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.

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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?

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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.

CNR's Montreal-Vaudreuil Commuter Trains

The Canadian Railroad Historical Association 'News Report' of June 1958 stated:

In September 1958 a 'foamer' - rather, a dribbler - is there to take in the steam power before it is too late. The location is Lachine: 45th Avenue, at Rene Huguet. The train is westbound for Dorval in the afternoon - and probably after a nap.

For the sake of future Lachine historians, the photo book also records that the 'Lachine extension' streetcar (discontinued by this time) formerly came up 45th and followed Rene Huguet west to the track's stub end at 55th Avenue. There, the operator took his control handle to the east end (making it the 'forward' end of the car) and returned to the intersection of Broadway and St. Joseph where passengers could transfer to the main Montreal streetcar system. Elsewhere, this Lachine extension route was referred to as the 92.

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The West Island Suburban Commuter Service Originated with the Grand Trunk Railway.

As a matter of course, the Grand Trunk had local stops along the line leading westbound from its downtown Montreal terminal - Bonaventure Station - from the time the railway's operations began.

The map above, a fire insurance key map from 1907, shows the Grand Trunk Railway (later Canadian National Railways) line from downtown Montreal to Vaudreuil. The Grand Trunk/Canadian National suburban passenger service on this track segment is the focus of this post.

Without access to original timetables from its first 60 years of operation, I chose the announcement below from the April 23, 1908 Montreal Gazette to demonstrate that local transportation was an important part of the Grand Trunk's service long before the 1950s-style suburbs were built up on 'The West Island'.

Sadly, for yesterday's typesetters (and today's screengrabbers), a proper timetable was not printed in the newspaper - the GTR could have purchased an advertisement to do that. Instead, each change was labouriously presented as part of a long thin column.

Beginning with the revised timetable at GTR headquarters, and ending with the final setting and checking of type at the newspaper, one can only imagine the attention to detail required to avoid errors and subsequent complaints.

Going through the text gives today's reader an idea of the stations then in service and the relative frequency of the service. Obviously, eastbound long-haul trains would probably not be particularly dependable for commuting daily between Vaudreuil and Montreal - yours might be stuck in snow just outside of Toronto, for example. 

By the same token, with organizational efficiency, telegraph or telephone communication, and station-front chalk-actuated schedule boards .. intermediate passenger stations might have been just as good as modern transportation systems in keeping passengers informed about schedule delays. 

(To see the source of any of my purchased photos, simply 'right click, save as ..'  to read the photo's label.)

This is probably a builder's photo showing the suburban Forney as delivered by the Montreal Locomotive Works in 1914. In the US, Matthias Forney 1835–1908 invented this particular configuration of steam locomotive for use on New York's urban elevated train system.

The Grand Trunk numbered the engines 1540-1545 while the CNR renumbered them 45-50 after it took over the Grand Trunk in 1923. 

You can see that the locomotive was designed to offer the engineer almost equally clear views for both forward and reverse running. On such a short run, it was faster and cheaper to run the locomotive around the coaches for the return trip - rather than turning it on a turntable (and there was no turntable at either Vaudreuil or Dorval in any case).

Here are examples of changes made to this locomotive class, which can be seen in these photos: 

• Addition of a powerful headlight for reverse operation.
• Addition of an Elesco feedwater heater - between the illuminated number boards and the stack. This cylinder-shaped device was a heat exchanger - used to preheat the cold tender water before it was injected into the hot boiler. 
• Shielding of the whistle (it was also moved forward on the boiler) and the safety valves from the cab - likely for ergonomic reasons.
• Probably - boosting the capacity of the air pumps (fireman's side) to decrease the time required to recharge the brakepipe, release the brakes, and race off to the next stop.
• Addition of a pilot (cowcatcher) on the rear end for reverse running.

Generally, the Montreal passenger terminal for the Grand Trunk was located above at Bonaventure Station (beginning in 1863. Another date: the Grand Trunk converted from Provincial to Standard Gauge in the Montreal area in 1873. And .. the line passing the old Lachine station to Dorval was double-tracked in 1892). Freight sheds were located here at Bonaventure as well. The station's history is discussed in a previous post on this website. This view is probably from the late 1920s. You can see the ghostly image of the CPR's Windsor Station headquarters in the background.

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Many North American railways saw their highest traffic levels during World War Two. This came after the track abandonments and cutbacks arising from the Great Depression. Below is the Montreal-Vaudreuil passenger schedule from my often-scanned 1944 Canadian National Railways public timetable.

It would have been interesting to see the wartime traffic associated with Y Depot, RCAF and the airport at Dorval. A large veterans' hospital had also been established at Ste Annes near the end of World War One.

The commuter trains are shown with numbers in the 200 series. In many cases, we can conclude that immediately after arriving at Bonaventure or Vaudreuil, equipment reversed and returned under another train number.

The photo above was taken in 1944. It shows an afternoon westbound at the Lachine station.

Before 1914, a variety of small locomotives powered these local trains. From 1914 until almost the end of the service in 1960, this specially-designed class of Forney-type locomotives was used.

*  *  *

The fenced railway line through Lachine (along today's Victoria Street) was the mainline between Montreal and Toronto and trains travelled at a high rate of speed - even in the early 1960s when western Lachine was well built-up.

A Gazette article from October 31, 1932 records the consequences of not looking carefully for high speed trains before venturing across the tracks.

*  *  *

The photo above, taken at Ville St Pierre in the 1950s, shows a CNR suburban train with its locomotive reversing eastbound toward the Bonaventure terminal. In the foreground is a Lachine, Route 91 streetcar - it is travelling on the separate railway system used by the Montreal streetcars. A CNR freight train is on the far track.

CNR posed publicity photographs were often taken at Dixie station - just west of today's 55th Avenue, Lachine. The Lombardy Poplars, tangent track and clear skyline helped show off any train's 'lines'. Beginning with the club's opening here in 1890s, golfers travelling to the Royal Montreal Golf Course would use this stop.

Looking at this westbound suburban train in an undated photo, you may have concluded by now that normal procedures involved running the suburban locomotive 'forward' westbound and 'backward' (coal bunker first) when returning to Bonaventure.

Having thought about the reason for this, I think perhaps this would give the engineer the best possible view of trackside signals when operating in either direction ..

Westbound, all steam engineers on CNR engines would have to look along the long obstructive barrel of the boiler to find their signals.

Eastbound, when reversing the Forneys, only the small coal bunker would block the engineer's view as he looked from the left side of the reversing locomotive to the right side of the track where his signals were displayed. While firemen routinely assisted in relaying signals, having the engineer in the best position to read them himself was probably preferable.

At Vaudreuil, an intercity westbound passenger train is shown at the western terminal of the GTR/CNR suburban service.

*  *  *

The 'You Don't Have to Ask Twice' Department

It was surprising to find this Gazette article from November 9, 1949. Usually, today's consumers seem to want 'more competition and more choice'.

In this case, the request was made by people not served at all by the CNR line.

The extraordinary wartime demands of the early 1940s were the exception. Beginning in the 1920s Canadian railways foresaw that private autos and commercial aircraft would eat away at their intercity passenger business.

.. Eventually, they got their wish.

*  *  *

As the following extract from a CNR employee timetable from 1957 shows: In the late 1950s, the CNR 200 series trains providing commuter service to the 'West Island' went no further than Dorval. As well, their eastern terminal had become Central Station, rather than Bonaventure Station.

In the 'Train Order Office' columns above, notice how many of the stations still had (D)ay and (N)ight operators to support train operations.

A few more details on local operations follow below.

*  *  *

Doug Wright did wonderfully accurate editorial cartoons for the Montreal Star newspaper which regularly featured railway subjects. This 1950s cartoon was reprinted in CRHA's Canadian Rail newsletter in the early 1960s. My father captioned the location and identified the train.

In the cab, the fireman is watching the passengers on the platform and waiting for the highball from the conductor.

The topographic map above is updated to 1952 and shows the CNR right-of-way through Lachine along today's Victoria Street. The 'Victoria' name was not a 1960s selection - the street name already existed on a shorter segment of street which paralleled the railway line in the east end of Lachine around the time of World War One.

On the map above, I have made the following marks, running east to west:

• Green Dot - top right corner, marks the location of Bonaventure Station

• Red Dot - shows the location of the wye at St Henri Station. Its south leg led to Central Station, the Victoria Bridge etc.

• Blue Dot - marks the almost complete circle of the Turcot roundhouse

• Red Dots - four of them - are positioned beside the station buildings which are shown on the map. Notice that these stations are not located near the CPR line through 'Forest Hills' - so local residents could not use CPR commuter services as an alternative.

*  *  *

Here is detail from a larger photo of the Turcot Yard facilities. Today the Turcot highway interchange towers right over the area formerly occupied by the roundhouse. One of the CNR Forney locomotives is ready to return to service and is waiting its turn for a spin on the turntable.

We meet again.

With its main rod removed a CNR Forney awaits its fate at Turcot Yard, July 1961.

CNR's Montreal Passenger Terminals Tribulations

In the News of Railroads column in the Montreal Gazette of August 20, 1909 this article appeared.

Spoiler alert: Except for the strange passenger 'Pool Train' era between the Great Depression and the 1960s, the Canadian Pacific would never share Place Viger, or any other Montreal passenger facilities with the Grand Trunk, Canadian Northern or the Canadian National.

Below is an undated photo of the Canadian Northern Railway's Moreau Street station - perhaps circa 1925. The facilities and location 'came with' yet another railway the Canadian Northern builders had bought. This location was not in the downtown area or the business district, and the facilities are not really consistent with the image which a transcontinental railway would want to project as it entered Canada's largest city. 

from: The Mount Royal Tunnel, Anthony Clegg; 1963; Railfare.

Because the railway needed a respectable, convenient and efficient downtown station, the Canadian Northern builders devised their scheme to tunnel through Mount Royal from the north. 

With the sale of house lots from a new prestigious 'model city' known as the Town of Mount Royal, they hoped to fund most of the cost of the tunnel. Residents of TMR, after a short walk to the local Canadian Northern station, would ride modern electric trains to the downtown Canadian Northern terminal in about 10 minutes.

*  *  *

The Great War, 1914-1918 caused a scarcity of capital and bankrupted the Canadian Northern and Grand Trunk Railways.

The Canadian Pacific had unselfishly offered to take over the government's orphan railways and run them efficiently as a business (and as a Canadian monopoly) - but governments held back on accepting this offer.

Here is what the Canadian National Railways were using for Montreal terminals in 1929 ..

Undated photo from: Canadian Rail; July 1980; Canadian Railroad Historical Association.

Moreau Street - perhaps this is its 'good side'.

Unused postcard, probably c1920.

Bonaventure Station, rebuilt with loving austerity by the Grand Trunk after its wartime fire.

from: The Mount Royal Tunnel, Anthony Clegg; 1963; Railfare.

The former Canadian Northern Railway Tunnel Terminal - a glamourous hole in the ground in the Montreal city centre. It is virtually 'unspoiled' from its original design - in this 1930 photo. The south portal of the Mount Royal Tunnel is under the camera's location.

Used postcard, mailed in 1911.

I believe that the Canadian National Railways (a federal crown corporation) used the old Grand Trunk Railway's headquarters in Montreal for its railway operations headquarters. Of the four, this is the only building which still exists.

Here are the street locations for the above four facilities as the streets are named today - I am using a convention that the St Lawrence River is to the 'south' of the downtown area:

• Moreau Street (officially: 'Montreal', then 'St Catherine St East' station): north-west corner of Ste Catherine Street and Moreau Street

• Bonaventure Station: south-west corner of Rue St Jacques and Rue Peel

• Tunnel Terminal: south-west corner of today's Central Station building on Rue de la Gauchetiere

• Grand Trunk Headquarters: north-west corner of Place d'Youville and Rue du Square Victoria

In Report on Railway Terminal Facilities at Montreal by Frederick Palmer, M.Inst.C.E., M.Am.Soc.C.E. of Rendel, Palmer & Tritton, Consulting Engineers of London, England, dated January 31 1929, the report begins:

The terminal passenger accommodation at Montreal on those railways which became absorbed in the amalgamation constituting the Canadian National Railways exists to-day probably as first constructed many years ago, and can now only be described as quite obsolete.

That's his very first sentence exactly as written. Then it gets better. 

Here is a map which Mr Palmer drew which lays out the status quo.

map from Report on Railway Terminal facilities at Montreal; January 1929; Palmer.

• Canadian National Railways tracks are represented in green. 
• Bonaventure is near the Tunnel Terminal. 
• Moreau St is the green stub in the east end under the writing 'Ontario St'.
• Canadian Northern had dispatched most of its power (locomotives) from Val Royal or 'Cartierville' - consider that the tunnel had electric locomotives or electric self-propelled cars and that steam replaced the electrics at the northern end of the catenary.
• Grand Trunk sent power from Turcot.

So the Canadian National Railways transportation system in Montreal was the heir to all these separate passenger arrangements - in addition to all the various locomotives, cars, yards, interlockings and spurs needed to handle freight traffic. To make things more complicated, consider just a few the diverse facets of the railway business back then and all the manual or procedural skills needed to keep all the elements functioning ...

Consider seasonal demand spikes for passenger holiday travel, employee discipline for safety violations, snow clearing, seasonal demand spikes before the end of the Montreal shipping season, express and postal business, shop staffing and supervision, train dispatching, crew calling, ordering and managing materials such as replacement rails and switches, waybilling and invoicing customers, employee timetable preparation, public timetable preparation, ticket stock printing, block ice supply and storage for refrigeration and air conditioning ... employee morale.

D.B. Hanna had been carried over from the Canadian Northern as a knowledgeable 'caretaker' and the CNR's first President. As Hanna completed his long career, Henry Thornton - an experienced railroader literally capable of organizing a railway in a war zone - was the true leader which Canadian National really needed at this point in its history. 

This was the 1920s! RCA! Automobiles! Aviation! Canadian gold mine investments! Ordinary first-time investors getting rich with leveraged stock market funds, which contained other stock funds, which contained the highest performing stocks - bought on margin! .. 

.. With the Canadian government's enthusiastic support of the progressive American railroad professional Sir Henry Thornton, Chairman of the Board and President of the Canadian National Railways from 1922 to 1932, anything was possible! 

Spoiler alert: Anything was possible .. until the Great Crash later in 1929 and the election of R.B.Bennett and his Conservative government in 1930. Thornton's biography The Tragedy of Henry Thornton begins with a quote:

'Now hath the butcher's dog pulled down the lordliest buck in England.'

But that's still a few months off. So Palmer's report came out in January 1929, and the media strategy was put into play ..

The Montreal Gazette of February 27, 1929 reported: 

Here's part the Montreal Terminals legislation which received Royal Assent on June 14, 1929: 

Canadian National Montreal Terminals Act, 1929

The Governor in Council may provide for the construction and completion by the Canadian National Railway Company (hereinafter called “the Company”) of terminal stations and offices, local stations, station grounds, yards, tracks, terminal facilities, power houses, pipes, wires and conduits for any purpose, bridges, viaducts, tunnels, subways, branch and connecting lines and tracks, buildings and structures of every description and for any purpose, and improvements, works, plant, apparatus and appliances for the movement, handling or convenient accommodation of every kind of traffic, also street and highway diversions and widenings, new streets and highways, subway and overhead streets, and also approaches, lanes, alleyways, and other means of passage, with the right to acquire or to take under the provisions of section nine of this Act or otherwise lands and interests in lands for all such purposes, all on the Island of Montreal in the Province of Quebec, or on the mainland adjacent thereto, as shown generally on the plan or plans thereof to be from time to time approved by the Governor in Council under the provisions of section seven of this Act; the whole being hereinafter referred to as the “said works”, and a short description whereof for the information of Parliament but not intended to be exhaustive, being set out in the schedule hereto.

[ ... ]

Schedule:

(a) Central Passenger Terminal facilities, and office buildings, including baggage, mail and express facilities, on the site of the present Tunnel Station, and generally covering the area bounded by Cathcart Street, St. Antoine Street; Inspector and Mansfield Streets, and St. Genevieve Street;

(b) Viaduct and elevated railway between Inspector and Dalhousie Streets, and St. David’s Lane and Nazareth Street to near Wellington Street, and thence along Wellington Street to Point St. Charles Yard and Victoria Bridge, crossing over existing streets, and with connections to existing railway facilities and Harbour Commissioners’ trackage;

(c) Coach yard facilities at various points, with principal yard at Point St. Charles;

(d) Grade separation by means of elevated, or depressed, or underground tracks, or streets, as may be determined on the existing railway between Bonaventure and Turcot and connection to the viaduct referred to in paragraph (b);

(e) Grade separation by means of elevated, or depressed, or underground tracks, or streets, as may be determined between St. Henri and Point St. Charles;

(f) Railway from Longue Pointe yard to the Northwest and thence Southwest to connect with the existing railway at and near Eastern Junction;

(g) Railway from the Cornwall Subdivision in the vicinity of Pointe Claire to the L’Orignal Subdivision in the vicinity of Val Royal;

(h) Railway between the Cornwall Subdivision near Lachine and the Lachine, Jacques Cartier and Maisonneuve Railway, near Western Junction;

(i) Railway from a point on the line between St. Henri and Point St. Charles near Atwater Avenue, along the River St. Pierre and the Aqueduct Tail Race to the waterfront, and construction of yard facilities on the Waterfront with connection to existing lines and Harbour Commission trackage;

(j) Local station facilities, engine and other railway facilities, signalling, electrification, and electrical equipment on present and proposed railways;

(k) Connections and transfer facilities to the tracks of the Montreal Harbour Commission near Longue Pointe, and/or at a point further East, and connections and transfer facilities to the C.P.R. East and South of the Lachine Canal, and at other points, except at Forsythe (now Rouen Street.) The Company to pay part cost, to be determined, of facilities jointly owned or jointly used.

The estimated cost of the said works is $51,409,000.

Here is the full text of the law :

http://laws-lois.justice.gc.ca/eng/acts/C-19.1/

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Next is part of Page 7 from:

Annual Report of the Canadian National Railway System

for the year ended December 31, 1938

Very few of the Palmer report's recommendations about the Montreal passenger terminals problem had been put into action during the 'lost decade' of The Great Depression.

(I included the western line abandonments for fans of western Canadian railroading.)

The 'co-operation' referred to would result in what you might call Circus Trains - the silly, confusing Pool Train scheme in eastern Canada which endured until the mid-1960s. Rail companies don't compete with each other in our modern age - they compete with rubber tires on 'free' roads.

A very long article in the Gazette of December 22, 1938 expresses the hopes of many that at least Christmas and the New Year of 1939 could be celebrated with new jobs and possibly a general economic improvement at some point in the future.

*  *  *

Before the CNR Montreal Terminals problem could finally be resolved, re-employment of Canadian workers came from another source.

The 'economic improvement', human misery and the often grim outlook for the 'Free World' brought about by World War Two began about 8 months later.

If you want to get something accomplished, go to war?

From the Gazette of April 3, 1943 - during some of the darkest days of the war.

The CNR public timetable of April 30, 1944 shows that 35 years after the Canadian Northern announced its new Montreal to Quebec City trains, operating out of Moreau Street ...

Moreau Street was still being used for some CNR passenger trains.