The Pacific Scandal


In May 1871, the government introduced legislation to allow construction of the railway from the Pacific Ocean to Lake Nipissing. The government chartered a company to build the line and granted it $30 million in cash and 20 million hectare of land as an incentive.

The opposition members, led by the Ontario reform, whose legislative leader was Alexander Mackenzie was devastated by such extravagance and confidentiality. He predicted that the railway would be marked by political corruption, he was right.

Hugh Allan's company, Allan Steamship Lines was one of the companies bidding on the project. The MacDonald government tried to combine the two companies, before he gave them the contract but it never worked. In the end, Evidence shows that Allan gave about $360 000 to the conservative re-election, in efforts of recognition of Cartier's support.

The year 1872 was a hard time for MacDonald's government, although it could present itself as the builder of the nation, but it failed to convince Washington to sign a new reciprocity agreement it had, they couldn't resolve who was to build the railway.

Liberal leaders claimed that Allan brought the contract with $360 000 in donation to Conservatives. People felt that the Americans were buying out their Canadian leader.

Shortly after the contract was awarded to Sir Hugh Allan company to build the pacific railway, scandal struck the MacDonald government.

A liberal member of Parliament, Lucius Seth Huntington, found a telegram that served as evidence of the 1872 corrupt election. The letter stated "I must have another $10,000. Will be the last time of calling. Do not fail me. Answer today.".  Allan had given the conservatives large sums of money it was disclosed that members of MacDonald's party had accepted campaign funds in the recent election from Sir Hugh Allan and that George Cartier, Macdonald Quebec lieutenant had promised Allan the charter in return for the funds. Cartier died in May 1873, and MacDonald faced the Pacific Scandal.

The Pacific Scandal was like a sharpened three-edge bayonet. The first edge, Sir Hugh Allan claimed to have given out $350 000 in campaign funds to the Conservatives party. The second edge was that having discussed the funds, Allan in due time receive the Pacific Railway charter from the government and the government got the money. The third edge was, while most of the money that Sir Hugh Allan dispensed was his, some was supplied by George McMullen and the Americans connected with the Northern Pacific Railway, who believed that they were going to be able to get control of the Pacific Railway in Canada. That was something that neither the MacDonald government nor the Canadian people had any intentions of allowing. When MacDonald accepted the money in the first place, that edge was hidden from him. He found out only after the elections were over.

When the Americans found out that they were going to be excluded from effective control of the Pacific Railway. They felt they had not put up time and money for nothing.

The liberal party wasn't going to let this go on. Threats were made in the House, about a corrupt bargain at the time of the August 1872, election. MacDonald told the House he had asked and got $45 000 from Allan, but Allan claimed he had given out closer to $350 000. MacDonald got a prorogation of Parliament on August 13th in strong opposite resistance, he got a Royal Commission appointed to investigate the affair. By October 23, 1873, Parliament opened and the government began to feel that they might weather it after all.

The liberals put enormous pressure on members of Parliament of all denominations to stand up for righteousness against inequity. Within a few days of the opening of Parliament, the support for the government began to weaken.

On November 3rd MacDonald made the speech of his life in the House. MacDonald said "there had been no corrupt bargain." he denied that Sir Hugh Allan had even been promised the charter, in return for campaign funds. MacDonald said that the use of campaign funds were well known to members on both sides of the House.

On November 5, 1873 MacDonald and the Conservatives resigned from politics because of what was known as the Pacific Railway Scandal. The MacDonald government never expected to be in power again.

The election of 1878 showed both MacDonald greatness and his defects. His greatness lay in his faith in Canada's capacity to achieve a firm union and became a great nation. He knew what to do to reach his goals, and he knew he could do it. At the same time he fought the elections on every issue that come to hand.

The Conservatives put forward a National Policy to solve the country's problems. The plan was to keep cheaper American goods out of Canada. Encourage Canadians to buy goods made by other Canadians. Fill the rich prairie lands with settlers. Encourage these settlers to buy manufactured goods made in Eastern Canada and to sell their agricultural products to eastern Canadians. Help to make this National Policy in place, the railway project was on again. In 1880 George Stephen and Donald A. Smith formed a company to build the railroad. This new company was called the Canadian Pacific Railway Company.

They worked out a deal with the government in return for building the railway, the company would own and operate it. In addition, the government would be later sold to settlers to raise money for the company. Also, the 1100km of railway that had already been finished were transferred to the Canadian Pacific Railway.

In November 1885 the Canadian Pacific Railway was completed. This was an important achievement for MacDonald's second government. The construction of the railway was started in 1874.

                                                          
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