Pacific Scandal
Encyclopedia
The Pacific Scandal was a political scandal
Political scandal
A political scandal is a kind of political corruption that is exposed and becomes a scandal, in which politicians or government officials are accused of engaging in various illegal, corrupt, or unethical practices...

 in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

 involving allegations of bribes
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...

 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 Columbia
British Columbia
British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...

's 1871 agreement to join Canadian Confederation
Canadian Confederation
Canadian Confederation was the process by which the federal Dominion of Canada was formed on July 1, 1867. On that day, three British colonies were formed into four Canadian provinces...

, the government had agreed to build the Canadian Pacific Railway
Canadian Pacific Railway
The Canadian Pacific Railway , formerly also known as CP Rail between 1968 and 1996, is a historic Canadian Class I railway founded in 1881 and now operated by Canadian Pacific Railway Limited, which began operations as legal owner in a corporate restructuring in 2001...

, a transcontinental railway linking the Pacific
Pacific Ocean
The Pacific Ocean is the largest of the Earth's oceanic divisions. It extends from the Arctic in the north to the Southern Ocean in the south, bounded by Asia and Australia in the west, and the Americas in the east.At 165.2 million square kilometres in area, this largest division of the World...

 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 Britain
Great Britain
Great Britain or Britain is an island situated to the northwest of Continental Europe. It is the ninth largest island in the world, and the largest European island, as well as the largest of the British Isles...

 and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

.

The scandal ultimately led to the resignation of Canada's first Prime Minister, Sir John A. Macdonald
John A. Macdonald
Sir John Alexander Macdonald, GCB, KCMG, PC, PC , QC was the first Prime Minister of Canada. The dominant figure of Canadian Confederation, his political career spanned almost half a century...

, and a transfer of power from his Conservative government to a Liberal government
Liberal Party of Canada
The Liberal Party of Canada , colloquially known as the Grits, is the oldest federally registered party in Canada. In the conventional political spectrum, the party sits between the centre and the centre-left. Historically the Liberal Party has positioned itself to the left of the Conservative...

 led by Alexander Mackenzie
Alexander Mackenzie
Alexander Mackenzie, PC , a building contractor and newspaper editor, was the second Prime Minister of Canada from November 7, 1873 to October 8, 1878.-Biography:...

. One of the new government's first measures was to introduce secret ballot
Secret ballot
The secret ballot is a voting method in which a voter's choices in an election or a referendum are anonymous. The key aim is to ensure the voter records a sincere choice by forestalling attempts to influence the voter by intimidation or bribery. The system is one means of achieving the goal of...

s in an effort to improve the integrity of future elections.

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
Rupert's Land
Rupert's Land, or Prince Rupert's Land, was a territory in British North America, consisting of the Hudson Bay drainage basin that was nominally owned by the Hudson's Bay Company for 200 years from 1670 to 1870, although numerous aboriginal groups lived in the same territory and disputed the...

 -- 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
Annexation
Annexation is the de jure incorporation of some territory into another geo-political entity . Usually, it is implied that the territory and population being annexed is the smaller, more peripheral, and weaker of the two merging entities, barring physical size...

. Indeed, sentiments of Manifest Destiny
Manifest Destiny
Manifest Destiny was the 19th century American belief that the United States was destined to expand across the continent. It was used by Democrat-Republicans in the 1840s to justify the war with Mexico; the concept was denounced by Whigs, and fell into disuse after the mid-19th century.Advocates of...

 were abuzz in this time: in 1867, year of Confederation
Confederation
A confederation in modern political terms is a permanent union of political units for common action in relation to other units. Usually created by treaty but often later adopting a common constitution, confederations tend to be established for dealing with critical issues such as defense, foreign...

, 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
Canadian Shield
The Canadian Shield, also called the Laurentian Plateau, or Bouclier Canadien , is a vast geological shield covered by a thin layer of soil that forms the nucleus of the North American or Laurentia craton. It is an area mostly composed of igneous rock which relates to its long volcanic history...

 of northern Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....

 by passing south through Wisconsin and Minnesota was, within the rubric of national interest, scrapped.

The Montreal capitalist Sir Hugh Allan, with his syndicate
Syndicate
A syndicate is a self-organizing group of individuals, companies or entities formed to transact some specific business, or to promote a common interest or in the case of criminals, to engage in organized crime...

 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, were in cahoots with American financiers such as George W. McMullen and Jay Cooke
Jay Cooke
Jay Cooke was an American financier. Cooke and his firm Jay Cooke & Company were most notable for their role in financing the Union's war effort during the American Civil War...

, men who were 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
Hugh Allan
Sir Hugh Allan, KCMG was a Scottish-born Canadian shipping magnate, railway promoter, financier and capitalist...

's Canada Pacific Railway Company and David Lewis Macpherson
David Lewis Macpherson
Sir David Lewis Macpherson, was a Canadian businessman and political figure. He was a member of the Senate of Canada from 1867 to 1896. He was knighted for his service to the country in 1884....

's Inter-Oceanic Railway Company. On April 2, 1873, Lucius Seth Huntington
Lucius Seth Huntington
Lucius Seth Huntington, PC was a Quebec lawyer, journalist and political figure. He was a Liberal member of the Canadian House of Commons representing Shefford from 1867 to 1882. He also served as President of the Queen's Privy Council for Canada and Postmaster General.He was born in Compton,...

, 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
Liberal Party of Canada
The Liberal Party of Canada , colloquially known as the Grits, is the oldest federally registered party in Canada. In the conventional political spectrum, the party sits between the centre and the centre-left. Historically the Liberal Party has positioned itself to the left of the Conservative...

, 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.

It is assumed that much of the money was used to bribe voters in the 1872 election. The secret ballot, then considered a novelty, had not yet been introduced in Canada. Although it was illegal to offer or accept bribes exchange for votes, effective enforcement of this prohibition proved impossible.

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
John Abbott
Sir John Joseph Caldwell Abbott, PC, KCMG, QC was the third Prime Minister of Canada. He served in the office for seventeen months, from June 16, 1891 to November 24, 1892. - Life and work :...

. Macdonald had sent the telegram to Allan six days before the 1872 election
Canadian federal election, 1872
The Canadian federal election of 1872 was held from July 20 to October 12, 1872, to elect members of the Canadian House of Commons of the 2nd Parliament of Canada. Prime Minister Sir John A...

 which read: "I must have another $10,000. Will be the last time of calling. Do not fail me. Answer today."

The scandal proved fatal to Macdonald's government
First Canadian Ministry
The First Canadian Ministry was the first cabinet chaired by Prime Minister Sir John A. Macdonald. It governed Canada from 1 July 1867 to 5 November 1873, including all of the 1st Canadian Parliament as well as the first eight months of the 2nd. The government was formed by the...

. Macdonald's control of Parliament was already tenuous following the 1872 election. In a time when party discipline
Party discipline
Party discipline is the ability of a parliamentary group of a political party to get its members to support the policies of their party leadership. In liberal democracies, it usually refers to the control that party leaders have over its legislature...

 was not as strong as it is today, once Macdonald's culpability in the scandal became known he could no longer expect to retain the confidence of the House of Commons.

Macdonald resigned as prime minister on 5 November 1873. He also 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
Canadian federal election, 1874
The Canadian federal election of 1874 was held on January 22, 1874, to elect members of the Canadian House of Commons of the 3rd Parliament of Canada. Sir John A...

. This election, in which secret ballots were used for the first time, gave Alexander Mackenzie
Alexander Mackenzie
Alexander Mackenzie, PC , a building contractor and newspaper editor, was the second Prime Minister of Canada from November 7, 1873 to October 8, 1878.-Biography:...

 a firm mandate to succeed 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 Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

 after Macdonald left office, and Mackenzie was blamed for the ensuing hard times. Macdonald would return as prime minister in the 1878 election
Canadian federal election, 1878
The Canadian federal election of 1878 was held on September 17 to elect members of the Canadian House of Commons of the 4th Parliament of Canada. It resulted in the end of Prime Minister Alexander Mackenzie's Liberal government after only one term in office. Canada suffered an economic depression...

 thanks to his National Policy
National Policy
The National Policy was a Canadian economic program introduced by John A. Macdonald's Conservative Party in 1876 and put into action in 1879. It called for high tariffs on imported manufactured items to protect the manufacturing industry...

. He would hold the office of prime minister to his death in 1891, and the Canadian Pacific would be completed by 1885 with Macdonald still in office.

External links

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