Company Of Adventures - Merchant Prince Part 9

Stephen had lobbied the Prime Minister hard to allow his St Paul syndicate to lease the new line, but Smith's partic.i.p.ation in the project was a complicating factor. The Liberal leader knew that no undertaking with the Smith name attached to it would be approved by Sir John A. Macdonald and his Tories, who remained so angry with Smith that they left the House of Commons en ma.s.se whenever he rose to speak. When Mackenzie introduced the bill to lease the line on March 18, 1878, he not only left out Smith's name but also pointedly denied that Smith had any connection with the project.

The Opposition Tories quickly turned the routine bill into a major issue, with Macdonald insisting that the legislation was a fraudulent measure because it would only "put money in [Smiths] own pocket." Mackenzie used his Commons majority to ram the lease through, but it was vetoed by the Torydominated Senate. Smith informed the Prime Minister STEAL OF EMPIRE 151.

that if the roadbed could not be legally leased, his syndicate would be happy merely to rent running rights. When Mackenzie approved that compromise, Macdonald could no longer hold himself back. In a stunning attack on Smith, the Tory leader commended the Senate's action, "which would put a stop to their [the government's] bargain with the honorable member for Selkirk to make him a rich man and to pay him for his servile support."

Smith rose in the Commons the following afternoon (the last day of the session) to defend his honour. The I-louse was all set to prorogue for a general election, but the Selkirk member's question of privilege halted the proceedings and turned Parliament into a rowdy daycare centre. When George Brown, founding editor of the Toronto Globe and at the time a Liberal senator, described the scene that followed as "the most disgrace- ful in the annals of the Canadian House of Commons," he was indulging in understatement. Members' shouts escalated from "liars" to "treacherous liars" and many cruder epithets that Hansard reporters chose to ignore.

just as the Commons was on the verge of bedlam, the sonorous knock of Black Rod, the parliamentary official whose entry signals termination of sessions, could be heard. The Speaker, trying to invite him in, as protocol demanded, could not make himself heard, so the poor man kept on knocking. "Finally ... Black Rod entered," reported WTR. Preston, then a parliamentary page. "He bowed, as usual. His lips moved, but no sound reached the frantic House. The Speaker stood up and evidently made an announcement. He was not heardthe 'Faithful Commons' continued to shout at one another with unabated fury! Finally, with what dignity he could muster, the Speaker stepped down from the dais, the Sergeant-at-Arms shouldered the mace, and preceded by Black Rod, they slowly made their way to the 152 LABRADOR SMITH.

lobby leading to the Senate. The Cabinet followed, and then as excited a mob as ever disgraced the House of Commons. . . ." Preston himself was caught up in the swaying, belligerent crowd and at one point found himself' pushed against Smith, just as "Tory members reached out to strike his grey top hat."

As usual, Sir John A. Macdonald had the last word. The final insult recorded in Hansard during that stormy parliamentary sitting was attributed to Macdonal~. "That fellow Smith," he declared, "is the biggest liar I ever met!"

The Liberal governments final official act was to grant Smith, Stephen and their partners the ten-vear running rights on the Pembina Branch line they had requested. It was soon connected with their St Paul, Minneapolis and Manitoba tracks, gWing them a inonopoly on western Canadian freight. In the election that followed, which easily returned Macdonald to power, the Tories singled out Smith as a special target. "Now, Sir John, if you want that prince of old scoundrels 'Sinith' beaten, use your influence to getVVilliam Ogilvie to con- sent to run adxised John C. Schultz. "Donald Smith has I think lost just about the last vestige of char acter he ever possessed here, since the accounts of the closing scene of the House have come to hand. . . ."

Smith's challenger turned out to be an even more for midable choice, Alexander Morris, who had been a min ister in Macdonald's first administration and served as Manitoba's first chief justice. When Morris pointed out his opponent's obvious conflict of interest between what was best for land sales in Manitoba and best for him as one of the proprietors of the St Paul, Smith reacted with a dose of righteousness improbable even for him. With a straight face he explained that "the primary object of the railway was for the benefit of Manitoba and not for the purpose of making money."

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Realizing that his re-election bid was in serious trouble, Smith tried to enlist the organizational a.s.sistance of J.H. Mcl~vish, a popular HBC Factor, but London head office firmly directed Winnipeg to "keep the Company neutral ... the Fur Trade officers must take no part in the election as such." Smith attempted to protect himself by pretending he was politically independent,* pledging that he had "no favour to ask and nothing personal to desire from any Government" and would "support only such measures as are conducive to the advancement of Manitoba. . . ."

just in case this high moral ground might prove too slippery, Smith transferred several gangs of Mkis who were on the Company's payroll to his riding and ordered twenty-six YIBC families to be iemporarily moved into his jurisdiction, then bribed them to vote for him. Even these out- rageous manoeuvres barely turned the trick. He won the election by a hair's-breadth margin of nine votes. On the night of his modest victory, as his cheering supporters led him through Winnipeg's main streets, the salute guns of Fort Garry boomed happily in the background. Smith was magnanimous in his triumph: he donated $7 50 to the Knox Church Building Fund.

A pet.i.tion charging Smith with bribery and corruption was immediately filed, but when it was heard before Mr justice Louis Bkournay in the Manitoba Court of Queen's Bench, Smith was confirmed in his seat. That verdict was tarnished by the fact that Smith held a fourthousand-dollar mortgage on Bkournay's house, granted at highly favourable terms. When the decision was overturned, a by-election was called for September 10, 1880. Smith ran as an independent, bolstering his political stance with bribes that totalled more than $30,000. But the voters refused to be bought. Smith was

*Which, in a way, he was-his sole allegiance was to himself 154 LABRADOR SMITH.

decisively beaten. His subsequent comment to James Cole, an HBc Factorwhohad acted as his campaign manager, easily ranks as Canadian history's longest snort. "I am sorry to say," Smith complained, "that a majority of the intelligent electorate of my late Selkirk const.i.tuency have, in the exercise of their undoubted privilege and the right to choose the most fit and proper person available for the purpose of representing them in the Dominion Parliament, seen fit to reject my own humble, not hitherto unacceptable person."

"The dainn voters," shot back the more succinct Cole, "took your money and votedagainst you!"

"You, " intoned Smith, "have properly expressed the situation."

HIS POLITICAL CAREER temporarily abandoned, Smith could concentrate on his long-standing ambition to be a fiscal animator-and personal beneficiary-of building a railway across Canada. His involvement with that project was to be the central public accomplishment of his life, forever perpetuated in the history books by the photograph ofhIs driving In the last spike.

Because it was the CPR that finally destroyed the HBC's dominance in west- ern Canada, its construction, at least as briefly stinunarized in the pages that follow, is part of the Company's history. Smith had resigned his post as the HBCs Land Commissioner in 1879, but he continued buying up stock. By 1883 he had become the HBCs dominant shareholder and a year later was appointed, along with Sandford Fleming, to head a Canadian subcommittee that controlled the Company's overseas operation-all this before the CPR had been completed.

The building of that railway probably ranks as Canada's greatest achievement. "A new current was in motion within the mainstream of human history," wrote STEAL OF EMPIRE 155.

Ralph Allen in his evocative Ordeal by Fire. "The railways opened up a new caravan trail for the restless, the driven, and the questing and led them to the heartland of Canada."

By 1880, all the elements of Smith's career seemed to combine in pushing him to join his cousin George Stephen in becoming a decisive figure in the railway's realization. A fringe benefit of the Minnesota railway venture had been to provide Stephen with an opportunity to view the West at first hand. He had travelled over the St Paul's rickety tracks in the autumn of 1877 and was then driven north to Silver Heights, where Smith and Stephen discussed the railway pro) ect's future. "The immensity of the treeless Prairie landscape affected him deeply, indeed disoriented him, as it does most people when they see it for the first time," WE Morton wrote of Stephen's reaction. "He could at last imagine what Smith had all along been telling him-that people would come to this emptiness, that they would survive and prosper, and that the railway would be the instrument of this population-that it would bring the population to its lands, and those people would provide it with its future earnings."

Because the revelation of his a.s.sociation with the project would have killed its chances, Smith was deliberately kept in the background, but it was his determination that proved essential in financing the epic venture. He had roused Stephen's interest in both railroading and the great North-West, and though the cousins both tended to h.o.a.rd their emotions too much to develop an easy friendship, theirs was an enduring partnership.

Stephen was una.s.suming in private and invisible in public. He loathed the circuitous mouthings of politicians but knew how to rent them-and occasionally buy them. He believed devoutly that man's salvation lay in hard work and besting one's enemies. His only recreation was fishing, and be owned the rights on two rivers to 156 LABRADOR SMITH.

prove it, the Matap6dia (later sold to the Ristigouche Club in New Brunswick) and the Mitis, where he regularly cast a most beautiful fly. He was a tall man, thin, with a hangdog look and brooding eyes that, complemented by his droopy nioustache, endowed his face with a cast of melancholy wisdom. His position as the Bank of Montreal's president togethcr with his experience in reviving the St Paul line made him a natural choice when the newly re-elected SirJohn A. Macdonald began his search for a syndicate to build the long-delayed transcontinental railway. "This m as the climate in which the CPR Syndicate was eventually formed," noted Pierre Berton in his lively history. "For all the controversy served to illuminate one fact: there was now available a remarkable group of successful men who had experience in both railway building and high finance. In the summer of 1880, the Macdonald government was looking for just such a group. It wasJohn Henry Pope, the homely and straightforward minister of agriculture, who had first drawn his Prime Minister's attention to the St Paul a.s.sociates.

"'Catch thern,' he said, 'before they invest their profits."'

And "catch them" Macdonald (lid, with as generous a mark-up as was ever offered any businessman not selling snake-oil. According to WT.R. Preston, it was "the most stupendous contract ever made under responsible gov- ernnient in the history of the world." To complete the transcontinental tracks from North Bay, Ontario, to Port Moody, at the head of Burrard Inlet in British Columbia, within ten years, the syndicate was granted an eventual $206 million in cash, subsidies and stock guarantees in addition to 25 million acres in land grants, with the shortfall in fertile acreage made up in other regions.*

Between 1893 and 1930, the CPR sold 2 3 million acres worth $178 million.

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According to John Gallagher, a historical researcher, when all the tax benefits and value of the land exchanges are taken into account, the CPR received gifts from the country worth $106,300,000. The CPR's authorized history, written by its publicity manager, John Murray Gibbon, was called Steel of Empire; a more appropriate t.i.tle might have been Steal of Empire.

The new Canadian Pacific Railway syndicate, granted its charter on October 21, 1880, included George Stephen, James J. Hill, J.S. Kennedy (the New York banker who had acted as trustee of the St Paul), Duncan McIntyre, who controlled the Canada Central Railway running between Ottawa and North Bay, Sir Stafford Northcote, twenty-second Governor of the Hudson's Bay Company, and Richard Bladworth Angus, yet another Scot with a nose for money, who had been named the Bank of Montreal's general manager when he was only thirty-eight.*

Building a Pacific railway was the dominant issue in Canada's fledgling Parliament for thirty years. One CPR lobbyist boasted that whenever the Speaker's bell rang for a division, there were almost always more MPs in his apartment, swilling free liquor and puffing

*Unlike most of his confr~res, Angus rejected the offer of a knighthood-twice-though he was a founder of the prestigious Mount Royal Club and his neo-Romanesque home was ample enough to eventually house McGill University's Conservatory of Music. His great hobby was cultivating orchids. One of his daughters married B.T Rogers, founder of British Columbia Sugar, amalgamating what became two great Canadian fortunes.

Angus, along with Stephen and Smith, dominated the Bank of Montreal for most of four decades, raising its a.s.set base from $3 8 million to $350 million. Angus was its general manager from 1869 to 1879 and president from 19 10 to 1913; Stephen served as vice-president and president between 1873 and 1881; Smith occupied the same positions from 1882 to 1905.

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complimentary cigars, than anywhere else in Ottawa. The CPR directors dispensed bountiful "bonifications," as they preferred to call them, to smooth parliamentary obstacles. Most of these bribes were in the form of CPR share options deposited in secret bank accounts.*

From the beginning the railway was difficult to finance. Most of the government's largess was scheduled to kick in only after completion targets had been met, and most sophisticated international investors had been disillusioned too often to gamble again on North American railway bonds.

Stephen at first could not get any stock exchange to list the CPR shares, and by December of 1881, Stephen and Smith were already forced to borrow on their own signatures $300,000 in working capital from the Bank of Montreal.

That same month, the railway's prospects brightened considerably with the i ecruitment of William Cornelius Van Horne as the CPR's general manager in charge of constructing the rail line. His a.s.signment was to complete twenty-nine hundred miles of track through a spa.r.s.ely explored land ma.s.s, across the Rocky Mountains and around Lake Superior, stretches that even daring railroaders considered impa.s.sable. During the 1881 construction season, only 161 miles of road across the flat prairie had been completed, and the entrenched staff of British engineers resented the intrusion of the fat Yankee with the big cigars who cursed like a spike driver and seemed immune to sensible objections to his outrageous demands. "We did not like him when he first came to Winnipeg as general boss of everything and everybody,"

*At the CPR's incorporation, the company directors sold to themselves at least 200,000 common shares at twenty-five cents each.

Stephen's holding of 3 1,000 share,, later produced .1 net dividend income (in equivalent 1990 dollars) of $3.9 million a year, and Smith's was at least as large.

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William Van Horne

J.H.E. Secretan, a CPR surveyor, complained to his diary. "His ways were not our ways ... he told me that if he could only teach the section men to run a transit, he wouldn't have a single d.a.m.n engineer about the place."

Van Horne boasted that he would lay five hundred miles of track in 1882.

By train and steamer or on horseback he ranged the Prairies-firing, hiring, ordering people and obstructions about. The snow had not left the ground when ten thousand men and seventeen hundred teams of horses began to push the rails westward, advancing two, three, and even four miles a day-once as much as twenty miles in three days. By the end of the 160 LABRADOR SMITH.

1882 season, 417 miles of track had been completed. When construction was held up by an engineer's refusal to drive his locomotive over a swaying trestle, Van Horne climbed into the cab himself "Well, if you ain't afraid of getting killed, with all your money, I ain't afraid either," reasoned the rea.s.sured driver.

"We'll have a double funeral-at my expense, of course!" Van Horne shouted back across the lurching engine as it successfully pirouetted across the deep divide.

Even tougher to cross were the two hundred miles along the north sh.o.r.e of Lake Superior. It is a land drowning in its own juices, with muskeg, quicksand and matted spruce forests making any kind of orderly traverse impossible. One particularly bitter stretch of muskeg cost $750,000 to cross, swallowing the tracks seven times along with three locomotives.

To the east, between Sudbury and Cartier, a lake had to be lowered ten feet to secure a foundation for tracks, and three miles of curve were needed to go around Jackfish Bay, although the straight lump across the water was less than half a mile.

The unexpected ruggedness of the terrain rapidly drained the companys treasury. The normally placid Stephen was beside himself with worry and at one meetingwith Smith despondently predicted the railwaywould go bust, "It mav be that we must succ.u.mb," Smith calmly replied, "but tl~at must not be as long as we individually have a dollar." The Macdonald government grudgingly advanced another loan of $30 million, but within six months Van Horne sent Smith a coded cable with the blunt message: "HAVE NO MEANS PAYING WAGES, PAY CAR CAN'T BE SENT OUT. UNLESS YOU SEND.

IMMEDIATE RELIEF, WE MUST STOP." Stephen begged Macdonald for an additional $22.5 mil- STEAL OF EMPIRE 161.

CPR tracklayers and boarding cars in nhich they ate and slept

lion, and even though the Prime Minister at first told the CPR president he might as well ask "for the planetjupiter as for more money," a bill for the further extension of funds was hastily presented to the Commons. The Liberal benches exploded with outrage, their critic charging that for six months a year the new railway would become "an idle, ice-bound snow-covered route," while party leader Edward Blake predicted its mountain section "would not pay for the grease on the axles."

The Tories finally rammed the extra loan through, but caucus denianded a dividend for their support. It took the form of humiliating Donald Smith by forcing him to agree, the story went, that he would run for Parliament in a future election not merely for the Conservatives, the party he had betrayed in 1873, but as a personal admirer of Sirjohn. As the CPR's troubles became more serious, Smith had emerged more and more into public view. "He was the great controlling spirit in all the princ.i.p.al business of the syndicate," Preston wrote of Smith, who officially became a CPR director in 1883 and remained the most influential member of the board's executive 162 LABRADOR SMITH.

committee for the next thirty years. He was more or less reconciled with Macdonald over a bottle of Scotch at a 1883 meeting arranged by Stephen.

In his typical selfcentred way, Smith reported that the Prime Minister felt better for it: "I know-without his saying it-that he is today a much happier man."

Stephen hurried off to London and by pledging Smith's and his own personal credit was able to negotiate a E77,000 loan, which would tide them over until the government's guarantees were formally approved. "Once again the partnership of company and government, the partnership of Donald Smith, John A. Macdonald, and himself, had triumphed," Donald Creighton wrote of this moment in The Old Cbieftain, the second volume of his magnificent Macdonald biography. "They were all Scotsmen, all Highlanders, all, ultimately, sons of the same river valley.. . . He remembered the river itself, winding onward, peat-black between the high banks, and brown, like old ale, over the shallows. He remembered the great rock which had given the Clan Grant its rallying-place and its battle slogan. The rock of defiance. Craigellachie.... He took a telegraph form, addressed it to Donald Smith in Montreal, and wrote a message of three words only; 'Stand fast, Craigellachie!...

Less than a year after the $22.5-million bailout, the CPR was on the verge of bankruptcy again. Stephen and Smith borrowed yet another $650,000 from the Bank of Montreal. By March 1885, they were pleading for another one million dollars to provide Van Horne with construction funds for one more month, but even their Bank of Montreal credit facilities had been exhausted, and to try tapping another bank would have triggered panic. The desperate situation prompted from Smith a totally unexpected retort: a short, declaratory sentence. "It's to the government, or to the penitentiary," he told Stephen, who had lapsed into his customary silence.

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It was, of course, to the government that the CPR turned because, as one of the railway directors correctly pointed out, "The day the CPR busts, the Conservative Party busts the day after." Whatever his personal feel- ings, Macdonald didn't dare ask his followers to approve yet another loan. Ile was on notice that at least three cabinet ministers would resign if he allowed the insatiable railway to feed at i fie public trough one more time. At a dispirited directors' nteeting, Smith and Stephen agreed to see what credit they might raise from their personal possessions. Stephen stood quietly by in the study of his $3-million house as evaluators a.s.sessed his paintings, statuary, cutlery, furniture, linen and imported piano. But the CPR president didn't have to surrender these luxuries. His raihA ay was saved by Louis Riel.

WILLIAM VAN HORNE later claimed the CPR should erect a monument to the M6tis leader, and he was right. Since fleeing Canada, he had spent time in a Montreal lunatic asylum, become a naturalized American citizen, and taught in a Montana mission school. When settlers along the South Saskatchewan River became radicalized by Ottawa's insensitivity to their demands, they joined forces with local Indians and M6tis who invited Riel to champion their cause. Once back on Canadian soil, he declared, "The time has now come to rule this country or perish in the attempt." Riel's exile had transformed him from the dreamy statesman of Red River into a hectoring, hard-edged prophet, preoccupied with theological theories. Riel spent little time on political or military strategy, formulating instead new catechisms and decreeing such oddities as new names not derived from pagan G.o.ds for the days of the week. He declared Bishop Ignace Bourget of Montreal his new Pope and himself a Messiah.

164 LABRADOR SMITH.

Chief Poundmaker (left) and Gabriel Dumont

The rebellion, which was backed by Big Bear's and Poundmaker's Cree warriors, grown aggressive with the frustrations of lost land and impending starvation, as well as the M6tis demanding aboriginal t.i.tle similar to that granted their Manitoba cousins in 1870, was masterminded by Gabriel Dumont. Grandson of a voyageur, illiterate yet fluent in six languages, a crack shot, permanent chief of the buffalo hunt and head of the first local government between Manitoba and British Columbia, Dumont was a worthy predecessor of Ernesto (Che) Guevara, the Argentine revolutionary who perfected modern guerrilla tactics as Fidel Castro's lieutenant. Appeals to Ottawa having been either ignored or rejected, Riel set up a provisional government at Batoche, a fording place on the South Saskatchewan River thirty-seven miles southwest of Prince Albert, and appointed Dumont his adjutant-general. In a preliminary skirmish at nearby Duck Lake, Dumont's M6tis easily routed a North West Mounted STEAL OF EMPIRE 165.

Police detachment from Fort Carlton, killing twelve constables and several volunteers. A dozen whites were ina.s.sacred at Frog Lake; Battleford was ransacked by Chief Poundmaker; local IJBC posts were looted and burned; lodges ol a.s.siniboines were already inarching east; and the powerful Blackfoot nation was threatening to join in.

In Ottawa, Stephen and Smith were back in their customarv pose, palnis outstretched for yet another government ~andout. The CPR had run out of payroll money and notes worth S7 irlillion would be maturing by June 1885. Failure to redeem them would push the company into the bankruptcy courts. In British Columbia, a band of three hundred strikers demanding back wages was being held at bay by the NWATP, and the company's stock was in a free-fall on the New York and London exchanges. On March 26, Macdonald gave Stephen the hard news that the federal treasury was shut tight to any further CPR grants or guarantees.

That also happened to be the date of the battle at Duck Lake, and as word of the ina.s.sacre was flashed to the Dominion's capital, everything changed. Having barely prevented the M6tis takeover of Manitoba in 1870, Macdonald knew he had to move fast or the M6tis leader might have the entire North-West up in arms. Yet there seemed to be no practical way of enforcing the federal power; Riel might as well have been on Mars.

William Van Horne, who was in Ottawa to backstop Smith and Stephen, announced that if the government put two batteries of men in his care, he would guarantee to have them on the Qu'Appelle River, next to Riel's encampments, in twelve days. Forty-eight hours after the Prime Minister agreed to the daring scheme, CPR trains were pulling into Ottawa to load the soldiers. Singing "The Girl I Left Behind Me," the men marched to the station for one of the most remarkable train rides in 166 LABRADOR SMITH.

Canadian history. Macdonald had been right. There was no practical way to move the militia west; the railway's Superior link was incomplete, with four gaps totalling eighty-six miles yet to be filled in. Much of that country was nearly impa.s.sable for lone hunters; to move more than three thousand men with supplies, ammunition and heavy artillery pieces across these quagmires seemed impossible.

Van Horne routed trains across temporary rails laid only hours earlier and at each end of steel loaded the troops into hastily fashioned freight sleds, feeding the soldiers steak and roast turkey to keep up their spirits. Fifteen years earlier it had taken Colonel Wolseley ninety-six days to move his volunteer army from Toronto to Red River. Van Horne's army made it in seven, and two days after that they were safely on the banks of the Qu'Appelle. By mid-April, the entire force was in place except for one Halifax battalion, and the troops moved into battle. Dumont's brilliant hit-and-run tactics at Fish Creek had won the initial encounters, but only two hundred M6tis sharpshooters remained to face the full onslaught of more than eight hundred soldiers at Batoche. Riel had refused to heed Dumont, who had advised continued guerrilla warfare. Instead, the M6tis were placed in siege formation; without any artillery, they had no chance. The four-day battle ended with Dumont fleeing to Montana while Riel surrendered to three Mounted Police scouts.*

*The M6tis leader was at first to be taken to Winnipeg for trial, but when he reached the CPR main line at Moose Jaw his party was rerouted to Regina for what, it was explained, were judicial reasons. The real reason was that under Manitoba law, prisoners had the right to demand half the jury be French-speaking. The Northwest Territories, where Regina was located, had no such provision.

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