Canadian Transport Sourcebook

George Stephen's Battle for a Transcontinental Railroad

Lord Mountstephen, who passed away in England on No­vember 30th, 1921, played a part in the history of Canada which is perhaps not so much appreciated by the younger generation as it should be. While his career was not so romantic as that of his cousin, Lord Strathcona, who, as it were, emerged out of untrodden wilderness to become a great international figure, his powerful mind was even more instrumental in forcing through to completion the Cana­dian Pacific Railroad, and bringing the vast areas of the Northwest into settlement, pro­duction, and civilization. All the secrets revealed in the books of memoirs and cor­respondence, which are now so rapidly aug­menting the materials for Canadian history, help to show the enormous services which George Stephen, as he was originally known, rendered to his adopted country in the years of his vigour.

Even though the greater part of his life was spent first as a financier in Montreal and later as a peer living in wealthy retire­ment in England, his career did not lack romance. He was born at Forres, a village in Banffshire, Scotland, in 1829, the son of a poor carpenter, and as a lad was a shep­herd boy on the hills of his native shire. At the age of twenty-one (1850) he came to Montreal to enter the business of an uncle, William Stephen, who was well established as a cloth merchant. A "gillie" more astute and able has never come to any land. A few years later we find him in control of the Stephen business, and holding an important position as a manufacturer of woollens. At the same time he was investing in the stock of the Bank of Montreal, of which he ulti­mately became President (1876). In the later sixties he was already the confidential friend and adviser of Sir John Macdonald and the leading statesmen and capitalists of the Confederation era; and even at that time was seized with a vision or the great possibilities of the Canadian Northwest. This interest was no doubt aroused by his relationship to Donald Smith (afterwards Lord Strathcona) who had come out as an employee of the Hudson's Bay Company in 1838 and in thirty years had risen to the post of chief resident commissioner of that great organization. George Stephen's sub­sequent investments in the St. Paul and Pacific Railway (later known as the St. Paul and Manitoba Railway), out of which grew the Northern Pacific, and which at the time was the sole railroad route to the Canadian West, show his sure belief in the future of the prairies. His close association in that enterprise with a native of Canada, the late James J. Hill, who later built the Northern Pacific Railroad, is also a matter of common knowledge, and his ultimate fame as the chief driving force in the con­struction of the C.P.R. arose directly from his participation in the St. Paul enterprise.

A large, and probably the most import­ant, part of the Correspondence of Sir John Macdonald is composed of the letters which passed between the Prime Minister and the Montreal financier from 1869 to 1891, when Sir John died—a period when both were bending all their energies to the development of the West and the linking of the Pacific with the Atlantic. These letters reveal how great a part Stephen played in that epic. After the purchase of the North­west Territories from the Hudson's Bay Company in 1869, it will be remembered that a very serious crisis arose. The half-breeds of the Red River, led by Louis Riel, armed themselves to resist the new regime, and declared an independent republic with headquarters at Fort Garry. In this crisis, Sir John Macdonald turned to George Stephen, "as a Protestant, unconnected with office, and known to be an independent man of business, who might be exceedingly use­ful" and desired him to accompany certain influential French Canadians to Fort Garry on a mission of conciliation. Stephen's business obligations would not permit him to undertake the journey, but instead he sent his cousin, Donald A. Smith, as one better fitted to undertake the task. Stephen at that time was on friendly terms with Colonel Garnet Wolseley, afterward one of the greatest generals of modern times. He desired that the colonel should accompany Smith, but Sir John vetoed the proposal in these words: "Smith goes to carry the olive branch, and were it known at Red River that he was accompanied by an officer high in rank in military service, he would be looked upon as having the olive branch in one hand and a revolver in the other. We must not make any indications of even thinking of a military force until peaceable means have been exhausted. Should these miserable half-breeds not disband, they must be put down, and then, so far as I can influence matters, I shall be very glad to give Colonel Wolseley the chance of glory and the risk of the scalping knife."

This was in December, 1869, and it will be recalled that later it did become neces­sary to despatch Wolseley, but the mere rumour of his coming was sufficient to end the existence of Riel's republic. The send­ing of Smith at Stephen's suggestion was the beginning of a relation between Sir John and the two Scottish cousins, which was later to have developments of inesti­mable importance. The friendship between Sir John and Donald Smith was broken by a savage quarrel in 1873, but subsequently, after years had elapsed, Stephen became the medium of reconciliation.

Throughout the seventies Sir John Mac­donald and Sir Charles Tupper were very active in trying to get a company formed to build the Pacific railroad that had been promised British Columbia as a condition of her entry into Confederation. Several schemes were put forward but proved abor­tive. One of them, in which Sir Hugh Allan was interested, led to the piffling "Pacific Scandal" which, in combination with hard times, defeated the Macdonald government in 1873. As Leader of the Opposition, Sir John hammered away at the plan, and when he returned to power in 1878 he was firmly resolved to build the railroad. At last he secured the friendly interest of Stephen who already had railway interests in Manitoba as above noted, and in 1880 the latter became instrumental in founding the syndicate which undertook to construct an all-Cana­dian route to the Pacific.

The contract was signed on September 14th, 1880, and although neither Stephen's nor Donald Smith's name appeared in the document, they ultimately took it over and financed it. The signatories on behalf of the Government were Sir John Macdonald, Sir Charles Tupper, Hon. John Henry Pope, and Sir David Macpherson. The signers for the syndicate were Duncan Mc­Intyre, afterwards vice-president of the road, Morton, Rose & Co., bankers, of London, and Kohn, Reinach & Co., a firm of German bankers. Sir John Rose, the London banker, was a Canadian and a close and trusted friend of both Sir John and George Stephen. Subsequently Stephen became the first President of the Canadian Pacific Railway thus inaugurated, and con­tinued in that post until 1888. The original terms of the contract were that the road should be completed by 1891, but long ere then the task had been accomplished largely through the energies. of Stephen, Donald Smith, and the great practical railroader, William Van Horne.

Judged by hindsight, the terms offered by the Government to the syndicate seem exceedingly generous, but they were not so regarded in that day by capital; and the task of carrying out the contract proved nerve-racking not only for the Government, but for Stephen as chief financial mind of the group. There were times when he gave up hope of ever putting through the pro­ject. These distresses and fears find an echo throughout the correspondence. It was a case of enemies abroad and "sedition" at home. Sir John again and again in his letters states his positive conviction that the United States coveted the Canadian West if they could acquire it on easy terms; and a vigilant Opposition headed by Edward Blake was urging the abandonment of the whole enterprise. They did very nearly succeed in killing it. Such opposition natu­rally affected the status of the C P.R. in the money markets of the world; and it is a matter of common knowledge that Stephen and Smith, who succeeded in placing the Bank of Montreal, of which the former was President, back of the enterprise, were deemed guilty of having plunged its resour­ces in the reckless gamble. Sir John Mac­donald on the other hand, who was in honour bound to support to the limit the men who had risked so much for his pet project, was embarrassed by timorous ele­ments in his own cabinet and his own cau­cus. When the money-markets failed him, Stephen had to turn to the Government for loans, and for the Prime Minister it was sometimes like pulling teeth to get them authorized by his cabinet. He had to remind the impatient Stephen to read Charles Reade's novel, Put Yourself in His Place, but, though there were "spats", mutual confidence helped to solve all difficulties.

One plan, that worried Sir John and others a great deal, was put forward by James J. Hill and the Northern Pacific interests to make connections with Northern Ontario and Quebec via Sault Ste. Marie, by acquiring certain Quebec railway charters. They succeeded in interesting Hon J. A. Chapleau, an eminent French-Canadian politician, and it looked for a time, in 1881, as though Quebec might be swung into line against the Canadian Pacific project. Later, when matters became better advanced, the young government of Manitoba placed many obstacles in the way of the C.P.R. and proposed some ruinous railway projects of its own, which had to be nipped in the bud at the sources of financial supply. Sir John Macdonald's grasp of the extra-territorial possibilities of the C.P.R. and his belief in their future development were prophetic. As early as 1884 we find him writing to Stephen on the advisability of making a deal with Japan for a steamship line and also with regard to securing the British subsidy for a mail service to Hong Kong. This was a year when the Government with great difficulty had forced through a loan of $20,000,000 to the company.

Sometimes there were moments of elation in those anxious years, as when Stephen was able to announce that Major Rogers had found an easy and practicable pass through the Selkirks, and thus quieted a fear that this range of mountains, lying between the Rockies and the Coast Range, could not be penetrated by rail. In August, 1884, Stephen's heart was gladdened by the following telegram from Hon. Alexander Mackenzie, the former leader of the Liberal party, who evidently did not sympathize with the tactics of his successor, Blake: "Mount Stephen, B.C. I heartily congratulate you on the wonderful work accomplished. Our trip exceedingly pleasant."

The then newly named mountain must remain a monument to Lord Mountstephen greater than any that could be erected by the hands of man.

But the darkest days for the C.P.R. were yet to come. In the spring of 1885 the second Riel Rebellion broke out, and the Government's western administration was seriously discredited. When Sir David Macpherson had been appointed Minister of the Interior, Sir Charles Tupper had written to Sir John from London, saying that the appointment was excellent if only Macpherson could be induced to regard the West as something more than an annex to Chestnut Park, Toronto, his beautiful private domain. Tupper's fears were in part justified by the events of 1885. It was just at this critical period that the C.P.R. was in bitter need of five million dollars to pay wages and complete construction. It could raise them from only one source—the Government. Members of the cabinet like Sir Mackenzie Bowell and Sir Hector Langevin were opposed to any further advances, and Stephen despondently believed that the road must go into the hands of a receiver. Officers of the C.P.R. in those days have seen him in tears at the thought of the ruin of his hopes and the financial disaster in which his friends would be involved. In a letter written on March 26th, 1885, he asked Sir John to put the Government's refusal in writing, "so as to relieve me personally of the possible charge of having acted with undue haste." He added: "I need not repeat how sorry I am that this should be the result of all our efforts to give Canada a railway to the Pacific Ocean. But I am supported by the conviction that I have done all that could be done to obtain it."

Sir John was busy day and night seeking to save the life of the company and avoid the necessity of a receivership, and two steadfast friends in the cabinet, Sir Frank Smith and Hon. J. H. Pope, were helping; but the political delays were maddening to Stephen, waiting daily for relief like a general in a beleaguered fortress. On April 15th he wrote: "It is impossible for me to continue this struggle for existence any longer. the delay in dealing with the C.P.R. matter whatever may be the necessity for it, has finished me, and rendered me utterly unfit for further work, and if it is continued, must eventuate in the destruction of the Company."

On April 16th he forwarded a code telegram from Van Horne which read: "Have no means of paying wages; pay car can't be sent out; and unless we get immediate relief we must stop. Please inform Premier and Finance Minister. Do not be surprised, or blame me, if an immediate and most serious catastrophe occurs."

Faced with the possibility of a destructive rising of navvies in addition to the other troubles in the Northwest, the timorous members of the cabinet yielded, and the loan of five millions was granted. Truly it may be said that Canada as a Dominion was saved. But there was still to be met venomous opposition in the House of Commons from politicians who had no faith in the West or the C.P.R., and some of whom were probably quite willing that the United States should have the prairies. In June, 1885, we find Stephen writing to Sir John: "I have read Blake's speech, and without exception it is the meanest thing of the kind that has ever come under my notice. It is an ill-conditioned, vindictive effort to discredit the Company, without the remotest possibility of benefiting anybody, politically or otherwise. ... I am so furious with Blake that I cannot at the moment write coherently about him or his speech. What a miserable creature he must be. ... I hope you will express the scorn and contempt which I am sure you must feel for both him and his speech."

But that was not Sir John Macdonald's way. He was just as determined as Stephen, but less given to expressing his inner convictions, and so the C.P.R. was saved. Stephen had earned the baronetcy which came to him on the completion of the line years ahead of schedule; also his peerage, which came later. But there were several "spats" with Sir John before the latter passed away in 1891; one particularly about an entry into Halifax, which the Government, as proprietors of the Intercolonial Railroad, refused to countenance. Sometimes Stephen wrote that he was haunted by a fear that good relations between the Government and the Company might not continue, and that such a "family quarrel" might prove disastrous for Canada. But he never ceased to give the most emphatic expression to his admiration for Sir John as the real creator of the C.P.R., without whose steadfast aid its construction could never have been accomplished. In 1890 he wrote Sir John reminding him of the tenth birthday of the project, to which the great statesman sent this reply:

"What a change that event has made in this Canada of ours. And to think that not until next year was it expected that the infant prodigy would arrive at maturity!

"Your health is now fully recovered from the strain that the vast responsibility thrown upon you in nursing the railway entailed. Mine is very fair but I feel the weight of 76 years greatly. We can both console ourselves for all the worry we have gone through, by the reflection that we have done great good to our adopted country, and to the great Empire of which it forms a part. ... You personally have had an enormous amount of strain, responsibility, and worry, but the enterprise has been a success from the beginning."

Thus in a few words did Sir John tell the whole story, with the shadow of death approaching. The work of Stephen was done. He had won his fight but was destined to live on for three decades and to die of old age in a country place, Brocket Hall, Hertfordshire, which had been the home of two Prime Ministers of Great Britain, Lord Melbourne and Lord Palmerston—a strangely prolonged and quiet end for the shepherd lad of the Banffshire hills whom fortune had made one of the doughtiest of Britain's empire builders.