''CN
redirects here, as it's the most common usage of the abbreviation in Canada; for more uses, see CN (disambiguation).'' ---- ''Canadian National Railwayslogo or herald (used pre-1960)'' ''Canadian National Railwaylogo or herald (used post-1960)'' ''Grand Trunk Western Railroadlogo or herald (used 1960-1995)CN's principal U.S. subsidiary'' The Canadian National Railway (commonly referred to as Canadian National, Canadien National, CN, or CN Rail; formerly referred to as Canadian National Railways or CNR), is the largest freight railway in Canada, both in terms of the size of its track network, and in revenue. It is also one of the six largest railway companies in North_America, and currently the only transcontinental railway, spanning from Nova_Scotia to British_Columbia and south to the Gulf_of_Mexico.Canadian Railway Industry in Crisis
In response to public concerns fearing loss of key transportation links, the Government_of_Canada assumed majority ownership of the bankrupt Canadian_Northern_Railway (CNoR) on September_6, 1918 and appointed a ''Board of Management'' to oversee the company. At the same time, CNoR was also directed to assume control of Canadian_Government_Railways (CGR). On December_20, 1918 the federal government created the Canadian National Railways (CNR) through a Privy Council order as a means to simplify the funding and operation of the various railway companies. The absorption of the Intercolonial_Railway of Canada (IRC), a constituent company of the (CGR), would see CNR adopt IRC's nickname ''The People's Railway''. Another Canadian railway encountered financial difficulty on March_7, 1919 when the Grand_Trunk_Pacific_Railway's (GTPR) parent company Grand_Trunk_Railway (GTR), defaulted on repayment of construction loans to the federal government. The federal government's ''Department of Railways and Canals'' took over operation of the GTPR until July_12, 1920 when it too was placed under the CNR. Finally, the bankrupt GTR itself was placed under the care of a federal government ''Board of Management'' on May_21, 1920, while GTR management and shareholders opposed to nationalization took legal action. After several years of arbitration, the GTR was absorbed into CNR on January_30, 1923. It was on this date also, that all component railway systems were fully merged under the CNR umbrella.Railway Nationalization
Canadian National Railways was born out of both wartime and domestic urgency. Railways, until the rise of the personal automobile and creation of taxpayer-funded all-weather highways, were the only credible long-distance land transportation available in Canada for many years, and as such, their operation consumed a great deal of public and political attention. Many countries regard railway networks as critical infrastructure (to this very day) and at the time of the creation of CNR during the continuing threat of the First_World_War, Canadian Prime Minister Robert Borden was not alone in his Union government's actions. United_States President Woodrow_Wilson nationalized major U.S. railroads under the ''Federal Possession and Control Act'' on December_26, 1917 as part of the war effort, however railways reverted to private ownership control afterward. The United_Kingdom nationalized its railway system during the Second_World_War, however subsequent governments endured harsh criticism for maintaining government ownership into the late 1990s (see British_Railways). It should also be remembered that broader geo-political events in Canada and worldwide were leading to governments taking a more interventionist role in the economy, with the growth of the public sector, as well as events in Canada such as the Winnipeg General Strike and the rise of Bolshevism. The latter two events were particularly troublesome to the federal government in Canada, which entered the Russian_Civil_War in support of the Allies from the First_World_War, for which at the time, the outcome was uncertain at best. The need to maintain a viable rail network was paramount.Criticism of CNR
Regardless of the political and economic importance of railway transportation in Canada; there were many critics of the Canadian government's policies in maintaining CNR as a Crown_corporation from its inception in 1918 until its privatization in 1995. Some of the most scathing criticism came from the railway industry itself, namely the commercially successful Canadian_Pacific_Railway (CPR) which argued that its taxes should not be used to fund a competitor. Some argue that the CPR could afford to make this criticism, having been itself the child of government and recipient of untold wealth by virtue of land and resource grants, as well as its position as a monopoly from its completion in 1885 until the CNoR started operations on the Prairies at the turn of the century. As a result of history and geography, CPR served larger population centres in the southern prairies, while the CNR's merged system served as a de-facto government colonization railway to serve remote and undeveloped regions of Western_Canada, northern Ontario, and Quebec. The company also became a convenient instrument of federal government policy from the operation of ferries in Atlantic_Canada, to assuming the operation of the narrow-gauge Newfoundland_Railway following that province's entry into Confederation, and the partnership with CPR in purchasing and operating the Northern_Alberta_Railway. A company-driven decision to create a radio network across Canada for its passenger train customers led to the federal government assuming total control in 1932, naming the new Crown_corporation the ''Canadian Radio Broadcasting Commission'', which was then renamed in 1936 to the Canadian_Broadcasting_Corporation (CBC).Politics and Government Priorities
It is generally accepted that government policy dictated CNR commercial decisions, whether such decisions were in the nation's interest, or in the political interest of the party in power. As such, CNR lost money for many years, except during the Second_World_War when its extensive network reaching into the resource hinterland proved beneficial, and during the late 1980s and early 1990s following deregulation of the Canadian railway industry. Where CNR failed to address costs was largely due to government interference, such as the requirement to purchase locomotives from all Canadian locomotive manufacturers, resulting in operational inefficiencies. CNR was considered to be competitive with CPR in several areas, notably in Central_Canada, prior to the age of the automobile and the dense highway network that grew in Ontario and Quebec. The former GTR's superior track network in the Montreal-Chicago corridor has always been a more direct route with higher capacity than CPR's. CNR was also considered a railway industry leader throughout its time as a Crown corporation in terms of research and development into railway safety systems, logistics management, and in terms of its relationship with labour unions.Deregulation and Recapitalization
Another problem that hobbled CNR was in the sheer number of low-volume branch railway lines which did not produce sufficient traffic to pay for their operation. Without deregulation in the railway industry permitting abandonment or sale of a railway line, or even the ability to set prices to match those of trucks, both CNR and CPR paid dearly for owning these inefficient lines. One tactic that CNR perfected was to ''demarket'' a line by providing sufficiently poor service to its few customers, that those customers would turn to trucks for improved service and lower costs. Once customers ceased to exist on a small branch line, the federal government would permit the line's abandonment. Had deregulation been in place several decades earlier, it is conceivable that many Canadian branch lines would have been viable in the hands of short line operators, saving millions of dollars for taxpayers funding highways, since the railway lines had already been publicly funded in their construction. From the creation of CNR in 1918 until its recapitalization in 1978, whenever the company posted a deficit, the federal government would assume those costs in the government budget, running into the billions of dollars over successive decades. Following recapitalization and changes in management, CN (name changed to Canadian National Railway, using the shortened acronym CN in 1960) started to operate much more efficiently, by assuming its own debt, improving accounting practices to allow depreciation of assets and to access financial markets for further capital. CN reported a profit in 11 of the 15 years from 1978 to 1992, paying $371 million CDN in cash dividends (profit) to the federal government during this time.Cutbacks and refocusing
The company's rise to profitability was assisted when CN started to remove itself from non-core freight rail transportation starting in 1977 when it transferred subsidiary ''Trans-Canada Air Lines'' (created in 1937) to the new federal Crown corporation Air_Canada. In 1978, CN along with CPR, transferred passenger rail services to the new federal Crown corporation VIA_Rail. In 1986, CN moved its ferry operation into yet another new Crown corporation Marine_Atlantic. At the time of their divestitures, all of these subsidiaries required considerable subsidies which partly explained CN's financial problems prior to recapitalization. CN also was given free reign by the federal government following the 1987 deregulation of the railway industry to make tough business decisions and remove itself from money-losing branch lines, some of which it had been forced to absorb through federal government policies and outright patronage. During the mid-to-late 1980s, thousands of kilometres of railway lines were abandoned, including the complete CN trackage in Newfoundland (this being CN subsidiary Terra_Transport, the former Newfoundland_Railway), Prince_Edward_Island (the former PEIR), numerous branch lines in Nova_Scotia, New_Brunswick, Southern_Ontario, throughout the Prairie provinces, and on Vancouver_Island. Virtually every rural area served by CN in some form was affected, creating resentment for the company and the federal government. CN also divested itself of several non-rail transportation activities such as trucking subsidiaries, a hotel chain (sold to CPR), and telecommunications companies, using the proceeds to pay down the company debt.CN's U.S. Subsidiaries
CN's railway network in the late (GTWR) operating in Michigan and Illinois; Detroit,_Toledo,_and_Ironton_Railroad (DTIR) operating in Michigan and Ohio; Duluth,_Winnipeg,_and_Pacific_Railroad (DWPR) operating in Minnesota; Central_Vermont_Railroad (CVR) operating down the Connecticut_River valley from Quebec to Long_Island_Sound; and a former GTR line to Portland,_Maine, known informally as the ''Grand Trunk Eastern'', sold to a short line operator in 1989.Privatization
In 1992 a new management team led by ex-federal government bureaucrat, Paul Tellier, started preparing CN for privatization by emphasizing increased productivity, achieved largely through aggressive cuts to the company's bloated and inefficient management structure, as well as widescale layoffs in its workforce, and further abandonment or sale of branch lines. In 1993 and 1994 the company experimented with a rebranding exercise that saw the names ''CN'', ''Grand Trunk Western'', and ''Duluth, Winnipeg, and Pacific'' replaced under a collective CN North America moniker. In 1995, the entire company including its U.S. subsidiaries reverted to using CN exclusively. The ''CN Commercialization Act'' was enacted into law on July_13, 1995 and by November_28, 1995, the federal government had completed an initial_public_offering (IPO) and transferred all of its shares to private investors. Two key prohibitions in this legislation include, 1) that no individual or corporate shareholder may own more than 15% of CN, and 2) that the company's headquarters must remain in Montreal, thus maintaining CN as a Canadian corporation.Purchasing Illinois Central
Following the successful IPO, CN has recorded impressive gains in its stock price. In 1998, during an era of mergers in the U.S. railway industry, CN purchased the Illinois_Central_Railroad (ICR), which connected the already existing lines from Vancouver,_British_Columbia to Halifax,_Nova_Scotia with a line running from Chicago,_Illinois to New_Orleans,_Louisiana. This single purchase of ICR changed the entire corporate focus of CN from being an east-west uniting presence within Canada (sometimes to the detriment of logical business models), into a north-south ''NAFTA'' railway feeding Canadian raw material exports into the U.S. heartland and beyond to Mexico through a strategic alliance with Kansas_City_Southern_Railroad (KCSR).Failed BNSF Merger
In 1999, CN and Burlington_Northern_Santa_Fe_Railway (BNSF), the second largest rail system in the U.S., announced their intent to merge, forming a new corporate entity ''North American Railways'' to be headquartered in Montreal to conform with the ''CN Commercialization Act'' of 1995. The merger announcement by CN's Paul Tellier and BNSF's Rob Krebs was greeted with skepticism by the U.S. government's Surface_Transportation_Board (STB), and protested by other major North American rail companies, namely CPR and Union_Pacific_Railroad (UP). Rail customers also denounced the proposed merger, following the confusion and poor service sustained in southeastern Texas in 1998 following UP's purchase of Southern_Pacific_Railroad (SP). In response to the rail industry, shippers, and political pressure, the STB placed a two year moratorium on all rail industry mergers, effectively scuttling CN-BNSF plans. Both companies dropped their merger applications and have never refiled.Purchasing Wisconsin Central
After the STB moratorium expired, CN purchased the Wisconsin_Central_Railroad (WCR) in 2001, which allowed the company's rail network to completely encircle Lake_Michigan and Lake_Superior, permitting more efficient connections from Chicago to Western_Canada.The 21st Century
Since the company operates internationally in two different countries, CN apparently maintains some corporate distinction by having its U.S. lines grouped under Grand Trunk Corporation for legal purposes
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