The National Dream: The Great Railway, 1871-1881 (13 page)

It was the heyday of the uncritical journalistic eulogy, when the title “merchant prince” was a panegyric, not an epithet; and Allan was hailed as the very prince of merchant princes. No muckraking scrivener delved into the working conditions of his employees. It
would be almost two decades before a royal commission rapped the Allan Line on the knuckles for forcing its longshoremen to pay onerous premiums to an insurance company that Allan himself had headed. Basking in the adulation of press and peer group, praised for his business acumen, his public philanthropies and his regular church attendance, Allan could scarcely be blamed if he felt himself to be above other men. He
was
a good businessman – his habits so strict that he never acted on a question which involved the spending of money without first having the transaction reduced to writing; he
was
a good churchman – he often read the lesson or delivered a lecture from the pulpit. He was also imperious and uncommunicative. He had a healthy disdain for the public, the press and the politicians. The first could be ignored, the latter two purchased. He was accustomed to making handsome loans, with vague terms, to newspapers: the Montreal
Gazette
and the influential French journal
La Minerve
were two which enjoyed his largesse. His only real politics, as that acidulous commentator, Goldwin Smith, remarked, were the politics of steamboats and railways. Allan undoubtedly felt himself above politics, more powerful than any politician and certainly more astute. He was a man long accustomed to getting his own way and it certainly never occurred to him, in the summer of 1871, that this very bull-headed self-confidence would frustrate his ambitions and besmirch his name.

It was to Sir Hugh Allan that Sir Francis Hincks dropped the news, early that August, that some Americans were interested in building the Pacific railway. It was too bad, Hincks added casually, that a work of such importance should be entrusted to foreigners. Allan was immediately interested. As the country’s leading shipowner he could benefit, perhaps more than anyone else, from a railway link to the Pacific. It would place him at the head of a transportation colossus and probably bring him other laurels. Allan had just received a knighthood; the successful construction of the Pacific railway would surely lead to a baronetcy and, perhaps more than anything else, the Lord of Ravenscrag, as the press had informally dubbed him, wanted a genuine title.

Allan lost little time in getting in touch with the Americans whose names Hincks had obligingly supplied. In September he met McMullen and Smith in Montreal and proceeded to form a company which, though ostensibly Canadian, would be almost entirely controlled and financed by the Northern Pacific; it was planned, in fact,
that it would be part of the Northern Pacific complex. Allan’s reward was to be a large block of stock, and a secret fund of forty thousand dollars – later raised to fifty thousand – to distribute, in McMullen’s phrase, “among persons whose accession would be desirable.”

McMullen, meanwhile, had held exploratory meetings with Macdonald. He and Allan also met some members of the Cabinet and were told that the Government was not yet ready to enter into negotiations to build the railway. McMullen later insisted that Hincks told him quietly that the Government would have to go through the motions of calling for tenders in order to avoid public censure, a conversation that Hincks himself heatedly denied, though he later admitted he probably did make some reference to the matter. There is no doubt that the aging Hincks, who had been out of the country for some fifteen years, was, more than any other member of the Cabinet, on Hugh Allan’s side in these preliminary negotiations and that he, of all the Cabinet, was the most pro-American and the least concerned about American railway ambitions in Canada. Hincks had had a conversation with Jay Cooke in New York that summer, which convinced the U.S. financier that his scheme of building an American line through the Canadian North West was workable. Now, however, a series of “unauthorized conversations” (Hincks’s phrase) took place between Hincks, McMullen and Allan from which it became clear to the Americans that the way would not be quite so smooth. A serious obstacle existed in the person of Sir George Etienne Cartier, Macdonald’s dynamic but ailing Quebec lieutenant, who had done so much to launch the railway idea in the first place. Carder’s position as solicitor to the politically powerful Grand Trunk Railway, which would not give in gracefully to an upstart, was felt to be a stumbling block. Certainly he was unalterably opposed to any U.S. participation. “As long as I live,” he had declared, “…  never will a damned American company have control of the Pacific.” He was prepared to resign rather than consent to it.

The Americans pressed on. They signed a formal agreement with Allan on December 23, 1871. The details were kept secret for good reason: Jay Cooke explained to his partner that “the American agreement has to be kept dark for the present on account of the political jealousies in the Dominion, and there is no hint of the Northern Pacific connection, but the plan is to cross the Sault Ste. Marie through northern Michigan and Wisconsin to Duluth, then build from Pembina up to Fort Garry and by and by through the Saskatchewan into British Columbia.”

At the same time a pretense would be made that an all-Canadian route was being constructed north of Lake Superior: “The act will provide for building a north shore road to Fort Garry merely to calm public opinion.” Its actual construction, however, was to be delayed for years while the Montreal-Duluth link through the United States was put into operation, financed by Canadian Pacific bonds sold in London to investors who believed they were promoting an Imperial project.

Jay Cooke was then at the peak of his meteoric career – a big, apple-cheeked financier, boyish-looking in spite of his flowing beard – dreaming dreams of a railway empire that would devour half of Canada for America’s manifest destiny. He was known throughout the financial world as the Tycoon, a name that had yet to be vulgarized by American journalism. “As rich as Jay Cooke” was a common comparative of the day and well it might be, for Cooke, the empire builder, lived like a prince of old, surrounded by three hundred costly paintings, in a million-dollar, fifty-two-room Philadelphia palace, popularly known as “Cooke’s castle.” Here prayers were a morning ritual and religious service an evening duty, for Cooke was nothing if not pious. On the Lord’s Day he engaged in a round of church and Sunday school services; on weekdays he worked hard at manipulating newspapers, politicians and governments, all of whom praised him to the skies.

“Manipulate” was a word that came easily to Cooke. The year before he had written to a colleague to invite his aid “in manipulating the annexation of British North America north of Duluth to our country.” It could be done, he suggested, without any violation of treaties but “as a result of the quiet emigration over the border of trustworthy men and their families.” Cooke was secure in the belief that “the country belongs to us naturally and should be brought over without violence or bloodshed.” In this scheme, he planned to use the new Canadian Pacific railway in which he and his associates would have a fifty-five per cent interest. Among other things, Cooke believed that a union between the two railroads (for that is what he ultimately envisaged) would strengthen the Northern Pacific’s chances for a loan in London. It was to have quite the opposite effect, engendering harsh opposition from the more powerful financial group that centred around the rival Grand Trunk. In the end, the opposition to him in London helped precipitate the failure of the Northern Pacific, which crashed in 1873 with a resonance that shook the North American financial world.

But in 1872 no cloud could be detected on the horizon and Jay Cooke’s itinerant commissioner in Canada, Lycurgus Edgerton, found Sir Hugh Allan in a mellow mood. He wished “a perfect entente cordiale from the outset,” Edgerton reported. If it ever occurred to Allan that he was engaged in a secret plot with American businessmen to deliver the Canadian North West into the hands of the United States (for this is what Cooke wanted), he was able to rationalize it magnificently. Business, after all, was business and American investment in Canada was not only desirable but also necessary. At one point he even wrote to General Cass, who was about to become the new president of the American railroad, that “the plans I propose are in themselves the best for the interests of the Dominion, and in urging them on the public I am really doing a most patriotic action.” What was good for Sir Hugh was, in his eyes, good for the country.

By the time this letter was written – with unconscious irony on Dominion Day, 1872 – Allan had for almost six months been engaging in a lavish shopping spree, using the Americans’ money in an attempt to buy up politicians, newspapermen and business opponents. On the question of who should be bought, and for how much, Allan differed with McMullen. The Chicago promoter was doing his best to suborn minor members of Parliament. Allan thought this “a waste of powder and shot.” He preferred to concentrate on bigger game – Cartier, Charles Brydges and Senator David Macpherson, all of whom had close Grand Trunk connections and one of whom was being urged to put a rival company together to compete with Allan for the contract.

Charles John Brydges was, in a contemporary’s words, “brought up in a railway age for railway use.” He had been a railwayman all of his life, starting as a junior clerk on the London and Southwestern in England at sixteen and rising to become general manager of the Grand Trunk at thirty-four. Now this hefty man with the resolute face and the firm jaw was a commissioner on the publicly-owned Intercolonial. Allan saw him as a man “using all the influence he can with Cartier to thwart our views.” On New Year’s Day, 1872, he wrote to McMullen that he had seen Brydges the previous day and “found out pretty nearly what he will require to join our railway project. His terms are very high, but as they possibly include more than himself, we may have to concede them.”

On January 24, Allan was more specific. He wrote to Smith and
McMullen that of the $1,450,000 in stock which he, Allan, was to receive, a sum of $200,000 would be earmarked for Brydges “on condition of his joining our organization and giving it the benefit of his assistance and influence.” If Brydges didn’t come through by April 15, or if he could be bought more cheaply, Allan would send half the money back, but keep the rest and use it “to secure any other influence that may be deemed by myself and you desirable or important.…”

Brydges, however, had plans of his own. He refused to believe that Allan’s company was, as the shipping magnate kept insisting, free of American influence. Allan told McMullen that Brydges was starting to talk seriously about forming an all-Canadian company to bid for the railway contract – as was Senator Macpherson. Macpherson’s Interoceanic company had a directorate of prominent Toronto and Ontario capitalists, including his partner, Casimir Gzowski, the railway contractor; William Howland, son of the Lieutenant-Governor of Ontario; John Carling, the brewer and Tory
M.P
., and others. His stated object was to defeat Allan’s scheme, which the Liberal press, especially the Toronto
Globe
, was denouncing almost daily as a front for the Northern Pacific. Toronto, which had pushed so hard for the acquisition of the North West, now saw itself losing out to Montreal in the struggle for the railway. If Allan got the contract, the city feared it would be by-passed. Thus Macpherson’s company had strong Toronto support.

It was not difficult for Macpherson or Allan to find partners for their ventures; they were clamouring to be let in. All directors of the successful company stood to make substantial profits with minimal risk. The plan was that each director would get a proportionate share of the stock without paying for it. Allan’s lawyer, J. J. C. Abbott, ultimately objected to this. He feared that if “the present
immaculate
and
excellent
government” were defeated, the victorious Grits would have an excuse to force out the friendly directors, take back the stock and load the board with their own political supporters. But even if the stock were technically
bona fide
, Abbott said, it would be issued “with the hope certainly of escaping from paying.”

It is also possible, in the light of Macpherson’s previous record, that he incorporated the Interoceanic company at least partly for its nuisance value. That technique had paid off handsomely for him once before. In 1851, he, Galt and Holton had managed to secure a charter to build a railway from Montreal to Hamilton. Nothing came of the
venture, but when the Grand Trunk entered the picture the three immediately took up 7,940 shares each in the dormant company, for which they expected handsome payment. The Grand Trunk could not be completed until it came to terms with them. All three, together with Gzowski, profited from a subsequent Grand Trunk construction contract.

Macpherson, in Allan’s view, was “rather an important person to gain over to our side.” He did his best to buy him off – or so he told his American backers on February 24. He claimed Macpherson had insisted on a quarter-million dollars worth of stock and threatened opposition if he didn’t get it. A few days later Allan was back again with a list of a dozen other prominent Canadians he said would have to be paid off with fifty to one hundred thousand dollars in stock apiece. The names ranged from that of George Brown of the
Globe
to Donald A. Smith, the chief commissioner of the Hudson’s Bay Company and independent member for Selkirk. “I think you will have to go it blind in the matter of money – cash payments,” he wrote. “I have already paid $8500 and have not a voucher and cannot get one.”

There is no evidence that Allan saw all or any of these men or offered them anything. Macpherson’s subsequent account of their meeting was quite different. Allan, he said, had called upon him to join in forming the Canadian Pacific Railway Company with the understanding that he, Allan, would head it. There would be eleven directors – six Canadians, including Allan and Macpherson, and five Americans, all of them directors of the Northern Pacific. Macpherson objected strenuously to the Americans’ involvement; all they needed to control the company was one vote, Allan’s, and if they controlled the purse strings they certainly controlled that. The naïve idea that the Americans would own the company and yet allow the Canadians to run it was too much for Macpherson. He washed his hands of Allan and set about getting a charter for his all-Canadian company.