n
West, by water to Collingwood and rail to Toronto, proved a
will-o'-the-wisp. In turn the company relied on independent steamers,
and set up a fleet of its own, but equally in vain so far as profit
went. By 1859 the road was bankrupt. A new general manager, Frederick
Cumberland, brought in a change of policy. Local traffic was
sedulously cultivated, and a fair degree of prosperity followed.

Most of the lesser roads constructed looked to the municipalities
rather than to the provinces for aid. The Municipal Loan Fund of 1854
was the third and last phase of Hincks's railway policy. This was an
ingenious attempt to give the municipalities the prestige of provincial
connection without accepting any legal responsibility. Municipalities
had previously been permitted to bonus or take stock in railways and
toll-roads, but their securities were unknown in the world's markets.
Hincks now provided that municipalities which wished money to aid
railways or other local improvements might practically pool their
credit and share in the credit of the province. Provincial {89}
debentures were issued against the municipal obligations pooled in the
Fund, and the proceeds of their sale given to the municipalities. A
sinking fund was to be maintained, and, if need be, the province could
levy through the sheriff on any defaulting town.

The municipalities made full use of their privileges. It was believed
that railway investments would yield high dividends, and the more
optimistic expected to see all taxes made unnecessary by the profits
earned. Town vied with town in extravagant enterprises.[3] Not a cent
brought a dividend; instead, the municipalities found themselves
saddled with heavy interest payments. One after another declined to
pay; Port Hope was $312,000 in arrears by 1861 and Cobourg $313,000.
The provincial government had {90} not the political courage to send in
the sheriff, and accordingly it was forced at last to assume the whole
burden. Prudent municipalities which had declined to borrow at eight
per cent found themselves compelled to share the burdens of their
reckless neighbours. Demoralization was widespread.

The railways constructed by such aid may be briefly noted. The Buffalo
and Lake Huron, extending from Fort Erie to Goderich, was completed in
1858. It had its origin in the ambition of Buffalo to have more
immediate connection with the rich western peninsula of Upper Canada
and the Lake trade be