On September 6, 1897, Ottawa agreed to provide a $3.4 million subsidy to Canadian Pacific Railway (CPR) to build a rail line through the Crow's Nest Pass, from Lethbridge, Alberta to Nelson, British Columbia. This subsidy allowed CPR to compete directly against American railroad companies transporting minerals out of the Kootenay region of British Columbia; in return, the CPR was obligated to fixed grain transportation rates in perpetuity for western Canadian farmers hauling to the port of Thunder Bay. These rates, known as the Crow's Nest Pass Agreement and Rates, were based on the distance between specific delivery points to Thunder Bay. In the early 1920s, legislation was passed extending the rate set in 1897 to all shipping points on the prairies, to all railways, and to additional destination points. This legislation changed the system from one governed by a two-party agreement between the federal government and CPR, to one where parliament unilaterally imposed a national policy by statute.
By the 1960s, the cost of shipping exceeded the revenue railways were seeking. As a result, the railways began to defer investment in grain transportation infrastructure, and the lines in western Canada were less able to support the demands of increased grain exports. Between 1972 and 1985, provincial and federal governments attempted to alleviate the situation by purchasing or leasing more than 15,000 covered, steel hopper cars for the railways to use in the movement of grain. In addition, the provincial governments of Alberta and Saskatchewan each purchased 1,000 hopper cars, and the Canadian Wheat Board another 2,000. The 19,120 publicly owned cars were augmented by cars owned and leased by the railway. The purchase of these hopper cars was an attempt by all parties to alleviate some of the increasing financial burden that railway companies were experiencing.
The Crow's Nest Pass Agreement rates were finally eliminated following the passage of the Western Grain Transportation Act (WGTA) in 1983. The WGTA increased the freight rates so that the railways would have enough revenue to maintain the grain transportation system. The Act committed Ottawa to paying a share of grain rates, with farmers paying a gradual increasing proportion of the costs. The federal government's portion of the payment to the railways came to be known as the Crow benefit; it too was eliminated in 1995, leaving the responsibility of grain transportation rates to the producer.