One Way to Run a Railroad

Toronto's usually crusty Royal York hotel has hired leotard-clad waitresses to serve customers in a new "Black Knight" room, and Quebec's courtly Chateau Frontenac has replaced some Victorian parlors with a smart new cocktail lounge. Is that any way to run a railroad? It seems to be, because these two changes are symbolic of a great transformation that is sweeping the owner of the hotels: the Canadian Pacific Railway.

A vital force in opening up the Canadian West, the investor-owned C.P.R. was long the slumbering giant of Canadian business. It took pride in being the "world's most complete transportation system," with $2.9 billion in assets, including its own 17,000-mile railroad network, a steamship company, an airline and even a chain of hotels to serve them. But until recently, it got a very small profit return on these vast assets; it allowed its operations to become antiquated, competing air and highway traffic to steal away earnings and its ships, hotels and airline to slip into the red. Even worse, it sold off or leased much of its 25 million acres of valuable oil, gas and mineral and timber land, largely because it was reluctant to compete directly with some of its own freight customers.

The Awakening. Such was the direction of the road when a veteran Canadian Pacific railman named Norris Roy

("Buck") Crump moved up to the road's presidency nine years ago. Crump has awakened the giant. Now the Canadian financial community is watching its performance--and its potential--with deep interest.

The new president moved slowly at first, was accused of copycat management because he adopted many innovations of the government-owned Canadian National. But Crump steadily picked up momentum, has become a hard man to brake. He has entirely dieselized the road, shorn off many of its unprofitable branch lines and short-haul passenger trains, aggressively adopted piggybacking and bought the world's largest railroad-owned computer to direct freight and handle accounting. Result: in 1963's expanding economy, after a monotonous downgrade run, C.P.R.'s earnings rose 24% to $40.1 million, the highest since 1957. Canadian Pacific Airlines also broke through the profit barrier to earn $350,000 in 1963 largely because of a wise investment in five DC-8 jets; even Canadian Pacific's hotels earned $1,100,000.

Spinning Markets. Under Crump, C.P.R. also rounded out its transportation empire by absorbing Smith Transport, Canada's biggest trucking firm. This fall it will begin construction of a new hotel in Montreal, has faced up to the motor age by taking on the management of motels. But its greatest growth could come from its considerable remaining land holdings, whose rich resources the road has now begun to exploit. The newly formed Canadian Pacific Oil and Gas, Ltd., earned $5,600,-000 for C.P.R. in 1963, and another stripling subsidiary, Pacific Logging, contributed $253,000. A 51% interest in Consolidated Mining and Smelting, the road's biggest subsidiary, last year brought in $1 million in profits. With the Canadian stock markets spinning as a result of mining finds at Timmins and the search for new finds, the railroad that opened up the West now hopes to find new sources of wealth under some of its land.

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