There have been a number of exciting booms in Canada: gold, real estate, miniature golf and hula hoops. In the middle of the nineteenth century, it was railways.
In an effort to stimulate railway building, the government guaranteed interest of not over six per cent on any issue of bonds for half the cost of any railway of 75 miles or more. The effect was magical. Railways sprang up everywhere, starting at one spot and ending nowhere — perhaps in a bush! One of them was the Cobourg-Rice Lake, Plank Road and Ferry Company, which was incorporated on June 9, 1846.
The way to make money was to form a company to build a railway and then borrow from the government. The directors would keep enough shares for control of the company and sell the rest to the public. Contracts for the building of the railway would more than be awarded to companies in which the railway directors held shares.
It was easy to sell shares to the public because most people believed the railways would make great profits. Instead, most of them went bankrupt and had to be bailed out by various governments.
Even so, the boom continued well into World War I. Two of the most spectacular railway barons were William Mackenzie and Donald Mann, both of whom received knighthoods. Mackenzie was a small town teacher who also kept a store. Mann was supposed to enter the ministry, but instead became a lumber camp foreman and construction boss. He could beat most lumberjacks with one hand tied behind his back.
In 1896, Mackenzie and Mann had a railway about 130 miles long, running between Gladstone, Manitoba, and Lake Winnipegosis. They built the Canadian Northern Railway from Quebec to the Pacific coast. By 1914, they owned 10,000 miles of track, hotels, telegraph companies, a transatlantic steamship service, iron and coal mines, sawmills and fisheries. They did this without investing a cent of their own money, except for their original 130-mile railway costs!
The Canadian Northern eventually went bankrupt and was merged with the Grand Trunk, to form the present Canadian National Railways, the largest in the world. Mackenzie and Mann did not go bankrupt. They made fortunes.
Amazing times! To read more about today’s post, I suggest Charles Cooper’s Railway Pages. Next, there’s a 34-page document at Canadian Railway Observations, but I assure you, it is far from being dry – I enjoyed it.