What Went Wrong John A?

April 10, 2018

49TH Parallel North
Introduction
It is impossible to speak about Canada, and the Canadian Confederation, without speaking of John A. Macdonald. Truly, he is the founder of the Canadian confederation. Quite rightly, Macdonald is recognized as the man whose determination confederated four of Britain’s North Ameri-can colonies: Canada West and Canada East (which were to become Ontario and Quebec) with New Brunswick and No-va Scotia. In light of the alternatives, the confederation of Canada, on July 1, 1867, was a momentous achievement by Macdonald, whose accomplishment was recognized by Queen Victoria, knighting his as a “Commander of the Bath,” hence: Sir John A. Macdonald.
It is to be noted that the initial confederation was but the foundation of a united “British” North America, and Mac-donald was already thinking in the long term; preparing to purchase Rupert’s Land and the North-West Territories from the Hudson’s Bay Company; to bring the other Atlantic mar-itime colonies into his Confederation; and enticing the colo-ny of British Columbia with his plan for a transcontinental railway within ten years. In order to achieve this new Cana-da, Macdonald also established the conditions to accelerate the disenfranchisement of the Indigenous inhabitants of British North America — from coast to coast. Consolidating the patchwork of colonial legislation passed since the old Province of Canada approved the assimilationist Gradual Civilizations Act in 1857, Prime Minister Macdonald had his new Canadian Parliament pass the Gradual Enfranchisement Act of 1869 which was later transformed into the now noto-rious Indian Act of 1876. This act, a culmination of all of the past laws, disenfranchising and subjugating the Indige-nous nations, declared that Indians could not be in lawful possession of any land without a permit from the minister.
Macdonald’s interference in the affairs of the Indige-nous nations and their right to their hereditary lands was contrary to the Royal Proclamation of 1763 recognizing In-digenous rights in British North America, and the subse-quent treaties made between Britain and the Indigenous na-tions — treaties that were often made in order to gain Indig-enous military support in the inter-colonial wars with the French and the Americans. Yet, none of this crucial matter of entitlement to the land was a concern to the pragmatic Macdonald and the eager Canadian colonialists. With the passage of the Indian Act, which thereafter was updated and revised with ever more draconian measures, the Indian nations and peoples lost their independence and became “wards” of the fledgling Canadian state.
It is this draconian colonial relationship, established by John A. Macdonald, which defines Macdonald as not only a colonialist, but a racist and imperialist, and detracts from his position as the “Father” of Confederation. Macdonald was a man of his era, but he had other options, which he chose to ignore or suppress. As pointed out by his worthy adversary, the Métis leader, Louis Riel, whom Macdonald hounded to the gallows, it was, and is, fundamental for Canada to fully recognize Indigenous sovereignty and ownership of tradi-tional lands, based both on hereditary right and legal right, as these rights predate the Canadian Confederation and had been guaranteed by the British monarchy and legal system.
As a Conservative politician John A. Macdonald estab-lished the political foundations of Canada as a federal state made up of provinces, with limited powers to be exercised by a Canadian Parliament, with an unelected Senate and centralization of both executive and legislative powers in the Prime Minister’s Office (PMO)—with the prerogative for the prime minister to declare war.
In Canada’s first political scandal Conservative Prime Minister John A. Macdonald and his ministers were caught taking money from Canada’s richest man to win an election. In the twenty-first century Canada once again rocked from one political scandal to the next as the Conservative Prime Minister made it “perfectly clear” that Canadian democracy is subordinate to prime ministerial centralized authority. Canada’s political system, as conceived by Canada’s first prime minister, needs renewal. What went wrong?
What went wrong? The following inquiry into the career of John A. Macdonald may assist in providing an answer to why it is necessary to not only recognize Macdonald’s achievements, but to sanction Prime Minister Macdonald, and why it is important that he be judged in light of both the past and the present. Reconciliation demands no less.

49th Parallel
In the early 1850s the Governor of Washington Territory led a U.S. War Department exploratory team east across the Rocky Mountains to assess a route for the then proposed Northern Pacific railroad. The Governor sent scouting parties to meet with the Plains Indian nations, including north of the 49th parallel. Inviting them to be the guests of “the Great White Father” in Washington. A number of chiefs took the Americans up on their offer, including the great Cree peacemaker Maskapootan.
Hearing reports of the American incursions into the Indi-an lands claimed by the Hudson’s Bay Company, the British Foreign Office grew concerned the Americans would annex the whole of the Great North West. The British Government appointed a Select Committee in 1857 to consider “the State of those British Possessions in North America which are un-der the administration of the Hudson’s Bay Company, or over which they possess a License to Trade.” Under cover of the Royal Geographical Society they sent Captain John Pal-liser and an expeditionary team out to cross the colonies on-to the prairies. Palliser led a scientific expedition west to the Hudson’s Bay Company’s main provisioning and adminis-trative center, Fort Garry, in the heart of the continent at the forks of the Red and Assiniboine Rivers. Heading west Pal-liser reported on agricultural potential, settlement possibili-ties, mineral deposits and made careful note of boundary topography and any American presence in the North West. Returning to London Palliser’s assessments were not promis-ing. Most devastating was Palliser’s description of a large arid plains in the flat south west, today’s southern Saskatch-ewan. Later dubbed the “Palliser Triangle” it is an area with rain fall so scanty and uncertain that the country was deemed a near desert—almost unsuitable for agricultural set-tlement. In the end, although the findings were far less sig-nificant than what had been desired, the National Geograph-ic Society hosted a prestigious review of Palliser’s Expedi-tion and published his Report allowing the British Colonial Office to put a British face on what remained in name only the “British North-West.”
Back in Upper Canada (Ontario) John A. Macdonald, the Anglo-Canadian lawyer and businessmen and one of the leading politicians of the United Province of Canada was not pleased with Palliser’s assessment of the North-West. Co-Premier of the joint Upper and Lower Canada Assembly John A. Macdonald had had a meteoric rise in politics in Canada West. Scots-born, as a lad in 1837 he “shouldered his musket” but saw no action as a militia private when Wil-liam Lyon Mackenzie and his rebels gathered at Montgom-ery’s Tavern in their quest to overthrow the ruling Family Compact in Upper Canada. After defending several rebels Macdonald gave up criminal law to concentrate on the more lucrative business of corporate law, and politics, becoming a municipal officeholder in the military town of Kingston on Lake Ontario. When Upper and Lower Canada set up a joint legislative assembly in 1840 Macdonald opposed this union and also spoke out against expanding the union to the Mari-times. Three years later, putting aside his objections, he was elected to the joint Canadian Parliament where he supported the conservative forces held firmly under the sway of Gov-ernor General Edmund Head. Within the Parliamentary tra-dition he was an able politician and tended well to the inter-ests of Kingston, building lavish public buildings and pass-ing out lucrative contracts to friends. Throughout his parlia-mentary career Macdonald held numerous positions on the boards of a number of major corporations. President of the Quebec City firm, St. Lawrence Warehouse Dock and Wharfage Company, which successfully bid on numerous government contracts, he would go on to be the first presi-dent of the Manufacturers’ Life Insurance Company in 1887.
With pressure from the economic elite of Upper Cana-da, and not to be outdone by a British assessment, Macdon-ald and the government of the United Province of Canada mounted their own scientific expeditions sending out Henry Youle Hind west to begin his own cursory look and review Palliser’s assessment. When his report came out in 1860 Hind and his crew of Canadians were much more optimistic than Palliser.
The chief obstacle for Macdonald was not the lack of rainfall but the Hudson’s Bay Company monopoly over the vast prairie. It remained a fur warren when it could be sur-veyed, sub-divided and sold—just as was happening south of the border in the United States with the Indian Wars and slaughter of the buffalo opening up territories as eastern trains filled with settlers.
The Anglo-Canadians lobbied the Select Committee against the Hudson’s Bay Company monopoly and for an-nexation of the North West by “Canada” following “equita-ble principles” i.e. financial compensation. To whom was this economic compensation to be paid? Was it to the Aboriginal owners of the land, the First Nations and Métis? No, it was to go to the distant inheritors of the shares in the original Company of Adventurers established back in 1670. The question of the Aboriginal title to the land and compensation to the real owners of the land did not enter into Canadian or British consideration.
Rising forces of finance also saw the venerable old Com-pany as an obstacle in the development of commerce and settlement in Britain’s North American possessions as a whole and on the development of the northwestern lands in particular. The commercial classes of London would no longer put up with a feudal monopoly that stood in the way of progress. Under these circumstances something had to be done, and finance capital knew what to do.

Edward Watkin
International Capital’s Takeover

Edward W. Watkin, General Manager of the Manchester Sheffield & Lincolnshire Railway (MS&LR), was a British Imperialist of the first order. A man of great ambition and scope Watkin’s career covered the globe. Involved in inter-national business and diplomacy he often visited the USA and Canada. As a financier and railway man he was in-volved in Anglo-American relations in Central America in the 1850s, Canada’s Grand Trunk Railway, the sale of the Hudson’s Bay Company and the Confederation of Canada in the early 1860’s, international railroads in the 1870s and the Channel Tunnel, a railway tunnel between England and France, in the 1880s. His Watkin tower in the 1890s was a financial and structural failure. Watkin died in 1901.

A twenty-five year Member of Parliament, Watkin was at the center of a group of London financiers colloquially known as the “City.” From his contacts in the City Watkin organized a select financial lobby, the British North America Association (BNAA), which sought investment opportuni-ties in British North America. With the political support of the Colonial Office and various colonial officials and politi-cians Watkin and the BNAA financed major infrastructure project in both the Upper and Lower Canada colonies in-cluding the first major colonial railways in British North America. In 1852 they incorporated the Canadian Grand Trunk Railroad Company to run a rail line from Toronto to Montreal, and in 1853 they incorporated the St. Lawrence and Atlantic Railroad to run from Montreal to the ice-free port of Portland, Maine. Hiring the Quebec legal firm of the influential Canadien lawyer and politician George-Étienne Cartier as solicitor for the Grand Trunk, Watkin ensured that Lower Canada would assist the railway through financial and land subsidies.

George Étienne Cartier
Macdonald’s French Lieutenant

As a young man George Étienne Cartier fought heroically with the rebels of Lower Canada. He was exiled in Vermont in 1837. A son of the loyal Quebecois elite Cartier was for-given his indiscretions. Once pardoned he returned to Que-bec to become a prominent lawyer representing the Catholic Sulpician order among other firms and institutions. Elected to the Legislative Assembly of the Union of Canada as the representative for the riding of Verchères Cartier joined the Cabinet, becoming provincial secretary for Canada East in 1854. As the most influential politician in Lower Canada he joined forces with the rising star of Upper Canada, John A. Macdonald, and the two men shared power jointly acting as Premier from 1857-62 during which time Cartier took up the call and actively promoted the federation of the British North American colonies. In 1858 he traveled to London with two Canadian businessmen politicians: Alexander Galt of the British American Land Company and John Ross of the Northern Railway Company and the Dominion Bank. Their mission was to convince Queen Victoria of the merits of a British North American union.
The 1865 end of the Civil War in the United States was a time of high anxiety in the British colonies. Fiercely loyal to Queen Victoria and the United Kingdom the Anglo-Canadians were caught in a dilemma. Like their British mas-ters they too had covertly supported the Southern forces during the war and were concerned for their own future. Shouts for American annexation of British North America arose from across the United States. Most vulnerable were the lands to the west, the isolated Red River settlement and the whole of the North-West. With the support of the British Colonial Office, John A. Macdonald and G. E. Cartier were actively proposing to confederate the Canadian colonies. Economically, this union provided the colonies with broader “British” i.e. non-American markets through internal trade. Politically, it provided a stronger administrative unit. Militar-ily, it provided a broader population base for defence. And last, but not least, it provided an entity large enough to con-struct a key piece of infrastructure: a British North American trans-continental railroad that would allow access to the huge, alluring, prairie lands to the west!
With “railway fever” gripping the United States and the mercantile class in the British colonies Edward Watkin had no difficulty selling the idea of expanding the Grand Trunk Railway into a major new inter-colony railroad connecting Toronto to Halifax and the Atlantic coast. Led by Upper Canada Premier Macdonald Upper Canada eagerly agreed. In Lower Canada co-premier George Étienne Cartier’s sup-port was already assured as he was on retainer as the solici-tor for the Grand Trunk Railway.
As both a businessman and a politician John A. Macdon-ald supported direct rail access for Canadian timber and oth-er commodities to the ice-free Atlantic seaports. With gener-ous grants from the various colonies the Grand Trunk began construction of a series of disjointed lines. Running into cost overruns and problems with construction the railway lost vast quantities of money. Continuously it sought further co-lonial financial support to carry on and generate anticipated traffic. Although Watkin and his associates were the ones bleeding the Grand Trunk near to failure it was under these circumstances that President Watkin once more came to the colonies to beg for more money. Unable to garner additional government financial support Watkin went into the United States and traveled west from Chicago to St. Paul by rail and up to the Red River settlement by cart. He visited the Red River settlement collecting data and observations about the fur trade. Thoroughly analyzing the Company’s value and potential and other economic possibilities he found that in addition to its Chartered northern lands, the vast water-shed of Hudson Bay included the enormous boreal forest and the immense Great Plains. The HBC also possessed large tracks of land in the Canadian colonies and major blocks of land at the mouths of the major rivers in British Columbia, building sites and coal mines on Vancouver Is-land.
Returning to London Watkin reported to the Colonial Office providing his overview of the economic and political situation in the post-war United States and the need to pro-tect British interest through a federation of the British North American colonies into one Imperial colony. He also re-viewed the state of the Hudson’s Bay Company and its many inconsistencies with the character of the modern era. He recommended a novel approach—a “Canadian” purchase of the Hudson’s Bay Company and its assets. Reporting to his financial friends he delivered much more than a simple report. Following all his investigations Watkin proposed a grand trans-continental scheme designed to consolidate transportation, trade and commerce in British North Ameri-ca. His plan initially saw the establishment of the Atlantic and Pacific Transit and Telegraph Company to operate a tel-egraph line across British North America, including the Hudson’s Bay Company lands. The construction of the tele-graph would lay the necessary infrastructure for the con-struction of a new trans-continental Grand Trunk railroad. Settlement and colonization of the southern Hudson’s Bay Charter lands would naturally follow, as would profitability for the beleaguered Grand Trunk Railroad Company. The beauty of the proposal was that all of this was to be financed through generous subsidies maintained by land grants and special taxes levied on the population by the colonial gov-ernments for mail and telegraph services. The “City” bankers quickly agreed to this magnificent proposal. They wanted in on this dazzling enterprise which sparkled with opportunities for large profits.
Arranging a special London meeting with the directors of the Hudson’s Bay Company Watkin outlined his proposal for the telegraph line and asked the HBC to grant a strip of land ten miles wide from the westerly end of Lake Superior across the Great Plains and into British Columbia. Based on the inevitable interference such a line would have with juris-diction over the fur trade in the Northwest the HBC Direc-tors voiced their firm opposition to any “Pacific Scheme” Watkin proposal was rejected. However, the Hudson’s Bay Company’s officers were well aware that the fur trade was not what it used to be. Profits were slimming, and pressures were mounting with the recent influx of 600 Anglo-Canadian settlers into the Red River community. Politically this “Canadian Party” was hostile to the Hudson’s Bay Company and seeking annexation of the North-West to Canada. Elements in Canadian financial circles in Toronto and Montreal were also calling on the Colonial Office for change. But there were many traditionalists on the HBC board who sought to maintain the fur trade and were unwill-ing to compromise with the nature of what still remained a profitable enterprise.
Watkin’s proposal was not without merit, and the Gover-nor of the Hudson’s Bay Company, who was Sir Edmund Head, the recently returned Governor General of the Prov-ince of Canada and Lieutenant Governor of Canada West and Canada East (1854-61) a business mentor to the Hud-son’s Bay Company’s Chief Factor Donald Smith and the Conservative politician John A. Macdonald. An autocrat by nature Head had ruled the Canadas and knew full well what was really behind the telegraph proposal. As Governor of the Canadian colonies (and the Maritime colony of New Bruns-wick) Head had been an early proponent of unification of the Maritime colonies and later Upper and Lower Canada and their linkage by rail. Having spent years in the British North American colonies Head had also carefully assessed Hudson’s Bay Company assets and knew well the value of his HBC shares. Working with the Colonial Office over the years, Head, a member of the Privy Council and Knight Commander of the Order of Bath, also knew that a “red-line” railway across British North America was necessary for strengthening the Empire, continental defence against Amer-ican aggression and over-land access to the Pacific. Alt-hough Hudson’s Bay Company Governor Head rejected the telegraph proposal, he nevertheless conferred with the Colo-nial Secretary, the Duke of Newcastle, for two months, leav-ing the door open for a sweeter offer.
As Watkin expected, the HBC was unwilling to lease the land for a right-of-way, but the Colonial Office was in sup-port of the Canadian government annexing the Hudson’s Bay Company lands. He now saw a golden opportunity for his select group of London bankers, the BNAA, to solve this problem by buying the Hudson’s Bay Charter and lands first—and then selling it to Canada with ample concessions to conduct business with large land grants, few restrictions or onerous taxes. Watkin set the value of the Company stock at £2,000,000 (pounds sterling). This sum was offered for the trading assets as well as the real estate holdings of the Hudson’s Bay Company in the Northwest. Governor Head was interested.
With the Colonial Secretary arranging the biggest land sale in North American history, larger than Jefferson’s Loui-siana Purchase, Watkin once again met with his London bankers. In the industrial spirit of the age, and the rapid ad-vancement adjacent to the Hudson Bay territories, he pro-posed the formation of a new organization to pursue invest-ment opportunities internationally—starting with the out-right purchase of the Hudson’s Bay Company and all its as-sets. Thereafter the appropriately named “International Fi-nancial Society” (IFS) was established as a new face for the BNAA which was already tarnished by the Grand Trunk railway—and its abysmal financial and safety record after ninety-nine passengers and crew died in a horrible bridge accident.
With this new cartel in place, bankers from the prestigious London firms Glyn Mills Currie and Co. and Barings Bank formally proposed the International Finance Society pur-chase the shares of the Hudson’s Bay Company. With the details arranged between the International Finance Society, Hudson’s Bay Company Governor Head and the Duke of Newcastle, the IFC purchased the venerable old Hudson’s Bay Company in June of 1863 with the intent of initially continuing to carry on the profitable operation of the fur trade, but also to “allow the gradual settlement of such por-tions of the Territory as admit of it, and facilitate communi-cation across British North America by telegraph or other-wise.”

THE INTERNATIONAL FINANCE SOCIETY LIMITED
ISSUE OF STOCK IN THE HUDSON’S BAY COMPANY
Incorporated by Royal Charter, 1670.
The Capital of the Hudson’s Bay Company has been duly fixed at 2,000,00 pounds of which amount the In-ternational Finance Society Limited have obtained, and are prepared to offer to the Public 1.930,000.
The Subscribers will be entitled to
1. The Assets of the Hudson’s Bay Company
2. The Landed Territory of the Company, held under their Charter, and which extends over an estimated area of more than 1,400,000 square miles, or upwards of 896 million acres.
3. Cash Balance of 370,000
The present net income, available for dividend amongst Stockholders of the Company, 4% interest on the above 2,000,000 Stock.
The Right Honourable Sir EDMUND HEAD, Director of Hudson’s Bay Company
Cutis Lampson, Deputy Governor
Eden Colvile, Hudson Bay House
George Lylall, MP.
Daniel Meinertzlagen, (F. Huth and Co.)
James Hodson (Finlay, Hodges and Co.)
Richard Potter Esq.

Fort Garry
North West Appropriation

The old Hudson’s Bay Company represented capitalism back at the mercantile stage. In the new era it stood in the way of progress. It had to go and it did. In the Northwest the sale of the Hudson’s Bay Company initially had little impact. Few even knew it had occurred. The fur trade con-tinued and Hudson’s Bay Company commercial operations also continued employing large numbers of indigenous Métis labourers—but shortly it all changed as capital intervened.
With such vast potential for capitalization, and Watkin’s long-term connections in the United States and Europe, the IFS quickly expanded its membership to become an interna-tional enterprise. It now included not only the original part-ners; Watkin, Glyn, Baring and the City but also Lord Bal-four (the head of the British Privy Council and the Foreign Office) and the American capitalists J.P. Morgan and James Stillman of New York’s City Bank (now Citibank). The IFS was soon involved in railway finance and construction across Europe as well as Egypt, Mexico, and India.
Control of the old Red River Settlement and the whole of Rupert’s Land was now in the hands of a new breed of capitalists. Gone were the pirates and feudalists of the an-cient past. This new breed wanted nothing to do with the fiduciary cost of governing, particularly the cost of govern-ing an area as vast as Rupert’s Land. They had had tremen-dous success expanding industry and finance, especially dur-ing the American Civil War, and were now involved in building hundreds of American railways—with financial and land grant support from the governments. They also wanted government to cover expenditures on infrastructure: opening of roads, highways, telegraphs etc., as well as to provide money in the form of grants, loans and tax concessions. To this new breed of capitalist the state was there to serve mo-nopoly capital. These were the new Anglo-Ameri-Can mem-bers of the international speculative class ushering in the age of credit and crisis.

Fathers of Confederation (minus Louis Riel)
Canadian Confederation

Returning to the colonies in 1864 Edward Watkin formally met the Canadian Coalition government of John A. Mac-donald and George Étienne Cartier and proposed the build-ing of an intercontinental railway with the IFS loaning Can-ada £500,000 at 4% to cover the cost of the route to the Pa-cific. Coming to a preliminary agreement they worked out a deal that, with modifications, was to be presented as part of a confederation program to “like-minded people” in the oth-er colonies. Preliminary discussions regarding the construc-tion of a trans-continental rail line saw the joint Canadian Premiers and the Colonial Office granting about 1,000,000 acres in portions of the largely unoccupied Crown territory traversed by the proposed telegraphic line.
In 1864, with the Confederation campaign having been consolidated and ready to present to the British Privy Coun-cil, Macdonald’s Conservative Upper Canada government was defeated in the Assembly and the Governor, Lord Monck, was ready to dissolve the Assembly. This would have slowed the confederation train momentum so Macdon-ald’s longtime bitter political foe, the reformer George Brown, offered to form a coalition government. With this shaky coalition behind him Macdonald began assembling the new Canadian federation, including the vast North-West as the centerpiece to his new British-Canadian confederation. Macdonald decided the former Hudson’s Bay Company lands would enter the new confederation as a colony of Up-per Canada (Ontario). Upon hearing that the British Mari-time Provinces of New Brunswick, Nova Scotia and Prince Edward Island were considering a Maritime union John A. Macdonald stepped forward and astutely proposed a much more substantial federal union. According to Macdonald the new union was to include all the self-governing British colo-nies in North America; British Columbia on the Pacific, the United Provinces of Canada (Ontario and Quebec), as well as the eastern colonies: Prince Edward Island, Nova Scotia, New Brunswick and Newfoundland. After a grand soiree, late into the evening, Macdonald, who had already brought two “reformers” William McDougall and Darcy McGee into his Cabinet, offered Charles Tupper of Nova Scotia and Samuel Tilley of New Brunswick their place in “his” cabi-net—conditional on bringing their colonies into his proposed grand union. Tilley was “in” from the beginning, but Tupper initially refused.
The following month representatives of old Lower Cana-da (Canada East) met with representatives from Newfound-land, Prince Edward Island, Nova Scotia, New Brunswick and the United Canada at the “Québec Conference.” Again, Macdonald pulled out all the stops. Working closely with Taché and Cartier they met privately with members of the old Château Clique and its clerical wing, the ancient rulers of Québec. Macdonald cleverly guaranteed their continued dominance within the new union with the promise of a pro-vincial legislature with limited powers, including taxation. The Rouges party was opposed because a union based on population would stack the House of Commons against French-speaking Quebec. As the reformers in opposition to the proposals were few in number, their position was drowned out by Cartier’s majority in the United Legislature.
With agreement in principle from key politicians, Mac-donald had the meeting adapt a series of seventy-two resolu-tions consisting of a detailed plan for a confederation of Britain’s remaining North American colonies into a new un-ion. Under his “confederate” plan the provinces kept control of a specific list of powers including education and language and the federal government would have residual, or all other unlisted powers necessary for “peace, order and good gov-ernment.” They also agreed to have two houses of govern-ment – a lower house – the House of Commons, based on representation by population and an upper house – an une-lected Senate – which would give regional representation—on appointment by the new prime minister. The Quebec reso-lutions formed the basis of the new Canadian federation.
New Brunswick initially opposed the confederation, but reversed its stand with the re-election of Leonard Tilly in 1866. In Nova Scotia, where the colony was the first over-seas British colony to receive self-government in 1847, Re-form leader Joseph Howe was initially opposed, but when Premier Charles Tupper pushed to have confederation rati-fied before he had to face an election Howe relented and took a cabinet post. Prince Edward Island and Newfound-land were opposed to the union and backed out immediate-ly.

Westminster
British North America Act, 1867

With animosity towards Britain palpable in the victorious United States, John A. Macdonald once again took his chief representatives to the Westminster Palace Hotel in London to prepare their final resolutions. As chairman of the London Conference Macdonald lay out his plans and resolutions for a formal confederation of the North American colonies with limited powers to be exercised by a Canadian Parliament, an unelected Senate and centralization of both executive and legislative powers in the Prime Minister’s Office (PMO). Over all the British Privy Council could not have been hap-pier to consolidate their American colonies. Macdonald set forth a series of resolutions that ensured that the develop-ment of a confederated Canada would unite the British North American colonies politically, economically and mili-tarily. Fearing post-war U.S. retaliatory intentions, and the possibility of a military invasion of British North America by the heavily armed and now idle U.S. Army, the British Privy Council heeded the calls of Macdonald and the colonial bourgeoisie and approved the plan. The British Parliament passed the British North America Act (BNA) establishing the new Dominion of Canada on July 1, 1867. This new Dominion of Canada initially consisted of the former British colonies of the United Province of Canada: Upper Canada (Ontario) and Lower Canada (Québec), Prince Edward Is-land and Nova Scotia, with provisions for the addition of all British territory in North America to the new country of Canada. Under Section 146 of the Act Rupert’s Land and the North Western Territory were to be admitted to the new Canadian Union “under terms to be arranged.”
Appointed the first Canadian Prime Minister, John A. Macdonald was charged with the task of forming Canada’s first government and holding an election. Credited with cre-ating the British “Dominion of Canada” Macdonald was knighted “Sir” John A. Macdonald and made a Right Hon-ourable Member of the British Privy Council.

William McDougall
Canadian Acquisition of Rupert’s Land
In April 1868, less than a year after Confederation, two high ranking Conservative Cabinet Ministers, William McDou-gall and George Étienne Cartier, both of whom would be very influential and very unfortunate in their careers, went to London and began formal negotiations at the Imperial gov-ernment’s Colonial Office with the Hudson’s Bay Compa-ny/International Finance Society for the purchase of the Company Charter thereby transferring control of Rupert’s Land to Canada. The Colonial Office was there to ensure “terms to be arranged” were satisfactory to all parties and that the transfer of Rupert’s Land to Canada was quickly negotiated. After some initial haggling the directors of the International Finance Company agreed to a Deed of Surren-der, disposing of HBC rights and privileges for a “token” cash payment and other privileges such as the Canadian Government agreeing to pay the Company the sum of £300,000 upon Rupert’s Land being transferred to the Do-minion of Canada.
The Hudson’s Bay Company/International Finance Socie-ty did not need the cash as according to the agreement they also retained “one-twentieth of the land in the fertile belt” (the southern territories), with an additional 50,000 acres in the vicinity of the Company’s trading posts:
The Company to retain all the posts or stations now actually possessed or occupied by them… and may within twelve months after the acceptance of the said surrender select a block of land adjoining each of their posts or stations… The Company may, at any time within fifty years after such acceptance of the said sur-render, claim in any township or district within the fertile belt in which land is set out for settlements, grants of land not exceeding one-twentieth part of the land so set out… For the purpose of the last Article, the fertile belt is to be bounded as follows: On the south by the United States boundary; on the west by the Rocky Mountains; on the north by the Northern Branch of the Sas-katchewan River; on the east by Lake Winnipeg, the Lake of the Woods and the waters connecting them.
The Company was given the right to carry on its trade without hindrance or “exceptional” taxation, and Canada agreed to the purchase of the materials for the telegraph line as originally conceived in the plans of the International Fi-nance Society. The Canadian Parliament, London, and the directors of the Company quickly ratified the terms. The sale was completed with the date of transfer initially fixed for October 1, 1869, but due to logistics December 1, 1869 was finally agreed upon as the day when Canada would take over its new responsibilities as lord and masters of the Great North West.
Negotiations between Canada and the new Hudson’s Bay Company had been carried out in secret. Neither the Cana-dian government, the Imperial government in Britain or the Hudson’s Bay Company/International Finance Society both-ered informing the inhabitants. The Hudson’s Bay Company did not inform Governor Mactavish and his Council, or the other “inland partners” who had made the Company for-tunes over the years. Nor were the indigenous peoples of the Plains told that they and the lands of the ancestors had been summarily transferred to the jurisdiction of the new Canadi-an state—where they had no rights.
In Ottawa the Canadian parliament quickly adopted “An Act for the Temporary Government of Rupert’s Land” that called for the establishment of a Canadian colonial govern-ment to be directed by a Lieutenant Governor and Council in the new Canadian territory. The Act was ill conceived and hastily implemented. In fact, in their haste to annex the Northwest the Canadian parliament prepared for this “new government” to come into effect even before the title was officially transferred to Canada on December 1 1869.
John A. Macdonald appointed his minister William Mac-Dougall as the first Canadian Lieutenant Governor of the North-West Territories. MacDougall and a “ready-made government” were sent to formally take control of Canada’s new North-West. When the Métis residents of the North West heard that Canada was sending a governor prior to any discussion or negotiation, the young Métis leader Louis Riel and the Métis cavalry under Ambroise Lépine blocked gov-ernor MacDougall, and his 300 rifles, from entering the Red River settlement. Hearing Canadian agitators and agents were preparing to seize the Hudson’s Bay Company’s head-quarters, Fort Garry, Riel occupied the fort and formed a provisional government to replace the moribund Hudson’s Bay Company government. Defeating MacDougall’s colonial deceit and aggression, a call for all-out war, Riel appealed to the English-speaking and French-speaking communities to come together in convention. Joined together the long-term inhabitants of the Red River established an historic Bill of Rights of Assiniboia calling on Canada to negotiate with the residents for inclusion in the Canadian confederation as a province with provincial rights.
With MacDougall’s ready-made government blocked and the Hudson’s Bay Company government moribund, the pro-visional government evolved into the Legislative Assembly of Assiniboia which sent three representative to negotiate with John A. Macdonald and the Canadian government. Based upon the provisions of the Bill of Rights the Canadi-an and North West delegates came to agreement for the en-try of the North West into Canada as a province. At the re-quest of Louis Riel the new province was named “Manito-ba.”

Louis Riel and Cabinet 1869
Manitoba Act and the “Law of Nations”

The North-West delegates to Ottawa saw the fulfillment of their duty. The Red River settlement was to be established as the Canadian Province of Manitoba with a Lieutenant Governor, appointed by Canada, to administer the transfer. As there was no official to act as the head of the newly rec-ognized government George Étienne Cartier, the acting head of the Canadian government at the time, suggested Louis Riel continue in his role as head of state until the Lieutenant Governor arrived. The delegates agreed and Louis Riel was now fully legitimized as the acting Governor of Manitoba.
Riel achieved his goal; the province of Manitoba would enter Canada with their “British rights” confirmed. This should have been a significant event in Canadian and inter-national history as it represented what Riel called the Law of Nations: No matter what the size of a nation it has equal rights with all other nations. Here was an example of a little nation bargaining, in good faith, with a larger nation and reaching an agreement acceptable to both sides
It seemed that Louis Riel succeeded in every way. He had proven himself an inspired leader. Basing both his theo-ry and practice on the rights of British citizens as established by the Magna Carta and British Parliamentary democrac, he had united the Red River Settlement, held mass meetings and drafted a Bill of Rights recognized by the Canadian government in Ottawa. This treaty between the people of Red River and the Canadian Government was given legisla-tive approval with the passing of the Manitoba Act of 1870. Canada and Manitoba were now one, joined together by treaty and Louis Riel could now be appropriately named as “Canada’s Indigenous (Métis) Father of the Canadian Con-federation.”

Amor De Cosmos
British Columbia
On the Pacific coast the grand Canadian Confederation of 1867 had little immediate impact on British Columbia where the gold seams of the great Cariboo gold rush of the early 1860s were giving out. Economic stagnation and massive debt were bleeding the coffers of the colony. When the Americans purchased Alaska from the Russians in 1867 the Anglo-Canadian communities of Victoria and New West-minster suddenly became actively concerned with their sta-tus as this purchase left the colony of British Columbia as the only non-American Pacific territory from California to Alaska. Once again “B.C.” was the center of a great deal of attention. American annexationist talk was widespread. Most trade, transportation and news already came from Se-attle or San Francisco and pressure was again mounting for British Columbia to be annexed to the United States. Many considered this amalgamation as inevitable, creating alarm amongst former Governor James Douglas’ pro-British co-horts. As a counter to the large American presence on Van-couver Island the British did what they do best. The Royal Navy hoisted the British Ensign and hosted a number of soi-rees and parties where issues of empire were discussed in private. These loyal sons of the empire stood firm for Queen and Empire. They saw North America as part of Britain’s world network, a link in the “Red Road” that circled the globe. The Empire still had need of a Northwest Passage, no longer a sea route, but a road or a railway that could transport British troops to Asia without interruption—and, if necessary, block an American invasion of British North America. Traveling to Ottawa under the auspices of John A. Macdonald the journalist and publisher Amor De Cosmos (Bill Smith) led a delegation who were offered a place in the Canadian confederation. Macdonald also agreed to take on the colony’s debt, while giving it six seats in the new Cana-dian Parliament (although the population barely warranted two). And, most significantly, he promised of a transconti-nental railway linking British Columbia with Ontario within ten years. Macdonald’s terms were more than agreeable to the B.C. delegates: they got everything they wished for and more—much more. In 1871 the British colony of British Co-lumbia joined the Canadian confederation. Now they had to wait for the train.

John A. Macdonald
Macdonald’s Treacherous Omission

Throughout this period John A. Macdonald knew well of American agents operating in the North West. He too had his agents in the United States and in the Red River com-munity. He had a number of informants keeping tab and making reports on Riel as well as the Americans. Contending with the failures of McDougall to peacefully take possession of the North West, and the ensuing political disaster he caused, as well as with the Americans meddling on the Brit-ish side of the border, John A. Macdonald had agreed to Riel’s demands for land and religious rights. He had had to concede to Riel—but he did not like it. The young (24) “half-breed” had beaten the seasoned Anglo politician (55) and negotiated land and democratic rights for the indige-nous population. Riel’s hereditary rights withdrew 1,400,000 acres from the Crown, as well as all rights to lands previous-ly settled for all inhabitants.
Language rights, religious rights, aboriginal rights; it was all too much for Macdonald who covertly withdrew clause nineteen, amnesty for members of the provisional government, from the final written agreement.
Shortly after the completion of negotiation with the pro-visional government Canadian Prime Minister John A. Mac-donald made what has to be a most unusual request of the American authorities. He requested the use of American rail transportation to move the new Governor and his “escort” through the United States to Manitoba. What was even more unusual was that the Governor’s escort would no longer be Bishop Taché but 1,400 Canadian troops—to protect the Governor and his retinue from the “hostile Sioux.” There was no Canadian railroad or accessible route that crossed the Great Canadian Shield to the Manitoba prairies. Macdonald needed his troops to travel through the United States to get to Manitoba. President Grant refused permission for Cana-dian troops to cross U.S. territory.
Without an official Canadian presence in the North-West the Americans felt that the new Canadian union was techni-cally unworkable. Canada had no direct connection with the North West. Macdonald’s only option was to build a road or railway across the craggy Canadian Shield. As a railway man Grant was aware of the challenges facing the new country. The region north of the Great Lakes was not only extremely inhospitable, it was amongst the most difficult terrain on which to build a railroad anywhere in the world. Crossing the Canadian Shield north of Lake Superior entailed 600 miles (965 kilometers) of muskeg, rock and water, and those were the good places.
By disallowing Canadian troops transport through the United States Grant believed he had cut Macdonald and Canada off from the North West and it would be his for the taking. The Northwest country had suffered two years of drought and severe crop failures and buffalo were becoming scarce—starvation was near. Grant believed that Riel would soon be requesting American assistance. Grant’s agents and the annexationists would make sure of that. Besides, Grant was fast tracking the construction of the Northern Pacific Railway and a spur line to ensure it locked up that lucrative Red River market.
Prime Minister Macdonald had one option. If his national dream was to succeed he needed to get his troops out into the North West following the old fur trade route across the great Canadian Shield. With the support of the British Colo-nial Office Colonel Garnet Wolseley of the British Army was dispatched to the North-West. His Canadian army was made up of a contingent of regular British troops and Ontar-io volunteers many of whom were recruited by the Protestant pastors of Ontario to strike a blow against the “ogre Riel.” Leaving the Great Lakes this army of 1,400 men traveled west over the old voyageur fur trade route. The green recruits from Ontario were following the historic route of the fur brigades of the past. Where the voyageurs traveled fast and light, Wolseley’s army took ninety-two days. They spent three months in horrid weather crossing the rocky muskeg terrain of the Canadian Shield.
News had come into the Red River from the Métis in the East that there was something amiss about the new Gover-nor’s retinue. This was no honour guard. The Governor was not with the troops, now was Bishop Taché. As Wolseley and his troops were nearing the last leg of their journey, coming overland from Fort William, the Métis community heard via the moccasin telegraph of the composition and the disposition of the troops. It appeared to be little more than an angry mob. As his army drew near Wolseley sent ahead a declaration addressed to the people of the Northwest that he came on a “mission of peace.” Wolseley promised:
… the force which I have the honour of commanding will enter your Province representing no party, either in religion or politics and will afford equal protection to the lives and property of all races and of all creeds… strictest order and discipline will be maintained and private property will be carefully respected.
Contrary to his written declaration to the people Col. Wolseley and his troops marched into Red River with re-venge in mind. As the soldiers rushed the front gate at Fort Garry, Riel, Lépine and other leaders left via the back gate. Barely escaping with their lives they were forced to flee to the American side of the border. As they made their way to relative safety Garnet Wolseley set up his headquarters in Fort Garry and gave his men free reign. A reign of terror en-sued as martial law was proclaimed and the taverns rapidly depleted of alcohol.
With the Red River under Canadian control the Hudson’s Bay Company’s Donald Smith was named acting Governor. Wolseley withdrew and was rewarded with a promotion. He would go on to represent British Imperialism across the globe, ending his illustrious career as Commander-in-Chief of the British Army. As Macdonald famously said of Wolse-ley’s tactics, “… an olive branch in one hand and a pistol in the other.”
With his interdiction of Riel John A. Macdonald usurped political power breaking the spirit of the Manitoba Act and spreading terror in the Métis community. For the Métis in-habitants and their English-speaking “half-breed” cousins this would be but the beginning of their great displacement. Overwhelmed by Anglo settlers, racists and speculators few of the Métis would successfully obtain title to their lands. Many would leave Manitoba and head further west to the Saskatchewan, where fifteen years later they would once again call on Louis Riel to come and assist them in their fight for democratic and land rights in the Saskatchewan Territory.

Once again Louis Riel would lead a constitutional struggle for indigenous and democratic rights. Once again John A. Macdonald would plan Louis Riel’s downfall, launching a war of aggression to defeat Louis Riel and the Métis and to imprison the Indian nations upon his starvation reservations. John A. Macdonald’s hatred of Louis Riel had the character-istics of an obsession: “He will hang though all the dogs in Quebec howl in his favour”—and he did: November 16, 1885—Louis Riel Day (except in Manitoba). For further in-formation please see LOUIS RIEL Let Justice Be Done.

Hugh Allan
Canadian Pacific Railway Act (CPR)

During the American Civil War railroads had not only been the backbone of the Union war machine, they were the new economic foundation of capitalism. In the last half of the nineteenth century financing and construction of railways became the central feature of economic development worldwide.
The Grand Trunk Railway was the biggest capital pro-ject in British North America. It incurred and racked up enormous debts throughout the 1850s. By 1860 it was $72 million in debt and that debt kept rising each year. With Watkin and the “City” financiers continuously begging for more capital the colonies were syphoning money from other fields to keep railroad construction ongoing. The govern-ment could not sustain the cost, or the political pressure. Be-cause of the constant crisis and deficit financing of the Grand Trunk, the United Province of Canada pulled out of negotiations for an inter-colonial railway linking Nova Sco-tia, New Brunswick and the Canadas.
Shortly after completing the Confederation of Britain’s North American colonies John A. Macdonald formally in-troduced and passed the Canadian Pacific Railway Act. Macdonald proudly told Parliament he did so to meet his obligation to build a trans-continental rail line to British Co-lumbia and to meet his colonial obligations to secure the right-of way for the Empire to the Orient. Construction of the line was to be the biggest British-American project of the century. It immediately attracted two rival financial syndi-cates that competed for the contract to build the new Cana-dian transcontinental railway. Toronto Senator David Mac-pherson, one of Macdonald’s key Conservative cronies, was head of the Interoceanic Company, a group of Canadian capitalists. Hugh Allan, “the richest man in Canada” and President of the Allan Steamship Lines headed the other bid. Hugh Allan operated the leading shipping service be-tween Canada and Great Britain and was also a director of the Grand Trunk Railway and the Northern Colonization Railway. He had plans to build a rail line along the north shore of the St. Lawrence River from Québec City through Montreal and on to Ottawa. With the passing of the Canadi-an Pacific Act Allan sought to fashion a new syndicate of financiers interested in bidding on the construction of a Ca-nadian Pacific railway.

Jay Cooke
Financing the Railway

President Ulysses S. Grant had signed the Treaty of Wash-ington with Great Britain in 1871 ostensibly giving up American ambitions for the annexation of British North America to the United States, but only after carefully as-sessing the political and economic situation in the British North-West. The treaty actually served as an effective “cov-er.” As a director of the Northern Pacific Railroad and Pres-ident of the United States Grant fostered a symbiotic rela-tionship between the army playing an active role in the paci-fying and removing of the Indians from the northern rail line right-of-way, and the railroads in turn enclosing the last of the Indian territories—inundating them with settlers. In 1872 Grant ordered the Army to build Fort Abraham Lin-coln at the Northern Pacific’s “end of rail,” effectively put-ting troops in place to sweep into Indian country at his command.
In the financial world everyone wanted in on the railroad action. Bankers and speculators sponsored lines running hel-ter-skelter. As long as the prospectus said “railroad” there was money to be made—and money to be lost. Amongst the small-time financial operators of the era was one George McMullen, a Canadian living in the United States. McMul-len was a wheeler-dealer who had been playing both sides of the border, dabbling in schemes ranging from canals to aph-rodisiacs to long-range cannons. In 1871 McMullen had been approached by agents of Jay Cooke of the Northern Pacific Railroad in regards to an opportunity to make a great deal of money investing in a Canadian railroad. McMullen was introduced to a group of likeminded businessmen: W. B. Ogden, an original incorporator of the Northern Pacific, General George W. Cass, a director of the Northern Pacific and Jay Cooke who handled acquisitions and investments. Cooke, who famously bankrolled the American Civil War selling bonds to “Tom, Dick and Harry” told McMullen that they were interested in working with the Canadian, Hugh Allan ensuring he got the contract for building a railway across the eastern portion of British North America. With this group behind him McMullen went to work with Allen establishing a new American backed Canadian Railway Company. Allan received shares in the Northern Pacific and forty to fifty thousand dollars to grease the palms of key individuals in Canada to ensure his syndicate got the con-tract.
John A. Macdonald rejected their offer outright. He knew that the principals in the Northern Pacific Railway would actively seek to thwart, sabotage, or obstruct the building of a British-Canadian rail line across the rocky Ca-nadian Shield and out to Red River and beyond to British Columbia. They wanted to connect the new Canadian line to their Northern Pacific, defeating Macdonald’s intended “British” line and effectively giving the American control of Canadian transportation, thereby gaining access to all Cana-dian markets.
As a pragmatic Canadian businessman Hugh Allan had no interest what-so-ever in building an all-Canadian railroad route to the North-West and British Columbia. He certainly did not inform John A. of his preference. Once he had con-trol of the company he could do, he presumed, as he liked, especially as Jay Cooke was most accommodating in ensur-ing that the American connections be in place when the new Canadian line was “forced” to detour the impenetrable Ca-nadian Shield. By then, it was conjectured, everyone, in-cluding John A. Macdonald, would realize that building a railroad line entirely in British North America was far too expensive.
Initially Allan planned to expand his line from Montreal to Lake Nipissing, and then, instead of crossing north of Lake Superior, he would run his railroad into the United States through northern Michigan, connecting a feeder line to Duluth, Minnesota where it would connect with the ever expanding Northern Pacific mainline. As Cooke and Presi-dent Grant had already established plans to build a feeder line up from Pembina in the Dakotas up to connect to Fort Garry the Canadian line could head west, north of the 49th Parallel to British Columbia—or not. With his little detours tucked in his back pocket Hugh Allan hoped to convince the prime minister to award the contract to his syndicate.
John A. Macdonald might have been a heavy drinker but he wasn’t stupid and he had ears—everywhere. It did not take long before he heard rumours of Allan’s scheme to skip south of Lake Superior. A son of the Empire, seeking to be Raj of the Indias, John A. knew his British Lords and Mas-ters needed to ensure that they could move troops across British North America—a “Red Line” to India and China—or anywhere else in the Empire. Canada was not an inde-pendent country. The British North America (BNA) Act had not granted Canada full independence. Canada was still a British Dominion and Canadians were still British citizens. In matters of an international nature, or defence of the Em-pire, British interests came first. If an “All Canadian” route was crucial to British interests John A. insisted upon an all-Canadian route. Macdonald told Allan that his American backers were not appropriate and if they were involved that they had to agree that it was to be an all-Canadian route.
With Macdonald adamant Allan realized he needed to raise some new Canadians associates to present to Macdon-ald. He needed them quickly—or his company would not get the contract—so he did it the way any sensible busi-nessman would do, he bought them. Included in this group were some of the key men in the Canadian economy, men such as Donald Smith of the Hudson’s Bay Company, who came on-board for a consideration of $100,000. Along with Smith were six other leading Canadian business figures, in-cluding Donald Smith’s cousin, George Stephens, President of the Bank of Montreal. Macdonald still held out, and re-fused to let the contract.
With the Toronto Syndicate of Macpherson closing in on a deal, Allan was desperate. Within days Jay Cooke and McMullen were back in Canada. In legend Cooke was known to have “bribed and buggered” damn near the whole of the U.S. Congress to get his railway bills passed. Now with Macdonald playing a nationalist Canadian card Cooke focused his dirty tricks campaign to put the ultimate pressure on Macdonald by supporting Liberal candidates in the up-coming election.
Jay Cooke mobilized his vast resources to pressure Mac-donald to ensure Allan got the Canadian Pacific contract. In Ottawa, Toronto and Montreal McMullen worked to induce anyone of use: clergy, capitalist, politicians, shoe shine boys and newspapermen, whomever it took, to meet his objec-tives. Gifts, pay-offs, favors, bribes and blackmail. Cooke and McMullen used them all to guarantee Hugh Allan was in a position to influence events when it came time for the con-struction of the proposed transcontinental Canadian Pacific Railway. In a secret communication Jay Cooke defined his plans:
American work has to be kept [in the] dark for the mo-ment and there is [to be at present] no hint of the North-ern Pacific connection, but the real plan is to cross [the Canadian Pacific over to the United States [at] the Sault Ste. Marie through northern Michigan and Wisconsin to Duluth, then build from Pembina [Minnesota] up to Fort Garry and by and by through the Saskatchewan [river valley] into British Columbia The Act [to be passed by the Canadian Parliament incorporating the Canadian Pa-cific railroad] will provide for building a North Shore Road to Fort Garry merely to calm public opinion, but it will provide for consolidation with other roads, so that the Michigan portion of the Northern Pacific clear to Duluth can be blended with the Canadian Pacific and the bonds sold as such in London we will have a straight route from Duluth to Montreal. This is all confi-dential. The parties have now gone to Canada to get the legislation for it, and I think Morton, Rose and Co. will find themselves left out in the cold, except as they may come in with us.
Cooke’s plan was to use his influence to seize control of any proposed Canadian Pacific railway and stall its construc-tion while accelerating Northern Pacific construction. With Cooke’s backing Hugh Allan now went to work, applying political pressure on Macdonald’s weak link, which turned out to be the leader and chief of the “French Party” within the Conservative Party, George Étienne Cartier.

George Étienne Cartier
Cartier’s French Party

It was George Étienne Cartier’s “French Party” that held the balance of power for the Conservatives. Cartier controlled forty-five Québec members who voted in a solid phalanx. As John A. Macdonald’s majority was considerably less than forty-five he needed Cartier’s block within his government. For Macdonald it was all a very tricky process. He had to balance the interests of his Ontario core, who were largely Anglo-Canadian Protestants with the interests of the Québe-cois, mainly bourgeois Catholic conservatives, whose inter-ests could, and often were, diametrically opposed to that of their fellows from Ontario. Cartier kept his cabal together through his dual connections in business and politics, most particularly promising a railway from Montreal to Ottawa.
If Hugh Allan were to get the Canadian Pacific’s first contract from Montreal to Ottawa he knew that Cartier was the key. Allan knew that Cartier kept his block together promising them a Montreal to Ottawa rail line. He also knew Cartier was no longer the force he had been. Cartier was get-ting old, his health was frail and Allan knew if enough pres-sure was put on Cartier it inevitably would influence Mac-donald. By manipulating public opinion against Cartier, who would now be seen as opposing a Montreal-Ottawa line that was ready to go, Allen planned to exert tremendous pressure on Cartier to support his bid.
Allan engineered a split. He launched a full-scale media campaign against Cartier, buying controlling interest in key regional newspapers. Those local papers he didn’t buy out-right he “subsidized” with financial and editorial support. He then hired local French Canadien lawyers to write edito-rials supporting the “ready to go” line. As the campaign be-gan to have an effect public opinion slipped away from Car-tier.
With Cartier on the ropes, Allan stumped the country from Montreal to Ottawa. He held “open” public meetings, open to his point of view, and made speech after speech as to the local benefits of his plan. Visiting the parishes he made sure that local priests put on the pressure from the pul-pit. He employed a number of male and female agents whose job it was to connect with influential people. The campaign grew in intensity as Cartier was vilified in the press, on the pulpit and in the pigpens. In the end Allan rounded up twenty-seven of Cartier’s forty-five Conserva-tive followers. Always a shrewd businessman, Allan was able to do all of this with “free” money provided by his American mentor Jay Cooke.
Cartier was caught. He knew that with an up-coming election in the wings he either had to agree to give Allan the contract or he would definitely loose his own seat in parlia-ment to the Liberals. Macdonald well knew he needed Car-tier to hold power and so the pressure paid off. Macdonald finally agreed that after the election Allan and his syndicate would receive the railway charter. The only caveat was one of perception.
In promising the charter to the rival syndicate, Macdon-ald outraged his colleagues from the Ontario wing of the Conservative Party. His old friend and colleague Senator David Macpherson fully expected the contract to be ten-dered to his Canadian Interoceanic Company. The shocked Ontario Press exposed Allan’s company as a front for the Northern Pacific and called Macdonald’s choice a “slap in the face” for Macpherson and Ontario’s business community.
With the election imminent Macpherson threatened and blustered and then reworked his proposal to Macdonald and called for the establishment of a new joint company to build the Canadian Pacific. He proposed a merger of the two most powerful syndicates in the country. Together they could build the railroad with everyone coming out a winner. Mac-pherson called on Macdonald to create a new board—without any “American” directors. He wanted the board to be made up of executives from both companies with his syndicate holding seven seats—with Allan’s to get six seats. Allan rejected this and instead made a counter-proposal, amalgamating the two companies, “upon terms I feel would be just to myself.” Allan wanted the presidency.
Macdonald was in a quagmire. His problems were multi-tudinous—especially as he had to go into the 1872 election without a firm commitment to his central platform: the Trans-Canada railway. He needed the railway to win the election. His dilemma was that he needed Macpherson and his people to keep Ontario Conservative, and he needed Car-tier to win Quebec to keep his majority. As the election drew ever nearer Macpherson would not budge on his position and Macdonald’s election was in jeopardy. In crisis Mac-donald finessed the whole operation. Telegraphing Cartier, in a meeting with Allan, Macdonald told Cartier:
Assure Allan that the influence of the Government will be exercised to secure him the position of Presi-dent…The whole matter to be kept quiet until after the elections…
Allan won this round but was still concerned that Mac-pherson would not go along with this new arrangement. Al-lan now delivered his coup—forcing Cartier to put his offer in writing. Cartier had no choice and conceded, sealing his own fate and destroying his once glorious career.
Cartier suffered greatly during the campaign Allan had conducted against him. He now looked for payback. He asked Allan “to help us in our elections.” When Allan asked Cartier how much he wanted, he was told that it could be up to one hundred thousand dollars. Allan wanted that in writ-ing as well. Two letters were produced; one had Cartier promising Allan the charter, and the other was for financial assistance during the election. When Cartier informed Mac-donald of what transpired, Macdonald was angry, he didn’t like the letters, especially the one that outlining financial as-sistance during the election of $50,000 to himself and his key ministers. He asked Cartier to withdraw it, but did not repudiate the “agreement.” Allan kept the letters.
Macdonald still had to deal with the critical detail of Al-lan’s American backers. He needed to get them off the books if Macpherson and company were to come on board. This was but a minor detail to Allan who removed the names of his American friends and put their stocks in his own name. He then wrote them formally notifying them of his transfer of their stocks “in trust” to his name—and inform-ing them of his plans to put large sums of their money into the Canadian election. Allan’s maneuvers were on the whole fairly transparent. He had taken the American names off the books, but no one was really fooled. His friends were well known figures in the world of finance and although techni-cally their names were not on the shares, the word was out on Allan.
Everybody knew Allan had just cooked the books. In the Ontario media there was general concern and a great deal of opposition to giving the Canadian Pacific Railroad contract to Hugh Allan, a man who was in hock to the head honchos from the Northern Pacific. McMullen and the Americans were not pleased with Allan removing their names either.

Canadian Pacific Railroad
John A Macdonald’s Railroad

With Cartier’s signature secured Allan changed tactics and was now doing everything he could to support, not harass, Cartier. He now had to ensure that Macdonald and Cartier won the election. Working to undo all he and McMullen had done to discredit Cartier, Allan financed his campaign like no other. With additional American money the Conservative campaign changed its tempo—still the election race re-mained close. Too close!
Having trouble scrounging reluctant dollars from donors John A. Macdonald was concerned as his base was crum-bling and the Ontario Liberals were gaining support. Mac-donald took an initial “un-official” $25,000 from Hugh Al-lan to help finance his campaign. Hugh Allan now had the Prime Minister turning a blind eye to his under-handed deal-ings.
Although John A. Macdonald had not approved the transfer of Allan’s money to the Conservative Party it now started to flow in all kinds of mysterious ways. Twice more Macdonald requested $10,000 from Allan—by telegram. Directly and indirectly Cartier got over $50,000, and numer-ous others also got more money with Allan spending an in-credible $350,000 to ensure John A. Macdonald’s Conserva-tives won.
Even with all of Hugh Allan’s corruption money Mac-donald just barely won the election and his own seat. George Étienne Cartier was soundly defeated. Allan had given Cartier $20,000 and forwarded another $30,000 to the Cartier Central Election Committee. This was cash money to buy votes in the streets, pubs, churches, wherever. Unfortu-nately for Cartier his political machine had been so corrupted that although money had been distributed far and wide, when it came time to vote, mysteriously, man after man put up for the opposition candidate. Cartier had been sold out. A secret Liberal supporter working on his Central Election Committee rigged the election—but not for Cartier—who lost his bid to maintain his long-held seat in the House of Commons.
John A. Macdonald needed his railroad and to do so he needed Cartier in parliament. He needed to find a vacant parliamentary seat, a seat where a “Frenchman” could win. Due to logistical reasons the first parliamentary election in the new western province of Manitoba were to be held at a later date. In an almost bizarre twist of logistical magic Car-tier could run again, in the same election, out in the new province of Manitoba. All they needed was to get Cartier on the ballot.

Louis Riel, Member of Parliament for Provencher, 1873
First Manitoba Election

The new Canadian province of Manitoba was divided into four electoral districts. Members were to be elected from the new ridings of Marquette northwest Winnipeg, Selkirk on the northeast, Lisgar to the southwest and Provencher in the southeast. There were no shortages of candidates for the election; including such notables as the leader of the “Cana-dian Party” Dr. Christian Schultz, and the HBC’s Donald A. Smith—the recently appointed board member of Hugh Al-lan’s Canadian Pacific Railway Company. There was anoth-er notable candidate: Louis Riel.
After being driven into exile from the Red River settle-ment Louis Riel remained south of the border in the little Métis community of St. Joseph working tirelessly meeting with Métis delegations, influential members of the communi-ty, as well as with members of the clergy. They all had major concerns, legal issues, land issues, rights issues. Most em-phatically they wanted Riel to run as their candidate in the upcoming federal election. Bowing to public pressure Louis Riel put his name forward and ran for Parliament in the new electoral district of Provencher—a riding of French-speaking parishes. With his nomination in place Louis Riel was en-sured of winning.
The very thought of Louis Riel in Parliament was an abomination to John A. Macdonald. With Cartier’s defeat came a most Machiavellian plot. Through Riel’s “second fa-ther,” Archbishop Taché, called back from Rome, the Prime Minister asked that Riel step aside to allow Cartier to run in his place. Taché convinced Riel that as deputy prime minis-ter and leader of the Quebec caucus Cartier would imple-ment the provisions of the Manitoba Act. After negotiating a number of vital concessions for the Métis Riel agreed to step aside and let Cartier run in his stead. In return for stepping aside Riel received a promise from his bishop providing im-munity from prosecution to the members of the Provisional Government, and that Cartier personally guarantee the dis-tribution of the 1.4 million acres of land promised to the Mé-tis in the Manitoba Act.
Cartier won the Manitoba election by acclamation. The problem was his health. He was too ill to deal with any of the problems of his constituents. Sent to London for his health, Cartier never recovered and died prior to returning to parliament.
With the death of Cartier went all hope of his exercising his enormous power to see to Amnesty or the distribution of Métis lands. With concern for their land and livelihood in-creasing, 500 Métis and their supporters gathered and once again nominated Louis Riel as the Conservative candidate replacing the deceased Cartier in the Provencher by-election. Undisputed in his nomination, Louis Riel, the new Member for Provencher, came home under armed Métis guard the acclaimed Member of Parliament for Provencher.

Sir. John A. Teaching the Poly-ticians What To Say
Disappearing American Backers

The proverbial hens had come home to roost. John A. Mac-donald lost his French lieutenant, and his nemesis, Louis Ri-el, was the member for Provencher—although never allowed to take his seat. To make things doubly tricky Senator Mac-pherson and his team of Canadian capitalists could “smell a rat.” They knew Hugh Allen had been supported by a bevy of American bankers and financiers. Now magically he had an “all-Canadian” board of directors on his new company. They did not believe the “disappearing American backers” story.
Senator Macpherson wanted to know why his old pal, John A. Macdonald, was supporting “an audacious, insolent, unpatriotic and gigantic swindle.” Hugh Allan on the other hand was putting the pressure on Macdonald for his payoff: John A. Macdonald to announce Allan’s presidency of the Canadian Pacific Railroad.
With the grumblings within his own Conservative Party getting louder and louder Macdonald could no longer be sure he could control his minions. He could not tell those in the Party wanting answers as to Hugh Allan’s presidency that Allen and company bought and paid for his election. Biblically proclaiming “These hands are clean” Macdonald tried to cover his trail. Still rumours persisted. Although there was no direct evidence, and technically the names of the American backers were not on Allan’s shares, the ruse failed. Everyone knew that if Macdonald gave Allan’s syn-dicate control over the contract he was giving it to the forces behind the Northern Pacific. Macpherson kept pushing. Macdonald met with Allan telling him that the pressure was getting to be too much. Allan would have to permanently cut his ties with the Americans and form a new “Canadian” company.
With the presidency slipping out of his grasp and the ar-rogance of his class, Allan attempted another ruse. He told his American backers that he was going to cut his ties with them, for now. He explained that although he held their shares “in trust” he could no longer operate with them even in the background. He intimated that once his new company was up and running and the heat was off, he would let them in through the back door.
Hugh Allan was not dealing with a bunch of boy scouts. This was a whole syndicate of wealthy and influential men. These were big boys, hard cases, who were not going to sit back and watch as Hugh Allan cut them out of their action. They had a lot of money invested already, and they did not buy Allan’s promise of future considerations. George McMullen was furious. He had helped Cooke pay for both Allan’s dirty tricks campaign against Cartier and his subse-quent campaign to have Cartier elected. When, in reviewing Allan’s letters to his American partners, he found Allan had spent over $343,000 of their money on the Canadian elec-tion he went to Montreal and confronted Hugh Allan. Chal-lenging Allan with the figures he was once again brushed off as more glib promises were made.
Shortly afterwards Macdonald made it official. In late December 1872 there was a gala party announcing Hugh Al-lan as president of a new Canadian Pacific Railway Compa-ny—forever after known as the “God-damned CPR.” It was to be the beginning of a new future with the Prime Minister and the country’s richest man opening up the North West. With the Presidency in hand Allan boarded his personal ocean liner and went off to London eager to sell shares in his new Canadian railway. That was the “final straw” for the Americans. Allan’s office was burgled and the letters re-trieved.
On New Year’s Eve 1872 McMullen and the disgruntled Americans rode into Ottawa demanding an immediate inter-view with John A. Macdonald. With little choice Macdonald let them in to his residence at 24 Sussex Drive. McMullen displayed his mass of evidence detailing Allan’s trickery, thuggery and bribes: including the money Macdonald took for his election. It was all there in black and white and the Prime Minister was caught red handed. Macdonald’s life’s work stood on the precipice. When he looked to placate them and cook a new deal: No go! The Americans had him. Macdonald, caught between a rock and a hard place, was finally stuck. He froze, paralyzed, he had no answer for the angry Americans. He did not act on their information and fire Allan, but turned to his solace, the bottle.
The next day McMullen leaked the correspondence to the Liberals and the Canadian press. Included in the corre-spondence was a purloined telegram from the Prime Minister begging Hugh Allan for not just money, but more money during the election:
Immediate, private. I must have another ten thousand—will be the last time of calling. Do not fail me. Answer to-day. J.A.
The once almighty John A. Macdonald already had a weakened majority; now his own party was split asunder. The opposition hammered away, not just at Macdonald’s corruption, but also that of Cartier. In the end it would be the Member of Parliament for Pembina Manitoba who played the key role in the downfall of John A. Macdonald.

Sir. Donald A. Smith
Pacific Scandal

Donald A. Smith of the Hudson’s Bay Company-International Finance Society had been elected the Con-servative Member of Parliament for Pembina in southern Manitoba in the first Canadian election. As a major share-holder and director in Hugh Allan’s Canadian Pacific Don-ald Smith was a man with more than a considerable interest in the railway business. But he was “clean” as he had not been involved in any of the dirty dealings. Holding this trump card Donald Smith now brought about Prime Minister Macdonald’s downfall.
When a vote of non-confidence in the government was raised in the House of Commons Donald Smith did not back his Prime Minister. Macdonald needed just one vote to stave off the “loss of confidence” motion, but, Donald Smith did not raise his hand. Canada’s first prime minister was defeat-ed. A new election was necessary. At the same time as he engineered the downfall of the Prime Minister, Smith effec-tively deposed Hugh Allan, the man who previously paid him $100,000 to be on the board of directors of the Canadi-an Pacific. Smith now placed his own “little” group of capi-talists in position to take over the Canadian Pacific Railroad. Through these maneuvers, defeating Macdonald and dump-ing Allan, Donald Smith built up a good deal of political capital with Alexander Mackenzie, the leader of the Liberal Party. Donald Smith, a Conservative Member of Parliament, had engineered an election that was almost certain to be a Liberal victory.
So it was that on November 5, 1873, Sir. John Archibald Macdonald, the first Prime Minister of Canada, knighted “Sir” for his confederation of the colonies, was forced to resign as prime minister in disgrace. In what became known as the “Pacific Scandal” John A. Macdonald was found to have taken “corruption money” and the Conservative Party went down in a resounding defeat in the election that fol-lowed. Macdonald attempted to defend his actions feebly claiming that the money was merely a “campaign contribu-tion” not to himself but to the party and certainly not a “bribe” to insure a railway contract. He and his government had been exposed as political opportunists of the worst or-der. Their unethical behaviour was their undoing. The Prime Minister of Canada had hounded the richest man in the country for money, accepting bribes to put this same man, Hugh Allan, in charge of the nation’s biggest capital project, the Canadian Pacific railway. Blind personal ambition over-took the Prime Minister in his quest for glory.
By 1878 Macdonald and the Conservatives were re-elected. He quickly took advantage of this second chance and once again asked for bids to build his Canadian Pacific railroad across the country. The Canadian Pacific Railroad Co., under Donald Smith and company, was awarded the right to build the railway in 1880. In the defining actions of his career Macdonald once again put commercial interests first and ignored the rights and demands of the Métis and Northwest settlers. He again launched Canadian forces against Louis Riel and the Métis. Defeating the Northwest Resistance he tried Louis Riel for High Treason, executing him on November 16, 1885. Donald Smith drove the last spike of the Canadian Pacific Railway two weeks later.
John A. Macdonald won re-election 3 more times. In 1891 Macdonald conducted his last campaign and won a majority for the Conservatives. The election exhausted him and he passed away in Ottawa on June 6th, 1891. A thor-ough-going colonialist John A. Macdonald placed his politi-cal career above the functioning of democracy and decency. He was willing to give up the “Canadian” Pacific Railway, his signature platform, to a group of American financiers for personal vainglory. Some called it pragmatism, others a fatal flaw, and still others the crime for which Louis Riel was ex-ecuted—”treason.”