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Livio, interesting post. It would be interesting to take that second graph back in time a bit, because it shows quite dramatically the rise of the west relative to the east.

One comment: "Politics usually trumps economics." One thing that I always found fascinating about the history of the railways is the extent to which the developers bypassed existing towns, bought up all the land in some less built up place, and then located crucial junctions there. So politics might trump wider economic interests, but not the personal gains of the developers!

Not everyone would be familiar with Pierre Burton's The Last Spike - not economics, but perhaps something to add to the references as a good general introduction? Or would you figure it's not accurate enough to be considered a good general introduction?

No, Pierre Berton's Last Spike is a great introduction to the building of the railroad. Thanks.

A railway thread!!! Oh Goody goody gumdrops! :)

So politics might trump wider economic interests, but not the personal gains of the developers!

Railways in the 19th century with Land Grants (west of Chicago, in the US) more often has as a "pump and dump" scheme rather than a long-lived infrastructure project. The goal was to build the line, develop the land, catch the boom and sell off the land; then the investors would be gone and move on to the next scheme.

The CPR expressly said it wouldn't follow that model and would instead earn its revenues from operating profits. It would also try to keep all profits for itself, which is why it turned into a conglomerate with ships, hotels, telegraphs, mines, etc. The "operating profit" model also worked well with the government's desire to use the CPR as its development agent.

As a reflection of this, 70% of all US railway companies have been bankrupt at one time or another, oftentimes more than once. Prior to 1930, railways were the bulk of the US stock and commercial debt markets. Ben Graham, author of "Securities Analysis" and "The Intelligent Investor" cut his teeth on railway securities; he devotes extensive sections in both to the analysis of railway debt and commercial paper and his passion and love of these specific markets shows.

The rise in the freight share of railways since 1970 is due to the rise of intermodal transport (containers and flatcars with trailers) and railway deregulation. I worked for a company that did regular shipments to BC, we were advised that railway intermodal with a truck for the "first and last mile" was the cheapest option.

Glad you liked a railway post Determinant! Point about US railways being the bulk of stock and commercial debt markets interesting. The modern corporate form developed in the early 19th century because of the financial needs of railroads. Railway debt was quite large in Canada too.

The shift in rail freight from Eastern Canada to Western Canada is largely due to shift in demand of agricultural and natural resources from Europe to Asia. It was in the mid 1970s roughly that the port of Vancouver started to overtake the Great Lakes as the main output for Canadian wheat. There was actually a short period of time when Canada was still exporting the majority of its wheat shipments to China through Thunder Bay and the Great Lakes. I have an old article somewhere discussing the buildup in port infrastructure in Vancouver and Prince Rupert during the Trudeau and Lougheed era's. Basically it was a Lougheed initiative after the PC's threw out the old Alberta Socreds. Thunder Bay has always been the main port for wheat exports to the East except in winter when they were railed to whole way to Halifax, Quebec City etc.

Note. The CN rail line to Thunder Bay(not the CP line) runs through Minnesota for a short distance. The main CN line to Eastern Ontario and Quebec though runs well to the north of T'Bay and is on Canadians territory for the whole distance as is the CP line.

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