Nationalism and the Pacific Scandal

Nationalism and the Pacific Scandal A.A. DEN OTTER THECANADIAN PACIFIC RAILWAY hasassumed an extremelyimportant rolein Canadianhistory.Viewed asan iron bond,weldingtogether diversecolonies and territoriesinto a mightynorthern nation,the railway'sexalted pasthas elevatedthe companyto mythicalstatus celebratedin song,verse,and prose. The CPRmyth, in fact, has profoundlyinfluencedthe interpretationof Canadianhistory.It has created,for example, two basicassumptions taken for granted in virtuallyeveryaccountof the CPR'S past.The first viewsthe railway primarilyasa patrioticadventure,an essential part of the government 's nationalpolicies. The second, derivedfromthenation-building theme,embraces theideathatthePacificrailwaywasalways intended asan all-Canadianprojectfinancedand built entirelyby Canadians through Canadian territory. By acceptingthese two tenets,most historians losesightof theprivate-enterprise character ofthetranscontinentalrailwayand seeit primarily as a cultural agent, a nation builder. The nation-buildingthesisalsocoloursthe characterization historiansgivethevariouspersonalities in theearlyhistoryof theCPR. In the PacificScandalstory,for example,DonaldCreightonviewedSir John A. Macdonald,Canada'sfirst prime minister, as a visionary statesman, whose railwaypolicywasbutoneaspect of atranscontinentalnation -building strategy. Despitethe embarrassment of the Pacific Scandal, Creighton insisted thatMacdonald actedpatriotically throughTheauthorwishes tothankJamieSnellfor lendinghimanimportant setof notes on thistopic, JoeCherwinski for manyhelpfulideas, andTom Travesforcommenting on anearlierversion of thispaperwhichwaspresented atthefirstCanadian business history conference. Seminar participants atMemorialUniversity ofNewfoundland, the University ofCalgary, andtheUniversity ofLethbridge offeredsuggestions. ThessI-IRCC provided thefundsneeded toconduct theresearch onthispaper. Canadian Historical Review, I•X•X,3, •988 ooo8-3755/88/o9oo-o315 $O 1.25/0¸ University of TorontoPress 316 THE CANADIAN HISTORICAL REVIEW out the affair; his hero appeared as a shrewd politician,cleverly manipulatingobstinateand mischievous businessmen to achievea nationalistic goal.One of thedeviousschemers wasSir Hugh Allan,a particularly selfish manwhosoldouttotheAmericans andthenliedto Macdonald about his connections. More honourable was Sir David Macpherson, a shrewdbut patrioticConservative friend, who proposed anall-Canadian routeunderall-Canadian management. Lurking in the shadowybackgroundwasJay Cooke,the annexationist villain,plottingto gain controlof the CanadianNorthwestfor the benefitof hisNorthernPacific Railway.In thismanner,thenationalist interpretation categorizes theplayers in thePacific Scandal according totheir apparentloyalties. x Thisessay doesnotintendtodebunkthec?Rnation-building myth. Even if western settlement occurred a decade or more after the c?R was completed,the railway undoubtedlymade the occupationof the Northwestfeasibleand it alsoprovideda practicalaccess to British Columbia. Moreover,thispaperwill notunraveltheintricacies of the PacificScandalof •873. Instead,it will re-examinesomeof the events leadingtothescandal in ordertodemonstrate thattheCanadaPacific Railwaywas primarily a co-operative business enterprisebetween Canadianand Americancapitalists, an alliancewhichenjoyedthe active supportof theCanadiangovernment. It willalsoshowthatthe opposition, whicheventually scuttled theCanadian-American alliance, was inspired by internationalcommercialand domesticpolitical considerations ratherthanpatrioticconcerns. An examination of the Canada Pacific scheme from a business perspective willalso revise thecharacterization oftheprimaryactors in thePacific Scandal. Not onlywillSirJohnA. Macdonald emerg•e asa corruptpolitician, buthisattempts toimpose anewpolitical settlement onacompleted business dealwillappearnaiveandclumsy. Similarly, a reviewof Jay Cooke'scareer will reveal that he wasnot a hostile foreignerfurtivelyplottingto makethe CanadianPacificRailwaya servileappendage to the Northern Pacific;it will demonstrate that nineteenth-century magnatesbuilt railwaysprimarily for business rather than nationalist purposes. Jay Cooke'sinitial investments in railwayprojectswere not inspiredby visionsof a transcontinental railwayempiredestinedto controlboththe AmericanandCanadian DonaldCreighton, John A.Macdonald: TheOldChieftain (Toronto•955).Creighton's viewisaccentuated byPierreBerton,TheNational Dream:TheGreat Railway •87•-•88• (Toronto •97o).Bertonemphasizes the nation-building themeeven morestrongly thanCreighton. The Canadian Pacific Railway, according to Berton,wasanheroic struggle against nature,geography, andthehostile United States. z 318 THE CANADIAN HISTORICAL REVIEW plains.Instead,throughvariousbusiness decisions, Cookegradually became more and more involved in the affairs of the Northern Pacific enterprise. In manyways,hebecameanagentof railwaytechnology's need to expand constantlyin order to remain competitiveand profitable. Throughouthiscareer,Jay Cookedisplayed theaggressive natureof an ambitious andinnovativepromoter.Born on the Ohio frontier in •82•, he advanced rapidlyand, during the AmericanCivilWar, his Philadelphia investment firm initiatedthepractice ofselling warbonds througha nationalnetworkof agents andbyaggressive advertising in leadingnewspapers. 2 His involvement in railways emergedafter the war whengovernmentbusiness declinedand hisinterestin western landdevelopment grew.In •868 hevisitedDuluthon LakeSuperior andboughtextensive propertiesin the area.Expansionist by nature, Cooke becameinterested in railways as enginesof growth and development. He believedtheypresented a means of developing the resources of theWest,creatingunparalleledopportunitiesfor investmentand profit. More particularly,hisextensive propertiesaround Duluth couldincreasein value only if its harbour becamea major shipping pointforwesterngrainandironheadedfor theeastern states andEurope.To compete with MilwaukeeandChicago, the undeveloped port of Duluth neededa networkof feeder railwaysfrom the interiorofthecontinent. sConsequently, Cookeacquired aninterestin the LakeSuperiorand Mississippi Railroad,whichintendedto link Duluth with St Paul on the Mississippi River. In •869 Cookealso acceptedan invitation to head a public bond campaignfor the Northern Pacific Railroad. The NorthernPacific represented Boston's longstruggle tocapture the trade of the Great Lakes and the...