Bud McDougald doesn’t walk the corridors of power. He drives
PETER C. NEWMAN
If the Canadian business Establishment has a grand master, that all-powerful figure has to be a nearly invisible Toronto capitalist named John Angus “Bud” McDougald. He is the archetype of the tycoons the radicals love to fantasize about. His lifestyle, his manners, his use of metaphor, his view of public power and private prerogative — everything about him is perfect. He is obsessively secretive, tough, chivalrous and right-wing in his outlook. Because he has never lost at anything he’s tried, winning has become the only tolerable condition of life for him.
McDougald shuns public notice. Unlike E. P. Taylor, whose enlarged mantle he now carries, McDougald deliberately cultivates the absence of a visible personality. Few Canadians are aware of his existence, and even those Establishment insiders who operate away from his immediate orbit know him less by sight than by reputation. McDougald is really not very much interested in what people think of him. He understands power very well, where it resides and how to exercise it. Discretion is best, anonymity even better. He senses that those of his would-be peers who appear on radio and television, in magazines and newspapers, do so because they are still in the process of testing the stretch of their authority. McDougald knows precisely where he fits. At the very top.
Well into his sixties, McDougald has a physical appearance that is engaging and, at a distance, surprisingly youthful. The cheek lines that run from his nose to the corners of his mouth form a precise isosceles triangle. The blue-grey eyes are always watchful, alert to every move, each nuance, any signal that might betray a visitor’s true motive. His grooming is beyond the impeccabl\: the threepiece suits are fashioned, & £271 each, by the firm of Huntsman’s, one of Savile Row’s most exclusive tailors; the English bench-made shoes are carved from the skins of young alligators.
His manner of speaking is somehow lulling, without highs or lows — the last visit to his Toronto house by Prince Philip; the rose-cultivating skills of his head gardener; the socialist tendencies of Pierre Elliott Trudeau; his triumphs at the British racetracks; the new Massey-Ferguson plant being built in Poland; the real reason the Packard Motor Car Company went out of business; the advice he gave President Eisenhower about dealing with the Russians; the broken valve on the propane tank that heats his swimming pool — everything is discussed in the same tone. There is little sense of irony in his makeup. He never takes a drink, doesn’t smoke or eat sweets, hasn’t had a cavity in 30 years.
The extent of McDougald’s fortune is difficult to estimate. The combination of his personal stock holdings and his position as chairman and president of Argus Corporation give him direct control over industrial and commercial assets worth two billion dollars, including Dominion Stores, Massey-Ferguson, Hollinger Mines, Domtar Limited and Standard Broadcasting. “We’re proprietors,” he says of the Argus setup, “and that’s where you get the reputation for being tough. Because you can say what you mean and not be afraid of losing your job.” McDougald also exercises voting control over Crown Trust (with $811 million in its custody); is a dominant force and member of the executive committee of the Canadian Imperial Bank of Commerce (assets $20.2 billion); a. member of the advisory board of the First National Bank in Palm Beach, Florida; and a director of several major international corporations including the $1.5 billion Avco conglomerate.
This is an excerpt from The Canadian Establishment, Volume One, by Peter C. Newman, being published next month by McClelland and Stewart.
He is reputed to keep about $10 million in cash and gold at the main Toronto branch of the Commerce. One estimate with which he doesn’t quarrel places his personal wealth in excess of $250 million. An indication of his income comes from his tax bill. A few years ago, Percy Finlay, a corporation lawyer and Hollinger director, weary of McDougald’s endless lamentations about the iniquities of the Canadian government, asked him: “Bud, why do you think you have the right to complain so much about this country?” They were in the Toronto Club at the time, surrounded by the local big money men sipping their pre-luncheon Scotch and sodas. McDougald didn’t even glance around before he gave his answer. “Because,” he said, “Fm the only man in this room who’s paid personal income tax of more than a million dollars every year for the past 16 years.”
The harsher side of McDougald’s nature is tempered by a kind of Henry James charm — a sense of the urbane, a faith in manners, the restriction of passion, deep respect for privacy and the proper order of things. It is this facet of his character that allows the outsider to sense that even in the face of all his power there exists a cast of sadness in Bud McDougald’s world. Although he has set himself up above the wearing constraints of ordinary lives, happiness has not visibly followed. He seems dimly aware of some loss to which he cannot put a name. Somehow the anticipated satisfactions keep eluding him; more success doesn’t bring anything he couldn’t have had before. Except perhaps the absence of fear. “I admire guts more than anything else in other people,” he says. “There are so many people you can trip up because you can outsmart them. Not because you’re smart, but because they’re afraid. They think you’ve got something up your sleeve that isn’t there.”
More than any other Canadian businessman, Bud McDougald has used his indigenous power base to build up remarkable circles of influence both in Europe and in the United States. Even if few Canadians can pretend to be his intimates, in Lopdon, Geneva, New York and Palm Beach he is no recluse. In such settings, McDougald is transmuted into a citizen of the world. “What I claim,” he says, “is that if you’re in an international type of operation as we are, and you really want to get through to the local community, you’ve got to be one of them. I find I can get business done an awful lot easier that way.”
When he’s in London, McDougald stays in a special suite at Claridge’s Hotel with bay windows angled to allow him an unobstructed view of his Phantom VI Rolls-Royce parked on the street below, so that he can signal the chauffeur when he’s on his way down. The oversized limousine is decorated in royal colors and lent to the Queen for ceremonial occasions. “I’ve been at Claridge’s for 25 years and it’s like a clearinghouse for the world,” he says. “It’s amazing; you stick around there for a week and you can see your connections from all over the globe.”
McDougald likes London on weekends when it is silent and free of people. His man knows the roads well and drives him down to the country houses for Saturday and Sunday luncheons. Among his closest acquaintances are the Marquess of Abergavenny, chairman of Ascot, and Lord Crathorne, a former British minister of agriculture. McDougald stables most of his hackney horses in England, is a member of both Epsom and Ascot, and knows the royal family well enough that on his 1967 visit to Toronto Prince Philip chose to stay with him, as did Princess Anne and her husband, Captain Mark Phillips, when they came to open the 1974 Royal Agricultural Winter Fair in Toronto.
The American headquarters of the McDougald empire is a large Mediterranean-style villa on Palm Beach’s Ocean Boulevard, next to the former mansion of the much-married Maijorie Merriweather Post Close Hutton Davies May. McDougald bought the house from one of the du Pont heirs in 1960, when the mansion he had been leasing for many years from Rick Bay was turned into the southern White House for President John F. Kennedy. The present villa, which has 18 bathrooms, attempts a Basque effect with tile roof and sloping eaves and looks so unusual that a local postcard company once issued its likeness to illustrate Palm Beach’s unique architecture. McDougald promptly ensured his privacy by buying all the available copies and having the plates destroyed.
McDougald spends most winters in Palm Beach, scheduling the annual meetings of the Argus companies close together in the spring so that he has to make only a few quick journeys north. When he commutes it’s in a jet owned by Sugra' Limited (that’s Argus spelled backwards).
“People think I go to my winter house in Palm Beach just to lie in the sun,” he says. “But I don’t ever get time. I operate the same as I do in Toronto. Palm Be.ach is quite a clearinghouse. It’s easier for me to be in Palm Beach in the winter with the various interests that we have than it is to be in Canada. That particular stratum of people we deal with are coming and going, people are moving all the time. You can fly from Paris or London to Miami, then straight out to the West Coast if you want to, out to Los Angeles or San Diego. So I see all kinds of our people in Palm Beach all winter long. Then, with our various other things, such as iron ore, which we’re heavily interested in, that’s a Cleveland operation. Their executives are up and down all the time; they have ranches, for instance, in lower Georgia where they shoot quail and that sort of thing, so 1 hold a lot of meetings in Palm Beach that normally you’d have either in Cleveland or Canada.”
You drive past the incongruously countrified mailbox with the Green Meadows sign on it, through the colonial-style picket fence, up the manicured driveway lined with weeping willows, catch sight of the McDougalds’ magnificent Toronto residence and it’s TARA. Formerly stretching over 300 acres, it’s in inner suburbia now, reduced to a mere 19 acres in a 1969 deal with the North York Council that permitted McDougald to keep a barn within city limits in return for disposing of his extra land for badly needed housing construction. McDougald has been offered two million dollars for the balance of the property, but he won’t sell. The McDougald estate, its lawns treated to give them the quality of the bluegrass horse country of Kentucky, consists of a large Georgian stable with indoor training ring for the eight resident thoroughbreds, separate cottages for the chauffeur and gardener, several outbuildings, a large swimming pool, and a 30-car garage. But it is the gleaming mansion, with its white pillars and handcrafted shutters — large enough to require a permanent staff of six servants — all there within sight of the city’s apartment towers, stabbing aimlessly at the sky, that makes the visitor blink in disbelief.
A large part of the McDougalds’ lives is taken up with horses. But they don’t pursue their hobby with the ferocity of E. P. Taylor, who once told them they were bad for the horse business because they become too fond of their animals. They won’t sell horses that can’t win races any longer and once bought a nursemaid pony for a colt whose mother “went bonkers.”
One of McDougald’s more relaxing hobbies is showing visitors his collection of classic automobiles. The temperature-controlled garages of Green Meadows house 30 cars. There are five RollsRoyces, including a 1913 Silver Ghost that is the most valuable Rolls in captivity; a 1928 model 38-250-SS supercharged Mercedes-Benz with a custom handmade body; the 1924 Isotta Fraschini Type B originally built (out of tulipwood) for Alfonso XIII, King of Spain; a 1909 Hupmobile; a 1920 Kissel Gold Bug; and various Bentleys, Packards, Bugattis and Alfa Romeos, and four custom-built Cadillacs, one of which McDougald uses for his drives to the Argus Corporation head office in downtown Toronto.
His daily circuit in one of the many limousines, with the Green Meadows coat of arms discreetly mounted on its side, is not really greatly different from Bud McDougald’s initial trek to the Toronto financial district in late 1926. His father, who ran a successful investment house called D. J. McDougald and Company, had given him a grey 1924 model 30/98 Vauxhall Velox. Easily capable of traveling more than a mile a minute, the hand-built masterpiece of machinery was the top sports car of its day. Bud was 18 at the time. The elder McDougald had arranged for him to get a clerk’s job at Dominion Securities Corporation but there was a condition attached to the gift of the car. “I either had to take the streetcar down to the office or the family chauffeur would drive me down, with his Prussian uniform, leggings, and so on,” McDougald remembers. “So the day I reported for work as an office boy I arrived in the $9,000 Vauxhall with the chauffeur in his Prussian uniform and went in and sat down at a little desk with an ENQUIRY sign on top of it and an enunciator to answer buzzers. They all thought ‘This is a great office boy — we’ll fix him.’ I got quite a lot of criticism but I still did it, because I liked it better than coming by streetcar. I was old enough to drive myself, but the basis that I was brought up with was that if you’re not prepared to defend yourself then you’d better not do it. I was allowed to take the family chauffeur every morning, providing I got off at the front door of the office. If I ever got out at the corner and walked along to avoid the teasing, I’d have got a whaling — or my father would never have allowed me to use the chauffeur again. But as long as I was prepared to stand up and take the criticism, then I could have him.”
The senior McDougald’s insistence that his son be allowed to do just about anything provided he was prepared to defend his actions produced an unorthodox upbringing. He grew up in his father’s Rosedale mansion and sporadically attended two of Toronto’s best private schools. He was enrolled at Upper Canada College for several years but is remembered there mainly for tying the rear axle of Principal William Lawson “Choppy” Grant’s Model T to a tree branch so that when the unmechanically minded school head got into his car and gunned the motor the wheels just spun in the air until Bud cut him down. Poor old Choppy never did catch on. The experience left McDougald permanently scornful of the teaching profession. Whenever he takes time to muse about his education, he will confess with mock sadness: “Left school at 14 and I’ve regretted it all my life.” Then, as the listener lowers his eyes in courteous acknowledgment of all those missed years of wisdom, Bud McDougald delivers the punch line: “Biggest mistake I ever made. Should have left when I was 12!”
The Argus Empire Company BC Forest Products Ltd. Dominion Stores Ltd. Domtar Ltd. Hollinger Mines Ltd. Massey-Ferguson Ltd. Standard Broadcasting Corp. As at December 31, 1974
Number of Percentage of Indicated common outstanding market shares shares value
500,000 2,000,000 2.500.000 1.042.000 2.850.000 2,687,475
6.6% 23.6% 16.9% 21.2% 15.6% 47.7%
$6,000,000 29.500.000 55,000,000 23.445.000 37,762,500 20.492.000 $172,199,500
Since he showed no signs of trying to pass any exams (“I just couldn’t waste the time; I had too many things going”), his father sent him off to tour Europe with a private tutor. Early in 1926 he abruptly decided to enrol in Cambridge University (“You could get into Sidney Sussex College quite easily if you knew your way around”). He took lodgings in the Carlton Hotel in London, but the general strike intervened, and McDougald found himself driving a milk wagon through the St. John’s Wood area of northwest London. It was while making these rounds that he decided England was washed up and he would return to Canada and the job his father had obtained for him at Dominion Securities.
He cleaned inkwells, clipped the Wall Street Journal and the Financial Post, drank midmorning coffee with the other messengers (to find out what was happening “below stairs”), ran out for ham sandwiches and often stayed until midnight. “One of my jobs at night was to go around to all the partners’ filing drawers, pick up their correspondence, and take them up to the filing department. I’d stay up there late, reading all their letters, and I knew more about some of the deals they were working on than all the partners put together.” Within two years, McDougald had been appointed the firm’s syndicate manager.
The 1929 crash wiped out his father’s firm as well as cutting the value of McDougald’s own private portfolio. Instead of reducing his increasingly expensive lifestyle, McDougald chose to push himself even harder. In 1934, just 10 days before his marriage to Maude Eustace Smith, he invested $10,000 cash in a short-lived partnership with a group of American promoters. The deal happened to fall through on his wedding day. The ceremony had been planned for three o’clock in the afternoon, but at 2.15 p.m. McDougald was still at his office with Pete Campbell, his best friend and legal adviser, trying to find some way out of the mess. After hurrying home to change into his striped trousers, he asked Campbell to invite his erstwhile partners to the wedding reception. It was there, in a series of tense whispered asides between the champagne toasts proposed by family and friends, that a settlement was finally negotiated.
During the next decade, while he was still with Dominion Securities, McDougald became interested in a series of outside ventures that enhanced both his reputation and his bank account. He built a large tanker using the then unique financing technique of showing the British shipyard a long-term charter contract with Shell Oil instead of making a down payment. He sold and bought companies, merged their assets, split their stocks, and became recognized as one of Bay Street’s shrewdest promoters. His credit rating and his connections were so good that at one point he was able to obtain Bank of Commerce financing for a venture that involved cash loans greater than 'the bank’s combined capital and reserves. (“I never had any trouble getting money. My problem has always been getting something that was worth putting money into.”)
His dealings were temporarily halted by a serious heart attack in 1938. But he recovered and spent most of World War II as head of Haldenby and White, Dominion Securities’ stock-trading operation, which allowed him even deeper penetration of the Street’s inner circles of influence. McDougald became known as the toughest member of the Canadian financial community. (“I don’t fool around,” he says. “I mean I call a spade a spade and if something’s wrong I take a tough position on it. I don’t fold. But I wouldn’t say that was being tough.”)
Harry Bawden recalls meeting Ted Gooderham at about this time, when the scion of the Ontario liquor fortune had just been to see McDougald. “I told him,” reported Gooderham, “ ‘Bud, I can remember when you were a boy. You used to say you’d make a million dollars. Well, you little bugger, you’ve done it!’ And you know what Bud replied? ‘Well, don’t forget this, Ted. It took me 17 years to learn how and five years to do it.’ ”
The ascent of Bud McDougald into that stratosphere of the Canadian Establishment that divides the adjudicators of power from those who merely belong goes back to 1945 and the beginnings of his partnership with E. P. Taylor. Though they were not each other’s afterhours favorites, the two men understood and complemented each other in the formation and development of Argus into one of Canada’s dominant corporate entities.
The Argus Corporation multiplied its influence through the Fifties and Sixties. A random sampling of the Toronto Stock Exchange on June 5, 1964, for example, shows that fully 10% of all the shares traded that day had been in Argus-owned enterprises. The Taylor stocks were consistent market leaders, and Bud McDougald was in the thick of every acquisition. “What allows me to see when a deal is really good?” he observed. “Well, you’ve got to be around to begin with. It’s unlikely that you’ll ever run into a good proposition if you’re just on the golf course and not moving around. One thing leads to another. I never had a written agreement in my life with anybody on a deal, never. Eddie Taylor and I never had an agreement and we never had a dispute over money. We had plenty of arguments over policy, but never have I been cheated in my life by anybody. Maybe it’s because I was always able to know who I was dealing with. I always went on the principle if a written agreement was necessary it wasn’t worth bothering with.”
McDougald made the news earlier this year when he rebuffed a take-over attempt at Argus by Paul Desmarais, the chairman Of Power Corporation, in Montreal. “Nobody can buy into Argus unless we want to sell it to him,” McDougald has always insisted.
Desmarais had originally accumulated 10.37% of Argus common stock on the open market through one of his subsidiaries (Shawinigan Industries) from 1965 to 1969; then he waited to be invited on the board. Nothing happened.
On Sunday, March 23, 1975, Bud McDougald was relaxing at his Palm Beach palace when he received an urgent request from Paul Desmarais for a meeting. Looking determined and unusually nervous, the Power Corporation chairman arrived a few moments later, sat down in McDougald’s living room, and came to the point: he was about to launch a $150-million bid for control of Argus; his host should lead the Toronto holding company’s shareholders in accepting his offer of $22 for each common share (then trading at $15.25/$ 16.50) and $17 for each Class C preferred share (then worth $12.75). McDougald was flabbergasted. “I said, ‘Paul, for God’s sake, don’t bother arguing with me, Argus just isn’t for sale. I’m going to croak someday and your turn may come — if, as, and, when that happens. I’ve got no interest in your deal, so just forget it.’ Desmarais seemed to accept that and I took him to the Everglades Club. We had lunch in a friendly way and afterward I dropped him on Worth Avenue where he wanted to do some shopping. And that was the end of that.”
Late that evening, W. G. “Bill” Cluett (of Cluett Peabody, the Arrow Shirt people), the Everglades Club president, suddenly died, and McDougald, who is not only a governor of the club but also a director of the syndicate that controls it, became preoccupied with choosing a successor. Picking a new head of the Everglades is a process only slightly less formal than deciding the papal continuity in Rome. Club governors meet in solemn conclave on the first juridical day after the incumbent’s passing and no one is allowed to disturb them. Desmarais telephoned the club on Monday morning to inform McDougald that he was proceeding with his bid despite the Argus chairman’s warning. But the Everglades steward refused to put him through. He left a number, and when McDougald finally called back it turned out to be a pay phone at the Palm Beach airport. Desmarais spent the rest of the day flying across the continent aboard his private JetStar. (The three-milliondollar plane was purchased by Desmarais from Henry Ford II. Its gold-colored interior has five seats, a sofa, a bar, a kitchen, and a complete stereo system.) He landed at the Palm Springs airport in California and was immediately driven to the El Dorado Golf Club at Palm Desert. He remained there for most of the next month, living in a villa lent to him by Fred Mannix, the Calgary industrialist. His only houseguest was Senator Louis Gélinas; his most important new acquaintance was Gerald Ford, who came to play golf at the El Dorado Club on March 22. Desmarais did phone McDougald once more, on the evening of March 24, to advise the Argus chairman that his lawyers had told him to report their negotiations to the SEC. McDougald, angry now, replied that as far as he was concerned no negotiations had taken place, and hung up.
At 11.12 a.m. the following day, with no advance notice, Power launched its bid for Argus. By the time the stock exchanges ordered a halt to trading in Argus shares three minutes later, the common stock had jumped a dollar and the Class C shares were up $2.38. Significantly, Power common finished the day up only 38 cents. It was as though the financial Establishment had, in those crucial 180 seconds, already decided who would be the eventual winner in this contest of Goliaths. In Ottawa, the Power offer blew up into a major political issue and Pierre Trudeau established a royal commission to examine “the economic and social implications for the public interest of major concentrations of corporate power in Canada.”
Because his Palm Beach residence has no office, McDougald converted Felix du Pont’s former private shower, a 10foot-square cubicle with windows overlooking the Atlantic, into his command post, equipping it with a desk, a wastebasket, a pencil sharpener, and two telephones. On the Wednesday morning following the Power bid, between ninethirty and twelve-thirty Mrs. McDougald logged 32 calls.
“I kept asking people,” McDougald remembers, “what are you talking about? Fight Power Corporation? There’s no fight. The war’s over. There isn’t any war. And Desmarais? I don’t know how anybody could live till he was 49 and be so naïve and green in that deal. The boardroom of Power must be just like Alice in Wonderland. It’s just fantastic. Take a fellow like Earle McLaughlin [chairman of the Royal Bank]. He knew the facts. The Royal was our main banker, right from the day Argus started. He’s a director of Power. I assume he approved this deal. He loaned them the money.”
PHOTOGRAPH BY JOHN REEVES
What only McDougald’s intimates realized at the time was that even under the pressure of the Desmarais bid McDougald had desperately wanted to retain the public silence he had never broken. The real reason he began to speak out was that the Power offer came at a particularly awkward moment for Argus, just as four major deals were moving into their crucial stages of negotiation. Standard Broadcasting, controlled by Argus, had made a secret take-over bid for Capital Radio, a large British private broadcaster aimed at the London market. Lord McFadzean, the chairman of Capital, and Lord Aylestone, chairman of the Independent Broadcasting Authority, threatened to break off the talks should the ownership of Argus change hands. At the same time, in Canada, Standard had made a $ 10-million bid for Bushnell Communications in Ottawa.
In his capacity as chairman of Massey-Ferguson, McDougald was also negotiating with “Bunkie” Knudsen, head of the White Motor Corporation, for a huge diesel plant at Canton, Ohio, which he wanted as an alternative source of engines to Massey’s strife-torn branch at Peterborough in England.
The most delicate bargaining of all concerned the 1.6 million Massey-Ferguson cumulative redeemable preferred shares then due to be issued. Wood Gundy, lead firm in the 30-member underwriting syndicate, had sent John Abell, one of its vice-presidents, to Palm Beach, where several of Massey’s directors were spending the winter, to tidy up the details. “There was a whole army of people in my house,” McDougald recalls. “Because the take-over bid was overhanging the market, dealers were beginning to get worried about taking commitments on these shares. The way Massey had been run under the Argus umbrella, they felt that was one thing, but under this other group, it might be something else ... Well, there I was, sitting in Palm Beach with some of the Massey directors still negotiating on the amount and the price. And as we talked, the thing was sinking further, till finally the syndicate people claimed the best they could sell was $20 million. ‘Well,’ I said, ‘that’s just an insult to Massey. But let’s get the thing cleaned up. If you’re willing to take on another five million dollars, we’ll settle for that.’ Abell called Toronto and came back to tell me there was a new quirk in the deal. Greenshields and Nesbitt, Thomson, members of the Massey syndicate, were actively soliciting Argus shares on behalf of Power.
“I was so mad, I said to Abell, T don’t like ungrateful people — this was only two weeks after we had given Nesbitt a $30-million bond issue in Dominion Stores — I don’t like disloyal people, and I don’t like people sabotaging their clients’ account. There’s only one thing to do: kick them out of this Massey financing altogether. Just kick them out. Don’t let them withdraw, because that’ll give the impression maybe they thought the issue wasn’t good.’ Poor Abell figured this was pretty rough stuff and pointed out that he’d got all this banking group already signed up and both Greenshields and Nesbitt were in it. “ ‘Well,’ I told him, ‘there’s only one chink in your so-called armor, and that’s me. In the dining room there are all those papers sitting out there, waiting for me to sign up. There’s going to be no deal at all unless you go to the telephone right now and tell both those people that they’re being kicked out for disloyalty and sabotage. And when you’ve finished you call the other members of the banking group and explain the reasons why they were kicked out — not let out, but kicked out.'
“I stood there while Abell did it. This was something new in Canadian finance. At one point he asked me who was going to take up their shares, and I said: ‘Don’t worry about that, I’ll take them up personally if I have to.’
“I’ll give Abell full credit. He did it. He kicked them out. It was quite a shock to them. As I say, it wasn’t allowed to get around that they simply weren’t part of the deal; they were kicked out. The very minute the other dealers heard that Greenshields and Nesbitt had been kicked out, they knew we meant business. That was the turning point. Before the day was over, we had the $40 million for Massey and the issue was oversubscribed the following morning.”
The Royal Bank, which had granted Desmarais the $150 million credit for his bid, now began to get nervous and started sending out feelers, trying to lay off at least $50 million on another bank. McDougald somehow got wind of the attempt and when the chairman of the Commerce (where he is a senior director) phoned to get his assessment he enthusiastically supported the loan. To McDougald it was the best banking deal he’d ever seen, because he knew the Commerce would simply get its standby fee on the $50 million, without ever actually having to advance the money.
At this point, E. P. Taylor, who had not been active in Argus management since 1959 but in the public mind continued to personify Canadian business power and prestige, openly joined the fray. Actually, Taylor had been in on the deal from the beginning, when he entertained Desmarais and Lord Hardinge at his Nassau estate early in March. Caryl Nicholas Charles Hardinge (whose title dates from 1846 when Field Marshal Sir Henry Hardinge was named Governor General of India) had spent much of his working life as a partner with the London stockbrokers Kitcat and Aitken. He had first met Taylor when he came to Ottawa in 1926 as a young aide-de-camp to the Earl of Willingdon, then Governor General, and immigrated to Montreal in 1952. He shared with Taylor a mutual interest in racehorses and as chairman of Greenshields had been chief underwriter for the New Providence Development Company in the Bahamas. Desmarais’ connection with Taylor was more recent. Taylor’s daughter had decorated his Montreal house and the two men had established a friendship based on mutual respect and personal compatibility. At 1.30 p.m. on April 17, a week before the Power offer for the Argus shares was due to expire, Taylor, who was about to board his private Hawker Siddeley jet at Toronto airport, made a statement to the Globe and Mail that he was tendering his 1,250,000 Class C Argus shares (worth $21.25 million) to Power Corporation, but stipulated that the announcement should be held until after the close of that day’s stock market. The story appeared in the Globe's bulldog edition, which reaches the street in the evening, well after the markets across Canada have closed.
When it broke, McDougald had only one comment: “Mr. Taylor is perfectly free to do what he wishes. He’s over 21.”
The Taylor manoeuvre, which also included a pledge by him to turn over the 175,000 shares of Argus common stock he holds to Desmarais in June of 1976, didn’t cause the expected stir. When the Power offer closed, holders of only 3% of the common shares had accepted its terms, though 3,987,812 Class C shares were turned in, giving Desmarais 50.8% of the total issued participating equity stock in Argus, but not control, since the Class C shares carry no votes. The offer had cost Power about $70 million. Perhaps before he undertook his foray, Paul Desmarais ought to have examined closely one of Bud McDougald’s 30 automobiles. On the side of each vehicle, so small it’s hardly visible, is part of the McDougald coat of arms and the McDougald motto: VINCERE VEL MORI (Conquer or Die).
Paul Desmarais’ official version ol these events is this: “During the winter of 1975, Bud and I met frequently in Palm Beach. I made a number of informal proposals and Bud told me that he had received many other offers. I told him, however, that all of these had been informal and that I would bring him a formal proposal approved by my board. Some time in March, 1 gave him our formal offer which he undertook to present to his board. He did, however, point out to me that, if the offer became public in the interim, he would deny it. I explained that the Power offer was approved by my board, financed by the banks and the OSC disclosure rules had to be met. For example, we had to advise the chairman of the OSC that we were talking. I expressed the hope that he would phone his directors in Jamaica, Barbados and the Bahamas as soon as possible and give me a reply so as to avoid the possibility of a leak. Bud said it would take some time to reach the directors so that we would have to take the risk of leaks. We know the results. Power now owns over 50% of the equity in Argus, without voting control. I am confident however that the board of directors of Argus will always act in the best interests of all its shareholders.”
McDougald still expends most of his time on Argus affairs, though he also runs Crown Trust, is a director of both Sangamo Company Limited (the world’s largest manufacturer of electric meters) and Avco Corporation, a huge U.S. conglomerate whose subsidiaries include large defense plants, radio and TV stations, a credit card system (Carte Blanche), as well as land development projects, consumer finance and insurance operations.
As he grows older, McDougald has retreated into a philosophy of life that attributes everything imperfect to the collective impulses of the liberal society in which he lives. “Our trouble today,” he complains, “is the courts, the parole boards, the universities and the churches.” He is an avowed anti-nationalist (he has no patience, he says, with the Walter Gordons, as though there were more than one) and believes that governments should “stay out of business and especially stay out of harassing business, which is what they’re doing.” He admits he has never felt the inclination to run for public office to put his beliefs into practice because of “the sort of people you have to meet — all that terrible going to strawberry festivals and the like.”
The McDougald Empire
Corporate Assets involved ($ millions)
Argus Corporation Dominion Stores Ltd. Standard Broadcasting Ltd. General Bakeries Ltd. Massey-Ferguson Ltd. Hollinger Mines Ltd. Canadian Imperial Bank of Commerce Domtar Ltd. St. Lawrence Corp. Avco Coip. (Greenwich, Conn.) Labrador Mining and Exploration Sangamo Co. Ltd. Stone and Webster Canada Ltd. Crown Trust Co? First National Bank (P ♦Member of the advi
McDougald’s political creed, though that may be too grand a category for it, is a simplistic loathing of state intervention in any form. “There’s no percentage in being socialistic,” he preaches. “I mean, some of the most successful fellows I know started with nothing and have done pretty well, and they’re not socialists. A lot of the people that inherited large sums of money are very sympathetic, but they never give anything away. I’ve found that out. I’ve watched them pretty carefully. Members of the second generation have a complex; they’re ashamed of something. They’re sometimes socialist, because they couldn’t do it on their own, so they’re trying to justify it. But they never give any of their own money away.” Because he made most of his own fortune himself, McDougald regards the sons of the rich as dilettantes. He was once having dinner with Bobby Kennedy in the Everglades Club. When the young senator tried to score a few dints in his political intransigence, McDougald pretended to go along with the lecture. In mock earnestness he confessed that he’d finally seen the light. Why didn’t they both do something about all the social needs the young Kennedy had been listing? “I put Bobby on the spot that night,” he remembers with some relish. “I said, ‘You just turn over everything Joe set up for you, and I’ll match it. We’ll give it all to a charity of your choice and that will set a good example for some others.’ But Bobby wasn’t very much in favor of that. It really shut him up.”
The vials of wrath have been retreating within Bud McDougald ever since his second major heart attack in 1966, when he spent most of nine weeks unconscious inside an oxygen tent in an intensive-care unit. He is seldom abusive now, aware that absolute power no longer holds men or causes. His pursuit of money has become more of a diversion than food for his soul.
Relaxing with a friend, he will tell the story of a childhood encounter that probably affected him — and his approach to life — more deeply than any other single experience. “Years ago I was on my way to Mexico with my father. We went from Chicago to St. Louis, Missouri, on a special train called the Banner Blue, and when we came into the railroad station in St. Louis, the trains used to come alongside each other, and right beside my father’s railroad car I looked across on the next track, and here was a fellow in another private car with a grand piano in it. This was at seven o’clock in the morning, and I was having breakfast and the fellow in the other car was going up and down doing his scales, just going like that until he nearly drove me crazy. That night we went to dinner at somebody’s house and then to a concert by Paderewski. He was a great pianist and premier of Poland at the same time. Because I was young, the hostess took me under her wing and I sat next to her while we heard this great concert. She turned to me and said, ‘You know, Bud, isn’t it wonderful to be so lucky to have that talent, to be able to play so easily?’
“ ‘Well,’ I said, ‘I’ve got a little special news on that one. I saw that bird this morning at seven o’clock, and if you think he just got it by having talent, you’re all wrong. He has the talent but he works hard, and I saw him doing his scales at seven o’clock this morning. And that’s why he’s drawing $10 a ticket.’ ” 'ÿ