THE PRINCELY BEGGARS
THIS LIFETIME IN CANADA
The best of Ralph Allen s remarkable new book.
ORDEAL BY FIRE
BY RALPH ALLEN
WELL, THE FIRST I knowed the king got a-going, and you could hear him over everybody; and the next he went a-charging up onto the platform, and the preacher he begged him to speak to the people, and he done it. He told them he was a pirate — been a pirate for thirty years out in the Indian Ocean — and his crew was thinned out considerable last spring in a fight, and he was home now to take out some fresh men, and thanks to goodness he’d been robbed last night and put ashore off of a steamboat without a cent, and he was glad of it; it was the blessedest thing that ever happened to him, because he was a changed man now, and happy for the first time in his life; and, poor as he was, he was going to start right off and work his way back to the Indian Ocean, and put in the rest of his life trying to turn the pirates into the true path; for he could do it better than anybody else,
In the lavish days of railway promotion, no promoters did better than the two Scots-Canadian wheeler-dealers. But no railway did worse, it seemed to a long-suffering public, than their private gravy train, the
incredible Canadian Northern
being acquainted with all pirate crews in that ocean; and though it would take him a long time to get there without money, he would get there anyway, and every time he convinced a pirate he would say to him, “Don't you thank me, don’t you give me no credit; it all belongs to them dear people in Pokeville camp-meeting, natural brothers and benefactors of the race, and that dear preacher there, the truest friend a pirate ever had!”
And then he busted into tears, and so did everybody. Then somebody sings out, “Take up a collection for him, take up a collection!” Well, a half-a-dozen made a jump to do it, but somebody sings out, “Let him pass the hat around!” Then everybody said it, the preacher too.
So the king went all through the crowd with his hat. swabbing his eyes, and blessing the people and praising CONTINUED ON PAGE 26
They were able to persuade the nation that what was good for them was good for the country too
them and thanking them for being so good to the poor pirates away off there; and every little while the prettiest kind of girls, with the tears running down their cheeks, would up and ask him would he let them kiss him for to remember him by; and he always done it; and some of them he hugged and kissed as many as five or six times—and he was invited to stay a week; and everybody wanted him to live in their houses, and said they'd think it was an honor; but be said as this was the last day of the camp-meeting he couldn’t do no good, and besides he was in a sweat to get to the Indian Ocean right off and go to wor k on the pirates.
When we got back to the raft and he come to count up he found he had collected eighty-seven dollars and seventyfive cents. And then he had fetched away a three-gallon jug of whisky, too, that he found under a wagon when he was starting home through the woods.
I he king said, take it all around, it laid over any day he'd ever put in in the missionarying line.
IN ITS HEYDAY of business adventure Canada never quite produced a pair of promoters to match the king and the duke of Mark Twain. But in William Mackenzie and Donald Mann—-each to be knighted in the fullness of time — it did create two of the most engaging dreamers who ever persuaded their country that what was good for them was good for the country too. T hey were a rare and able pair, both sprung from good Ontario stock, of the best Scots Presbyterian blood and persuasion. They met first in western Canada, following the golden trail of the CPR. By 1914. they loomed as mightily on the stage of current events as Sir Robert Borden and Sir Wilfrid Laurier; compared with their granite Scots-Canadian figures the Kaiser and even the British prime minister were distant and indistinct.
With their Canadian Northern Railway, Mackenzie and Mann had by the outbreak of World War I achieved prodigies of promotion that made such other giants in their field as Van Horne. Lord Shaughnessv. Charlie Hays and James J. Hill appear as rather stodgy and timid. They had begun with a chaotic and insignificant little complex of feeder lines on the sparse and unprofitable prairies. But they had expanded quickly with government help of various kinds.
All governments, municipal, provincial and federal, had recognized since the last half of the nineteenth century that only steel rails could galvanize the great mass of C anada to life and prevent it from sinking into paralysis like a lumpish giant. And in those times the notion of public ownership, public utility and public building was relatively strange and even vaguéis terrifying — more so by far than the well-accepted practice of putting public money into private business. Allying their own instincts to the popular philosophy of government, Mackenzie and Mann stretched out eagerly across the country, devouring the largesse of the taxpayers by the sackful.
Mackenzie, the small-town teacher and occasional storekeeper, had become gifted in the ways of high finance. Mann, the student for the ministry and lumber-camp foreman, had become a highly competent construction boss, perfectly willing and able to beat up the average lumberjack with one hand tied behind his back. They had reached their zenith together at a highly favorable time.
The gigantic CPR, despite its scandals and its skeletons, was working to the manifest advantage of the country as well as that of its proprietors. All but a few' socialists — and socialists were then very few — accepted it as a model of how public help to private enterprise could end in public good. On the other hand, other railways, notably the Grand Trunk, were in deep trouble even with the substantial aid they had had from the privy purse. As the confident and plausible Mackenzie and Mann continued to expand their Canadian Northern, L.aurier and most other Canadians were staunchly in favor of w'hat was to be — depending on the ultimate fate of the Grand Trunk Pacific — either the country's third or its second transcontinental line.
I he king and the duke carried through a bewildering array of schemes for finding
money. Behind an impenetrable fog of debentures, mortgages, bond flotations, loans, subsidies and guarantees, they disappeared from the ken of the ordinary Canadian and went on with the exciting business of putting up their railroad. They built hotels, created telegraph companies, express companies and grain elevators, acquired coal and iron mines, halibut fisheries and whaling stations. They gave business to subcontractors who wore frequently their own creatures. They created trust companies and bought and sold a street railway. In time they found themselves so much in debt to the state in its various forms that the state was faced with a difficult decision: either cut off the subsidies and guarantees, force Mackenzie and Mann into bankruptcy and admit that the state had been grotesquely careless with the taxpayers’ money or continue the guarantees and subsidies in the hope that Mackenzie and Mann would succeed as the CPR had done in not dissimilar circumstances before.
As outright grants and gifts, the Canadian Northern had by 1913 received more than seven million acres of government land, as much as the area of Belgium or Holland. In addition to these grants of property from the Dominion and the friendliest of the provinces, the promoters had been given about $30 million in cash. For their services as launchers and managers. their creditors had allowed them to keep almost all the common stock of the railroad, now valued at $100 million.
The handouts of land and money were
only a par» of »he railway’s benefices from the public purse. In its last ten years Laurier’s Liberal administration had guaranteed the Canadian Northern’s bonds for more than $50 million. In its first ihree years Borden’s Conservative government guaranteed them for almost as much more. The provinces had guaranteed an additional hundred million. Thus, in subsidies of cash and land and the underwriting of their credit, more than a quarter of a billion dollars of public money stood behind the empire the king and the duke had huilt from virtually nothing except their magnificent energy, ability, nerve, and powers of persuasion.
But a quarter of a billion still wasn’t enough. Mackenzie and Mann were in 1914 more gloriously and heroically broke than any two men in Canada’s history. Yet so adept had they become at using other people’s money that they were both immensely rich. In a confidential letter to Borden, the Tory banker F.. B. Osier said that Mackenzie's closest friends estimated his personal and untouchable fortune at between fifteen and forty million dollars. But his and his partner’s railway continued to totter on the verge of bankruptcy.
The proprietors now announced to Borden that they needed another $45 million if they were to finish their line to the Pacific coast. This demand was accompanied by the now familiar promise that it was to be positively the last. Borden, to whom the alternatives of abandoning the line to ruin and defeat and taking it over as a public property were equally unpalatable, conceived the revolutionary notion that it was time the government safeguarded its equity by taking over some of the common stock. Mackenzie and Mann and their closest associates held $100 million of this and Borden proposed that they surrender $40 million worth to the nation in return for the new bond guarantee and in partial discharge of past obligations.
During the late spring and early summer, debate about the railway question pushed the approaching war well down into the second layer of the nation's consciousness. The chief entertainment of the debate was provided by two young Tory lawyers — each to become in his own time a prime minister. The newest resolution for the relief of Mackenzie and Mann hail been framed by Borden’s solicitor-general. Arthur Meighen. and Meighen pressed the ease for it to (he House of Communs with unremitting vigor. This enraged a somewhat older but equally rising C onservative named Richard Bedford Bennett. Bennett assailed the “shameless mendicancy" of the only mildly embarrassed king and duke, whose aides were busy lining up support in the lobbies. His demand was simple and, as events were to prove, prophetic. Let the country take over the ( anadian Northern at once. When his young colleague arose to challenge him, Bennett berated Meighen for his "impertinent interruptions" and dismissed him as the gramophone of Mackenzie and Mann.
Bennett, who partly through a mishap of history was to win a place in his country’s memory as a mere defender of wealth and orthodoxy, continued his attack on wealth and orthodoxy hour after hour. Prime Minister Borden for the most part kept to the sidelines and let the young and confident Meighen take the brunt of Bennett’s attack.
Bennett’s main argument was simple enough. Mackenzie and Mann had assets of their own and they refused to use their own assets either to build the railroad that was making them rich or to rescue it from its difficulties. They wanted the country to pay their debts. Mackenzie and Mann were not even paying the men who worked for them, Bennett said,
little more than perfunctory opposition to the new Borden-Meighen plan for the relief of the railway promoters. He expressed admiration for Mackenzie and Mann, but said that if the country had to go into partnership with them the country should be the senior, not the junior, partner.
The bill giving them another forty-five million dollars passed without much real difficulty. The king and the duke had reason once again to count their blessings and praise their brothers and benefactors.
But time at last ran out for them in I9I7. One of Borden’s last major acts as prime minister had involved yet another massive handout. From his castle overlooking Toronto, Mackenzie pleaded bankruptcy. With the same stunned complaisance with which Canadian statesmen have nearly always responded to the cries of wealthy mendicants, Borden quickly put through a bill to pay off another $25.000,000 of the Canadian Northern’s debts and, though the country already held it in trust, to buy the rest of the railway’s stock for a further $10,000.000.
Fqually open-handed settlements were in the making with the Grand Trunk and the Grand I runk Pacific, two older companies that had also been financed, refinanced. subsidized, resubsidized, rescued, revived and rewarded by the public purse a dozen times and now were for sale to the taxpayers who already owned them in principle in equity and almost certainly in law. Mackenzie in business. At Mackenzie’s importuning he made a personal visit to New' York to meet a group of New York bankers (Otto Kahn himself was one of them) and see if he could persuade them to vote a private bond issue. The bankers indicated a willingness to discuss details. Borden’s spirits rose momentarily, but only momentarily; the bankers’ terms, it soon developed, might have been written by Sir William Mackenzie himself. They’d be quite happy to float the desired bond issue and their sole condition was that the government of Canada must guarantee both the principal and the interest; in short, if the government would give them a commission the New' York banks were prepared to lend the promoters the government's money. They would not risk a penny of their own. In the commercial market the credit of Mackenzie and Mann was non-existent.
To the last Borden had tried to keep
Dazed and saddened. Borden returned to Ottawa and the bitter task of persuading parliament to give the entrepreneurs just one final ten million dollars and then call the whole thing off. This enterprise was attended by contumely and dissent but. apparently through force of habit, parliament acquiesced. The king and the duke surrendered their railway to the burgeoning Canadian National, and retired with nothing but their memories and their money. ★
NEXT: THE; HEYDAY OF THE RUMRUNNERS
AND THE SCANDALOUS CUSTOMS SERVICE.
Kulph Allen's book Ordeal by Fire will be published this fall by Doubleday Canada Ltd.