Gordon P. Osler makes $100,000 a year. He was born a member of the WASP elite that runs the Canadian economy

Well, what’s wrong with that? Read on

DOUGLAS MARSHALL June 1 1968

Gordon P. Osler makes $100,000 a year. He was born a member of the WASP elite that runs the Canadian economy

Well, what’s wrong with that? Read on

DOUGLAS MARSHALL June 1 1968

Gordon P. Osler makes $100,000 a year. He was born a member of the WASP elite that runs the Canadian economy

DOUGLAS MARSHALL

No CLASS OF MAN since society began has been so consistently reviled as the very rich. Pity the poor plutocrat, cursed by the ancient philosophers because of his lust for gold and virtually denied entry into the kingdom of heaven by Christ. The love of money was the root of all evil. The Protestant ethic later modified the doctrine somewhat, equating goodness with prosperity, but there remains an underlying theme in Western Christianity that it is more blessed to be poor than filthy, stinking rich. In today’s schizoid society, half capitalist and half socialist, the rich generate envy and command a certain amount of respect. But they also inspire hatred and contempt. We’re not shooting the bloated, parasitical capitalists — at least not here and not yet. But there is a general feeling that excessive private wealth, especially ostentatious or inherited wealth, is not so much evil as socially reprehensible or “not very nice.”

Yet for most of us the rich remain a mystery. One thing great wealth can undoubtedly buy is privacy. Thus our ideas about the very rich are usually the product of caricatures in books and films. We think in terms of oil kings, robber barons, arrogant aristocrats and Eastern potentates. We picture limousines, servants’ halls, swimming pools, vast broadloomed offices and ultra-exclusive clubs. We imagine all the goods and services we would surround ourselves with if we had the income on a couple of million dollars. But aside from such daydreaming, our ideas are fuzzy. Just who are the rich, anyway? Do we need them? What do they do with their money? How are they different from the rest of us beyond the fact, as Hemingway succinctly explained to Scott Fitzgerald, that they have more money?

Let’s take a look at the man shown on this page. He is Gordon P. Osler, a mildmannered 45-year-old Toronto investment manager and, although not in the E. P. Taylor class, a fairly typical flake off Canada’s economic upper crust. Osier is chair-

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man of the board, president and chief executive officer of UNAS Investments Ltd., a small but solid firm formed four years ago by the merger of Osier’s family business in Winnipeg with a Toronto company. The offices are on the 31st floor — about halfway up — of the new Toronto-Dominion Centre, the vertical manifestation of Bay Street. Osier’s income, from salary and investments, is around $100,000 a year. That puts him in the company of only a few thousand other Canadians, but Osier doesn’t consider himself excessively rich. ‘T have a friend,” he says, "whose CPR dividends alone exceed my salary. Now that’s what I call rich.”

You could easily mistake Osler for a branch-bank manager or a high-school principal. What saved him from such middleclass fates was his breeding. Although born in Winnipeg, he is the grandson of Sir Edmund Osler, a former president of the Dominion Bank, and is directly related to the Toronto Osiers, charter members of the rich Anglican Establishment in Ontario. As befits such a background, Osier attended a private school in Winnipeg and was in the process of failing his first year at Queen’s University when the war intervened. He enlisted as a trooper, served with the Canadian Armored Corps in England and landed in continental Europe four days after VEDay.

His father had died while he was overseas and so instead of returning to university Osier decided to go straight into the family investment firm. He started, as is traditional in such cases, at the officeboy level, chalking up stock prices on a blackboard. As is also traditional, he didn’t stay at that level long. Today Osier holds 20 directorships in a healthy portfolio of firms that includes Trans-Canada Pipe Lines, North American Life, Interprovincial Steel and Pipe and the Toronto-Dominion Bank. He is, as he nonchalantly admits, a classic representative of what Professor John Porter in The Vertical Mosaic calls the corporate elite. Porter argues that this small group,

composed almost entirely of like-thinking Anglo-Saxons who went to the same schools and belong to the same clubs, wields enormous decision-making power in Canada. They virtually run the country.

In these terms the real capital of Canada is Toronto, with Montreal its only close rival. The residents of these two cities, about one sixth of the total population, scoop in about half of all the dividend income in Canada. "Before I moved to Toronto from Winnipeg four years ago,” says Osler, “I found I was flying down here every two weeks or so on business. This is the centre of things.”

In Toronto, Osier felt a bit like a highschool graduate trying to find his bearings during his first year at university. There was far less personal and social intermingling among members of the economic elite than there had been in a smaller place like Winnipeg. But just as universities have fraternities to help Establishment freshmen make contact with their peer group, Toronto’s corporate community has clubs. "They are damn hard to get into if you are a newcomer,” says Osier. “It has taken me three years to get into the Granite Club. Fortunately, I had an out-of-town membership in the Toronto Club, so I was able to join that quite easily.”

The Toronto Club, along with the York Club and the National Club, is a prime staircase to status in the city. Initial fees may amount to several thousand dollars and its ranks, Porter discovered, contain more than 100 members of the economic elite. “Nobody conducts formal business in a club,” says Osier. "But there are lots of luncheons that are, in fact, business meetings. Belonging to a club is certainly useful. I particularly like the concept of the ’big table’ where a dozen or so members can sit down without prior arrangement and get to know each other.”

Osier also belongs to the WASP-dominated Royal Canadian Yacht Club where he moors a 22-foot sailing boat. His general

style of living is, by elite standards, fairly modest. He owns a large house in Toronto’s money-treed Forest Hill district, runs two cars and has an outdoor swimming pool. Most Sundays he rides. He keeps two horses at a private stable near Newmarket, Ont., and he is one of the directors of the Canadian Equestrian Team. Sometime during the winter he and his wife usually take a skiing holiday in Banff, the Laurentians or Utah. Three summers ago they took their children, a son and two younger daughters, on a grand tour of Europe. Both the girls go to private schools, one to Branksome Hall and the other to Bishop Strachan School. The son, who attended Upper Canada College, is now a freshman at the University of Toronto’s Trinity College. Trinity’s ivy walls enclose a quadrangle of a foreign field that is forever England. It is an Establishment fraternity in its own right.

"Anybody enjoys making money up to a point,” says Osier. “But after a certain level of income it is not too important. I don’t think my style of living would change very much if I were earning two or three times what I am now. It sounds corny, but the important thing is to like what you arc doing. It’s a short life and you may as well enjoy it.”

Osier’s style of living, in fact, is only a cut or two above the level most middle-class Canadian families aspire to. The difference is that the Osiers can afford to live that way and many of the rest of us can’t — even though television, magazines and other media create the illusion that the good life is available to us all. That illusion was effectively shattered by The Vertical Mosaic. Porter’s studies proved that Canadians as a whole are simply not as rich as we like to think we are or as our credit-card economy indicates.

The TV commercial’s image of affluent middle-class life, for instance, the picture of an “average” family in a suburban home with two cars in the garage, occasional holidays abroad,

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With a weak political elite, wealth fills the power vacuum

kids in nursery school and a kitchen and basement full of gadgets, implies an income of $10,000 to $15,000 a year. These days only about 10 percent of all Canadian families are in that range.

Perfect upper-middle-class security, the ability to pay for university fees or give married children the down-

payment for a house, probably can't be had for less than $25,000. Official estimates show there are some 68,000 Canadians, just under half of them in Ontario, receiving more than $25.000. Real power and true membership in the economic elite is confined to the 5.700 Canadian residents with incomes above $100,000. And at the very

pinnacle of the vertical mosaic are 633 people raking in $300.000 or more.

These estimates hear little relation to taxable income. The bigger and more varied the income, the easier it becomes to take advantage of intricate tax laws and avoid heavy taxation. For instance, the latest figures show there are only 850 Canadians paying tax

on $100,000 or more and only 110 very top people with taxable incomes averaging $325,000 each.

The surprising thing is that a majorit\ of the rich do, by definition, work for their money. In the $100,000-to-$200,000 class, 53 percent of the income comes from salaries, professional fees, business profits and commissions on sales. The rest, as might he expected, comes from what used to be called "unearned income" mortgages, dividends, hond and hank interest, foreign investment and estate income.

Another source of income, which could he called either earned or unearned depending on how you look at it. is alimony payments. Canadian women mulct ex-husbands for a total of $23.5 million each year. One anonymous woman alone pays taxes on $58,000 in alimony income. On the other hand, who would believe that Canadian men declare an alimony income totaling $376.000?

No matter where the money comes Irom. however, the room at the top is pretty cosy. Because of Canada's money-biased public education systems, Porter discovered, elites perpetuate themselves and their ideology. Members are recruited from the ranks ol the very rich or, more rarely, the upper-middle class. It is almost impossible for a lower-middle-class person to make it into the big time. The concept of a nouveau riche in Canada is largely a myth. Hence the top people all tend to know each other to an astonishing extent. People who first met in prep school or a fraternity come together in boardrooms, in clubs, in charity organizations or at the executive level of trade and business associations. The elite world is a complex web of small groupings linked by familiarity and. frequently, kinship. And the hoards of the dominant corporations, adds Porter, “are themselves woven by the interlocking directorship into a fabric not unlike the web ol kinship and lineage that provides cohesion to primitive life.” There is ample evidence to support Porters thesis that this economic elite, considered as a corporate hand of blood brothers, collectively exercises enormous power. This is partly because the political elite, which should provide a counterbalance, is comparatively weak in Canada. Governments may be able to lay down broad outlines ol development policy, hut it is the corporate world that usually decides the priorities of how much is going to be invested where. What is less clear is how much power an individual member of the elite has in modern Canadian society. What does the very-rich man’s money buy him?

The main things it buys, of course, are security, comfort, a measure of deference and the privilege of living cheque-by-jewel to a lot of other money. Raze Vancouver’s Shaughnessy Heights. Toronto’s Forest Hill and Rosedale and Montreal’s Westmount and you would leave a large proportion of Canada’s economic elite without a roof over their heads. For instance, the winding roads of Shaughnessy form an Establishment nucleus of 100 top people—from J. V. Clyne. chairman of MacMillan Bloedel Ltd., on down. The area has its own private burglar - prevention service, and the

Shaughnessy Ratepayers’ Association is seeking the power to regulate its own zoning restrictions. That’s privilege.

But beyond the pleasures of economic propinquity, the rich man’s individual power seems to be somewhat fettered. Democracy, which is a dubious concept at the corporate political level, manages to operate fairly effectively when it comes to equal rights for individual citizens. In the area of justice, by all accounts, the suspicion that there is one law

for the rich and another for the poor has little ground in fact. Undoubtedly, the elite tend to look after their own. It’s not unheard of for a judge, himself a fraternity alumnus, to quietly dismiss charges brought for some fraternity prank. And the influence of kith and economic kin can make itself felt in more important cases. Moreover, the rich can afford more expensive — although not necessarily better — lawyers, can more easily pay for divorces and probably, through

their educational advantages, have a much clearer idea of what their rights are. But it is impossible to buy a judge outright — at least once he’s been raised to the bench. “1 don’t think anybody can purchase a light sentence,” says Toronto lawyer W. A. Macdonald. “If there is any hankypanky in the justice area, it would more likely have to do with ‘political’ considerations.”

It is also extremely difficult, although not impossible, for a single

rich man to influence a politician. Two years ago the Barbeau committee on political financing reported that 90 percent of all party funds come from institutions — corporations or trade unions. A top Liberal organizer who served on the Barbeau committee says all kinds of difficulties face a rich man who tries to buy himself a member of parliament:

“Say your wealthy man goes into a riding where there isn’t a great deal of money spent — never more than $15,000. So this fellow' puts up $50,_ 000 or $100,000 — and something smells all over the lot. Actually, the first dilemma with which your man is faced is whether there’s a sitting member of his party or not. MPs who are already in don’t need the wealthy very much. They are doing quite nicely, thank you, and they know the rich man’s proposition is a questionable if not a dangerous one. If the wealthy man wanted a new fellow, he’d have to import him. Either way it’s very difficult.”

One widely quoted example of the problems a rich man meets w'hen he meddles with politics is K. C. Irving’s forlorn attempt to make Charlie Van Horne premier of New Brunswick. Irving, who controls just about everything except the legislature in the province, recalled Van Horne from the United States, promoted his election as leader of the provincial Tories and backed him to the financial hilt in last year’s election. In spite of Irving’s massed platoons of wealth and influence, incumbent Liberal Premier Louis Robichaud cantered easily to a 32-26 victory at the polls.

For similar reasons it is extremely risky for the rich man himself to go into public life. His money, naturally, is an important asset in terms of the time, energy and expenses incurred by a campaign. But unless he has the right image, the image of a Nelson Rockefeller working 16 hours a day for New York State despite all his wealth, he is lost. Considerable resentment is generated by a man who appears to be trying to buy his way into something — as millionaire publisher John Bassett discovered in 1962 when, against all predictions, he lost the fight for his home Toronto-Spadina riding by a landslide.

Perhaps fearing the sort of humiliation Bassett and others before him suffered (including Roy Thomson in 1953), few top-ranking members of the corporate world seek top-ranking political posts. The C. D. Howes and Senator McCutcheons are exceptions. Porter’s research showed that only 16 percent of the political elite in Canada were from elite families. In any case, he adds, the privileges enjoyed by the very rich are not threatened by the predominantly middle-class holders of political power in this country.

The one area of public life where the rich man does get a chance to throw his individual weight around is as a patron of the arts or in organized philanthropy. Fund - raising is something the rich do really well. Partly to preserve the historic alms-giving role of the wealthy and partly to prevent governments from creeping too boldly into the welfare field, the corporate elite has virtually assumed full control of charity in Canada. Each elite family usually has its own fa-

GORDON P. OSLER continued

Who raises money best? The moneyed

vorite charitable outlet, the control of which it jealously guards, and in every city there is an “inner circle” of leading businessmen who can make or break a campaign.

Because it lacked the right corporate names on the letterhead. Toronto’s $5,450,000 Centennial project, the St. Lawrence Centre for the Arts, was foredoomed to lumber along like a civic white elephant constantly on the verge of keeling over with anthrax. On the o'her hand. Toronto Western Hospital';. current drive to raise seven million dollars for expansion is galloping ahead healthily. The reason: the campaign has two experienced co-chairmen with the right elite connections— Bruce Matthews, chairman of the board of Excelsior Life, and Trevor Moore, vice-president of Imperial Oil. Matthews eats in the Toronto Club nearly every lunch-time and when he and Moore are in town together they usually make two personal calls a day on potential contributors.

“All the money has to be solicited.” says Moore, “and about 80 percent of the funds will come from companies. When we approach a company, it's after a group of businessmen have tried to assess what the company will give. During our 20or 30-minute interview with the company's president we try to get him to ask what we are expecting from him. And if he doesn’t ask, then we try to tell him tactfully that we expect so much.”

Or to put it another way, when Excelsior Life and Imperial Oil walk into the office, it’s not prudent for a self-respecting member of the elite to send them away empty-handed.

The question remains: do we need the rich? The general feeling among economists and sociologists is that, except for the obvious social inequalities suggested by the very existence of elites, the rich don’t do society much harm and sometimes even do it good. Apologists for private wealth most frequently cite the expertise in philanthropy as a valid enough reason for keeping the rich around. Says one economist, “The rich arc extremely

useful to the country. The amount of taxes they contribute is so tremendous and on the whole they are extremely conscientious citizens. These people often do things with their own funds that they feel are worthwhile. And because they have such broad experience they are generally right.”

An associate of E. P. Taylor once used similar arguments to justify the beer tycoon’s social existence: “Taylor has created more jobs for Canadians than anyone outside the government; he has kept in Canadian hands firms that otherwise might have been unable to resist foreign bids for control; and Taylor personally has put in more time fund-raising for hospitals, universities, charities, service organizations, cultural projects than anyone else in sight.” Kenneth Carter, who headed the 1966 Royal Commission on Taxation, is also in favor of leaving the rich alone. “People who earn large incomes are generally making a pretty useful contribution to the nation.” he says. “Certainly there’s not much doubt that people who head successful promotional activities are mobilizing capital and taking substantial risks themselves. Inherited wealth helps expand existing businesses or open new ones. And I think we should all aspire to save money. Thrift is a useful quality.” One of the main proposals in the Carter report would be to reduce income tax by an average of 8.5 percent for those earning less than $10.000 and increase it by an average of 14 percent for those earning more than $10.000. But Carter and most other modern economists, including leftwingers. reject the idea of imposing a limit on income by prohibitive taxation. Under Carter's proposals, people earning more than $300.000 would still be turning over only 47.3 percent of their income to the government in direct taxes. Currently they are taxed at 35.3 percent. The reasoning is that prohibitive taxes (a) destroy incentive and (b) seldom work anyway.

“All efforts to out-tax the rich everywhere have tended to fail,” says Prof. Porter. “All taxing systems have got enough loopholes that ways can be

found around them. We should close those loopholes and certainly tax the rich more than we now do in Canada. I would also be in favor of much heavier death duties and estate duties than we have at present. Inheritance strikes me as one of the basic sources of inequality.

“But I don’t think you can introduce a taxing system on incomes that is too punitive. Money incentives are extremely important in modern life and industrial societies have to have some form of differential rewards to keep the system operating. The basic question is whether some activities are over-rewarded. How much should top executives be paid for doing what they do in the upper echelons of the corporate world? Unless you are prepared to establish economic controls, which might create worse features than we now have, you must accept the market system. An executive gets what the market will pay him — and there’s a market for top executives.”

Eventually, however, the successful executive is bid up into an income level where money is no longer the chief incentive. He has, like Osier, more than enough to satisfy his lifestyle. Who really needs two retreats in the Bahamas or three swimming pools? Yet he still goes on making money. Sociologists who have studied this phenomenon suggest that artistic and creative motivations come into play with the very rich. They indulge in corporate empire-building simply to express themselves. E. P. Taylor has explained, “I do something that is constructive. There are people who like to paint or garden. 1 like to create things.”

Do such motivations mean that the economic elite will grow steadily more powerful? Not necessarily. Porter hopes for a revolution in Canadian society that would send shudders through Shaughnessy and cause whimpering in Westmount. He doesn’t want to destroy the corporate elite as such, but he does want to drastically change its membership. He would disinherit the old rich, break up their established network of privilege and influence, and recruit a true nouveau riche by drawing on the largely wasted talents of the middle and working classes. The instrument for such a revolution would be a reformed educational system that gave everybody fully equal opportunities right through to university graduate level.

“I think it is very foolish to downgrade the value of money,” argues Porter. “I would never want to say poverty is blessed. There’s been far too much of that. As long as that holds as a value, it stands as a great impediment to people who are re-educating themselves in order to have better jobs. Money is important. The more you have, the more independent you are, the wider range of interests you can pursue and the easier it is to protect your family from the hazards of life. Money can provide a great variety of things — all of which are, in a way, freedoms.”

Perhaps that is the essence of what makes men like Gordon P. Osier dilferent from the rest of us. Despite any number of Bills of Rights, despite all the democratic institutions we cherish. Osier is by accident of birth a freer man. ★