Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/189138
Authors: 
Carlos, Ann
Lewis, Frank
Year of Publication: 
1991
Series/Report no.: 
Queen's Economics Department Working Paper 814
Abstract: 
This paper addresses whether government subsidies to two Canadian railroads built in the 1850s - the Grand Trunk and the Great Western - made economic sense. The historical literature suggests that these railroads, although privately unprofitable, were socially profitable. Through a careful study of company records, we find that the Great Western was socially profitable and that a relatively small additional subsidy would also have made it privately profitable. But the Grand Trunk was privately unprofitable and probably socially unprofitable as well. The form of the subsidy offered the railroads - loan guarantees - and the consequences, have a depressingly up-to-date ring. While the Great Western received small amounts of limited guarantees, the Grand Trunk received considerable aid. The Grand Trunk was then encouraged to issue large amounts of heavily discounted debt, which contributed to its eventual failure.
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.