The Last Spike: The Great Railway, 1881-1885 (64 page)

The Prime Minister had been doing his best to avoid Stephen, whose letters, telegrams, and personal visits were becoming more importunate as the crisis grew. Stephen, however, would not be put off. He shuttled back and forth between Montreal and Ottawa, plaguing cabinet ministers and government servants, such as Schreiber, when he could not see their chief. His letters had taken on a waspish, old womanish quality. “It is as clear as noonday, Sir John,” he wrote in January, “that unless you yourself say what should be done, nothing but disaster will result.…” But Old Tomorrow would not say. In vain, Stephen pleaded, cajoled, promised, and threatened. Tilley, the finance minister, who did not believe the company’s plan was politically feasible, exasperated him. Could Macdonald do nothing with Tilley? “What alarms me is the apprehension that
the patient will die while the doctors are deliberating on the remedy.…” Stephen was almost at the end of his tether – or thought he was: “I feel
my
ability to save it has gone. I am sorry to confess this even to myself.”

The horrifying prospect of the dividend hung like a spectre over the
CPR’S
executive committee. Default, the president knew, would be fatal. The company’s books were about to close. It had guaranteed a five per cent dividend and was responsible for two-fifths of that sum. If it did not advertise the dividend, the world would assume that the Canadian Pacific was bankrupt. Again, the only hope was the government. Surely, it would come to the assistance of the company on a temporary basis, making an advance on supplies before the end of January; those funds could be paid back out of the monthly estimates. If Stephen could have that assurance he would take the risk of advertising the dividend. He wired Macdonald on January 20: “The dividend must be cabled to night.… Can I trust to this? Please answer. I cannot delay advertizing dividend any longer.”

Now the Prime Minister was forced into a corner. He must break the news to Stephen that there was no chance of any further government assistance. He faced a revolt in his cabinet and he was not prepared to do battle for the railway. Three ministers were obdurately opposed to further relief for the
CPR
and one of these, Archibald McLelan, the Nova Scotian, who was Minister of Fisheries, had given notice that he would resign if any further public monies were advanced to the
CPR
. Thomas White, the editor of the staunchly Conservative Montreal
Gazette
, had warned Macdonald that a relief measure could not be carried and that the press was already alarmed and “beginning to sound the tocsin.” The
Week
, Goldwin Smith’s influential political journal, had just declared that however docile Macdonald’s majority might seem to be, he dared not ask it to support another
CPR
loan. The Prime Minister was inclined to believe this. He wired Stephen the same night that there was little chance of legislation that session. He would, however, be able to carry an advance of enough money to pay the dividend if it would enable Stephen to postpone matters until 1886. With an election behind him, Macdonald felt he could change many minds.

This was worse than no answer at all. As Macdonald himself surely knew, there was no way the railway could stay afloat until 1886 without further funds over and above the subsidy. Stephen wired back, “Impossible,” and took a train for Ottawa. The journey was in vain. Old Tomorrow’s only action was to postpone a decision in council until the end of the month. Stephen knew what he must do.

In one of his directors’ meetings, when bankruptcy was imminent and
real, Stephen, in a speech that Van Horne later characterized as the finest he had ever heard, turned to Smith and said, simply: “If we fail, you and I, Donald, must not be left with a dollar of personal fortune.” Smith had silently agreed. Now the two Scotsmen, each of whom had started life without a penny and risen to positions of almost unparalleled wealth, prepared to go down with the railway. They pledged the remainder of their joint fortunes and all their personal assets – everything they possessed down to their gold cuff links – to raise the six hundred and fifty thousand dollars necessary to pay the dividend and an additional one million dollars on a five-month note to provide the short-term funds the company would need to carry it over the coming weeks.

When the treasury officers arrived at his new home on Drummond Street to take an inventory of his personal possessions, Stephen stood quietly by. They had already counted his cash and securities. Now they brought along experts who valued his growing art collection, his marble statuary, his furniture, and his famous imported piano. Then they catalogued his household linen, his china, and his silverware. Stephen carefully examined the long list of his material possessions acquired over a period of thirty-five years in Canada, and then, in the words of an eyewitness, “without a flicker of an eyelid signed it all away.”

It was a remarkable act, given the business morality of that day, or indeed of any day, as Stephen himself well knew. What he and Smith had done was “simply absurd on any kind of business grounds.”

“I venture to say,” he told Macdonald, “that there is not a business man in all Canada, knowing the facts, but would say we were a couple of fools for our pains. But as long as we are able to save & protect the Company against its enemies who seem bent on its destruction we shall not grudge any risk, or loss that may occur. Personal interests have become quite a secondary affair with either of us.”

This attitude was unique in North American railway annals. Among the various United States transcontinental lines, bankruptcies had been the rule. The directors and promoters, however, had rarely lost a penny. On the contrary, they had generally profited at the expense of the ordinary bond and stockholders. Railways were not generally viewed by their promoters as a method of developing the nation but merely as an easy way of siphoning money out of the public purse. Road after road was used as a stock promotion by rings that grabbed the land subsidy, sold it at a profit, floated as much stock as possible, drained off the cash through phoney construction companies, and let the railway go into receivership. But to Stephen, money was secondary; he had made his killing in the St. Paul
line, with Jim Hill’s help, and had managed to create a railway out of it into the bargain. He did not embark on the Canadian Pacific project for profit but for sheer financial adventure, which he loved, and probably also for kudos. Perhaps if he had known how hazardous that adventure would become and how often the kudos would be tinctured with the bitter gall of calumny he might have rejected the notion.

“…  it is killing to have any of our friends think we are simply doing our bare duty by the Coy & are making money out of it,” he told the Prime Minister. Making money was for Yankees like Jay Gould and the notorious Russell Sage – railway bandits who wore no masks. Stephen shared Macdonald’s contempt for the stereotype. To be likened to Gould, as he had been, was particularly mortifying. The thing that Stephen prized most was his reputation; the idea that he might be the means whereby his friends and business associates would lose money bothered him far more than the possible financial ruin he now courted. It was not enough that he be a man of honour in the business world; he must be
seen
to be a man of honour. If the
CPR
crashed, Stephen must crash with it. At least, if he ended up selling pencils in the streets (an unlikely outcome), the world would know that he had done his duty at great personal sacrifice.

As for Donald Smith, he remained, as always, imperturbable. Stephen, on the other hand, was becoming more emotional as the days wore on and the Government dallied. At one point, when he was at his lowest ebb, he began to cry while sitting in Collingwood Schreiber’s office. His tears of despair were the outward sign of an inner sense of impending personal doom. “… I am not
sure
of
myself
being able to stand the strain for an indefinite time,” he confessed to Macdonald. “I have had warnings of which no body knows but myself which I will fight against to conceal to the last.”

No such melodramatic disclosures issued from Smith’s compressed lips. If he had physical warnings, he never betrayed them; if he had emotions, he never revealed them. In a quarter century in the Labrador fur trade he had become inured to hardship and had learned to bear reverses throughout his life without flinching. The curse of snow-blindness, the lash of the Little Emperor, George Simpson, the volleys of rotten eggs at political meetings, the charges of bribery, the taunts of John A. Macdonald who had called him a liar to his face in public – all these storms had broken around that frosty, weathered head, but Smith had never cracked or indicated that he cared. He was a lonely man, subject to considerable gossip about his “strange and complicated” family relationships. “His wife,” Sir Henry Tyler wrote to Lady Tyler in 1888, “is said to have another husband, & his daughter, lately married against her mother’s
wishes, not to be his own.” But he was always present in the background when needed, as solid and unmoving as the great rock of Craigellachie; and Stephen undoubtedly drew strength from that presence.

The two Scotsmen could provide relief only on a short-term basis; they could not, unaided, save the railway with a million dollars. The demands of the contractors in the mountains and along Lake Superior would consume that sum in a few weeks. Already the three-month notes given to satisfy clamorous creditors were coming due, and Macdonald was still vacillating on the “rearrangement scheme,” as Stephen called it. When Parliament opened, Blake noted sardonically that, for once, there was no mention of the
CPR
in the Speech from the Throne.

“Is it the intention of the Government to propose any measure of relief for the Canadian Pacific Railway Company for its embarrassment?” he asked on March 3.

“There has been no application from the Canadian Pacific Railway Company to propose a measure to relieve them from their embarrassment,” Macdonald replied.

This was strictly true, but as Stephen noted, “…  they [the Government] have the whole case in their hands, though not in official shape, not signed, etc.…”

All during this period, the newspapers were engaged in lively speculation about the future of the
CPR
– a public debate that was, as Stephen said, “simply killing the Coy which for the moment has no credit left.” Even the friendly
Mail
had admitted that for some time past the company had not had the means to finish the road: “Mr. Stephen and his associates have broken their agreement and by the terms of the bargain the road already finished, with all its belongings, is forfeited,” the paper declared on March 11. There were, it said, three possible solutions: persuade somebody else to complete and operate the railroad under a similar contract; have the government take it over; or extend help to Stephen.

Stephen continued to hammer away at Macdonald to pursue the last course, modifying his original proposal for relief here and there but, in essence, asking for the removal of the lien and a further loan of five millions.

“I don’t know how Council … will take it,” a weary Macdonald wrote to Tupper in London. “…  our difficulties are immense … we have blackmailing all round.” As the price of acceptance the hungry Quebeckers were again demanding that the provincial government lines be subsidized while the Maritimers were clamouring for another railway. “How it will end God knows,” Macdonald said, “but I wish I were well out of it.” Tupper, a strong supporter of railway relief, had offered to return and
replace the recalcitrant McLelan or, if necessary, take a seat in the House as a private member; but, as the Prime Minister pointed out, that would not be possible before the end of the session.

Macdonald was dispirited, Tilley was indifferent, Stephen was close to collapse, and even the normally ebullient Van Horne was in a private state of gloom. Outwardly, the general manager remained supremely confident. One morning when a creditor approached, asking for payment and expressing fear as to the outcome of the railway’s financial crisis, Van Horne turned to him bluntly and said: “Go sell your boots, and buy
C.P.R
. stock.” Inwardly he must have had his doubts. The absence of the pay car in the Selkirks and on the shores of Lake Superior was threatening to close down the railway. At Beavermouth, the rowdy construction camp on the Columbia, there was already talk of a mass strike. On the Lake Superior section, men were threatening to lynch a contractor whom they blamed for holding back their wages.

When he was not on the road, the general manager haunted Ottawa, visiting the Russell House and the Rideau Club, working to secure the faith of the politicians and the contractors by painting word pictures about the future of the North West and the railway. In private, to an inner circle of intimates – Frank Smith, one of Macdonald’s closest friends and cabinet ministers was one – he pointed out the disastrous effect the railway’s collapse would have on the country. More than ninety-two million dollars had been spent, of which fifty-five millions was public money. How could such an enterprise be permitted to fail for want of a few millions more? The major banks – not only the Bank of Montreal, but also those carrying the contractors – would totter; wholesale houses would crash; an army of men would be thrown out of work; Canada’s credit would be damaged for years in the international money markets.

Van Horne had more difficulty in getting to Macdonald himself. There is a story of how he managed, at last, to intercept the Prime Minister in the lobby of the House.

“Sir John,” he said, “we are and you are dangling over the brink of Hell.”

“Well, Van Horne,” Macdonald replied, “I hope it will be delayed a while. I don’t want to go just yet.”

As they strode along the corridor the elusive Tory leader slipped away to speak to “an old friend.” That was the last Van Horne saw of him. When he turned back to speak again, Macdonald had vanished, leaving behind a somewhat baffled stranger, flattered at having been so suddenly buttonholed by the Prime Minister.