Canadian National Railways, incorporated 6 June 1919, is the longest railway system in North America, controlling more than 50 000 km of track in Canada and the US. Now called Canadian National, the CROWN CORPORATION's holdings have expanded since the 1920s to include marine operations, hotels, TELECOMMUNICATIONS and resource industries, but the core of CN still lies with its railway system (now called CN Rail), which had its origins in the amalgamation of 5 financially troubled railways during the years 1917-23: the GRAND TRUNK and its subsidiary, the GRAND TRUNK PACIFIC; the INTERCOLONIAL; the CANADIAN NORTHERN; and the NATIONAL TRANSCONTINENTAL.
The Grand Trunk was itself an amalgamation of various smaller lines, including the 23.2 km CHAMPLAIN AND ST 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 1600 km of the Laurentian Shield. Those challenges were faced after Confederation by the government-owned Intercolonial from Halifax to Québec City and by the heavily subsidized CANADIAN PACIFIC RAILWAY.
Although Canada by the 1890s was traversed from sea to sea by the CPR, the issues of monopoly in the West and of partisan politics federally led to further transcontinental ventures. The Canadian Northern, founded by William MACKENZIE and Donald MANN, was begun with small Manitoba lines in 1895. 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 and, when WWI diverted the credit of English banks, the debt loads of these railways had to be absorbed through government nationalization.
Completion of government ownership in the early 1920s led to the appointment of Sir Henry THORNTON as CN's first president. 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 BROADCASTING, RADIO AND TELEVISION). Unfortunately, partisan politics forced Thornton's resignation in 1932.
Economic depression in the 1930s reduced traffic volume, leading to cuts in wages and dismissal of employees. 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, before WWII CN was able to purchase and to finish and service in its own huge shops at Pointe St-Charles, Montréal, a large number of Canadian-built steam locomotives, in particular the 4-8-4 Northern type, which hauled millions of tons of freight and thousands of troops during the war.
In the 1950s and 1960s CN was modernized under the dynamic presidency of Donald GORDON, who rationalized 80 subsidiary companies down to 30, one of which, CN Marine, operates all ferry service in the Atlantic provinces. Gordon also directed the conversion to diesel locomotives and electronic signalling while adding to CN assets the Queen Elizabeth Hotel (1958) and a new head office in Montréal.
By the end of the 1970s CN had merged its own system of telecommunications with that of CP, and completed construction in Toronto of the CN TOWER. 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. In early 1988 CN announced plans to sell off its many hotels.
Two problems remain characteristic of CN as a huge crown corporation with profits in 1985 of $75 million. Financially, it has until recently depended on federal subsidies to compensate for statutory freight rates in the long-distance haulage of Prairie grain (see CROW'S NEST PASS AGREEMENT). Politically, ownership by the federal government has often influenced high-level appointments with at least as much respect for partisan interest as for "hands off" direction. In 1997 CN shed much of its track and staff and returned to profitability. In February 1998 it purchased US rail company Illinois Central Corp for $2.4 billion, making CN the 5th largest railway in North America.
See also RAILWAY HISTORY.