The National Dream: The Great Railway, 1871-1881 (57 page)

There was another offer before the government that June. It came in the name of Duncan McIntyre, who was engaged in building the Canada Central Railway from Ottawa to Lake Nipissing. Though McIntyre’s name was appended to the preliminary correspondence, it was no secret that his principals were George Stephen and the other members of the St. Paul group. The arrangement between Stephen and McIntyre was a marriage of convenience. As the virtual owner of the Canada Central, McIntyre would be a valuable ally if Stephen’s group secured the contract, for McIntyre’s line stopped where the
CPR
was to begin. The alliance could mean that the through route from Ottawa to the Pacific Ocean would be controlled by a single company. McIntyre, a heavy-browed Lowlander with a great soup-strainer moustache, was another self-made Scot who had begun life in Canada in 1829 as a clerk in a mercantile firm. Although he became a spokesman for the new syndicate in its formative period, he was always something of an outsider within the group; and when the ultimate crisis came he would be found wanting. He did not have Stephen’s stamina, nor Smith’s, and the day would come when Stephen could not stand to be in the same room with him.

The Stephen-McIntyre offer was a tempting one, especially as it was the only one that came from Canada, but it asked more than the Cabinet was prepared to grant: a subsidy of twenty-six and a half millions and a land grant of thirty-five million acres. The Syndicate would not budge or bargain. The subject, McIntyre told Macdonald, was closed “for the present”; but the door was obviously being left ajar. On June 29, at a picnic at Bath, Ontario, Macdonald was emboldened to announce that there were a number of capitalists in Ottawa bidding for the construction of the railway and that
negotiations had reached the point where a deputation of ministers to England was indicated.

Macdonald and Tupper sailed for England on July 10. The Prime Minister intended to see both Puleston, Brown and Company and Sir Henry Tyler, president of the Grand Trunk. Campbell was left to negotiate with Onderdonk and his backers. As for McIntyre, he was sailing on the same ship – not entirely by coincidence – and, as the mail steamer touched at Rimouski, a letter arrived for Macdonald from George Stephen, from his fishing camp at neighbouring Causapscal. It was an odd missive, diffident yet wistful, and it opened the door a little wider.

“I am aware,” Stephen wrote, “it is often impossible for a Government to adopt the best course; and it is the knowledge of that fact that makes me rather hesitate to commit myself to the enormous responsibilities involved in this undertaking. You will have no difficulty, I feel sure, in finding men on the other side, more or less substantial and with greater courage – mainly because they know less of the difficulties to be encountered but also because they will adopt measures for their own protection which I could not avail myself of.”

It was a clever letter, though Stephen may not have consciously intended it as such since he himself was of two minds regarding the project. Nevertheless, he managed very subtly to damn all other aspirants to the contract while obliquely selling his own group. He pointed out the difficulties of a large bonded indebtedness in which “the real responsibility is transferred from the Company to the people who may be induced to buy the bonds … while the Company or projectors pocket a big profit at the start.…” He suggested any English financial organization would indulge in this kind of manipulation at great risk to Canada: “It would indeed be a disastrous affair to all concerned, if the English public were induced to invest in a bond issue which the road could not carry.…”

His own plan, Stephen remarked, would have been to limit the borrowing to the smallest point “and if we issued a bond at all to take care it did not much exceed $5,000 a mile.” He would expect his profit to come from the growth of the country after the railroad was built.

“I could not be a party to a scheme involving a large issue of bonds on a road which no one can be sure will earn enough to pay working expenses,” Stephen declared. He had no intention of going to England; he would be outbid there. No English or American organization could do the job as well or as cheaply, yet they would
want to pocket the profits in advance while Stephen was willing to take the risk and wait.

Then, once more, the soft sell: Stephen was satisfied that he and his group could construct the road without much trouble and if anybody could operate it successfully, they could. The line from Thunder Bay to Red River would be profitable and they would use the experience gained in Minnesota in the management and settling of the lands. The Canada Central to Ottawa and certain Quebec roads would, of course, have to be incorporated because the terminus must be at Montreal or Quebec City, not Lake Nipissing, far off in the wilds of northern Ontario.

It was a letter dictated from a position of strength and confidence, written when Stephen was salmon fishing with Angus; indeed, the two had discussed nothing else all week, the fishing having been poor. In it, Stephen played Macdonald like an angler. He had thrust the bait towards him: the Minnesota experience, the desire to take risks, the special knowledge of Canadian conditions, the unquestioned ability of his group to do the job. Then, in a final paragraph, he pulled back slightly but left the bait dangling: “Although I am off the notion of the thing now, should anything occur on the other side to induce you to think that taking all things into consideration, our proposal is better upon the whole for the country than any offer you get in England, I might, on hearing from you, renew it and possibly in doing so reduce the land grant to some extent.…”

The Opposition, he reminded Macdonald – if one believed the
Globe –
would prefer limiting the land grant and increasing the cash subsidy.

It was a hard letter for Macdonald to resist, since Stephen’s was the only Canadian group bidding and it was clear that he was prepared to do the job for about twenty-five millions in cash and an equal number of acres of good prairie land. Moreover, the other aspirants were dropping away. In August, the Onderdonk group passed: they were interested, but the Fraser canyon was occupying their efforts and they did not feel they had enough time to consider the matter. In London Macdonald and Tupper approached Sir Henry Tyler, the debonair and witty president of the Grand Trunk. The company was a political force in Canada and such a strong supporter of the Government that Grand Trunk employees, at election time, were given strict orders on how to vote. It was important that Tyler be given a chance, at the very least, to refuse the contract.

He did just that. Tupper reported his reaction, given in the tea room of the House of Commons, where Tyler was a sitting member: “If you’ll cut off the portion of the railway from Thunder Bay to Nipissing I’ll take up the project; but unless you do that, my shareholders will simply throw the prospectus into the wastepaper basket.” There it was again: the terrible geography of North America conspiring against the efforts of the struggling nation to consolidate. Tupper replied that Canada could not consent to be for six months without any communication with Manitoba, the North West and British Columbia except by a long detour through a foreign land. That was that; Tyler would become an implacable enemy of the
CPR
and would almost succeed in smashing the line financially. The Grand Trunk’s philosophy did not encompass a transcontinental nation; in the eyes of its absentee owners Canada was not much more than a way point on the route that led from the Atlantic to Chicago. Sir Henry’s blunt refusal, though he could not suspect it at the time, would reduce the Grand Trunk to a secondary railroad; the
CPR
would shortly outrank it and, in the end, outlive it. By the time the older company caught the spirit of the new Canada and decided to push its own line of steel to the Pacific it would be too late. That belated and disastrous undertaking spelled the end of the company which might have been the greatest in the nation.

The offer from Puleston, Brown and Company, which Macdonald pushed, or pretended to push – it was financially more attractive than Stephen’s – also dissolved. Puleston, the Civil War colonel who was to become a British knight and Member of Parliament, was a solider citizen than his front man, Lord Dunmore, but he could not, in the end, get the European backing he promised. It is possible the Prime Minister was relieved. A transcontinental railway built by a British promoter with American roots using French and German money was scarcely a great national undertaking. Stephen’s letter was in his pocket and McIntyre, as he well knew, was in England. He began a series of discussions with McIntyre in London. Sir John Rose, who represented one of the smaller British financial houses and had some connection with the wavering European group, was present. George Stephen, in Canada, was at the end of the cable line. By September 4, the provisional agreement was made. Twenty-five million dollars and twenty-five million acres it was to be. McIntyre returned to Canada at the end of the month and so did the Prime Minister, to whom Stephen immediately wrote. He had seen “the important document,” he said,
and he hoped there would be no difficulty in coming to terms on all points.

He and his colleagues had taken on a job that no one else in the United States, Britain, Europe or Canada had been persuaded to tackle. It was a huge responsibility and already in Montreal financial circles there were murmurings that this time the reckless Stephen had bitten off more than he could chew.

“…  my
friends
and my
enemies
agree,” he wrote, “in affecting to think [that it] will be the ruin of us all.”

And it almost was.

2
Success!

All during late summer and early fall the newspapers of Canada were alive with rumour and speculation. During August, the
Globe
, with glee, continued to report the failure of Macdonald’s mission, announcing the collapse of the Puleston, Brown offer and that of several other totally non-existent negotiations ranging from the Rothschilds to Sir Hugh Allan, a tactic which the rival
Mail
charged “was unprecedented in the newspaper annals of any country.” On September 7, the Manitoba
Free Press
reported that on the basis of “the most positive information from London,” the mission to Britain was a failure. By mid-September word of actual negotiations began to leak out. The Montreal
Daily Witness
, reporting the rumours, described the prospective deal as “utterly ruinous.” Even the
Mail
, having disposed of the
Globe
, was remarkably hesitant: there was “no great reason for rejoicing … but it is quite likely that a reasonable bargain has been made.” In the
Bystander
, Goldwin Smith was his usual acerb self: “Our deliverance from Government contracts and their pestilent influence is almost as great a cause for rejoicing as our deliverance from the mad undertaking itself.”

The English press, covering Macdonald’s visit, was generally hostile and its editorial remarks were cabled back to the Canadian newspapers. Much was made of the fact that the Canadians, having built small portions of the transcontinental line, had exhausted their means and were, at a late moment, appealing to the mother country for help. The all-Canadian route through the bleak Lake Superior country was universally condemned as useless. “The climate, too, is painted in black colours,” the
Mail
reported.

Of all the adverse British comments, that of
The Times
was the
most moderate. Referring to the Lake Superior section as “the pauper the rest of the family will have to support,” the newspaper asked “whether the Dominion would not have been wise to retain for itself this special burden and not endeavour to throw it on European capitalists. If they accept it, they do so solely because they believe the dose to have been sweetened to an extent which will be very costly to the Canadian taxpayer.”

The London
Examiner
launched an all-out attack on Macdonald and his colleagues: “The Dominion Ministers have grossly mismanaged their mission. They have repelled confidence where they should have nourished faith, and have sown distrust where they should have cultivated hope. They have been mysterious and fussy at the same time. They have flourished about their object and have inspired communications that have proved to be misleading. The upshot is, with the best intentions, they have cast no credit on the Canadian Pacific Railway.”

The American press was equally scathing. The New York
Herald
referred to the mission as “abortive” and predicted that Macdonald would fail “in spite of all his financial juggling and the apocryphal rumours he has set afloat to influence public opinion.” The hard truth was that the railway would be “constructed through a wilderness, with long stretches of absolute barrenness and in a climate of such severity that the road would be closed for four months of the year.… For fifty years to come it would be a sheer waste of capital to build the Canadian Pacific Railway, and the investing classes understand this so well that Sir John Macdonald’s hypothetical syndicate could have no success in selling its shares.”

The New York
Commercial Bulletin
reported that Macdonald had got himself “out of one very embarrassing scrape, but in a way which threatens to put him and the Dominion in a worse position than ever. Such an exhaustive accumulation of debt is something more than four million of population can be expected to stand.”

Yet in spite of all this hostility there was enormous excitement when it was learned that Macdonald would be arriving at Hochelaga station, Montreal, on the afternoon of September 27. Early that morning a rumour sped around the city that the Prime Minister had passed through secretly the previous night, having failed in his mission and “anxious to reach without delay the obscurity the capital affords.” Then it was learned that Macdonald had spent the previous evening in Quebec City. Would he stop in Montreal? The excitement
grew. Early in the afternoon both telegraph companies posted notices that the ministerial train would arrive in Montreal at 4.40 p.m. With that the sense of expectation became acute. The
Daily Witness
reported that “rarely have political and financial circles been so agitated over any public event” and the
Mail’s
correspondent wrote that never in a long experience had he “witnessed such intense anxiety to see a public man and hear what he has to say upon a great question of public interest.”