Trains are awesome! My country, Canada, wouldn't exist without the efforts of the Canadian Pacific Railway laying the track from east to west. Canada's geography pulls almost irresistibly north to south, so the train routes became the mysterious circulation system of a body that still seems only to exist in our minds...
(But there is terrible human cost to this accomplishment. When British Columbia joined Confederation in 871, Canada agreed to build a rail line all the way to the Pacific coast. This was accomplished in just over four years— largely due to Chinese railway workers. Between 1881 and 1885, over 17,000 Chinese men came to Canada to work as labourers on the construction of the western section of the transcontinental railroad. Approximately 700 of them were killed in industrial accidents largely due to unsafe working conditions. Chinese labourers worked in harsh conditions and for less than half the pay of their white coworkers.
So once again, history is full of romance—when you're white and get to write your version of history...)
Train travel in Canada hangs by a thread... A Crown corporation, VIA Rail, was created in the 1970's with the mandate to maintain train routes, using track jointly owned by the Canadian National and Canadian Pacific Railways, but the way it's set up constrains its ability to fulfill its mandate as the existing routes are mainly used for freight, and it has been forced to abandon unprofitable routes (retaining these was largely the reason for creating VIA in the first place). As you point out, other competing forms of transport have had a disastrous effect on demand for train travel. VIA Rail has never achieved profitability and relies heavily on subsidies. High-speed rail might be a way forward, but would involve massive investment in new track and there is no interest from the private sector in partnering. Basically we have routes in the Quebec - Windsor corridor, the famous glass-domed train that travels westward through the Rockies (very much a tourist-based route), and I believe some routes into remote areas where building roads is not an option.
We have to start thinking of the environmental and social benefits to train travel. If we were able to connect a vast country with thousands of miles of railways, surely we can underwrite local routes for the benefit of people living in remote areas. Transport is a public benefit, and we need to start thinking this way again, not just in terms of profit and loss.
DR