CHAPTER III.--HISTORY OF NEWFOUNDLAND SINCE THE GRANT OF RESPONSIBLE GOVERNMENT.

The Period from 1855-1895. (continued)

  90. The failure of the Banks left the Colony for the time being not merely without banking facilities but without negotiable currency. Seven of the largest mercantile houses in the Island, some of which had been established for upwards of a century, were involved in the general ruin. Business was paralysed; the most fantastic rumours were current; every man was the object of distrust and suspicion to his neighbour; misery and distress were widespread. These chaotic conditions were happily relieved by the entry into the colony of Canadian Banks.* One of Your Majesty's Commissioners, Sir William Stavert, had the privilege of establishing the first Canadian Bank, the Bank of Nova Scotia, in the Island. A branch of the Bank of Montreal was shortly afterwards opened in St. John's and a branch of the Merchants' Bank of Halifax (now the Royal Bank of Canada) was also established. Later, the Canadian Bank of Commerce commenced business in the Island. Since 1895, the banking business of Newfoundland has been in the hands of these institutions and the currency of the Island has been the Canadian dollar, in the place of a local currency.

  91. The distrust engendered in the confused conditions of this period has never been wholly dispelled. The effect on the morale of the people, unlettered and educated alike, was deep and permanent. Newfoundland has enjoyed her years of prosperity in the present century but never have those with capital large or small shown any marked desire to invest it within the confines of their own country. Indeed, it has been computed that not even as much as 5 per cent. of the bonds comprising the public debt are held in Newfoundland. This aversion from local investment is shared by the fishermen, who prefers to hoard his savings, whether by hiding them in his house or by leaving them on deposit in the Banks. Once deposited in a Bank, they are considered as sacred, and it is said that the majority of fishermen would prefer not merely to be continually in debt to the merchants but even to go on the dole rather than draw on such reserves. The deposits in the four Canadian Banks now stand at the substantial figure of $26,000,000, the greater part of which may be represented as savings; yet in the country generally there is widespread poverty and, up to the commencement of the fishing season of 1933, no less than 25 per cent. of the population were in receipt of Government relief.

  92. The year 1895, thus opened amidst general gloom and despondency. With so many firms in liquidation, it was reported that no vessels would be sent to the seal fishery, which opens in March. When the time came, however, outfits were made as usual; the fishery was very successful and a wave of renewed optimism spread through the Island. Difficulties in the way of outfitting for the cod fishery were largely dispelled by the action of the Government of the United Kingdom, already recorded, in making a substantial grant for relief purposes. But for this timely assistance, which enabled advances to be made for the purchase of salt, food, and fishing gear and for the hire of schooners, hundreds of deserving fishermen would have been unable to proceed to the fishery. On the successful issue of the fishery, these advances were in almost every instance repaid. Money was also advanced for the purchase of seed potatoes, and useful public works were undertaken as a means of relieving those who were not able to participate in the fishery. By the end of 1895, it could be declared that the crisis was over and that Newfoundland was set once more on the tide of rising fortune.

The Period from 1895 to Present Day.

  93. The years from 1895 to 1914 may be said to have been a period of abundant promise, marred, in its initial stages, by a lack of statesmanship which came near to mortgaging the future of the Island and, in its final stages, by a programme of public expenditure which, however well intentioned, was economically unsound. In the anxiety to stimulate the development of the Island, the ultimate cost was not counted; and, though from the full consequences of the first false steps the country was rescued by the wisdom and determination of Sir Robert Bond, in the closing years of the period may be detected the first signs of that extravagant and indeed reckless optimism which was to be so marked a feature of the policy of succeeding Governments and is so largely responsible for the present predicament of the Island. It should not be forgotten, however, that already by 1895 there were disturbing signs that loose ideas of the guardianship of public funds were taking root both in political circles and in the Civil Service.

  94. By 1890, the disadvantages resulting from dependence on a single industry, viz., the fishery, had become increasingly manifest, and it was an accepted commonplace that only by a widening of the activities of the people could economic security be achieved. We have seen now the programme of railway construction, which was launched in 1880 with this object in view, was held up by the failure of the contractors. But the demand for a railway which would open up the country became ever more clamant, and in 1890 it was decided to resume the construction of the line northwards to Hall's Bay (starting at what is now Placentia Junction) as a first step towards the building of a transinsular railway. The contract for the new line, with a branch line to Brigus or Clarke's Beach in Conception Bay, was given to Messrs. Reid & Middleton, and work was begun in October, 1890. This contract was the first of a series of contracts with which Mr. (later Sir) Robert Reid was associated. Mr. Reid, a Scotsman who had made a reputation for railway construction in the United States and Canada, was during the next ten years to play a prominent part in the affairs of the Island.

  95. Shortly after the conclusion of this contract, a new survey was made for the proposed transinsular line, as a result of which it was decided to abandon the route previously contemplated. The route now selected traversed the well-timbered valleys of the Exploits and Humber Rivers, which were looked upon as the most fertile territory in the Island, and emerged at Bay of Islands on the west coast; thence it bent southwards to St. George's Bay, passed through the Codroy Valley and terminated at Port-aux-Basques, an excellent harbour only 93 miles distant from North Sydney, Cape Breton, and free from ice throughout the year. There can be no doubt that, of the alternative routes open to the Newfoundland Government, this route was the most promising for the purpose in view, and it is in fact the route which the railway follows to-day.

Port aux Basques Port aux Basques, looking East, n.d.
Photographer unknown. From the album of photographs furnished to the Newfoundland Royal Commission, August 1933. Courtesy of the Centre for Newfoundland Studies Archives (Coll-207), Memorial University of Newfoundland Library, St. John's, Newfoundland.
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  96. The change of route resulted in 1893 in the conclusion of a new contract with Mr. Reid, who had continued to carry on the work after his partnership with Mr. Middleton had been dissolved in 1892. By this time the line had been constructed almost as far as the Exploits River. Under the new contract Mr. Reid undertook to complete the whole line to Port-aux-Basques within three years, receiving from the Government the sum of $15,600 per mile in Newfoundland bonds, the same rate as that provided in the 1890 contract. It was estimated that the line from Placentia Junction to Port-aux-Basques by the new route would be some 500 miles in length;† on this basis the sum payable to the contractor would have been $7,800,000. The contract of 1893 further provided that Mr. Reid should maintain and work the line at his own expense for a period of ten years from the 1st September, 1893; he was also to construct a system of telegraphs. In return he was to be granted in fee simple 5,000 acres of land for each mile of main line or branch railway operated. It was provided that the land so granted was to be situated on each side of the railway in alternate sections of one or two miles in length and eight miles in depth, the Government also retaining an equal amount of land with the contractor along the route. For the operation of the new line, with the Branch to Placentia, the land to be granted to the contractor amounted to over 2,500,000 acres. This was the first grant of land to the contractor.‡

  97. Such was the position when the Island was overtaken by the financial crisis of 1894-95, a crisis which drove home with cruel severity the lesson that without variety of pursuits the Island could never be secure from periodical visitations of distress. Yet the Government, in its anxiety to develop the country, was crippled by lack of capital and credit. It was in this dilemma that the Government decided to conclude yet another contract with Mr. Reid as the only means by which the development of the Island could be stimulated. The general election of 1897 placed Sir James Winter in power, and on the 3rd March, 1898, a contract was signed by Mr. Reid which virtually disposed of all the Island's means of communication. This contract, which was the subject of much hostile criticism, must be referred to in some detail, not only because of its immense importance to the future of the Island, but because it shows to what desperate lengths the Government was driven in the endeavour to achieve economic stability.


  * See "Evening Telegram", St. John's, Dec. 13, 1894, et seq.
  † The actual length of the line from Placentia Junction to Port-aux-Basques, constructed under the 1890 and 1893 contracts, was 483 1/18 miles and the actual payments made to the contractor for the construction of the line amounted to $7,544,000. The length of the railway from St. John's to Port-aux-Basques is 547 miles.
  ‡ There were at this time three Railways: (1) from St. John's to Harbour Grace, via Whitbourne, known as the "Newfoundland Railway"; (2) the line from Placentia Junction to Bishop's Falls on the Exploits River, known as the "Northern Railway"; (3) the line from Bishop's Falls to Port-aux-Basques, known as the "Western Railway." Under the 1893 contract, lines (2) and (3) were to be operated by Mr. Reid, together with the line from Whitbourne to Placentia. Line (1) was still the subject of legal proceedings following the failure of the original contractors (see paragraph 74) and was eventually acquired by the Government in 1896. The branch line to Brigus and Clark's Beach was still under construction and provision was not made for its operation until the acquisition of line (1) by the Government, steps were taken to extend it to Carbonear.


Image description updated May, 2004.



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