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The Pacific Scandal was a political scandal in Canadamarker which ultimately led to the resignation of Canada's first Prime Minister, Sir John A. Macdonald, and a transfer of power from his Conservative government to a Liberal government led by Alexander Mackenzie.

The Pacific Scandal involved allegations of bribery being accepted by the Conservative government in the attempts of private interests to influence the bidding for a national rail contract. As part of British Columbiamarker's 1871 agreement to join Canadian Confederation, the government had agreed to build the Canadian Pacific Railway, a transcontinental railway linking the Pacificmarker Province to the eastern provinces. The proposed rail project, when completed, was the most intensive and ambitious of its kind ever undertaken to date. However as a new nation with limited capital resources, financing for the project was sought after both at home and abroad, naturally attracting interest from Great Britainmarker and the United Statesmarker. American interests in financing the project ultimately killed the scandal.

Background

For a young and loosely defined nation, the building of a national railway must be put within the context of active attempts at state-making. Canada, a nascent country with a population of 3.5 million in 1871, lacked the political jurisdiction to meaningfully control its political boundaries within its recently acquired Rupert's Land -- building a transcontinental railway was national policy of high order in changing this situation. Moreover, the post civil war era was a period of rapid expansion for the American frontier, as land hungry settlers poured west, exacerbating talk of annexation. Indeed, sentiments of Manifest Destiny were abuzz in this time: in 1867, year of Confederation, US Secretary of State W.H. Seward surmised that the whole North American continent "shall be, sooner or later, within the magic circle of the American Union." With sentiments of this nature in mind, it is little wonder that national interest fell within preventing the infusion of American investment into the project. Established by this point was the purposeful alignment of an "all Canadian route" -- discussion of a less costly route to bypass the rugged Canadian Shield of northern Ontariomarker by passing south through Wisconsin and Minnesota was, within the rubric of national interest, scrapped.

The Montreal capitalist Sir Hugh Allan, with his syndicate Canada Pacific Railway Company, sought the lucrative charter for the project. The problem lay in that Allan and Sir John A. Macdonald highly, and secretly, in cahoots with American financiers such as George W. McMullen and Jay Cooke, men deeply interested in the rival American undertaking, the Northern Pacific Railroad.

Scandal

Two groups competed for the contract to build the railway, Sir Hugh Allan's Canada Pacific Railway Company and David Lewis Macpherson's Inter-Oceanic Railway Company. On April 2, 1873, Lucius Seth Huntington, a Liberal Member of Parliament, created an uproar in the House of Commons. He announced he had uncovered evidence that Sir Hugh Allan and his associates had been granted the CPR contract in return for political donations of $360,000.

In 1873, it became known that Allan had contributed a large sum of money to the Conservative government's re-election campaign of 1872; some sources quote a sum over $360,000. Allan had promised to keep American capital out of the railway deal, but had lied to Macdonald over this vital point, and Macdonald later discovered the lie. The Liberal party, at this time the opposition party in parliament, accused the Conservatives of having made a tacit agreement to give the contract to Hugh Allan in exchange for money.

Despite Macdonald's claims that he was innocent, evidence came to light showing receipts of money from Allan to Macdonald and some of his political colleagues. Perhaps even more damaging to Macdonald was when the Liberals discovered a telegram, through a former employee of Sir Hugh Allan, which had been stolen from the safe of Allan's lawyer, Sir John Abbott. Macdonald had sent the telegram to Allan six days before the 1872 election which read: "I must have another $10,000. Will be the last time of calling. Do not fail me. Answer today."

Macdonald resigned as prime minister. He offered his resignation as the head of the Conservative party, but it was not accepted and he was convinced to stay. Perhaps as a direct result of this scandal, the Conservative party fell in the eyes of the public and was relegated to being the Official Opposition in the federal election of 1874, after which Alexander Mackenzie succeeded Macdonald as the new prime minister of Canada.

Despite the short-term defeat, the scandal was not a mortal wound to Macdonald, the Conservative Party, or the Canadian Pacific Railway. An economic depression gripped Canadamarker after Macdonald left office, and Mackenzie was blamed for the ensuing hard times. Macdonald would return as prime minister in the 1878 election thanks to his National Policy. He would hold the office of prime minister to his death in 1891, while the Canadian Pacific would be completed by 1885 with Macdonald still in office.

References

  1. The National Dream: The Great Railway, 1871-1881, by Pierre Berton, Anchor Canada 1970
  2. John A. Macdonald: The Old Chieftain, by Donald Creighton, Toronto 1965, The Macmillan Company of Canada Ltd., p. 120
  3. The National Dream: The Great Railway, 1871-1881, by Pierre Berton, Anchor Canada 1970, p. 10
  4. John A. Macdonald: The Old Chieftain, by Donald Creighton, Toronto 1965, The Macmillan Company of Canada Ltd., p. 120
  5. Mr. Prime Minister 1867-1964, by Bruce Hutchison, Toronto 1964, Longmans Canada.
  6. Mr. Prime Minister 1867-1964, by Bruce Hutchison, Toronto 1964, Longmans Canada.


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