Crow Rate
Encyclopedia
The "Crow Rate" or "Crow's Nest Freight Rate" was a rail transportation subsidy
imposed on the Canadian Pacific Railway
("CPR") by the Canadian
government
, benefiting farmer
s on the Canadian Prairies
and manufacturers in central Canada.
rail interests to push lines northward, to rail out ore and to provide machinery and supplies needed for the development of local smelters. Both the Canadian government and the CPR wanted an all-Canadian rail line to forestall this American access and to reassert Canadian sovereignty in the area. A rail line was planned from Lethbridge, Alberta to Kootenay Landing near Nelson, British Columbia
through the Crow’s Nest Pass, which would also enable the development of coal
deposits in the Pass and the Elk River valley, important both for mineral smelting operations and for the CPR's conversion of locomotives from wood to coal.
The CPR needed government funding and concessions for the construction of this rail line, and the negotiated agreement between the CPR and the Canadian government was contained in the "Crow's Nest Pass Agreement" dated September 6, 1897. Amongst other things, the CPR agreed to provide reduced rail rates for farmers' grain shipped east to the Great Lakes and for farm machinery shipped west from central Canada "forever".
Unfortunately, this may partially be the cause of the abandonment (and in few cases, sale) of thousands of miles of CP branch lines and even secondary main lines due to the grain traffic on many of them being no longer profitable. CP was unable to cover the cost of keeping lines open that primarily served grain elevators, in many cases, due to the low rates that the farmers got, and it ultimately led to the closure of many grain elevators which were abandoned from rail service, thus causing the Crow Rate to arguably have negative long-term impact on CP.
With the 1993 election
of the new Liberal
government of Jean Chrétien
, the government took steps to eliminate the subsidies altogether. This was implemented in 1995 through the Western Grain Transition Payment Program, which provided one-time payments to farmers to assist them in making the transition away from subsidized shipping.
Subsidy
A subsidy is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more labor A subsidy (also...
imposed on the Canadian Pacific Railway
Canadian Pacific Railway
The Canadian Pacific Railway , formerly also known as CP Rail between 1968 and 1996, is a historic Canadian Class I railway founded in 1881 and now operated by Canadian Pacific Railway Limited, which began operations as legal owner in a corporate restructuring in 2001...
("CPR") by the Canadian
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
government
Government of Canada
The Government of Canada, formally Her Majesty's Government, is the system whereby the federation of Canada is administered by a common authority; in Canadian English, the term can mean either the collective set of institutions or specifically the Queen-in-Council...
, benefiting farmer
Farmer
A farmer is a person engaged in agriculture, who raises living organisms for food or raw materials, generally including livestock husbandry and growing crops, such as produce and grain...
s on the Canadian Prairies
Canadian Prairies
The Canadian Prairies is a region of Canada, specifically in western Canada, which may correspond to several different definitions, natural or political. Notably, the Prairie provinces or simply the Prairies comprise the provinces of Alberta, Saskatchewan, and Manitoba, as they are largely covered...
and manufacturers in central Canada.
Origin
In the late 19th century, mineral strikes in southeastern BC near Nelson, Ainsworth, Rossland, Kaslo, Kimberley and Moyie inspired AmericanUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
rail interests to push lines northward, to rail out ore and to provide machinery and supplies needed for the development of local smelters. Both the Canadian government and the CPR wanted an all-Canadian rail line to forestall this American access and to reassert Canadian sovereignty in the area. A rail line was planned from Lethbridge, Alberta to Kootenay Landing near Nelson, British Columbia
Nelson, British Columbia
Nelson is a city located in the Selkirk Mountains on the extreme West Arm of Kootenay Lake in the Southern Interior of British Columbia, Canada. Known as "The Queen City", and acknowledged for its impressive collection of restored heritage buildings from its glory days in a regional silver rush,...
through the Crow’s Nest Pass, which would also enable the development of coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
deposits in the Pass and the Elk River valley, important both for mineral smelting operations and for the CPR's conversion of locomotives from wood to coal.
The CPR needed government funding and concessions for the construction of this rail line, and the negotiated agreement between the CPR and the Canadian government was contained in the "Crow's Nest Pass Agreement" dated September 6, 1897. Amongst other things, the CPR agreed to provide reduced rail rates for farmers' grain shipped east to the Great Lakes and for farm machinery shipped west from central Canada "forever".
Unfortunately, this may partially be the cause of the abandonment (and in few cases, sale) of thousands of miles of CP branch lines and even secondary main lines due to the grain traffic on many of them being no longer profitable. CP was unable to cover the cost of keeping lines open that primarily served grain elevators, in many cases, due to the low rates that the farmers got, and it ultimately led to the closure of many grain elevators which were abandoned from rail service, thus causing the Crow Rate to arguably have negative long-term impact on CP.
End of "forever"
Although popular with farmers, these reduced rates were not cost-effective for the railway and provided central Canadian manufacturers and grain ports with an unfair advantage. The Crow Rate was suspended by the CPR during World War One and only reinstated in 1925. By the early 1980s, the government attempted to resolve the problems between the competing interests by altering the agreement. The Western Grain Transportation Act of 1983 allowed shipping rates to increase, but never more than 10% of the world price for grain. In addition, further cash payments were made by the government to the CPR.With the 1993 election
Canadian federal election, 1993
The Canadian federal election of 1993 was held on October 25 of that year to elect members to the Canadian House of Commons of the 35th Parliament of Canada. Fourteen parties competed for the 295 seats in the House at that time...
of the new Liberal
Liberal Party of Canada
The Liberal Party of Canada , colloquially known as the Grits, is the oldest federally registered party in Canada. In the conventional political spectrum, the party sits between the centre and the centre-left. Historically the Liberal Party has positioned itself to the left of the Conservative...
government of Jean Chrétien
Jean Chrétien
Joseph Jacques Jean Chrétien , known commonly as Jean Chrétien is a former Canadian politician who was the 20th Prime Minister of Canada. He served in the position for over ten years, from November 4, 1993 to December 12, 2003....
, the government took steps to eliminate the subsidies altogether. This was implemented in 1995 through the Western Grain Transition Payment Program, which provided one-time payments to farmers to assist them in making the transition away from subsidized shipping.