Van Horne had been with the Chicago, Milwaukee & St. Paul for just over a year and a half when he was invited to move north to become general manager of the Canadian Pacific Railway. Although he was only thirty-eight, he was already a seasoned railroader whose tenacity, resourcefulness, and capacity for hard work had attracted the attention of senior railroading men in the United States. One of these men, a transplanted Canadian named James Jerome Hill, persuaded the CPR’s president, George Stephen, to make the offer that would launch a new chapter in Van Horne’s life.
5
Van Horne Moves to Canada
William Van Horne first met James Jerome Hill, an almost mythical American railway magnate, in 1876, when he was busy transforming the small, bankrupt Southern Minnesota Railroad into a paying property. Hill, who had settled in St. Paul, Minnesota, was then reorganizing the St. Paul, Minneapolis & Manitoba Railway with the aid of several associates, two of whom — Donald Smith and George Stephen — were Scottish Canadians. Hill quickly became Van Horne’s mentor and friend. That they were attracted to each other is not surprising. Both were driven, gifted, practical railroading men with inquiring minds, amazing stamina, a strong aesthetic streak, and a passion for art. They even bore a striking physical resemblance to each other — stocky, bald, and barrel-chested.
In 1881 it was Hill who suggested to George Stephen, the CPR’s president, that Van Horne be invited to become general manager of the fledgling company, incorporated earlier that same year. Relatively little of the CPR’s main line had been built by then, and the CPR syndicate was eager to see the pace of construction speeded up. “You need a man of great mental and physical power to carry this line through,” Hill wrote to Stephen. “Van Horne can do it. But he will take all the authority he gets and more, so define how much you want him to have.” Van Horne was indeed the ideal choice for pushing through the construction of the railway. For one thing, he had a practical knowledge of almost every department of railway work, from the construction of bridges or the laying of curves to the management of an extensive system. He also had the ability to make tough decisions, an asset that would prove indispensable to building the CPR.
James J. Hill, empire builder of the American Northwest and Van Horne’s friend and arch railroading rival.
Courtesy of Library and Archives Canada, C6654.
The construction of a transcontinental railway had been a central issue in Canada ever since Confederation in 1867. Many people all across the wide, sparsely populated country believed that a ribbon of steel was essential to the survival of the fragile Canadian union. The framers of the British North America Act had even incorporated the Intercolonial Railway in Canada’s constitution, and the terms of British Columbia’s entry into Confederation in 1871 also contained a provision calling for the construction of a transcontinental line.
The new federal government had been able to complete the eastern section of the project quite easily by finishing the construction of the Intercolonial Railway in 1876, the first through-train arriving at Quebec from Halifax on July 6 of that year. The western section would pose far more problems and take much longer to complete. Prime Minister Sir John A. Macdonald made the first attempt, placing a privately owned syndicate headed by the wealthy shipping magnate Sir Hugh Allan in charge. The entire enterprise soon collapsed, however, when it was reported that Allan had contributed large sums of money to Macdonald’s party during the hard-fought election campaign of 1872. The eruption of the “Pacific Scandal” and the findings of a royal 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