CNR Financials, 1928

The historical era ...

from: History of the Canadian National Railways; GR Stevens; 1973; Macmillan.

CNR broadcasting poster from 1926.
The CNR system was the nucleus of what later became the CBC.
The Ottawa antenna location shown is the roof of the Jackson Building (Bank and Slater Streets).

from: 150 Years of Canadian Railroads: Bernard Fitzsimons; 1984; Royce Publications.

In 1928, one diesel motor is being lowered into CNR's pioneer diesel-electric 2-unit locomotive - CNR 9000.
Location: Canadian Locomotive Works, Kingston, Ontario.

from: Railways of Canada; 1973; OS Nock; A and C Black. 

Sir Henry Thornton, 1871-1933
First President of the Canadian National Railways, 1922-1932.

Born in the US, and knighted in Britain for his transportation work during the Great War,
Thornton was hounded, disgraced and dismissed by a newly-elected Canadian government for his efforts
(and spending) to reorganize and modernize the CNR.
He died less than a year after leaving his CNR post.

*  *  *

Below are three pages which outline the financial condition of the CNR in 1928.

from: The Financial Post Survey of Corporate Securities; 1928; Maclean Publishing Company.

The commentary notes that there is 'no stock investment interest' in the CNR. During the railway capital crisis - which began in earnest with the Great War 1914-1918 - every spare dollar was taken out of Canadian railways and put into more profitable investments. Companies with contracts with the British government to make tin hats, 'iron rations' for the front, and ammunition would turn handsome profits. Railway lines through the sparsely-populated Canadian wilderness would only attract 'patient investors' - and there were few of those as the war got going.

Unable to raise further capital, and without enough revenue to keep the wolf (the banks) from the door, the Canadian Northern, Grand Trunk and others had their capital stock seized. Much of it had been pledged as security for loans, for government grants and through bond indentures.

The Canadian government ended up holding the railways' capital stock. To forestall legal claims from the builders/owners/shareholders, all that was left to do was to set up arbitration panels to determine the stock's 'real value'. The whole financial mess was eventually consolidated into the Canadian National Railways.

In the statements, you can see some of the interesting and descriptive old company names.

from: The Financial Post Survey of Corporate Securities; 1928; Maclean Publishing Company.

In history, railways were important in the development of modern financial techniques - taking investors' money and, in exchange, issuing security certificates - such as shares, bonds, debentures and equipment trust certificates. Previously, there had been very few businesses which needed so much investment to become established - railways needed a lot of heavy equipment and supplies to build and to operate.

• Shares evidence ownership and generally include some influence on how the business is run. In the event of a business winding up, after debtholders are paid off, the owners get the residual.
• Bonds are usually secured on particular corporate assets - the latter may be seized if there is a default on interest payments or a default on the scheduled bond redemption. 
• Debentures (are like bonds, but) are issued on the general credit of the company. Without something to seize, these creditors may be out of luck if the company's credit worsens. 
• Equipment trust certificates are secured on a particular series of rolling stock. 

Before any paper certificates were issued by the railway companies, all of the original 'securitization' was done through appropriate legal processes to satisfy investors that their money was secure at the moment it was invested with the company. 

Below is a modern version of the process of pricing and selling bonds (debt securities) to the original investors. The issuing [railway] company uses underwriters to distribute and sell their bonds - which, at face value, are priced at $100. You can see how the underwriters buy the bonds at less than face value from the company, and sell them to investors at '$100'.

from: The Canadian Securities Course; 1990; The Canadian Securities Institute.

If a company ever hopes to issue more stock or more debt securities in the future, it must be run in a prudent financial manner ...

Once the company has the original money from the underwriters, 'the market' puts its own price on each type of security. Marketable bonds (like stocks) are generally traded between investors on a secondary 'bond market' - where their prices also rise and fall like stocks. 

The pricing of marketable bonds is very complex (it's all about the 'time value of money' and what 'future payments' are worth) but, generally, if prevailing interest rates go up, the prices of bonds already issued go down - i.e. below $100. And vice versa.

Potential bond investors in 1928 would have been interested in the financial condition of the government-owned CNR. If the bonds were backed by a government (i.e. 'government guarantees') and/or they seemed like a good risk, they might prove to be a good investment. The bonds listed were all 'Outstanding in the hands of the public'.

To buy or not to buy?

*  *  *

Below, you'll notice that Sir Henry Thornton is also on the board of Canada Steamship Lines.

from: The Financial Post Survey of Corporate Securities; 1928; Maclean Publishing Company.

from: Canada 1935 - The Official Handbook of Present Conditions and Recent Progress; Dominion Bureau of Statistics.

By the time the photo above was taken,
the faith of the general public in the stock market and in the financial system had been destroyed ..
by the Great Crash and the ensuing Great Depression.

America's Largest Railway, Part 2 - Freight

from: America's Largest Railway, 1950, Canadian National Railways. Collection of LC Gagnon

from: America's Largest Railway, 1950, Canadian National Railways. Collection of LC Gagnon

The setting sun casts shadows on the former Grand Trunk Railway Bonaventure passenger station -
seen at the end of the new freight sheds.

from: America's Largest Railway, 1950, Canadian National Railways. Collection of LC Gagnon

from: America's Largest Railway, 1950, Canadian National Railways. Collection of LC Gagnon

from: America's Largest Railway, 1950, Canadian National Railways. Collection of LC Gagnon

The Newfoundland Railway was added to the CNR when Newfoundland joined Confederation in 1949.

from: America's Largest Railway, 1950, Canadian National Railways. Collection of LC Gagnon

"Freight comes to use in all shapes and sizes and we are equipped to handle all of it."

from: America's Largest Railway, 1950, Canadian National Railways. Collection of LC Gagnon

from: America's Largest Railway, 1950, Canadian National Railways. Collection of LC Gagnon

To Ottawa in 1965

On a CRHA Excursion - May 30, 1965.

I don't know who these people are.
You can see the convenience of having a civilized terminal with coach-floor-level platforms.

During this era, excursion steam locomotives could still back in on their trains before departing for points south or west from Central Station. However, they could not pull their trains into and under Central Station on their return - so the steam locomotives were generally cut off at Turcot Yard.

I can identify these two kids.

Arriving early is beneficial because you get to pick a good seat, reserve it with a coat or a picnic lunch ... AND if you hang around the power, you might be invited into the cab. Particularly if you dress in a 'professional' manner.

The D-1 is a self-propelled car, formerly used to maintain low-ridership passenger service on branchlines. It was retained and altered to support maintenance of the local CNR catenary. 

CPR Windsor Station is in the background and I believe that is the CP Chateau Champlain being erected.

A runpast up Vaudreuil hill.

Captain Noel of the CN Police (foreground) was a regular fixture on these fantrips.
CRHA volunteers provided passenger support during detraining and entraining.
The CNR Police were there to supervise overall safety.
The ubiquitous CN orange step box can be seen on the ballast.

Climbing over right-of-way fences for good/safe photo vantage points,
avoiding 'soakers',
and clambering up from the ballast onto the coach steps,
... were skills developed by young railfans.

Here is the watering stop at Alexandria, Ontario.
A small antique pumper truck provided the water.

Local fire departments usually did the honours for water.
Coal (needed less frequently) was usually supplied by clamshell buckets at the excursion's turn-around point.

The heavy infrastructure to re-supply steam locomotives had been demolished almost everywhere by this point.

The view from the rear of the train at Alexandria.
The clear signal notwithstanding, we are headed in the other direction.
I believe the track leading off to the right was an industrial spur.

'Coming into Ottawa.'

The steam beneath the tender is probably exhaust from the coal auger - part of the automatic stoker system.

*  *  *


A Brief Digression on 'The Railway and Ottawa's Urban Planning Process' ...

from: Ottawa Terminals Employee Timetable; Canadian National Railways; September 26, 1954, my collection.

Our excursion is approaching on the Alexandria Sub at the right
and arriving at Union Station at the top edge of the map.

For people not familiar with Ottawa's geography ...
As a convention for this post, I will refer to moving over the Ottawa River toward Quebec as 'north' 
and moving in the opposite direction as 'south'.

from: Railways in Ottawa Today; Douglas E Stoltz; Canadian Rail; April 1965; Canadian Railroad Historical Association. Collection of  LC Gagnon.

My father recorded that the entire train reversed into Ottawa Union Station
and you can see there are opportunities to wye the train on the approach to Ottawa.

The article for which this map was drawn detailed all the changes to Ottawa trackwork. For people like me who are less familiar with how the rail network was built and used, these articles are great. I'll leave all the details about Ottawa rails to experts on the subject.

Ottawa (along with other Canadian cities) was undergoing a great transformation during this period. The domination of coal-powered steam railways ... with all their refueling coal dust, street-level hazards and traffic obstructions, noises, dirty oily 'rain', and black sooty 'snow' ... had ended with the CNR/CPR official death of steam in 1960. 

Modern urban planning practices of the 1950s and early 1960s promoted the new domination of clean, quiet, rubber-tired internal combustion vehicles. Bigger wider roads, boulevards and parkways would quickly get workers and their families to their destinations - on their own schedules. 

In hindsight, it would have been nice if a mass transit node, in the form of a downtown railway station, had been allowed to survive the automotive onslaught. In this Canadian Rail article, even the planned demolition of the Union Station building was mentioned.

from: from: Railways in Ottawa Today; Douglas E Stoltz; Canadian Rail; April 1965; Canadian Railroad Historical Association. Collection of  LC Gagnon.

Our excursion was travelling from the lower right corner of this photo, to the terminal fan of tracks seen to the right of the Parliament Buildings.

Caption from the 1965 article:

'CNR former roundhouse and coachyard. Double track through centre of photo is CN Alexandria Sub and the line to its right is CPR M&O Sub. Where they meet is "Deep Cut" and beyond it is the coachyard and Union Station. All other tracks are now gone: NYC installations on right, CNR on left. One year ago the CNR wye area looked almost the same as in this photo - now an expressway interchange is under construction here.'

Canada was celebrating its 100th anniversary of Confederation on July 1, 1967 so there was added urgency to complete the modernization of Ottawa's infrastructure. 

If the Canadian flags in the slides which follow look crisp and new, they are, as the 'Maple Leaf' was officially flown for the first time on February 15, 1965.

Unused postcard, my collection.

I have toned-down some of the colourization of this black and white photo so the local railway details can be seen more easily. I am guessing that this photo was taken in the 1945-1950 period before intercity passenger and freight transportation went to the post-war highways.

Unused postcard, my collection.

Here is the Union Station building, looking 'south' with the Rideau Canal beside it.

In the foreground is the CPR track leading to the 'Royal Alexandra Interprovincial Bridge' and Quebec.

from: Ottawa Union Station Closes; July/August 1966; Canadian Rail; map by Tony Clegg. Collection of LC Gagnon.

Here are some early details of the Union Station terminal area.

Postcard mailed 1910, my collection.

At one point the CPR seems to have had a glorified yard ... looking 'north' of Union Station. 

Looks may be deceiving, though - 

for at least part of its life, the Alexandra Bridge carried a separate streetcar line as well.

from: The National Capital Plan Exhibit - a Guide to the Plans; no date; The National Capital Planning Committee/ J Gréber, consultant; The Federal District Commission.

My father picked up this pamphlet during a visit to Ottawa in the 1950s.

It was probably handed out at a display of models showing Ottawa's proposed redevelopment.

Notice that in this dystopia all is surrendered to the automobile.

• Union Station has been razed.
• An interprovincial road carries traffic along the canal - including between Parliament Hill and the Chateau Laurier.
• Somehow, model trees far outnumber model autos.
• No public transportation can be seen.

*  *  *

Back to the Excursion ...

"Vnion Station" in May 1965.
The 'Romans' who originally built the station did not write the letter 'U' as we do today.
(These slides are about as old as the station was then.)

Looking 'north' - the Rideau Canal locks and the bridge.

Fun on the Hill.
Those are parked cars. Parking was free, but you had to parallel park all by yourself.

Royal Alexandra Interprovincial Bridge
Although Union Station was to be closed in 1966, this bridge still carried trains at this point.
On the far (Quebec) side you can see the railway grade continuing off at exactly the same level.

Here is a look at our train before departing Ottawa.

At the Alexandria water stop there is the usual tender-top excursion train conference.
With some 'waters' chemicals were added to prevent foaming in the boiler and mineral deposits.

A frequent experience at these stops (seen above)
was a too-hot fire/boiler setting off the thunder of the high-pressure safety valve

- a deafening, technically wasteful ... but exciting demonstration of the power within.

Back at Turcot Yard, 6218 is cut off before a diesel pulls the consist in under Central Station.


Below is the CRHA flyer section offering our excursion, complete with Sunday's projected schedule.
During the summer, the railways still operated on Standard Time
so there were always addition calculations for passengers.

And here is one of many preserved CRHA excursion tickets with its stub detached.

America's Largest Railway, Part 1 - Passengers

Cover: America's Largest Railway, 1950, Canadian National Railways. Collection of LC Gagnon

In 1950, when this pamphlet was obtained by my father, the Second World War had been over for about 5 years, and Newfoundland had just joined Canadian Confederation during the previous year. 

The government-owned transportation system had inherited and developed many different transportation modes and services and this booklet described most of them. As well, the history of the crown corporation was outlined in a couple of short write-ups.

This first post of a series will deal mainly with passenger-related services ...

The history mentioned above appears at the end of this post.

This highly staged 'hooping up' of train orders 'on the fly' included an operator with very shiny shoes. The second set of orders for the conductor in the operator's left hand seems to be crimped into a wire coat hanger. Generally, a similar wooden hoop with a shorter handle would have been used. Unfortunately the locomotive's running gear was underexposed.

The publicly-owned transportation services of Newfoundland became the responsibility of the CNR in 1949. The vessel above is the Bar Haven - one of 14 vessels in the CNR's Newfoundland fleet. The booklet makes the point that there were few roads on the island. Most of the coastal fishing communities were reached only by ship. The racks on the shore are probably wooden fish flakes which were used to dry cod for export.

TCA later became Air Canada. It was subsequently privatized.

As usual, it looks like this stationary publicity shot was taken somewhere on Montreal's 'west island'. There seems to be some photo shop fiddling around the side of the railway post office car - immediately behind the locomotive - to denote speed. 

Welcome Traveller/Bienvenue, half-sheet pamphlet circa 1950. Collection of LC Gagnon

This bilingual pamphlet (English interior below) interprets part of the CNR's post-war passenger coach acquisition effort. Many of us can remember the metallic sound of those 'crash bars' on the doors because a good number of these coaches were passed on to VIA Rail.

Back to 'America's Largest Railway' ...

"Travel is pleasant in air-conditioned coaches of the Canadian National, with adjustable seats and wide windows."

The corridor to end of the car can be seen under the lights along the left side.
Travelling along that corridor, you would find doors to the reserved, extra-charge bedrooms along the wall on the right side of the corridor.

Anecdotally, railways often used office staff to populate the trains in their advertisements. The equipment would generally be stationary in a railway yard for the company or agency photographer to do the work. 

... High-speed intercity travel didn't lend itself to taking time exposures of carefully-posed subjects.

Here is the history mentioned earlier ...