Provincial Ownership
In 1920, the lines owned by J.D. McArthur entered financial difficulties following the First World War. Coinciding with the problems faced by the McArthur lines (ED&BC, A&GW, and CCR), both the Grand Trunk Pacific Railway (GTPR) and Canadian Northern Railway (CNoR) had fallen victim to similar circumstances brought about by the financial strain of the conflict and falling traffic levels. The Dominion government had nationalized the GTPR and CNoR, along with other previously federally owned lines into the Canadian National Railways.
Following the federal example, and in an attempt to preserve rail service to northern and northwestern Alberta, the provincial government leased the ED&BC and CCR in 1920 for five years. In 1921 the government entered into a five-year agreement with the Canadian Pacific Railway (CPR) to operate the ED&BC and CCR. That same year, the provincial government purchased the A&GW outright and chose to operate it separately.
CPR immediately raised freight rates on the ED&BC and CCR lines, charging "mountain prices", claiming that the cost of operating on grades into the Peace and Smoky River valleys of the northwestern prairie was as much as it cost to operate in the Rocky Mountains. Consequently Peace River farmers paid the highest freight charges on the Canadian prairies to reach the lakehead at Port Arthur and Fort William.
The provincial government purchased the ED&BC and CCR from McArthur in 1925, following the expiration of the five-year lease. Dissatisfied with the CPR's operation of the ED&BC and CCR, the provincial government allowed the operating contract for the these railways to expire in 1926, with operations subsequently taken over by the new provincial Department of Railways and Telecommunications, which was also tasked to operate the AG&W and the newly-built PVR.
In 1928, the provincial government began to solicit proposals from both the CPR and the Canadian National Railways (CNR) for purchasing the provincial railways. In 1924, CNR president Sir Henry Thornton visited the ED&BC line and in 1928, CPR president Edward Beatty did the same.
Read more about this topic: Northern Alberta Railways
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