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CN Predecessors
The Grand Trunk was itself an amalgamation of various smaller lines, including the 23.2 km Champlain and Saint Lawrence Railroad (1836), which connected Montréal with boat traffic to Lake Champlain and the port of New York; the Great Western Railway linking Niagara, Hamilton and Toronto with Windsor and Sarnia; and the St Lawrence and Atlantic Railroad, which gave Montréal access to the year-round port facilities of Portland, Maine. The Grand Trunk became the dominant long-distance railway in central Canada, but its English shareholders would not agree to the expense of building from Québec City to Halifax over Canadian soil, nor to construction westward over the 1,600 km of the Laurentian Shield. Those challenges were faced after Confederation by the government-owned Intercolonial Railway from Halifax to Québec City and by the heavily subsidized Canadian Pacific Railway (CPR).
Although Canada by the 1890s was traversed from sea to sea by the CPR, increased immigration and agricultural production in the West led to the developmental of new transcontinental railways, many of which were financially supported by the federal government. The Canadian Northern, founded by William Mackenzie and Donald Mann, began as an amalgamation of two small Manitoba lines in 1899 and grew into a transcontinental railway system of over 16,000 km. In 1903, Sir Wilfrid Laurier’s Liberal government authorized the building of the Grand Trunk Pacific from Winnipeg west to Prince Rupert, and of the National Transcontinental from Winnipeg east to Moncton.
All of these lines were financed by heavy borrowing, mostly from British banks. However, when the First World War began, credit was no longer available from the banks. The government called a royal commission, which in 1917 recommended nationalization of all the railways (except the CPR) and absorption of the railways’ debts.
Nationalization
By 1919, the Intercolonial, Canadian Northern, National Transcontinental and Grand Trunk Pacific had become part of a government railway system known as the Canadian National Railways (CN). In January 1923, the Grand Trunk Railway officially became part of this system. At around the same time, Sir Henry Thornton was appointed president of CN. Despite an inherited debt of $1.3 billion, gross earnings that barely covered operating expenses, and the difficulty of keeping the government at arm’s length, Thornton gradually established annual surpluses while drawing remarkable personal support from among the 99,000 employees of CN. He promoted community service, supporting branch lines and introducing school cars and Red Cross units to serve children and the sick in regions remote from urban centres.
Between 1923 and 1932, he was responsible for using CN facilities to develop a network of radio stations, which inaugurated programs such as Hockey Night in Canada and led to the formation of the Canadian Broadcasting Corporation (see Radio and Television Broadcasting). However, partisan politics forced Thornton's resignation in 1932.
The Great Depression
Economic depression in the 1930s reduced traffic volume, leading to cuts in wages and dismissal of employees (see Great Depression ). At the same time, highway and air travel diverted traffic away from the railway. In 1937, however, under C. D. Howe as minister of transport, CN organized formation of Trans-Canada Airlines (now Air Canada), and in 1938 the federal government cancelled more than $1 billion of its inherited debt. As a result, CN was able to purchase a large number of Canadian-built steam locomotives (in particular the 4-8-4 Northern type), which were finished and serviced in the corporation’s huge shops at Pointe St-Charles, Montréal. These locomotives hauled millions of tons of freight and thousands of troops during the Second World War .
Modernization and Diversification
In the 1950s and 1960s, CN was modernized under the dynamic presidency of Donald Gordon, who rationalized (or reorganized) 80 subsidiary companies down to 30. Gordon also directed the conversion to diesel locomotives and electronic signalling and moved the head office to Montréal.
By the end of the 1970s, CN had merged its own system of telecommunications with that of Canadian Pacific (creating CNCP Telecommunications) and had completed construction of the CN Tower in Toronto. CN Real Estate redeveloped company-owned downtown properties in several cities, including the Toronto Convention Centre Complex.
In 1981, CN Exploration was formed to develop CN-owned mineral rights in western Canada. On the highway, Canadian National amalgamated all its trucking subsidiaries into CNX/CN Trucking, their trailers carried over long distances on piggy-back rail cars.
Refocusing on Rail
In the late 1970s, CN started to divest itself of non-rail businesses, including real estate, hotels, and CNCP Telecommunications. Around the same time, Air Canada and VIA Rail, CN’s passenger train subsidiary, became separate Crown corporations (shortly after incorporation, VIA also took over passenger rail services from Canadian Pacific). By 1989, CN was primarily a rail freight company.
CN also abandoned thousands of kilometres of money-losing branch lines across the country, as well as entire track networks in Newfoundland and Prince Edward Island.
Privatization
From the mid-1980s, there was increasing talk about privatizing CN. As a railway company, CN required significant capital investment on an ongoing basis. Politically, ownership by the federal government often influenced high-level appointments with at least as much respect for partisan interest as for “hands off” direction.
In Canada (as in Britain under Prime Minister Margaret Thatcher), the economic recession of the 1980s led to the privatization of many national companies. In the 1980s and 1990s, over two dozen Crown corporations were sold to private investors, including Air Canada (1988) and Petro-Canada (1991). In November 1995, CN was also privatized, with many of its shares bought by American investors. According to the CN Commercialization Act of 1995, the company headquarters had to remain in Montréal , which ensured that CN would remain a Canadian corporation.
Following privatization, CN shed much of its track and staff and increased its profitability. In February 1998, it purchased US rail company Illinois Central Corporation for US$2.4 billion. The acquisition of Illinois Central expanded CN’s rail network to a third coast, the Gulf of Mexico. CN later acquired Wisconsin Central (2001), the rail and marine holdings of Great Lakes Transportation (2004), shares of BC Rail (2004), and the Elgin, Joliet & Eastern Railway (2009).
The largest rail network in Canada, CN is also the only transcontinental rail network in North America. It transports approximately $250 billion worth of goods annually, and in 2016 earned over $12 billion in revenue. That same year, the company employed over 22,000 people in Canada and the US.
