Abbott incorporated the second Carillon and Grenville Railway Company on May 4, 1859. The charter stated that the Montreal & Bytown, its bondholders, creditors or a new company could re-appropriate the Carillon & Grenville if construction of a Montreal to Ottawa railway was resumed.
Abbott rehabilitated the C&G and about 400 yards (366 m.) of new track at Carillon and Grenville was laid to provide better access to the steamers. Preparations were made to carry out extensions to the east and west.
On May 19, 1860 the Carillon & Grenville obtained statutory powers to build east to a connection with the Grand Trunk Railway at Point Claire or with the North Shore Railway on the north side of the Riviere des Prairies. It was also given the power to build west to Ottawa if the Vaudreuil Railway Company had not done so within two years. The Montreal & Bytown's land grant rights were transferred to the Carillon & Grenville at this time.
In 1861 parliament authorized the Carillon & Grenville to build to a connection with the Montreal and Champlain Railroad Company at Lachine. All of these extension plans fell through and the only thing that saved the railway was the growing importance of Ottawa and the rapid expansion of river shipping.
Until January 1, 1855 Ottawa was called Bytown. Even with a new name, it was still basically a small, rough-and-tumble lumber town that seemed destined to obscurity. Ottawa’s place in the sun came on December 31, 1857 when Queen Victoria announced that Ottawa would be the new Canadian capital. Ottawa was now an important destination and the Ottawa River was a key route to it. Many travellers preferred to travel from Ontario points to Ottawa via Montreal because of the poor service on the Rideau Canal and on the only direct rail service to Ottawa, the Prescott & Bytown.
River traffic increased enormously. The Steamboats were large and even luxurious and for years managed to compete successfully with the railways. One would think that the Carillon & Grenville would share in this prosperity but it didn’t. The railway’s share of the through passenger fares was so small that it could do little more than meet operating expenses. Modernization was out of the question.
Throughout much of its life, operations on the Carillon & Grenville followed just about the same simple pattern. As a portage railway it only operated during the shipping season so there was no winter operation. There were never any turning facilities on the railway so the locomotives permanently faced west. They would run around their trains at Grenville and backup towards Carillon on the eastbound trip. One round trip per day was the norm so the only time when two locomotives could be seen under steam at the same time was when a work train was required out on the line. There was no freight service.
In 1864 the Ottawa River Navigation Company was incorporated and it bought the Carillon & Grenville from Abbott. There were rumours at the time that Abbott and his associates made a hefty profit.
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