If you’re preparing for a significant expenditure, like enhancing your residence or hosting a wedding celebration, a home equity financing could be a wonderful way to obtain the cash you need. This video could aid you identify if it’s the ideal path for you, by clarifying some typical uses and also just what crucial aspects impact how a lot you could obtain. To get more information, go to https://www.discover.com/home-equity-loans/.
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Dow Drops 500 Points
Image by YoTuT
AIG Tumbles 61%, Pushing
Dow to a 500-Point Decline
September 15, 2008 6:13 p.m.
The stock market suffered its worst daily plunge in nearly seven years Monday as the bankruptcy of Lehman Brothers Holdings threw the U.S. financial system into an abyss, uncertain where the bottom of its credit-related problems lies.
Lehman’s demise makes it the biggest casualty yet in the long-running credit crisis, which has so far seen torrents of red ink, restructurings and acquisitions, and shutterings of a few commercial banks. But until Sunday night, no Wall Street firm of such size and stature had suffered an all-out meltdown.
The Dow Jones Industrial Average, which languished with a loss between 200 and 300 points for most of the day, saw its losses accelerate in the last hour of trading to suffer its worst daily point drop since trading resumed after the 9/11 terror attacks. The Dow ended down by 504.48 points on Monday, off 4.4%, at its daily low of 10917.51, down 18% on the year.
All 30 of the Dow’s components fell, save for Coca-Cola, which rose 0.5%.
American International Group plunged 60.8%. The Federal Reserve Monday asked Goldman Sachs Group and J.P. Morgan Chase to help make – billion in loans available to the company, according to people familiar with the situation. The insurer has been racing to restructure its business and raise fresh capital to avoid a downgrade of its credit ratings.
The number of big players on Wall Street is dwindling, but traders said it remains to be seen where and for how much longer the ill effects of soured credit bets will continue to surface. A series of events through the end of the week, including a Fed meeting Tuesday and stock-options expiration Friday, could shed more light on the state of the financial system and send investors on another dizzying ride.
"It’s a dicey situation right now," said Bill King, chief market strategist at M. Ramsey King Securities in Burr Ridge, Ill. "You have a lot of guys right now who don’t know who to trade with because of counter-party issues," especially in the credit markets, where traders said it remained difficult to find buyers for certain securities despite the last 24 hours’ realignment on Wall Street.
Bank of America was another big decliner among Dow stocks, off 21.3%. The company had been a suitor for Lehman but pulled out of talks as it became apparent in recent days that the Fed would not guarantee the financing of an acquisition as it did in J.P. Morgan Chase’s purchase of Bear Stearns in March. Instead, Bank of America quickly moved to buy Merrill Lynch on Monday. Merrill shares ended little changed.
Two remaining big investment banks — Goldman and Morgan Stanley — saw their shares fall. Goldman was off 12.1%, while Morgan Stanley fell 13.5%. Both firms are due to report their fiscal third-quarter results in the next few days and are expected to try to make the case that they’re very different from Lehman and Merrill. Analysts are expecting each to stay in the black but are bracing for write-downs of billion to billion each at Goldman and Morgan Stanley.
Financial stocks in the S&P 500 fell 9% as a group. The sector has shed .27 trillion in market value since October 2007. Financials now comprise 14.4% of the S&P 500, down from 22% at the end of 2006.
"Too much leverage is the alpha and omega of this story," said Doug Kass, president of the hedge fund Seabreeze Partners Management in Palm Beach, Fla., referring to financial firms’ use of borrowed money to make bets on securities tied to risky mortgages. In a note to clients Monday, he criticized some banks’ use of 30 dollars in leverage for each dollar of collateral in recent years – a practice that effectively amplified losses once prices of homes and the credit bets themselves began to fall.
In an interview, Mr. Kass added: "We’re moving into the timeframe in which it makes sense to look for well-valued (financial) stocks. But investors should still take a conservative approach," including relatively small-sized bets on a recovery after more than a year of rocky credit trading and plummeting share prices in the financial sector.
In particular, the last few days’ events have underscored the challenges facing the Fed, the Treasury Department, and other federal regulators, who are trying to strike a delicate balance between establishing a sturdy framework for the financial system while at the same time allowing markets to reward smart decisions and punish bad ones. By taking the rescue option off the table for Lehman, the U.S. government effectively declared that there are limits to its role as backstop-in-chief — a concept that could have implications for other troubled firms in the months ahead.
Just last week, the government seized mortgage giants Fannie Mae and Freddie Mac, and months prior it brokered the sale of Bear Stearns to J.P. Morgan. But now, Washington appears to want Wall Street to largely fix its own problems.
"We’ve re-established ‘moral hazard,’" a person involved in the Lehman talks told the Journal, referring to the notion that the government should eschew bailouts, since financial firms might take more risks if they’re insulated from the consequences. "Is that a good thing or a bad thing? We’re about to find out."
Other financial bellwethers suffered Monday. Wachovia plummeted 25% as analysts raised questions about the potential need for Wachovia to raise new capital to absorb future losses. Mike Mayo of Deutsche Bank downgraded the stock to "Hold" from "Buy," concerned about Wachovia’s large portfolio of risky bets on adjustable-rate mortgages, which he called a wild card in analyzing the company.
"Our view has been that Wachovia does not need more capital," he said in a research note, since he thinks loan losses over the next few years will be less than expected. However, given increased concerns about economic growth and intense stress in financial markets, "this margin of safety has been reduced."
Troubled Washington Mutual tumbled 26.7% as investors feared it wouldn’t be able to find a buyer to shore up its books.
After the close, S&P Ratings Services lowered its credit ratings on Washington Mutual to junk. "Increasing market turmoil and the related impact from managing its concentrated mortgage franchise in this troubled housing and credit cycle led to the downgrade of WAMU," said S&P credit analyst Victoria Wagner. "The company’s weak equity pricing in the markets is also a concern, and it increasingly appears that market conditions could overtake credit fundamentals and leave the company with greatly diminished financial flexibility."
Other stock yardsticks suffered Monday. The Nasdaq Composite Index was off 4.7% to 2179.91, near a 6-month low and down 18% on the year. The small-stock Russell 2000 fell 4.2% to 689.76, down 19% on the year. The S&P 500 was off 4.7% to 1192.96, down 19% on the year. All the broad measure’s sectors fell.
Among names listed on the New York Stock Exchange, about 8.1 billion shares changed hands, a new record. Decliners outnumbered advancers nearly 19 to one on the exchange.
Credit markets showed few signs of relief. The Fed-funds rate traded as high as 6.5% Monday, well above the central bank’s 2% target as demand for cash far outstripped supply. The shortage forced the Fed to inject a massive billion cash via its daily repurchase-agreement operation, which helped bring down the rate to 3.5%.
Traders said that various Wall Street firms offered a staggering 3 billion in mortgage-backed paper to use as collateral for repo agreements, but the Fed only accepted about billion of it — a sign that much of that debt remains too toxic for the Fed to assume on its books.
In the meantime, the three-month Libor/OIS spread, a gauge of stress in the money markets, widened to around 104.6 basis points from around 84.5 basis points Friday. Monday’s reading was its widest since December when the gap increased to above 110 basis points, a record.
"These markets just continue to be broken," said Don Wilson, head of DRW Trading, a proprietary firm active in Chicago’s interest-rate pits.
Treasury prices surged, pushing interest rates lower as investors sought safe havens. The two-year note was recently up 23/32, yielding 1.844%. The benchmark 10-year note was up 1-18/32, yielding 3.527%. The 30-year bond jumped 2-3/32 to yield 4.193%.
Crude-oil futures settled down .47 at .71 on the New York Mercantile Exchange on Monday on fears that the financial crisis could further slow the wider economy and fuel demand. It was oil’s first finish below 0 since early March.
The dollar dropped against the Japanese currency, changing hands recently at 105.47 yen, down from 107.87 yen late Friday. But the dollar managed to post gains against the euro and British pound.
Write to Peter A. McKay at email@example.com
Back to School Vaccinations
Image by 666isMONEY ☮ ♥ & ☠
"No one will be turned away for an inability to pay."
Prices at River City continue to slip-slide away.
Image by seeChicagorealestate.com
How low can you go?
What if your sole purpose in life were to serve as an example to others…for what NOT to do? This seems to be the karma for poor 800 S. Wells, also known as River City. The building looks like a cross between a space ship outside and a submarine inside. The concrete walls can be depressing and the roof over the lobby has been known to leak. A slew of River City properties are currently short sales or in foreclosure.
Comprised of 448 units sitting on 20 acres of land southwest of Printer’s Row, there are studios, one-, two- and three-bedroom units. Currently the lowest-priced available studio is a recently listed short sale offered at ,000; the lowest-priced one-bedroom is a foreclosure property offered ,000 which is down from the original asking price of 0,000. The lowest-priced available two-bedroom unit is priced at 6,400. It was originally offered at 8,900. This unit is…wait for it, here it comes…in foreclosure. Ditto the lowest-priced three-bedroom which is now offered at 5,500 after sitting on the market for a total of 348 days.
There must be more than one gobsmacked River City homeowner asking himself, “What happened?”
The answer is: a perfect storm of a developer who over-promised and an economy that was bucking for a giant reset.
When River City converted to condos in 2001, American Invsco offered buyers two years of free assessments and taxes plus a guaranteed renter for two years. Back then banks were happy to underwrite pie-in-the-sky loans to applicants whose eyes were bigger than their checkbooks. So why not jump in?!
We know how that story played out.
But they say there’s a lid for every pot. River City makes sense for buyers with specific goals. Some enjoy the unique architecture. Some like being in close proximity to the Chicago River (great for sailing and kayaking). Some cannot resist the unbelievable condo deals to be had – invest now, keep the property for a few years, and watch the equity build.
So if you’re a hardy soul and a bit of a gambler, River City might be a good bet for you. Want more information? Contact Ted Guarnero at Baird & Warner, (312) 810-6693 or search all homes at www.seechicagorealestate.com
Whenever you’re creating a remodeling task or residence remodelling, it’s best if you start with identifying just how you’ll shell out the dough. Often which comes right down to taking out fully a loan or making use of your savings.
Some individuals may have enough cash conserved to think about purchasing their remodeling task or residence renovation out of pocket. But just because you have sufficient savings to pay for your property remodeling project doesn’t indicate you really need to eliminate often a home equity loan or a home equity credit line (HELOC). Experiencing residence equity can be a smart move, under specific circumstances. Your own individual financial situation will determine exactly what repayment program you should choose. So browse this bout of Big Money Real Estate for my great tips on when you should make use of home equity and whether to pick a home equity loan or HELOC to cover a home renovating project.
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Image by A.Davey
When a building’s interior is exposed similar to this, the structure loses its feeling of permanence, while the living rooms look like phase units.
This building, which sticks during my mind principally given that residence regarding the long-shuttered Jazz Quarry and something of Portland’s final "adult" cinemas, it becoming demolished to create method for the Sky 3 Apartments.
New condo construction in Portland died with all the worldwide financial crisis of 2007-2008 and has yet becoming resurrected. So, while household prices rise, no new condos are arriving online, just apartments. The cost of a perch in one of our hip "Portlandia" communities can now exceed 0K. One explanation financial institutions aren’t financing new condominiums could be the extremely high threat of construction-defect litigation, which can be practically inevitable nowadays. At the very least townhouses are still being built, nonetheless they’re away from sight and if they’re in the core.
It was reported that the "Las Vegas based Molasky number of companies . . .and Portland-based E&F qualities are intending to develop a 15-story mixed-use building with 196 units, at Southwest Jefferson Street and 11th Avenue."
The delopers sent applications for a 10-year property tax exemption of almost 0,000 in exchange for maintaining a number of the products at below-market rents to market the availability of moderate-income housing.
"While most associated with units of Sky3 Put would hire at market rate – as high as ,250 30 days for a two-bedroom apartment – 20 per cent would hire at a reasonable price for folks making 80 percent of this area’s median family members earnings – ,850 for an individual or ,500 for a household of four. Those flats would range in rent from 1 four weeks for a studio to ,118 for a two-bedroom product."
Truthfully, i cannot imagine investing ,250 in after-tax bucks on rent, whenever residence ownership and a home loan would offer tax-deductible interest and home fees, the alternative of equity in the future and, depending on the amount of the loan, reduced monthly payments.
Opportunity Needs to be Knocking
Image by Viewminder
Once the government assured all of these mortgages and basically residence equity loans…
few people like going individuals were bitching in regards to the financial institutions.
Cash had been simple…
debt was being given away like candy on Halloween.
Today the money’s kinda dried out.
Plus the individuals gotta make great on those loans their particular government guaranteed.
Four years ago I didn’t have to view the news headlines to see how the economy ended up being performing.
I possibly could inform on garbage time.
I would see a few of these vacant boxes for plasma display televisions along with other big customer things made in China.
Today garbage time seems different.
At the least within my area there’s a whole lot less consumin’ goin’ on.
I have heard some amazing some ideas on Occupy Chicago demonstration.
I’ve heard some actually nutty a few ideas.
The one thing that could make every person delighted… at the very least the folks with all the power to be delighted… is if the playing industry were levelled…
if there clearly was window of opportunity for everybody.
Twelve years ago I began a company… I strolled in to the bank and with just my motorists lisense and quarter-hour I wandered completely with two bank reports and two checkbooks.
Just last year I went to start two new business lender reports.
I really couldn’t believe the paperwork I required.
It took me two weeks to get it completely.
I decided to go to Six Flags this weekend for FrightNight.
I experienced to walk-through metal detectors and become put through search.
I experienced to quit my small pocket-knife after walking through the material detectors.
I assume I could have walked the mile back again to my automobile and stashed it truth be told there in interest of public safety nevertheless kids were jonesin’ to jump on a rollercoaster.
I am all for layin’ along the legislation to kick some terrorist ass…
but it is stuff like that that makes me groan.
If it was our freedom the terrorists were wanting to destroy…
they made their particular point and additionally they scored.
We do not need even more laws.
We don’t need certainly to give up any longer legal rights.
We want even more freedom.
Among the ironies we see using the Occupy action… and there are many…
is wanting to make use of federal government to repair the issue.
I love just how Ronald Reagan place it…
‘Government is the issue.’
A home equity loan allows you to borrow secured on your home’s equity and certainly will help you attain goals like remodeling kitchen area or consolidating your expenses. To learn more, visit https://www.discover.com/home-equity-loans/.
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Suzy Orman gives her accept exactly how a property Equity Line of Credit (HELOC) and a house Equity debts (HELOAN) fundamentally work.
More details at:
< iframe width= " 425 "elevation= " 355" src=" https://www.youtube.com/embed/BePfTsdBFeU?rel=0" frameborder=" 0" allowfullscreen > Jayson Bates NMLS # 220798. 602-573-3101 cell. https://www.valleyofthesunrealestateshow.com. In this episode of Valley of the Sun Property Program I examine the House Equity Loan. I discuss the various sorts of Home Equity car loans as well as some of the challenges of the Residence equity funding. If you are checking into a home equity lending then this is some great information for you.
602-573-3101. https://www.valleyofthesunrealestateshow.com.< iframe size=" 425" elevation=" 355" src
= “https://www.youtube.com/embed/VqdGq5BvAr4?rel=0″ frameborder=”0” allowfullscreen > http://www.biggerpockets.com/askbp078. On this episode of the #AskBP Podcast, Brandon shares his guidance for an audience who isn’t really certain exactly what the very best financing item to go after for his brand-new residential property. Discover the major reason Brandon would certainly select among those alternatives over the other! Video clip Score:/ 5
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A home equity loan is simply where you’re taking a second mortgage against your house. So, I know that might sound a little confusing, but let me give you an example.
Let’s say my house is worth 0,000, and I have a mortgage on it, and I owe 0,000 on that mortgage. So, that means there’s 0,000 of equity there in that property. And one of the challenges, sometime, is you pay your mortgage down, you might want to use that equity or some of that value, for other financial goals you’re looking to achieve. So, how do you do that?
The way you do that, is by taking out a home equity loan against the property. And most home equity loans might be a 10 or 20 year loan, and you’re borrowing the money. And typically you’re gonna pay a little higher interest rate than you would on your regular mortgage, because, technically, if you don’t make your payments, the bank that holds the first mortgage has the first right to your collateral. And the lender for the second mortgage, or the home equity loan, would be next in line. So because of that, there’s a little bit more risk, and you’ll often be assessed a little bit more interest, because of that risk.
Now, there are two main types of home equity loans. There’s a set loan, a home equity loan where I borrow a certain amount. Let’s say, I borrow ,000. I pay interest on it, and every month I make my monthly payment. So, I know exactly when I’ll be done, and I know exactly what my monthly payment will be. That’s known in the industry as a home equity loan.
Another type of home equity, is what’s called a home equity line of credit. This is where you have access to money, but you’re only gonna pay interest, if you actually use it. So, it works very similar to a credit card where, if I’m not using the money, I’m typically not paying interest. But once I use it, then there’s a balance, and a monthly payment associated with it.
So, really important, a lot of times people take credit card debt, or other types of debt, and they want to consolidate it onto a home equity loan. And the reason they want to do that is, number one, to simplify their financial life. Number two, home equity loans usually have a lower interest rate, than credit cards, for example. And number three, sometimes the interest on a home equity loan is tax deductible. So, those are all good benefits.
But if you do this, be aware that once you do that, you’re home is now at risk. In other words, if I can’t make my credit card payments, the lender can’t come take my house. But if I can’t make my home equity loan payments, my house now is at risk. So, that’s a big difference.
Number two, most home equity loans take a lot of time. They’re 10, 20 year loans. And, like we were talking about, if you stretch out debt, often times you may pay more over the long term, even though your monthly payment may go down.
And lastly, when consolidating debt onto a home equity loan, be aware that you’re not moving debt around versus paying it off. Because I see a lot of people, they move credit card debt to their home equity loan, and then in a few years, what happens? The credit card debt starts coming back, and they owe money on the home equity. So, they have more debt. They’re addressing some of the symptoms, and not the cause.
So, home equity loans can be a great way to give you access to money and equity that’s tied up in your property. But just make sure you don’t fall into any of those problem areas, because I see that happen a lot. And people underestimate the risk that they incur.
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Simple example of borrowing from equity to fuel consumption. Created by Sal Khan.
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Finance and capital markets on Khan Academy: This old and badly drawn tutorial covers a topic essential to anyone planning to not live in the woods — your personal balance sheet. Since homes are usually the biggest part of these personal balance sheets, we cover that too.
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Choosing the most useful home equity financial loans could be an occasion eating task. It will take a good amount of analysis and preparation in order to find that loan that’s the most suitable for your requirements and current financial situation. Numerous claim that this particular loan is superior to other styles such lines of credit but with things in life particularly those coping with money, there are lots of downsides.
Before you rush off to the financial institution you have to understand what a home equity loan even is. It shares many qualities similar to that of an extra home loan but is, in fact, completely different. While refinancing a mortgage and bringing down interest levels are two of significant reasons property owners take-out home financing, a house equity loan is certainly not utilized for these types of. Unlike a moment home loan an equity loan is not for a preset quantity in line with the value of your house.
alternatively an equity loan will be based upon your credit score. Like a mortgage you are putting your property up as security therefore failure to repay the mortgage indicates the loss of your house. Another loan much like a property equity loan may be the Home equity personal credit line or HELOC. The difference the following is that most useful home equity loans are available only one time or twice whilst HELOC is a revolving line of credit.
Given it really is properties, lots of people are very cautious about whenever and why they take-out the loan. Utilized for larger expenditures deemed necessary such as for example health expenses, expenses, and similar circumstances, home equity loans are not typically used for frivolous explanations particularly a boat or a vacation to Cabo San Lucas.
Finding best home equity loans for the scenario is vital. The tips to finding the most effective might seem like bit more after that common sense but it is worth reviewing. Establish your precise needs. Can you simply take on credit cards rather? Do you really need to place your house exactly in danger? Develop another spending plan to ascertain whenever you can feasibly pay the mortgage right back. Never ever neglect you could possibly lose your house in the event you are not able to repay it. Compare costs and rates of interest. You may be able to find a better cost else where.
Getting that loan is extraordinarily helpful especially in times during the desperate needs. These financial loans should not be taken gently specially when anything because crucial as your home is exactly in danger. If you are not entirely specific or if perhaps you can easily stay without the money then many advise against these types of that loan. The very best residence equity financial loans usually takes time and energy to find however the advantages take the time worth it.
Some cool home equity loans images:
CPR / My Neighbour to the West
Image by bill barber
From my set entitled “Our Home, Streetsville”
In my collection entitled “Places”
In my photostream
I’ve always lived close to railway lines. When I was growing up in Orangeville, Ontario, I lived near the main station. Both the Canadian National Railway (CNR) and the Canadian Pacific Railway (CPR) passed through town. When my sister and I moved to a fifty acre farm in Dixie, Ontario (near Toronto) in 1960, the CPR bisected our land.
For the twenty-two years Karen and I have lived at our current address in Streetsville, Ontario, the CPR has been our neighbour across the back fence. People ask us, “Don’t the trains bother you?” We answer that we don’t even hear them.
We sit on the deck and view a lot of interesting stuff go by. One day I watched a trainload of tanks pass. Didn’t know Canada had so many tanks. We also see intriguing graffiti on the sides of tankers and boxcars. And there are cars from all over the U.S. and Canada.
This is the first shot of the trains I have taken from the deck, but there will be more. It’s best to take such pictures after the leaves have dropped, since it’s hard to see the trains through the summer foliage.
Reproduced from Wikipedia, the free encyclopedia
The Canadian Pacific Railway (CPR; AAR reporting marks CP, CPAA, CPI), known as CP Rail between 1968 and 1996, is a Canadian Class I railway operated by Canadian Pacific Railway Limited. Its rail network stretches from Vancouver to Montreal, and also serves major cities in the United States such as Minneapolis, Chicago, and New York City. Its headquarters are in Calgary, Alberta.
The railway was originally built between eastern Canada and British Columbia between 1881 and 1885 (connecting with Ottawa Valley and Georgian Bay area lines built earlier), fulfilling a promise extended to British Columbia when it entered Confederation in 1871. It was Canada’s first transcontinental railway. Now primarily a freight railway, the CPR was for decades the only practical means of long distance passenger transport in most regions of Canada, and was instrumental in the settlement and development of Western Canada. The CP company became one of the largest and most powerful in Canada, a position it held as late as 1975. Its primary passenger services were eliminated in 1986 after being assumed by VIA Rail Canada in 1978. A beaver was chosen as the railway’s logo because it is one of the national symbols of Canada and represents the hardworking character of the company. The object of both praise and condemnation for over 120 years, the CPR remains an indisputable icon of Canadian nationalism.
The Canadian Pacific Railway is a public company with over 15,000 employees and market capitalization of 7 billion USD in 2008.
Canada’s very existence depended on the successful completion of the major civil engineering project, the creation of a transcontinental railway. Creation of the Canadian Pacific Railway was a task originally undertaken for a combination of reasons by the Conservative government of Prime Minister Sir John A. Macdonald. British Columbia had insisted upon a transport link to the east as a condition for joining the Confederation of Canada (initially requesting a wagon road). The government however, proposed to build a railway linking the Pacific province to the eastern provinces within ten years of July 20, 1871. Macdonald also saw it as essential to the creation of a unified Canadian nation that would stretch across the continent. Moreover, manufacturing interests in Quebec and Ontario desired access to sources of raw materials and markets in Canada’s west.
The first obstacle to its construction was economic. The logical route went through the American Midwest and the city of Chicago, Illinois. In addition to the obvious difficulty of building a railroad through the Canadian Rockies, an entirely Canadian route would require crossing 1,600 km (1,000 miles) of rugged terrain of the barren Canadian Shield and muskeg of Northern Ontario. To ensure this routing, the government offered huge incentives including vast grants of land in Western Canada.
In 1872, Sir John A. Macdonald and other high-ranking politicians, swayed by bribes in the so-called Pacific Scandal, granted federal contracts to Hugh Allan’s "Canada Pacific Railway Company" (which was unrelated to the current company) and to the Inter-Ocean Railway Company. Because of this scandal, the Conservative party was removed from office in 1873. The new Liberal prime minister, Alexander Mackenzie, began construction of segments of the railway as a public enterprise under the supervision of the Department of Public Works. The Thunder Bay branch linking Lake Superior to Winnipeg was commenced in 1875. Progress was discouragingly slow because of the lack of public money. With Sir John A. Macdonald’s return to power on October 16, 1878, a more aggressive construction policy was adopted. Macdonald confirmed that Port Moody would be the terminus of the transcontinental railway, and announced that the railway would follow the Fraser and Thompson rivers between Port Moody and Kamloops. In 1879, the federal government floated bonds in London and called for tenders to construct the 206 km (128 mile) section of the railway from Yale, British Columbia to Savona’s Ferry on Kamloops Lake. The contract was awarded to Andrew Onderdonk, whose men started work on May 15, 1880. After the completion of that section, Onderdonk received contracts to build between Yale and Port Moody, and between Savona’s Ferry and Eagle Pass.
On October 21, 1880, a new syndicate, unrelated to Hugh Allan’s, signed a contract with the Macdonald government. They agreed to build the railway in exchange for ,000,000 (approximately 5,000,000 in modern Canadian dollars) in credit from the Canadian government and a grant of 25,000,000 acres (100,000 km²) of land. The government transferred to the new company those sections of the railway it had constructed under government ownership. The government also defrayed surveying costs and exempted the railway from property taxes for 20 years. The Montreal-based syndicate officially comprised five men: George Stephen, James J. Hill, Duncan McIntyre, Richard B. Angus, and John Stewart Kennedy. Donald A. Smith and Norman Kittson were unofficial silent partners with a significant financial interest. On February 15, 1881, legislation confirming the contract received royal assent, and the Canadian Pacific Railway Company was formally incorporated the next day.
The CPR started its westward expansion from Bonfield, Ontario (previously called Callander Station) where the first spike was driven into a sunken railway tie. Bonfield, Ontario was inducted into Canadian Railway Hall of Fame in 2002 as the CPR First Spike location. That was the point where the Canada Central Railway extension ended. The CCR was owned by Duncan McIntyre who amalgamated it with the CPR and became one of the handful of officers of the newly formed CPR. The CCR started in Brockville and extended to Pembroke. It then followed a westward route along the Ottawa River passing through places like Cobden, Deux-Rivières, and eventually to Mattawa at the confluence of the Mattawa and Ottawa Rivers. It then proceeded cross-country towards its final destination Bonfield (previously called Callander Station).
Duncan McIntyre and his contractor James Worthington piloted the CCR expansion. Worthington continued on as the construction superintendent for the CPR past Bonfield. He remained with the CPR for about a year until he left the company. McIntyre was uncle to John Ferguson who staked out future North Bay after getting assurance from his uncle and Worthington that it would be the divisional and a location of some importance.
It was assumed that the railway would travel through the rich "Fertile Belt" of the North Saskatchewan River valley and cross the Rocky Mountains via the Yellowhead Pass, a route suggested by Sir Sandford Fleming based on a decade of work. However, the CPR quickly discarded this plan in favour of a more southerly route across the arid Palliser’s Triangle in Saskatchewan and through Kicking Horse Pass over the Field Hill. This route was more direct and closer to the American border, making it easier for the CPR to keep American railways from encroaching on the Canadian market. However, this route also had several disadvantages.
One consequence was that the CPR would need to find a route through the Selkirk Mountains, as at the time it was not known whether a route even existed. The job of finding a pass was assigned to a surveyor named Major Albert Bowman Rogers. The CPR promised him a cheque for ,000 and that the pass would be named in his honour. Rogers became obsessed with finding the pass that would immortalize his name. He found the pass on May 29, 1881, and true to its word, the CPR named the pass "Rogers Pass" and gave him the cheque. This however, he at first refused to cash, preferring to frame it, and saying he did not do it for the money. He later agreed to cash it with the promise of an engraved watch.
Another obstacle was that the proposed route crossed land controlled by the Blackfoot First Nation. This difficulty was overcome when a missionary priest, Albert Lacombe, persuaded the Blackfoot chief Crowfoot that construction of the railway was inevitable.
In return for his assent, Crowfoot was famously rewarded with a lifetime pass to ride the CPR. A more lasting consequence of the choice of route was that, unlike the one proposed by Fleming, the land surrounding the railway often proved too arid for successful agriculture. The CPR may have placed too much reliance on a report from naturalist John Macoun, who had crossed the prairies at a time of very high rainfall and had reported that the area was fertile.
The greatest disadvantage of the route was in Kicking Horse Pass. In the first 6 km (3.7 miles) west of the 1,625 metre (5,330 ft) high summit, the Kicking Horse River drops 350 metres (1,150 ft). The steep drop would force the cash-strapped CPR to build a 7 km (4.5 mile) long stretch of track with a very steep 4.5% gradient once it reached the pass in 1884. This was over four times the maximum gradient recommended for railways of this era, and even modern railways rarely exceed a 2% gradient. However, this route was far more direct than one through the Yellowhead Pass, and saved hours for both passengers and freight. This section of track was the CPR’s Big Hill. Safety switches were installed at several points, the speed limit for descending trains was set at 10 km per hour (6 mph), and special locomotives were ordered. Despite these measures, several serious runaways still occurred. CPR officials insisted that this was a temporary expediency, but this state of affairs would last for 25 years until the completion of the Spiral Tunnels in the early 20th century.
In 1881 construction progressed at a pace too slow for the railway’s officials, who in 1882 hired the renowned railway executive William Cornelius Van Horne, to oversee construction with the inducement of a generous salary and the intriguing challenge of handling such a difficult railway project. Van Horne stated that he would have 800 km (500 miles) of main line built in 1882. Floods delayed the start of the construction season, but over 672 km (417 miles) of main line, as well as various sidings and branch lines, were built that year. The Thunder Bay branch (west from Fort William) was completed in June 1882 by the Department of Railways and Canals and turned over to the company in May 1883, permitting all-Canadian lake and rail traffic from eastern Canada to Winnipeg for the first time in Canada’s history. By the end of 1883, the railway had reached the Rocky Mountains, just eight km (5 miles) east of Kicking Horse Pass. The construction seasons of 1884 and 1885 would be spent in the mountains of British Columbia and on the north shore of Lake Superior.
Many thousands of navvies worked on the railway. Many were European immigrants. In British Columbia, the CPR hired workers from China, nicknamed coolies. A navvy received between and .50 per day, but had to pay for his own food, clothing, transportation to the job site, mail, and medical care. After two and a half months of back-breaking labour, they could net as little as . Chinese navvies in British Columbia made only between .75 and .25 a day, not including expenses, leaving barely anything to send home. They did the most dangerous construction jobs, such as working with explosives. The families of the Chinese who were killed received no compensation, or even notification of loss of life. Many of the men who survived did not have enough money to return to their families in China. Many spent years in lonely, sad and often poor conditions. Yet the Chinese were hard working and played a key role in building the western stretch of the railway; even some boys as young as 12 years old served as tea-boys.
By 1883, railway construction was progressing rapidly, but the CPR was in danger of running out of funds. In response, on January 31, 1884, the government passed the Railway Relief Bill, providing a further ,500,000 in loans to the CPR. The bill received royal assent on March 6, 1884.
In March 1885, the North-West Rebellion broke out in the District of Saskatchewan. Van Horne, in Ottawa at the time, suggested to the government that the CPR could transport troops to Qu’Appelle, Assiniboia, in eleven days. Some sections of track were incomplete or had not been used before, but the trip to Winnipeg was made in nine days and the rebellion was quickly put down. Perhaps because the government was grateful for this service, they subsequently re-organized the CPR’s debt and provided a further ,000,000 loan. This money was desperately needed by the CPR. On November 7, 1885 the Last Spike was driven at Craigellachie, British Columbia, making good on the original promise. Four days earlier, the last spike of the Lake Superior section was driven in just west of Jackfish, Ontario. While the railway was completed four years after the original 1881 deadline, it was completed more than five years ahead of the new date of 1891 that Macdonald gave in 1881.
The successful construction of such a massive project, although troubled by delays and scandal, was considered an impressive feat of engineering and political will for a country with such a small population, limited capital, and difficult terrain. It was by far the longest railway ever constructed at the time. It had taken 12,000 men, 5,000 horses, and 300 dog-sled teams to build the railway.
Meanwhile, in Eastern Canada, the CPR had created a network of lines reaching from Quebec City to St. Thomas, Ontario by 1885, and had launched a fleet of Great Lakes ships to link its terminals. The CPR had effected purchases and long-term leases of several railways through an associated railway company, the Ontario and Quebec Railway (O&Q). The O&Q built a line between Perth, Ontario, and Toronto (completed on May 5, 1884) to connect these acquisitions. The CPR obtained a 999-year lease on the O&Q on January 4, 1884. Later, in 1895, it acquired a minority interest in the Toronto, Hamilton and Buffalo Railway, giving it a link to New York and the northeast US.
So many cost-cutting shortcuts were taken in constructing the railway that regular transcontinental service could not start for another seven months while work was done to improve the railway’s condition. However, had these shortcuts not been taken, it is conceivable that the CPR might have had to default financially, leaving the railway unfinished. The first transcontinental passenger train departed from Montreal’s Dalhousie Station, located at Berri Street and Notre Dame Street on June 28, 1886 at 8:00 p.m. and arrived at Port Moody on July 4, 1886 at noon. This train consisted of two baggage cars, a mail car, one second-class coach, two immigrant sleepers, two first-class coaches, two sleeping cars, and a diner.
By that time, however, the CPR had decided to move its western terminus from Port Moody to Gastown, which was renamed "Vancouver" later that year. The first official train destined for Vancouver arrived on May 23, 1887, although the line had already been in use for three months. The CPR quickly became profitable, and all loans from the Federal government were repaid years ahead of time.
In 1888, a branch line was opened between Sudbury and Sault Ste. Marie where the CPR connected with the American railway system and its own steamships. That same year, work was started on a line from London, Ontario to the American border at Windsor, Ontario. That line opened on June 12, 1890.
The CPR also leased the New Brunswick Railway for 999 years and built the International Railway of Maine, connecting Montreal with Saint John, New Brunswick in 1889. The connection with Saint John on the Atlantic coast made the CPR the first truly transcontinental railway company and permitted trans-Atlantic cargo and passenger services to continue year-round when sea ice in the Gulf of St. Lawrence closed the port of Montreal during the winter months.
By 1896, competition with the Great Northern Railway for traffic in southern British Columbia forced the CPR to construct a second line across the province, south of the original line. Van Horne, now president of the CPR, asked for government aid, and the government agreed to provide around .6 million to construct a railway from Lethbridge, Alberta through Crowsnest Pass to the south shore of Kootenay Lake, in exchange for the CPR agreeing to reduce freight rates in perpetuity for key commodities shipped in Western Canada. The controversial Crowsnest Pass Agreement effectively locked the eastbound rate on grain products and westbound rates on certain "settlers’ effects" at the 1897 level. Although temporarily suspended during World War I, it was not until 1983 that the "Crow Rate" was permanently replaced by the Western Grain Transportation Act which allowed for the gradual increase of grain shipping prices. The Crowsnest Pass line opened on June 18, 1899.
Practically speaking, the CPR had built a railway that operated mostly in the wilderness. The usefulness of the Prairies was questionable in the minds of many. The thinking prevailed that the Prairies had great potential. Under the initial contract with the Canadian Government to build the railway, the CPR was granted 25,000,000 acres (100,000 km²). Proving already to be a very resourceful organization, Canadian Pacific began an intense campaign to bring immigrants to Canada.
Canadian Pacific agents operated in many overseas locations. Immigrants were often sold a package that included passage on a CP ship, travel on a CP train, and land sold by the CP railway. Land was priced at .50 an acre and up. Immigrants paid very little for a seven-day journey to the West. They rode in Colonist cars that had sleeping facilities and a small kitchen at one end of the car. Children were not allowed off the train, lest they wander off and be left behind. The directors of the CPR knew that not only were they creating a nation, but also a long-term source of revenue for their company.
During the first decade of the twentieth century, the CPR continued to build more lines. In 1908 the CPR opened a line connecting Toronto with Sudbury. Previously, westbound traffic originating in southern Ontario took a circuitous route through eastern Ontario.
Several operational improvements were also made to the railway in western Canada. In 1909 the CPR completed two significant engineering accomplishments. The most significant was the replacement of the Big Hill, which had become a major bottleneck in the CPR’s main line, with the Spiral Tunnels, reducing the grade to 2.2% from 4.5%. The Spiral Tunnels opened in August. On November 3, 1909, the Lethbridge Viaduct over the Oldman River valley at Lethbridge, Alberta was opened. It is 1,624 metres (5,327 ft) long and, at its maximum, 96 metres (314 ft) high, making it the longest railway bridge in Canada. In 1916 the CPR replaced its line through Rogers Pass, which was prone to avalanches, with the Connaught Tunnel, an eight km (5 mile) long tunnel under Mount Macdonald that was, at the time of its opening, the longest railway tunnel in the Western Hemisphere.
The CPR acquired several smaller railways via long-term leases in 1912. On January 3, 1912, the CPR acquired the Dominion Atlantic Railway, a railway that ran in western Nova Scotia. This acquisition gave the CPR a connection to Halifax, a significant port on the Atlantic Ocean. The Dominion Atlantic was isolated from the rest of the CPR network and used the CNR to facilitate interchange; the DAR also operated ferry services across the Bay of Fundy for passengers and cargo (but not rail cars) from the port of Digby, Nova Scotia to the CPR at Saint John, New Brunswick. DAR steamships also provided connections for passengers and cargo between Yarmouth, Boston and New York.
On July 1, 1912, the CPR acquired the Esquimalt and Nanaimo Railway, a railway on Vancouver Island that connected to the CPR using a railcar ferry. The CPR also acquired the Quebec Central Railway on December 14, 1912.
During the late 19th century, the railway undertook an ambitious program of hotel construction, building the Château Frontenac in Quebec City, the Royal York Hotel in Toronto, the Banff Springs Hotel, and several other major Canadian landmarks. By then, the CPR had competition from three other transcontinental lines, all of them money-losers. In 1919, these lines were consolidated, along with the track of the old Intercolonial Railway and its spurs, into the government-owned Canadian National Railways.
When World War I broke out in 1914, the CPR devoted resources to the war effort, and managed to stay profitable while its competitors struggled to remain solvent. After the war, the Federal government created Canadian National Railways (CNR, later CN) out of several bankrupt railways that fell into government hands during and after the war. CNR would become the main competitor to the CPR in Canada.
The Great Depression, which lasted from 1929 until 1939, hit many companies heavily. While the CPR was affected, it was not affected to the extent of its rival CNR because it, unlike the CNR, was debt-free. The CPR scaled back on some of its passenger and freight services, and stopped issuing dividends to its shareholders after 1932.
One highlight of the 1930s, both for the railway and for Canada, was the visit of King George VI and Queen Elizabeth to Canada in 1939, the first time that the reigning monarch had visited the country. The CPR and the CNR shared the honours of pulling the royal train across the country, with the CPR undertaking the westbound journey from Quebec City to Vancouver.
Later that year, World War II began. As it had done in World War I, the CPR devoted much of its resources to the war effort. It retooled its Angus Shops in Montreal to produce Valentine tanks, and transported troops and resources across the country. As well, 22 of the CPR’s ships went to warfare, 12 of which were sunk.
After World War II, the transportation industry in Canada changed. Where railways had previously provided almost universal freight and passenger services, cars, trucks, and airplanes started to take traffic away from railways. This naturally helped the CPR’s air and trucking operations, and the railway’s freight operations continued to thrive hauling resource traffic and bulk commodities. However, passenger trains quickly became unprofitable.
During the 1950s, the railway introduced new innovations in passenger service, and in 1955 introduced The Canadian, a new luxury transcontinental train. However, starting in the 1960s the company started to pull out of passenger services, ending services on many of its branch lines. It also discontinued its transcontinental train The Dominion in 1966, and in 1970 unsuccessfully applied to discontinue The Canadian. For the next eight years, it continued to apply to discontinue the service, and service on The Canadian declined markedly. On October 29, 1978, CP Rail transferred its passenger services to VIA Rail, a new federal Crown corporation that is responsible for managing all intercity passenger service formerly handled by both CP Rail and CN. VIA eventually took almost all of its passenger trains, including The Canadian, off CP’s lines.
In 1968, as part of a corporate re-organization, each of the CPR’s major operations, including its rail operations, were organized as separate subsidiaries. The name of the railway was changed to CP Rail, and the parent company changed its name to Canadian Pacific Limited in 1971. Its express, telecommunications, hotel and real estate holdings were spun off, and ownership of all of the companies transferred to Canadian Pacific Investments. The company discarded its beaver logo, adopting the new Multimark logo that could be used for each of its operations.
In 1984 CP Rail commenced construction of the Mount Macdonald Tunnel to augment the Connaught Tunnel under the Selkirk Mountains. The first revenue train passed through the tunnel in 1988. At 14.7 km (9 miles), it is the longest tunnel in the Americas.
During the 1980s, the Soo Line, in which CP Rail still owned a controlling interest, underwent several changes. It acquired the Minneapolis, Northfield and Southern Railway in 1982. Then on February 21, 1985, the Soo Line obtained a controlling interest in the Milwaukee Road, merging it into its system on January 1, 1986. Also in 1980 Canadian Pacific bought out the controlling interests of the Toronto, Hamilton and Buffalo Railway (TH&B) from Conrail and molded it into the Canadian Pacific System, dissolving the TH&B’s name from the books in 1985. In 1987 most of CPR’s trackage in the Great Lakes region, including much of the original Soo Line, were spun off into a new railway, the Wisconsin Central, which was subsequently purchased by CN.
Influenced by the Canada-U.S. Free Trade Agreement of 1989 which liberalized trade between the two nations, the CPR’s expansion continued during the early 1990s: CP Rail gained full control of the Soo Line in 1990, and bought the Delaware and Hudson Railway in 1991. These two acquisitions gave CP Rail routes to the major American cities of Chicago (via the Soo Line) and New York City (via the D&H).
During the next few years CP Rail downsized its route, and several Canadian branch lines were either sold to short lines or abandoned. This included all of its lines east of Montreal, with the routes operating across Maine and New Brunswick to the port of Saint John (operating as the Canadian Atlantic Railway) being sold or abandoned, severing CPR’s transcontinental status (in Canada); the opening of the St. Lawrence Seaway in the late 1950s, coupled with subsidized icebreaking services, made Saint John surplus to CPR’s requirements. During the 1990s, both CP Rail and CN attempted unsuccessfully to buy out the eastern assets of the other, so as to permit further rationalization. As well, it closed divisional and regional offices, drastically reduced white collar staff, and consolidated its Canadian traffic control system in Calgary, Alberta.
Finally, in 1996, reflecting the increased importance of western traffic to the railway, CP Rail moved its head office to Calgary from Montreal and changed its name back to Canadian Pacific Railway. A new subsidiary company, the St. Lawrence and Hudson Railway, was created to operate its money-losing lines in eastern North America, covering Quebec, Southern and Eastern Ontario, trackage rights to Chicago, Illinois, as well as the Delaware and Hudson Railway in the U.S. Northeast. However, the new subsidiary, threatened with being sold off and free to innovate, quickly spun off losing track to short lines, instituted scheduled freight service, and produced an unexpected turn-around in profitability. After only four years, CPR revised its opinion and the StL&H formally re-amalgamated with its parent on January 1, 2001.
In 2001, the CPR’s parent company, Canadian Pacific Limited, spun off its five subsidiaries, including the CPR, into independent companies. Canadian Pacific Railway formally (but, not legally) shortened its name to Canadian Pacific in early 2007, dropping the word "railway" in order to reflect more operational flexibility. Shortly after the name revision, Canadian Pacific announced that it had committed to becoming a major sponsor and logistics provider to the 2010 Olympic Winter Games in Vancouver, British Columbia.
On September 4, 2007, CPR announced it was acquiring the Dakota, Minnesota and Eastern Railroad from its present owners, London-based Electra Private Equity. The transaction is an "end-to-end" consolidation, and will give CPR access to U.S. shippers of agricultural products, ethanol, and coal. CPR has stated its intention to use this purchase to gain access to the rich coal fields of Wyoming’s Powder River Basin. The purchase price is US.48 billion, and future payments of over US.0 billion contingent on commencement of construction on the smaller railroad’s Powder River extension and specified volumes of coal shipments from the Powder River basin. The transaction was subject to approval of the U.S. Surface Transportation Board (STB), which was expected to take a year. On October 4, 2007, CPR announced it has completed the financial transactions required for the acquisition, placing the DM&E and IC&E in a voting trust with Richard Hamlin appointed as the trustee. CPR planned to integrate the railroads’ operations once the STB approves the acquisition. The merger was completed as of October 31, 2008.
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