The National Dream: The Great Railway, 1871-1881 (40 page)

Fort William needed a propaganda arm. With the help of Adam Oliver, a new newspaper, the Fort William
Day Book
, was established at the town plot. Hagan and the
Sentinel
engaged the upstart journal in a battle which was fought without mercy. Week after week both papers published interminable accounts of the deficiencies of the rival community. The
Sentinel
marshalled columns of scientific evidence to show that the Kaministiquia River was too shallow for lake traffic. The
Day Book
published equally impressive evidence to prove that the harbour at the Landing was so exposed as to be virtually useless. An early settler in Fort William later recalled that “so keen was the interest in the exciting squabble between the two villages that almost the entire population would go into the office to watch the interesting process of getting the paper to press.”

The
Day Book’s
apprentice delivered the paper, with some misgivings, to twenty-seven subscribers at the hated Landing, travelling there by tugboat. He was allowed just twenty-five cents in expense money, that being the exact one-way fare. This meant he had to walk home, carefully making his route through the back streets to avoid being mobbed by boys from the Landing who were as interested in the rivalry as their elders.

The
Day Book
had scarcely begun publication in the summer of 1877 when Hagan of the
Sentinel
with the help of the Toronto
Mail
got hold of some powerful ammunition: the carpetbagger Oliver and his Liberal friends had apparently been selling land to the government at fancy mark-ups. Worse than that, they had actually put up part of a building on land already appropriated for the railway and had managed to sell it to the Crown at an inflated price.

This was the famous Neebing Hotel case, which became a popular scandal in the big city papers and finally prompted a Senate inquiry. The Senate committee, after hearing the evidence, came to the conclusion that the charges were correct.

It was an unblushing piece of jobbery, even for those days. Oliver,
Davidson and Brown were all implicated. Lots purchased by Oliver and his partners for between sixty and ninety dollars were sold two years later to the government for as much as three hundred. And who was acting as an official government evaluator? Brown! He had one hundred thousand dollars invested in Fort William lands. In one instance the partners had purchased 136 acres for one thousand dollars and laid out a paper town. They sold eight acres of this nonexistent community to the government for four thousand dollars. The valuation was Brown’s.

The Opposition press charged that the former Liberal
M.P.P.
, Oliver, had inside information on which lands the government would buy and pointed out that he also just happened to own land on which the Ontario government was then planning to build a mental institution. Oliver was no longer in the Legislature; he had been unseated for “bribery and corruption” (his own phrase). His partner Davidson had, witnesses testified, been seen with a plan of the Fort William town plot showing the lots the government would need marked in colour as far back as November 1874 – before anyone else had that information. The map appeared to be a tracing taken from the public works department. There was evidence, denied vehemently by Davidson, that he had the information direct from Mackenzie. Certainly Mackenzie’s role in the matter was suspect; at best he was shown to have a terrible memory. It was he who had asked the Department of Justice to appoint Brown to act with the government evaluators. He did not know, Mackenzie swore, that Brown was a member of the Oliver, Davidson firm. Yet Brown’s name appeared with that of Oliver and Davidson on a document – it was the contract for the telegraph line – that Mackenzie himself signed in February, 1875.

The Senate committee was certain that Oliver and his partners had inside information. “After having heard and weighed the evidence … your Committee find it difficult to believe that the persons who enriched themselves at the expense of the people of Canada had not in some way ascertained, in advance of the public, that the Government had determined to locate the terminus of the Canadian Pacific Railway on the town plot of Fort William.”

In addition, the committee concluded that there was no real reason for the railway to go through the Oliver townsite at all. There were better locations available for a terminus before the town plot was reached where the land would have been cheaper and easier to
assemble. And the government seemed to have waited a suspiciously long time before buying
any
land. Fleming had personally urged Mackenzie to buy up the land for the terminus in 1874, when the lots could be had at a quarter of the price eventually paid. Mackenzie ignored him.

In the case of the Neebing Hotel, Oliver and his partners certainly knew in advance what was happening. He and Davidson, having been notified of the position of the line of track and having sold the property to the government for ten thousand dollars, began the hasty construction of a “hotel” on the same piece of ground. The Neebing Hotel, as the Toronto
Mail
reported gleefully, was “the only structure of its kind in the world, an imaginary hostelry in an imaginary city. For this shell, unfinished, rudely and hastily thrown together, composed of refuse slabs, with not even a chimney, $5,029 was paid.” Testimony before the Senate committee showed that the builder was paid only thirteen hundred dollars to construct the hotel; but then the books were shamelessly padded – five hundred dollars, for instance, for non-existent “damages,” another item of five hundred dollars charged twice, discrepancies between accounts and vouchers, and so on. The Senate committee, which thought that the price of all real estate sold to the government at Fort William was “exceedingly and unaccountably extravagant,” reported that in the case of the Neebing Hotel the government had been “grossly overcharged” and confirmed that the building had been erected long after the owners knew it would be on railway property. They “were not entitled to payment or compensation of any kind.”

The case became nationally notorious. During the campaign of 1878, John A. Macdonald never failed to draw a laugh when he declared solemnly that the only punishment he wished for the Government, if they were defeated, was that they be compelled to board for the next two years at the Neebing Hotel.

Just how much political muscle Adam Oliver had with the Mackenzie administration came to light two years later when a royal commission began investigating various contracts awarded along the north shore of Lake Superior. The circumstances under which Oliver, Davidson and Company secured a quarter-million-dollar contract to build the telegraph line from Thunder Bay to Winnipeg were as astonishing as they were suspicious.

Tenders for the line were opened in August, 1874, but the actual contract was not awarded until the following February. The
intervening months were spent in what a later century was to brand as “wheeling and dealing.” The lowest bid was passed over in a fashion that the Royal Commission described as “peremptory”: the bidders, when they asked for a little time to complete their security, did not even receive the courtesy of an answer. The next two lowest bids were both entered, in effect, by one Robert Twiss Sutton of Brantford and it became clear from subsequent testimony that he had no intention of fulfilling the contract but had simply entered the contest in order to be bought off by his competitors, a fairly common practice in those days. In December, Adam Oliver arrived in Ottawa to do the buying off.

The lower of the two Sutton bids was twenty-five thousand dollars higher than the rejected tender. It was in the name of Sutton and Thirtkell. The other Sutton bid was twenty-eight thousand dollars higher still. It was in the name of Sutton and Thompson. Both W. J. Thirtkell, a Lindsay druggist, and William Thompson, of Brantford, were mere front men, brought in for a price to lend the weight of their names to the tender. Sutton was, in fact, used to buying Thompson’s name for this purpose.

Oliver arrived in Ottawa expecting to be able to buy up the lower of the two Sutton bids. But once in the capital he discovered for mysterious and unexplained reasons that he could actually be awarded the higher one. Oliver promised Sutton a quarter of the profits; Sutton paid off his silent partner, Thompson, with a cheque for eight hundred dollars; and Oliver’s firm ended up with the coveted contract. It was fifty-three thousand dollars fatter than it would have been had the lowest tender been accepted.

Apart from the cavalier treatment of the lowest bidder, there was never any explanation of how the higher of the two Sutton bids came to be accepted, rather than the lower one. But one thing did develop from the testimony. It was Mackenzie himself, Smith’s “noble man,” who handled the entire business and not one of his underlings, as was the general practice. And all the dealings with the Minister were in the hands, not of Robert Sutton, the official tenderer, but of Adam Oliver. To achieve the kind of financial miracle that Oliver managed required a detailed knowledge of all the tenders for the contract – information that was supposed to be secret. But then, at the same time, Oliver’s partner Davidson was brandishing the map of the town plot full of supposedly secret information from Mackenzie’s department.

In Adam Oliver’s favourite game, the maker’s side must win at least three tricks to avoid being euchred. Oliver had won them all: he had got the terminus moved to Fort William, he had sold property to the government at extortionate prices and he had gained a telegraph contract at a bonus rate. He was not quite as successful as a builder. The complaints about the state of the line were continual. Poles, badly anchored, kept toppling. Wires stretched over trees in lieu of poles strangled and killed them; the roots decayed, and the trees fell over, taking the wires with them. Sometimes it took a message as long as a month to reach Winnipeg on Adam Oliver’s expensive telegraph line.

By this time the two rival communities at the lakehead had stubbornly gone their separate ways. The apartheid was formalized in 1881 when a new municipality was chopped out of the old one to accommodate the settlement of Fort William. The twin villages grew to towns and the towns to cities until it was difficult to tell where one began and the other ended. But so deep were the ancient animosities that each developed its own bus line, police force, fire department, power commission, newspaper and service clubs. It was not until 1969, ninety-four years after the sod-turning ceremony on the banks of the twisting Kaministiquia, that the rusty hatchets were finally buried and the twin cities became one.

3
The stonemason’s friends

The strains of office were beginning to tell on Mackenzie’s temper and health; it was the railway that was chiefly to blame. Not only was he Prime Minister, but he had also chosen to assume the burden of the Ministry of Public Works, the most sensitive of cabinet posts in that era of railway contracts. In the spring of 1877, the ex-stonemason revealed a little of his feelings when he exploded in the House that “it is impossible for any man in this country to conduct public affairs without being subjected to the grossest political abuse. Let a political friend get a contract and it is stated at once that [it] is because he is a political friend. Let a political opponent get a contract and we are charged with trying to buy him over to the Government.”

Nonetheless more friends than opponents were awarded contracts on the various sections of the rail and telegraph lines being built along
the granites of Superior and the muskegs of Manitoba. The Mackenzie government awarded eleven contracts west of Lake Superior, between 1874 and 1878, for grading, track laying and telegraph lines. The total amount paid, as of June 30, 1880, was $5,257,336. Eight of the largest contracts – amounting to a total of $4,986,659 – went to prominent Liberal wheel-horses, men who in every case were members of a federal or provincial parliament, past, present or future. These included J. W. Sifton, Adam Oliver, Joseph Whitehead, Patrick Purcell, James Conmee, and David Glass. Glass’s was one of several names prominent on the Liberal side in the Pacific Scandal which popped up subsequently in the railway contracting business. Another was that of Senator Asa B. Foster, who secured a contract for the eighty-five mile “Georgian Bay branch,” which was never built because it subsequently developed that the grades were impossibly steep. But Senator Foster, the man who paid off McMullen, received forty-one thousand dollars for his work on the contract before it was annulled.

“The Mackenzie government,” wrote John Willison, a journalist of the period, “like all other governments in Canada, had greedy mercenaries hanging upon its skirts, bent upon pillage and crafty beyond the wit of man in devising means to get at the treasury by devious contracts or skilful alienation of the public resources.”

Mackenzie poured out his own feelings on the matter to a fellow Liberal: “Friends expect to be benefited by offices they are unfit for, by contracts they are not entitled to, by advances not earned. Enemies ally themselves with friends and push their whims to the front. Some attempt to storm the office. Some dig trenches at a distance and approach in regular siege form. I feel like the besieged, lying on my arms night and day. I have offended at least 20 parliamentary friends by defence of the Citadel. A weak minister here would ruin the party in a month and the country very soon.”

Yet it is arguable how strong the stonemason himself was. Mackenzie took over the Department of Public Works with the memory of the Pacific Scandal haunting him and, before that, distasteful recollections of the Grand Trunk-Conservative marriage and allied railway schemes. He determined to establish an inflexible method of handling tenders on public contracts: the lowest bidder
must
be given the job. On the face of it this was designed to prevent favouritism. In practice it turned the department into a broker’s office.

It did not matter who the low bidder was, or how outrageous his tender. He could be an incompetent, a bankrupt or – as generally developed – a man interested in peddling contracts. Theoretically a deposit accompanied each bid which was to be forfeited if the bid was not successful, but these deposits were too small to deter anyone; besides, they were invariably returned to the unsuccessful bidders after the tenders were opened.