home.
Van Horne arrived in Manitoba’s raw, infant capital on the last day of 1881, when temperatures were skidding to about forty degrees below zero Fahrenheit and the city was awash in New Year’s celebrations. He immediately established his headquarters in a dingy office above the Bank of Montreal, and the next morning he began work. Winnipeg was teeming with new immigrants, many of whom were forced to seek accommodation in the city’s immigrant sheds because they could not afford the skyrocketing rates charged by crammed hotels. This overcrowding would make a forceful impression on Van Horne during the time he lived there.
The CPR’s decision in 1881 to build its main line through Winnipeg virtually guaranteed that the city would expand at a giddy pace. Waves of farmers and agricultural labourers from Ontario, the United States, and Europe began pouring into Canada’s gateway to the West and the adjoining town of St. Boniface. The resulting frenzied land boom was well under way when Van Horne arrived on the scene. That January city lots were flipped like pancakes, selling for double the previous day’s price. Before the boom collapsed in late 1882, it would plunge the city into the wildest sixteenth months in its history and help to ignite frantic land speculation in other projected railway towns in Manitoba and the Northwest Territories as well as in Port Moody, British Columbia.
Van Horne was particularly concerned about speculation on land expected to be designated as town sites and CPR stations. Under no circumstances would he tolerate the idea of anybody making a fortune at the CPR’s expense. On his first day in his office he placed a small ad in the January 2 Winnipeg newspapers cautioning the public against buying lots expected to be snapped up for stations along the CPR line until he had officially announced their locations. Among those caught up in the orgy of speculation were senior CPR officials based in Winnipeg. Leading the pack was a courtly Southern aristocrat, Thomas Rosser, the CPR’s chief engineer. Within a month of assuming his new position, Van Horne not only sacked Rosser but also instructed the superintendent of construction to investigate the source of any continuing leaks of plans and, if necessary, to take the appropriate action.
Winnipeg, the gateway to the Canadian West, at about the time Van Horne arrived to take up his job as general manager of the CPR.
Courtesy of Library and Archives Canada, C33881.
Van Horne received a frigid reception from his colleagues in Winnipeg. His reputation as a manager who pioneered new ways of doing things in railway operations made tradition-loving railway men resent him. There was also his nationality and his personality: he was a plump, blunt-speaking Yankee who initially hired other Americans whose work he knew and respected. “We did not like Van Horne when he first came up to Winnipeg as General Boss of Everybody & Everything,” the locating engineer, an Englishman named J.H. Secretan,
