The major factor of the linking of Canada was the Canadian Pacific Railway (CPR). The CPR began in 1880 and was completed in 1885. The significance of this railway was that it linked Montreal and central Canada to the west coast. Eastward, it linked Montreal with the Maritimes, which was part of MacDonald's National Policy. The USA took this development as a threat. The Canadian Pacific Railway is politically and economically important for developing the status of Canada.
There were extended negotiations between the supporters of MacDonald's National Policy, led by the owner the of Bank of Montreal, George Stephen, and the owner of the Hudson's Bay Company, Donald Smith who helped raise money in England. This group was under British Canadian control and the offers were reasonable. The CPR had 25 million acres of fertile western land, near to the rail line and also received 25 million dollars from the government.
The costs varied greatly from the original estimations and it became harder to raise capital. The last iron spike was hammered in by Donald Smith as the western moving team met with the eastern moving team from Port Moody.
In 1871, the Canadian government under MacDonald suggested building a railway from Central Canada to link the west and the east together. In 1873, the changed government banned MacDonald's contract for building the railway. Five years later, MacDonald came back to power and initiated a new association to build the railway. In 1880, a syndicate was arranged to start building the railway, until the CPR was making 10% of its invested capital. In 1885, the last spike was hammered (some reports say that it is gold and some say it is iron). Twelve years later, the freight rates were reduced because of the Crows Nest Pass Agreement.