1. History of The CPR
SS 10

2. BC & Confederation
In 1871, British Columbia was lured into Confederation with the promise of a transcontinental railway within 10 years. The proposed line — 1,600 km longer than the first US transcontinental — represented an enormous expenditure for a nation of only three and a half million people.

3. Sir Hugh Allan
Two syndicates vied for the contract, and it was secretly promised to Sir Hugh Allan in return for financial support for the Conservatives during the closely contested 1872 election. The subsequent revelation that Allan was largely backed by American promoters, and that he had sunk $350,000 into the Conservative campaign, brought down the government.

4. The Pacific Scandal
The Pacific Scandal was the first major political scandal in Canada after Confederation. It involved the taking of election funds by Prime Minister John A. Macdonald in exchange for the contract to build the Canadian Pacific Railway.
J.W. Bengough puts words into the mouth of John A. Macdonald at the time of the Pacific Scandal.

5. Campaign Donation
The scandal originated when Macdonald and his Conservative colleagues George-Etienne Cartier and Hector Langevin went shopping for campaign funds for the 1872 general election. The target of their solicitations was Sir Hugh Allan, a Montreal shipping magnate and railway builder. The Conservatives needed money to fight the election, particularly in Ontario and Québec, where a number of seats were in jeopardy. Despite Allan’s generosity in providing more than $350,000, Macdonald did poorly in the vote. Although he held onto power, the majority he won in 1867 was substantially reduced.
Hector Langevin

6. Post Election Revelations
After the election, a railway syndicate organized by Allan was rewarded with the lucrative contract to build the Canadian Pacific Railway — the trans-continental railroad promised to British Columbia when it joined Confederation. Allan was given the contract on the assumption that he would remove American control on the syndicate's board of directors. But Allan, unknown to Macdonald, had used American money to supply the campaign funds to the Conservatives, creating an awkward situation.

7. Evidence Comes to Light
Even more difficult was evidence that came to light after the election, showing an agreement between Allan and the Conservatives, assuring Allan the railroad contract in return for his campaign funds. The Liberals broke news of the scandal on 2 April, 1873.
A litany of damaging letters and telegrams appeared in Liberal newspapers in July. One of the most sensational pieces of evidence against the Prime Minister himself was a telegram from Macdonald to Allan's lawyer, John Abbott: "I must have another ten thousand; will be the last time of calling; do not fail me; answer today."

8. Conservatives Resign
The government was stunned. It managed to weather a royal commission struck on 14 August. But it could not survive in Parliament. The House of Commons met on 23 October. Threatened by the likelihood that members from the new province of Prince Edward Island would vote against it — and with many of its supporters in disarray — the Macdonald government felt obliged to resign.
Allan's company never did get started, and a new contract agreement to build the Canadian Pacific Railway had to wait until 1880.
Sir John A MacDonald

9. CPR Contract
On 21 October 1880, the government finally signed a contract with the Canadian Pacific Railway (CPR) Company, headed by George Stephen, and construction began in The "Last Spike" was driven on 7 November 1885 and the first passenger train left Montréal in June 1886, arriving in Port Moody, BC, on 4 July. Completion of the railway was one of the great engineering feats of the day and owed much to the indefatigable supervision of William Van Horne and the determination of Sir John A. Macdonald. While Macdonald’s government was criticized for the generous terms offered to the company, it considered the railway crucial to the nation.

10. Not Just Private
Though ostensibly a private enterprise, the CPR was generously endowed by the federal government with cash ($25 million), land grants (25 million acres), tax concessions, rights-of-way, and a 20-year prohibition on the construction of competing lines on the prairies that might provide feeder lines to US railways. Whether or not the country received adequate compensation for this largesse has been hotly debated ever since. However, the CPR was built in advance of a market and by a very expensive route through the Canadian Shield of Northern Ontario. Macdonald's controversial decision in favour of an expensive all-Canadian route seemed to be vindicated during the North-West Rebellion; how would the American government have reacted to Canadian troops moving across American territory? The CPR also had a profound effect on the settlement of the Prairie West, and new cities, from Winnipeg to Vancouver, were heavily dependent on the railway. Other western towns were strung out along the railway like beads on a string.

11. The Canadian Northern Railway
The flood of immigrants to the Prairie West after 1900 and the dramatic increase in agriculture soon proved the CPR inadequate, and a third phase of railway expansion began. Numerous branches sprouted in the West, of which the most notable was the Canadian Northern Railway, owned by the two bold entrepreneurs Donald Mann and William Mackenzie. The Canadian Northern grew by leasing and absorbing other lines; it also constructed new links to Regina, Saskatoon, Prince Albert, and Edmonton, and pushed on through the Yellowhead Pass. It was linked to the East, with its main eastern terminus at Montréal, and also operated mileage in eastern Québec and the Maritimes.
Though sometimes portrayed as rapacious promoters, Mackenzie and Mann built their railway to serve western needs that were not being met by the CPR, and they invested most of their own fortunes in the enterprise. Nevertheless, the railway received public assistance of $250 million, most of it in the form of provincial and federal bond guarantees.

12. A Third Transcontinental Railway
Meanwhile, Prime Minister Laurier enthusiastically encouraged the development of a third transcontinental railway by the Grand Trunk company, now led by Charles M. Hays. Although it would have made sense for the GTR to co-operate with the Canadian Northern company, mutual jealousies made such co-operation difficult. Therefore, the federal government itself decided to build a line from Winnipeg to Moncton (the National Transcontinental Railway or NTR) and to lease it to the GTR on completion. The NTR was built through the empty expanse of northern Québec and Ontario in hopes of encouraging development there; begun in 1905, it was completed in 1913 at a cost of $160 million. The GTR's subsidiary, the Grand Trunk Pacific (GTP), constructed the more profitable line westward from Winnipeg. The GTP began construction in 1906 and was completed in 1914 through the Yellowhead Pass and along the spectacular Skeena River valley to Prince Rupert, BC.

13. Macdonald's Comeback
The scandal was the final political struggle for Cartier, who had lost his Montreal East seat in the 1872 election but was acclaimed to the Manitoba riding of Provencher a month later. Cartier was at the centre of the scandal because he had authored the letter offering the railway contract to Allan. He died the following year, on 20 May in London, where he was receiving treatment for Bright’s disease.
Macdonald would rise to become prime minister again, when his party won the 1878 election, and would remain prime minister until his death in He was succeeded, ironically, by John Abbott, Allan's one-time lawyer.