The Last Spike: The Great Railway, 1881-1885 (59 page)

In the face of these defections, the loyalty and steadfastness of Donald A. Smith was refreshing and touching. Smith, as Stephen explained to a friend years later, really had very little to do with the railway except to attend board meetings; but he never failed his cousin when personal guarantees were needed at the bank. A story told of that time describes how at every directors’ meeting Stephen would begin by asking: “Has anyone found anybody to buy any of the stocks and bonds since we last met?” One day Smith, coming in late and observing the gloom on the faces of his fellow directors, suggested a twenty-four-hour adjournment. When the morrow came, a jaunty Smith entered and asked: “Has anyone raised any money?” His colleagues gloomily shook their heads. Whereupon Smith announced: “I’ve stolen another million and that will last us till somebody gets some more.”

Though this tale, which made the rounds of Montreal clubs, may be apocryphal, Smith was prepared, like Stephen, to invest all of his own money in the Canadian Pacific. Stephen, who went to London in July, was able that month to “
melt
,” as he put it, a number of land grant bonds into cash by giving the personal guarantee of Smith, Angus, and himself to a British bank for a four-month loan. “Smith,” he told Macdonald, “has behaved splendidly, promptly doing what I asked him to do.…”

It was the second of three trips Stephen made across the Atlantic in that desperate year of 1884. The first, in April, had been a total failure. Stephen had hoped to raise funds to build the Manitoba South-Western, an important branch of the railway, and also to try to boost public confidence in Canada and in the
CPR
. He failed on both counts and returned to Montreal exhausted.

The continued attacks on the Canadian Pacific affected Canada’s own credit position on the other side of the Atlantic. Leonard Tilley, the finance minister, arriving in London in June and hoping to float a loan of five million pounds, was alarmed at the propaganda campaign that had been organized. “A desperate effort is being made here, and successful -too,”
he reported, “to force down both Govt. bonds and
CPR
stocks, and the knowing ones say they will be forced still lower. All kinds of unfriendly statements are sent here from the U States & Winnipeg … and I fully expect that when the prospectus of our loan appears to-morrow we will have a heavy
GT
blast against it.” The expected blast came: a “fierce article” in the
Standard
and a “vile article” in the
Mining & Financial Register
, which referred to the loan as “another crutch for the
CPR.”
A man actually paraded in front of the great financial house of Baring, where the bonds were being offered, advertising the article by means of huge handbills. Tilley, who blamed the Grand Trunk for planting the story, got his money only with difficulty and not at the rate he expected. A week later
CPR
stock dropped to a record low of 39 on the New York board. As John Rose had put it earlier that year, there seemed to be “some evil genius at the American end of the cable where Canada is concerned.” The railway’s enemies, determined to drive it into bankruptcy, were also apparently prepared to bruise the country as well. “It is painful to see how much animosity is shown to Canadian interests,” Rose reported in July. The animosity was not confined to outsiders; Rose put the Bank of Montreal, among others, in the enemy camp. His own firm had been badly injured by virtue of holding Canadian Pacific and other Canadian securities.

Stephen, whose skin was never very thick when attacks were being made on his railway, responded with fury to the “malicious venom” in the
Globe
that summer. It was “simply damnable that they should be allowed to live and pursue such hellish work.” There was no doubt in his mind as to who was the grey eminence behind the
Globe’s
continuing attacks: “Hickson is at the bottom of it all.…” Finally, Stephen was stung to the point of reply. The
Globe
published his letters in full and then turned them against him:

“If Mr. George Stephen’s statements that the last loan of $30,000,000 will build and equip the road, why is he so sensitive about the attacks of the Globe? To be frank with Mr. Stephen he has humbugged the public as much as he can. He has a corrupt government and the corrupt Parliament at his mercy; but a few years hence he will have to appeal to the electors of Canada who make and unmake governments and parliaments. He had better make good use of the power he has at present over the creatures who have so shamefully betrayed the taxpayers of this country. Mr. Stephen has lost caste; Mr. Stephen is looked upon now as a pocket edition of Jay Gould. It is his own fault. He has betrayed the public for a fortune for himself and his friends. He has sullied the reputation
he once had as a high-toned businessman. He has no one to blame but himself. He sees his downfall near at hand, and hopes that by blaming the Globe newspaper he may fall upon a bed of doom; but we sincerely hope it won’t be, as it deserves to be upon something harder.”

To the sensitive Stephen, who valued his personal integrity and reputation above all else – far more than he valued his own fortune or possessions – these insinuations were almost too much. Perhaps the wickedest of all gibes was the rumour, widely published in the Liberal press, that he had imported a grand piano from the United States worth four thousand dollars and was protesting paying the standard twenty-five per cent duty. The original report had it that Stephen was claiming exemption for the piano under the clause in the
CPR
contract that allowed the importation of railway material duty free. This was vigorously denied, but the explanation was almost as damaging. “He claims,” the
Globe
sneered, “his piano is a fine work of art, that it would be a model for Canadian piano workers. Is this not a slur upon our manufacturers?” The net effect of the story was to present Stephen as a bloated capitalist, tinkering with expensive toys at a time when he was appealing for further government aid for the railway.

In the face of such calumny, Stephen was forced to hold his peace. During that year he seemed to swing from depression to elation and back to depression again. In August he confidently told the press that the government loan of the previous spring was quite sufficient to finish the railway. In October, the Prime Minister found that “he is in high spirits over the
CPR
.” At that point he had just seen the company’s balance sheet, which showed that the railway was making money in all its divisions – a net of $563,374 on earnings of $4,017,209 in the first nine months of 1884.

Stephen’s elation was short lived. Soon he was a mass of nerves again. The company could certainly make money, but the shortage of ready cash was killing it. In mortgaging the railroad, Stephen had made it impossible to raise any further funds except through the sale of outstanding stock. But the government lien, together with the bitter campaign being waged against the
CPR
in New York and London, had frightened off potential buyers. Unless he could make an arrangement to get rid of that lien he faced an impossible situation. It was a maddening dilemma: as soon as the
CPR
became a through line the profits would roll in, for it held a mileage advantage over other transcontinental railroads. Goods arriving from the Orient could speed across Canada to the Atlantic far faster than any rival road could carry them. But could the
CPR
be completed? By October,
Stephen realized that there simply was not enough money to do the job.

He set off for England for the third time that year, seeking to raise more funds. The loan he had negotiated in July would shortly be due. Worse, the five-million-dollar loan he had raised in New York the previous year by pledging ten million dollars worth of
CPR
stock was also due in November. He had not expected to have to worry about that obligation since he had believed the stock would become saleable at a price beyond the loan. But the stock was still hovering around the 40 mark. There were other worries. Looking beyond the financial watershed of November, Stephen could see the dark month of February looming up. Then the railway would be forced to pay its guaranteed dividend of five per cent. The government was responsible for three per cent, but the
CPR
would somehow have to find the cash for the remainder – an amount in excess of one million dollars.

The situation looked almost hopeless. On the trip across, Stephen outlined the railway’s plight to Macdonald, who was on the same ship, taking a voyage to London for his health. The news could not have done much for the Prime Minister’s stomach trouble, nor could Stephen’s hesitant proposal that fresh legislation might be enacted to free the property from the government lien have sat very easily on Macdonald’s shoulders. To the weary Prime Minister, who had exhausted himself and used up much of his political credit through the loan legislation of the previous spring, this was an almost impossible suggestion. Only a few months before the air had crackled with brave promises about the future of the
CPR
and of the country. Now, to have to admit that the railway was again in financial trouble! It was too much to swallow politically.

Nevertheless, Stephen began to see some tiny pinpoints of light at the end of the dark tunnel down which he had set his course. The New York loan he solved by the now familiar device of using his own funds and those of some of his friends. He simply bought up the stock held as collateral and paid off the debt. Then in London, the doughty Charles Tupper came to his aid as a result of his conversations with Macdonald. Tupper, mindful of the government’s earlier adventures in railroad building, was opposed to taking over the road from the company. The objections were formidable, he thought. But “the prosperity of Canada is involved in this gigantic enterprise.” It could not be allowed to fail. He drafted a plan for relief of the railway and shot it off to Tilley in Ottawa. It was all very tentative; nobody knew, certainly not Macdonald, whether any further plan to aid the
CPR
could be forced down the throats of the Cabinet and the public in time to do any good. Still, it was a straw at which Stephen
could grasp. And, finally, by pledging $385,000 worth of Toronto, Grey and Bruce bonds, which he, Donald Smith, and R. B. Angus held among them, he was able to raise a loan of a quarter of a million from a Scottish financial institution. It was this small bit of Highland good cheer that prompted the president to send off to Donald Smith one of the most memorable cablegrams in Canadian history – and certainly the shortest.

Both Stephen and Smith had come from small Scottish towns in the countryside drained by the River Spey, in a land once dominated by the Clan Grant. Stephen remembered, and knew that Smith would remember also, a great rock which dominated the valley no more than three miles from Dufftown, in Banffshire, where he had been born. Everyone knew the meaning of that rock: it was a symbol of defiance. In the brave old days, when clan battled clan, a sentinel had kept watch on its stark promontory, and when the enemy was sighted and a fiery cross borne through Speyside, this rock had become a rallying place for the Clan Grant. The rock was known as Craigellachie, and it was this defiant slogan that Stephen dispatched to his cousin. Into one brief, cryptic sentence, the
CPR
president managed to convey all the fierce passions, bold defiance, dark hatreds, and bright loyalties inherited from his Scottish forbears. “Stand fast, Craigellachie!” the cable advised, and Donald Smith, when he read it in Montreal, must himself have heard, as in the distance, the clash of warring claymores and the wild skirl of battle.

Chapter Eight

1
Eighteen eighty-five

2
Riel: the return of the Messiah

3
“I wish I were well out of it”

4
Marching as to war

5
he cruel journey

1
Eighteen eighty – five

Eighteen eighty-five was perhaps the most significant year of the first Canadian century. After that year nothing could ever be the same again, because for the first time Canadians would be able to travel the length of their nation without setting foot in a foreign land. Van Horne’s two hundred miles of engineering impossibilities and Edward Blake’s sea of mountains would both become authentic Canadian tourist attractions. Names like Lake Louise, Banff, and Yoho would stand for the ultimate in scenery; Kenora and North Bay would symbolize hunting and fishing paradises; Sudbury would be emblematic of mineral wealth; Regina and Moose Jaw would conjure up visions of golden wheat; Calgary would automatically mean cowboys and rodeos. Three years before, most of those names had not existed on the map.

A series of devices came into being that year that would help to bind the country together. The single-pole electric trolley had just been invented and was demonstrated for the first time at the Toronto Agricultural Fair of 1885. “The thought of a motor car run by an invisible force and drawing a car with fifty people aboard seems almost an impossibility,” the
Globe
commented. That same year Gottlieb Daimler took out his historic patent for an internal combustion engine and Karl Benz built the first automobile – a three-wheeled one. The presence of radio waves was confirmed and the long-distance telephone put into use. Portland cement was beginning to replace bricks and cedar blocks on the major streets. Like the railway, these new aids to communication would help stitch the awkward archipelago of population islands into a workable transcontinental reality.