TT4-2-2003E.pdf - Office des transports du Canada

A Centennial Historical Perspectiveof the Canadian Transportation Agencyand its PredecessorsAvailable in multiple formats

© Minister of Public Works andGovernment Services Canada, 2004Printed and bound in CanadaISBN 0-662-34905-9Catalogue No. TT4-2/2003E-PDFThis document and other CanadianTransportation Agency publications areavailable in multiple formats and on itsWeb site at: www.cta.gc.ca.For more information about the Agencyplease call (819) 997-0344or toll free 1 888 222-2592.Correspondence may be addressed to:Chief of PublishingCanadian Transportation AgencyOttawa, ON K1A 0N9Cover photos:First passenger train to Edmonton from Winnipeg – Canadian Northern Railway Company, 1905,Photographer: G.D. Clark, CSTM/CN002380 • Ferry MV Federal Avalon, St. John’s, Newfoundland andLabrador, 1975, Photographer: M. Segal, CSTM/CN001689 • Porter assists passengers with their luggage,Halifax, Nova Scotia, 1951, CSTM/CN002828 • A TCA Canadair DC-4M North Star flying over Kinley Airport,Bermuda, 1950, CSTM/CN000261 • Other 6 images are stock photography held by the CanadianTransportation Agency, ©Digital Vision.

AcknowledgmentsAcentury ago, on February 1, 1904,the Board of Railway Commissionersbegan work as Canada’s first independentregulatory body with jurisdiction overtransportation matters. The structure andscope of that first Board evolved over theyears to its present form as the CanadianTransportation Agency, with jurisdictionover air, rail and marine matters, as wellas the responsibility to remove undueobstacles in transportation for personswith disabilities.Committee, chaired by Claude Jacques,Arun Thangaraj and Judie Carrigan.Other members of the Committee are:Vice-Chairman Gilles Dufault, formerMember Keith Penner, Craig Lee, AlisonHale, Nancy Hay, Katie Fillmore, PaulJuneau, John Corey, Louise McCreadie,Michelle Raby and Julie Leroux. TheFrench text revision was done by PaulHoule. Preparation and publication wereco-ordinated by Judy Deland, the Agency’sChief of Publishing.This history was commissioned as acentennial project by the CanadianTransportation Agency to mark thesignificance to Canadians of transportationregulation and how it hasevolved over the past 100 years. TheAgency is the oldest tribunal in Canada.Freelance writer Cecelia McGuireresearched and wrote the history underthe guidance of the Agency’s CentennialThe Agency would like to thank thefollowing organizations for use oftheir photos: the Canada Science andTechnology Museum Corporation, thePacific Pilotage Authority Canada andthe Greater Toronto Airports Authority.Design and layout prepared byAcart Communications Inc.iA cknowledgments

ContentsChairman’s Message 1Chapter One: All Aboard, The Board of Railway Commissioners, 1904 to 1938 5Chapter Two: Engines of Change, The Board of Transport Commissioners, 1938 to 1967 29Chapter Three: Taking Control, The Canadian Transport Commission, 1967 to 1988 51Chapter Four: Shifting Gears, The National Transportation Agency, 1988 to 1996 73Chapter Five: Keeping Pace, The Canadian Transportation Agency, 1996 to 2004 87Appendix: Members’ List 100Bibliography 105iiiChapter One — ALL Contents A BOARD 1904 TO 1938

Chairman’s MessageIn 2004, the Canadian TransportationAgency marks 100 years of service toCanadians in motion.I believe, as this history oftransportation regulationchronicles, that the Agencyand its predecessors reflectnothing less than theevolution of Canada itself,its economic developmentand its changing place inthe world.On February 1, 1904,the Board of RailwayCommissioners, with its authority overrailways, was established as the Canadiangovernment’s first independentregulatory body.That first board, with the full powers ofa Superior Court, became the model fornot only the transportation agencies thatsucceeded it, but for federal regulators inother fields as well. It is not surprisingthat the Canadian government’sregulatory history would have beenpioneered by a transportation board.The sheer vastness of our country hasmade transportation perhaps the mostfundamental and critical component ofCanadian economic and politicaldevelopment. Over time, uniquelyCanadian institutions have been createdto ensure that the publicgood is protected in thedevelopment of ourtransportation systems.That first Board of RailwayCommissioners, withjurisdiction over railwayfreight rates, constructionand abandonment, amongother things, was quiteregimented in its approach.It existed for 34 years, fromthe heyday of railway expansion whenrailway promoters rushed hither and yonto lay down new tracks, until theDepression-era retrenchment of railwaysand the emergence of competition fromautomobiles and aircraft.The Board of Transport Commissionerswas created in 1938 to succeed the firstboard and assume additional authorityover air and marine matters. However,the Government of Canada, seeking atighter rein on the airline industry, wenton to create a separate Air TransportBoard in 1944. In 1947, the CanadianMaritime Commission assumed authorityover marine matters.1Chairman’s Message

The Canadian Transport Commission (CTC),which emerged in 1967, was created todeal with all modes of transportation asa competitive whole. Part of its mandatewas to rationalize the over-built andunder-used railways. It was a difficulttime for the Canadian railways and theircustomers, a time I recall from when Iwas living on the Prairies. A railway wasallowed to apply to abandon rail lines;but the CTC was required to holdhearings to determine if the service wasrequired in the public interest, in whichcase the service would be continued andthe railway would be compensated.Otherwise, lines were abandoned.It was an unwieldy and costly process.In the early 1980s, Canada embraced theinternational trend toward deregulation.The most notable development duringthat period was the Staggers Act, whichderegulated railways in the United States.Deregulation of airlines followed. Themove to deregulation in Canada was moregradual and balanced, and it led to theNational Transportation Agency in 1987.That trend toward less-intrusive regulationhas continued with the CanadianTransportation Agency in 1996, and itsregime is certainly the least regulated inour country’s history. Competition andmarket forces are now the drivers, asopposed to strict regulation. Railwaysand airlines are mainly free of rateregulation and they have freedom ofmarket entry and exit, as well as freedomto abandon operations. Airlines are stillregulated under the terms of internationalagreements but, domestically, theycan operate with relatively little intrusionby government.Today, the Agency deals much differentlywith its clients and constituents than inthe past. Whereas its predecessorsmaintained a distance from their clients,the Agency today reflects how the worldhas changed to become more user-friendly,more citizen-focused. Still mindful thatwe are a court and must maintainindependence and impartiality, we atthe Agency feel strongly that we have aresponsibility to the public, carriers andconsumers to ensure they are fully awareof their rights and obligations under theAgency’s governing legislation. Ouremphasis now is on communication andoutreach. At the same time, we striveto keep up with developments in thetransportation industry, to be informedand tuned in.We have shifted away from regulatorymeans whenever possible to findingsolutions through voluntary approaches.This is especially true in the area ofaccessible transportation for persons withdisabilities. The mid-1990s saw twosignificant sets of regulations develop,the Terms and Conditions of Carriagefor People with Disabilities and theTraining Regulations for Personnel2Canadian Transportation Agency — 100 Years at the Heart of Transportation

Dealing with Persons with Disabilities.Both are far-reaching and apply to allfederally regulated carriers. In the yearssince these initiatives were introduced,we have increasingly sought voluntarycompliance through codes of practice,rather than by formal regulation.resolve disputes through mediation. Ourexperience to date indicates a 95 per centsuccess rate in helping the parties findtheir own solutions, quickly and inexpensively.We intend to continue to providemediation as an alternative disputeresolution process.These codes of practice were hammeredout by the Agency, the community ofpersons with disabilities and the carriers;of course, they involved lots of consultation,listening and refinement. But wewere successful in putting the codes inplace and in setting target dates for theirimplementation; with service standardsfor all modes of transportation—rail,air and marine. That has been quite asignificant shift in our regulatoryapproach—from enforcement tovoluntary compliance and monitoring.The position of Air Travel ComplaintsCommissioner, established in 2000 andnow held by Liette Lacroix Kenniff,represents another method of resolvingcomplaints through facilitation andpersuasion, rather than through aregulatory process. The Commissionerreports to the Transport Minister and toParliament twice a year and uses publicawareness to encourage carriers to treatcustomers fairly.In the past two years, the Agency hasbeen offering a new service to clients toThe role of transportation regulation hasalways been to balance the interests ofshippers and consumers against theinterests of carriers. There is a naturaltension between users and providers oftransportation. Users always want betterservice and lower costs while providerswant more business and more revenue.Balancing those interests was thechallenge presented to the Board ofRailway Commissioners when it first meton a snowy February day 100 years ago.Since then, the one constant has beenthe need for a regulatory body committedto balancing these diverging interestsin a fair and transparent manner. Thatwill remain the Agency’s goal as itcontinues to adapt to a changinglandscape in transportation in Canada.Marian L. RobsonChairman and Chief Executive OfficerFebruary 20043Canadian Chairman’s Transportation MessageAgency

CHAPTER ONEAll AboardThe Board of Railway Commissioners1904 to 19381904 1938 1967 1988 1996 2004February 1, 1904, the Board of Railway Commissioners was inaugurated.•August 4, 1914, Canada joins Britain in the war effort.•1930s, the Great Depression hits–many Canadians experience difficult times.5

The Board of Railway Commissioners1904 to 1938The Canadian Transportation Agencyhad its origins 100 years ago in anatmosphere of intense commercialcompetition and vigorous—evenstrident—political rivalry. It has emergedas a vital though largely low-key playerin shaping the Canada we know today.The Agency’s story began with theestablishment of the Board of RailwayCommissioners in Ottawa on asnowbound February day in 1904.CSTM/CN002380in Council will have to be passed makingthe appointments.”Even Nature conspired against the newBoard. Local newspapers ran stories aboutthe record snowfall in the Dominion’scapital that February, making it difficultto travel. “Snow clearing seems to be theprincipal industry in Ottawa this winter,”the Citizen glibly reported.It was not an auspicious beginning, but thenewly appointed Railway Commissionersplunged ahead. On February 9, AndrewG. Blair, as chairman of the Board,addressed a group of railway executivesand business luminaries. He was animposing figure, a large, dour-lookingman, a month short of his 60th birthday,his face, beneath a heavy white beard,worn by the tense months of politicalfighting, and then, lately, by inertia.First passenger train to Edmonton from WinnipegCanadian Northern Railway Company, 1905From the beginning, the RailwayCommissioners faced obstacles. Accordingto the Railway Act of 1903, the Boardwas to be inaugurated on February 1,1904. However, as the Ottawa Citizennoted on February 2, in a proceduralglitch, the appointments to the Boardhad been made “by Order in Council andgazetted before the date of the cominginto force of the Act which establishedthe commission.” The official launchwould be delayed because “new OrdersBut his voice didn’t waver when hespoke: “The powers and jurisdictionconferred upon this Board are comprehensivein their scope, far-reaching intheir effects and they will touch at a vitalpoint the already immense andconstantly increasing business interestsof the country on the one hand, and thegreat and always growing interests ofthe railway interests on the other.”Moments later, however, he added, “Weare without a staff and without quartersto transact our business… Although weare quite unequipped, we thought we6Canadian Transportation Agency — 100 Years at the Heart of Transportation

would take up two or three applicationsat this date.” 1 If his comments verged onwhining, he could be forgiven. Blair hadbeen working toward this goal forseveral years and was anxious to see itaccomplished.As far back as 1896, he had seen thenecessity of establishing a permanentand independent regulatorybody to ensure thatthe public interest wasserved in the race toexpand Canada’s railways. 2Railways had been at thecentre of economic growthin Canada since the 1850s.In fact, they had played adramatic role in thecreation of Canada.The Grand Trunk Railway,completed betweenToronto and Montréal in1856, linked Canada Westwith Canada East (nowOntario and Québec), andhelped to lay the groundwork forConfederation. 3The promise of a railway was instrumentalin the decision of Nova Scotia and NewBrunswick to join as well. (The IntercolonialRailway was completed in 1876,linking Nova Scotia and New Brunswickto Québec.) In 1871, British Columbiawas drawn into Confederation with thepromise of a rail link to the rest ofThe powers andjurisdiction conferredupon this Board arecomprehensive in theirscope, far-reaching intheir effects and theywill touch at a vitalpoint the alreadyimmense andconstantly increasingbusiness interestsof the country.Canada. The result of that provision wasCanada’s first transcontinental railway,completed in 1885 by the CanadianPacific Railway (CPR). Aid for PrinceEdward Island’s debt-ridden railway, anda year-round link to the mainland, luredthat province into the union in 1873.At the dawn of the 20th century, shiploadsof immigrants were pouringinto the country’s ports, andthe railways, with their hugeland grants, were largelyresponsible for where theysettled. Railways alsocontrolled the movement ofgoods and passengers acrossthe country, and were vitalto the Dominion’s industrialgrowth.But as Canada’s businessinterests became moredependent on rail travel forsupplies and markets,shippers began to complainabout freight prices andabout the railways’ near monopolies ontransportation. Railways argued thatthey needed to charge rates that wouldpay their costs, which indeed they did.But they weren’t charging everyone thesame rate, and that was the crux ofthe problem. 4Freight-rate competition was healthy inCentral Canada, where several railcompanies vied with one another, with7Canadian Transportation Chapter One AgencyChapter — ALL A BOARD 1 — 1904 ALL TO ABOARD 1938 1904 to 1938

water transportation and with Americanrailways south of the border for customers.The railways had to set competitively lowrates, often offering special deals to theirbigger and better customers.But in regions where competition waslow or non-existent, freight rates wereset higher. The railways reasoned thatthey were recouping the profits that theyhad shaved off in the more competitiveregions. It made good business sense tothem, but not to the shippers beingcharged the higher rates. Inevitably thecomplaints were heard by the politiciansin Ottawa.Some of the loudest complaints camefrom the Western provinces where theonly transcontinental railway, CPR, hadheld a virtual monopoly since 1885.Successive governments in Ottawa,which had heavily subsidized much ofthe railway construction across Canada,sought a solution to the debate.When Andrew G. Blair became Canada’sMinister of Railways and Canals in 1896,there was already a Railway Committeeof the Privy Council, of which he becamechairman. The Committee had beencreated by the Railway Act of 1888. (ThisAct was a revision of the General RailwayAct of Canada of 1868, the first railwaylegislation after Confederation, whichitself was drawn from the RailwayClauses Consolidation Act of 1851.Neither of these acts had any real force,and the railways had largely ignoredthem and set their own rates.) 5The Railway Committee of the PrivyCouncil was intended to regulate railwayfreight rates and to hear complaints as ajudicial body. But Blair soon discoveredthat it had serious defects: it was madeup of politicians who could not be calledunbiased; it was based in Ottawa anddidn’t travel; committee members didn’thave any technical training; and therewas no permanent staff.A lawyer and a seasoned politician, Blairwas known for his canny political mindand his unwavering determination. Hehad sat for 18 years in the New Brunswicklegislature, 14 years of that time aspremier. When he joined Sir WilfridLaurier’s Liberal government, he was 52years old. He brought with him toOttawa his wife, Anne, a welcomeaddition to the capital’s social circle, andthose of his ten children who were stillliving at home. 6As Minister of Railways and Canals, he setto work to find solutions to the freightratesproblem. In 1897, Blair worked onthe Crowsnest Pass Agreement in whichthe government gave the CPR a subsidyfor construction of its Crowsnest Pass linein return for the company reducingrates—the so-called Crow rate—on graingoing to the Lakehead and to manywestbound routes.8Canadian Transportation Agency — 100 Years at the Heart of Transportation

In 1899, Blair commissioned Simon J.McLean, a noted political economist ofthe time, to study railway commissions inBritain and the United States, and then,in 1901, to examine railway rates inCanada. With the results of McLean’s tworeports, Blair introduced a bill in 1902 toestablish a railway board. That bill wasrejected, so Blair went back to work todraft another proposal. 7On March 20, 1903, he introduced arevised bill to establish a Board ofRailway Commissioners, an independentbody with regulatory powers overrailways. That bill passed, and with theGovernor General’s assent in October 24,1903, it would become law.The Grand Trunk Railway—with lineswithin Central Canada that reachedfrom North Bay, Ontario in the north,to Chicago in the U.S. Midwest, and toPortland, Maine in the east—proposed,with government support, to build aWestern system from its northernterminus at North Bay to Winnipeg, andon to the West Coast. Promoters of theCanadian Northern Railway (CNR), withlinks from Edmonton to Port Arthur(now Thunder Bay), proposed branchesextending east and west to both coasts.At first, Laurier attempted to work outa deal in which the two railways wouldcombine their efforts into onetranscontinental network, but anagreement could not be reached. 8Meanwhile, the government wasconsidering another solution to thefreight rates issue—competition. And SirWilfrid Laurier had taken the matter intohis own hands. Two railways had beenlobbying for several months forgovernment funds to expand their linesin the West.Laurier held the view that, with competition,the CPR would lower freight rates,Western shippers would be happy, andthe competing railways would flourish.He also had visions of the grain-rich Westexpanding with new settlers and newindustry. He reasoned that a secondrailway would be needed to accommodatethis burgeoning wealth.Laurier remained determined to have asecond transcontinental railway. Hefavoured the Grand Trunk and proposeda deal in which the government wouldbuild the eastern section of the new lineand the Grand Trunk would build thewestern portion.Blair objected, chiefly because theGrand Trunk already had an easternterminus at Portland, Maine, completelybypassing the Maritime provinces. Blairhad his own proposal—the CanadianNorthern, with an extension to theWest Coast, would hook up with thegovernment-owned Intercolonial atQuébec City, which would take trafficthrough the Maritimes to Halifax.9Chapter One — ALL A BOARD 1904 TO 1938

Laurier would not be deflected from hisown developing plan. Blair would notsupport him. In the resulting impasse,Laurier decided to ignore Blair, excludinghim from the railway discussions. OnJuly 13, 1903, Blair resigned as Ministerof Railways and Canals.On July 30, Laurier presented his billgiving the go-ahead for the Grand TrunkPacific Railway. Blair stood as a privatemember in the House ofCommons on August 11,1903, to deliver a speechcondemning the GrandTrunk plan. It was a stirringbit of rhetoric, but it hadlittle effect on the plan.On September 29, the billpassed its third reading.In December, Laurierappointed Blair to headthe new Board of RailwayCommissioners. The twoTheBoard of RailwayCommissioners wasthe first independentregulatory bodyestablished by theDominiongovernment.faltering steps was an opportune routefor retreat. And so there he sat on thatfrosty February day in 1904, in an officehe had known well as a cabinet minister.The Board had been given temporaryquarters in the Railway Committee’s oldoffices, in the West Block of theParliament Buildings.But, despite the familiar surroundings,Blair had entered a whole new realm, anuncharted course in Canadianregulation. No one coulddoubt the tremendousauthority that had beenbestowed on the Board. Ithad the full powers of aSuperior Court to hear allrailway complaints and itsdecisions had the force oflaw. It had regulatory powersover construction, operationand safety of railways(except those owned by thegovernment), and on suchmen had not resolved their differences, matters as freight rates, fares, demurragebut the veteran politicians had madeand other charges.expedient choices. Laurier saw that Blair’sproven abilities would be put to good According to the Railway Act, the Boarduse as chairman of the new Board, and was to consist of three commissioners,appreciated the advantage of removing each appointed for a ten-year term.him from the House of Commons where Michel E. Bernier, who had been inhe could cause trouble.Laurier’s cabinet as Minister of InlandRevenue and who had sat on the RailwayBlair, for his part, had failed to stop the Committee of the Privy Council withGrand Trunk bill and was short of allies in Blair, was appointed the Deputythe House. The task of leading the new Commissioner. The other member of theBoard, his brainchild, through its firstBoard was James Mills, who had been10Canadian Transportation Agency — 100 Years at the Heart of Transportation

called from his post as the first presidentof the Ontario Agricultural College inGuelph, Ontario.and approved construction and repairson railways and crossings. The AccidentBranch investigated railway accidents.Together the three men set to work toestablish rules and regulations for thenew body. They had no models tofollow. Theirs was the first independentregulatory body established by theDominion government. They would laythe groundwork for a new method ofpublic regulation in Canada.The first Annual Report of the Boardshows that the commissioners took uptheir tasks with a great deal of energy.Between February 9 and October 18, theBoard held 62 days of public sittings.Although 38 of those days were spent inOttawa, the Board travelled to Torontofor six days of hearings in June and,between August 8 and September 18, itheld 18 days of sittings in 15 differentlocations between Winnipeg and Victoria.The Board also hired 19 permanentemployees—one of them being Blair’sson and namesake, A.G. Blair Jr., as theBoard’s law clerk—and set up fourdepartments to handle routine work.The Records Department dealt with thepaperwork—complaints received by theboard, orders and decisions issued by theCommissioners as well as investigationscarried out. The Traffic Department dealtwith tariffs and freight classifications.The Engineering Department inspectedThe Board was also establishing itscredentials with the Canadian public.In July 1904, the Canada Law Journalreported that “we doubt if even theDominion Government, whichconstituted the Board, has yet realizedthat it has created a Court of suchextended jurisdiction as this Boardpossesses, and which jurisdiction, ifwisely exercised by a tribunal ofcompetent members, will be both asafeguard to the public and a speedymethod of settling differences betweenrailway companies.”But the 60-year-old Blair, busy as he wasmarshalling the Board through itsformative days, had not hung up hisgloves in the political ring. The fall of1904 brought the excitement of a federalelection and fresh battles to be fought.Laurier led his campaign with promisesof a bigger and better Canada.The election would yield one of themost often repeated—and misquoted—phrases in Canadian political history.On October 15, The Globe newspaperreported on an election rally for Laurier,at Massey Hall in Toronto. “Let me tellyou, my fellow countrymen, that all thesigns point this way, that the twentiethcentury shall be the century of Canadaand of Canadian development,” Laurier11Chapter One — ALL A BOARD 1904 TO 1938

declared. Among Laurier’s promises wasthe second transcontinental railway thathis deal with the Grand Trunk Railwaywould provide.Four days later, the October 19 edition ofthe Daily Telegraph in Saint John, NewBrunswick carried a blaring headline,“BLAIR RESIGNS AND WILL STUMPCOUNTRY AGAINST G.T.P. SCHEME.”According to the Telegraph, Blair hadsent the following telegram to its editor:“I authorize the announcement that Ihave resigned my position as Chairmanof the Railway Commission and havenotified the Prime Minister that, beyondre-affirming my strong objection to theGrand Trunk Pacific scheme I have nopresent intention of re-enteringpublic life.”Laurier’s deal with the Grand TrunkRailway had stipulated that theDominion government would build theeastern half of the system, fromWinnipeg to Moncton, New Brunswick,to be called the National Transcontinental.After completion, thegovernment would lease that sectionto the Grand Trunk’s still-to-be-builtsubsidiary, the Grand Trunk Pacific, whichwould extend across the Prairies to theport of Prince Rupert in British Columbia.However, Blair, along with many others,raised doubts that the Grand Trunkwould use Moncton as its easternterminus when it already had one inPortland, Maine.Another story in the Telegraph that daycarried Blair’s last address as chairman tothe Board of Railway Commissioners.“I feel that this infant child, at whosebirth I closely attended, has been nursedby this time into some degree of strengthand vigour. What little abilities andenergies I possess have been applied inthat direction. I think it has now gotfairly well on its feet, that it will be ableto move along and that it will grow infavour. I believe that this commission willgrow in strength and usefulness andcome to be regarded as one of the mostimportant and useful institutions in thecountry.” He also alluded to “prospects”in his future, suggesting that he mighthave other job opportunities.Blair’s warning about the Grand Trunkwas repeated on October 22 in the SaintJohn Telegraph: “It is vital that theGovernment should not only own butoperate the railway, because in no otherway can you guarantee that the trafficwill go through a Canadian outlet. Weare spending the money, and we aregetting nothing for it.” Blair againtrumpeted the advantage of thegovernment-owned Intercolonial Railwaysystem through the Maritimes.The Conservative-aligned paperspromoted the view that Laurier’s GrandTrunk deal was selling Eastern Canadadown the river. The Maritimes frettedthat they would be thrust out in the coldif the Grand Trunk project went ahead.12Canadian Transportation Agency — 100 Years at the Heart of Transportation

Reports speculated that Blair would runas a Conservative, that Laurier’s defeatwas imminent. Liberal-backed papersminimized the impact of Blair’sopposition and even questioned theauthenticity of Blair’s telegram that hadbeen quoted in the Saint John Telegraph.A week earlier, William Mackenzieand Donald Mann, the promotersbehind the CNR, had bought La Pressenewspaper in Montréal. A rumouredconspiracy to turn La Presse, a long-timeLiberal supporter, into a weapon againstLaurier sent the prime minister scurryingto Montréal to root out the suspectedperpetrators. 9Then, on November 1, Blair’s withdrawalfrom the political campaign wasannounced. Under the headline, “BLAIRON THE RAILWAY JOB”, the Telegraphreported: “Hon. A.G. Blair stated, beforehe resigned as Minister of Railways (hehad resigned from that post in 1903),that he could not stand up in Parliamentand attempt to steer through the GrandTrunk Pacific bill without wearing a maskand carrying a dark lantern, so great wasthe swindle of public money.”But, the front-page story continued,“And it is only (now in November 1904)the sudden illness in Mr. Blair’s familythat prevented him from taking thestump against this outrageousexpenditure of the people’s money.”There was no other explanation. But themessage was clear. Blair had withdrawnfrom the election campaign. He hadgiven his final performance on thepolitical stage.On November 3, 1904, Laurier and hisLiberal government were re-elected andthe Grand Trunk Pacific deal went ahead,though it would be several years beforethe railway construction was completed.And, as it happened, the promoters ofthe CNR expansion managed to beg andborrow enough financial backing to buildtheir own transcontinental route thatwould link with the Intercolonial line.Canada would have not two, but threetranscontinental railways, to cross itsgreat expanse from sea to sea.Back at the offices of the Board ofRailway Commissioners, Albert C. Killammoved into the chairman’s spot onFebruary 7, 1905. 10 He was a career jurist,although he had spent a brief time in theManitoba legislature. Born in NovaScotia, the son of a sea captain, he hadgone to Ontario to study and practiselaw, and then on to Winnipeg where hehad risen to the position of Chief Justiceof the Court of Queen’s Bench in 1899.In 1903, he had become a justice of theSupreme Court of Canada.With Killam in charge, politics werepushed aside while the Board turned tothe pressing business at hand. In the nexttwo years, the Commissioners made twomajor decisions regarding freight rates13Chapter One — ALL A BOARD 1904 TO 1938

that illustrate the early acceptance of theprinciple of different rates according toregion. In 1906, the Board allowed theuse of the ‘mountain scale’, a highertariff charged by the CPR on freightgoing through British Columbia. TheBoard had decided that the higher ratewas justified because the cost of movingfreight through the Rockies was greaterthan elsewhere. In 1907, at a Torontohearing on international rates, the Boardreduced tariffs on freight carried inOntario and Québec in response to lowertariffs south of the border.In 1908, the Board assumed jurisdictionover express, telephone and telegraphtolls. The Board approved tariffs and thelicensing of new companies, and settleddisagreements. Not only did the newduties represent confidence in the Board,but they also underscored the linkbetween telecommunications and therailway. The telegraph system followedthe railways’ rights of way and was usedby the railways for signalling.Newspapers also relied on the telegraphto transmit news. In 1910, the Boardruled that the CPR, which was operatinga telegraph news service, was usingdiscriminatory pricing by charging ahigher price for delivering messagesthat originated with other news services.The Board’s ruling established a basicprinciple of Canadian telecommunications—theseparation of controlof message content from control oftransmission. In the telephone industry,a similar principle was used when BellTelephone, which had a monopoly in alarge part of Canada, was prohibitedfrom providing content-based services.Another major area of regulation forthe Board was railway safety. In 1907,the Board received a petition from theOntario Trainmen’s Associationexpressing concerns about safetyregulations for railway workers. Theworkers had reason to be concerned.In the twelve-month period ending inMarch 31, 1908, the death toll in railwayaccidents was 529 with 1,309 peopleinjured. Among the dead were 246employees. An alarming 806 rail workershad been injured. The Board’s AccidentBranch reported that year thatderailments and head-on collisionsaccounted for about 40 per cent of thecasualties and added, “This is a state ofaffairs that calls for the Board’simmediate attention.”The Board had already created theRailway Equipment and SafetyAppliance Department, but the railemployees proposed a Uniform Codeof Train Rules for Canadian Railways thatwould ensure that employees were welltrained, trains were properly equippedand hazardous practices were eliminated.The Board invited railways and otherinterested parties to respond and,on July 12, 1909, the new UniformCode was adopted.14Canadian Transportation Agency — 100 Years at the Heart of Transportation

On March 1, 1908, Chief CommissionerKillam died of pneumonia. It was a greatloss to the Board as described in theAnnual Report of that year: “Mr. Killamnever spared himself and… he wasindefatigable in his efforts to carry intoeffect the purposes for which this Boardwas created… Mr. Killam realized that theRailway Act was ‘on trial’ and that it waswell to proceed carefully and cautiously.He felt that when action was taken bythe Board, there should be, as far aspossible, no uncertainty in regard to thepropriety and correctness of such action.”CSTM/CN002526judge of the Superior Court of Canada orof any province, or who is a barrister oradvocate of at least ten years’ standingat the bar of any province.”D’Arcy Scott, a prominent lawyer and themayor of Ottawa, was appointed theAssistant Chief of the Board. Simon J.McLean, the political economist who hadwritten the railway reports that hadformed the basis for Blair’s bill to createthe Railway Board, was another worthyappointment. The third was ThomasGreenway, who had been Premier ofManitoba from 1887 to 1900, and for atime its Agriculture Minister, and whohad firsthand knowledge of the West’sattitude to railway rates. Greenway,however, was 70; he took ill upon arrivalin Ottawa and died without ever sittingon the Board.First train into The Pas–railroad employeesand passengers with luggageThe Pas, Manitoba 1908On March 28, 1908, James Pitt Mabee,a judge from Ontario’s High Court ofJustice, became the new chiefcommissioner, and then on July 29, theRailway Act was amended to enlarge theBoard to six members from three. A newrequirement stated, “Any person may beappointed chief commissioner or assistantchief commissioner who is or has been aOn May 19, 1909, a further amendmentto the Railway Act gave the Board ofRailway Commissioners jurisdiction overelectric power rates. The Board, with itsincreasing workload and growing staff,began to lobby for larger quarters. (Sinceits early days, it had offices and a courtroomat 64–66 Queen Street in Ottawa.)A Railway Grade Crossing Fund wasintroduced in 1909, to be administeredby the Board with an annual injection of$200,000 from government, which wouldhelp provide devices like signs, lightsand fencing to protect the public atrailway crossings.15Chapter One — ALL A BOARD 1904 TO 1938

ailway with other railways that thegovernment already owned, includingthe Intercolonial. 12A revised Railway Act of 1919 providedfor the incorporation of the CanadianNational Railways Company with a boardof trustees to oversee its management.By 1923, with the addition of the GrandTrunk and Grand Trunk Pacific, theamalgamation was completed and theCanadian National Railways system wasin operation.The war alone could not be blamed forthe failure of the competing railways.Over-building and duplication of serviceshad crippled them with debt. Theenormous growth that had beenanticipated in the West at the turnof the century had not materialized.Immigration had been curtailed by thewar, as had industrial development.The war had taken a terrible toll onCanada. When peace finally arrived,the country was weighed down withenormous debt, high inflation andshortages in food and other staples. Itsindustries were in disarray. It had lost alarge part of its workforce on Europe’sbattlefields. Many of those who camehome were maimed in body and spirit.The Winnipeg General Strike, in 1919,lasted from May 15 to June 25, involvedmore than 30,000 workers, and resultedin a violent clash with the Royal NorthWestMounted Police. Thirty people wereinjured and one died. Other strikes brokeout across the country that summer.At the Board of Railway Commissioners,changes were afoot. Chief CommissionerDrayton had been granted a knighthoodfor his war effort. On August 1, 1919, heleft the Board to become finance ministerin Borden’s Union government. The nextday he was replaced by Frank Carvell,who had just jumped ship from his postas Public Works Minister.The new chairman was popularly knownas Fighting Frank Carvell. He had none ofDrayton’s polish or charm. At 57, he wasa lawyer and a politician who, after abrief excursion to the New Brunswicklegislature in 1899, had resigned to runfederally. He lost in the election of 1900,but won in 1904 and sat with Laurier’sLiberals. He then broke with Laurier overthe conscription issue and joined Borden.Carvell was brusque in demeanor, alegacy from his early training in theCanadian militia, and had a reputationfor being outspoken and feisty. Hischaracter was perhaps not ideal fora judicial position.The railways continued to seek increasesto their rates. Although the CPR was stilloperating in the black, the higher costof labour and fuel was hurting all therailways. When Arthur Meighen’s20Canadian Transportation Agency — 100 Years at the Heart of Transportation

Conservatives took over the governmenton July 20, 1920, there was anapplication from the railways for a35 per cent advance before the Board ofRailway Commissioners. But objectionshad been raised by shippers andregional interests.Carvell called for a Board hearing inOttawa for August 10. He refusedrequests to hold hearings around thecountry on the issue. An article in theManitoba Free Press on August 6, 1920,offered some reaction to Carvell’sdecision: “Curtly declining to considerthe request of the Calgary board of tradefor a Western sitting of the RailwayCommission before applications for ratesincreases are disposed of, and charginghis telegram ‘collect,’ Hon. Frank B. Carvell,chairman of the Railway Commission,wired the Board yesterday as follows,‘Telegram received. All principles thereinset forth can be argued in Ottawa as wellas in the West.’ “The Free Press story continued, “His lackof courtesy, and his departure from theuniversal business practice of prepayingmessages of this character, causewidespread comment.”Carvell wrapped up the rates hearing byAugust 21, and issued a judgment onAugust 27, raising rates between 35 and40 per cent. Provincial, municipal andshipping representatives appealed to thegovernment. Prime Minister Meighenasked the Board to review its decision,although he didn’t raise any realobjections to it. Upon review, theBoard restated its decision. The Boardwas displaying its independence andresistance to political pressure, a laudableresponse, but the shippers weren’tappeased. 13In the spring of 1921, at the requestof Cabinet, Carvell set out withCommissioner A.C. Boyce to holdhearings in Western Canada on rateequalization, that is, charging shippersthe same rates no matter in what part ofthe country they did business or whatcommodity they shipped. The hearingsthat followed revealed just howimpossible an equalization scheme wouldbe in a country with so many diverseregional interests. It was becomingpainfully obvious that there would be nosatisfactory solution, within the Board’sregulatory powers, to the divergentregional interests and the profitobjectives of the railways. Carvell, forhis part, made some public speechesdefending previous Board decisions, andwas criticized for expressing his opinionsso openly. He was straying from theimpartiality required in his position. 14The governments of Arthur Meighen andhis successor, William Lyon MackenzieKing, continued to grapple with theequalization of freight rates. At the same21Chapter One — ALL A BOARD 1904 TO 1938

time the Canadian economy entered adownturn that lasted into the mid-1920s.The railways reduced some rates of theirown accord and the railway commissionlowered some more.In 1922, the government appointed aspecial committee to study the CrowsnestPass Agreement of 1897, in which theCPR had agreed to certain rate reductions.The committee restored some partsof the original Crow agreement—whichhad been lifted during the war—toreduce rates for shippers. 15In 1923 the Board, at the request ofcabinet, reduced railway rates on grainexports from Vancouver.In October, after a seven-day hearing, theBoard decided to help the railways bydispensing with the Crowsnest PassAgreement, despite the 1922 statute thathad reinstated the relatively low Crowrate on grain.An appeal to the Supreme Court by theWestern provinces resulted in a ruling in1925 that the Board couldn’t drop theCrow rate. The railways could, however,use the narrow interpretation of theagreement as set in 1897. In response,King’s government stepped in to cancelthe Crow-based rates, except those ongrain and flour. Parliament also orderedthe Board to hold a general inquiry intoother rate issues. 16On August 9, 1924, Frank Carvell diedamid a clamour for an investigation ofthe Crow rate.Prime Minister Mackenzie Kingappointed Harrison A. McKeown, thechief justice of New Brunswick’s SupremeCourt, to replace Carvell. McKeown hadserved in the New Brunswick legislatureas Solicitor General and AttorneyGeneral. In 1908, he was appointed ajustice of the province’s Supreme Courtand later Chief Justice. He had alsotaught law, and had been dean of thelaw faculty at the University of NewBrunswick from 1922 to 1924. McKeownwas 61 when he joined the Board and hesoon found problems of his own.On September 2, McKeown andCommissioner Frank Oliver, a Westernerwho had founded the EdmontonBulletin, approved fixing the grain ratesto Vancouver based on the Crow rate.They did this despite the opposition ofthree other Board members, who hadmade a decision on the same issue in1923. Simon J. McLean, who had beenwith the Board for 17 years, A.C. Boyceand Calvin Lawrence, were concerned,in fact, by the lack of impartiality inMcKeown’s decision. McLean summedup their objection “that fairness andreasonableness of the rate is to bedetermined on the facts after dueenquiry; that the order was issued on arecord partially heard and incomplete”. 1722Canadian Transportation Agency — 100 Years at the Heart of Transportation

A new method of answering the needs ofthe shippers and the railway companieswas found in the Maritime Freight RatesAct that was adopted in 1927. The Actreduced by 20 per cent the local tariffsand rates on freight originating in theMaritimes and bound for other parts ofCanada. The Act also allowed for thecompensation of railways for any lossesresulting from the reductions. The Boardwas given the task of determining theannual compensation for the railways.Also in 1927, the Railway Board issued adecision in the General Rates Investigation bywhich it maintained the higher mountaintariff and transcontinental rates to interiorpoints; it also ordered a lower rate on grainover the Canadian National route fromthe West to Québec City, and requiredrailways to adopt a more liberal interpretationof the 1925 grain legislation.In 1929, approval of tolls for internationalbridges and tunnels was addedto the Board’s jurisdiction.In the Annual Report for that year, theBoard stated that the fire season wasone of the worst seen in 40 years in thePrairie provinces. What the reportdescribed as a “long period of extremedrought and high winds in the West”resulted in a poor grain crop that fall.There was more bad news to come.At the end of October, the Wall Streetstock market suffered a drastic fall invalues. On the same day, the WinnipegGrain Exchange was hit by falling prices.The Great Depression had arrived.Hundreds of thousands of Canadianswere unemployed, some starved, otherslost their homes, and families werebroken apart.The government looked for ways to offerassistance. By 1933, more than a millionCanadians were on government-fundedrelief. Make-work projects were establishedto give jobs to the unemployed.Among the projects were severalsupported by the Railway Grade CrossingFund. From 1930 to 1938, the governmentincreased its financial allotment tothe Fund, which had been administeredby the Board since 1909, to contributeto safety improvements at highwaycrossings, now with the added objectiveof providing work.The railways also made use of governmentrelief funds to clear the railwayrights of way. A huge clearing effort in1936 led to this report from the Board’sfire inspector: “During the season of1936 the railways… carried out a largeamount of right-of-way clearing withspecial gangs recruited from the ranks ofthe unemployed who had heretoforebeen domiciled in labour campsthroughout the country. This work willhave beneficial results in greatly reducingthe fire hazard.”23Chapter One — ALL A BOARD 1904 TO 1938

The next year, the fire inspector reported,“A minimum of major clearing of rightsof way was carried on during 1937.Work in the previous year accounted for1,700 miles, on both sides of the tracks.”To no one’s surprise, the number of firesalong railway lines was greatly reducedthat year.Meanwhile, McKeown retired on March 1,1931, as chief of the Railway Board.Charles P. Fullerton, ajustice of the ManitobaCourt of Appeal, wasappointed on August 13,1931 to replace him.In November, in the depthof the Great Depression,R.B. Bennett’s Conservativegovernment appointed aroyal commission to lookinto the condition ofCanada’s transportation system.Mr. Justice Lyman Duff, of the SupremeCourt of Canada, was named head ofthe commission. The Canadian NationalRailways system was suffering financiallyand the government sought a solutionto the public railway’s problems. 18In 1932, Sir Henry Thornton resigned ashead of the CNR, a position he had heldfor close to ten years, amid rumours oflavish spending. The next year, thegovernment set up a three-memberboard of trustees to govern the CNR,By the mid-1930sair travel wasbecoming morecommon with severalsmall airlinecompanies operatingin Canada.and asked the 64-year-old Fullerton tohead the board. 19At the same time, the governmentadopted the Canadian National-CanadianPacific Act of 1933 to encourage cooperationand co-ordination of therailway system. In the coming years, thetwo railways, crippled by the economicstandstill and loss of customers, wouldagree to pool certain passenger services,and eliminate unprofitableduplication of services.In 1933, the Board of RailwayCommissioners assumedjurisdiction over theabandonment of rail lines,in which they were givendiscretion to weigh therailways’ financialresponsibilities against theusers’ transportation needs.During 1934 and the first half of 1935,no chief was appointed to the RailwayBoard, and the position was temporarilyfilled by Assistant Chief CommissionerSimon J. McLean, who had been one ofthe original designers of the Board, andnow had served on it for more than25 years.On August 12, 1935, Hugh Guthrie tookover as Chief Commissioner. Guthrie wasa lawyer from Guelph, Ontario, with along career in politics. He had entered24Canadian Transportation Agency — 100 Years at the Heart of Transportation

the House of Commons in 1900 and satwith Sir Wilfrid Laurier’s Liberals until theconscription bill of 1917, when he hadmoved to Borden’s Union government,and later to the Conservatives.By the mid-1930s air travel was becomingmore common with several small airlinecompanies operating in Canada.CSTM/CN000246After Arthur Meighen resigned asConservative leader, Guthrie had beena frontrunner in the 1927 leadershipcampaign. At the convention, Guthriewas the first candidate invited to speak.In a fateful slip-of-the-tongue, however,he had announced: “Ladies and gentlemen,I welcome this, the greatest Liberalconvention in all history.” 20 R. B. Bennettwould go on to win the leadership raceand to become prime minister. It wasnow Bennett’s government thatappointed Guthrie in 1935 to the Boardof Railway Commissioners. Guthrie was69 years old, and the Board had enteredits fourth decade.Railways were no longer the only meansof transporting freight or passengersacross the country. Road construction—including major projects like the Trans-Canada Highway—and technologicaladvances were making motor vehiclesa viable source of competition.The civilian aviation industry had also beendeveloping in Canada since World War I.Bush-flying had long been an acceptedmethod of carrying passengers and goodsto areas of Canada’s North where noother transportation was available.People, airplanes and the R.100 at Saint-Hubert, QuébecAugust 1930In 1935, a plan for a national airlinewas being considered by Bennett’sgovernment. However, a fall electionbrought the Liberals back to power andPrime Minister William Lyon MackenzieKing put the transportation portfoliointo the hands of Clarence Decatur Howe.Howe had been born in the United Statesand trained as an engineer. In Canada,he had made a successful business ofbuilding grain elevators. As the Ministerof Railways, Howe disbanded the boardof trustees that had been overseeing theCanadian National Railways, anddismissed Fullerton, the former Chief ofthe Board of Railway Commissioners.25Chapter One — ALL A BOARD 1904 TO 1938

Then he set about reforming Canada’stransportation system. The Transport Actof 1936 created the first federal Departmentof Transport with Howe at itshelm. The department consolidated thefunctions of three departments: Railwaysand Canals, the Civil Aviation sectionwhich had been under the umbrellaof National Defence, and the MarineDepartment.In 1938, the Transport Act was passedcreating the Board of TransportCommissioners from the old Board ofRailway Commissioners.Symbolic of that change were tworetirements announced in the finalAnnual Report of the Board of RailwayCommissioners: Simon J. McLean, whohad written the reports at the turn ofthe century that had assisted A.G. Blairin designing the Railway Act of 1903,retired as Assistant Chief Commissionerto become a technical adviser. AndA.G. Blair Jr., the son of the founder andfirst chairman of the Board, retired aslegal counsel on November 28, 1938.He had been with the Board since 1904.The era of railway supremacy had ended.It was time to move on.26Canadian Transportation Agency — 100 Years at the Heart of Transportation

Notes for Chapter OneThe Board of Railway Commissioners’ annual reports (1906 to 1937) were the main sourceof information for this chapter. House of Commons Debates were consulted for detailsabout parliamentary discussions and policy statements. Newspapers were also used asnoted in the text.1 The Ottawa Citizen, February 11, 1904,reported on the first hearing of the Boardof Railway Commissioners.2 The limitations of the Privy Council’s RailwayCommittee are discussed in W.T. Jackman’sEconomics of Transportation, p. 659–660, andKen Cruikshank’s Close Ties, p. 57–64.3 Two histories that describe the early transportationsystem in British North America andin the first years after Confederation areOscar D. Skelton’s The Railway Builders, andG.P. de T. Glazebrook’s A History ofTransportation in Canada, Volumes I and II.4 Accounts of the development of Canada’sfreight rate structure can be found inA.W. Currie’s Economics of CanadianTransportation, Ken Cruikshank’s CloseTies and W.T. Jackman’s Economicsof Transportation.5 Ken Cruikshank, Close Ties, p. 48.6 The Dictionary of Canadian Biography,Volume XIII, (1901–1910) describes A.G. Blair’spolitical and personal life. Mrs. Blair’s socialskills are mentioned in Sandra Gwyn’s ThePrivate Capital.7 Cruikshank, Close Ties, p. 65.8 Joseph Schull, Laurier, p. 422.9 Ibid, p. 441–444.10 Biographical information about Albert C.Killam and his successors on the Board ofRailway Commissioners can be found inAnnual Reports and in various editions ofWho’s Who in Canada.11 Cruikshank, Close Ties, p. 135.12 Jackman, Economics of Transportation,p. 688–9.13 Both A.W. Currie’s Economics of CanadianTransportation and Ken Cruikshank’s CloseTies deal at some length with various freightrate decisions.14 Cruikshank, p.151–3.15 Cruikshank, p.164.16 Cruikshank, p.186–9.17 Board of Railway Commissioners’ AnnualReport, 1925.18 A.W. Currie, p. 448–9.19 Donald MacKay, The People’s Railway,A History of Canadian National, p.114.20 John G. Diefenbaker, One Canada, Memoirsof the Right Honourable John G. Diefenbaker,p. 156.Chapter One cover photo:Grand Trunk Railway “Ten Wheeler” steam locomotive No. 986, 1900CSTM/CN00383327Chapter One — ALL A BOARD 1904 TO 1938

CHAPTER TWOEngines of ChangeThe Board of Transport Commissioners1938 to 19671904 1938 1967 1988 1996 2004July 1, 1942, Canadian Pacific Air Lines started operations.•August 1950, railway unions held the first nationwide strike in Canada–legislation was passed to send the strikers back to work after nine days.29

The Board of Transport Commissioners1938 to 1967As Canada approached its 71stbirthday in the spring of 1938,newspapers delivered daily reports of thelatest skirmishes in Spain’s civil war andof the growing menace of fascism asAdolf Hitler’s shadow crept ominouslyacross Europe.At home, the nationaleconomy was shakingoff the lethargy that hadgripped it for almost adecade in the GreatDepression.On May 17, the CanadianPress reported that “morethan 585,000 motorvehicle licences have beentaken out in Ontario thisyear, 61,000 more than inthe same period last year.”A few days later, theOttawa Citizen reportedthat “three days aheadof schedule, the Dibblee ConstructionCompany started work this morning ongrading Uplands Airport for Trans-Canada Air Lines, preparatory to layingtwo runways… Work on the airport isbeing rushed so that the runways willbe ready by June.”On July 2, the Citizen reported thatthe federal Cabinet was still working,although Parliament had been proroguedthe day before, on the Dominion holiday.C.D. Howeoversaw the creation ofTrans-Canada Air Lines,the country’s firstpublicly owned airline,as a subsidiary of thepublicly ownedCanadian NationalRailways, and witha monopoly over theinternational andtranscontinental routes,and over airmail service.“Governor General Lord Tweedsmuir wason hand for the prorogation ceremony atmidnight Thursday night (June 30) butwhen it was found impossible to wind upbusiness by that time, Prime MinisterMackenzie King advised him not topostpone his vacation tripto England… Mr. JusticeCannon, acting as deputyto the Governor General,prorogued the session at3:40 p.m. (on July 1).”The House had beenoccupied with the passageof several bills in its lastdays before the summerbreak. One of the billspassed was the TransportAct, which created theBoard of TransportCommissioners withauthority over inlandwaterways and airlines,along with jurisdictionover railways, telegraphs,telephones, and express companies,inherited from its predecessor, theBoard of Railway Commissioners.The press made little mention, duringthose formative days, of the man whohad directed the Board’s creation. Butfor the next 19 years of its existence theBoard of Transport Commissionerswould constantly be aware of C.D.Howe’s presence and of his powerover transportation policy.30Canadian Transportation Agency — 100 Years at the Heart of Transportation

Howe was 49 years old in 1935 whenhe won the Port Arthur riding inNorthwestern Ontario. Mackenzie King,recognizing him as a shrewd, toughmindedbusinessman, pulled him into hisnew cabinet. 1By 1938, as the Minister of Transport,Howe had made major policy changes tothe transportation industry. He had nopatience, however, for the political lifeand he made no bones about it. A typicalremark was: “I don’t think I’m doinganything useful when I sit in the Houseand listen to the kind of blather that’sbeing talked here.” 2For instance, with inland water transportation,the Board had jurisdiction overlicensing and rates, but not over othermatters. In the aviation sector, the Boardhad power of approval for licensing andrates for air service between specifiedCSTM/CN000256Despite his shortcomings in diplomacy,Howe was one of Mackenzie King’s mostsuccessful cabinet ministers. In 1937, hehad spearheaded the organization ofoperating and ground services forCanada’s first transcontinental air system.He then oversaw the creation of Trans-Canada Air Lines, the country’s firstpublicly owned airline, as a subsidiaryof the publicly owned CNR, and with amonopoly over the international andtranscontinental routes, and over airmailservice. Throughout his political career,TCA would remain Howe’s favouriteproject.According to the Transport Act, theBoard was given authority over air andwater transport, but its powers overthese two modes were much morelimited in scope than over railways.A TCA crew aboard a Canadair DC-4M North Star, 1950points in Canada, or between specifiedpoints in Canada and outside, but theactual points and places of its jurisdictionwould be determined by cabinet.The Transport Act also gave the Boardthe power to approve agreed-uponcharges between carriers and shippers.This section of the Act allowed theheavily regulated railways to competein specific areas with the unregulatedtruckers, for instance, by makingagreements for special rates withlarge-volume shippers for a minimumquantity of freight.31Chapter Two — ENGINES OF C HANGE 1938 TO 1967

The new Board continued with the samecommissioners who had been appointedto the previous Board, and with thesame staff.The Annual Report of 1939 describes theadded workload: “A great deal ofcorrespondence, discussion and detailedwork has been necessary in respect to thelicensing provisions of the Transport Act,particularly so in respect to aviation,”wrote W.E. Campbell, director of theTraffic Department. “A large amount ofeducational work has been necessary inthe preparation and the filing of tariffs;also, it has been necessary to investigatealleged violations of licences, tariffs, etc.,much of which might have been avoidedhad there not been such an extraordinarylack of co-operation among the variouscompanies, and a greater appreciationof the necessity to comply with theprinciples laid down in the Act.”The Annual Report made no mention ofthe cataclysmic events of the late summerof 1939 that would take Canada intoanother world war. For several years,tensions had been building in Europeas Germany’s Hitler led a campaign ofaggression against neighbouringcountries. In 1938, there were plans afootfor a British Commonwealth Air Trainingprogram to be set up in Canada. WhenHitler invaded Poland in the fall of1939, there was no turning back. OnSeptember 10, 1939, Canada declaredwar on Germany.In the 1940 Annual Report, ChiefEngineer D.G. Kilburn wrote that besidesthe normal work of the department,“war conditions have imposed additionalduties. Many new industrial war plantsand air fields have been constructed andexisting plants enlarged. The consequentincreased traffic on the railways broughtabout additions to existing railway trackfacilities and, to meet growing war-timedemands for railway transportationservices, further additions are underconsideration. These increased facilitiesinvolve examination, inspectionand approval.”World War II created a boom in Canada’stransportation industry. By the secondyear of the war, CNR reported revenuesof over $300 million and, for the firsttime in many years, it wasn’t dependenton the public purse. 3Meanwhile, the approval of freightrates was removed from the Board’sjurisdiction during the war. As noted inthe Annual Report of 1941, “Order inCouncil P.C. 8527 of November 1st, 1941,imposed restrictions upon the ratescharged for transportation andcommunication services. The facilities ofthis department are being utilized toassist the Wartime Prices and Trade Boardin carrying out the provisions of theOrder in Council.” The government frozeprices and wages to the level prevailingbetween September and October 1941.32Canadian Transportation Agency — 100 Years at the Heart of Transportation

As the Board reiterated in later war-timereports, “There can be no increase in anyrates or charges for transportation ofgoods or passengers… without theconcurrence of the Wartime Prices andTrade Board.”Meanwhile, the Board carried on with itsregular duties of issuing licenses,approving abandonment and constructionof railway lines, administering theRailway Grade Crossing Fund, andinvestigating railway accidents and fires.On November 3, 1939, Hugh Guthrie, theBoard’s chief commissioner, died at theage of 73. Guthrie’s successor wasColonel James Albert Cross who had beenSaskatchewan’s attorney general from1922 to 1927, under two Liberalpremiers. In World War I, he had servedas an officer with the 28th Battalion andhad been made a companion of theDistinguished Service Order.On April 1, 1940, the Ottawa Journaldescribed Cross as “a modest soldierlawyer,who once was elected to theSaskatchewan legislature without makinga single speech” and “at 63, he looks agood ten years younger.”On April 9, C.D. Howe became Ministerof Munitions and Supply, a departmentspecifically created to give the governmentcontrol over industry during thewar years. He also kept the post ofMinister of Transport.Throughout his career, Howe maintaineda protective interest in Trans-Canada AirLines. He considered the airline his owncreation, and watched closely any Boarddecisions that affected the air industry.(In fact as late as June 20, 1950, whenHowe was Minister of Trade, OppositionLeader George Drew passed a motion inthe House of Commons to havejurisdiction over TCA turned over to theTransport Minister, and out of Howe’scontrol. The motion was voted down.)The Board’s role in aviation was unclearfrom the first. The Transport Act stipulatedthat the Board had jurisdiction overpoints and places that were specificallynamed by cabinet. In several instances,when the Board made a decisionregarding an air licence, the cabinetoverruled the Board by “unnaming” theroute, and thus removing it from theBoard’s jurisdiction. Also, if the Boardturned down a licence for an air operatorto fly to a place which had been namedby cabinet, the ruling could becircumvented by the air operator flyingto an “unnamed” place near thenamed place. 4Soon after TCA was created, CanadianPacific Railways, which briefly had beenincluded in a proposal to create thenational airline, decided to create its ownair service. On July 1, 1942, CanadianPacific Air Lines started operations.It had bought up several air routes fromsmaller operations, and with Board33Chapter Two — ENGINES OF C HANGE 1938 TO 1967

approval had air licences that expandedits territory into several markets.One of its purchases was an air companythat flew between Victoria andVancouver. At the time, TCA didn’t flybetween the two cities because therewasn’t a proper landing site at Victoriafor its larger planes. But when an airportwas built that TCA could use, it appliedto the Board of Transport Commissionersfor a licence to deliver mail and providepassenger service to Victoria.The Board was faced with a difficultdecision that would, on the one handallow the duplication of services, and onthe other hand block the publicly ownedTCA from fulfilling its transcontinentalmandate. The Board ruled that TCA coulddeliver mail between Vancouver andVictoria and also that it could provide airpassenger service, but only as a continuationof its transcontinental route. Thatleft the local passenger service, whichrepresented the majority of the traffic,to Canadian Pacific Air Lines. 5In the House of Commons, on June 11,1944, Howe expressed his opinion of theBoard’s performance: “The Board ofTransport Commissioners is bound by theTransport Act and is concerned chieflywith railway problems. The effect of theadministration of the Board was this. In1938, when the Act was passed, therewere a great number of independent airoperations in this country. Four yearslater, there was only one independent airoperation. Every other air operation inthe Dominion was owned and operatedby the railway companies.” CanadianPacific, under Board approval, hadbought more than 40 air operations inthose years. Howe was concerned thatthe private railway company had beenallowed to purchase such a large shareof the domestic air services.On the matter of the Victoria-Vancouverroute, Howe said: “The Board ruled thatTrans-Canada Air Lines must operatefrom Vancouver to Victoria with emptyseats, because there was another airoperation connecting the two centres.The fact that the other operation wasovercrowded and could not begin tohandle the traffic, and could not obtainplanes sufficient to carry the traffic didnot weigh with the Board.”On September 11, 1944, the TransportAct was amended to provide for “theremoval of commercial air services fromthe jurisdiction of the Board ofTransport Commissioners.”The Aeronautics Act, at the same time,created a new Air Transport Board toprovide licensing and regulatoryfunctions. In the House of Commons,Howe explained the new AeronauticsAct: “A much more scientific as well as afairer method, a method more in keepingwith the supremacy of Parliament isbeing adopted.”34Canadian Transportation Agency — 100 Years at the Heart of Transportation

Mackenzie King had made an earlierAnother policy change introduced bypolicy statement about the airlineC.D. Howe involved ownership of theindustry. “Competition between airairlines by the railways. On March 17,services over the same route will not be 1944, Howe stated: “It is becomingpermitted,” he had baldly stated in the obvious that ownership of airways byHouse of Commons on April 2, 1943. And our competing railway systems impliesalthough he had added that there would extension of railway competition intobe areas where private enterprise would transport by air, regardless of theparticipate, Mackenzie King made it clear government’s desire to avoid competitionthat the government’s airbetween air services. Thepolicy was to effect forCanada “a freedom ofaction in internationalrelations because it wasn’tlimited by the existence ofprivate interests ininternational air services.”At the end of World War II,the government wanted tocontrol the air industry andensure its development,avoiding the problems therailway industry hadsuffered at the hands ofprivate enterprise.The Air Transport Board’srole was clearly laid out inthe Act as an administrativeMackenzie Kinghad made an earlierpolicy statementabout the airlineindustry.“Competitionbetween air servicesover the same routewill not be permitted,”he had baldlystated in theHouse of Commonson April 2, 1943.government has decidedthat the railways shall notexercise any monopoly of airservices. Steps will be takento require our railways todivest themselves ofownership of airlines to theend that, within a period ofone year from the ending ofthe European war, transportby air will be entirelyseparate from surfacetransportation.”The effect of requiring theCPR to divest itself of theCanadian Pacific Air Lineswould be considerableexpense and time spent onbody, subject to close ministerial control. the reorganization. As was apparent inThe Air Transport Board could issuethis and other policy statements, Howelicences and regulations, but only subject was determined to advance the causeto the approval of the Minister ofof the publicly owned Trans-CanadaTransport. Also, the Air Transport Board Air Lines at the expense of privatewas responsible for recommending policy enterprise. (The divestiture policy waschanges to the Minister. In effect, it had reversed, however, in 1946 and CPR wasnone of the independence of the Board allowed to keep its airline.)of Transport Commissioners.35Chapter Two — ENGINES OF C HANGE 1938 TO 1967

The first chairman of the Air TransportBoard was R.A.C. Henry, who had workedfor CNR and had been deputy minister ofRailways and Canals in 1929 to 1930. In1940, he had assisted in the developmentof the Department of Munitions andSupply. The two other members wereAir Vice Marshall Alan Ferrier of theRoyal Canadian Air Force, an aeronauticalengineer, and J.P.R. (Roméo) Vachon, apioneer in the Canadian aviation industrywith experience in both flying andaeronautical engineering.In future years, many of the membersappointed to the Air Transport Boardwere drawn from the civil service. Thispractice reinforced the already closerelationship between the Boardand government. 6The Air Transport Board was not requiredto submit its own annual reports, anotherindication of its lack of autonomy.However, it did issue one report for theperiod September 11,1944 to December 31,1946. That document was directed to theMinister of Reconstruction and Supply,a new position created for C.D. Howein late 1944.That Air Transport Board Annual Report,which was published in 1947, clearlyadvanced the government’s thinking:“In accordance with laid down policy,direct competition is not permitted onscheduled air routes. The reason is that,at the present stage in the developmentof air transportation in Canada, thevolume of traffic is such that there is notroom for competing services and it isconsidered uneconomical to try to dividethe small available business between twoor more carriers. While at some laterdate a policy of competition might bejustified, at the present time it would bedisastrous and is considered to be againstthe public interest.”As Minister of Reconstruction, Howehad a mandate to direct the post-warreorganization of industries andmanpower. He still held the portfolio forMunitions and Supply, and was on hisway to earning the sobriquet “Ministerof Everything.”Howe was also still in a position to directtransportation policy after the war. TheBoard of Transport Commissioners’Annual Report, covering the period of1945, stated: “During the year the Boardof Transport Commissioners was askedby the Department of Reconstructionto make a survey of possible railwaycrossing eliminations at certain prioritypoints throughout Canada, having inmind public convenience and necessity,together with possible post-waremployment.”A Bureau of Transportation Economicswas created in 1946 to provide economicand statistical studies for both the Boardof Transport Commissioners and the AirTransport Board.36Canadian Transportation Agency — 100 Years at the Heart of Transportation

Wage and price controls were dropped atthe end of the war, and soon a clamourfor higher wages was heard. In 1946,both the Canadian National andCanadian Pacific railways raised theirwages in response to union agitation. 7Inevitably, the Railway Association ofCanada, representing CNR and CPR,applied for a general increase in freightrates to offset the increased operatingcosts and declining volume of post-wartraffic. After 150 days of hearings, theBoard rejected the railways’ applicationfor a 30 per cent increase.Mackenzie King’s announcement inthe House of Commons that he wouldbe retiring.Justice Archibald had been appointed tothe Supreme Court of Nova Scotia in 1937,and was appointed to the ExchequerCourt of Canada on the same day that hewas appointed to the Board of TransportCommissioners. The Board’s Annual Reportfor 1948 explained that an amendmentto the Railway Act that year providedthat the Chief of the Board of TransportCommissioners would be a judge of theExchequer Court (now the Federal Court).On March 30, 1948, the Board settled onan increase of 21 per cent, using a costrevenuemethodology. Seven of the nineprovinces (not Ontario or Québec)appealed the decision to cabinet,claiming the Board had lost the public’sconfidence by its methodology. Whilethe government reviewed the decision,it asked the Board on April 7, 1948, toconduct a general freight ratesinvestigation. Meanwhile, the RailwayAssociation sought another 20 per centincrease from the Board. 8On June 30, 1948, Chief CommissionerCross, now 72, in poor health and worndown by the contentious freight ratesissue, resigned. There was nothing in thelocal papers on July 1, 1948, about Cross’sresignation—or about his replacement,Justice Maynard Brown Archibald. Thebig news on that day was Prime MinisterMeanwhile, the Board continued to hearthe Railway Association’s second requestfor a freight rate increase. The Boarddecided to give an interim increase of8 per cent on July 27, 1948. CPR appealedto the Supreme Court and the Courtruled that the Board should make afinal decision.In October 1948, the governmentrejected the appeal by the provincesin what came to be known as the21 per cent case, the rate increaseoriginally approved by the Board inMarch 1948, and asked the Board toreview its decision. The government alsodecided to set up a royal commission tostudy transportation. In January 1949,W.F.A. Turgeon, formerly a judge inSaskatchewan, was appointed to heada royal commission that would studyfreight rates and transportation policy.37Chapter Two — ENGINES OF C HANGE 1938 TO 1967

And the Board, following the SupremeCourt order, authorized a freight-rateincrease of 16 per cent, but again theRailway Association returned, claimingthe Board had miscalculated the shortfalls.The Board’s final decision was a 20 per centincrease announced on July 27, 1949.In 1948, the Board had also dropped themountain scale (established in 1914 asa higher railway rate for traffic in theRockies) in response to an applicationfrom British Columbia.It was a tumultuous time for the railwaysand by extension for the Board ofTransport Commissioners. The combinationof fierce competition from trucking andair operations exacerbated by higheroperating costs was putting extremepressure on the railways, which werealready shackled by stiff regulations.Meanwhile, the shipping industry hadexperienced a huge burst of expansion inthe war years, most of it created by thefederal government. In 1947, in an effortto stem the post-war decline in theindustry, the government created theCanadian Maritime Commission. TheCommission’s responsibilities includedadministering subsidies and recommendingpolicies to the Minister of Transport.and express companies. In 1949, it wasgiven jurisdiction over licensing of oiland gas pipelines. But the majority ofthe Board’s workload remained railwayregulation.In August 1950, railway unions seekinghigher wages and better benefits held anationwide strike, the first in Canadianhistory. Legislation was passed to sendthe strikers back to work after nine days.The government appointed Mr. JusticeR.L. Kellock, of the Supreme Court ofCanada, as an arbitrator to settle thedispute. After hearing both sides, Kellockgranted a wage increase and directedthat a 40-hour, five-day week shouldbe instituted as of June 1, 1951. Thisultimately would put more pressure onthe railways to increase their rates. 9The Board of Transport Commissioners,meanwhile, was the target of criticismfrom various quarters for its handling ofthe railway problems. A particularlyscathing attack against the Board wasdelivered in the House of Commons onJune 21, 1950, by Opposition LeaderGeorge Drew. At this point, the Liberalshad been in power in Ottawa for 15consecutive years and Louis St. Laurenthad been the prime minister for two ofthose years.The Board of Transport Commissionerscontinued to approve licences and ratesfor inland water transport, and still hadjurisdiction over telegraph, telephoneDrew began with a denunciation of theBoard of Transport Commissioners, saying“it had demonstrated itself to beincompetent by its own actions during38Canadian Transportation Agency — 100 Years at the Heart of Transportation

this extended period (of freight ratehearings).” Then he launched into a longdiatribe liberally laced with the word“incompetent”, and recommended thatthe Board be disbanded and that a newboard be created. In response to thecriticism, it was noted in the House thatJustice Archibald, the Board’s chiefCommissioner, was “gravely ill.”CSTM/CN000238recommended that the Board deal withapplications at a speedier rate.On October 30, 1951, Transport MinisterLionel Chevrier dealt with more criticismabout the Board of TransportCommissioners. The resignation of the60-year-old Justice Archibald was set forthe next day, and Opposition memberstook the opportunity to attack theBoard again. In defending the Board’smembers, Chevrier blamed the problemson staff shortages.“The Board is lacking in expert staff.That is a fact,” Chevrier told the Houseof Commons. “The Board has not therequired traffic advisers that it shouldhave… Traffic experts are almostimpossible to find in this country.”Victoria inner harbour looking southeastBritish Columbia 1947Photographer: W. AtkinsThe report from the Turgeon RoyalCommission was tabled in the Houseof Commons on March 15, 1951.It recommended an equalization offreight rates; that the Board of TransportCommissioners establish a uniformsystem of classification of rates throughoutCanada, excluding the Maritimes;that the Board establish a uniform systemof accounts and reports for the railways;and that the lower rates on grain andflour as set out in the Crowsnest PassAgreement of 1897 continue. It alsoThe new Chief Commissioner wasJohn D. Kearney, a lawyer and careerdiplomat. 10 He had held several foreignposts that had earned him a reputationas an incisive and astute arbitrator.He had headed the Canadian mission inDublin from 1941 to 1945, and, in 1947,became the first Canadian HighCommissioner to India after that countryachieved independence. Kearney’sappointment to the Board coincidedwith his appointment as a Justice of theExchequer Court of Canada. Anamendment to the Railway Act in 1952would make the appointment of ChiefCommissioner an automatic appointmentto the Court of the Exchequer.39Chapter Two — ENGINES OF C HANGE 1938 TO 1967

In January 1952, the Board began hearingson rate equalization. After a long series ofconsultations, equalization on class ratesfinally went into effect in March 1955.A new department of Accounts and CostFinding was set up by the Board tohandle the uniform classification of ratesand associated accounting systems.While the Board continued to deal withfreight-rate applications, other issueswere brewing.In 1949, Newfoundland joinedConfederation. The new province’srailways became part of the CNR system,and eventually decisions about theprovince’s freight rates and other railwayissues fell within the Board’s jurisdiction.The Liberal government, in 1955, commissionedWalter Gordon, an accountantwho had worked for the Bank of Canadaand the Finance Department, to head aroyal commission on Canada’s economicprospects. One section of that study wasdedicated to transportation, under thesupervision of J.C. Lessard, a formerdeputy minister of transport. The report,issued in 1956, highlighted the changingtrends in passenger and freight transportationin the 25-year period from1928 to 1953. In 1928, almost 60 per centof passenger travel had been by privateautomobile while close to 40 per centused rail transport. In 1953, close to80 per cent was by private car and just over10 per cent by railway. Buses representedclose to 7 per cent of passenger travel in1953 and airplanes 3 per cent.In 1955, the Railway Act was amendedto increase Parliament’s annualappropriation of funds to the RailwayGrade Crossing Fund to $5 million. Theamendment was based on a report submittedon May 10, 1954, after the Boardcarried out a Canada-wide investigationof railway-highway crossing problems.Similarly, the 1950s saw widened freightcompetition with the expansion oflong-haul trucking companies, theintroduction of gas and oil pipelines andthe construction of the St. LawrenceSeaway, which allowed larger ships totravel from Montréal through the GreatLakes as far as Thunder Bay.An amendment to the Transport Actin 1955 removed the necessity of theBoard’s approval for agreed charges.The amendment gave greater freedom tocarriers to make specific agreements oncharges, the only requirement being thatthe charges be filed with the Board20 days prior to their taking effect.The discovery of oil in Leduc, Alberta, onFebruary 13, 1947, had created a newdomain over which the Board was givenjurisdiction—oil and gas pipelinescrossing interprovincial or internationalboundaries. Other oil fields had beenopened up in Canada in previous years,but the Leduc find set off a burst of oil40Canadian Transportation Agency — 100 Years at the Heart of Transportation

development. The Board’s AnnualReports document a succession ofapplications and approvals for pipelineconstruction over the next few years.As the wealth of Alberta’s oil and gasresources became apparent, the searchfor profitable markets got under way.Although U.S. markets could easily bereached over Alberta’s southern border,Ottawa expounded a policy of servingCanadian markets first. In practice,however, companies were allowed tobuild pipelines to both American andCanadian destinations because Canadianmarkets alone could not support thecosts of constructing the lines.In 1953, C.D. Howe, now in the Tradeand Commerce portfolio, seized upona scheme put forth by TransCanadaPipeLines, to build a gas pipeline fromAlberta to Ontario and Quebec. Howeenvisioned the cross-Canada pipeline as anational project reminiscent of previoustranscontinental endeavours, like theCanadian Pacific Railway in 1885. 11In 1954, TransCanada PipeLines appliedfor a permit to construct the 2,188-milepipeline from the Alberta-Saskatchewanborder through Manitoba and Ontario asfar as Montréal. The Board of TransportCommissioners granted the applicationsubject to the company satisfying theBoard that it had financing for the projectby December 31, 1954, and that it had acompletion date of December 31, 1957.TransCanada soon realized, however,that the cost of construction was beyondits means. The company, which waspartly American owned, applied toOttawa for financial aid, but was refused.In August 1955, Howe proposed a Crowncorporation that would build theunprofitable section of the pipeline fromthe Manitoba border to Kapuskasing,in northern Ontario. Northern OntarioPipe Line Crown Corporation would thenlease the pipeline back to TransCanada.Howe’s plan was a circuitous way ofhelping the company, without givingit money outright.TransCanada PipeLines then soughtfinancial backing to buy the actual pipeneeded for the project. An Americancompany agreed to supply the pipe inreturn for part ownership. That dealbrought American ownership of thecross-Canada pipeline to more than75 per cent, along with a stipulation thatthe order for the pipe would expire onJune 7, 1956.Construction problems didn’t end there.Howe introduced legislation to set upthe Northern Ontario Pipe Line CrownCorporation in March 1956. By May, theFederal Power Commission in the UnitedStates still hadn’t approved import of gasto that country, part of the scheme thatwould see a branch pipeline crossing intoMinnesota. This rejection dissolved hopesfor American financial help to build therest of the line.41Chapter Two — ENGINES OF C HANGE 1938 TO 1967

On May 8, 1956, the Canadian governmentproposed lending to TransCanadaPipeLines 90 per cent of the cost of theline between Alberta and Winnipeg.By then, the deadline for passage of theTransCanada PipeLines bill was a monthaway, on June 7.Opposition to Howe’s plan had beenbuilding in the House of Commons. OnMay 14, the Toronto Globe and Mailannounced that the government plannedto use closure “to ram through itspipeline legislation in short order.”When the Opposition complained, theGlobe wrote: “Howe sprang to the attackcharging his opponents with ‘a vacancyof mind, a refusal to face the facts, or theeasy irresponsibility of those who need notproduce a workable course of action.’ ”When the Opposition cried that thepipeline legislation was a “sellout,”Howe dismissed it as words “one mightexpect to hear from a banana republicrevolutionary, but not from anyCanadian statesman.”On May 24, the Board of TransportCommissioners gave permission toTransCanada PipeLines for constructionof the Western section from Alberta toWinnipeg. Mitchell Sharpe, then theassistant deputy minister of Trade andCommerce, attended the hearing onbehalf of Howe. Sharpe read a statementsupporting the permit.The battle that ensued in the House ofCommons was one of the most ferociousof the 1950s. The opposition partiesclaimed that the government wassubsidizing a pipeline that was ownedlargely by American interests. A unitedfront of Conservatives and theCo-operative Commonwealth Federationconducted a filibuster with long speeches,a steady barrage of questions, points oforder and objections to prevent thetabling of the bill and to stall voting. Thegovernment retaliated with closure, ararely used device to put the bill to a voteat various stages without further debate.In the early morning of June 6, 1956, theTransCanada PipeLines bill was passed inthe House of Commons, and then quicklypassed in the Senate. It was given royalassent on June 7, six hours before theoption for the purchase of the pipewould have expired.Opposition Leader George Drew calledfor a vote to censure Speaker RenéBeaudoin for “subordinating the rightsof the House to the will of the government.”That vote was lost, but theLiberals continued to be derided for theirundemocratic methods in pushing thepipeline bill through Parliament.On January 15, 1957, Justice John D.Kearney resigned as Chief Commissioner ofthe Board. At the age of 63, he went tosit on the Exchequer Court. Clarence DayShepard, a 42-year-old corporate lawyer,42Canadian Transportation Agency — 100 Years at the Heart of Transportation

moved into the Chief Commissioner’sto send his staff ahead. The Globechair on the same day. Shepard had the reported: “The next prime minister hasdistinction of being the youngest man to been left to answer his own telephoneserve as Chief Commissioner since the today, and to carry and check his ownfirst Board was appointed 53 years before, and his wife’s baggage tonight.”and the first veteran of World War II. Hehad served on the boards of severalThe TCA episode had nothing to do withmajor companies, and had the vigourthe Conservative government’s laterand energy of his youth.announcement that it wouldallow competition on theThe country went to thepolls on June 10, 1957, andended more than 20 yearsof Liberal rule. The newgovernment would beformed by the Conservatives,under JohnDiefenbaker, a firebrandlawyer from the Prairieswho had already establishedhimself as a toughopponent in the Houseof Commons.The TCA episodehad nothing to dowith the Conservativegovernment’s laterannouncementthat it would allowcompetition on thetranscontinentalair route.transcontinental air route.But it couldn’t haveendeared the publicly ownedairline to the new primeminister. The airline wouldnow be in a precariousposition, with its main ally,C.D. Howe, gone from theHouse of Commons. Howehad lost his Port Arthur seatin the election and subsequentlyretired from politics.Diefenbaker’s campaign platform hadIn the next few days, however, whileincluded calls for more competition andOttawa eagerly awaited the arrival of the less government interference in business.new prime minister, Diefenbaker wasIf he were to keep his election promises,occupied with travel arrangements. He TCA’s monopoly position was in jeopardy.and his wife, Olive, wanted to fly with hisstaff to Ottawa on an overnight TCAIt was not the first time that TCA’s routesflight from Saskatoon. But as the Globe had been threatened. In the early 1950s,and Mail reported on June 14: “TheCanadian Pacific Air Lines and anotherDiefenbakers have been dickering with Western-based airline, Pacific Western, hadTCA in an attempt to get at least onemade applications to the Air Transportstaff member on the all-night flight.”Board for transcontinental freight andpassenger services. The Board had heldIn the end, TCA couldn’t accommodate cross-country hearings, but then had passedthe staff members and Diefenbaker had the matter to the cabinet, where it had43Chapter Two — ENGINES OF C HANGE 1938 TO 1967

died. (In 1945, the Air Transport Board hadbeen given jurisdiction to hear complaintswith the powers of a superior court andin 1950, it had been given the power toinitiate hearings, but it still remained underthe authority of the Minister of Transport.)In 1952, Transport Minister Lionel Chevrierhad announced that TCA’s monopoly onthe transcontinental route would remainin place, but that competition would beallowed on regional routes.Although TCA continued to hold thetrans-Atlantic routes in 1957, itsmonopoly was already being eroded.Canadian Pacific held the Pacific routes,and had won South American andMexican routes in 1952. It was granted apolar flight to Amsterdam in 1955, andwas given the Lisbon and Madrid routesearly in 1957. 12When Diefenbaker installed George Heesas the new transport minister, bothCanadian Pacific and Pacific Westernwere working on applications to the AirTransport Board for transcontinentalroutes. Hees hired Stephen Wheatcroft,a British economist, to conduct a studyof airline competition in Canada.After just a few months in office,Diefenbaker called another election,seeking to strengthen his weak minoritygovernment. In March 1958, theConservatives received the largestmajority yet seen in Canadiangovernment—208 seats.The Wheatcroft report, meanwhile, hadbeen delivered on February 7, 1958. Itsuggested that limited competition onthe transcontinental route wouldbe healthy.On October 6, the Air Transport Boardbegan country-wide hearings into theCanadian Pacific’s application for atranscontinental route. The Air TransportBoard issued its report in December andTransport Minister Hees announced thedecision on January 21, 1959. The Boardhad recommended against additionaltranscontinental air services. But it didrecommend a single daily return servicefor Canadian Pacific from Vancouver toWinnipeg, Toronto and Montréal toconnect with its international service. 13A Globe editorial on January 23, 1959,suggested that the Air Transport Boarddecision had not gone far enough inintroducing competition in the skies.“The Board’s logic is surrounded bybefuddlement,” The Globe stated.“Transport Minister Hees reiterated lastFebruary (while he was campaigning forre-election) that the prime responsibilityfor introducing competition would restwith the Air Transport Board. That Boardhas now done the government adisservice by suggesting that when itspresent members (of government) werein opposition, they did not mean whatthey said about ending the TCAmonopoly (a Conservative campaign44Canadian Transportation Agency — 100 Years at the Heart of Transportation

platform). The Board’s policy appears tobe ‘Competition if necessary, but notnecessarily competition.’ ”Although there was some discontentmentwith TCA’s monopoly on transcontinentalroutes, the daily Canadian Pacific flightsput a dent in the publicly owned airlines’budget. In 1960, TCA reported its firstdeficit—others would follow. 14The railways were not faring muchbetter. Through the late 1950s, theycontinued to deal with union demandsfor higher wages, and decliningpassenger travel. Meanwhile, theycontinued to seek higher freight rates.The Board of Transport Commissionershad granted a rate increase of 17 percent effective December 15, 1958. InApril 1959, the railways demanded afurther 12 per cent increase.In response to shippers’ complaints,Parliament passed the Freight RatesReduction Act, directing the Board toreduce the 17 per cent rate increase to10 per cent, while the government wouldreimburse the rail companies for theirloss in revenue. The legislation would bea temporary measure. The Board was putin charge of the reimbursement fund. 15At the same time, the governmentestablished a Royal Commission onTransportation that would look, not onlyat the railway freight rates, but at allaspects of transportation in Canada.In May 1960, and again in 1961, theFreight Rates Reduction Act wasextended, as the royal commission,headed by M.A. MacPherson, heldhearings.The Board of Transport Commissionerscontinued its regular business. Aninterruption to normal proceedingsarose in 1958 when Chief CommissionerShepard was seconded to the AirTransport Board, while the chairman ofthat board was ill. Then late in 1958,Shepard resigned to take a position asvice-president of the British AmericanOil Corporation. Mr. S. Bruce Smith, anEdmonton lawyer, was appointed, butbecause of family illness, resigned beforetaking office. In a quick succession ofevents, Roderick Kerr, who had servedthe Board of Transport Commissioners forseveral years as senior counsel and thenbriefly as Assistant Chief Commissioner,took over the Chief’s position.Another change for the Board involvedits loss of jurisdiction over gas and oilpipelines in 1959, when legislation waspassed to create the NationalEnergy Board.The MacPherson Commission issued itsfindings in three volumes in 1961–1962.The Commission defined the objective ofCanada’s national transportation policyas “the movement of Canadian goodsand people with minimum demands onthe human and material resources.” The45Chapter Two — ENGINES OF C HANGE 1938 TO 1967

Commission recommended that thetransportation policy be achieved throughcompetition rather than regulation, aradical shift from the government’sapproach for the past 60 years. 16CSTM/CN001777financial aid to particular shippersshould not be disguised as transportationsubsidies.The final recommendations of theMacPherson Commission were releasedin 1962, at a time when the Conservativegovernment was nearing the end of itsfour-year mandate. On January 23,Diefenbaker tabled the second volumeof the report, saying the documentswould be “thoroughly examined.”CN passenger train Newfie Bullet en route toSt. John’s, Port aux Basques, Newfoundlandand Labrador, 11 September 1967Photographer: G. RichardThe report foresaw a reduced role forrailways, and recommended that railwayscould only compete with other modes oftransport if the burden of regulation waslifted. Where the obligations couldn’t belifted, the railways should be compensatedfor the expense of service. Four areas inwhich the railways were hindered,according to the commission, werepassenger services, branch lines, grainrates and free transportation privileges.On April 12, 1962, Finance MinisterDonald Fleming said, “The recommendationscontemplate a radical departurefrom the basis of rate-making as providedfor in the present provisions of the RailwayAct. The two volumes would involve afundamental reconstruction of much ofour railway legislation, particularly onthe financial and regulatory side.”With an election in the offing, it was notthe time to start “a radical departure”or “a fundamental reconstruction” intransportation policy. It was time tocampaign for re-election.The Conservatives won a minoritygovernment in June 1962. But, unhappywith the small win, they returned to thepolls on April 8, 1963—and lost.The report also recommended that allmodes of transport should be treatedequally, and that each mode be allowedto compete with another, and thatThe Liberals returned to power with aminority government and a new primeminister, Lester B. Pearson, a former civilservant and winner of the Nobel Peace46Canadian Transportation Agency — 100 Years at the Heart of Transportation

Prize. On November 8, 1965, the thirdelection in just over three years wascalled and this time another Liberalminority government was voted in.Although transportation policy and theMacPherson Commission had beenshoved to the sidelines, they had notbeen forgotten in the intervening years.Subsidies to railways, initiated by theFreight Rates Reduction Act in 1959 asa temporary measure, were still beingdoled out. The Conservative government,and then the Liberal government in 1963,continued to work on legislation tochange the freight rates policy. A billwas introduced in 1963. Then, a cabinetshuffle put John Whitney Pickersgill incharge of the Transport portfolio.Jack Pickersgill had earned legendarystature on the Hill by the time he tookover transportation policy in February1964. Originally a professor of history,Pickersgill had joined the civil service inthe late 1930s and was quickly promotedto the office of Mackenzie King. Hebecame King’s personal secretary andconfidant, and later St. Laurent’s. He hadserved as Clerk of the Privy Council andSecretary of State.In 1952, he won a seat in the House ofCommons and became a major player inLiberal politics. There was nothing aboutthe running of government or theworkings of Parliament that Pickersgilldid not know. When he had worked assecretary to the prime ministers, apopular comment had been “Clear itwith Jack.” 17 As a politician, he earnedthe nickname Jumping Jack because hepopped up from his seat so often in theHouse of Commons. Unlike his predecessor,C.D. Howe, Pickersgill revelled inparliamentary debate. In fact, he hadbeen involved in planning the closuretactics used in 1956 to get the pipelinebill through Parliament.Now he was ready to take on thereconstruction of transportation policy,and he was determined to create a billthat would stand the test of time.On January 27, 1967, the Winnipeg Pressreported, “A massive transportation billthat will revolutionize Canadianrailroading passed its final debatinghurdle on Thursday night. TransportMinister Pickersgill won a round ofapplause from both sides of the chamberas the final vote was taken to end15 days of clause-by-clause study.Only routine third reading and Senateapproval remain before the bill goes toroyal assent.”The National Transportation Act wasbased on the MacPherson RoyalCommission completed five years before.It had been introduced in the House inSeptember 1966, before it was sent tocommittee for two months of study. The30,000-word bill had 60 amendments,but remained mostly intact.47Chapter Two — ENGINES OF C HANGE 1938 TO 1967

The main points of the bill were: theestablishment of the Canadian TransportCommission to direct all forms oftransportation under federal control—railways, shipping, airlines and interprovincialtrucking; that railways wouldhave the freedom to set freight rateswithout regulation; and that railwayswould be able to abandon uneconomicbranch lines and passenger services unlessthe government specifically orderedotherwise in the public interest, and thenpaid their deficits.There was one point in which Pickersgilldid not manage to change transportationpolicy, and that was the Crowsnest PassAgreement. A legacy from the time ofAndrew G. Blair, the Crow rate had beenpassed in 1897, giving the CPR a subsidyfor Crowsnest Pass construction in returnfor a reduced freight rate in perpetuity.Although there was no political desire toremove the Crow rate, Pickersgill didattempt to put an amendment into thebill that would allow for a cost study of itat a later date. That was soundly defeated.On March 27, 1967, another major policyshift was announced, this time regardingairlines. Canadian Pacific was allowed todouble its transcontinental service to tworeturn flights a day. It also was allowedto add Calgary, Edmonton and Ottawa toits transcontinental route. (The route hadbeen Vancouver, Winnipeg, Toronto andMontréal.) The policy decision was basedon a study by Stephen Wheatcroft, theBritish economist who had recommendedthe first expansion of Canadian Pacificinto transcontinental service in 1958.The first intimations of change at theBoard of Transport Commissioners camein the Annual Report for 1966, publishedearly in 1967. The opening pages of thereport contained this announcement:“While this report deals with the workof the Board during the 62 years since itsestablishment in 1904, it may well marka historic turning point in the field oftransportation regulation in Canadaand may be the last report submittedby the Board… If legislation (Bill C-231)is enacted, the Board of TransportCommissioners for Canada will bemerged with the Air Transport Board andthe Canadian Maritime Commission intoa new Canadian Transport Commission.”A historic turning point had indeed beenreached. The National Transportation Actwas passed and became law. And it wasCanada’s centennial year. The nation wasgetting ready to celebrate.48Canadian Transportation Agency — 100 Years at the Heart of Transportation

Notes for Chapter TwoThe Board of Transport Commissioners’ annual reports (1938–1966) are the main sourcefor this chapter. The House of Commons Debates were used for relevant discussions ordecisions in Parliament. Canadian newspapers were used as noted in the text.Other sources include:1 Reginald Whitaker, The Government Party,Organizing and Financing the Liberal Partyof Canada, 1930–1958, p. 88 and p.180.2 John Robert Columbo, Columbo’s CanadianQuotations, p. 269.3 G.R. Stevens, History of the Canadian NationalRailways, p. 383.4 A.W. Currie, Economics of CanadianTransportation, p. 544.5 Ibid, p. 549.6 Fred Paul Gosse, in his unpublished thesis,The Air Transport Board and Regulation ofCommercial Air Services, for Carleton College,Ottawa, April, 1955, commented that civil servantswere posted to the Air Transport Board.Two chairmen of the Air Transport Board, J.R.Baldwin and W.J. Matthews, were both seniorcivil servants in the Department of Transport.7 A.W. Currie, p. 403.8 Ibid. p. 101–152. Currie gives a good explanationof the series of freight rate cases heardbetween 1946 and 1951.9 Ibid, p. 405.10 Who’s Who in Canada, 1957. The Board ofTransport Commissioners Annual Reports alsocarried some biographical information aboutthe Board chairmen.11 Two sources discuss C.D. Howe’s role in theTransCanada PipeLine debate: C.D. Howe:A Biography by Robert Bothwell and WilliamKillbourn, and Seeing Canada Whole, AMemoir, by J.W. Pickersgill.12 Peter Pigott, National Treasure, The History ofthe Trans-Canada Air Lines, p. 382–385.13 Ibid, p. 387.14 Ibid, p. 382.15 Board of Transport Commissioners, AnnualReport, 1959.16 John Saywell, editor, Canadian AnnualReview, 1962, p. 209.17 John Robert Columbo. Columbo’s CanadianQuotations, p. 475.Chapter Two cover photo:A TCA Canadair DC-4M North Star flying over Kinley Airport, Bermuda, 1950CSTM/CN00026149Chapter Two — ENGINES OF C HANGE 1938 TO 1967

CHAPTER THREETaking ControlThe Canadian Transport Commission1967 to 19881904 1938 1967 1988 1996 20041967, the Centennial Expo held in Montréal, Québec was a huge success.•February 1, 1972, proclamation of the Pilotage Act.•1983, the Western Grain Transportation Actreplaces the Crowsnest Pass Agreement.51

The Canadian Transport Commission1967 to 1988Centennial year was a time ofeuphoria. Throughout the springand summer of 1967, Canadiansenthusiastically waved their flag—thenew maple leaf that had been adoptedby Parliament in 1965—and expressedtheir national pride with countlessparades and costume parties.Expo 67 in Montréal, the centrepiece ofthe Centennial, was a huge success. Expoofficials clocked more than 50 millionpaid admissions to the site from April 28to October 27. 1The influx of tourists brought heightenedactivity to the transportation industry.CNR reported that 18 million people usedits passenger rail services that year, a25 per cent increase over the previousyear. 2 Airlines experienced a spike inbusiness as well, with a 20 per cent rise intraffic (from 1966) at Montréal’s Dorvalairport alone. 3In the cooling winds of autumn, thecelebratory mood drifted away. Partystreamers were swept from dance-hallfloors, Centennial tartan sports jackets—just slightly garish—were relegated tothe backs of closets where they wouldstay, and colonial-style dresses withmatching bonnets were stuffed intoboxes to gather dust in patriotic attics.On September 20, 1967, the CanadianTransport Commission (CTC) met forthe first time. The new president wasCSTM/CN001689Ferry MV Federal Avalon, St. John’s, Newfoundland and Labrador 1975Photographer: M. Segal52Canadian Transportation Agency — 100 Years at the Heart of Transportation

John W. (Jack) Pickersgill, most recentlythe Minister of Transport who hadpersonally escorted the new NationalTransportation Act through Parliament.managed to find a third way. It is notevery member who can write his ownticket or draft the bill for his own finalhaven of rest.”Since passage of the legislation in January,Pickersgill had assessed his own futureand decided it was timefor a career change. Ashe related in his memoir,Seeing Canada Whole, hesaw little ahead forhimself in politics, aftersitting in the House ofCommons for 14 years. Atthe age of 62, however,he was not ready forretirement. After somediscussion with PrimeMinister Lester Pearson,Pickersgill resigned fromcabinet and the House ofCommons. Then onSeptember 20, he tookthe top spot at the newlycreated CanadianTransport Commission. 4Pickersgill’s new job didnot go unremarked in the House ofCommons. On September 25, TommyDouglas, leader of the New DemocraticParty, commented that it had been said“a Member of Parliament could get outof politics in one of two ways, either bydying or by being defeated. The first is sofinal, and the second so humiliating.”But Douglas added: “Mr. Pickersgill hasThe CanadianTransport Commission’smandate was to dealwith all modes oftransportation as acompetitive whole“with the object ofco-ordinating andharmonizing theoperations of all carriersengaged in transport byrailways, water, aircraft,extra-provincial motorvehicle transport andcommodity pipelines”.Whether Pickersgill got any rest at thenewly formed commission remained amatter of lightheartedconjecture in the House ofCommons for some time,but the CTC set to work,nevertheless, at an earnestand steady pace.The Canadian TransportCommission absorbed mostof the members from theprevious boards—the Boardof Transport Commissioners,the Air Transport Board,and the Canadian MaritimeCommission. (Roderick Kerr,who had been chairman ofthe Board of TransportCommissioners, moved tothe Exchequer Court.) TheNational TransportationAct had provided for amaximum of 17 memberswho would serve for 10 years and to amaximum age of 70. According to theAct, there would be a president and twovice-presidents, one to supervise legaland administrative matters, the other tooversee research.The CTC also absorbed the staffs of theprevious boards, which numbered 377 in53Chapter Three — TAKING C ONTROL 1967 TO 1988

1967. In late 1968, the CTC set up headquartersat 275 Slater Street in Ottawa.The Canadian Transport Commission’smandate was to deal with all modes oftransportation as a competitive whole“with the object of co-ordinating andharmonizing the operations of all carriersengaged in transport by railways, water,aircraft, extra-provincial motor vehicletransport and commodity pipelines.”The ultimate aim of the Act was “aneconomic, efficient and adequate”transportation system. To achieve that, theCTC was instructed to provide regulationwithout restricting competition amongthe modes of transportation; to ensurefair distribution of costs of servicesprovided at public expense; to providecompensation for services that carrierswere required to provide in the publicinterest; and to ensure that rates set bycarriers should not be unfair.The CTC established separate committeesto handle the five modes of transportation:rail, air, water, motor vehicle andcommodity pipeline (except oil products).Most of the authority and responsibilitiesheld by the CTC’s predecessors in theareas of rail, air and marine wereassumed by the new committees, witha few striking differences.Under the new National TransportationAct, railways would be able to set theirown rates (other than on grain coveredby the Crowsnest Pass Agreement), andthey would be allowed to abandonuneconomic branch lines and passengerservices, unless required in the publicinterest. The Railway TransportCommittee would make decisions onabandonment applications.The Air Transport Committee heldresponsibility, under the government’snew policy of restricted competition, forregulating air licencing and tariffs. Inconsidering licences, the committee wasinstructed to consider “present andfuture public convenience and necessity.”The aim was for broader competitionwithout endangering the privilegedstatus of the publicly owned airline, thenewly renamed Air Canada.The CTC also created a Motor VehicleTransport Committee with the intentionof assuming some authority over theextra-provincial commercial truckingand bus industries. Truck companies hadbecome the railways’ main competitionfor freight traffic, but they were largelyunregulated. The federal governmenthad handed control of interprovincialcommercial trucking to the provinces inthe Motor Vehicle Transport Act of 1954.Regulations between the provinces wereuneven or non-existent. Part III of theNational Transportation Act allowed forthe cabinet to make exemptions to the1954 Act that would give the CTCjurisdiction in specific areas. Theprovinces, however, were reluctant to54Canadian Transportation Agency — 100 Years at the Heart of Transportation

give up their powers. Part III of the Actwas not proclaimed until 1970, and thenwas seldom put to use.The Motor Vehicle Transport Committeedid, however, assume other responsibilities.In 1969, the CTC began to implementthe Atlantic Region Freight AssistanceAct, which extended to truckers in theAtlantic provinces the same subsidies thatrailways had received since 1927, underthe Maritimes Freight Rates Act. Thesubsidies were intended to reduce theburden on shippers in the Atlanticprovinces for moving their goods eitherout of the region to Central or WesternCanada, or to other parts within theAtlantic region.According to the 1969 Annual Report,the Motor Vehicle Transport Committeemade “another step in equality ofregulation” when it began to allowexemptions for trucking companies fromthe Lord’s Day Act. When the Act, whichbasically prohibited work on Sunday,was drafted in 1906, it had specificallyexempted railways and shippingcompanies. Now, upon application,trucking companies could be exemptedas well.In 1967, the Commodity PipelineTransport Committee was also created tohandle the fifth mode of transportationunder the new CTC’s jurisdiction—pipelines for commodities other than oilor its products. There were no actualcommodity pipelines to regulate in 1967,however. The National Energy Board hadassumed control of oil and gas pipelinesin 1959.The National Transportation Act had alsoprovided for a Research Branch, whichPickersgill had envisioned as settingpriorities for transportation studies andrecommending policy. By the end of 1968,a full-time staff of 23 was employed inthe Research Branch and an advisoryboard of interested citizens had beenestablished to help determine prioritiesfor study. As it turned out, however, theResearch Branch never functioned asPickersgill had intended.In Seeing Canada Whole, writtenmany years later, Pickersgill wrote,“Unfortunately a good deal offrustration developed largely becausethe planned scope of the ResearchBranch was not adequately explained.”He continued, “My hope of anindependent and permanent entityavailable for research into transportproblems and opportunities fadedaway.” In 1970, the Ministry of Transportestablished its own research facility, theCanadian Transportation DevelopmentAgency, and recruited some of the CTC’sresearch staff.The CTC set up the InternationalTransport Policy Committee in 1968,which took over responsibility formonitoring international agreements55Chapter Three — TAKING C ONTROL 1967 TO 1988

for the different modal committees.And in 1970, yet another committee wasformed, the Review Committee, set up toreview appeals of decisions that hadbeen made by the modal committees.The majority of the CTC’s work, however,was concentrated on the rail and air modes.The Railway Transport Committee’s firstpriority was to set out the framework forrationalizing passenger rail service andbranch lines. Since 1959 when theRailway Reductions Act had been enactedas a temporary measure, freight rates hadbeen frozen and the government hadbeen paying annual subsidies to railwaysfor their losses. By 1967, the governmenthad paid out over $500 million.CNR-operated bus service was passedto the Newfoundland Board of PublicUtility Commissioners that year.In 1969, the Railway TransportCommittee, after months of hearingsand consultations, issued the CostingOrder, which outlined the method todetermine railway operating costs andto calculate losses in order to apply fordiscontinuance of service.CSTM/CN000543The CTC’s goal was to eliminate thesubsidies by gradual reduction withineight years; to allow railways to set theirown rates according to competition;and to allow railways to abandon theuneconomic branch lines and passengerservice, unless required in the publicinterest, at which time the governmentwould compensate the railways.In 1968, the CTC allowed CNR todiscontinue its trans-Newfoundlandpassenger rail service, known as theNewfie Bullet. The decision was basedon CNR’s assurance that it wouldestablish its own service for the provinceof “unquestionably clean, modern andfast buses.” Jurisdiction of theFreight train transporting potash in yardMelville, Saskatchewan 1967Photographer: Gerry RichardAs soon as the Costing Order was issued,the CTC received 31 applications forpassenger-train discontinuance, including18 applications from CPR to discontinueall of its passenger service, exceptcommuter lines. CPR claimed more than$30 million in losses in 1968. CNR filedapplications for 13 services, claiminglosses of more than $11 million. The CTCset to work to determine actual losses,and then, as required by statute, to begin56Canadian Transportation Agency — 100 Years at the Heart of Transportation

public hearings into each applicationfor discontinuation. That in itself was amammoth task since every public hearingcould involve submissions from severalparties and several days of hearing. TheCTC was required to consider the publicinterest in every discontinuance, and aslaid out in the Act, it had to ensure“efficient, economic and adequate”service.On June 18, 1970, after the requiredpublic hearings, the CTC rejected CPR’sapplication to discontinue the Canadian,its daily transcontinental passenger trainservice. The Canadian’s losses in 1968 wereset at more than $15 million.As the CTC’s Annual Report for 1970stated, “Because of the probable annuallevel of subsidy required to continuethe Canadian—more than $1 million amonth—the CTC directed CPR to producea plan of rationalization.” One canalmost hear an intake of breath fromthe CTC—and the government—asthat monthly sum was considered.In February 1971, the CTC rejected CNR’sapplication for discontinuance of theSuper Continental, its transcontinentalpassenger service, and set CNR losses for1969 at $14 million.On April 14 of that year, the CTCannounced that it would conduct astudy of an integrated transcontinentalpassenger service plan. Another studywas set up to examine passenger servicefrom Montréal to the Maritimes.By the end of 1971, CNR had filed fordiscontinuance of all of its passengerservices. With the CNR filings, the CTChad received applications for discontinuanceof all the passenger rail service ofany significance in Canada. Annual lossesfor passenger services from CNR werereported at $76.3 million in 1970. CPRannual losses were set at $31 million.The total, including some small passengerlines, was $108 million.The CTC’s Annual Report for 1971carried a message that, considering theescalating compensation to be paid outfor uneconomic services, might havebeen a plea for help: “The figures($108 million) emphasize the importanceof the commission’s rationalizationprogram which is aimed at discontinuingthose services no longer required bypublic need, ending unnecessaryduplication and eliminating any overcapacitythat may exist on services thatare required to continue operating inthe public interest.”The railways were working to reducecosts on those lines. “The total annualsavings from rationalization effected bythe CNR and CPR during the last threeyears are $17.5 million,” the 1971 CTCreport stated. “Without such steps mostof that amount would have become arecurring subsidy charge on the taxpayers.”57Chapter Three — TAKING C ONTROL 1967 TO 1988

The railways had also started to introduce exceeded the amounts that they weresome cost cutting in local train stations. receiving in previous subsidy payments.New technology had introduced the useof computers and the centralization of By 1973, the CTC had issued decisions oncommunications. Gradually in the early all 70 applications for discontinuance of1970s, the major railways began topassenger-train service it had received sinceremove local station agents from the1967. Of those, it had ordered 59 servicessmaller centres. All thesecontinued and approved thefactors helped the railwaysto cut some costs.However, a substantialamount would still haveto be paid from the publiccoffers for uneconomicservices that the CTC hadordered to continue in thepublic interest—to the tuneof 80 per cent for passengerlines and 100 per centon branch lines.The railways hadbeen relieved of hugelosses for runninguneconomic servicesthat the CTC deemedto be in the publicinterest, but the pricepaid by taxpayers wasconstantly mounting.discontinuance of 11.Similarly, by the end of 1973,the CTC had decided that allbranch lines in the Prairiesshould be protected fromabandonment until the endof 1974. In turn, the railwaysrunning the uneconomicbranch lines would becompensated for their losses.The CTC’s Annual Report for1974 remarked on the sharpUnder the National Transportation Act, increases in operating costs for “everythe plan was to phase out generalsegment of the transportation industry.”railway subsidies, or “normal payments,” That year, “the total payments forwhich had been agreed upon prior to various statutory subsidies administered1967. A schedule was set up so thatby the CTC for rail, water, road and airpayments that totalled $110 million in transport rose to more than $232 million,1967 would decline by $14 million a year up $52 million from 1973. The majorto reach $12 million by 1974. No railway outlay was in payments to the railways aswould receive any other subsidy—for compensation for uneconomic servicesinstance, for running uneconomicthey were required to provide in thepassenger service or branch lines—until public interest during 1973.”those claims exceeded the amount ofsubsidy they were already receivingFurthermore, the Annual Report stated,under the normal payments plan. Only “Total claims from railways for lossestoo quickly, however, the railwayscaused by running uneconomic servicesreached the point where their lossesin the public interest amounted to58Canadian Transportation Agency — 100 Years at the Heart of Transportation

$160.4 million.” Another $26 million waspaid in claims through a continuousprocess of verifications from 1969–72.That same Annual Report announced anew “railway branch-line freeze in thethree Prairie provinces. The new policydesignates a basic network of12,413 miles of track to be protectedfrom abandonment until the year 2000.Another 6,283 miles will be protecteduntil the end of 1975. A total of525 miles of track, not currently in use,is open to abandonment procedures.”The railways had been relieved of hugelosses for running uneconomic servicesthat the CTC deemed to be in the publicinterest, but the price paid by taxpayerswas constantly mounting.The Railway Transport Committee hadother concerns, among them railwaysafety. A rash of accidents in 1970 onthe main lines between Montréal andToronto led to an inquiry and later theformation of a task force to establishsafety measures for the movement ofdangerous commodities by rail. A RailwaySafety Advisory Committee wasestablished in 1973.The railway committee also continuedto hear rate applications for telephonesand telegraphs, part of the mandatepassed on from the previous Board ofTransport Commissioners. In August 1970,the committee took over regulation ofcharges by private wire-servicecompanies. In 1971, the CTC set up aseparate Telecommunications Committeeto deal with the increasing rate issues.The CTC’s workload continued to growand so did its committees. Now ithad eight.Meanwhile, the Air Transport Committeewas occupied with the steady stream ofapplications for commercial air licences.As with CTC decisions on thediscontinuance of rail service, the AirTransport Committee considered thelicencing applications on a case-by-casebasis, to determine present and futurepublic convenience and necessity. Thevolume of applications increased—from 377 in 1967 to 695 in 1974.In 1969, CP Air (formerly Canadian PacificAirlines) was allowed a larger share ofthe transcontinental route—20 per cent,as had been outlined in the government’sair policy of 1967. By 1970, CP Air wasproviding 25 per cent.Regional carriers were also taking overmore routes, often in areas where thelarge carriers chose to withdraw theirservices. Subsidies were used asencouragement for the regional airlinesto supply uneconomic routes, where noother transportation was available.Although more competition was beingallowed in the air mode, Canada’spublicly owned airline was stillgranted priority.59Chapter Three — TAKING C ONTROL 1967 TO 1988

The CTC’s policy in this regard isillustrated in its 1974 Annual Report.“Nordair was denied authority for aroute linking Montréal, Ottawa, Sudburyand Thunder Bay. The Nordair decisionfollowed public hearings at Sudbury andThunder Bay during which Air Canadaannounced plans to add the same routeto its schedule early in 1975.”Successive annual reports in the 1970shint at the fast pace of developments inthe transportation industry since the CTChad been formed in 1967.In 1971, the CTC’s Marine TransportCommittee conducted a study oncoasting trade and recommended thattraffic between Canadian ports bereserved for Canadian vessels and thatrestrictions be broadened to offshoreactivities like dredging, salvage anddrilling. Proclamation of the Pilotage Actof February 1, 1972, gave the Marinecommittee new jurisdiction over tariffs ofpilotage charges for the country’s fourpilotage authorities—Pacific, Atlantic,Great Lakes and Laurentian.In 1973, the CTC reported that “a majorround of negotiations with the UnitedStates gave 46 new Canadian and U.S.scheduled air routes, bringing thetotal to 81.”International Intermodal Transport andFacilitation Branch. The branch would“co-ordinate, harmonize and developpolicy on economic regulation ofinternational multimodal transport,including movement of containerizedand break-bulk cargo.” One area of studywould be a single through bill-of-ladingfor entire intermodal transport of goodsfrom the point of origin to the destination.Since the CTC’s early days, there hadbeen a power struggle with the Ministryof Transport over policy-making. As earlyas November 22,1968, an OppositionMember of Parliament had put hisfinger on the problem. Conservative MPThomas Bell had asked in the House ofCommons: “Who is really the boss intransportation? Is it the minister or isit the new chief dictator of the CTC(referring to Pickersgill)?”Pickersgill’s retirement on August 31,1972, did little to deflect the rivalry withthe Ministry of Transport. He wasreplaced by Edgar J. Benson, who hadserved as finance minister during PrimeMinister Pierre Trudeau’s first term inoffice. Benson, a chartered accountant,had overhauled Canadian tax laws in thelate 1960s and was still young—only49—when he turned his energies tooverseeing the CTC.The Annual Report for 1974 announcedthat the CTC’s International TransportPolicy Committee had established anIn the early months of 1974, a jurisdictionaldispute between the CTC and theMinistry of Transport surfaced in the60Canadian Transportation Agency — 100 Years at the Heart of Transportation

House of Commons. A shortage of railwaycars that winter had caused a slowdown offreight traffic in the West, including themovement of grain to export markets.CTC’s responsibilities to order the railwaysto purchase additional equipment.Marchand had further reason to takepolicy-making into his own hands. 5Transport Minister Jean Marchanddescribed his quandary on March 7, 1974,in the House of Commons: “About thesame number of boxcars are available thisyear as we had last year. This means thatno provision was made for any growth inthe economy. So, what do we do in thissituation? Honourable Members mightsay, ‘You are the minister; you do it.’ It istrue that Honourable Members gaveresponsibilities to the minister, but theyforgot to give any authority at all inmany instances.”“We have the CTC,” Marchandcontinued, “which has final authorityover almost everything, except in a fewcases where there is provision for anappeal to the minister.”Marchand, who was well known for hisblunt manner, concluded: “We haveeverything in Canada. We have water, air,surface—we have ice, we have snow andwe have distance—we have everythingto have fun in transportation. Somethingwe do not have is a real policy and I hopethat sooner, rather than later, it will bepossible to have such a policy.”Under questioning from the HouseStanding Committee on Transportation,Benson said that it was not within theOn April 8, Marchand reported to theHouse that he was preparing a policypaper on transportation.A July election returned Trudeau’s Liberalsto power and Marchand set to work onhis transportation policy proposals. Ayear later, on June 16, 1975, he tabled adocument called Transportation Policy—A Framework for Transportation inCanada, along with an Interim Report onInter-City Passenger Movement in Canadaand an Interim Report on FreightTransportation.Marchand’s policy paper envisaged “theuse of transportation as an instrument ofnational policy rather than as a passivesupport service.” It further explained“that the transportation system shouldbe accessible, equitable and efficient,rather than economic, efficient andadequate. The notion of efficiency is notlost, but the emphasis is on service toCanadians.”The paper also stressed that it would“rely on competition where economicand technical conditions permitted,rather than relying almost exclusively oncompetition.” In effect, Marchand waschanging the course of nationaltransportation policy—directing it away61Chapter Three — TAKING C ONTROL 1967 TO 1988

CSTM/CN000559things, I want to be able to say to theCTC that this is a new policy and thatthey will follow it.”Aerial view of a westbound train near Kamloops,British Columbia 1975from competition and back to regulationwith the top priority being serviceto Canadians.Marchand defined the CanadianTransport Commission’s role in this way:“Transportation in Canada is too big abusiness to dispense with an organizationsuch as the CTC. But we would like to seethe policy made by the Ministry ofTransport and applied by the CTC. Rightnow, there are many fields where it is theCTC that is making the policy, not thedepartment at all.”Marchand continued, “I do not mind ifthey (the CTC) have a lot of authority butwhat I do mind is that if we think it is inthe interests of Canada to do certainMarchand did not get a chance to havehis way with the CTC. On September 25,he was removed from the Transport postin a cabinet shuffle. The MontrealGazette explained the next day that“Mr. Marchand, deservedly popular forhis human qualities, his frankness and hisnegotiating skills, came to the pointwhere he needed the lighter load he hasbeen given.” Marchand became aMinister without Portfolio, while JusticeMinister Otto Lang was appointed to theTransport job.According to Trudeau, The Gazettereported, the economy was “in a serioussituation.” And the prime minister was“determined to take whatever measuresare necessary to achieve positive results.”The Gazette had reported on September 16that CPR had announced a new round oflayoffs as part of the railway’s austeritymeasures in response to “low levels offreight traffic and rising costs. CPRreported it was curtailing spending in avariety of ways, besides layoffs, includingstoring locomotives and boxcars,reducing administrative costs andpostponing capital projects.”In October 1975, Trudeau’s governmentintroduced wage and price controls, athree-year program to tackle rocketing62Canadian Transportation Agency — 100 Years at the Heart of Transportation

inflation. The country had been strugglingfor several months with spiralling costsin the face of a world-wide oil crisis. Thegovernment’s belt-tightening measureswould be felt in all areas of Canadianlife, including transportation policy.As the CTC’s 1975 Annual Reportexplained, the anti-inflation program“placed an increased responsibility on theCTC to regulate or monitor rate increasesand profit margins in those areas oftransportation and telecommunicationsthat fall within federal jurisdiction.”A commission of inquiry, headed by EmmettHall, a retired Justice of the SupremeCourt of Canada, was appointed in 1975to investigate the railway requirementsof grain producers, elevator operatorsand related businesses. Meanwhile, thefreeze on abandonment of 6,283 miles ofbranch lines in the Prairie provinces wasextended for another year to the end of1976. While the Hall Commission heldhearings throughout the four Westernprovinces, the CTC allowed 362 of the525 miles of unprotected Prairie trackageto be abandoned.On January 29, 1976, Transport MinisterOtto Lang issued a directive for developmentof “a basic single network of railpassenger services across Canada” withthe expressed purpose of “avoidingduplication of services.” The CTC wasasked “to conduct a series of publichearings to ensure that the views ofCanadians continue to be determinedand taken into account in arriving at anational passenger service network.”On June 11, Lang described in theHouse of Commons his interpretationof Canada’s transportation problems:“The conglomeration of approaches totransportation in Canada which hasdeveloped over the years is full ofinconsistencies and contradictions, thathave built into it tremendous costs andnon-productive expenditures.”Lang answered critics of his “user-pay”approach to controlling costs intransportation with the response, “If itisn’t the user who should pay, then whoshould pay—the non-user?”Lang went on to say: “Productivity in thiscountry will be improved by the rationalapproach to transportation and thelowest cost alternatives being selected.Productivity will also be improved asusers of transportation face the real costto this country of what we are trying todo and not the artificial rates based onsome Band-Aid, political opportunitysubsidy. Those subsidies we will want toremove and that will be our task.” That,as Lang and others were to discover, waseasier to say than do.Another government plan wasmentioned in the CTC’s 1976 AnnualReport. “Transport Minister Otto Langannounced in mid-year that the63Chapter Three — TAKING C ONTROL 1967 TO 1988

government was willing to provide upto $2 million for start-up costs involvedin the establishment of air services tocertain points in Manitoba andSaskatchewan. The Minister directed theCTC to invite proposals on the operationof specific routes and to provide himwith a detailed assessment of thesubmissions received.” The routes werejet service between Regina, Brandonand Toronto, and jet or non-jet servicelinking Saskatoon and Yorkton inSaskatchewan to Dauphin, Brandonand Winnipeg in Manitoba.In 1976, CNR’s Roadcruiser bus service,the only public passenger service inNewfoundland, was put under the CTC’sjurisdiction. A dispute between CNR andits provincial regulator had led Ottawa tomake an exemption to the Motor VehicleTransport Act, according to Part III of theNational Transportation Act.In another jurisdictional change thatyear, the Canadian Radio-TelevisionCommission assumed authority overtelecommunications from the CTC.In May 1977, the Hall Commission onGrain Handling and Transportationreleased its report called Grain and Railin Western Canada. It recommended theabandonment—in stages from 1977 to1981—of 2,165 miles of grain-relatedPrairie branch lines and the retentionof the other branch lines until 2000. Thereport also recommended the establishmentof a Prairie Rail Action Committee.The CTC subsequently began to considerapplications for abandonment of theeligible branch lines.The CTC Annual Report for 1977 reportedthat restrictions had been eased onCP Air’s transcontinental routes to allowturnarounds at western points other thanVancouver. The CTC also noted that thegovernment would allow CP Air toprovide air services to Saskatchewan,and also to consolidate all of its licencesinto one, which would allow the airlineto operate flights between any twopoints named in the consolidated licence.The Air Transport Committee alsowarned, “Continued cost pressures,including world-wide increases in fuelprices, caused air carriers to file forincreases in international and domesticfares and rates in 1977.”Meanwhile, Bill C-31, the bill based onMarchand’s policy plan to amend theNational Transportation Act, was stalledin its first reading in the House ofCommons in January 1977. Enthusiasmfor the bill gradually waned as efforts forchange in transportation policy weredirected elsewhere.The Air Canada Act of 1977 removed theairline from CNR control and made it aseparate Crown corporation, under thejurisdiction of the CTC and subject to thesame regulations as its competitors.64Canadian Transportation Agency — 100 Years at the Heart of Transportation

In 1978, the CTC allowed the airlines tointroduce a variety of new fare discounts.Between April 1978 and October 1979,the Western and Eastern transcontinentalpassenger services of both CP and CNRwere absorbed into a new Crowncorporation called VIA Rail.In March 1979, the CTC issued a reporton a meeting about public transportationfor people with disabilities, and created aspecial advisory panel. Among its recommendationswere changes to tariffs toallow self-reliant passengers with wheelchairsto travel alone and to require VIARail to provide lifting devices fortheir assistance.The Canadian Transport Commissionopened a Western division in Saskatoonon May 1. In response to a governmentpolicy that enunciated a need for aWestern presence, the CTC 1979 AnnualReport stated, “Its mandate is to performall those functions of the CTC that aredelegated to the modal committees:from Thunder Bay to Pacific Coast for railand from the Ontario-Manitoba borderto Pacific coast for other modes.” Twocommissioners were appointed to theCTC’s Western division. It took overresponsibility for the Prairie branch-linerehabilitation program, and Prairiebranch-line abandonment applications.The CTC pointed out, “Although it is incharge of all modes, its primary concernsat this time are the rail and air divisions.”Also in May, a member of the CanadianTransport Commission attended ameeting in London, England, to discussthe Bonn Declaration on Terrorism. In thedeclaration made in 1978, seven Westernnations, including Canada, had agreedthat sanctions—in the form of cancellingair services—would be directed at anycountry that refused to extradite orprosecute hijackers, or to return hijackedaircraft. The airline industry had entereda chilling new era in which peacetimewas no protection against violence inthe skies.Then in the fall of 1979, danger hit closerto home. On November 10, 1979,24 CPR cars carrying liquified chlorineand other flammable compressed gasesderailed in Mississauga, a suburbancommunity west of Toronto. A raging fireresulted, forcing the removal of 230,000citizens from the area. Although nodeaths were reported, the catastrophicpossibilities of the derailment alerted thenation to potential disasters ahead.A Board of Inquiry was appointed, underOntario Appeal Court Justice SamuelGrange, to investigate the derailment.The Canadian Transport Commissionbecame the focus of the federal Auditor’sReport in 1979. “The commission, incommon with some 30 other federalgovernment departments, is currentlyengaged in an intensive review of itsmanagement practices and controls,”the CTC reported at the end of the year.65Chapter Three — TAKING C ONTROL 1967 TO 1988

“The reforms that can already be foreseenas resulting from this review will “For scheduled flights, carriers can nowallowing more competition in air fares:touch upon almost every aspect of the innovate fare reductions of nearlyCommission’s organization50 per cent.”and operations.”That laissez-faire experiment was sidetrackedin 1982, “after a number of“In addition to improving its internalmanagement and financial controls, the carriers had made it known that farediscountinghad reached a point wherecommission has an important role to playin the realm of regulatory reform. As the revenue losses had begun to threatenlargest of the federalthe stability of the domesticregulatory agencies, theCTC will be the trial agencyupon which new policies,aimed at lightening theburden of regulation uponsociety, will be tested.Those policies which arefound to be workable andbeneficial will then bepassed on to the myriadof other, smaller federalregulatory agencies.”Regulatory reform wasalready under way. As the“As the largest ofthe federal regulatoryagencies, the CTCwill be the trialagency upon whichnew policies, aimedat lightening theburden of regulationupon society,will be tested.”scheduled airline system.”The CTC imposed restrictionson discounts of more than25 per cent, which includedrequirements such as roundtriptravel and 14-dayadvance booking.The Grange Report on theMississauga Railway AccidentInquiry was released onJanuary 19, 1981. OnSeptember 30, the CTCordered implementation ofseveral recommendationsCTC reported, “Regulatory amendments including a speedier conversion to rollerliberalizing domestic and international bearings, modifications of tank cars tocharter rules were approved December 21, increase safety, the use of additional hot1979, and incorporated into the Airbox detectors, and a reduction in speedCarrier Regulations.”and in the length of trains.The CTC reported in 1980 that in the airsector “more flexible regulations andsimplified accounting procedures wereestablished to permit greater carriercompetition and less regulatory burden.”Among other things, the CTC wasIn 1981, just three years after it hadbeen created, VIA Rail was weigheddown with a deficit and had applied tothe CTC to abandon 20 per cent of itspassenger services. The CTC allowed thediscontinuances on September 28, 1981.66Canadian Transportation Agency — 100 Years at the Heart of Transportation

By the end of the year, VIA had cut ninetrains, including the Super Continental,one of two transcontinental services.In late 1983, the Western GrainTransportation Act was passed to replacethe venerable Crowsnest Pass Agreement.The Crow rate, considered sacred byWestern farmers, was a reduced freightrate on grain that CPR had agreed to in1897. The Act to replace it washammered out by Jean-Luc Pépin, whohad been Transport Minister since 1980.But when the bill was released, it causedenough of an uproar among Westernfarm groups that Prime Minister Trudeauquickly moved his only cabinet ministerfrom the West into the Transportportfolio. 6 Lloyd Axworthy, fromWinnipeg, replaced Pépin on August 12,1983. The new Act, allowing for afreight price increase (to a maximumof 10 per cent on the world grain price)and federal compensation to railwaysfor losses, was passed on November 17.The CTC took over responsibilities forthe costing of grain movements, costforecasting, determining rates, andpayment of the government’scommitment to railways, now at$650 million.There were other changes afoot in theearly 1980s. The Liberal governmentfaced increasing public dissatisfactionin the midst of economic recession andhigh unemployment.The CTC Annual Report of 1983announced a series of public hearings tobe held in early 1984 to discuss air farepolicy at Transport Minister Axworthy’srequest. It also announced an inquiryinto intermodal and multimodal transportationservices. And in a revision of itsgeneral rules, the Canadian TransportCommission set new time limits for itselfin issuing decisions.In the closing days of 1983, the CanadianTransport Commission welcomed an oldopponent into its fold. Jean Marchandresigned from the Senate, where he hadspent the past seven years, to becomethe CTC president on December 16.Edgar J. Benson had completed his 10-yearterm on August 31, 1982, and had takenan ambassadorial post in Dublin. Duringthe interim, the CTC’s John T. Gray,vice-president-law, had filled in aspresident. The 65-year-old Marchandhardly had time to settle into his chairbefore there was a flurry of more changes.The 1984 CTC hearings on Canadian airfare issues and domestic chartersdetermined that there was need for anew air policy. Amendments to the AirCarrier Regulations governing domesticand international advance bookingcharters had been suggested. Anotherreport on air services in Northern regions,based on hearings held in June and July,stressed the necessity of providing betterair service in remote areas betweenLabrador and the Yukon. Transport67Chapter Three — TAKING C ONTROL 1967 TO 1988

Minister Axworthy introduced a newCanadian air policy that year, implementingsuggestions from the CTC hearings.In the fall of 1984, the CTC held aninquiry into the effects in Canada of U.S.rail deregulation. The study had beenrequested by Axworthy “after two majorCanadian railways reported revenuelosses of $100 million to U.S.competitors.” The Staggers Act, passed inthe United States in 1980, freed theAmerican rail industry from economicregulation and opened the way tocompetition. As the CTC reported, theinquiry found that “the rail regulatorysystems of the two countries are nolonger compatible and suggested anumber of legislative changes to restoretrans-border railway pricing harmony.”A federal election on September 4, 1984,brought in a Conservative governmentunder Brian Mulroney. One of thepriorities identified by the Mulroneyteam in its campaign platform wastransportation policy reform.In July 1985, Transport Minister DonMazankowski introduced a positionpaper on transportation in the House ofCommons. It was called Freedom toMove—A Framework for TransportationReform. The paper outlined sweepingrevisions to transportation policy thatinvolved reduced economic regulationand greater reliance on market forces.As the CTC Annual Report announced,“the effects on the Canadian TransportCommission will be dramatic.”The Annual Report quoted these wordsfrom Mazankowski’s speech: “Economicregulatory reform in transportation isneeded in Canada if it is to achieveeconomic renewal and growth to meetinternational competition. Canada’sability to achieve economic progress inthe 1980s and 1990s will depend in alarge measure on a productive and moreefficient transportation system.”The Transport Minister continued, “It isthe federal government’s view that thechanging environment of regulatoryadministration, coupled with thedetermination to reduce governmentinterference in the marketplace, requiresthe establishment of a new regulatoryagency as a successor to the CanadianTransport Commission.”The fate of the Canadian TransportCommission had been decided. It wouldbe replaced by another agency with lessregulatory authority. Jean Marchandresigned as president on July 31, 1985,soon after Mazankowski’s policy paperwas released. J. David Thompson, theCTC’s vice-president-law, sat in thepresident’s chair until Erik Nielsen wasappointed in early 1987. Nielsen hadbeen a Conservative Member ofParliament since 1957. He served inJoe Clark’s short-lived government in1979–1980 and then held several cabinet68Canadian Transportation Agency — 100 Years at the Heart of Transportation

posts in the Mulroney government. InJanuary 1987, he had resigned from theHouse of Commons to head the CTC.While the new legislation was drawn up,the commission continued with its dailyworkload. Mazankowski had asked theCTC’s Western Division to inquire intopossible alternatives to railway branchlines in Canada. The objective, accordingto the CTC, was to find better ways toimprove the effectiveness, efficiency andreliability of the railway system at aminimum cost. The Western Divisionissued a report on June 28, 1985, onalternatives to railway branch lines. Thereport found that branch-line subsidieshad grown from $37.1 million in 1971 to$322 million in 1982. It also found thatconsideration had not been given tocompetition from other modes oftransport. The report recommended acomplete review of railway costing.On June 26, 1986, Transport MinisterMazankowski introduced Bill C-18 inthe House of Commons. It was the newNational Transportation Act that wouldCSTM/CN001653Launching of the Labrador coastal ship MV Taverner, Collingwood, Ontario 196269Chapter Three — TAKING C ONTROL 1967 TO 1988

create an agency to replace the CanadianTransport Commission. Ironically, theCTC’s Research Branch, created byPickersgill back in 1967 to serve as aninstrument of policy-making, had assistedthe Mazankowski team in drafting thenew legislation.Among changes to the original Actof 1967, there were provisions forconfidential contracts for rail shippers;increased intramodal competition;reduced regulation governing thecommercial airline sector; rate arbitrationfor shippers and carriers; and protectionof the unique nature of the North’s airand marine transportation.John Crosbie became Transport Ministeron June 30, 1986, a couple of days afterthe National Transportation Act wastabled. He guided Bill C-18 and theaccompanying Bill C-19, the new MotorVehicle Transport Act, through Parliament.“With the late summer passage of BillC-18,” the CTC reported in the 1987Annual Report, “and in anticipation ofthe new National Transportation Actbecoming law on January 1, 1988, thecommission began to phase out itsactivities.” A transitional team was set upto accommodate the relocation of staff,which had grown in 1986 to almost1,000 people.Among the CTC’s final decisions inDecember 1987 was the approval forCNR and CPR to operate their trainswithout cabooses. The prospect of trainsrunning without cabooses seemedstrange in those days. But once discarded,they were soon forgotten.The Canadian Transport Commissionwould meet a similar fate. After 20 years,it had become obsolete. Under a newagency, Canada’s transportation systemwould have “freedom to move”.70Canadian Transportation Agency — 100 Years at the Heart of Transportation

Notes for Chapter ThreeThe main sources of research for this chapter were the annual reports of the CanadianTransport Commission from 1967 to 1988 and the House of Commons Debates.Newspaper sources are noted in the text.Other sources include:1 James H. Marsh, The Canadian Encyclopedia,p. 738.2 Donald MacKay, The People’s Railway,A History of Canadian National, p. 246.3 F.H. Leacy, Historical Statistics of Canada,a collection of data from Statistics Canada(previously the Dominion Bureau of Statistics).The figure for Dorval airport comes from theTransportation and Communications section,Civil Aviation. T240-246, titled “Arriving anddeparting civil flights at selected Canadianinternational airports, 1960 to 1975.”4 J.W. Pickersgill, Seeing Canada Whole,A Memoir. Although a large part ofPickersgill’s memoir focuses on his earliercareer, the later chapters discuss his time asTransport Minister and the early days of theCanadian Transport Commission.5 H.N. Janisch, The Regulatory Process of theCanadian Transport Commission, p. 16. Thisdocument, a study prepared for the LawReform Commission of Canada, gives a lengthyanalysis of the workings of the CTC based ona six-month research project in 1974–75.6 Stephen Clarkson and Christina McCall,Trudeau and Our Times, Volume 1, p. 292,and Volume 2, p. 327–8.Chapter Three cover photo:The Turbo Train under testing, Saint-Hyacinthe, Québec, 1967CSTM/CN00056471Chapter Three — TAKING C ONTROL 1967 TO 1988

CHAPTER FOURShifting GearsThe National Transportation Agency1988 to 19961904 1938 1967 1988 1996 20041988, the government divested Air Canada.•1992, the National Transportation Act was amended to expandthe role of the Agency with respect to making the federal transportationaccessible to persons with disabilities.•February 24, 1995, Canada signed an “Open Skies” agreementwith the United States.73

The National Transportation Agency1988 to 1996The Canadian Transport Commissionhad moved across the Ottawa Riverto Hull in the late 1970s. More than 800employees now occupied the top fivefloors of the fortress-like brick buildingat 15 Eddy Street. In its 20 years ofexistence, the CTC had amassed a largeorganization that would have to be overhauledto implement the government’snew vision for transportation policy.Erik Nielsen, a former Cabinet ministerin Brian Mulroney’s government, wasappointed to head the new NationalTransportation Agency. Nielsen had a lawdegree and a Distinguished Flying Crossearned in World War II. He also had areputation as a scrapper, picked upduring a 30-year career in the House ofCommons as the representative forWhitehorse, Yukon. His appointmentsignalled a changing of the guard, a guardthat the Mulroney government decidedhad become entrenched in a regulatorysystem that was no longer viable.As the Ottawa Citizen reported onNovember 28, 1987, “Transport MinisterJohn Crosbie said he was fed up withregulations so severe they requiredairlines to fill in a form ‘to go to thebathroom.’ So he hired Erik Nielsen.”Crosbie had outlined the agenda forchange in a more serious vein on June 17,1987: “The current regime was put inplace in 1967. Since then, the worldeconomy, the Canadian economy andCanada’s transportation industry havechanged significantly. The regulatoryregime simply did not keep pace. As aresult, at the present time it impedesrather than supports growth anddevelopment, it stifles competition in allmodes of transportation, it reduces thecompetitiveness of producers and ithinders the free movement of goodsand people.”A passenger information representative assiststravellers at Toronto Pearson International Airport,OntarioEleven of the 13 incumbents in theCanadian Transport Commission weregiven their walking papers in the restructuringthat followed. The new Act called74Canadian Transportation Agency — 100 Years at the Heart of Transportation

for a maximum of nine full-time Members,including a Chairman and Vice-Chairman,to be appointed by Cabinet for five-yearrenewable terms, and six part-timeMembers. To provide some regionalrepresentation, the Act required thatthere be one Member from each of fiveCanadian regions: Pacific, Prairie,Ontario, Québec, and Atlantic Region.Micheline Beaudry, aMontréaler withmanagement experience inenergy and transportation,was appointed Vice-Chairman. Six other fulltimeMembers wereappointed to five-yearterms. Two formermembers of the CTC wereappointed as temporaryMembers.The 1988 Annual Report indicates thatthe Agency did not stint on staff training.“As employees were placed in newpositions,” the report stated,“considerable emphasis was placed ontraining to ensure that all employeesunderstood their new responsibilities.”A government booklet, Freedom to Move,published in 1988, explained the Agency’srole: “The powers of the new Agency aredesigned to ensure responsiveness topublic interest, industry needs and policydirection from the government. The“The powersof the new Agencyare designed to ensureresponsiveness topublic interest,industry needs andpolicy direction fromthe government.”Agency has authority to grant transportationlicences, review public complaintsand help resolve disputes betweenshippers and transportation firms.” 1The new Act stated that safety was apriority, that competition should be theprime force to drive the Canadiantransportation industry, and that shippersand travellers should be thechief considerations inestablishing policy.The Act also directed thatcompetition should be notonly intermodal (betweendifferent modes oftransport), but also intramodal(between carrierswithin a particular mode).Regional economicdevelopment was anexpressed goal. Also, allmodes should be treatedfairly, and carriers should pay forfacilities provided at the public’s expense.The new Agency’s operations wererestructured to reflect the Act’sphilosophy. Unlike the CTC, which hadseparate divisions set up according totransportation mode, the new Agencywas divided into branches according tothe duties performed. The DisputeResolution Branch settled rate or servicedisputes and monitored acquisitions andmergers of transportation companies;the Market Entry and Analysis Branch75Chapter Four — SHIFTING G EARS 1988 TO 1996

was responsible for licensing within allmodes; the Transportation SubsidiesBranch dealt with subsidy payments,determination of Western grain ratesand railway rationalization proposals.The Legal Services, CorporateManagement and Human Resources andthe Secretariat branches providedrelevant expertise and support to theother branches. Regional offices were setup in Moncton for the Atlantic region,and Saskatoon for the Prairie region.The National Transportation Agencywould continue to hold public hearingsinto transportation matters and settledisputes between shippers and carriers,but now only in response to specificcomplaints or at the government’srequest. The Agency would also providefinal-offer arbitration along withmediation, but the services would beoffered only upon request.“In most cases the Agency can only takeaction upon request. In keeping with theemphasis on minimal regulation, it isintended to respond to problems ratherthan seek them out,” the governmentbooklet, Freedom to Move, explained.policy and for the actions of the Agency.The government may issue general policyor other binding directions to the Agencyand may alter any decision, order orregulation made by the Agency.”With a move toward deregulation,the Agency’s regulatory duties werealso redefined.As laid out by Transport Minister LloydAxworthy’s Canadian air policy in 1984,air services were no longer required toprove “present and future publicconvenience and necessity,” except inNorthern Canada, where the airlineindustry was still considered fragile.In the rest of Canada, an air serviceneeded only to be “fit, willing and able,”that is, able to operate a safe air servicewith proper insurance coverage. Earlierconditions regarding routes, schedules,fares and equipment had also beenremoved. Air services could now negotiateconfidential contracts and they neededto give only 120 days’ notice to reduce orstop service. In instances of monopoliesin service, the public could appeal faresto the Agency.The Agency no longer had a pro-activerole in policy-making, but was boundto follow the policy directives ofgovernment. As the booklet explained,“the Minister of Transport is accountableto Parliament for national transportationThe new Act reduced regulations inthe rail sector so that shippers couldnegotiate confidential contracts withindividual railways, and file theagreements with the Agency. Thenew Act required only that rates be76Canadian Transportation Agency — 100 Years at the Heart of Transportation

compensatory to cover the actual cost ofshipping. The interswitching limit wasalso extended, from 6.4 kilometres(four miles) set in 1908 to 30 kilometres(18 miles). Captive shippers beyond the30-kilometre limit could ask their localcarrier for a competitive line rate.If a rate could not be agreed upon, theAgency, on request, would set the rate.The new National Transportation Actalso made it easier for railways to sellan unprofitable line, and ensured agovernment subsidy to the public toestablish other means of transportationwhere necessary. If a line had futureeconomic potential, the Agency couldorder the railway to continue service ona subsidy basis. If the line was found tobe uneconomic, the railway had to give90 days’ notice of abandonment, duringwhich time the public had 60 days toappeal. The Agency then had to makea decision within six months.Marine transportation in the North wasprotected in the same way as Northern airservices. No new service would be allowedto enter an area that would endangerexisting services. The Agency continued itsother administrative duties in the filingof tariffs, under the Pilotage Act and theSt. Lawrence Seaway Act, and would holdhearings in response to complaints.A new assignment for the Agency wasthe monitoring of major companymergers and acquisitions in all modesof transportation. The Agency was alsorequired to conduct annual reviews ofthe National Transportation Act. A majorreview of the Act was required in thefifth year of operation.The new legislation stated thattransportation services must be offeredwithout undue obstacles to publicmobility, particularly for travellers withdisabilities. The Agency was instructed toinvestigate any complaints in that regard.In July 1988, the Agency was furtherempowered to prescribe, administerand enforce regulations for accessibilitystandards of persons with disabilities forall of the modes of transportation.The creation of the CanadianTransportation Accident Investigationand Safety Board in 1989 removed theAgency’s role in investigating railwayaccidents. But the Agency continued todistribute subsidies and set the annualrate scale for the movement ofWestern grain.In its first Annual Review, the NationalTransportation Agency reported thatconfidential contracting was the principalcompetitive mechanism used in therailway industry in 1988.It also reported that fare wars continuedthroughout the year in the air industry.“The major airlines flew more passengers77Chapter Four — SHIFTING G EARS 1988 TO 1996

and transported more cargo farther, butfare competition forced yields downwardwith corresponding effects on cash flowand profits,” the Agency reported.In 1988, the government had sold AirCanada. The Annual Review remarkedthat “one of the most prominentdevelopments associated with thederegulation of Canada’s air transportindustry in the 1980s has been thecreation of two large carrier familiesheaded by Air Canada and CanadianAirlines International.” Canadian AirlinesInternational was owned by CalgarybasedPWA, formerly called PacificWestern, which had bought out CP Airin 1987.and air carriers to ensure that theadvance payments were adequatelyprotected.In 1988, VIA Rail’s discount fares hadbecome the focus of Agency hearings.The Voyageur bus company complainedabout VIA’s proposed discounts in theMontréal-Ottawa-Toronto corridor.The bus company claimed that the fareswould hurt its business, charging that VIAalready had an unfair advantage becauseit was a Crown corporation withgovernment funding. The Agencydecided that the discount fares wereprejudicial to the public interest, andrecommended to Cabinet that an inquiryinto VIA Rail pricing policy be established.When the Agency allowed Wardair,hurting and close to bankruptcy, to bepurchased by PWA, the Montreal Gazettereported on January 20, 1989 that “airfares are bound to rise and fare wars arelikely to be less frequent.” But thatprediction turned out to be wrong.Charter air services continued to enterand leave the market, creating enoughcompetition for the major airlines thatfare wars persisted.In response to the rapid turnover ofcharter air services, the Agency maderevisions to the Air TransportationRegulations in 1991 to protect advancepayments by consumers. The Agency alsoconducted field audits of tour operatorsAn Agency inquiry into VIA pricing washalted in April 1989 when TransportMinister Benoit Bouchard announceda plan to slash funds to VIA Rail. Thegovernment’s five-year plan would cutVIA passenger service in half, mainly inthe Atlantic provinces. Bouchard also setup a Royal Commission on PassengerTransportation, under Lou Hyndman,a former Alberta Cabinet minister.Meanwhile, the major railways continuedto rationalize their lines. The MontrealGazette reported on October 18, 1989,that “the National Transportation Agencyhas been besieged by a flood ofapplications for closing freight railwaylines throughout Canada.” According to78Canadian Transportation Agency — 100 Years at the Heart of Transportation

the newspaper report, CNR and CPRwere planning to close 65 freight linescovering 2,102 kilometres in 1989, “morethan double the applications fielded in1989 from all 15 railway companies.”CNR had ceased rail operations inNewfoundland in 1988 and discontinuedservice in Prince Edward Island in 1992.By 1993, CPR no longer had any rail lineseast of Québec.A Southam News report on July 23, 1991,questioned the success of transportationderegulation. “With airline losses up,competition down and gasoline pricesand taxes higher, touring Canada thissummer is costly.” The report continued,“While deregulation was supposedto open Canada’s skies to new airlines,the effect has been quite the opposite.This summer Canada’s market is clearlydominated by Air Canada, CanadianAirlines International, a unit of Calgary’sPWA Corp., and 11 regional airlines withintheir control.” The Southam report dubbedthe Canadian air industry a “duopoly.”In 1992, the National Transportation Actof 1987 was amended to include thewords “accessible” and “persons withdisabilities” in its declaratory clause. Theamendment made the needs of travellerswith disabilities an integral part of theAgency’s jurisdiction.In January 1992, the Agency released aninterim report on the accessibility offederally regulated ferries. An interimreport on the accessibility of groundtransportation at Canadian airports wasissued in December of that year and areport on accessibility of motor coachservices was released in May 1993.Meanwhile the fare wars being foughtin the Canadian skies were making somepeople nervous. PWA had announced inBut the Agency stated in its 1992 AnnualReview that “in spite of apparentconcentration in the industry, the level ofdomination at the route level hasdecreased considerably. There has been asignificant reduction of the dominantcarriers’ market share on most Canadianroutes, and no monopolization of keyhub airports by dominant carriers.”A passenger with visual impairment and guide dogaboard a VIA Rail train©Canadian Transportation Agency79Chapter Four — SHIFTING G EARS 1988 TO 1996

1992 that Canadian Airlines was in financialtrouble and that it was looking for abuyer. When negotiations for a mergerwith Air Canada failed, PWA started talkswith the U.S.-owned American Airlines.On September 12, 1992, NDP LeaderAudrey McLaughlin, was quoted bySoutham News, after a debate in theHouse of Commons over airfare wars, assaying: “if we don’t have some kind ofregulation, the only thing we’ll haveflying over Canadian airspace will beCanadian geese.”However, the Mulroney government heldits ground on deregulation, and federallyfunded research supported its stand.On November 19, 1992, the Royal Commissionon National Passenger Transportation,chaired by Lou Hyndman, released itsreport. “Government departments shouldno longer own, finance, maintain oroperate Canada’s transportation system,”the report recommended. “It must be supportedby travellers and not by taxpayers.”finished on November 31. With Nielsen’sdeparture, Vice-Chairman MichelineBeaudry became the acting Chairman.The government, meanwhile, appointeda lawyer from Québec City to head areview committee of the NationalTransportation Act. Gilles Rivard’scommittee would conduct the mandatoryfive-year review of the Act. Included inthe review would be an assessment ofthe operations of the Agency. The Rivardcommittee report, released on March 9,1993, found that the NationalTransportation Act of 1987 had accomplishedmuch of what it had set out todo. But the committee encouraged thegovernment to move even furthertoward deregulation by openingCanada’s transportation sector tomore competition.Rivard told Canadian Press on March 9that deregulation was working: “Thechanges, while painful, were necessary.Canadian shippers and travellersare benefiting.”The Hyndman Commission recommendedthe withdrawal of government transportationsubsidies, the application of auser-pay concept, and a restriction ofthe government’s role in transportationto policy-making.Meanwhile, the Agency said goodbyeto Erik Nielsen when his five-year termThe review committee recommendedthat the air sector be opened to moreforeign investment and that if amonopoly developed in the domesticmarket, foreign carriers should beallowed to enter. In the rail sector, thecommittee recommended privatizationof CNR and more liberal rationalizationrules so that railways could reduce costs80Canadian Transportation Agency — 100 Years at the Heart of Transportation

more quickly. The committee alsorecommended that CPR and CNR shouldbe encouraged to share trackage.For the National Transportation Agencyitself, the review committeerecommended an examination of itsorganization, and its human andfinancial resources. The staff of theAgency had been greatlyreduced since the days ofthe Canadian TransportCommission. In 1986, theCTC had more than 800employees and anadministrative budget of$43 million. By 1992-93,the agency operated with508 employees and abudget of $35 million. 2But with the Agency’sreduced regulatory role,the committee suggestedthat it be assessed for cost-effectivenessand efficiency.On March 16, 1993, a week after theNational Transportation Agency ReviewCommittee report was released to thepublic, Rivard was appointed chairman ofthe Agency. Meanwhile, the Rivard committee’sreport was sent to the ParliamentaryStanding Committee on Transport, andfurther consultations were held.The Agency was reorganized that yearto create departments along modal lines“If we don’thave some kindof regulation,the only thing we’llhave flying overCanadianairspace will beCanadian geese.”that included the Rail Branch, the Airand Accessible Transportation Branchand the Marine, Trucking and RegulatoryOperations Branch. Legal Services, theSecretariat and Communications Serviceswere merged into another branch, whileCorporate Services was combined with thePlanning, Review and Quality Managementand Internal Audit branches.On May 27, 1993, the Agencyissued a major decisionallowing AMR Ltd., ownerof American Airlines, tobuy a 33 per cent stake inCanadian Airlines, rulingthat the airline wouldremain Canadian ownedand controlled. On June 24,the federal Cabinet upheldthe decision, dismissing anappeal by Air Canada.A fall election in 1993 brought theLiberals to power, under Jean Chrétien.While the new government settled in towork, the Agency was conductinghearings into another complaint from theVoyageur bus company about VIA Rail’sdiscount fares. Voyageur continued tocomplain that the Crown corporationhad an unfair advantage and that bycutting fares in Ontario and Québec,VIA damaged the bus company’sbusiness. The Agency decided this timethat VIA’s discount fares didn’t endangerthe bus business.81Chapter Four — SHIFTING G EARS 1988 TO 1996

On December 1, 1993, the Coasting Trade Young pointed out that CanadianAct was enacted, in which the Agency taxpayers in 1994 were directlywould recommend to the Revenuesubsidizing the federal transportationMinister whether foreign vessels should system to the tune of $1.6 billion, andreceive temporary licences for work in to the tune of $700 million in indirectCanadian waters, taking into accountsubsidies. Young also said, “We supportwhether Canadian vessels were available. the government’s overall review ofboards and agencies,On June 3, 1994, TransportMinister Douglas Youngdelivered a policystatement in the House ofCommons: “The currenttransportation system isbecoming a handicaprather than an advantageto Canadian businesses andconsumers. We mustDouglas Youngadded, “We intendto eliminate outdated,unnecessaryand often stiflingregulations.”including the NationalTransportation Agency.”He added, “We intend toeliminate outdated,unnecessary and oftenstifling regulations.”The government had set itsgoals for transportationpolicy. The coming monthsmodernize quickly. Much of our system is would reveal how successful it would beoverbuilt and we can no longer afford it.” in implementing them.Young pointed out the flaws in thetransportation system, echoing concernsthat had been raised in the past. “Wehave too much spare capacity—too many‘empty cars’ that are not being utilized.Many services are now being heavilysubsidized and for the wrong reasons.The profitability and long-term viabilityof many segments of the industry are inperil. Intermodal links are more preachedabout than used. Clients of our systemsare being shielded from the real coststhat are being subsidized by taxpayers.The environmental consequences oftransportation, especially in urban areas,are becoming more acute.”CPR and CNR had been negotiatinga merger of their freight services eastof Winnipeg and Chicago. Theirnegotiations broke down in July 1994.CPR then offered to buy CNR’s railoperations east of Winnipeg. That bidwas rejected by the government. InSeptember, Transport Minister Youngset up a task force to considerprivatizing CNR.The Agency’s 1994 Annual Reviewexpressed some optimism that Canada’seconomy was recovering from a lingeringrecession amid reports of higher trafficin all modes of transport. The Annual82Canadian Transportation Agency — 100 Years at the Heart of Transportation

Review also noted an increase inintermodal transportation as shippersused more than one mode of transportto deliver goods.An intermodal complaint had come tothe Agency’s attention early in 1994.CNR claimed that the purchase ofMontréal’s troubled Cast containershipping company by Canadian Pacificwould hurt competition on the maintransportation route from North Americato Europe. CNR claimed that merging thetwo companies would involve 80 per centof container business at the port ofMontréal, which was the largestcontainer port in Canada. The Agencydecided, however, in favour of thepurchase and Canadian Pacific boughtCast in March 1995.Meanwhile, the Canadian governmentsigned an “Open Skies” agreement withthe United States on February 24, 1995,that allowed unlimited access of airlinesbetween the two countries.On February 27, 1995, three subsidyprograms administered by the Agencywere put on the chopping block. FinanceMinister Paul Martin announced in thefederal budget that railway subsidyprograms established under the WesternGrain Transportation Act, the MaritimesFreight Rates Act and the Atlantic RegionFreight Assistance Act would be cut inthe summer.On June 20, 1995, Transport MinisterYoung tabled Bill C-101, otherwiseknown as the Canada TransportationAct, that would continue the NationalTransportation Agency as the CanadianTransportation Agency 95 per cent.A story in the Ottawa Citizen a weeklater, on June 28, reported that theNational Transportation Agency “has tocut 200 of its 500 jobs over the next18 months.” The Agency was attemptingto find work for its employees in othergovernment offices.On November 2, 1995, the OttawaCitizen reported that “hard economiesdictated CPR relocation to Calgary fromMontréal where it was created 127 yearsago.” The Citizen explained that the areabetween Thunder Bay and the PacificOcean generated 80 per cent of CPR’srevenue. Ironically, the Western rail linethat had been so unprofitable for therailway for so many years in its firstcentury had now become the railway’smain source of revenue.On December 14, when the TransportMinister announced plans for a newMarine Act in the House of Commons,he was in an optimistic mood aboutCanada’s transportation system.Young listed the government’s recentachievements in the area: an agreementwith NAV Canada to commercializeCanada’s air navigation system; an83Chapter Four — SHIFTING G EARS 1988 TO 1996

international air transportation policy toensure that Canadian carriers made useof the routes they were allotted; thesigning of the “Open Skies” agreementwith the United States; the privatizationof CNR; and the elimination of$700 million in subsidy payments underthe Western Grain Transportation Actand the Atlantic Region FreightAssistance Program.The new Canada Transportation Actessentially reiterated the same policy thathad been declared in the earlier NationalTransportation Act. But the Actintroduced regulations that wouldtransform the Agency itself. As theAgency’s Annual Report for 1996 related,“what made these changes exceptionalwas the magnitude of their impact.”The Canada Transportation Act, alsocalled Bill C-14 (formerly C-101), wentto third reading on March 25, 1996.It received royal assent on May 29.84Canadian Transportation Agency — 100 Years at the Heart of Transportation

Notes for Chapter FourThis chapter is largely based on annual reports of the National Transportation Agencyfrom 1988 to 1992. The Agency also published annual reviews from 1988 to 1994, whichgave comprehensive analyses of the Canadian economy and the transportation industry.Annual reports were not published by the Agency in 1993, 1994 and 1995. However,performance reports were published for those periods. Information regardinggovernment initiatives and policy statements are taken from the House of CommonsDebates and government policy documents. Newspapers were also consulted, asmentioned in the text.Other sources were:1 Freedom to Move: in Canada’s NewTransportation Environment, a seriesof pamphlets published in 1988 whenJohn Crosbie was Transport Minister.The information quoted in the text comesfrom the pamphlet subtitled The NationalTransportation Act and The Motor VehicleTransport Act.2 Margaret M. Hill, Recasting the FederalTransport Regulator: The Thirty Years’ War,1967–1997, an essay contained in the book,Changing the Rules: Canadian RegulatoryRegimes and Institutions, G. Bruce Doern,editor, p. 57.Chapter Four cover photo:Stock photo held by the Canadian Transportation Agency, ©Digital Vision85Chapter Four — SHIFTING G EARS 1988 TO 1996

CHAPTER FIVEKeeping PaceThe Canadian Transportation Agency1996 to 20041904 1938 1967 1988 1996 2004July 1, 1996, regulation of motor vehicle transport and commodity pipelineswas removed from the Agency’s mandate.•August 2000, Canada’s first Air Travel Complaints Commissioner was appointed.•December 21, 2000, Air Canada was allowed to take control of Canadian Airlines.•September 11, 2001, terrorist attacks in the United States usinghighjacked commercial airlines changes air travel forever.87

The Canadian Transportation Agency1996 to 2004The Canada Transportation Act wasproclaimed on July 1, 1996, when,as the Ottawa Citizen reported, “Forone sweet day, there were no clouds inthe sky and few in the minds of 140,000Canada Day revellers who packedParliament Hill to mark the nation’s129th birthday.”Spring had been slow incoming and then the cool,wet weather lingeredinto summer.As the Annual Report forthat year related, theNational TransportationAgency was dealing withthe upheaval involved inreducing a staff of 500 byalmost half. “The closure ofthe National TransportationAgency’s Moncton officepresented a particularchallenge, as this officeadministered the Atlantic Regiontransportation assistance program.Employees in Moncton had thedemanding task of closing the books onthe subsidy program, while their jobswere being terminated.”According to the Canada TransportationAct, the Canadian Transportation Agency,which began operations on July 2, wouldbe a streamlined version of its formerincarnation. The Agency membership wasreduced to a maximum of seven full-timeAccordingto the CanadaTransportation Act,the CanadianTransportationAgency, which beganoperations onJuly 2, would be astreamlined versionof its formerincarnation.Members appointed by Cabinet for amaximum term of five years, and amaximum of three part-time Membersappointed by the Minister of Transport.The requirement of regional representationamong the Members was removedalong with the regional offices.Marian Robson, who hadjoined the NationalTransportation Agency onMarch 27, 1995, wasappointed Chairman.Mrs. Robson had 25 years ofexperience in the transportationfield, includingexecutive positions in theCanadian port system, as amanager for CNR and, in the1970s, as special assistant toTransport Minister Otto Lang.Jean Patenaude, a policyadviser at Transport Canada,was appointed to the Agencyas Vice-Chairman. Two Membersmoved from the old Agency to the new.The existing national transportationpolicy had remained largely intact in theCanada Transportation Act: namely, that“a safe, economic, efficient and adequatenetwork of viable and effectivetransportation services accessible topersons with disabilities ... that makesthe best use of all available modes oftransportation at the lowest total costis essential to serve the transportationneeds of shippers and travellers,88Canadian Transportation Agency — 100 Years at the Heart of Transportation

including persons with disabilities, and tomaintain the economic well-being andgrowth of Canada and its regions.”The Agency would continue in its role asa quasi-judicial tribunal and an economicregulator with responsibilities thatincluded issuing licences to air carriersand railways, resolving disputes overvarious air, rail and marine transportationrate and service matters, and thedetermination of the annual maximumrate scale for Western grain movements.The Agency also had powers to removeundue obstacles to the mobility oftravellers with disabilities.a timely manner, allowing no more than120 days from the receipt of an applicationor a complaint. The Agency was alsogranted the authority to levy fines for noncompliancewith regulatory provisions.The Canada Transportation Act providedfor an easier process for railways to sellrail lines or to discontinue service;eliminated the Agency’s role inmonitoring mergers and acquisitions ofrail carriers and airlines; removed railsubsidies for continuing uneconomicfreight and passenger service; andremoved entry restrictions for Northernair services so that all domestic air servicewas put under the same licensing regime.Regulation of motor vehicle transportand commodity pipelines was removedfrom the Agency’s mandate. The Agencywas given a new role in consumer protectionwith a financial fitness requirementfor air services. Under the new Act, airservices were prohibited from advertisingif they didn’t have a licence. The Actrequired the Agency to make a decision inStock photo held by the Canadian TransportationAgency©Digital VisionThe Canada Transportation Act requiredthe Agency to conduct an annual assessmentof the Act and to report on anydifficulties observed in its administration.This requirement provided a checkpointfor the Agency to report loopholesencountered in the Act, as had been thecase in the Atlantic subsidies programunder the previous legislation.As the Canadian Transportation Agencyopened its doors, the approach of thenew millennium presented a whole newarray of challenges in Canada’s transportationsystem. An aging populationraised increasing concern about the need89Chapter Five — KEEPING P ACE 1996 TO 2004

to make transportation accessible topeople with disabilities. Passenger airtravel was expanding in a fiercelycompetitive market at the internationallevel, while on the domestic side AirCanada and Canadian Airlines were themajor players in a market that saw littlegrowth. A balance would have to bemaintained between the twin objectivesof encouraging competition andprotecting Canadian interests.Rail and marine carriers were exploring newfrontiers in intermodal container traffic.Meanwhile, as the two major freightrailways, CPR and CNR, sold off theirbranch lines, short-line railway operationswere springing up in large numbers.But even as the Agency was adapting tomeet these new challenges, it still wasoccupied with many of the same concernsthat had brought about the creation ofthe first Board of Railway Commissionersalmost 100 years before. One of the firstmajor complaints addressed to theAgency involved the railways’ movementof grain for export markets. Thatcomplaint would also eventually leadto some amendments to the Act.On April 14, 1997, the Canadian WheatBoard filed a complaint with the Agencyagainst CPR and CNR, claiming that theyhad not fulfilled their service obligationsand that farmers had incurred transportrelatedlosses of more than $50 millionthat winter. After several delays, aA coastal pilot disembarking a vessel atBrotchie Ledge, Victoria, British Columbia 2003two-month Agency hearing began inSaskatoon on March 30, 1998, with CPRinvolved. CNR had settled earlier withthe Wheat Board, paying an undisclosedfigure in compensation. On September 30,1998, the Agency decided that CPR hadnot met its service obligations forwestbound traffic, had breached someaspects in regards to U.S. bound traffic,but had met its service obligations foreastbound traffic. The Agency also foundthat weather-related disruptions hadhampered traffic in the westboundcorridor. The Agency concluded that norelief was necessary for the Wheat Board.In December 1997, Minister of TransportDavid Collenette had appointed Supreme90Canadian Transportation Agency — 100 Years at the Heart of Transportation

Court Justice Willard Estey to undertakea review of the grain transportationand handling system. Estey’s report inDecember 1998 called for a morecommercial grain-delivery system thatcontinued to protect the public interest.Arthur Kroeger, a former deputy ministerof Transport, was appointed in May 1999 todevelop a system of grain-transportationreforms. Kroeger sought the Agency’shelp in estimating transportation costsand to determine the extent to whichthe railways shared their profits withshippers. Among Kroeger’s recommendations,submitted to the TransportMinister in September 1999, was a capon railway grain revenues.On August 1, 2000, the governmentpassed Bill C-34 which replaced theregulation of maximum rates for themovement of grain with a regulation ofmaximum revenues, or a revenue cap,that CNR and CPR could earn for themovement of grain. The Agency wasgiven responsibility for establishing therevenue cap each year.Bill C-34 also put a limit on the tariffrates for grain originating on branchlines, provided for longer notice andnegotiation periods for discontinuanceand transfers of service and includedprovisions for level-of-service complaintson branch lines. The Bill also gave theAgency the power to grant runningrights in level-of-service complaints.The new legislation also improved thefinal-offer arbitration process, makingit more efficient and extending it todesignated commuter authorities and topassenger railway service. In ruling onprocedural matters, the Agency coulddefer the appointment of an arbitrator.There were also provisions forsimultaneous submission of offers, theoption of using three arbitrators, and astreamlined process for disputes valuedat less than $750,000. The bill alsorequired that the Agency’s list ofarbitrators include information abouttheir specific areas of expertise.Although the Agency continued tohold formal hearings into a variety ofcomplaints, it began to look for speedier,more efficient ways to deal with disputes.In 2000, a pilot project was started in theRail and Marine Branch, in whichmediation was used to settle disagreementsbetween two parties, without thetime and cost of public hearings. TheAgency began to train mediators, andmade them available upon request, toshippers, carriers and other parties.Meanwhile, the Agency’s role in theMarine sector had undergone otherchanges. In 1998, the Canada Marine Actestablished new port authorities, handedover some ports and harbours to localgovernments, commercialized theSt. Lawrence Seaway and created theFederal Bridge Corporation to managefederal bridges. The Agency, for its part,91Chapter Five — KEEPING P ACE 1996 TO 2004

would be responsible for investigatingany complaints regarding changes intariffs or fees at the new facilities.Another provision in the Canada MarineAct called for a ministerial review of thepilotage system. At the request of theTransport Minister, the Agency conductedthe review, which specifically looked atthe training and licensing of pilots;compulsory pilotage area designations;and measures related to financial selfsufficiencyand cost reduction. TheAgency issued a report in August 1999with 21 recommendations. Among otherthings, the Agency suggested thatpilotage authorities use a risk-basedmethodology to establish criteria forcompulsory pilotage. The Agency’srecommendations were adopted andtabled in Parliament in November 1999.Transport Canada then developed thePilotage Risk Management Methodology,which could be applied consistently by allfour authorities.Transport Canada statistics in 1999showed a sharp rise in air passengertravel since 1987, most of that to pointsoutside Canada, with less growth in thedomestic market. 1 Despite the expansionin air travel, however, Canadian Airlineswas teetering close to bankruptcy thatyear. After a series of negotiations withdifferent parties, it became apparent thatCanadian might negotiate a merger withAir Canada.In anticipation of the re-establishmentof an air monopoly in Canada, TransportMinister David Collenette introducedA Policy Framework for AirlineRestructuring in Canada on October 26,1999. The policy laid out a series ofconditions necessary for the Air Canada-Canadian Airlines agreement to bepermitted, including one that requiredAir Canada to continue all of Canadian’sroutes for at least three years. OnDecember 21, Air Canada was allowedto take control of Canadian Airlines.In November 2001, an amendment tothe Shipping Conferences Exemption Actchanged the Agency’s role in that area.The Act exempts shipping conferencesfrom the Competition Act and allowsthem to set common tariffs andconditions of carriage. The amendmentremoved the requirement that shippingconferences file tariffs with the Agency,requiring them only to make their tariffsavailable to the public electronically.On February 17, 2000, Collenette tabledthe new policy in the House of Commons.Bill C-26 would, among other things, givethe Agency increased authority to reviewpassenger fares and cargo rates onmonopoly routes, to review domesticterms and conditions of carriage and torequire notice of discontinuance ofservices on monopoly domestic routes.The return to a dominant-carriersituation was now making it necessary92Canadian Transportation Agency — 100 Years at the Heart of Transportation

to increase regulatory powers for theAgency to ensure competition. It was afar cry from the days of C.D. Howe whenregulations were put in place to detercompetition for Air Canada’s predecessor,Trans-Canada Air Lines.Air Canada’s takeover of CanadianAirlines inevitably caused someturbulence, despite efforts toward asmooth transition. On July 9, 2000, theMontreal Gazette described the earlydays of the new service: “A growingnumber of people now hate to fly.”The Gazette’s description of the chaoticconditions included “longer lineups,more lost luggage, more delays,declining quality of meals and frequentover-booking.” An Air Canada employeetold the newspaper that “efforts tointegrate the airlines’ operations arenothing short of Herculean.”referee,” borrowing the term from hisformer career as a National HockeyLeague referee for 21 years. 2As Transport Minister Collenette explained,“The government and the members of theHouse of Commons Standing Committeeon Transport agreed that there neededto be someone in the federal machineryof government to act as the championfor consumers who are dissatisfied withtheir treatment by airline companies. Thekey duties of the Commissioner will be toreview complaints, to ensure that allalternative solutions have beenexhausted and, where appropriate, tomediate an outcome that satisfies boththe consumer and the airline.”Bill C-26 had, luckily, foreseen the needfor some assistance to airline customerswho were increasingly frustrated byairline problems. The position of an AirTravel Complaints Commissioner wascreated to work within the Agency toreview and attempt to resolve complaintsof airline customers. The first appointeeto the position, on August 1, 2000, wasBruce Hood, a travel agency owner,president of the Association of CanadianTravel Agents (Ontario branch) and aboard member with the Travel IndustryCouncil of Ontario. Mr. Hood explainedhis new task as being an “airlineView of container ship from pilot boat nearBrotchie, Victoria, British Columbia 200393Chapter Five — KEEPING P ACE 1996 TO 2004

The Commissioner was required to makesemi-annual reports to the TransportMinister, listing the complaints receivedand the carriers involved, and highlightingany systemic problems detectedin the airline industry. By the end of theyear, the Air Travel ComplaintsCommissioner had received more than1,200 complaints, many of them aboutquality of service, lost luggage andscheduling problems.As time passed and the new officebecame more widely known, complaintswould increase and their substancewould vary. One kind of complaint,so-called air rage, arose from disputesabout how airlines handled unrulypassengers. Airlines had the right toimpose sanctions on passengers; infact, they could refuse to carry them.However, the airlines were required toestablish in their tariffs the sanctionsthey would use for unruly passengers.Air Canada, in the closing days of 2000,was feeling the strains of its expansionand had announced plans to cut jobs andraise air fares. WestJet, a discount carrierthat had started operations in WesternCanada in February 1996, had betternews. 3 It had expanded eastward andwas managing to make a profit.Competition on the domestic scene wasalive and well, both in the scheduled andcharter air businesses, but Air Canadawas having cash-flow problems.A major part of the Agency’s mandatewas to ensure that there were no undueobstacles in the transportation system forpeople with disabilities. In 1995, theAgency had established regulations forPersonnel Training for the Assistance ofPersons with Disabilities. The AirTransportation Regulations alsoaddressed terms and conditions forcarrying persons with disabilities. Agencyinspectors monitored carriers andfacilities across the country to ensurethat the regulations were followed.The Agency was also working on codesof practice for the transportationindustry. The codes were intended toencourage voluntary compliance withinthe industry rather than using aregulatory approach. In November 1996,the Agency launched its first Code ofPractice, Aircraft Accessibility for Personswith Disabilities. The Air Code, applicableto operations using aircraft with morethan 30 seats, was followed by codes ofpractice in the marine and rail sectors.The Rail Code was introduced in February1998, and in June 1999 the Code ofPractice for Ferry Accessibility for Personswith Disabilities came into effect. Thecodes outlined areas where transportationfacilities and equipment should beimproved, including features such ashandrails, elevators, lighting, lettering onsigns and provisions for wheelchairs. Asthe codes went into effect, the Agencycarried out monitoring surveys to assessindustry compliance.94Canadian Transportation Agency — 100 Years at the Heart of Transportation

In 2002, the Agency finished work on a barriers to the mobility of persons withnew Code of Practice called Removing disabilities in the federal transportationCommunication Barriers for Travellers network, the Agency addressed anwith Disabilities (the Communicationincreasing number of complaints fromCode). The Communication Code setpersons with disabilities. Some of thesecriteria for improving communications complaints raised jurisdictional questionsand access to information for travellers as to whether certain health conditionswith disabilities. It would apply to air, rail constitute disabilities for the purposes ofand ferry transportation service providers the Canada Transportation Act.and terminals.In 1997, Linda McKay-PanosThe Agency developed aneducation program for thetransportation industry andfor consumers withdisabilities and providesworkshops and readingmaterial on an ongoingbasis to increase awareness.An AccessibilityAdvisory Committee, withrepresentatives fromdisability groups,government agencies, thetransportation industry andother interested people, wasThe September 11tragedy had sentshudders throughthe world’s financialmarkets, already hitby a crash in thehigh-tech industryand scandalsinvolving majorU.S. corporations.complained about theseating accommodationprovided to her by AirCanada and the carrier’spolicy of charging passengersfor additional seatingbecause of obesity. Beforeconsidering the complaint,the Agency needed todetermine that obesity wasin fact a disability for thepurposes of the CanadaTransportation Act. TheAgency issued a decision inDecember 2001 that obesityoriginally established on January 30,in itself is not a disability for the purposes1990, as the Equipment Accessibilityof the Act, but that there might beCommittee. The committee offersindividuals who are obese and have aguidance to the Agency in developing disability for the purposes of the Act.regulations, codes of practice, andThe Agency decided to rule on obesityindustry guidelines on accessibility.complaints on a case-by-case basis. In theThe Agency meets annually with theMcKay-Panos case, the Agency ruled, incommittee and consults it regularlya split decision on October 23, 2002, thaton regulatory projects.the Calgary resident did not have adisability for the purposes of the Act.In addition to the regulations and codes The complainant appealed that decisionof practice designed to address systemic to the Federal Court.95Chapter Five — KEEPING P ACE 1996 TO 2004

In another obesity case, also involvingseating on Air Canada, the Agencydecided on December 17, 2002, that theperson had a disability for the purposesof the Act. However, the Agency foundthat Air Canada provided another seatfor the passenger, and so there was notan obstacle to the person’s mobility.The Agency has received other obesitycomplaints against both Air Canada andVIA Rail, but those cases would not beheard until the Federal Court ruled onthe McKay-Panos appeal.The Agency decided on May 10, 2002, inresponse to several complaints, that anallergy in itself is not a disability for thepurposes of the Act, but that there mightbe people who, because of allergies,have a disability for the purposes of theAct. The Agency decided, in other words,to consider allergy applications on acase-by-case basis.opportunity to submit evidence beforefinalizing the determinations. OnOctober 29, 2003, the Agency issued itsfinal decision, finding 14 undue obstacles.During the writing of this historicaldocument, VIA has appealed the Agency’sdecision to the Federal Court.New methods of dealing with complaintswere introduced by the Agency in recentyears. The mediation pilot project,started earlier in the rail and marinesectors, was introduced to the AccessibleTransportation Branch in 2002. TheAgency also began an experiment withmodified hearings, in which Membersmet disputing parties in a more informalsetting than the traditional hearingprocess. Both parties of a dispute gaveoral presentations, and Membersquestioned the parties directly, avoidingthe paperwork, cost and more lengthyprocess of formal hearings.In another precedent-setting case, theCouncil of Canadians With Disabilitiesfiled an application with the Agencyregarding the accessibility features ofpassenger cars purchased by VIA Rail in2000. The Council complained thatseveral features on the Renaissance carscreated undue obstacles to the mobilityof persons with disabilities.In a March 27, 2003 decision, the Agencydetermined that, on a preliminary basis,there were 14 “undue” obstacles, butthat it would offer VIA a furtherAs required by statute, the Canadian TransportationAgency has offered assessmentsof the Act in its annual reports.In June 2000, Transport Minister DavidCollenette established a panel to carryout a five-year review of the CanadaTransportation Act. The panel, headedby Brian Flemming, a lawyer and formerpolicy adviser to Prime Minister PierreElliot Trudeau, received more than 200written submissions from interestedparties, held public hearings across thecountry and set up an interactive Web96Canadian Transportation Agency — 100 Years at the Heart of Transportation

site. It also commissioned 50 researchstudies on specific transportation issues.Vice-Chairman Jean Patenaude left theAgency to sit on the review panel. GillesDufault, who had joined the Agency in1998, was appointed Vice-Chairman withspecial responsibilities in the area of airtravel complaints. Mr. Dufault, who hadbeen an adviser to Prime Minister Trudeauand an executive at VIA Rail, had morethan 20 years of experience in seniormanagement in both private andpublic sectors.On July 18, 2001, the Transport Ministertabled the panel’s report in the House ofCommons. It was a wide-ranging reportthat recommended further deregulationof the transportation industry, and a movetoward greater competition including, inthe air sector, that foreign ownership beallowed to increase to 49 per cent from25 per cent.In the rail sector, panel recommendationsincluded removing the onus on a shipperof proving “substantial commercial harm”in the case of a complaint, and that thegrain handling and transportation systembe put on a more commercial basis, whichmight include removing the revenue capon grain rates. For VIA Rail, the panelsuggested, among other things, thatthe Québec-Windsor corridor, the mostprofitable part of the operation, beseparated from the rest of VIA and beallowed to move toward a morecommercial, cost-recovery basis.The main thrust of the panel review wasthat Canada’s transportation networkswere moving in the right direction, butthat government policy could promotemore deregulation.Besides safety and economics, thepanel pointed to other importantconsiderations: “environmental goals,sustainable development, efficiency inenergy use, co-ordination andintegration of modes, and policies tosustain rural communities.”A canine from Greater Toronto Airports AuthorityCanine Service Unit inspects luggage at TorontoPearson International Airport, Ontario 2002On September 11, 2001, less than twomonths after the release of the report,passenger jets hijacked by terroristscrashed into the World Trade Centerin New York City, the Pentagon near97Chapter Five — KEEPING P ACE 1996 TO 2004

Washington and a field in ruralPennsylvania, sending the global airlineindustry into a tail spin. Two months later,Canada 3000, described in the reviewpanel’s report as the largest chartercarrier in Canada, declared bankruptcy.The September 11 tragedy had sentshudders through the world’s financialmarkets, already hit by a crash in thehigh-tech industry and scandals involvingmajor U.S. corporations. The invasion ofAfghanistan by a Western coalitionincluding Canada, added to therecessionary atmosphere.The Agency’s Annual Report of 2002stated that “major airlines around theworld struggled with huge financiallosses and insolvency in 2002, as thetroubled air industry continued to besqueezed by lower demand and higheroperating costs.” In 2003, fears related tothe outbreak of Severe Acute RespiratorySyndrome (SARS) contributed toairline difficulties.In the rapidly changing landscape of the21st century, the challenge of creatingtransportation policy got tougher.On February 25, 2003, Transport MinisterCollenette tabled a policy statement andintroduced Bill C-26, the TransportationAmendment Act, which would amendthe Canada Transportation Act, theRailway Safety Act and enact legislationfor VIA Rail. However, when Parliamentprorogued in November 2003, the billdied on the order paper.In 2004, as the Canadian TransportationAgency celebrates its centennial year,the transportation industry continuesto evolve. In the final days of 2003, AirCanada’s financial situation was stillunresolved after it had been grantedcreditor protection in April. Also, CNRhad purchased BC Rail, one of Canada’slargest railway companies.In the Air Travel ComplaintsCommissioner’s semi-annual report forthe period July to December 2002,concerns were raised about the state ofthe air industry. Liette Lacroix Kenniff,who was appointed in the fall of 2002,suggested that airlines, faced withfinancial hardships, might be less willingto deal with consumer complaints.Those are just some of the issues that theAgency will deal with in 2004. But,whatever the future brings, the Agencywill continue to adapt to the needs andissues of the national transportationsystem and the Canadian public.In the last century , the Agency hasundergone several transformations. Thefirst Board created by A.G. Blair had beena regulatory body chiefly concerned withrailways. Over the years, new jurisdictionalpowers were added and othersremoved. New statutes were written andold ones revised. Governments changed98Canadian Transportation Agency — 100 Years at the Heart of Transportation

and policy visions were redrawn. TheAgency has undergone name changes,role changes and a succession ofoperational reforms. Today’s Agencybears little resemblance to the originalBoard of Railway Commissioners.But there has been one constant in theintervening years. The Agency, movingthrough time, has reflected not only theevolution of the Canada’s transportationindustry, but the economic reality of thenation itself.As it steps into its second century, theCanadian Transportation Agency facesnew challenges. It will accept newresponsibilities as legislation dictates andadapt to shifts in government policies.But it will remain constant in its goal—to help achieve an efficient andaccessible transportation system withCanadians’ interests at heart.Notes for Chapter FiveThe information for this chapter was taken mainly from the Canadian TransportationAgency’s annual reports, 1996 to 2002. The House of Commons Debates providedinformation about parliamentary discussions on transportation. Material from newsmedia is attributed in the text.Other notable sources are:1 Statistical information obtained fromTransport Canada charts, printed in Vision andBalance, the Canadian Transport Act Reviewpanel’s report, published in 2001, pp. 114–5.2 Montreal Gazette, August 2, 2000.3 Montreal Gazette, December 22, 2000.Chapter Five cover photo:Airplane parked at Terminal 3 of the Toronto Pearson International Airport, Toronto, Ontario99Chapter Five — KEEPING P ACE 1996 TO 2004

AppendixMembers’ ListBOARD OF RAILWAY COMMISSIONERS ANDTRANSPORT COMMISSIONERSMEMBER OFFICE APPOINTED TERMINATEDAndrew George Blair Chief Commissioner February 1, 1904 October 31, 1904Michel Esdras Bernier Deputy Commissioner February 1, 1904 January 31, 1914James Mills Commissioner February 1, 1904 January 14, 1914Albert Clements Killam Chief Commissioner February 6, 1905 March 1, 1908James Pitt Mabee Chief Commissioner March 28, 1908 May 6, 1912D’Arcy Scott Assistant Chief September 17, 1908 September 16, 1918CommissionerSimon James McLean Commissioner September 17, 1908 August 5, 1919Assistant Chief August 6, 1919 September 16, 1938CommissionerThomas Greenway Commissioner September 17, 1908 October 30, 1908A.S. Goodeve Commissioner April 4, 1912 November 22, 1920Henry Lumley Drayton Chief Commissioner July 1, 1912 August 1, 1919Wilfred Bruno Nantel Assistant Chief October 20, 1914 October 19, 1924CommissionerA.C. Boyce Commissioner October 4, 1917 October 3, 1927Dr. John Gunion Rutherford Commissioner September 17, 1918 July 24, 1923Frank Broadstreet Carvell Chief Commissioner August 2, 1919 August 9, 1924Calvin Lawrence Commissioner November 4, 1921 May 4, 1931Frank Oliver Commissioner September 21, 1923 September 20, 1928Harrison Andrew McKeown Chief Commissioner September 16, 1924 February 28, 1931Thomas Vien Deputy Chief September 5, 1925 January 31, 1931CommissionerTobias Crawford Norris Commissioner March 30, 1928 March 29, 1938John August Stoneman Commissioner March 12, 1929 March 12, 1949Charles Perry Fullerton Chief Commissioner August 13, 1931 December 31, 1933François Albert Labelle Deputy Chief December 16, 1931 July 15, 1933CommissionerGeorge A. Stone Commissioner December 16, 1931 June 30, 1948François Napoléon Garceau Deputy Chief September 16, 1933 April 10, 1943CommissionerHugh Guthrie Chief Commissioner August 12, 1935 November 3, 1939William Hugh Assistant Chief November 8, 1938 November 7, 1958Masson WardhopeCommissioner100Canadian Transportation Agency — 100 Years at the Heart of Transportation

Frank Mitchell MacPherson Commissioner September 21, 1939 March 29, 1959James Albert Cross Chief Commissioner April 1, 1940 June 30, 1948Armand Sylvestre Deputy Chief April 18, 1945 April 17, 1960CommissionerMaynard Brown Archibald Chief Commissioner July 1, 1948 October 31, 1951CommissionerHoward Brown Chase Commissioner July 28, 1948 May 19, 1959William John Patterson Commissioner April 28, 1949 July 3, 1951John D. Kearney Chief Commissioner November 1, 1951 January 15, 1957Overton A. Matthews Commissioner January 1, 1953 September 1, 1955Leonard James Knowles Commissioner September 1, 1955 January 2, 1962Clarence Day Shepard Chief Commissioner January 15, 1957 January 1, 1959Roderick Kerr Commissioner October 6, 1958 November 8, 1958Assistant ChiefCommissioner November 8, 1958 December 31, 1958Chief Commissioner January 1, 1959 1967Herbert Henry Griffin Assistant Chief January 19, 1959 September 20, 1967CommissionerJohn Miller Woodard Commissioner May 20, 1959 September 20, 1967William Roy Irwin Commissioner August 1, 1959 September 20, 1967Joseph Émile Dumontier Deputy Chief May 26, 1960 September 20, 1967CommissionerAlfred Sydney Kirk Commissioner January 3, 1962 September 20, 1967AIR TRANSPORT BOARDNAME POSITION START DATE TERMINATION DATERobert Alexander Cecil Henry Chairman September 11, 1944 1948Alan Ferrier Member September 11, 1944 December 1949J. P. Roméo Vachon Member September 11, 1944 1954John Russel Baldwin Chairman 1949 July 1954Alexander Daniel McLean Member January 1950 1962Wilbert Jamieson Matthews Chairman July 1954 1958Joseph Louis Gérald Morisset Member January 1955 August 4, 1965Chairman August 4, 1965 September 20, 1967Paul Yettvart Davoud Chairman March 1, 1959 1963George Russell Boucher Member 1962 September 20, 1967Frederick Thomas Wood Chairman October 10, 1963 1965John Rashleigh Belcher Member andVice-Chairman 1965 September 20, 1967James Flood Clark Member 1966 1967101A ppendix — MEMBERS’ LIST

CANADIAN MARITIME COMMISSIONNAME POSITION START DATE TERMINATION DATEJohn Valentine Clyne Chairman November 1, 1947 July 7, 1950Louis de la Chesnaye Audette Member November 1, 1947 December 31, 1953Chairman January 1, 1954 July 31, 1959Henry J. Rahlves Member November 1, 1947 1948Angus McGugan Member 1948 July 7, 1956Jean-Claude Lessard Chairman December 13, 1950 December 31, 1953Carl William West Member January 1, 1954 1959Alexander Watson Chairman August 1, 1959 February 20, 1965George Alexander Scott Member February 1960 1964Jack Clemenger Rutledge Member 1960 September 20, 1967Howard Jackson Darling Member February 21, 1965 1966Chairman 1966 September 20, 1967CANADIAN TRANSPORT COMMISSIONNAME POSITION START DATE TERMINATION DATEJohn Whitney Pickersgill President September 20, 1967 August 31, 1972Pierre Taschereau Vice-President September 20, 1967 July 31, 1971John Rashleigh Belcher Member September 20, 1967 July 31, 1972George Russell Boucher Member September 20, 1967 November 8, 1970Alan Pengelly Campbell Member September 20, 1967 December 30, 1976James Flood Clark Member September 20, 1967 August 31, 1976Raymond Robin Cope Member September 20, 1967Vice-President (Research) February 15, 1968 September 24, 1975Howard Jackson Darling Member September 20, 1967 February 20, 1970Joseph Émile Dumontier Member September 20, 1967 September 1, 1970Laval Fortier Member September 20, 1967 April 18, 1974Herbert Henry Griffin Member September 20, 1967 December 31, 1975William Roy Irwin Member September 20, 1967 January 14, 1970David Haney Jones Member September 20, 1967 January 1, 1988Roderick Kerr Member September 20, 1967 October 31, 1967Alfred Sydney Kirk Member September 20, 1967 September 16, 1970John Arthur Delamare Magee Member September 20, 1967 January 10, 1985Joseph Louis Gérald Morisset Member September 20, 1967 February 15, 1973John Miller Woodard Member September 20, 1967 December 15, 1978Guy Frank Lafferty Member March 13, 1969 1979Raymond MacDonald March Member March 19, 1970 December 24, 1981John Barrie Glen Thomson Member June 28, 1971 June 16, 1981102Canadian Transportation Agency — 100 Years at the Heart of Transportation

Guy Roberge Vice-President (Law) August 1, 1971 December 24, 1981Louis René Talbot Member September 9, 1971 1979Ann Harley Sedgewick Carver Member January 28, 1972 1979E. J. Benson President September 1, 1972 August 31, 1982Edward Henry LaBorde Member August 21, 1973 January 6, 1981John Teaton Gray Member June 1, 1974 December 24, 1981Vice-President (Law) December 24, 1981 May 31, 1984Ralph Azzie Member May 27, 1976 December 24, 1983Yves Dubé Vice-President June 1, 1976 September 1, 1986(Research)Malcolm Douglas Armstrong Member September 1, 1976 August 4, 1986James Maurice McDonough Member August 4, 1977 January 1, 1988J.A.L. Gérald Drainville Member 1979 March 31, 1988Paul Langlois Member 1979 March 31, 1988John Francis Walter Member 1979 March 31, 1988Bernard R. Wolfe Member 1979 March 31, 1988Robert John Orange Member May 2, 1981 March 31, 1988Jean-Louis Bourret Member December 23, 1981 March 31, 1988Anne-Marie Trahan Member December 23, 1981 June 2, 1986David Hilton Chapman Member March 3, 1983 March 31, 1988Jean Marchand President December 16, 1983 July 31, 1985John Carr Munro Member June 29, 1984 March 31, 1988John David Thompson Vice-President (Law) June 29, 1984Acting President July 31, 1985 1987Michael James Landers Member July 9, 1984 March 31, 1988Marcel Lambert Member March 11, 1985 January 1, 1988Erik Hersholt Nielsen President January 21, 1987 January 1, 1988NATIONAL TRANSPORTATION AGENCYNAME POSITION START DATE TERMINATION DATEErik Hersholt Nielsen Chairman January 1, 1988 November 30, 1992Micheline Beaudry Vice-Chairman August 15, 1988 November 30, 1992Acting Chairman December 1, 1992 March 15, 1993Vice-Chairman March 16, 1993 June 30, 1996Craig S. Dickson Member January 1, 1988 1996Marcel Lambert Member January 1, 1988 March 31, 1990James Maurice McDonough Member January 1, 1988 December 31, 1988James Daryl Mutch Member January 1, 1988 November 30, 1992Edmund J. O’Brien Member January 1, 1988 1996103A ppendix — MEMBERS’ LIST

B. Keith Penner Member January 1, 1988 June 30, 1996Edward Ehrlich Weinberg Member January 1, 1988 November 30, 1992Nicolle Forget Member August 15, 1988 1993Kenneth Raphael Ritter Member April 1989 June 30, 1996George C. Minaker Member 1990 June 30, 1996Jacques Voyer Member May 20, 1992 1993Patricia Danforth Member June 22, 1992 1993James A. McGrath Member March 1,1993 1995Gilles Rivard Chairman May 3, 1993 June 30, 1996Richard Cashin Member 1993 June 30, 1996Marian Lorraine Robson Member March 27, 1995 June 30, 1996CANADIAN TRANSPORTATION AGENCYNAME POSITION START DATE TERMINATION DATEMarian Lorraine Robson Chairman July 1, 1996Jean Dorius Patenaude Vice-Chairman July 1, 1996 June 2000Richard Cashin Member July 1, 1996 June 30, 2003B. Keith Penner Member July 1, 1996 June 30, 2003Michael A. Sutton Member December 22, 1997Mary-Jane Bennett Member January 19, 1998Gilles Dufault Member January 19, 1998Vice-Chairman August 2000Bruce Melvin Hood Air Travel Complaints August 1, 2000 July 31, 2002CommissionerGuy Delisle Member January 8, 2002George Albert Proud Member January 8, 2001Liette Lacroix Kenniff Air Travel Complaints October 1, 2002CommissionerReginald Beaton Tulk Member December 16, 2002104Canadian Transportation Agency — 100 Years at the Heart of Transportation

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