nion against any grant of government aid, except during a
brief period before the Rebellion of 1837, when the lavish policy of
state construction and state bonuses adopted by the neighbouring
republic proved contagious in Upper Canada. {51} Under the influence
of that example the Cobourg Railroad was to be granted a loan of
L10,000 as soon as an equal sum was privately subscribed and one-third
was paid up. The Toronto and Lake Huron was promised L3 for every L1
of private capital expended, up to L100,000, while the London and Gore
was offered a loan of twice that sum; in both these cases the loan was
to be secured not only by a lien on the road, but by the liability of
the communities benefited to a special tax. None of these generous
offers was taken up, and they were not renewed. But a growing
realization of the importance of railways and of the evident difficulty
of building them in Canada solely by private funds compelled the
formation of a new policy of state assistance. This new policy ushered
in the first great period of railway construction.

{52}

CHAPTER V

THE GRAND TRUNK ERA

The New State Policy--The Canadas: First Phase--The Maritime
Provinces--Halifax to Quebec--European and North American--Howe's
Negotiations--Hincks to the Rescue--The Maritime Provinces--The
Canadas: Second Phase--Struggle for the Contract--Floating the Grand
Trunk--Construction Under Way--The Grand Trunk in Straits--Causes of
Failure--Speculation and Jobbery--Great Western and Northern--The
Canadas: Third Phase--Municipal Enterprise

It has been seen that by the close of the forties British North America
was realizing both the need of railway expansion and the difficulty of
financing it. Other factors combined to bring about the intervention
of the state on a large scale. Both in the Canadas and in the Maritime
Provinces political disputes were giving place to economic activities.
The battle of responsible government had been fought and won. Men's
energies were no longer absorbed by constitutional strife. Baldwin and
LaFontaine were making way for Hincks and Morin; Howe had turned to
constructive tasks. Responsibility was bringing new confidence and new
initiative, though colonial dependence still continued to hamper
enterprise. British and American contractors discovered the virgin
field awaiting them, and local politicians discovered the cash value of
votes and influence. The example set in the United States