The Politics of Industrial Change: Railway Policy in North America

By R. Kent Weaver | Go to book overview

CHAPTER FIVE
Rail Nationalization in Canada: The Politics of Executive Dominance

THE CANADIAN pattern of railway ownership differs substantially from both the U.S. pattern of private sector dominance and the European pattern of public sector monopoly. At the beginning of World War I, the Canadian federal government owned only about 5 percent of the national railway mileage.1 Currently, one federal Crown corporation and one private enterprise of roughly equal size dominate the rail freight industry in Canada with much smaller provincially owned and private sector firms sharing about 10 percent of the market. As in the United States, a federal public enterprise provides almost all of the intercity rail passenger service. This chapter examines the two major extensions of Ottawa's railway ownership in the twentieth century--the establishment of Canadian National Railways (CN) between 1917 and 1923 and VIA Rail Canada in 1977--and the consequence of those decisions for rail industry adjustment.

Strong parallels in the two Canadian nationalizations can be seen despite the more than fifty years between them. Although public enterprise was not a first choice in either case--less direct instruments were used initially--neither was it a last resort. In both cases there was strong support for public enterprise within the executive branch (cabinet or ministries), reflecting a belief that state enterprise was the most effective instrument to achieve the goals of the government of the day. And in Canada, unlike the United States, public enterprise was chosen explicitly and openly rather than through the evolution of quasi-public enterprises.

Executive support for public enterprise was matched by executive dominance in the decisionmaking process. In establishing Canadian

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1
This excludes the National Transcontinental (the eastern division of the Grand Trunk Pacific), which was constructed by Ottawa, but scheduled for lease by the Grand Trunk Pacific.

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