The National Dream: The Great Railway, 1871-1881 (16 page)

It makes a striking picture, this pivotal meeting in the Prime Minister’s office. The youthful McMullen, his round eyes coldly furious, faced a man thirty years his senior, whose languorous attitude gave no hint of his inner emotions. Physical opposites, the two antagonists had certain common qualities. Both were possessed of lively imaginations, which allowed them to glimpse future benefits in schemes others thought hare-brained. Both, as a result, enjoyed the steady nerves of committed gamblers. For Macdonald, the railway project had been an immense political risk; for McMullen, a considerable financial one. Oddly, McMullen, the apparently hard-headed businessman, was far more quixotic than the pragmatic politician who faced him across the desk. Macdonald’s gambles – or visions or dreams (all three nouns apply) – had a habit of turning out far more successfully than McMullen’s astonishing series of ventures, several of which certainly
were
hare-brained.

The interview took up two hours. McMullen came armed with Allan’s letters to him; he proceeded to read the Prime Minister some
compromising extracts. He produced the correspondence with General Cass. He unfolded the secret contracts made the previous year with the Americans. He talked mysteriously about strange stories that Allan had told him about paying off Members of Parliament. He said he could name names in that connection – names of persons “who are very near to you.” Macdonald was inwardly aghast but, at moments like this, he knew enough to maintain a poker face. He denied that Allan had bribed the Government. In that case, McMullen replied smoothly, Allan must be a swindler – he had taken almost four hundred thousand dollars from the Americans on just that pretext. He urged Macdonald either to stick to the original agreement or leave Allan out of the new company. Macdonald replied that he could do neither; if McMullen thought he was badly used, that was his problem. The Americans, said the Prime Minister, had been out of the company for some time.

Not so, replied McMullen, and he produced Allan’s own correspondence in evidence. Again, Macdonald was appalled, but he did not turn a hair.

“He [Allan] ought to have been more frank with you,” Macdonald said. “He could not if he had tried obtained what he wanted to get. He must have ascertained that last session. He could not by any possibility have effected the purpose you wished him to effect of getting your associates, the American capitalists, interested in the company. He could not do so, the public feeling was so great.”

McMullen grew more threatening. He began to talk about what would happen politically if the public knew all the facts “as they certainly would, if Allan was put in and allowed to break his sacred obligations with his associates.” Macdonald made no comment but asked for time to consult with Allan and his lawyer, Abbott. On that note the encounter ended.

McMullen was back in Ottawa three weeks later. This time he brought along Charles Mather Smith and another colleague, Hurlburt, who had been privy to the early negotiations. Smith brought
his
correspondence with Allan and the three men indulged in a kind of Greek chorus of woe, bewailing their relationship with the perfidious Montrealer and crying out that they had advanced huge sums of money for the railway in good faith. Macdonald was properly sympathetic. He agreed that they had been badly used by Allan who should certainly be made to refund the money. McMullen began to talk wildly about seizing Allan’s ships in American ports and suing him in the courts.

“I think you are quite right,” said Macdonald. “If I were in your place I would proceed against him.”

With this the atmosphere grew almost genial. McMullen and Smith denied that they were trying to blackmail the Government and asked, wistfully, if there was any chance they could be given an interest in the railway. That, Macdonald told them, would not be possible.

McMullen offered to let Macdonald have copies of all the damaging correspondence, including some new documents nailing down Allan’s dishonesty regarding the extent of the American interest in his company. These showed that on October 12, at the very time when Allan and Abbott had assured Parliament that negotiations with the Americans had been terminated, Allan was paying over American money to incorporate the railway company.

Although none of the men involved knew it at the time, this was not the full extent of Allan’s duplicity. The day before he finally dumped McMullen, Allan had a long talk with Lycurgus Edgerton, the Jay Cooke agent, about the new company Macdonald was forming. Allan assured the Northern Pacific man that there was nothing in the charter to affect Cooke’s plans. “Certain, unreasoning public opinion had to be conciliated by an apparent concession …” but this was “more in form than in substance.” Edgerton was able to report to Cooke that there would be no all-Canadian route via the north shore of Lake Superior, if Allan remained in control. It was a “useless expenditure … dictated by a sentimental patriotism, and a narrow minded jealousy and prejudice.” For the next five or ten years “if not for
all time
, the Canada Pacific must be subservient and tributary to the interests of the Northern Pacific.”
^*

Even without this knowledge it must have been clear by now to the Prime Minister that Allan was an unfortunate choice to head the new company. For almost a year Macdonald had been telling his colleagues, his friends, his political enemies and the country at large (as well as himself) that Allan was the only possible choice for the job – a man of business acumen, probity, sagacity and experience
who commanded the total respect of the financial community. Now he stood revealed as a blunderer, a conniver, a liar, a double-dealer and, perhaps worst of all, a Yankee-lover – a man whose imprudence, in Macdonald’s own words, “has almost mounted to insanity.” And this was the man who would shortly be setting off for London on a mission of the greatest delicacy to secure the underwriting of the world’s largest railway project.

“Entre nous, Allan seems to have lost his head altogether,” the dismayed Prime Minister wrote to Sir John Rose, Canada’s unofficial spokesman in England. “…  He is the worst negotiator I ever saw in my life … I fear that Allan’s intense selfishness may blind him as to the true interests of the scheme; that is to say, I fear he will be inclined to think more about how much he can make out of the thing, than the success of the enterprise itself.” Clearly, if the financial community or the public at large knew what Macdonald knew, the railway scheme would collapse like a soap bubble.

Would they find out? Worry gnawed at Macdonald as he prepared for the session of 1873. There was a bitter letter from Senator Asa B. Foster, a long-time railway contractor, regretting that he had not been included on the board of the new company. Both Cartier and Allan had promised him this plum, he claimed. For the past eighteen months, Foster revealed, he had had knowledge of Allan’s dealings with the Americans and he had “seen all of the papers that were shown to you and some that were not.” He himself had had an understanding with the Americans; they had promised him three and a half per cent of the company. There was no knowing what use the disgruntled Foster would make of that information.

There was a brief lull, then another brutal letter from Chicago, this time from Charles Mather Smith, pointing out that it was Allan, not the Americans, who had made the first overtures and that “He stated that he came to us by the direction of the Ministry.… The Government alone had the address of our Syndicate.” They had accepted Allan, in effect, as a representative of the Canadian cabinet. Would Macdonald have any objection if the group petitioned Parliament for redress?

Macdonald naturally had every objection in the world. The Americans would have to be bought off, if, indeed, blackmailers could ever be bought off. He wrote to Hincks in Montreal and Hincks sought out Abbott, the lawyer who, more and more, was assuming the role of fixer in the various chapters of the continuing unpleasantness. Some bargaining then took place between Abbott and the Americans.
McMullen had wanted more than two hundred thousand dollars. Abbott pared the sum down to $37,500 U.S. He paid him twenty thousand down and placed Allan’s cheque for the rest in an envelope which he gave to Henry Starnes of Allan’s Merchants’ Bank. McMullen then placed the offending correspondence in another envelope and gave that to Starnes. The banker’s instructions were to wait until ten days after the end of the coming session and then deliver the envelope with the money to McMullen and the envelope with the correspondence to Allan. This was the best arrangement that Abbott could make to keep the story from becoming public before Allan completed his negotiations in England and while Parliament was in session.

The arrangement was concluded on the very eve of Allan’s departure. Indeed, Hincks did not learn that the lawyer had been successful until the night before Allan sailed, at a dinner given in his honour. The circumstances did not lend themselves to a detailed report of exactly what occurred (though there was whispered agreement to destroy certain revealing memos by both Macdonald and Allan) and Hincks probably did not want to know anyway. Nor did Macdonald. One thing the Government could
not
be involved in was the paying of blackmail, since blackmailers were notoriously undependable. In the months and years that followed, a good many pundits and politicians asked aloud or in print why Macdonald did not buy off McMullen as soon as McMullen arrived in his office on New Year’s Eve. The answer surely is that in Macdonald’s shrewd view, McMullen was perfectly capable of taking the money and selling the correspondence later on. The view was absolutely correct. George McMullen did not bother to collect the second envelope from Henry Starnes, the banker. He had already received a higher bid from Macdonald’s political enemies.

^*
Allan was not the only Canadian prepared to sell out to the Americans for financial gain. According to General Cass, some of Macpherson’s associates who had joined the amalgamated company were farming out some of their stock on the side to Northern Pacific people. Cooke himself wrote to a Minnesota congressman: “…  the puzzle to me is that these men should have been so clamorous for the interest and then do just what they accused Sir Hugh of – selling out to the Americans. Under such circumstances, I do not think that the stock can be a very desirable thing to have.”

Chapter Three

1
Lucius Huntington’s moment in history

2
Scandal!

3
The memorable August 13

4
The least satisfactory Royal Commission

5
Battle stations

6
Macdonald versus Blake

1
Lucius Huntington’s moment in history

The first session of the Second Parliament of Canada opened on March 6, 1873, with no hint of the storm that was gathering. The air was bracing and frosty and, though the snow was piled in soiled mountains along the sidewalks, the sky was blue and the sun bright. To Lord Dufferin, the dapper new governor general, setting off for Parliament Hill in his glittering four-horse state carriage, the weather was “quite divine.”

He was deposited promptly at three o’clock before the main archway to the accompaniment of clanking swords, jangling spurs, brass band and Royal Salute and, as he entered the blood-red door of the Senate, he found himself proceeding through what one observer aptly called a “double file of living millinery.” The crimson chamber had been cleared of desks and the senatorial chairs were now occupied by the wives and daughters of the parliamentarians and leading citizens, along with their sisters and their cousins and their aunts, all caparisoned in gowns from Paris, London or New York, every one of which would be allotted its own descriptive paragraph in the Ottawa press the following day. The crush in the gallery above was unprecedented. So great was the demand for tickets that some twenty-four hundred had been issued; there was scarcely room for a third that number of spectators.

It was Lord Dufferin’s first Parliament and it was perhaps as well that he could not foresee the trials that lay before him. He had served as a diplomat at St. Petersburg, Rome and Paris, but nothing in his past had prepared him for the political hurly-burly of the Canadian scene. As he marched easily towards the canopied chair known as the Throne, followed by his entourage (the military brilliant in scarlet and gold), Dufferin, who was more than a little snobbish, looked about him with satisfaction. It was true that the Canadian Senators were not draped in the robes of English peers but “they looked a very dignified body in their sober court dress.” Indeed, he was “rather surprised to see what a high bred and good looking company they formed.”

The Governor General took his seat and looked out across an ocean of fluttering Parisian fans, glistening pearls and diamonds and silks in pale pastels framed against the darker velvets; it reminded him of a bed of flowers. Now, at the call of the Gentleman Usher of
the Black Rod, the Members “swarmed in like a bunch of schoolboys” (there were four future prime ministers in that swarm). The Governor General read the speech from the Throne, feeling a little silly at having to repeat it in French.

One of the key paragraphs in the speech dealt with the railway: “I have caused a charter to be granted to a body of Canadian capitalists for the construction of the Pacific Railway. The company now formed has given assurance that this great work will be vigorously prosecuted, and the favourable state of the money market in England affords every hope that satisfactory arrangements may be made for the required capital.”

Macdonald was not the only Member present who must have felt the hollowness of those words. By this time the Opposition was in on the secret and, as the session progressed, rumours began to flit around Ottawa about a coming political earthquake. Hincks anticipated trouble in a letter to Sir Charles Tupper, in which he suggested ways of countering the revelations (“You can testify that Sir John never tried to promote Sir Hugh Allan’s views …”). The
Globe
, which called the railway scheme “financially the maddest, and politically the most unpatriotic, that could be proposed” hammered away daily, in editorial after editorial, its two points: first, that Allan was backed by Yankee dollars and, second, that the Government never had any intention, at any time, of dealing with anybody else.