3. Capital Renewal And Expansion

The three vessels purchased from Hamilton's a editors formed the nucleus of a fleet which at its peak numbered thirteen. This expansion reveals much about the opportunities afforded a joint stock company for financing growth.

The traditional method of purchase was still available to the firm. This involved payment in a limited number of large sums over a period of three to four years. This might be secured by a mortgage either initially or after a default in payment was made. Typically the mortgage would be taken by the vendor, although depending on the state of his financial affairs, a bank might intervene. The Canadian Inland Steam Navigation Company was well placed with respect to the sympathies of bankers given that its president was also president of the Merchant's Bank and a director of the Commercial Bank, its vice- president after 1864 a director of the Commercial Bank, and its general manager the ex-president of that same bank.(29) In addition it shared a number of directors with the Merchant's Bank.(30) The relationship between the steamboat company and its bankers ensured that the firm would never want for short term accommodation.

While not authorized by its charter to sell bonds for long term financing, the issuance of stock raised two new possibilities. The first of these was the exchange of real capital, particularly steamboats, for shares in the company. While in many respects this paralleled giving an owner a vote in the deliberations of the managing committee of a cartel, the option did not exist here for pulling one's steamboat out after a year. Rather the stock had to be sold, after 1867 largely through the Montreal brokers. A further alternative for raising funds was to issue additional shares. Even though the act of incorporation limited the amount available it was possible to have this boundary extended by Parliament. All these various methods would be used by the company in providing money for the renewal and expansion of the company's steamboat capital.

The Passport,Kingston and Champion were acquired by means of a mortgage granted them by Hamilton's assignees.(31) If these vessels were to be secured before the beginning of navigation, speed was essential. Consequently the purchase was made before the paid-up capital was sufficient to provide cash. To fill out their first line, the directors chartered the two other vessels used in the Mail Line the previous year, the Banshee and the New Era. With minority holdings in one and complete control of the other steamboat, company vice-president O. S. Gildersleeve may also have influenced this decision.(32)

For the Canadian Inland Steam Navigation Company, chartering would only be a short term solution, Before long the decision had been made to replace those aging wooden vessels with new iron ones. Following the course charted by the Kingston, their iron hulls were fabricated in Glasgow shipyards, shipped to Canada and assembled in Montreal. And like the Kingston and Passport they were limited to the maximum dimensions of the St. Lawrence canal locks and designed to deserve the appellation "luxurious." Four of this plan were built for the company: the Grecian in 1863, the Spartan in 1864, the Corsican in 1870 and the Bohemian in 1873.(33) These displaced the wooden vessels on the company's central route, the Mail Line. Lack of evidence to the contrary suggests that they were paid for out of reserved earnings.

Although upgrading the company's Mail Line fleet was a major priority, considerable attention was also given to expansion. The first move in this direction was the acquisition of the Magnet.(34) Apart from accounting for most of Milloy's shares in the firm, the Magnet represented a commitment to the development of the resorts of the lower St. Lawrence. In the decade following the American civil war this trade thrived. Much of this was due to the patronage of many Canadians who, following the examples of the Governors General and politicians, flocked to the sea shore during the height of the summer.(35) So prosperous was it in fact that despite the addition of a second vessel, the company's boats drew opposition from both the Richelieu Company and a stray vessel of the St. Lawrence Tow Boat Company. The differences with the Richelieu Company were settled amicably but the stray eventually had to be purchased.(36)

This acquisition was part of the firm's most important expansion. In all, six vessels were acquired in the fall of 1867. The move necessitated an amendment to the act of incorporation authorizing the sale of 50% more stock. At the same time the 'Inland Steam' was dropped from the corporate title.(37) The primary motivation for the purchases was to eliminate competition. Fortunately, the Canadian Navigation Company was able to raise the requisite funds without driving itself deeply into debt.

Of the six vessels the company obtained, five had been running in opposition the previous season. The exception was the Corinthian, an iron-hulled vessel built along the same lines as the boats in the Mail Line for the company's vice-president. The North Shore - Rochester route on which she operated apparently provided insufficient business for a vessel of her dimensions because Charles Gildersleeve commissioned a smaller steamboat and sold the Corinthian to the Canadian Navigation Company.(38) For a second time the Gildersleeves may have taken advantage of their position with the company to dispose of a vessel.

The first of the opposition boats was the Union, which had been running against the Magnet on the Saguenay route. Although constructed of cheaper materials the Union was forty feet longer and possessed an additional deck. Purchased from the St. Lawrence Tow Boat Company for a reported $50,000, five years later it would be returned to the same company when the Canadian Navigation Company withdrew from the Saguenay trade.(39)

Like the Union, most of the vessels purchased from the Ontario Steamboat Company were too large to pass the St. Lawrence canals. While one was an ex-Mail Line vessel, the remaining three had, in their heyday, been the largest American boats on the lake. Now, after twenty seasons they could scarcely provide serious opposition for any of the current Royal Mail line vessels. Nevertheless, the Ontario Steamboat Company had been making noises about expansion, building a $15,000 dry dock at Charlotte, Rochester's lake port, and openly contemplating the construction of new steamboats.(40) While it is now impossible to judge how seriously this threat needed to have been taken, the fact remains that the purchase of the company's real assets, including vessels and dry dock, effectively forestalled the danger of a revived American opposition. Run only at the height of the summer travelling season, the American vessels were gradually disposed of.(41)

Return to Home Port

Chapter 5 appeared in FreshWater.