A. Wartime Developments

1. At the meeting of the Canada-United States Permanent Joint Board on Defence held in Montreal in April, 1942, the U.S. State Department Member of the Board indicated informally that his Government was planning to seek Canadian authority for the U.S. Army Engineers to make a survey between Prince George, B.C., and Fairbanks, Alaska, with a view to ascertaining whether the construction of a railroad between these two points would be practicable.

2. In an official note, dated April 16, 1942, the U.S. Minister in Ottawa requested the Canadian Government to authorize his Government to make a survey of a route that would follow the "Rocky Mountain Trench" i.e. north from Prince Gorge along the valleys of the Parsnip, Finlay, Kechika, Frances and Pelly Rivers to Fair banks. It was learned at the time that a railway over this route was being considered as either an alternative to, or as an adjunct of, the Alaska Highway. It was apparent from a memorandum obtained from the U.S. authorities that considerable quantities of rails, locomotives and rolling stock would be required from Canadian as well as United States sources. The Canadian Steel Controller indicated on April 25, 1942, that he doubted the availability of locomotives and rolling stock in Canada.

3. The U.S. request was also considered by the Departments of National Defence, Transport and Mines and Resources. All stated that they had no objection to the survey being carried out. The Deputy Minister of Mines and Resources added that, for the survey to be official, it must be made by a Provincial Land Surveyor in British Columbia and by a Dominion Land Surveyor in the Yukon and suggested that such officers should be attached to the U.S. survey parties.

4. On April 22, 1942, a reply was sent to the U.S. Minister to the effect that while, in view of shortages of manpower, equipment and steel, the Canadian Government doubted the practicability of the construction of a railway, it was agreeable to the proposed survey being carried out. It was made clear that this did not commit the Canadian Government to approval of construction and that the latter wished to be kept fully informed of the progress of the survey. It was also pointed out that a road survey previously made by the British Columbia-Yukon-Alaska Commission covered much the same territory.

5. The survey was commenced immediately with the assistance of four Canadian Army engineers. Mr. C.K. Le Capelain, Canadian Liaison Officer on the Alaska Highway Project, was designated in a similar capacity for the railway survey. SemI.monthly reports were submitted by the U.S. authorities until completion of the survey in October, 1942, and the official report on the survey, dated October 12, was sent by the U.S. Legation in Ottawa to the Government under cover of a Note dated November 20, 1942.

6. In September of that year the Canadian Government had been informed that the survey was almost complete but that no decision could be reached by the U.S. authorities without certain additional information from the Canadian Government. Before recommending the project, the U.S. Army wished to know whether 1500 miles of rails and other equipment could be provided by Canada and stated that, unless these were available within 45 days, they could not be distributed in time to permit construction to begin the following spring. Apparently it was intimated informally to the U.S. authorities that the rails were not available in Canada. On November 15, 1942, Lieut.General Somervell, U.S. Army, informed the Rt. Hon. Mr. Howe that, after thorough consideration of the project, it had been decided to abandon the plan to construct the railroad, because of the lack of sufficient traffic to justify it. It appears, however, that the real explanation of this decision was the lack of rails and other equipment.

7. The official report on the survey is in the possession of the Department of Transport. Attached is a copy of a brief outline of it, dated December 9, 1942, † prepared in the Privy Council Office for the information of the members of the General Defence Construction Projects Panel. This summary states that the report made it clear that the Rocky Mountain Trench had been considered because it would permit the most rapid construction and that only a railway suitable for military needs (e.g. using second-grade ties and light rails, and with little provision for breaking up trains at intermediate points) had been contemplated. The report indicated that a railway to be used for long-term purposes would have to be of a higher standard and laid down on some route based on traffic potentialities. The railway planned was to be 1417 miles long - 530 miles in B.C. and 650 miles in the Yukon - and would cross 6 navigable rivers. It was believed 17,000 men working for 400 days and using 238,000 tons of materials, (including rails, track fittings, bridges, construction machinery, locomotives and rolling stock) would be required to complete the railway at a cost of U.S. $112,000,000.

8. Dr. Camsell, Deputy Minister of Mines and Resources, made a secret report on September 8th, 1942, copy of which is attached,t apparently supporting the view that the Rocky Mountain Trench route was the most practicable for military purposes.

B. PoSt.War Developments

9. In September, 1943, the U.S. Military Attaché in Ottawa sought and received authority from the Canadian Government to release the U.S. Survey Report and maps to private interests represented by J.R. Wemlinger, Consulting Engineer (the man chiefly responsible for the U.S. authorities considering the construction of a railway in 1942), who was interested in the construction of a railroad through British Columbia to Alaska. It was also agreed that the report and related documents should no longer be classified as `restricted".

10. On November 13, 1947, the Edmonton Agent of the Northwest Territories Administration reported hearing on good authority that New York bankers were considering the extension of the Pacific and Great Eastern Railway, owned by the Government of British Columbia, from the neighbourhood of Prince George, B.C., to Fairbanks, Alaska. 1t was understood that the proposed railway would follow more or less the same route as the Alaska Highway and pass through either Pine Pass or Peace River Pass (where, incidentally, high grade bituminous coal had been under test for the past six months). On January 16th, 1947. the Canadian Ambassador in Washington reported that no information on this proposal was available in Washington. The President of the American Association of Railways was said to know nothing about it.

11. In November, 1947, Mr. Willis T. Batcheller, the head of a firm of Consulting Engineers in Seattle, had discussions about the possibilities of a B.C.-Yu.kon-Alaska railroad with the Vice-Chief of the General Staff, the Deputy Minister of Agriculture and the Right Honourable Mr. Howe. Apparently Mr. Howe expressed to him considerable interest in such a possibility from both the development and defence points of view.

12. In December, 1947, the Wilson Engineering Corporation, Denver, Colorado, wrote to External Affairs, referring, without giving any details, to "a plan to construct a railroad along the Alaska Highway" and requesting right-of-way permits from the Governments of Canada and British Columbia. On the advice of the Department of Transport, this company has since been informed that, in order to obtain the desired permits, it should apply for incorporation in Canada as a railway company.

13. At a meeting of the Permanent Joint Board on Defence on November 20-21, 1947, it was noted that there was increased public and offtcial interest in the development of North-Western Canada and Alaska and in the improvement of communications in that area for both economic and strategic reasons. 1t was agreed that available material regarding proposals for a railway through British Columbia and the Yukon to Alaska should be considered by the Board at its next meeting on February 19-20, 1948.⁶¹ As a result, at a recent meeting of the Cabinet Defence Committee, it was decided that a memorandum should he prepared by the Department of External Affairs on the subject for General McNaughton, Chairman of the Canadian Section of the Board. The latter has asked that it reflect the views of the other interested Departments.

C. Factors to be Considered

14. A memorandum containing the foregoing paragraphs was accordingly, sent by External Affairs to the Deputy Ministers of Transport, National Defence and Mines and Resources with a request for any comments they might care to make with a view to its improvement. At the same time, they were asked to state their views briefly and on a purely tentative basis, regarding certain considerations which will presumably have to be carefully weighed if and when the Canadian or U.S. military (or other) authorities decide that the possibility of constructing a railroad deserves serious study. These considerations are the following:

(1) Is there any really active interest or pressure in Canada or the U.S. in favour of a railway?

(2) Is there a present need or a probable need in the near future for a railway for either (a) civilian purposes, (h) military purposes or (c) a combination of these?

(3) What would he the best routes from the points of view of (a) availability of civilian and/or military traffic; (b) the availability of materials such as coal, timber, etc; (c) engineering problems, such as water and mountain barriers; (d) the greatest economy of construction; (e) speed of transportation for military purposes?

(4) Is there likely to he enough civilian and/or military traffic available in the near future to enable a private or public railway to operate without loss? If not, what is the probable annual cost of providing such a railway?

(5) If it is desirable to construct a railway should it be financed or operated by (a) private interests; (b) a public body; (c) on a semI.public basis?

(6) If the Canadian, British Columbia and U.S. Governments should assume any measure of financial responsibility, in what proportion should each contribute financially and exercise control?

17) If the U.S. Government should contribute anything to a railroad, what, if any U.S. personnel, should be allowed to work in connection with it on Canadian territory?

15. The following are the replies to these questions that have been received from Mr. J.C. Lessard, Deputy Minister of Transport and Mr. H.L. Keenleyside, Deputy Minister of Mines & Resources.

(1) Mr. Lessard. "To our knowledge, there is no really active interest or pressure in Canada in favour of a railway to Alaska. Our understanding is that the government of the Province of British Columbia is anxious to extend the Pacific Great Eastern, in order to develop the coal and forest resources on the projected extension north of Prince George. Naturally British Columbia is anxious that the Pacific Great Eastern form part of a railroad to Alaska."

Mr. Keenleyside. "So far as I know there is no very active interest or pressure in Canada for the construction of such a railway. A good many people have stated that they are in favour of a railway to Alaska, and there is, of course, strong pressure in British Columbia for the completion of the Pacific Great Eastern Railway as far as the Peace River area. There is not, however, any well informed and formally organized body of opinion pressing for a railway to Alaska."

(2) Mr. Lessard. "For purely civilian purposes, there is definitely no present need for such a railway. The maintenance of the Alaska Highway to all-year-round traffic is ample to take care of all civilian traffic originating and terminating between the British Columbia-Alberta boundaries and the Yukon. There are bus and truck routes operated on fairly regular schedules, and our understanding is that the traffic is very light. In addition, civilian air services operated by the Canadian Pacific Air Lines from Vancouver through Prince George and from Edmonton through Grande Prairie to the Yukon and Alaska are available for businessmen and emergency cases. Mention should also be made of the steamship services between Vancouver, Prince Rupert and Alaska."

Mr. Keenleyside. "A railway along the route indicated would be of great value for the development of the country traversed. Whether that value would be sufficient to justify the construction and the probable subsequent cost of operation is the kind of question that cannot be firmly answered. If the railway line were to cut across a new Sullivan Mine its construction would, of course, be justified. I know of no way, however, of forecasting such a result."

(3) Mr. Lessard. "This would be the subject of a full engineering report complementing survey made in 1942 and referred to in your memorandum."

Mr. Keenleyside. "The most practicable route is undoubtedly that along the Rocky Mountain trench to the Finlay River and over the Frances-Pelly River Divide to the Yukon Valley. As Dr. Camsell has pointed out this presents no serious engineering difficulties. Whether or not this is the best route from the standpoint of the ultimate value of the area to be opened up is again an unanswerable question. It has the advantages, however, of known resources of coal and timber, and of reducing to a minimum (among the routes suggested) the cost of construction and upkeep."

(4) Mr. Lessard. "There does not appear to be enough civilian and/or military traffic to enable a private or public railway to operate without loss. Depending upon frequency of service, the annual cost, (deficit) would vary between $25,000,000 to $50,000,000."

Mr. Keenleyside. "Neither I nor anyone else could answer this question with any assurance. It is probable, however, that for some considerable time at least the railway would operate at a loss. The measure of that loss will depend on discoveries during construction; on the military use that is made of the line; on the success of tourist campaigns that may be developed; and on a variety of other factors which I am not competent to assess." Mr. Keenleyside prefaced his replies to these questions with the remark that the experience of the Pacific Great Eastern Railway, which has been running at a loss, makes it very doubtful that a new line would do much better.

(5) Mr. Lessard. "Bearing in mind that costs have increased by at least 40% since 1942, it would appear that such a railway could not be built for less than $160,000,000 in 1948. We fail to see how a private company could finance the construction of such a railway, with traffic possibility at a minimum."

Mr. Keenleyside. "This is a matter of public policy, and the only answer that I would feel inclined to make would be that if the railway is to be constructed by private interests, they would be likely to demand so much in the way of public assistance and support that it would probably be simpler for the Government to finance and operate the railway itself - presumably through the Canadian National Railway."

(6) Mr. Keenleyside. "In my opinion control should be exclusively in Canadian hands. On the other hand, it might be reasonable to propose that the United States Government should make a very considerable payment towards the construction of this facility on the ground that it is a contribution to the development of Alaska. My inclination would be to suggest that contributions should be in the form of a onetime grant, and should not involve a recurring appeal to the United States Congress for funds to maintain a railway on Canadian territory."

(7) Mr. Keenleyside. "This would be a matter for negotiation, but in general it would be my view that the United States participation should be reduced to a minimum both as to numbers and time."

16. Mr. Lessard also pointed out that the Bureau of Transportation Economics is at present making a survey of the economic and commercial potentialities of the Alaska Highway, for the Department of Mines and Resources, which will be of interest in connection with the question of a railroad.

17. As a result of the enquiry addressed to the Deputy Minister of National Defence, the following reply has been received from the Secretary of the Chiefs of Staff Committee:

"The Chiefs of Staff have given preliminary consideration to this matter and are of the opinion that, from a long-term strategic viewpoint, the recommended railroad would be useful. However, it is felt that peacetime military requirements can be met by existing systems and that there is unlikely to be sufficient military traffic in the near future for such a railroad to operate without loss.

"You will appreciate that the time has not been available for the Chiefs of Staff to go into this matter fully. The views are, therefore, tentative . .. only and subject to such amendment as may seem desirable in the light of further study"

18. It should be emphasized here that all the views quoted in paragraphs 15 to 17 inclusive are, of course, purely tentative.

⁶¹Le secrétaire de la section canadienne fit rapport à la CPCAD lors de ses réunions des 19 et 20 février sur la base de cette note. Les opinions des Chefs d'état-major canadiens tels que rapportés dans le paragraphe 17 furent communiqués à la CPCAD.
The Secretary of the Canadian Section gave a report to PIED at its meetings of February 19-20 based on this memorandum. The views of the Canadian Chiefs of Staff as recorded in paragraph 17 were relayed to PJBD.