The National Dream: The Great Railway, 1871-1881 (59 page)

The trouble with the
Globe’s
apoplexy was its very inevitability. The
Bystander
, no friend of the railway, was finally driven to attack the
Globe
for its intemperance: “It would surely be difficult for a political party to be worse served than the Canadian Opposition has been served on the present occasion by its reputed organ … [which] represented them as mad with factious malevolence, passionately desiring the failure of the operation, agonized by any favourable intelligence, hailing any adverse report, no matter how frivolous, as a crumb of comfort.” It was true. The
Globe
had assumed a variety of positions during the previous three months, alternately laughing at Macdonald for bungling the financing of the railway and attacking him when he was successful. “The gain of the Opposition,” said the
Bystander
, “has thus been ruined, and the leaders will go to Ottawa without a shred of moral authority left.”

The contract was the most important Canadian document since the British North America Act and one of the most important of all time, for it was the instrument by which the nation broke out of the prison of the St. Lawrence lowlands. It represented a continuation of the traditional partnership between the private and the public sectors, which always had been and would continue to be a fact of Canadian life whenever transportation and communication were involved. The geography of the nation dictated that the government be in the transportation business – either fully, as in the case of the canals and the Intercolonial, or in a kind of working partnership with private industry, as in the case of the Grand Trunk and the Canadian Pacific Railway. In these matters the Canadian government was to be involved far more deeply than its counterpart south of the border and this mutual participation was to broaden and deepen as the nation developed. The express and telegraph systems, the future transcontinental railways, the airlines and the pipelines, the broadcasting networks and communications satellites – all the devices by which the nation is stitched together are examples of this loose association between the political and business worlds. Like the original
CPR
they are not the products of any real social or political philosophy but simply pragmatic solutions to Canadian problems.

Apart from the all-important subsidies of twenty-five million dollars and twenty-five million acres of land, the chief provisions of the
CPR
contract were these:

The government would turn over to the Company all the lines built with public money-the Onderdonk section in British Columbia, the Pembina Branch and the Thunder Bay-Red River line – upon completion.

The government would waive duty on the import of all railway materials, from steel rails to telegraph cable.

The free land would be taken in alternate sections of 640 acres each from a strip forty-eight miles wide running along the route between Winnipeg and Jasper House. The Company could reject land “not fairly fit for settlement.” It could issue up to twenty-five million dollars worth of land-grant bonds, secured against this acreage. It must deposit one-fifth of the bonds with the government as security, but it could if it wished sell the rest of the bonds, as the land was earned by construction, in the proportion of one dollar per acre.

The land would be free from taxation for a twenty-year period or until sold. Stations, grounds, workshops, buildings, yards, etc., would be free from taxation forever and the land for these would also be provided free.

For twenty years no other line could be constructed south of the
CPR
to run within fifteen miles of the United States border.

The Company, in return, promised to complete the road within ten years and forever after to operate it “efficiently.” That adverb was significant since it relieved the
CPR
of future responsibilities for unprofitable aspects of its operations – passenger service, for example.

The contract was drawn up by J. J. C. Abbott, Sir Hugh Allan’s one-time solicitor and now solicitor to the new syndicate and eventually to the new company. It was a document free of loopholes, “one which has since borne the test of judicial scrutiny,” in the words of a later
CPR
president.

The Ottawa
Free Press
figured out that, in one way or another, the Syndicate was being handed a gift amounting to a cash equivalent of $261,500,000. Stephen’s private estimate was considerably lower but he neglected to count such items as freedom from taxation, duty-free imports and free land for company property. He figured the value of the 710 miles of completed government line at thirty-two millions and the cost of the work to be completed by the Company
at forty-five millions. The Syndicate had thirty millions in hand, including the cash subsidy, and could raise fifteen millions from its own resources. But this was a wildly optimistic piece of reckoning, as future events were to prove.

The press attacked on several fronts. Even such loyal western papers as the Winnipeg
Times
found it hard to stomach the monopoly clause, especially in the light of the experience with the Kittson Line’s exorbitant rates. The eastern Opposition press hit hard at the monopoly clause and also the proposition regarding duty-free construction materials; after all, Macdonald’s victory had been secured by the promise of increased protection. The great debate on the contract was not without its ironies: one was the spectacle of traditionally free-trade newspapers and politicians bitterly attacking the entry of construction materials free of tariff.

Nor did the press believe the Syndicate would actually commence building the Lake Superior section at once, as the contract stipulated. “Who is going to hold them to the bargain?” asked the
Witness
, pointing out that it would be cheaper to sacrifice the security held by the government, which was, after all, only one million dollars. (As it turned out, the prairie section was begun well ahead of the Lake Superior stretch.)

But more than anything else, the press harped upon the American influence in “the St. Paul Syndicate,” as its opponents called it. The
Globe
cried that “all the outlets from the Canadian North West … will be handed over to the grasp of the St. Paul and Manitoba Railway.” The Ottawa
Free Press
reported that not only the St. Paul interests “but also the railway kings of Chicago and New York” were behind the scenes. The headquarters of the Syndicate, the paper insisted, would be only nominally in Montreal; the real nerve centre would be in St. Paul. Much was made of a dispatch in the St. Paul
Globe
, which declared that “the position of the company’s roads is such that it cannot acquire interests or form alliances adverse to St. Paul.” Attacks were launched on the American influence in the shape of Jim Hill and Norman Kittson. Even Angus, a Montreal Scot, was labelled an American, since his address was given as St. Paul.

The anomalous presence of Donald A. Smith – a Liberal in what everyone assumed was a Conservative hive – created confusion and embarrassment. The fiction of keeping his name off the list of Syndicate members fooled no one; it was quite obvious that he was deeply involved. To the Conservative newspapers Smith had been a
villain of the deepest dye; how could they praise any enterprise with which he was connected? The Liberal newspapers, on the other hand, had been praising Smith; how could they now attack what some were calling “the Donald A. Smith Syndicate”? The Montreal
Gazette
found itself in an invidious position. On November 3, it attacked Smith and his connection with the Pembina Branch. On November 16, it congratulated the Government on its choice of men to build the
CPR
and praised them for their experience in building the same Manitoba line which it had just attacked. As the Manitoba
Free Press
commented, “that is eating humble pie with a vengeance!” Some papers – the
Gazette
was one – simply continued to pretend that Smith was not involved, but this did not wash.

“The
personnel
of the Syndicate is not acceptable to our people,” a Winnipeg supporter confided to Macdonald. “Mr. J. J. Hill is one of the old Kittson Co. whose crushing rates were felt so severely here for many years and it is supposed that he represents in the Syndicate Mr. D. A. Smith who is also regarded with suspicion and dislike.”

Stephen did his best to defend his colleagues: “Kittson is one of the best old gentlemen you ever knew, honourable to a degree; he takes no
personal
interest in these matters being content to do just as the rest of us tell him. Hill is a very able fellow, without whom we could not easily do the work. He has scrambled from a very humble beginning to a very high position, and of course, those he has passed on the road do not like him. The real control and govt. of the enterprise will be in the hands of Angus, Kennedy, McIntyre and myself … so you see there is no danger of the control getting into the hands of our St. Paul friends.” That was not strictly true. It was inconceivable that Jim Hill could be connected with such an enterprise without taking an active role.

In spite of Stephen’s reassurances, the editorials hit home to Macdonald. Two years before he had publicly called Smith the greatest liar in the world. Now he had handed the former fur trader’s closest friends – and Smith, too, by all accounts – an enormous slice of Canada. Two years before he had gone to the country with a policy of protecting local manufacturers. Now he had given the Syndicate a unique opportunity to buy on the open market; in Montreal, a delegation of iron manufacturers, appalled at this threat to home industry, were already preparing an onslaught on the capital. Almost ten years ago he had boasted that he had resisted with every atom of
his being the attempts by Americans to buy into the Allan railway syndicate. Now he appeared to be welcoming even more Americans with open arms. As Peter Mitchell told a group of friends, the whole affair was very badly mixed: the Tories liked the terms but hated the men, whereas the Liberals hated the terms and liked the men.

It did not go unremarked that much of the Government press was suspiciously silent on the subject of the contract and that those comments which were made tended to be grudging. The Ottawa
Citizen
said it would be glad to see some of the details amended or at least more clearly defined. “It is not perfect,” the
Mail
admitted, “but … is it not by far the best scheme yet proposed?” The Montreal
Herald
, a Liberal paper, was in a difficult position because, it was said, Smith and Stephen owned stock in it. Certainly it switched its point of view and went on the attack, upon which its editor tendered his resignation.

These misgivings, implicit in the attitude of the ministerial press, only reflected the doubts and, in some cases, the shock of Macdonald’s own followers. Some said the contract would be the ruin of the country; the obligations were so great the credit of Canada would be destroyed, making it impossible to borrow for other purposes. That was the theme on which many back-benchers harped: where was the money to come from? Others saw in the contract the ruin of the party; the undertaking was so clearly onerous that the country would be alarmed and turn against the Tories. There were other murmurings. It was an American syndicate whose members were either Yankees or annexationists. It was a Montreal syndicate without a single name from Toronto or Ontario; the Ontario members who had tried so hard to seize the transportation initiative from Montreal were incensed about that. The Manitoba members were angry about the monopoly clause. The Victoria members were disturbed because there was no mention of the island railway. As the session opened the Ottawa
Free Press
, reporting this dissension, declared that “sufficient has transpired to show that Sir John Macdonald cannot carry the Pacific Railway Bill.…”

Already some papers, remembering the days of ’73 and seeing another political crisis in the making, were coining slogans like “the Pacific Swindle” and “the Pacific Disgrace.” And the rumours were beginning to fly: Charles Tupper had joined the Syndicate (scandal!); the Governor General had urged that there be a dissolution of Parliament so that the matter could be decided by the people (crisis!);
John A. Macdonald had privately announced his intention of retiring (sensation!).

Macdonald had no intention of retiring, any more than Tupper had of joining the Syndicate or the Governor General of dissolving Parliament; the press treated the flimsiest gossip as news. It was an indication that the great Canadian debate, which had been going on since 1871, was about to reach its immediate climax. Was the country prepared to stand behind this first great national undertaking? How much did the nation care whether it was united by these costly bands of steel? Was the price too high? Was the bargain a fair one? Could the country afford it anyway? Was it just another piece of railway jobbery (as the Grits suspected) or a great nation-building device (as the Tories proclaimed)? Could the opponents of the great railway prolong the debate long enough to rally public opinion, as they had in 1873, and force the Government to climb down? Would Macdonald’s own supporters stand behind him or would they again fall away like dying leaves? The battle lines were drawn. As the opening session approached, Macdonald, though ill once more, was reasonably confident of victory. But, unlike the impetuous and optimistic Stephen, he knew the fight would be long and consuming.

4
The Great Debate begins

Ottawa, Thursday, December 9, 1880. The weather is bitterly cold: two below zero at 8 a.m. with the skies heavy, dreary and grey. Portland and Phaeton sleighs are skimming along the hard-packed roads, their occupants swathed in heavy robes of bear, wolf and buffalo. The streets are crowded despite the cold. The town is alive with visitors, muffled in furs, steam pouring from frosted nostrils. Newspapermen and Senators are flooding into town. Back-benchers are hand-shaking their way through the hotels. The Russell House is preparing to accommodate one hundred and fifty dinner guests at a single sitting, all crowded together at long tables under great chandeliers and all discussing the topic of the day: the contract with the Syndicate
.