The fur trader who grubstaked our nation

Donald Smith spent thirty lonely years in Labrador, then soared to a title and a business empire. On his way he toppled a government, financed the CPR, dreamed up Mounties and generated more love and hatred than any man in our history

PETER C. NEWMAN April 11 1959

The fur trader who grubstaked our nation

Donald Smith spent thirty lonely years in Labrador, then soared to a title and a business empire. On his way he toppled a government, financed the CPR, dreamed up Mounties and generated more love and hatred than any man in our history

PETER C. NEWMAN April 11 1959

The fur trader who grubstaked our nation


A Maclean’s flashback


Donald Smith spent thirty lonely years in Labrador, then soared to a title and a business empire. On his way he toppled a government, financed the CPR, dreamed up Mounties and generated more love and hatred than any man in our history

Most Canadians think of Lord Strathcona only as a bearded history-book gentleman in a swallow-tailed coat, uncomfortably bashing in the last spike of the Canadian Pacific Railway. Behind this fuzzy public memory is the most remarkable business career in Canadian history.

Strathcona was probably the last of his type.

His empire-scale financial manipulations touched the lives of many men, leaving them with a brooding sense of disquiet, like the first of a month of rainy days. Although he spent more than half his manhood in tattered exile as an obscure Labrador fur trader, Strathcona more than any other businessman became a major determining force in the early evolution of Canadian economics and politics.

His astounding skill as an international financier made possible construction of the CPR—a feat that united the country economically as Confederation had politically. During his four decades as governor of the Hudson’s Bay Company, he transformed a dominion of wilderness into a commercial enterprise. As its president for twenty-seven years, he made the Bank of Montreal Canada’s largest financial institution.

Strathcona is rarely remembered now as a statesman but his diplomacy settled the first Riel rebellion and his dramatic political turnabout toppled Sir John A. Macdonald’s first Canadjan parliament. Even less well remembered is the fact that Strathcona was responsible for establishing the predecessor force to the Royal Canadian Mounted Police, continued on page 49

The fur1 trader who grubstaked our nation continued from page 27

“That fellow,” Sir lohn A. Macdonald declared bluntly, “is the biggest liar I ever met”

When Lord Strathcona died of a heart attack at ninety-four, in 1914, he had outlived most of the violent animosities that he created as plain Donald Alexander Smith. During the last three decades of his life—after most of his generation had been buried — he listened to his legend, and began to believe it.

He wished desperately to be remembered not only as a man who had never sinned, but as a man intrinsically incapable of sinning. He regarded his House of Commons seat as a patriotic trust, and would not accept his MP's salary. Yet he was tossed out of parliament for bribing voters to re-elect him and the success of his companies depended on the loans and stock options his agents distributed to ministers of both parties.

His contemporaries were sharply divided in their verdicts of Donald Smith and his achievements.

Sir John A. Macdonald bluntly declared: “That fellow Smith is the biggest liar I ever met." W. T. R. Preston, the chief Ontario Liberal organizer, wrote: “The Smith syndicate was entirely responsible for using Canadian parliament for the most improper purposes that ever became operative among a free people.”

Those who defended Smith were equally vocal. After presenting to him the tenth of his twelve honorary degrees, the Very Reverend Daniel M. Gordon, vice-chancellor of Queen's University, proclaimed: “As a Canadian, I am grateful to God for the large service He has

enabled Lord Strathcona to render Canada.”

Because Smith spent the first thirty years of his business life forgotten in Labrador, the record of his appearance is almost entirely that of his old age. He liked to picture himself as a Viking prince, moving the limbs of his six-foot frame with military precision. The formidable penthouse of his gnarled brows gave his snow-squinted eyes a telescopic effect. When he spoke there was not a quiver in his meticulously combed beaver. His sentences were ridiculously cumbersome, lacking the flash of wit.

Rather than use a word of abuse, even in the most aggravating circumstances, Smith preferred merely to signify his agreement with the words of an underling. On the night of his humiliating defeat by Manitoba voters in 1880. for instance, he remarked to James Cole, a Hudson’s Bay Company factor: “I am sorry to say tha. a majority of the intelligent electorate of my late Selkirk constituency have, in the exercise of their undoubted privilege and right to choose the most fit and proper person available for the purpose of representing them in the dominion parliament, seen fit to reject my own humble, not hitherto unacceptable person.”

Cole described the upset more succinctly: “The damn voters took your money and voted against you!”

“You have properly expressed the situation,” said Smith.

During the decades before and after the turn of the century, Smith was one of Canada’s best-known, if not best-loved, public figures. Invitations to the many receptions at the largest of his four homes —a baronial red-stone castle at 1157 Dorchester Street—were envied by every social-climbing Montrealer. Smith was such a snob that he kept a secret tally, classifying his visitors according to rank. The impressive roll call included a future king and queen (George V and Queen Mary who came to Canada in 1901 as the Duke and Duchess of Cornwall and York), a prince and princess, eight dukes, seven marquises, twenty-one earls, six viscounts, six governors-general, twentysix lieutenant-governors, seven prime ministers, twenty-seven provincial premiers, four archbishops, seventeen bishops. twenty-nine supreme-court judges, fourteen chief justices, thirty-one mayors, and fifty-eight generals.

The dining room of the house opened into a garden for summer teas often attended by more than two thousand guests. When the future King and Queen of England stayed with Smith, he built a special balcony off the second floor so that the royal couple might have a better view of the fireworks exploded from the top of Mount Royal in their honor.

The custom-made furniture was carved out of bird’s-eye maple; bisecting the house was a dramatic, three-story staircase, all its mahogany components faultlessly dovetailed with wooden pegs.

Below stairs and out of hearing eight rooms were partitioned off for more than a dozen maids, butlers and flunkeys.

Fitted more by temperament than by birth for the aristocratic life. Smith ruled his household with humorless mastery. Once while he was eating breakfast with Dr. Wilfred Grenfell, he watched the lamp under the hot water kettle falter and die. When the missionary wanted to relight it Smith stopped him, and angrily summoned his personal manservant. “Remember, James,” he said. “You have only certain duties to perform. This is one. Never, under any circumstances, let such an omission occur again.”

Such arrogance was particularly maddening to those who remembered Smith's inconspicuous background. He was born on Aug. 6, 1820, at Forres, a Scottish milling town. His adolescence was much less influenced by his father—a tradesman clinging to solvency with alcoholic indecision — than by John Stuart, his uncle. Stuart had been second-in-command during Simon Fraser’s pioneering exploration of the Fraser River’s headwaters in 1808, and later became factor of the Hudson’s Bay Company trading post on Lesser Slave Lake. Following his unspectacular graduation from the local grammar school, young Donald began to toil as a clerk in the office of the town lawyer.

When he was eighteen, John Stuart came home on furlough and offered to recommend him for a junior clerkship

in the Hudson's Bay Company. The youngster accepted eagerly. In May 1838, a year after Queen Victoria had succeed ed her uncle on the British throne, Smith sailed for Canada.

Montreal, at the time of his arrival, was a puppy bush settlement with a population of barely thirty thousand, its only patch of sidewalk the approach to Notre Dame Cathedral. McGill University consisted of a medical faculty with two part-time professors.

Smith's first job was counting muskrat skins in the stuffy Hudson's Bay

warehouse at Lachine, for “twenty pounds a year and all found." For three years he lugged around the stacks of pungent pelts. Then he was promoted to junior trader at Tadoussac, an isolated St. Lawrence River trading post at the mouth of the Saguenay.

Being forced to mature away from a world he had just begun to know, but where he felt the things in which he wanted to participate were happening, he began to feel the gnawing need for selfassertion which never left him. The pressures which made him one of the most

frigid aristocrats of his era had their roots here, on his lonely treks through the Saguenay forests, apparently forgotten by his world.

When his cabin caught fire during the summer of 1847. Smith fed the flames with his clothes and private papers, cackling incoherently in hope-exhausted frustration. That fall he began to feel the symptoms of increasing snow blindness. His requests for compassionate leave were repeatedly denied.

When the schooner Marten called in at Tadoussac on her way to Montreal, he

deserted. After Montreal doctors had examined him and declared there was nothing wrong with his eyes, Sir George Simpson, the autocratic Hudson’s Bay governor, punished Smith for breaking the rules by assigning him to the company’s version of hell; Northwest River, a derelict trading post tucked into a clearing on the shore of Hamilton Inlet, a hundred-mile-deep salt-water gash in the frowning eminence of the unexplored Labrador coast.

During his thirty years in Labrador, Smith acquired the paradoxical insensibility to both hatred and loyalty which later allowed him twice to betray his political allegiances and to promote some of the toughest deals in Canadian business history. Yet the local Indians and Eskimos regarded him as such a benevolent monarch that after he became rich, a delegation of Nascopies journeyed all the way to Montreal and demanded that Smith buy Labrador, kick out the Moravian missionaries who followed him, and become its king.

Dressed in a flaming flannel shirt and homespun trousers, Smith spent most of his northern appointment bartering blankets and tobacco for furs. He established Labrador’s first farm, began the seal-oil trade, and experimented with salmon and cranberry exports. He married Isabella Hardisty, an army officer's daughter who had come north with James Grant, one of Smith’s fellow traders but became Grant’s wife without church ritual. A few months later she changed her mind and picked Smith as her husband. The marriage was legalized half a century later in a secret ceremony at the British Embassy in Paris.

Smith returned to England for a holiday in 1864 and so impressed Hudson's Bay officials in London that he was transferred out of Labrador to Montreal as the company's chief factor. Canada was then barely two years old. Electricity was still considered a risky innovation; the telephone and typewriter had not yet appeared.

The bearded Labrador trader came to the company’s Canadian headquarters just as the Canadian government completed its negotiations for the purchase of nineteen twentieths of the Hudson's Bay territories for $1,500,000. When the French haifbreeds who farmed around Fort Garry, in southern Manitoba, were organized by Louis Riel to resist the transfer, Sir John A. Macdonald sent Smith to investigate the uprising.

He reached Fort Garry on Dec. 27, 1869, and at a public meeting three weeks later proclaimed Ottawa's intentions to the suspicious settlers. After his return to Ottawa, Smith recommended the armed expedition which the next spring restored law to the prairies. He also urged the establishment of a permanent semi-military force in the region. This resulted in the formation of the North West Mounted Police, predecessor of the Royal Canadian Mounted Police.

Smith capitalized on his popularity with the Fort Garry settlers by winning the Winnipeg seat in the first Manitoba legislature. He became federal MP for Selkirk in 187!. But politics occupied little of his time. He was quietly becoming one of the new dominion’s most influential businessmen. While the transfer of the Hudson’s Bay land made other shareholders panic, Smith, who realized the. value of the territories remaining to the company, bought up enough shares at depressed prices so that he eventually acquired stock control in the company. His business reputation prompted many

of the Hudson’s Bay factors to send him their savings for investment. With these funds and his own growing fortune, he captured control of the Bank of Montreal in 1887. For the next twenty-seven years he was the Bank’s president, backing many of Canada's most profitable early commercial enterprises. He personally bought a textile mill at Cornwall and built a railroad rolling-stock plant in Montreal.

Sensing that railway construction would quickly become the new dominion’s most profitable business, Smith became determined to obtain the charter to build the CPR. The government initially gave the contract to Sir Hugh Allan, a Montreal shipowner, but that plan exploded in parliament during 1873. when documents were tabled proving that Allan had contributed to Sir John A. Macdonald's campaign funds. The revelations forced the resignation of Macdonald's regime, but had he been able to gain parliamentary support, he could have picked his successor.

When the vote that would determine the fate of Canada's first parliament was approaching. Smith was in the west. Because his position with the Hudson's Bay Company and his popularity with the prairie settlers had made him one of Macdonald's most powerful backbenchers. the prime minister ordered him back to Ottawa. “Upon you." Macdonald wrote Smith, “and the influence you can bring to bear, may depend the fate of this administration.”

Nov. 5, 1873. the night of the crucial debate, was a cloudless, moon-washed autumn evening. The galleries were packed; visitors overflowed onto the floor of the House. At five minutes after one. Smith rose. “I would be most willing to vote confidence in the government,” he said, as the treasury benches yelled support, “if 1 could do so conscientiously." Then, speaking in the hushed tones of a judge pronouncing his verdict, he dealt the death blow: “For the honor of the country, no government should exist which has a shadow of suspicion resting on it: and for that reason. 1 cannot give it my support.”

Smith's speech nearly caused a riot in the House. Macdonald, incoherent with rage, shouted at him: “Coward! Mean, treacherous coward!" Later he remarked to one of his cabinet ministers: “I could lick that man Smith quicker than hell could frizzle a feather.”

In the election that followed, Smith returned to the House as one of the most influential members in the Liberal government under Alexander Mackenzie. He won by a hundred and two ballots, but his even narrower margin in the next general election was ruled illegal. To guarantee victory, he had temporarily transferred twenty-six Hudson’s Bay families into his riding, and bribed them to vote for him. A Manitoba judge, Mr. Justice Betourncy, confirmed Smith in his scat, but when a reporter discovered that Smith held a four-thousand-dollar mortgage on the judge’s home, a Supreme Court appeal reversed the decision.

Smith’s parliamentary expulsion was humiliating, but he was already devoting nearly all his time to railroading. He acquired the bankrupt St. Paul and Pacific Railway, and extended its tracks into Winnipeg. Unknown to Macdonald, he was the principal backer of the syndicate awarded the CPR charter in 1880. He organized the Canada North West Land Company to get the maximum profit from the company’s land grants and participated heavily in the arrangement whereby the CPR directors sold themselves treasury stock at twenty-five cents on the dollar, ensuring personal profits

even before the first locomotive was purchased.

Although Smith and the other CPR backers threw most of their personal fortunes into the project, the price of flinging the tracks across the continent had been so grossly underestimated that eventually only an appeal for a loan from the government could save the venture. “It’s to the government or to the penitentiary.” Smith remarked to a fellow director, in one of his rare short sentences.

When Macdonald, who had meanwhile

returned to power, was first approuvhed about the CPR loan, he flatly refused. But during the party caucus that followed, Tory members agreed to vote the subsidy. provided some way could be found to humiliate Smith for his treachery in 1873. Smith was told that the CPR would get the money only if he agreed to contest a Montreal constituency in the next election, not just as a Tory, but as a personal admirer of Sir John A. Smith agreed. He re-entered the House as the Conservative member for Montreal West but rarely attended sittings.

Riel's second rebellion provided the transport business that finally saved the CPR. The railroad was completed on Nov. 7, 1885. At Craigcllachie, a flag stop in the Monashee Mountains of B. C... Smith climbed off a work train to pound the last spike through its iron holding plate into the wooden tie. His first blow merely turned the head of the spike over. Roadmaster F. P. Brothers yanked it out and replaced it with a new one, which Smith carefully tapped in with slow, measured strokes. A year after the railroad's completion, Smith was knighted.

Afraid that he might swing behind the new Liberal leader. Sir Wilfrid Laurier, the Tories in 1896 appointed the seventysix-year-old financier-politician Canadian High Commissioner to the United Kingdom.

London society immediately adopted the former Labrador fur trader as its favorite colonial character. Queen Victoria called him "His Labrador Lordship," or, in kinder moods, “Uncle Donald.” “You talk with him,” wrote A. G. Gardiner, editor of the London Daily News, “and it is as if Canada stands before you, telling her astonishing story.” When the Queen elevated him to the peerage in 1896, Smith chose as his official crest a beaver gnawing a maple tree. As “Baron Strathcona and Mount Royal, of Glencoe, in the County of Argyll, and of Mount Royal, in the province of Quebec and Dominion of Canada,” he represented this country in London for eighteen years. His appointment paradoxically was extended both by the Liberal Laurier and the Conservative Borden.

He worked twelve hours a day. The lights of his office on Victoria Street burned late so often that the building was nicknamed “the lighthouse.” During one holiday in rural England, he began dictating letters to a newly hired secretary on Sunday morning. The assistant politely but firmly declared that he could not work on the Sabbath. Smith paced his room all day, and promptly at midnight woke up his startled clerk with the command: “The Sabbath is now over. We must make haste with those letters!”

Finally in a position to compensate for the hardships of his decades in Labrador, Smith became Canada’s most generous philanthropist.

He gave away twelve million dollars during his lifetime; ten million dollars in his will. Easily his most dramatic gift — and probably the most deliberately spectacular action in his life—was his donation in 1900 of a fully equipped mounted regiment to help the British

fight the South African War. Smith analyzed reports of the Boer successes against the sedulously drilled British infantry and quickly recognized the need for a mobile troop of mounted scouts. He offered a million dollars to raise Strathcona’s Horse—an army of six hundred North West Mounted Police veterans. Volunteers included a hundred adventurous Arizona cowboys, who offered to enlist their own horses, but Smith turned them down.

The publicity that surrounded the success of the Strathconas in the South African war gave Smith a world-wide reputation for philanthropy. Once a youthfully arrogant tramp walked into his London office and asked for a handout because he claimed to be the son of the man who had driven the young Smith to Aberdeen, when he had left home to sail for Canada. He was given a five-pound note. Next day he w;as back. He received more money. But when he was announced again, Smith quietly told his secretary: “Give the gentleman another five pounds and tell him he need not return. You may add that his father did not drive me to Aberdeen. 1 walked."

Smith’s will provided generously for his family, as well as dividing nearly six million dollars among Canadian and British universities and hospitals. He also set up the half-million-dollar Strathcona Trust for Physical and Patriotic Education in Canada, which still operates out of Ottawa, allocating about thirty thousand dollars a year for school cadet equipment and scholarships to physicaltraining instructors.

The supreme snobbery of Smith extended beyond the grave. His will directed that money be set aside for the establishment of a leper colony. But it had a strict entrance requirement: only leprous British gentlemen of good standing could be admitted. ★

This cuticle is excerpted from Flume of Power, to he published later by Longmans, Green & Co.