The promoters moved quickly. They sold the bonds on the international market based on 350 miles of railway to be built for $20,000 per mile plus $400,000 for the Edmonton terminals. The issue was oversubscribed. The bonds sold at 110 but the province received only part. The sum of $7,400,000 was deposited in three separate Canadian bank accounts.2
Opposition and government members in the Alberta Legislature began to raise questions about the contract with the A&GWR. They asked about construction standards, government supervision of standards and financing. W.H. Cushing, Minister for Public Works, expressed concern that engineers in his department had not been consulted about the A&GWR plans and specifications. In February 1910 Cushing resigned from his cabinet position.3
In March 1910 Premier Rutherford announced his intention to appoint a royal commission to determine if any government officials or members of the legislature had any connection with the A&GWR. The Premier hoped that this would clear the government and help to unify his Liberal government that had become divided over the handling of the A&GWR.4 On May 26, 1910 Lieutenant Governor Bulyea announced the resignation of A.C. Rutherford as Premier. Furthermore, Bulyea had asked Arthur L. Sifton to form a government.5
Sifton favoured building railways into settled areas rather than spending money to support pioneer roads like the A&GWR.6 Sifton introduced a bill to the Legislature that would allow the A&GWR bond money in the banks to be transferred into the provincial treasury and then used for other public works projects.7 The bill passed in December 1910. The banks however refused to release the funds.8 The affairs of the A&GWR were thereby tied up until 1913 when the Privy Council upheld the appeal of the banks and the Government of Alberta was forced to repeal the 1910 Act.9 In the 1911–12 session Sifton appeared to moderate his stance on railway development as his government announced further guarantees to support railway building throughout the province. This included a guarantee of bonds to the Canadian Northern Western Railway to support the building of a railway from Athabasca to Fort McMurray with a branch line to the east end of Lac La Biche.10
In September 1913 Premier Sifton announced to the Legislature that he had reached an agreement with J.D. McArthur to take over the Alberta and Great Waterways Railway.11
The McArthur interests submitted a route map to the Department of Railways of the Government of Alberta that described the line passing through the community of Lac La Biche at the east end of the lake.12 Location and survey work began immediately. The turning of the first sod took place at Carbondale on the ED&BCR line some 12 miles north of Edmonton on January 3, 1914. This was the second start for the railway as approximately five miles of grade had been built in 1909 under the original contract. The level terrain to Lac La Biche allowed the work to proceed rapidly. By September 1, 1914, 95 miles of grade had been completed and 25 miles of track had been laid. By December 20, 1914 grading had been completed to a point 23 miles beyond Lac La Biche. On February 6, 1915 the track had reached the end of the grade and in going so had passed through the settlement at Lac La Biche.13
Between Edmonton and Egremont the new line passed through well settled lands. The railway appeared to attract settlement to the area between Egremont and Abee as a great deal of land in this area had been renewed for settlement by January 1, 1916.14 Much of the land from Abee to Ellscott remained unoccupied. Land had been renewed for settlement along the line between Ellscott and Bondiss. Beyond Bondiss the line crossed unsettled land again until it reached Lac La Biche. Over a three-year period this settlement pattern did not change.15
In the Boyle area the line deviated from the railway’s intended route as described in the A&GWR Act. Instead it took a more easterly course and headed directly to the east end of Lac La Biche so that it provided the historic Hudson’s Bay community of Lac La Biche, established in 1798, with direct main line railway service rather than branch line service. While inconsistent with the route outlined in the A&GWR Act this route deviation did follow the 1914 route plan filed with the Alberta Department of Railways and Telephones.16 W.R. Smith the Chief Engineer for the railway took the firm position before an inquiry that engineering factors had determined the need for the altered route plan.17 This action left the settlers in the Plammondonville (Plammondon) area without a railway. An Act to amend the A&GWR Act formally authorizing the new route to Lac La Biche passed through the Alberta Legislature in April 1915 after the track had been laid down through Lac La Biche.18
At Lac La Biche railway divisional point facilities were laid out. McArthur built a small but very distinctive hotel on the lakeshore. It opened in the summer of 1916. For part of that summer the railway offered daily service between Edmonton and Lac La Biche with a gasoline rail car in order to attract guests to the hotel and the outdoor recreational activities in the area.19 In the following summers the rail service frequency declined significantly. The hotel never did become a successful venture. A significant commercial fishing industry flourished for a few years as a result of the arrival of the railway. Beyond Lac La Biche agricultural settlement clustered around the bay at Barregat. Beyond that point the railway’s financial viability rested solely on its reaching the intended terminal on the river bank at or near Fort McMurray.
By February 26, 1915 the track had been laid down to a point 23 miles beyond Lac La Biche (mile 135). Grading work pushed on in 1915 but the muskeg conditions slowed progress. On November 20, 1915 track laying resumed from mile 135 and by January 5, 1916 it had reached mile 182 some 17 miles south of the Christina River.20 During the grading season of 1916 grading work progressed to the end of the line at Fort McMurray.21 The labour shortage caused by the war effort hampered progress. Labourers worked in very harsh conditions for low wages. Foremen pressed them to work faster. Demands for better wages were sometimes met but occasional strikes did occur. On one occasion in the summer of 1916, a group of striking labourers who had been working on the grade some considerable distance north of Lac La Biche was forced to walk back to Edmonton to collect their wages.22 Work did continue. By February 23, 1917 reports stated that rails had reached mile 232, by March 5, mile 240 and by April 4, mile 264.23 Track laying began again in the autumn of 1917 but very little was accomplished even though work was nearing the Clearwater River valley.24 It was January 1919 before another five miles of track was laid down. This brought the line to the edge of the Clearwater River valley at about mile 274.25 The unstable grade on the hill representing the final ten or so miles into Fort McMurray halted further track laying activity.
Upon reaching this point it became possible for the railway to offer revenue service on the 160 miles of track north of Lac La Biche. In July 1919 the A&GWR secured the mail contract between Edmonton and Fort McMurray. Previously mail had gone from Edmonton to Athabasca by rail, motor boat on the Athabasca River to House River and then by portage to Fort McMurray. The A&GWR carried the mail by regular train to Lac La Biche then transferred it to a contractor who carried it by gasoline speeder to the end of the track. From this point a wagon took the mail the eight miles down to the Clearwater River and a motor launch carried it to its final destination.26 During 1919 and 1920 the railway advertised occasional train service to mile 274.27 These trips from Edmonton to the end of track took six to nine days to complete as much of the line north of Lac La Biche had not been ballasted and much of it crossed unstabled muskeg.28
Financial problems plagued the railway too. McArthur’s attempts to sell the railway had failed. The railway had not paid interest on the bonds and all of the $7,400.000 in the bond fund had been exhausted. Since the government of Alberta had guaranteed the bonds, it had to act. In July 1920 the government of Alberta by agreement with J.D. McArthur took over the railway company free of all encumbrances by the Union Bank and J.D. McArthur Company Ltd. The contractor began operating it through the Department of Railways and Telephones. A year later the government confirmed the agreement through an Act of the Legislature and appointed Premier Charles Stewart as President of the Company and named four other cabinet members as directors of the Company.
Immediately after the agreement was signed in 1920 the government began rehabilitating and operating the line as far as Lac La Biche. It placed the rehabilitation and completion of the Lac La Biche to Fort McMurray section in the hands of the Northern Construction Company. These contractors immediately began work on a new grade down to the Clearwater River via Deep Creek (Saprae Creek) as the original grade via the Christina and Clearwater River valley had proven to be very unstable and therefore costly to rehabilitate and maintain. On November 10, 1921 the track reached the mouth of Deep Creek at the Clearwater River. Here terminal facilities were built and the site was named Waterways. A spur allowed box-cars to be taken to the river bank where freight could be transferred to steamships and barges. The A&GWR could finally carry out its intended mandate. The track was not extended to Fort McMurray because wharves there would be subjected to annual flooding and ice damage.29 In 1925 the railway was extended another 3.5 miles along the original McArthur grade to a new terminal just short of Hangingstone Creek. The grade did have to be built up so that it was above the high water level of the Clearwater River before the track extension was laid down. A spur track at the new Waterways station served the new freight transfer warehouses on the Clearwater River. The track was extended principally to better serve the growing salt industry in the area.30
The railway’s advance toward Waterways began to affect shipping patterns to the north as early as 1920. In that year the last scows were taken from Athabasca Landing and the tramway on the island at Grand Rapids was taken up.31 By 1920 northern shipping companies were transferring their far north freighting operations and facilities from the Peace River to Waterways.32 Trans-shipment facilities at Waterways allowed the northern transportation system to handle heavy machinery. This stimulated oil drilling activities near Fort Norman on the MacKenzie River and the development of gold mining activities in the Great Slave Lake area. Both the federal and provincial governments encouraged research into the tar sands at Fort McMurray.33
By 1929 the government had invested some 3.6 million in the A&GWR to bring it up to a strong enough business operation to make it attractive to private enterprise. In that year it became part of the newly formed Northern Alberta Railways.
As part of the NAR the line made a significant contribution to the World War II effort by hauling heavy equipment and supplies for the Canol pipeline. It also played a significant role in freighting heavy equipment for the developing tar sands project at Fort McMurray during the 1970s. Its role as an access railway to Canada’s Arctic region ceased in 1964 when the Great Slave Lake Railway opened from Roma Junction north of Peace River to Hay River.