Crow subsidy

The Crow Rate, or Crowsnest Freight Rate, was a rail transportation subsidy benefiting farmers on the Canadian Prairies and manufacturers in Central Canada by rate requirements imposed on the Canadian Pacific Railway (CPR) by the Canadian government in exchange for financing and other benefits.

In the late 19th century, mineral strikes in southeastern BC near Nelson, Ainsworth, Rossland, Kaslo, Kimberley and Moyie inspired American 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 Crowsnest 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 "Crowsnest 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".

The Crow Rate was suspended by the CPR during World War One and reinstated in 1922.

Although popular with farmers exporting grains, these reduced rates were not cost-effective for the railway and provided central Canadian manufacturers and grain ports with an unfair advantage. 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.

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