The Line-Up of the Financiers
A Three-Fold Grouping of Important Canadian Interests
IF the Hon. George A. Cox. Senator of the Dominion of Canada, were fifty-one years of age instead of being seventy-one and in consequence were more inclined to be pugnacious, there is every likelihood that the public would be treated in the near future to an interesting exhibition of financial fisticuffs, the object of which would be to decide who should have control of the Canadian Bank of Commerce. Even yet it is not entirely
beyond the bounds of possibility, despite assurances to the contrary vouchsafed the daily press, that the venerable senator will gird up his loins, gather his seconds around him and enter the aren i, there to do battle for his old mistress. It is common knowledge that he did not relish resigning the presidency of an institution, in the building up of which he had played so prominent a part, and that he should still have a preference for it. is entirely natural. But whatever is to occur in this connection is entirely concealed in the obscurity that interposes a thick veil between the present and the future, and the Senator, as everybody knows, keeps his own counsel.
The disintegration of what had come to be known as the Bank of Commerce group of financiers, has been one of the most notable events in the history of Canadian finance. A few years ago the Commerce directors with George A. Cox at their head, presented almost as strong and united a front as the group of brainy men who guided the destinies of the Bank of Montreal. There was every prospect that they would continue to hold a position of great strength in the financial life of the Dominion and might equal, if they did not ultimately eclipse, the achievements of the Montreal group. But for some occult reason, which will probably never be known until the memoirs of one or other of the principals in the event come to light, there was a cleavage in the ranks of the Commerce directorate. George A. Cox resigned the presidency and was suc-
ceeded by the General Manager of the Bank, Sir Edmund Walker. Plausible explanations were given out to dispose of any suspicions that the old sovereign had been dethroned or that there was anything unpleasant beneath the placid surface of the dividing waters, but a change there was and one which no amount of explaining could quite clear up. Outwardly there was nothing to indicate that a disagreement had taken place; the expresident still remained a director and apparently gave strong support to his successor. Nevertheless, the popular mind refused to be satisfied and rumors of all sorts were rife.
For a time it could not be said that the resignation of Mr. Cox from the president’s chair had any great significance or that his absence from that position made any particular difference in the administration of the Bank. Quite recently, however, new light has been shed on the situation, which has served to revive the old suspicions and to give them added force. The changes announced in the directorate of the Canada Life Company appear to have a direct bearing on the relations existing between Senator Cox and his associates on the one hand, and Sir Edmund M alker and his colleagues on the other. There can be no gainsaying the fact that the removal of Sir Edmund Walker. Mr. Z. A. Lash and Mr. H. B. Walker from the Canada Life Board looks very much like an act of retaliation on the part of Senator Cox. which may be but the preliminary skirmish in a battle of more serious proportions. When one remembers that the Canada Life has been all along the Senator's favorite corporation, that he is concerned heart and soul in its welfare, one can readily understand his desire to surround himself on its board with men closely associated with his own interests.
But it is not of this aspect of the case that this article intends to deal, however entertaining speculations about the out-
come of the anticipated struggle may be. M hat it will seek to make clear is that by the disintegration of the old Commerce group and its separation into two parties, together with the influence of other interests. the financial leaders of Canada have divided themselves into three great parties. sharply and vividly outlined, and that all the large undertakings at present before the country are controlled by one or other of the three groups. Like the brilliant fragments of colored glass turning inside a kaleidoscope and forming themselves ever and anon into new and beautiful combinations, the financiers of the Dominion have been brought into a striking situation, where, in place of a large number of groups, the pieces have been ranged in three sets of unusual brilliance.
In the centre, unchanged to any material extent by the passing movements of time and circumstance, there still scintillates the clever company of gentlemen who control the Canadian Pacific Railway Company. Originating with Lord Mountstephen, Lord Strathcona, the late Duncan McIntyre and Mr. R. B. Angus, the group now includes Sir William Van Horne, Sir Thomas Sliaughnessy, E. B. Osler, W.
D. Matthews, Hon. Robert Mackay, C. R. Hosmer and their associates. In a sense Lord Mountstephen has dropped out, and Lord Strathcona is no longer active, but both men have played an important part in the great undertaking with which their ñamas will always be connected. Very closely allied is the Bank of Montreal, the destinies of which were for many years wrapped up with those of the railway company, while the Dominion Bank, of which
E. B. Osier is president and W. D. Matthews vice-president, may be considered as a sort of secondary financial institution. There is also the powerful Royal Trust Company in close alliance with both the C. P. R. and the Bank of Montreal. The gentlemen who occupy seats on the directorates of these important corporations may not inappropriately be termed the C. P. R. group of financiers.
And now it is extremely interesting to observe the other two groups into which
the slowly moving kaleidoscope of time has brought the leaders of Canadian finance. The first distinct figure to be evolved ranges itself around the second transcontinental railway, the C. N. R. It forms a group of growing importance and of wide influence. Its active leaders are naturally Sir William Mackenzie and Sir Donald Mann, and the Canadian Bank of Commerce is the financial institution most closely associated with its activities. Ever since Mackenzie and Mann started on their meteoric career, they have depended to a large extent on the Commerce to finance their undertakings, and while latterly the bulk of their support has come from England, there is still a close bond between the railway and the bank. The direct connecting link, if one were to be sought, would be Mr. Z. A. Lash, K.C., who is the legal adviser of both concerns and holds a seat on the directorate of each. The prominent members of the C. N. R. group, besides Mackenzie, Mann and Lash, are Sir Edmund Walker, Alexander Laird, Frederic Nicholls, D. B. Hanna, P. H. Phippen and Sir Henrv Pellatt, who is in fairly close touch with this particular combination. The number of undertakings in which these gentlemen are interested is probably larger than the number of ventures upon which the C. P. R. group have entered, but on the other hand, their companies are by no means so large or so heavily capitalized. For instance, it was computed about a year ago that Sir William Van Horne, who may be considered as the leader of the C. P. R. group, was interested in companies having a total capitalization of $480,700,000, while Sir William Mackenzie’s companies were capitalized at $214,900,000, or not quite half as much. As brilliant and successful financiers, however, the C. N. R. group falls little short of the older group.
The third and latest group to be formed is, as might be anticipated, associated with the Grand Trunk Pacific undertaking, and to a certain extent with the Grand Trunk Pacific itself. The . building of the third transcontinental gave an opening for some aggressive work, and Senator Cox, being left out in the cold as it were by the C. N. R. people, saw his opportunity. He interested himself in the railway and assumed the leadership of the group of men who had gathered to its support. As yet the G. T. P. financiers are hardly as closely united as are the men who control the other railways, but the tendency will be for them to draw together in much the same way. Their organization, if such it may be termed, is by no means complete, for no great bank has as yet been swung into line. It may be that the Senator still has hopes of recovering the Commerce, of which he remains a director. It may be, as many are inclined to believe, that a new bank will be launched to care for the Cox interests. Or it is by no means improbable that he purposes to work with two or three of the smaller banks. His confrere and oldest friend. Senator Jaffray, who is in very close touch with him, is vice-president of the Imperial Bank, a growing institution, while Duncan Coulson, president and general manager of the Bank of Toronto, has just been added to the directorate of the Canada Life, an indication that the latter bank is being brought into touch with the Cox interests. Robert Bickerdike. M.P.. another newcomer on the Canada ' Life
Board, is one of the promoters of the new International Bank of Canada.
The lines of demarcation between the C. N. R. and the G. T. P. groups is not altogether clear, nor is this to be wondered at when it is remembered that the latter is really an offshoot of the former. Members of the G. T. P. group still retain a connection with interests in the C. N. R. group. Senator Cox himself, as has been pointed out, continues a director of the Bank of Commerce, and takes care to have it known that he attends the board meetings. Likewise, J. V . Flavelle. who is president of the National Trust Company, a Cox-controlled corporation, retains a directorship in the Commerce. E. R. Wood, whom many believe is George A. Cox’s logical successor as dictator of many companies. is still a Commerce director. In fact, the G. T. P. group, while out of control of the bank, are still a strong element on its board. Whether Sir Edmund Walker will play tit for tat with the Senator, and do as he was apparently done by in the case of the Canada Life, remains to be seen. There are those who say that they would not be at all surprised to see Messrs. Cox, Flavelle and Wood superseded by the C. N. R. interests at the next annual meeting, though such a course of procedure would undoubtedly precipitate a serious and absurd conflict.
A writer of much painstaking industry about a year ago figured out that the big financial interests of Canada were in the hands of twenty-three men. As three of these gentlemen have passed away in the interval, and as it would be impossible without a good deal of trouble to name their successors, it may be assumed without much fear of contradiction that there are twenty capitalist-directors now in control of the situation. The list is as follows, in the order determined by the number of corporations in which each is interested: Senator Cox, W. D. Matthews, F. Nicholls, Senator Mackay, Sir IT. M. Pellatt, Sir W. Mackenzie, Sir W. Van Horne, E. B. Osler, Z. A. Lash, R. B. Angus, C. R. ILosmer, Lord Strathcona, H. M. Molson, R. Forget, D. B. Hanna, E. B. Greenshields, Sir D. D. Mann, Sir T. Shaughnessy, W. Wainwright and H. A. Allan. Of the twenty, W. D. Matthews, Senator Mackay, Sir William Van Horne, E. B. Osler, Z. A. Lash, R. B. Angus, C. R. Hosmer, Lord Strathcona, E. B. Greenshields, Sir T. Shaughnessy are clearly members of the C. P. R. group; F. Nicholls, Sir H. M. Pellatt, Sir W. Mackenzie,
Z. A. Lash, D. B. IPanna, Sir I). D. Mann, belong to the C. N. IP. group; leaving Senator Oox and William Wainwright as members of the third or G. T. P. group. In point of numbers, the C. P. R. group has ten, the C. N. R. group six, and the G. T. P. group two, which is about in proportion to the length of existence of the three groups.
It is, of course, absurd to say that the groups are or ever will be absolutely distinct. There will be reciprocal dealings between the various elements, while few men of the stamp of the present leaders of Canadian finance would stand for a foolish conflict of interests based on personal likes or dislikes. At the same time there can be no doubt that there is a growing tendency to work together on the part of quite a number of Canadian financiers, who see in the success which has attended the undertakings of the C. P. R. combination a very good reason for holding together and linking up their companies. The evolution of the C. N. R. and the G. T. P. groups has been a natural outcome of this estimate of the situation, for in these new transcontinental are to be found the opportunities of repeating in the years to come some of the history which has been so advantageous for the C. P. R. financiers.
It is consequently interesting to trace out the ramifications of the various branches of the tree of finance, and to find a branch drawing its sustenance from one limb twining its leaves with those of some branch attached to quite another limb. Take for instance the banking interests. It has already been shown that the C. P. R. and the Bank of Montreal are associated, but at the same time, it is well known that the Grand Trunk banks extensively with the same institution. Likewise the C. P. R. is closely linked with the Royal Trust Company, but, despite the fact that the National Trust Company is working for the G. T. P., the president of the latter road. Charles M. Hays, holds a seat on the board of the former company. Sir William Whyte,
vice-president of the C. P. R. is a director of the Imperial Bank, which, through Robert Jaffrav, is allied with the G. T. P. group. In fact, there is such an interweaving of interests as to make it oftentimes difficult to follow out the lines of separation, and so be able to say what group controls any given institution. The great railways themselves afford the best clue to the problem, for there is a clearcut distinction between the controlling forces in each case, without any overlapping.
The radius of influence does not stop here, however, but it will be found on investigation that the financial combinations control industries and utilities of farreaching importance, and that even the press comes under the sway of one or other of the groups to a great extent. Tt will be interesting to watch the course of events in the future and to see how the various combinations work out their plans.