Life and Time of Sir Alexander Tilloch Galt 9780773584730

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LIFE AND TIMES

OF SIR ALEXANDER TILLOCH

GALT

OSCAR DOUGLAS SKELTON

LIFE AND

TIMES OF

SIR ALEXANDER TILLOCH GALT EDITED AND WITH AN INTRODUCTION BY GUY MACLEAN

The Carlelon Library No. 26 / McClelland olUi Stewart Limited

Copyright

© McClelland and Stewart Limited, 1966

By permission of Mr. H. H. Skelton and Mrs. A. R. Menzies Life alld Times of Sir Alexander Tilloclt Gall was first published in 1920 by the Oxford University Press, Toronto.

The Canadian Publishers McCleUand and Stewart Limited 25 Hollinger Road, Toronto 16

PRINTED AND BOUND I N CANADA

BY T. H . BEST PRI NTING CO MP ANY LIM ITED

THE CARLETON L I B R ARY

A series of Canadian reprints and new collections of source materi al relating to Canada, issued under the editoria l supervision of the Institute of Canadian Studies of Carleton University. Ottawa.

GENERAL EDITOR

Robert L. McDougall

.,

EDITORIAL BOARD

David M. L. Farr (History) Pauline Jewett (Political Science) H. Edward E nglish (Economics) M UDi Frumhartz (Sociology) Gordon C. Merrill (Geography) Wilfrid Eggleston (l ournalism)

CONTENTS

INTRODUCTION TO THE CARLETON LIBRARY EDITION,

PREFACE TO THE ORIGINAL EDITION,

xi

xix

I : THE BRIT ISH AMERICAN LAND COMPANY,

1

John Galt, agent for the Canada Company; backwoods settlements and sensitive governors; the break with the Company; last days in London; the call of Canada; the British American Land Company; Alexander Galt and the Company's policy; Galt as Commissioner; the success of his policy. 16 , / Canada in the forties; canal and railway; the riva lry of Boston and Portland; promoting the St. Lawrence and Atlantic; the first Canadian appea l for English capital; the fai lure: Galt takes hold.

2: GALT AND THE COMING OF THE RAILWAY,

3:

THE BUILDING OF THE GRAND TRUNK,

27 The railway era; the rivalry of the United States; Howe and th e Intercolonial; Canadian plans for the Grand Trunk; Hincks and the English contractors; the struggle for the contract; the amalgamation; the bui lding of the road; Gzowski and Company: later years; the balance sheet of the Grand Trunk.

4:

CANADA UNDER THE UNION:

49 Galt and the union era; th e union of the Canadas; the coming of responsible government; Galt's introduction to politics.

THE COM ING OF RESPONSIBLE GOVERNMENT,

5:

THE AFTERMATH OF RESPONSIDLE GOVERNMENT,

63

Gal t's first election to Parliament; the passing of racial ascendancy; the passing of the old colonial system; the annexation movement of 1849.

A

6:

P ARTI ES AND THE UN ION, 71 Sectional strife and party instabi li ty; Clear Grits and Rouges; the Hincks-Mo rin min istry; the achi evements and the fa ll of the G rea t Min istry; Galt, the Rouges, and the Min istry; John A. Macdonald and the Liberal-Conservatives.

7:

SECT IONAL CONF LICT AND TH E WAY OUT:

8:

PARTY CHANGES AND TH E FEDERATION PROPOSALS, 84 Perso nal changes; the seat of government crisis; Galt offered the premi ership; the Cartier-Macdonald ministry; Galt's federation policy adopted; negotiatio ns in EngUmd; tbe issue postponed.

9:

GALT AS M I N ISTER OF FINANCE :

10:

• 11:

1854-1856, 77 T he rise of Macdonald and Ca rli er; the achievements of tbe coalitio n; the growth of sectional conflict; the remedies: repeal of the Union; American models; Rep. by Pop.; the Double Majority; federal union of the Canadas; the federation of British No rth America; the services of Galt.

1858-1 862, 107 The fortunes of the Carlier-Macdonald ministry; a financial crisis; Jacking the stable doors; debt conversion, and Canada's credit; fiscal policy; free po rts ; the government, the decimal currency, and tbe note iss ue.

127 Reciprocity; the reciprocity movement; the working of reciprocity; United States complaints; Galt's defence of Canada's poli cy; the C ivil War; earlier Anglo-American frict ion; British attitude durin g the Civil War; the Trelll affa ir; Galt's first diplom atic ve ntu re; the interview with Lincoln; passing of the crisis .

CANADA AND THE UNITED STAT ES ,

135 Changes in imperi al relati ons; in ternal affairs and the power of the Governor; external affairs; trade relations; tariff autonomy a nd the Galt Memorandum; negotiations with the United States and France; the respo nsibility of defence; the Civil War crisis; the storm in England ; Galt points the moral: Confederation.

CANADA AN D THE MOTHER COUNTRY,

- 12:

T HE COM ING OF CONFEDERATION, 145

,/

The party see-saw; new converts to federation; th e Coali tion of 1864; the Maritime provinces come half way; the Conference at Quebec; the Conference draft and G alt's 1858 proposals; Confede rat ion and th e people; the Co nference with the imperial autho rities, 1865; the attempt to prolong rec iproci ty; a new fiscal pol icy; ministerial changes: the resignat ion of Brown and of Galt; the final stage.

13:

THE NEW NAT ION, 195

Galt's changing interests; last months in office; the "C.B.'s" ; business affa irs; new political ali gnments; Ca nadian natio nality; Canada and th e control of fore ign affairs; last calls to politics.

14:

CHURCH AND STATE ,

237 The rise of ultramontanism; th e movement in Canada; Galt takes the field; the triumph of moderation.

15 :

HIGH COMMI SS IO NER AND AMl1ASSADOR-AT- LARGE,

16:

CLOSING YEARS,

245 T he Halifax Comm issio n; the fisheries dispute; case and counter-case; the award a nd its reception; the French and Spanish mission; the High Co mmiss ionership; finding a foo ting in London; protection , preference and reciprocal trad e; defence and imperi al federation; want ed : an emigration policy; Ga lt's retirement.

NOTES,

273

281

SUGGESTIONS FOR FURTH ER READI NG, IN DEX,

289

287

Introduction to the Carleton Library Edition The life of Alexander Galt is a history of Canada in the nineteenth century. From the moment he arrived in Lower Canada in 1835 until his death fif ty-e ight years later, his pursuits paralleled the story of his adopted country. At eighteen be was settling virgin lands in Lower Ca nada; before he died he was pioneering schemes to open up the West. And in the years between, as businessman, politician, and diplomat, he played a leading role in every new phase in the nation's growth . The biography of such a man required the hand of an historian with a solid grasp of all those soc ial. economic, political, and constituti onal forces which were influenced by and had influenced Ga lt. One such scholar emerged to accept tbe challenge. Oscar Douglas Skelton ( 1878- 1941) was a forerunner of modern Canad ian historians. Born in Orangeville, Ontario, be was ed ucated at Queen's University where he graduated with first class Ho nours in Classics. Following two more years of classical studies at Queen's and the University of C hi cago. he spent some time as a journalist and as assistant editor of a literary periodical. H e returned to Chicago fo r two years of graduate study in Political Science and Economics, after which he was given an appoint ment at Queen's where he remained fo r seve nteen years as Professor of Political a nd Economic Science arid subseq uently as Dean of the Faculty of Arts. Skelton was a n enormo usly productive scholar as well as an inspiring teacher. His first book, Socialism: A Critical Analysis ( 1911), attracted the favourable attention of Lenin. and prompted G. D. H . Cole, an acknowledged authority on the subject, to describe it as the best criticism of socialism ever written.1 His numero us articles appeared with impress ive regulari ty in a variety of journ als rangin g from the highly academic Journal 0/ Political Economy and American Economic Review to the more practical Grain Growers' Guide . His contr ibution to the writing of Canadian history was prodigious. The sheer bulk of hi s work is in itself awesome. In a ten-year period he published seven, often large and always authoritative, studies: an essay on the general economic history of the Dominion, 1867-1 9 I 2, wh ich comprised most of volume 1

G. S. Graham, "Oscar Douglns Skelton," Conodion H istoricol Re"jew, xxn (June, 1941). p . 233.

xii - I N TR O D UCTI ON

IX of Canada and its Provinces ( 19 14), Th e Railway Builders (19 16). The Day of Sir Wilfrid Laurier (19 I 6) . Th e Canadian Dominion ( 1919), the Life and Times of Sir A lexander Tilloch Calt ( 1920) . and the Life alld Letters of Sir Wilfrid Laurier (192 1). It was a n astoni shi ng demonstration of steady industry combined with so und lea rnin g, and o ne which has rarely been equa lled in this country. Skelton was in tensely interested in all the im port ant issues of the day , but after the Fi rs t Wo rld War he was parti cularly conce rn ed wi th Can ada's eq ui vocal pos itio n vis-a-vis G reat Britain. The growth of self-gove rnment had bro ugh t the colo nies internal autonomy bu t the legal co ntrol of foreign policy was still rese rved to the Mother Cou nt ry. In oth er words, on major issues, there was one fo reign poli cy for all members of the E mpire a nd it was dictated from Lo ndo n. Fo r a state whose natio nal interest did not always coin cide with th at of Britai n, thi s was an unsatisfactory, eve n an intolerable, situation. So in 1920 Skelton, kee nl y aware th at with in the Empi re practice normall y out ra n constitutional form, submi tted a solution. In two articles he desc ribed an Empire of equ al partners bound by a common allegiance to the C row n. T wo years later, in an address to the Ca nadian Club of Ott awa, he emphatically rejected a statement by Lloyd George that the British Fo reign O ffice was th e instrument of foreign policy fo r the E mpire. H e presen ted a forcefu l argumen t fo r Canad ian control of Ca nadian fo reig n po licy. " Let us remember," he said, " that as a matter of actu al fact we have assumed, and wi th cumulati ve rapidity in the las t few yea rs, co ntrol over the greater part of thi s field of foreign policy th ro ugh our own gove rnm ent , and that the path of security, the path of safely, the path o f responsibi li ty, the path of honour a nd of duty toward other nati ons in the world lies, I think , in fo llowing th at course to the log ical end.":'! This speech marked th e begin ning of a new ca reer. M ackenz ie K ing had heard it and was very favo urabl y impressed, noting in his diary: "An excellent address - would make an excellent fo undation for Canadian policy on Ex ternal Affairs and Ske lto n hi mself wou ld make an excellen t man for that departm en t."s Skelto n was asked to prepare backgro und info r-

• w.

A. Mackintosh. "0. O. Skelton." in R. L. McDougall (cd.) Canada's Past and Present; A Dialoglle (Ou r Lh'i ng Tradition, Fifth Series), Toronto, 1965 , p. 69. Dr. Mackintosh's essay is fou nd on pp. 59·77 of this volume. ~ R. MacG. D awson, William LyQII Macke/nil: Killg, A Political Biography, 1874·1923 (Toro nto, 1958), p. 454.

I NTRO D UCTIO N - xiii

mation for the Imperial Conference of 1923 and to accom pany King to Londo n.4 And in tbe next yea r, with some misgivings, he accep ted the invitati on to join the Department of External Affairs as Counsellor. He succeeded Sir Josep h Pope as UnderSecretary of State for External Affa irs in 1925. Skelton exerted a very great influence on Canadian foreign policy in the years th at followed. lnheriting a department of three officers, he bu il t it into one of the world's most respected diplomatic services. He was the trusted adviser not only of King, but of Meighen a nd Bennett as we ll. An un obtrusive co nfida nt of three primc ministers, he helped to guidc Canada to fu ll nationhood a nd, as an architect of th e Comm onwealth, assisted in establishing the pri nciples wh ich have grouped a host of emergen t nations into a unique family of states. At the tim e of his death Ske lton enjoyed an immense prestige as the man wilo, more than any other in his time, created Canadian foreign policy a nd the machinery to execute it. S Recently, however, there have been signs of a reassess ment of his role as a policy-maker and, as is always the case with a forceful and influe nti al public figure, controversy wi ll DO doubt conti nue. But until the diplomatic records are ope n to scholarly exami nation, it is too soon to pass judgment. 1I In the mean time we may safely assume that, whatever the revis ion, the portrait of a dedicated and extraordinarily capable public serva nt wi ll endure. Certainly Skelton's stature as a n historia n remains und iminished. Jf voluminous writings are the only cri terion of a scholar's worth, tben Skelton's prolific pen alone should secure him an honoured place among Canadian historians. His signi ficance, however, may be measured not only by the number of King drew o n the assistance of Skelton because the Department of External Affairs had a tiny establishment of three officers, two of who m were elderly, and the third a man whom King s uspected of Co nservative leanings. In 1922 he described Ihe department as a "Tory hive" (J ames Eayrs, Th e A rt 0/ tile Possible: GOI'emmellt and Foreig" Policy In Ca"ada (Toronto, 196 1], p. 39). ~ G. S. G raham. op . cit. , p. 234. ~ For some recent rderences to Skehon and Canadian fo reign policy, sec: Druce H utchison, Th e In credible C(madlatl (Toronto, 1952), p. 250; James Eayrs, III Defence of Canada (Toronto, 1964) , PP. 11, 24 ; Vince nt Massey, What's Past Is Prologll e: The Memoirs of the Right Honol/rable Vincent IIlassey (Toronto, 1963), pp. 134-35; H . Blair N catby, William L>tOn Mackt!llzie King: The Lonely U d ellls, 1924-1932 (Toronto, 1963), p. 35; C . r . Stacey, review of Vincent Massey. What's Past Is Prologue in the Ca"adia" II lstorlcal R eview, XLV (December, 1964), pp. 322-23. 4

xiv - LIFE AND TIMES OF SIR A . T. GALT

books he wrote, but also by the methods he employed in writing them. For he was part of the revolution which took place in historical scholarship about the time of the First World War . Nineteenth-century writing in Ca nad ian history was largely the hobby of amateurs - antiquarians, journalists and lawyers who were content to chronicle political events. They were pre occ upi c ~ with two particular periods : the conquest of French Canada and the achievement of responsible govern ment. Equally important themes, such as the co ming of Confederation, they virtuall y ignored: They rarely ventured into the fie lds of economic and social history, a deficiency which st ruck Skelton as deplorable. "It never occurred to me before," he wrote to Adam Shortt, "bow completely and absolutely and inexcusably wanting all the histories of Canada arc on th e side of trade and commerce a nd industrial Hfe generally."7 Trained in modern techniques, he endeavoured to break with the tradit ional approach and to set fort h th e underlying economic and social factors which determine the course of politics. The Life and Times of Sir A lexa"der Til/ocl! Galt is a classic example of Skelton's approach put into practice. It desc ribes a man whose interests were as sweeping as the country itse lf : a politician who helped create it, a businessman who made it economically viable, a nd a statesman who blazed new trails in its diplomacy. The biographer co ntent to wr ite this Hfe from speeches would have given but a fleeting glimpse of a restless giant. Skelton, hindered by the paucity of previous hislori cal research, se t about the immense task of compressing within one volume a history of Canada and the life story of one of its princi pal figures. The wonder was, to paraphrase Samuel Joh nson, not that he did it well, but th at he did it at all. Not surprisingly, the end result was a massive volume. lnterspersed through the perso nal narrative were large ch unks of genera l history. These produce a patch-work effect and make tedious reading tOday. This unhappy fo rm was dictated by Skelton's assumption that most of his readers would have only a vague knowledge of the period and might, therefore, miss the fu ll impact of Galt's genuine creativity. These segments really detract from the main story and for that reason have been largely eliminated from this reprint of Galt. When first written, howeve r, they shed light on many hitherto neglected but forma· T

Kenneth N. Windsor, "Historical Writing in Canada to 1920," Liter· UIJ' History oj COllada (Toronto, 1965 ), p. 235.

lNTRODUCTION - xv

tive phases of Canadian history. Thus Skelton broke new ground which subsequent scbolarsbip has cultivated intensively. As will be gathered from tbe footnotes prepa red for this new edition, his descriptions of land settlement, railway building, party politics, Canadian-American relations and imperial problems have long since ceased to be definitive. Tbis fac t should in no way lesse n one's admi ration of the work of an incisive intellect in interpreting detail and fitting it into a broad integrated pattern. Skelton was not a stylist of prose. His books have neither the graceful artistry of a Creighton nor the sharp wit of an Under~ bill. Nevertheless, his writing was fluent and lucid, very often concealing from the casual reader his close-knit reasoning and imaginative skill. Embedded in his work are frequent flashes of insight which laboriously research ed monographs have merely served to confirm. This is not to say th at Skelton's biograph y of Galt is without its faults . Although he deprecated his predecessors' neglect of economic history and made a conscious effort to compensate for it, his interests remained focused on the formal develop ment of institutio ns and the achievement of self-gove rnment. Great portions of the origi nal edition of th e book are devo ted to accounts of Galt's enco unt ers with scheming Englishmen bent on frustrating the stead y Canadian adva nce toward fu ll autonomy. Sometimes the assid uous pursuit of this th eme managed to bring to light events of immense importance. For example, Skelton properly attached great significance to Galt's "declaration of indepe ndence" in J 859 when he confidently affi rmed the right of Canadians to impose a duty 00 British imports desp ite tbe loud protests of British manufacturers and a rebuke by the British governmeot. This was a turning point in the history of imperial relat ions, making possible the effective conlrol of the selfgoverning colonies over their owo trade and tariff policies. Obsession wi th imperial re lations, however, diverted Skelton's attention from anot her predominant theme of Canadian history, the inHueoce of geograp hy. Tbe state of Canada has been moulded by its geography. Early trade routes ran east and west from the Saskatchewan valley and through the Great Lakes-St. Lawrence system to tbe sea. Over this vast natural system of communication the staple prod ucts of the hinterland moved to the large cities of the Eas t. Men of imagination perceived that tbe natural pattern might be sustained by acts of will. Galt was one of the very first to see that ribbons of steel could reinforce the old commercial empire of

xvi - LIFE AND TIM ES OF SIR A. T . GALT

the St. Lawrence. FulJy six years before .!Jle Charlottetown Conference he was proposing to superimpose a poli tical structure, Confederation, upon the geographical skeleton . Political union of the colonies, canals and railways all became part of a single gra nd design to im pose a nation upon the inheren t facts of geography. It is within the context of th is design that Galt's perceptive gen ius emerges. Skelton accorded Ga lt full recognition as the prophet who called fo r a federation of th e colon ies as early as 1858, but inexp licably he fa iled to note tbat Ga lt, as much as any man, made it a practical rea lity. The representatives of Nova Scotia, New Brunswick a nd Prince Edward l sland at the Charlottetown Conference were initiall y sceptical about the larger uni on which the Canadians had come to propose. They fea red that the Maritimes stood to suffer financially. If their suspicions had not been overcome, the confere nce might have dissolved and with it the project of Confederation. Only one man among the Canadians was capable of convincing th e Maritimers that th ey had noth ing to feae s Galt may not have been as able a politician as some of his colleagues from Canada but he had a quick, clever mind, able to devise arra ngements capable of circumventing the most stubborn opposition. Here was a challenge worthy of his mettle. On the second day of the di sc ussions Ga lt ou tli ned the fina ncial imp lications of union. With sweeping ge neralities substa ntiated wit h pertinent facts and figures, he drew for the de legates an exciting vision of a nati on stretching from sea to sea. The plan of nationa l development, he argued, could only become a reality if the central government possessed unlimited powers of taxation . He brougbt forth an inge ni ous scheme of debt allowances whic h co nvinced th e Maritime delegates of tbe practicab ility of federation. At luncbeon aboard the Queen Victoria immediately following his speech, enthusiastic expressions of general approval were heard for tb e first time. Onte tbe burdle of Maritime hostility had been cleared, the delegates could sit down to bam mer out tbe shape of uni on. A successful biographer must have a curiosity about people and the skill to evoke bis subj ect's' presence. When we have fin ished rcading Skelton's life of Galt, we know a grea t deal about a Maker of Ca nada, a Father of Confederation, a Diplomat; but so mehow Galt is missing. ]t is as if we had been given a . 8

Donald Creighto n, T he Road to Confederatloll. TIle Emergence of ClIIwda: 1863-1867 ( To ronto, 1964), pp. 114-116.

INTRODUCTION - xvi.i

formal portrait of an institution rather than a man. Propriety seemed to restrai n Skelton from probing beneath the surface to discover what motivated th is dynamic, volatile, infec tiously enthusiastic person. There is little about Ga lt's private life, his famil y, his wealth, his appearance and habits. We can only regret that Skelton, who had the full co-operation of Galt's son, did not inquire afle r those intimate details which, though they may be incidental, make a figure out of the past come to life. It is the make-up of Galt th at is intriguing. What did he want of life? What drove him in relentless pursuit of money? What interest did politics really have for him? Was the Globe near the truth when it wrote: "He has not the courage of a mouse, nor has he the sense of ri ght and desire fo r th e people's good . ... He is a jobber at heart; the benefit of the people is his last thought in considering a public question."? Certainly, as we follow Galt's career, the suspicion grows that to him politics was distastefu l but necessary. It was to further the interests of the British American Land Company that he went into politics in the first place. In J 849 he was a strong supporter of union with the United States, resenting what he tbought was a British betrayal of Lower Ca nadian merchants. Thirty years later he advocated closer imperial unity in the hope that it would lead to preferential treatment for Canadian produce in British markets. The prospect of wider horizons for business expansion inspired him to take up the cause of Confed eration. The need for more profitable negotiation of trade treati es prom pted him to fight for Canadian diplomatic independence. Behind the political ach ievements there was always the hard-h eaded, pragmatic Scot, ready to promote an idea when it served his interests. Skelton judiciously presen ted the acco mplish ments with scarcely an inquisitive glance a t the motives behind them. A more personal biogra phy will some day reveal a character far more complex tban tbe one portra yed by Skelton. Skelton set out to write a general history of the period as well as a biography of Galt. The background material which might have been necessary in 1920 is now fami liar to most educated Canadia ns and for that reason has largely been omitted from this abridgement. The omissions, which a re always indicated by ellipses, amount to abo ut one-third of the original tex t. Chapters 1, 16 and 18 have been de leted and the chapters in this Carleton Library edition renumbered. Chapter I, "John Galt and the Canada Company," and Chapter 2 in the original

xviii - LIFE AND TIMES OF SIR A. T. GALT

edition have been combined as Chapter 1 of this edi tion; Chap· ters 16, "The H aliiax Commission," and 17 have been combined and renumbered as Chapter 15; and Chapters 18, "The Northwestern Enterprises," and 19 now form Chapter 16. At appropriate points brief connecting passages have been inserted and marked by the symbo l "'. Quotation marks in these co nnecting passages indicate material take n from Dr. Skelton's text. In a few places explanatory material has been introduced by the use of square brackets. Skelton's system of footnoting was inconsisten t and most of the orig inal references have been dropped. Several exceptionall y pertinent ones (indicated by asterisks) have been included among the editor's notes at the end of the volume. GUY MACLEAN

Dalhousie U1l iversity November, 1965

Preface to the Original Edition Few among the makers of Canada have played so varied a part in her upbuilding as Alexander Tilloch Galt. There have been statesmen who impressed themselves more spectacularly upon popular memory. There have been businessmen who have si nce carried througb greater projects of industrial development. There have, however, been few men in OUf annals who combined in such a degree eminence both in political and in commercial Hfe. No man did morc. if any did as much, to achieve Confederation. While be declined the highest office in his country's g ift, Galt was for many years foremost in party council and in parliamentary struggle. Few finance ministers have combined his large grasp of public affa irs, his power of bringing order out of chaos, and his lucidity of express ion. He was our first and is still our foremost diplomatist. In the shaping of opinion upon the future political relations of his country he took a changing but always reasoned and always influential part. Yet he never could bring himself to make politics his sale or dominant interest. In the opening of the Eastern Townships to settlement, in the early rai lroad development of Canada, and in the first great projects of joint stock compan y enterprise, he displayed unusual financial capacity and power of handling men , whiJe in his latest years his energy aod optimism found an outlet in enterprises for develop ing the land and mining resources of the far west. Throughout the fo rmati ve period of our national history, . Galt played a part of lasting significance to the Canada and the Canadians of after days. The forces that shaped the life and destiny of the Canada of the days before Confederation, and the new Canada of the first years after, are nowhere more fuJly displayed th an in his manifold interests and achievements. In presenting this story of his life, it is hoped to give some picture of the times in which he worked, and particu larly of the political experiments worked o ut under the Union of the two Canadas. It is a pleasant duty to acknowledge the kiodness of Mr. Elliott Galt in placing his father's private papers unreservedly at the writer's disposa l. O. D. SKELTON

Kingston, Canada, 1919

1: The British American Land Company John Galt, agent for the Canada Company; backwoods settlements and sensitive governors; the break with the Compa ny; last days in Lo ndon; the call of Canada; the Brit ish American Land Company; Alexander Galt and the Compa ny's policy; Galt as Commissioner; the success oC his policy .

...... The career of Alexand er T illoch Galt ca nnot be properly understood withou t reference to that of his fa ther, John Galt. In temperament a nd in abili ty the younger Galt rese mbled his fatb er, "with just sufficient variation to turn the dreamer into the doer." John Galt was born in Ir vine, Ayrshire, in 1779. After an apprent ices hip in the Greenock Customs H ouse, he moved, in 1804, to London where he engaged in several unsuccessful business enterprises. H e studi ed law at Lincoln's Inn, but was never called to the Bar. A new and more even tful period in h is li fe began when he sailed o n a trip through the Mediterranean, d uring which time he travelled briefly wi th Lord Byron. Upon reachi ng Turkey it sud de nly occurred to him th at here was a base for an evasion of the Napoleonic blockade. He negot iated with a Glasgow firm and , by circu mven ting Turkish red tape, managed to orga ni ze the shipmen t of British manufactures through the Balkans into Hunga ry and Germ any. Following Napo leon's defeat at Waterloo, Ga lt turned to literat ure. He wrote travel books, biographical studies, and severa l novels. Most of hi s wo rk is best forgotten, but Annals of lhe Parish, published in 182 1, enj oyed a deserved success. A li ve ly descript ion of Scottish life, it has been compared favourably with the best of Sir Walter Scott's novels. l In the year that A ""ais of the Parish appeared, Galt was appointed agent in London for residents of Upper Ca nada who were seeking red ress fro m the British gove rnm ent for damage suffered du ring the War of 18 12. H e pressed hi s clients' claims successfull y and the British gove rnm ent agreed to make pa rti al co mpensation. At the sa me ' time, they argued that the gove rnment of Upper Canada shou ld provide the remainder. Unfortunately, the Upper Ca nad ian governm ent had few so urces of reve nue and was unab le to assume this unexpected obli ga tio n. Encouraged by the prospect of winning his clients' case, Galt saw a plan whereby Upper Ca nada could ra ise a large sum of

2 - LIFE AND TIMES OF S IR A. T. GALT

money quickly through development of the Crown Reserves in the province. When the colony had been settled, large tracts of choice land had been rese rved to the Crown in order to provide a stable revenue in the fu ture. A similar reservatio n had been made for the support of the Protestant clergy. In thi s way about one-third of tbe land of the colony bad been reserved from settlement. Galt proposed that some of both Reserves be sold to a private company for development and that the income thus obtained from the sale be used to meet the claims of his clients.:! He interested a number of London merchants in the project and became the main instrument in the founding of a great colonizing organization. The Canada Land Company, which was set up in 1824 with Galt as sec reta ry and resident manager, acquired vast tracts of land in Upper Canada at very favourable prices. On a grant of one million unsurveyed and largely un~ explored acres near Lake Huron, Galt proceeded to lay the foundations of a n extensive colony. It was the most important single attempt at settlement in the history of Upper Canada; Guelph, Goderich, and many other towns of Western Ontario are his monument. The Canada Land Company prospered under Galt's management, but unfortunately he incurred the enmity of Sir Peregrine Maitland, the Lieutenant-Governor of Upper Canada. Maitland unjustly suspected him of sympathizing with the radical party of the colony, led by William Lyon Mackenzie, and complained of his alleged political activities to the Colonial Office, which, in turn, passed the reports on to the Company's directors. In J 829, having been accused of political interference and financial extravagance, Galt was summarily dismissed. A fin ancially ruined man, Galt returned to England and resumed his literary pursuits. · He produced a large number of insign ificant books on a variety of subj ects, and was briefly editor of a London newspaper. But unable to relinquish his interest in North America, a nd hopeful of recouping his earlier losses, John Ga lt took a leading part in the formation of the British American Land Compa ny for the purchase and development of Crown lands in the Eastern Townships of Lower Canada. Before he was able to pursue the new project act ively, be suffered a paralytic stroke and spent his remaining years in • Skelton failed to note tilat John Galt served some time in debtors' prison following his rcturn to England. It is interesting to speculate as to whethcr or not this fact was of any influence in shaping Alexander Galt's fervent ambition to make money.

THE BRITISH AMERI CAN LA ND COMPANY - 3

the painful compilation of an autobiography until his death in 1839. "His work li ved after him, a nd to the land of his chief interest he gave his three sons to carryon the work he had been compelled to abandon." Alexander was the youngest of John Galt's three sons. The eldest, John, entered the service of the Canada Company and died at a relatively early age. Thomas also was employed with the Ca nada Company before stud yi ng law. He became a very successful lawyer and a Queen's Counsel. In 1869 he was appointed a puisne judge of the Court of Common Pleas of Ontario and became Chief Justi ce in 1887. He was knighted in the following year. Alexander TilIoch Galt was born in Chelsea, London, September 6, 1817. Of his earl y boyhood there are few records: happy the boys that have no history. It was largely for the sake of his growing fa mi ly th at his father removed in 1823 from London to Eskgrove, nea r Edinburgh. Five years later came the great adventure : John Galt, looking forward to years of successful work as the Canada Comp any's Commissioner, had sent for his family to join him. The prospect was hailed with delight by the three boys, who talked all day and dreamed all night of bears and Indians and forest trails. The slow journey across the Atlantic, the honou rs showered upon the famous author and his family in New York, the journey by steamboat and barge up the Hudso n and th e Erie Ca nal to Lockport, were aU sou rces of keen deli ght to the expectant youngsters. A halt was made at Burlington Bay, but early in the summer Mrs. Ga lt went on to the Priory in Guelph, while the three boys were sen t to the school of Mr. Braithwaite, in Chambly, Lower Canada. Two years later they were recalled to join their father in England, and it seemed th at the brief Canadian episode was over. In London the chief associations and interests of the family were literary, and for a time it appeared probable that it would be the man of letters rather th an the man of business in John Galt who wou ld li ve again in his sons. Tom and Aleck wrote in 1830, when one was fifteen and the other thirteen, the tale which appears, scarcely revised, in Bogle Corbett , and the younger boy, a year or two later, had the honour of seeing a story all his own appea ring in Fraser's Magazine, then in the full flush of its success. But these first flights were not continued. Opportunities for business careers developed, and all three sons seized them. The literary facility a nd the power of lucid,

4 - LIFE AND TIMES OF SIR A. T. GALT

straightforward narrative which Alexander inherited stood him in good stead in both his commercial and his polit ical career, but it never tempted him to make li terature a n end in itself. It was to be business and politics, not business and literature, which were to divide the interest of the younger Galt. Early in March, 1835, Alexander Galt sailed for Quebec, to take up his work in the head office of the ncw Land Company at Sherbrooke. From the outset his fortunes were closely linked with those of the Eastern Townships, the vast undeveloped territory which lay between the St. Lawrence and the American border and between the Richelieu and the Cha udiere. They were the field of the operations of the Land Company in which his business train ing began and his first success was ach ieved. It was with the object of developing the Townships that he was induced to take up the buiJding of the St. Lawrence and Atlantic Rai lroad, and thus entered upon his railroad career. And it was also the interests of the Township and of th e Compan y which first led him into politics, as it was the limitations of the Townships field which throughout shaped his poli tical career . . . . --' Fre nch sett lement in Canada had been confined largely to the banks of the St. Lawrence and its tributaries. When British ru le began in Quebec, seigneuries were dotted along the river ba nks, but a few miles beyond the land was a wi lderness. The Brit ish attempted to encourage settle ment but with little success. Crow n and Clergy Rese rves were allocated and hundreds of thousa nds of acres were given to those who had fled from the American Revolution or had fought in the War of J 8 12. Many who received grants subsequently sold them to speculators who eventually acquired large estates. Most of the large proprietors did not live on these estates and some lived outside the province altogether. The la nd in large areas of Lower Canada consequently lay unse ttled and unproductive. The British Land Company was organized in 1833 to undertake a settlement venture in Lower Canada similar to th at carried out by the Canada Company in Upper Canada. 3 The Company secured a grant of over 800,000 acres and in subsequent purchases acquired another 400,000 acres. The land was situated in the Eastern Townships, in the counties of Sherbrooke, Sherrord, and Stanstead, and in th e southeast corner of the province between Lake Megantic and the St. Francis

THE BRiTiSH AMERICAN LAND COMPANY - 5

River. The coming of the Company was welcomed by the Engl ish-speaking settle rs in th e Townships, but was bitterly opposed by the F rench representatives in th e Leg islati ve Assembly. The F rench feared they wou ld be swamped by a new influx of English settlers. The Company began operatio ns in 1835, proceeding to open up roads, to bui ld warehouses, mills, a nd wharves, and to attract settlers. The results in the next few years were not encou raging. The belter class o f English immigra nt was fri ghtened off by the rebell ion in 1837, many settlers failed to meet their obligations, and some of the agents proved to be inefficient or dishonest. By j 838 the Compa ny was in financ ial difficulty and was forced to ask for a suspension of interest o n loans. ,..... In all the ups and down of the Company's affa irs an d in the political excitement of th ese yea rs, young Ga lt had been a watchfu l but quiet observer. He mastered thoroughly the routine tasks assigned him, lay in g a solid basis for that grasp of commercial forms and insight in to intricate financial rela ti ons which always impressed his fellows. In 1840, he was given hi s first independent commi ss ion, the task of coll ectin g from the St. Francis settl ers the lo ng overdue debts for the provisions advanced on their first settl ement. His repo rt to the Commiss ioner soon made it clear th at the youn g man of twenty-three had a power of going direct to the heart of a difficulty, a fertility of reso urce, and a qu iet assurance of powe r whi ch marked him out as the only man who co uld save the situatio n for the Company. After report in g the arrangements made to cancel or re new the provision obligat io ns, Ga lt proceeded to review the whole situation in the St. Francis district and to suggest changes in the Company's policy. Sales had practically ceased, reaching less than £ 1,000 the preceding year; a nd now a tax on wild lands was threatened, which, even at a hal f penny per acre, would amo unt to £ 2,500 a year. As fo r the sales already made and the settlements effected, Galt drew a dark but not exaggerated picture. The bulk of the settlers secured had been " brough t up under the E nglish poor laws," and had little veracity or adaptability. The expenditure of a grea t amou nt of capital in making roads, bridges, and mills, a nd in int roduci ng and supporting these pauper immigrants, had brought abo ut a hectic prosperity. followed by a sweeping reaction. Many of the immigrants were gone and their debts with them ; more would fo llow; few who

~

6 - LIFE AND TIMES OF S I R A. T. GALT

remained could meet the ir pressing obligations to the Company. The roads made at such vast ou tlay were fa lli ng into ruin; many were actuall y impassab le - grown up with bushes four feet high. Victoria, on which so ma ny thousands of pounds had been spent, was deserted by all but one family. The saw mill was idle. At Gou ld the storehouses were falling to ruins. At Robinson only fo ur fami lies remained, inc luding the agent; the tavern keeper had depa rted in despair, the blacksmi th's forge was silent, the grist mi lls on which over £ 1,000 had been spent were in bad order, the pearl ashery in ruins. For the future, the young observer calmly recommended a complete change in the directors' policy, as to both men and methods. There could be no doubt in the mind of any person acquainted with settling in the woods that British pauper imm igrants were helpless when left to the ir own una ided judgment. To give a new settlement a fa ir chance, a large pro'\ portion of the pioneers should be Americans or Anglo-Canadians; many of this class were now in the Townships, anxious to push on somewhere. Some had means, oth ers none, but any able-bodied man going with nothing but his axe into the woods wou ld make a more valuable settler than nineteen out of twenty of those already in Sl. Francis. Further, the methods of payment ..... should be changed. The present practice of requiring the settler to pay one-fifth of the purchase price down, and the balance in rapid instalments, deprived him of funds badly needed for the support of his fami ly and the cultivation of his land. Instead, the Company should adopt a sti ll more extensive credit system, throwing open their lands to any who appeared likel y settle rs, at the current value, interest only to be paid for a certain number of years, and thereafter the principal in easy instalments. Incidentally, this would mean that the Company would turn a large area of land liable to the proposed wild land tax into a revenue-produc ing asset. As for the present settlers, the only means of saving the Company's interests was to take payment for land and services in labour, and app ly this labour to the building of public works accepted by the government as part of the purchase price, and of grist mills and asheries at Gould, which was much better adapted than Victoria as headquarters of the district. The fina l recommendation in this sweeping review was that in view of the emergency and of the numerous dai ly calls requiring prompt dec ision, it was essential that the Commissioner shou ld be given a free hand: the Court of Directors must by this time have

THE BRITISH AMERICAN LAND COMPANY - 7

learned that the Company's interests would be safe in his discretion. The report did not lead to immed iate results. Before deciding on the best method of carrying on the Company's affairs, the directors had to decide whether they would go on at all. Negotiations were opened for the resumption of the whole or part of the lands acquired from the Crown, while alternative proposals for relief from interest or postponement of instalments were pressed both in London a nd in Kingston. It was clear by this tim e that the business of a land company was far from being the certain and speedy road to wealth it had seemed. Land could indeed be bought for three or four shillings an acre, but it was not land in England, but land in the heart of an American wilderness, requiring time and patience and abi lity to develop. Millions of acres in Upper Canada and in the states of the middle west were being thrown on the same bargain counter. Cos tl y roads must be built and maintained, to take the settlers in a nd bring their produce out. Unexpected political disturbances and racial jealousies must be faced. The cumulat ive attraction, to prospective immigrants, of frie nds established in the western sections must be overcome. Values would rise in time, but in time interest on the capital invested would also mount and the cost of the establishment wou ld eat into possible profits. If increment of value was to be secured , it would have to be earned. Matters went from bad to worse. Tn 184 1, only 400 of the \' 28,000 immigran ts who la nded at Quebec could be diverted toF the whole Eastern Townships. The sale of land was under 1,500 acres and did not even meet the cost of the Canadia n establishment. A new calamity was thre atened in the imposition of a tax of a penn y a n acre upon all wild lands, by the newly created Municipal Council of the Coun ty of Sherbrooke, a tax more than double current receipts. The only gleam of relief came in the consent of the government to take back 511,000 acres, much of which had been surveyed and rendered accessible. In this crisis, late in 1842, the yo ung clerk whose report. forwarded by the Commissioner to the Directors, had shown such a confident grasp of the situation, was summoned to London. He laid before the Court a full anal ysis of its various undertakings, and repeated the remedies suggested, with others I which later experience had shown necessary: as for British ~ emigrants, canvass them before sailing, not at Quebec or Montreal; seek Americans and French Canadians, who were

8 - L IFE AN D TI MES OF SIR A. T . G ALT

now showing a dispositio n to settle in the Townships; accept pay ment from settlers in labour and especially in prod uce; sell wild lands on long cred it, for the present; obtain improved farms fo r sale to settlers with capital by making arra nge ments with the present sett lers to take over their ho ldin gs when re ~ q uired, paying them in money, wild land and ca ncelled debts; throw no more money into the lake at Port SL F rancis; endeavour to bring manufacturers to She rbrooke and help them to uti lize the Co mpa ny's mill sites there avai lable; give the Commiss ioner more independent discretion ; let him endeavour to take the place in the Eastern Townships wh ich the extent of th e Company's interests wa rranted, and lead rather than be dri ven in such matters as the imposition of taxes a nd the expend iture of receipts. In a separate memorandum , on which no action was taken, Ga lt proposed to take over from the Company its Sherb rooke holdin gs, in which £27,500 currency had been invested and on which no return was bein g secured. H e offered to pay £25,000 on fi ve to ten years' credit, secured by a mortgage a nd by the assignment of bis whole salary. Leavin g the Di recto rs to consider this extensive programme, he paid a lengthy visit to Scotland with his mother, renewi ng old acqu anta nces and old memories. By September, 1843 . the Court had concluded that if the Company was to go o n, it must be largely on the lines Galt suggested and under hi s control. H e was appointed Secretary, and instructed to return to Canada , where his first task woul d be to carryon negoti ations with the government as to further res um ption of unproductive lands and a nnulment of the wild land tax. In these proceed in gs he was to consult the Commiss ioner, but thi s instructi on was large ly for fo rm's sake, as the Court had already determ ined to give the Sec retary still further promotion if his plans succeeded. The new Secretary lost no time in returning to Canada. After a brie f confe rence with the Com missioner he posted on to Kingston, the seat of governm ent. How he fared in his fi rst experience of practical politics, how be fo und the Company's influence at Court rather less than nothin g, how he bargained with the G overn or-General, Sir Charles Metcal fe, for mutual support, will be see n later. It need o nly be said here that he soon reali zed th at res um ption of the lands was out of the questi on and that it would be difficult to ind uce the provincial legislature eith er to restrict the general powers of the new municipal bod ies or to overrul e the specific exerc ise of their power

THE BRITISH AMERICAN LAND COMPANY _ 9

complained of. The sudden break-up of the ministry a nd the approaching genera l e lec tion put definite action at Kingstoil out of the ques tion. Ga lt turned to Sherbrooke and began to sound the Municipal Council and especially its leading spiri t, Samuel Brooks, local manager of the C ity Bank, as to the possibili ty of a compromise. Meanwhile the sys tem of long credit sales had been put into operation, and had alreadY led to a large increase both in the price and the quant ity of land sold . The purchasers we re ch iefly residents of the Townshi ps, man y of them squatters on the land they boug ht , and French Canadians from the se igne uries. This first instalment of the new po licy was pro mising success. It appeared that th e tide had turned. \V hen Galt agai n crossed to London to report, in February, 1844, he received hi s reward by being appointed Com missio ner. In undertaking the task of restoring the Company's desperate for tunes, the new Commissioner promised to finance future operations without funher calls upon the sha reholders. In return he stipul ateo a free hand and a reasonable length of time to prove the success or failure of hi s plans. This co nfidence the Court of Directors freely gave and loyall y continued. Throughout the period of Galt's service as Commissioner he enjoyed the personal friendship and official backing of the leading shareholde rs of the Compa ny, a nd fo und the connection thus formed of much va lue in later financial ent erprises. Galt's firs t task was to avert the crush ing burden of taxation imposed by the Sherbrooke Council. H e admitted at once that some measure of laxation was just and imperati ve, both to sec ure revenue a nd to co mpel development. H e protested, however, th at the rate of a penn y an acre levied was fa r in excess of that required for the works in view, and that it made no d isti nction between good land and bad, land near and land remote, or between absentee proprietors who had received their land free and done not hing to develop it, and the Land Company, which had paid for its holdings and had poured out thousands in belterments. The Council itse lf had recognized the unfairness of the tax by making no determined effort to co llect it in a ny of the three years it had been levied .... In lieu of this tax he urged an assessment upon all real property, improved and unimproved , according to the value, and offered to advance the Council £2,000 to set the work in motion. As a result of this negotiation and the influence of the minor proprietors, the tax was not collected, but constructive

10 - LI FE AND TI MES OF S I R A. T . GALT

measures ha iled, pending th e reconstruction of the whole municipal machinery. In 1845 the District Councils wcre abolished a nd township authorities with no power to collect such taxes established in their place. Two yea rs latcr co unt y municipalities were again set up, and in 1848 the Sherbrooke Council once more proposed to collect arrears of taxes. Once more the Commissioner succeeded in averting th is blow and he ncefo rth the Company's lands bore only a moderate tax burde n. Ga lt now turned to the vital problem of att racting sett lers. From the format ion of the Company the Un ited Kingdom had been looked to as the natural source of immi grat ion, but hope had been repeatedly deferred. The ca mpaig n was now ca rri ed on more vi goro usly, though th e personal ca nvass in the British Isles which G alt suggested was not unde rtaken. In preparing info rm ation for intendin g colonists Galt was unusually frank a nd plain spoke n, a nd his expressions of opinion on settlement have therefo re a va lue unusual in immigration literatu re either of governments or of pri vate enterprises. He warned all comers th at Canada was a land of hard work, a land where in six months a farmer or labourer must carn the bulk of his support for the whole year. "A settlemen t in the backwoods of Canada," he conti nued, " however romantic and pleasing may be the accoun ts ge nerall y publjshed of it, bas nothing but stern reality and hardship co nn ected wit h it, Alone in the woods in his log cabin with his fa mil y, tired with his day's work, and know ing that th e morrow bri ngs but the same toil, the emig ra nt will find but few of his fancies realized. Instead of the certain and luxuriant crop he has loo ked to as assured, he may find th at either his own unskilfulness, the quaJity of tbe seed, or the premature severity of the season, has reduced his harvest within a narrow compass. His cattle may die or he and his fa mi ly may be afflicted with sickness. An observat ion of seven years and an intimate acquaintance wi th most of the new sett lements of the Eastern Townships, has satisfied the writer that for the fi rst years the emigra nt to succeed must work as hard and suffer perhaps greater privations than if he rem ained in G reat Britain, but he bas throughout the conscio usness that he is worki ng for himself and that whi le mea ntime he does not wa nt for food, he will soon be possessed of th e same comfor ts and enj oy the same independence as his older neighbours around him." He distingu ished three classes of immigrants. In the firs t class were the men of capital, perhaps £ 750 to £3 ,000. They

THE BRITISH AMERICAN LAND COMPANY - 11

were the most likely to become disap pointed with the country, since they usuall y invested the bulk of their means at once in land and buildings and stock, lived comparatively lavishly, depended on hired labour, and either knew nothing of farming or had learnt it in a country where land was dear and labour cheap, and were unwilling to unlearn. When in a few years tbey looked about and saw men whom they had at first employed in a situation superior to their own, they too often decided that "Canada is a very good country for a labouring man but not for a gentleman." They wou ld do much better to bank their money and live in comfort in one of the villages in the Townsh ips until they bad acquired experience, or else to start in a modest way. The labouring man, again, often dreamed that the ri se to independence would be much more rapid and wages higher than the facts warranted. "Unfortunately," be continued, "but few labourers on their arrival in Canada consider what their position was in the land of their birth, and instead of being grateful to Providence and their fellow-men for the improved prospects afforded them, they are difficult to please and qu ite insatiable in their demands. The writer has known instances where thirty shillings a month and board bas been refused by men who preferred beggin g their way around the public works, where they expected higher wages. The labouring man who seeks a borne in Canada should be satisfied to be secured with his family from want in the first instance, and in the course of a ve ry short time opportunity is never wanting for an industrious honest man of this class to better his condition." ]t was, however, the middle class. the small farmers and mechanics witb sufficient means to support their families for about eighteen months, until the land gave returns, who were best advised in emigrating. With £80 or £90 such a settler could make a good start, and soon achieve not wealth, which few found, but independence, and opportunity for his children after him: "the real object can be readily obtained, that of an independent horne. subject to the curse of original si n, but the possessor must work hard for its enjoyment." Advice such as this gave little ground for complaint of being lured to Canada by false pretences. It was supplemented by literature of a more conventional and optimistic kind, but neither frank words nor glowing prospectuses could divert to the Townships any large number of British immigrants. The fact was that in the British Isles Lower Canada meant Frenchspeaking Canada: its climate was reputed more severe, and its

12 - LI FE AND T IMES OF SI R A. T. GA LT

mea ns of com mun ica tion much more backwa rd than was the case in Upper Canada or rIl inois. While tens of thousands passed on to the fer tile Eng lish-speaking west, and thousands halted in Montrea l, hund reds tri ckled into the Townships. There was more hope of settlement by farmers already in the prov ince or in the adjoini ng states, swarm ing to new scenes. A good ly number of these men were secured, but the sou rce of supp ly was lim ited and the growth slow. Soo n the lure of Ohio a nd JIIinois call ed the Vermonte r, when the Erie Canal and the ra il road made western travel easy, and he ceased to push northwa rd. It became clea r th at the Co mp any must look mo re and mo re to th e very men whose represent atives had fo r yea rs bitterly attacked it and all its ways - the Fre nch Canadians. One great barrier to their incurs ion had been the unwillingness of the Ca tholic clergy to see their fl ocks settl ing upon any land held in .( free and com mon socage, since by the Q uebec Act of 1774 it had been prov ided tha t F rench law and cus tom, incl udi ng the right of the priest to tax and tithe, exte nd ed only to lands held under seigniorial tenu re. By an ordinance of 1839, howeve r, co nfi rmed by an Act of the Canadi an Leg islatu re in 1849, .,.. permi ssion was gi ven to th e church auth orit ies to set up parishes beyond the old bo unds. With the pa rish system, it was held, went the tith ing power. At the sa me time lhat th is barrier was rem oved, the growing ti de of emigra nts to tbe New England states was stirring clerical and nationalist leaders to rea li ze the need of making the swa rm s fro m the seigneuries settle within the province. Thus the Compan y fo und th eir new effo rts met more than half way. Additio nal French-speaking agents were appoin ted, and, solicited o r unsoli cited, a steady stream of stu rdy habi tants began to pour in. A special impetus was given to the movement in 1848 by the concl usion of an agree ment ' betwee n the Company and the newly orga nized Association fo r the Estab lis hm ent of French Ca nadia ns in the Eastern T ow nships. T he Assoc iation agreed to encourage approved F rench-Ca nad ian se ttlers to sett le in the Tow nship of Rox ton, and later in Ely, Stukely, a nd Oxfo rd , a nd, with the ass istance of the Bishop of Mon treal, to build a chu rc h and sc bool and prov ide a mission priest. The Co mpa ny engaged to provide land o n lo ng terms, to bu ild road s and mills - " in short , to accomplish all th at has hith erto bee n th e dut y of the Seigneur without exac ting from the settler the obnox ious condi tions whi ch apply to lands in the ( French) Ca nadian parishes."

THE BRIT1SH AMER ICAN LAND COMPAN Y - 13

The Commissioner who in 1848 offered his French-Ca nadian compatriot "a settleme nt in the Eastern Townships where be will retain all the advantages of hi s native parish, his la ng uage, his clergy, and his social habit s, without one of the restrictions which there curb hi s ind ustry and enterprise," little thought that before the cen tury ended the Eastern Townships "Iwou ld be overwhe lmi ngly French-speaking. The terms of sale exper imentally adopted in 1843 were J cont inued. No payment o n purchase was requ ired; fo r the first } ten years interest onl y was paid, and then the principal was paid off in fo ur equal annual insta lments. This was long credit, and it could not have profited the Company if it had not been for the high prices set upo n land, before 1843. Writing the Court of Directors in 1850, Galt declared: " It must be borne in mind X that the sales made of the Compa ny's property have bee n at a price enormously greater tha n their real cash va lu e, a res ult almost entirely prod uced by o ur long credit and partially by our system of produce payments. By these two points combined the Company have not merel y had a monopoly of sales but at their own prices. Lands equally good have been sold for 3/ and 3/ 6 an acre cash when our sales were made at 10/ - and 12/ 6 (currency)." From some poin ts of vi ew these terms might see m excessive, but they ev idently suited the circ umstances of the purchase rs, since practicall y no wild land was sold by the Company befo re the cha nge was made nor by oth~r proprietors during the later period. In any eve nt. to charge $2.00 and $2.50 an ac re, for good Townships land, could hard ly constitute exto rtion. The fact record ed in the sa me report, that it had not bee n necessa ry to bri ng a lawsui t against a single purchaser since 1843, made clear the considerateness of the po li cy adopted. The produce system to wh ich the Commiss ioner refers in his ..; 1850 report was another outsta nd ing fea ture of th e new regime. Settlers were allowed to make payment in grain or stock, preferably young cattle, and wh il e thi s enta il ed much additiona l work upon the age nts, it met ad mirably th e circumstances of settler; who lived far from ma rkets and were short of ready cash. Galt was able to say with truth that he was carrying on the most extensive system of barter known in th e western world. The sche me bore a curious resemblance to one of John Galt's proposals for the Canada Company territory, but seems to have .J been suggested rather by observation of customs on the seig n- ,.. curies. It was a temporary measure, gradua ll y abandoned as the

14 - LIF E AND TIMES OF SIR A. T. GALT

growth of tra nsportati on an d ba nk ing facilit ies made such a primitive survival unnecessary. In pursuance of his policy of active development, Galt pushed on the building of roads as far as the cash on hand or the labour services du e permitted, and built or aided the building of mills and stores and asheries in T ownship centres. Sherbrooke, where the Company had early acquired practicall y all the available water powers a nd so me J ,500 acres of adjoi ning land, be regarded as potentially the most valuable part of the whole estate, th ough bringing in no return for the time. He urged that the only way to make the large investment producti ve was to put in still more capital, developi ng th e water powers and making advances to manufacturers who could lease or later purchase the mill-si tes. This was done, out of the proceeds of land sales, and the growth wh ich followed justified tbe policy, though one experiment, the establishme nt of a cotton factory in which the Company took an interest, resulted in a loss. Later, in 1853, when the mineral wealth of the Townships began to arouse attention, Gait organized a subsidiary company, the British American Mining Association, which had a chequered career in its pursuit of gold and copper, and finally resold to the parent company, in 1866, the bulk of the lands it had purchased. The chief enterprise in wh ich Ga1t embarked fo r the development alike of the T owns hips and of the Company's es tate was, of course, the building of the St. Lawrence a nd Atlantic Railroad, but the record of th is undertaking must be deferred to a later chapter. For twelve years Galt directed the policy of the British American La nd Compa ny. Then growing business interests and political engagements made it difficult to give the detailed attention its affairs demanded. The directors pressed him to remain, and for the last ye ar, 1855, he arran ged to give only a general oversight, with an Assista nt-Comm issioner, Mr. R. W. Heneker, to carryon the rout ine work. Even th is partial release proved insufficient, however, and with the close of the year he resigned his post, Mr. H eneker succeeding. The results of this stewardship may be summed up briefly. They amply justified the confidence which the young Commissioner had felt in his own powers, and the confidence which the Court of Di rectors had freely give n. From annllal sales of fifteen hundred acres, the average during Galt's term increased

THE BRITISH AMERICAN LAND COMPANY - IS

to twelve thousand. When he took charge, practically the whole of the Company's in vestment was unproductive; when he retired, the revenue-bea ring mortgages held equalled tile book value of the remaining wild lands. The actual value of the real es tate alone bad come to equal the whole capital, leaving over £ 100,000 mortgage credits to the good. With all Lhis irnprove- . ment in conditions, it was not until 1851 that actual cash returns X warranted the payment of a dividend, but from tbat year till Galt's retirement it was not again passed. The very year after he withdrew the Company found itself unable to declare a dividend and not until ten years had gone was it resumed. Wi~ the grad ual reduction of its boldings, tbe activities of tbe Company were lessened, but it is still in existence. The credit of this achievement did not rest entirely with tbe Commissioner. The Company shared in the prosperity or tbe stagnation of the who le country, and each year that passed increased the va lue of the lessening land. Yet the experience of the Company both before and after Galt's Commissionership made it clear how much depended upon the perso nal factor. Opportunities might be frittered away, profits eaten up by loose ma nagement. There was need of decision and sound judgment if the happy skirts of chance were to be seized, and fortunately they were at hand. The Directors said no more than bare truth whe n in 1856 they declared that the retiring Commissioner had by his able management "changed the position of the Company from one of almost helpless insolvency to that of a valuable and remunerative und ertaking."

2 : Galt and the Coming of the Railway Canada in the forties; canal and raiJway; the rivalry of Boston and Portland; promoting the St. l awrence and Atlantic; the first Canadian appeal for English capital; the failure: Galt takes hold.

I n the closing forties Canada entered upon its first great rai lway cra. l Fo r a decade, in th e words of Sir All an MacNab, railways became OUf politics. T hey dom inated public interest and private spec ulation. At the close of the era Canada was vastly differen t from what it had been at the o utset. Not only were the ends of the great struggling prov ince bound togethe r, and winter's six months' ban upon intercourse with the outcr world removed, but new experience had been atta ined in orga ni zi ng joint stock companies. T he How of capital fro m London had been started. New possibil ities of sudden wealth by rai lway promot ion or land spec ulation opened up before the sober plodding prov inc ials. The all too intimate connec tio n between railways and politics whic h has eve r since been a distinguis hing feature of Canadian li fe had begun. The nation· building possi bilities of the rai lway were becoming manifest to the eye of faith. T he province definitely emerged from the pionee r stage and became an organic part of the great worl d of commerce and finance. I n this development A. T. Gal t took a varied but always prominent pa rt. Ali ke in the promotion, the fi nancing. a nd the construction of ra ilways, his skill and tact and optimistic courage found fitting opportunity. He was the representative railway figure of the decade, and a survey of his act ivities enables us to realize in some measure the cha nges in Canada's indust ri al life .... ,..., Backward methods of tran sportatio n were a serious handica p in the development of the Canad ian economy in the 1840's. The system of roads was totally inadequate to the needs of the population. A vigorous policy of canal construc ti on was begun immed iately after the union of 1841 bu t, even when the 8t. Lawrence canals were finished , they provided only a partial solution to the problem of transport, si nce they were available for only a part of the year, and served a limited area. In Montreal it was hoped that the canal system woul d divert a n increasing volume of the trade which flowed southeast through New York by way of the Erie Canal and the Hudso n River.

•

GALT AND THE COM I NG OF T H E RA I LWAY - 17

The ho~ proved overl y optimistic; nine-tenths of the trade from tbe west by way of the lakes continued to pass through New York. On the eastern seaboard of the United States, the chief rival of New York for the developing tt ade of the western interior was Boston. New York had gained a clea r advantage over its competitor by the bu ild ing of the Erie Canal. A lthough Boston had already tapped the canal at Alba ny, the possibility of a still more ambit ious stroke was obvio us; a: railway from M onueal to Boston would give the New E ngland port direct access to the canal system of the St. Lawrence and the heart of the western states. Such a rail connection wou ld be of immense benefit to the Eastern Townships which desperately needed better communications. The rivers of the area were closed during the winter mont hs and in a ny case were poorly adapted to nav igat ion. Clearly the interests of Mont real, Bosto n and the Eastern Tow nships should have coincided. When first approached by the Boston promoters of the proposed rai lway, Montreal business circles were unenthusiastic. Aside from the fac t that the large amounts of capital required for the scheme were not readily avai lable in Mon treal, merchants there were confident that the recen tl y completed ca nal system, combined wit h the preferential d uties provided by Great Brita in, wou ld be sufficient to make the St. Lawrence port the great dist ribution cen tre of the interior. They saw no necessi ty for the cons tructio n of hundreds of mi les of ra ilway to reach the New England coas t. ,.... The seed planted by the Boston missioners fe ll o n 'stony ground in Montrea l, but in ferti le soil in Sherbrooke. I n February, 1843, a meeting of the inhabitants of the 81. Francis district was he ld at Sherbrookc, and the proposed railway heartily commended to the attent ion not only of the British, Ca nadia n and Uni ted States governme nts, but a lso, with un co nscious prophecy, to "the Philanthropist a nd the Patriot." Ga lt was absent in England at the ti me but o n his return a nd his appointment as Commissioner of the Land Company, he tbrew himself into the project with enthusiasm and energy. He recognized its supreme importance, not only for the Townships genera ll y but for the Land Company in particular. H e became chai r man of a provisional comm ittee, composed of B. Pomeroy, Edward Hale, Samuel Brooks, John Moore, I . McConnell, and George S. Browne, visited Boston and interviewed the leading rai lway men, and prepared a modes t prospectus or "Stat istical

18 - LIFE AND TI MES OF S I R A. T. GALT

l nformation relative to the proposed Rail Road from Montreal to BostOD via the Eastern Townships." But to no avail. Bostoo's efforts were distracted by the rivalries of different companies aod different routes, and Montreal rema ined aloof. Her aloofness sudde nl y ended. H itherto the practice of importing goods in bond over fo reign soil had bee n unknown in America, but in 1845 a Drawback or Bonding bi ll was passed at Washington. In the inte rest of Un ited States ports a nd railways it permitted free passage in bond to Canadian imports or exports. At once Montreal saw its monopoly threatened . Canada West would import its British wares by New York, o r Boston. particularly during the month s when the St. Lawrence was sealed wi th ice. The establishment in 1840 of the Cunard line of steamers, plying between Liverpoo l and Boston, and heavily subsid ized by the British government, bad already tended to make Boston a distributing point for the prov ince, and the new measure wou ld hasten this development. Montreal must itself seek rai lway communication to the sea, if it was not to be sidetracked for six months of the year. A t the same time a rival claimant appeared for the choice of Atlant ic terminus. Portland, a sleepy little tOWD in Maine, threatencd with the loss of what popUlation and trade it had by the irrcsistible attraction of Boston, had ye t two assets of importance, one a good harbo ur, the most northe rly on the Uni ted Stales coast, and the other the enthusiasm of Jo hn A. Poor. Poor, a young lawyer practising at Bangor, had early become fired with enthusiasm for railway-building. In 1843 he made public two schem es which had a lasti ng influence o n the railway progress, not only of Maine, but of the British provinces on ei th er border. The fi rst was fo r a road from Montreal to Portland, which would be much shorter th an any possi ble route to Boston, and the second for a road from Portland to Halifax which would connect with the New England and New York railways and make H alifax: the landing place of all passengers, mails a nd fast freight between England and North America. with Portland an im portant secondary di st ributing centre. Galt and his Sherbrooke friends soon dec ided to throw in their lot with Portland rather than with Boston, ma inly because it was becoming appa rent that if Boston won, a southerly route by BurlinglOn and Lake Champlain, thence north ward, wou ld be cbose n, and the Eastern Townships left out in the cold. In endeavouring to bring th e merchants of MO!1 lreai to this view,

GA LT AND TH E COM ING OF THE RAILWAY - 19

Galt formed many lasting busi ness connections and personal friendships whic h were to lead bim a decade later to make Montreal bis ho me. His effo rts were earn estl y backed by Poor, who earl y in 1845 made a fi ve-day journ ey up from Portland through a north-east blizzard a nd turned the scale by a fervent address to the Board of Trade. A spectacular element in tbe contest between Portland and Boston was int rod uced by a race arranged by Poor and the Boston agents. An English ship was shortly to arrive at Portland and to proceed at o nce to Boston ; it was agreed that an express should start from each port immediately upon arriva l, Portland being favoured by distance, Boston by its partiall y completed railways. The Portland agents stationed relays of teams fro m five to fifteen mi les apart, and marked o ut the road by evergreens stuck in the snow. They had the triumph of seein g a coach and six arrive in Montreal twelve hours ahead of its Boston rival; the 280 miles had bee n covered in 20 bours. Whether moved by this victory or by more prosaic arguments, the Canadia n legislature in March, 1845, incorporated the St. Lawrence and Atlantic Railroad Company, with power LO build to the New H ampshire border, there to join the Atlantic a nd S1. Lawrence, running to Po rtland, and chartered by Maine and New H ampshire. Its capital was put at £600,000, Halifax currency, or $2,400,000. Maximum rates - five pounds per ton fo r freight and th irty shill ings per passenger fo r the whole 125 miles to the border, and proportionate rates for shorter distances - were named, and it was provided that half of any surplus profits over 12 per cent were to go to the prov ince. A provisional committee was struck, incl udi ng Peter McGill, William Molso n, George Moffatt and John Torrance, prominent among Montreal merchants, John Fotheringham of th e City Bank, A. N. Morin, then in parliament and later to be joint premi er, Samuel Brooks and Edward Hale, members for Sherbrooke town and county, A. T. Galt, a nd others. The terminus chosen and the charter secu r.ed. the next step was to obtain the capi taL The provisional directors expected to be able to raise the whole amount from private sources, partly in Montreal and the Tow nships, but mainly in England. T hey had little doubt as to the large profits to be reaped once the road was built, but realized th at it might be di fficu lt to persuade outside capi talists to take their ow n rosy view of the possib ilities of this undertak.ing in a remote and obscure province. Accord-

20 - LIFE AND TI MES OF SIR A. T. GALT

ingly tbey determined to seek government ass istance, not a subsidy, but a bond guarantee of 3 per cent for twenty years on the est imated cost, £500,000. Accordingly, in March, 1845, th e provisional committee wa ited upo n the Draper-Viger cabinet, Ga lt acting as chi ef spokesma n. They found little welcome. The finances of the province we re not flourishing. The canal programme absorbed all surp lus reven ue. In any cvcnt, the ministers, as Galt had fea red, . . . looked upon tbe support of the Eastern Townships members as secu re for Metca lfc and themselves whateve r happe ned, and were not disposed to make unn ecessa ry concessio ns to keep th em in li ne. Galt himself was not persona grata wi th several of th e members, part ly beca use he was grad uall y becoming more moderate in hi s pol itical sympathies, more distrustful of the ext reme Compact party, and partl y because of a not unnatural jealousy which the official representatives of the Townships fe lt of the influence and energy displayed by the yo ung Commissioner. It was not surprising, therefore, th at no guarantee was fo rt hcomi ng. Fai ling government backing, the provisional committee were compelled to rely on tbe merits of the plan or tbeir ow n skill as prospectus writers. In bri nging the investment before the Canad ia n public, provi ncial bopes and local fears al ike we re appealed to. The railway was "to be considered as the completion of the Canad ian efforts to obtain the trade of the West," and the only means of averting the disastro us blow to the importa nt interests of Montreal tbat would co me "by divert ing the supply of Western Ca nada to New York a nd Boston." The settlement of the Eastern Townsh ips and the development of la rge local traffic were also emphasized. With all th is persuasiveness, the total subscripti ons in Montrea l and the Townships amounted to only £ 100,000 currency, or one-sixth of the capital required. To secu re the rema in der, the co mmittee determi ned to send Ga lt to London, and acco rdingly he spent th e sum mer of 1845 learning the ways of the Eng lish in vestor. The S1. Lawrence and Atlantic was tbe first Canadian enterp rise to appea l for English capital. The time seemed propitious. England was in the grip of the Hudso n railway mania. After the Liverpool and Manchester was opened in 1830, rai lway develop ment proceeded stead il y and soundly. In 1840 about 1300 miles had been constructed. The extortionate price set on land by the great proprietors, and

GALT AND THE COMING OF THE RAILWAY - 21

the heavy cost of getting a bill throu gh parliament had prevented more rapid expansion. After 1840 the pace qu ickened. George Hudson, a mercha nt of York, who had been successful in promo ting a local road, embarked on wider schemes and soon became a power in the land. The influence which the landed proprietors had brought to bear upon Parliament to block railwa y proposals was now exerted to carry the bill of any and every compan y which had seats at its board and gold to fling for its right of way. The capital which Parliament authorized railway companies to raise was, in 1842-3, £4,500,000 ; in J 845, £ 60,000,000. In two days Hudson ob tained approval of forty bills in volvi ng th e expend iture of £ 10 million . The scrip of a company whi ch stood at £4 a share went up to £40 three or four days after he joined the directorate. In a single week in 1845, in three newspapers, eighty-nine new schemes were announced, requiri ng £84 million capital. And still the issues poured forth. Every hotel in London was jammed with the witnesses brought down by counsel for riva l lines. and the committee rooms and lobby of the House of Commons presented a scene such as they never witnessed before or since. Galt reached London when th is pandemo nium was at its height. He was not without influential fr iends in Lombard Street. The shareholders a nd directors of the Land Company included many men prominent in finance, Edward Ellice, Alexander Gillespie, Robert McCa lmont, and o thers, and both because of the Company's interest in the upbui ldi ng of tbe Townships and their confide nce in the judgment of the Commissioner, they gave the plan their sanctio n and went on the London committee. The London prospectus dwelt on the support already given in the colony and the possibilities of through and local traffic. It estimated the cost at £450,000 stg., the income at £ 80,000, and the expenses at £ 30,000. It is interesting to note, in view of the contrary emphasis in the Grand Trunk prospectus eight years later, the co ntrast made between English a nd American railways , "the fonner, from the ir vast prelimi nary expenses, costly land outlays, double tracks and extensive establi shments costing about £ 30,000 a mile, whi le the latter, with single track s, do not average over £5,600 per mile and are worked very much cheaper, th us affordi ng the capitalist a good return in the one case f rom an amount of traffic that would subject him to ruinous loss in the other." On the whole, it was a modest cla im compared to the hundreds of glow ing forecasts which appeared in rival columns

22 - LI FE A N D TI MES OF SIR A . T. GALT

in August, 1845. Yet it did not pass unheeded. The bulk of the capital was subscri bed at once and small deposits paid down. The yo ung financier and his fellow-directors in Montreal were delighted. Other Ca nadia n railway promoters awoke to the possibilities of tappi ng thi s great reservo ir, and Allan MacNab journeyed over at once to endeavour to duplicate fo r the Great Western Galt's success, though without avai l. The long procession of Ca nadian railway magnates, actual and potential. to London had begun. The rejoicings did not last long. The flood of speculat ion on which the Canadi a n offerin g had been floated so easily, was already ebbing. The disclosure of Hudson's fra~d in the Eastern Rai lway projec t hastened a collapse. Thousands of scrip holders were ruined in the smash. Those who could still draw back has tened to do so. The 8t. Lawrence and Atlantic suffered with the rest. Its English subscribers refused to pay up the calls and endeavoured to recover their deposits. The building of the road seemed further away than ever. When Ga lt returned to Canada, he found the committee uncertai n whether to go on. H is own vote was for pressing forwa rd. Blissfull y un aware of the difficulties of financi ng and building a rai lway in a pioneer co untry, the majority of the committee came to the same co nclusion, and in April, 1846, the definite organization was affected. George Moffatt , Member of Parliament for Montrea l, was elected president, and the directors included A. N. Morin, John Torrance, Thomas Stayner, Peter McGill, Samuel Brooks and A. T. Galt. Under an ab le engineer, A. C. Morton, surveys were at once begun. Sectional ri va lri es and the hilly nature of the border country prese nted equal difficulties. Stanstead and Sherbrooke each sought the line, the one claiming a shorter route, the other offering a junction with a late r road running to Quebec and perhaps to Halifax. With sim ilar rivalries rampant on the Maine side of the border, the two boards found much difficulty in agreeing on the ju nction point; in fact, it was not until 1851 that this was defin itely settled. Trial locations by way of Sherhrooke made it seem p robable that a line about 126 mi les long could be secured, th e cost now being estimated at £ 850,000 curre ncy, or $3,400,000. By wide canvassing, th e stock subscri bed in Canada was increased to £200,000; about £35,000 remained uncancelled in London, and the contractors for the first section, fro m Longueuil to the River Richelieu, took the same amount of

GALT AND THE COM I NG OF THE RA I LWAY - 23

stock in parl payment. But it was soon found that subscribing was one tbing and paying a nother. Little was secured from London even after lawsuits established the stockholders' liability. Monlreal subscribers were hard hit by the commercial depression foll owing the repeal of the Corn Laws, and incidentally, of the preference wh ich Canada-mi lled flour had enjoyed in Bri ta in. In time, however, the bulk of these subscrip tions was paid up. The Township shareholders, for whom Ga lt was mainl y held responsible, had even less ready money. As late as October, 1849, Galt found it necessary to send an urgent circular to the great majority of th e Townships men, in which he declared: J am aware that the want of mOlley ill this district, and the fact that the oWlay all th e Railroad was not taking place amongst us, have operated prejudicially on the ability of th e Township stockholders to make th eir payments; but now that the work is actually in progress to speedy completion , I have pledged myself to th e Directors that there will be 110 backwardness here, and J rely on the good faith of th e people of this district to enable me to fulfi l my assurances. In my past exertions on behalf of the Railroad, I have been supported by the conviction Ihat I could depend all the hearty co-operation 0/ every resident in the Townships, and great will be my disappointment if my present appeal be not responded 10 by the immediate and earnest endeavour of every stockholder here ( 0 fu lfil his engagem ents.

This appea l had its effect, and, tardily, the long overdue calls were paid. To facilitate matte rs, subscribers were a llowed to make payments in kind , delivering meat or flour or butter and eggs to tbe construction gangs along the route, at a fixed schedule of prices. The line was drawn, however, when one of the Sherbrooke shareholders, himself a director, wished to turn in a farm as payment on hi s subscriptio n. In dignant at the refusal, tbe director at once resigned. Even if all stock subscribed had been paid up, the Company's capital wou ld still have fa ll en far short of the estimated cost. It was next determined to attempt to fl oat a loan in England , in the hope that bonds wou ld appea l more strongly th a n speculative shares. Again the fin ancial capacity and personal tact of the young Commissio ner were recognized, and late in December, l846, the Board aUlhori zed him to proceed to England and endeavour to seU a £ 500,000 issue of bonds. With the

24 - LIF E A N D TIM E S OF SIR A . T . G ALT

Oregon diffic ulty threatening war in A meri ca, and rail way enterp rises sti ll suffering from the reactio n fro m Hudson ism, Lo ndo n decl ined even to nib ble at the oppo rtunity, and Galt returned em ply-handed. These resources fai lin g, the di rectors turned to the quar ter I which was to prove fo r two ge nerations to co me the last and often the first hope of th e railway pro moter - th e state. T he prospects of securing govern ment aid were more favourable than th ey had bee n some years before. T he canal system which had absorbed all the funds and all the attenti on of the provi nce was practicall y completed. The constitutio nal struggles which had marked the past quarte r cen tury were nea rly over, and men were glad to turn to other issues. Polit icia ns of the H incks a nd Macdonald lype were ta king the place of th e Baldwi ns and Lafontai nes. In Canada West an influenti al group , headed by Sir All an MacNab, were eq ua ll y anx ious to secure government backing fo r the Great Western project, and th ey joined forces with the Montreal backers of the Sr. Law rence and At lan tic. During 1848 the governm ent gave no sign of aid , though a Comm ittee of the House, with M acNab as Chairman, recommended guaranteeing the stock of these two roads. Constru ctio n was pushed slowly a long with ex isting resources, and on D ecember 7 the road was opened to St. Hyac inthe, thi rty miles fro m Lo ngueui l. Then Mo ntreal un derwen t a n exper ience which brought home to all the necessity of a winter outlet to the sea. D uri ng th e fall and earl y win te r the canals had poured in to Mo ntreal and Quebec, as usual, the growing stock of western produ ce, to be shipped across the ocean as soo n as the ice broke up in the spring. T he wi nter was sca rcely begun when pri ces in the E nglish markets bega n to fa ll, a nd fo r nearl y six months th e Ca nadi an merchants were compell ed to Sil idly by while eve ry post brought word of still further decreases. The losses th at resulted in this single winter were estim ated at half th e cost of bu ilding the railroad through to the winter port of Portl and. Earl y in February, 1849, George Etienne Cartier presented another petition from the St. Lawrence and At lantic directo rs, emphasizi ng the need of railways to supplement the canal system in sec uri ng fo r Ca nad ian routes and Ca nad ian po rts the ir fa ir share of the trade of the West. Every U nited States city o n the Atl antic seaboard was backing a ra ilway des igned to give it as great a proporti on as possible of this growing traffic. Canada must no t be behindhand. Finall y in Apr il, J 849, Francis Hincks, Tnspector-General in the Baldwin-Lafo ntai ne mini stry, brought down a measure

GALT AND THE COM I NG OF TH E. RAILWAY - 2S

based upon a suggestion of the S1. Lawrence directors. He proposed th at whenever any railroad over seventy-five miles long had been balf built from pri vate resources, the government wo uld guarantec the interest, no t to exceed 6 per cen t, on an issue of bonds eq ua l to half the total cost of the road. ThV province wo uld be protected by a first lien on the whole road. MacNab, thou gh leading the Opposition of the day, hastened to second the resolutions, a nd the first step in the pol icy of state aid to rai lways was speed ily taken. The ho rizon brightened, but not all th e clouds had yet lifted. It was still necessa ry to find fund s to build thirty-three miles to Me lbourne or Richmond, before the Company would be entitled to call upon the province fo r aid for the seco nd half. To make matters wo rse, during the summer of J 849, serious misma nagement of the Company's finances came to light. The history of Canad ian corporations bad fitly begun by a striking instance of directors failing to direct. Under the management of a fai thless sec retary, a debt of £50,000 had accumulated of whose existence the directors knew nothing! Vigorous measUIes were needed to save the situat ion. Galt, who had hitherto taken little pa rt in the deta iled management, was pressed by his fellow-directors to corne to Montreal and take control. The Land Co mpany were reluctant to give up part of his services but agreed rather than lose them altogether. Accordingly A. N . Mo rin , th e existing president, who was too muc h preoccupied wi th politics to give the rai lroad 's affairs due thought, resigned late in 1849, and Ga lt was elected in his stead. He was not yet prepared to make Montreal his headq uarters, but more and more th e railroad and other metropolitan affairs drew him away from Sherbrooke. With the assistance of Joho Young - politician, promoter, business man, eager advocate of canal and railway and of a St. Lawrence bridge - Galt soon brought order out of chaos. The city of 'Mo ntrea l had already agreed to aid the road by taking £ 125,000 preferential stock, giving its bonds in exchange. Now the Land Co mpany and the Seminary of SI. SuI pice were each induced to take bonds to the amount of £25,000. To bridge the remainin g ga p, a contract was made with Black, Wood and Co mpany, of Pennsylvania, who had built pa rt of the Ca nadian line, and were to build all the Maine portion, by which they und ertook to build th e who le road. The price per mile agreed upon was £6,550, or $26,200. This was a somewhat hi gh figure for an on ly moderately well-built road , but it was only a nominal price. The con tractors agreed to accept part of their

26 - LI FE A N D T I M ES O F S I R A . T . GA LT

pay in stock which was at a discount of 15 or 20 per cent, and the rest in provincial bonds, when secured. The transaction practically mean t that the governmcnt's half of th e road was sufficicntl y increased in cost to recompe nse the contractor for th e shortage on the first balf. There were still some difficult corners to turn, days when the City Bank or tbe Commercial or tbe British North America would decli ne to advance a few hundred po unds to meet pressing local debts , days when tbe proc rastinati on of the contractors or their demands for extra payment strained patience to the utm ost. Eve ntu ally the Com pany took the contract f rom Black, Wood & Co. and comp leted it by day-work, under the efficient supervision of the new Chief Engineer, Casimir S. Gzowski. But the worst was over. The second sectio n of the road, from S1. H yacinthe to Richmond, was opened in October, J 85 1, and the tbird section, from Richm ond to Sherbrooke, in Sep tember, 1852. The latter event was made the occasion of a great celebrati on, with the Governor-General and nearly all the members of the provi ncial parliament in attendance. Meanwhi le the Maine Compa ny, th e Atlantic and St. Lawrence, had bee n faci ng much the sa me di fficulties. The city of Portland had come to its aid by tak ing $1,500,000 of bonds, and an equal amount was sold privately, together with a few thousand shares of stock. The state of Maine, however, unlike the province of Canada, was barred by its constitution from giving any aid to railways or other private en terpri ses, so th at the American promoters reached the end of their tether sooner than tbe Canadians. It was accordingly arranged in 1851 that the Canadian Company should build sixteen mi les beyond the border to Island Pond, Vermont. For this purpose a special issue of bonds at 7 per cent was made, and noated in London by the President. Before the road to Portl and was completed, new en terprises had been set on foo t which dwarfed it in importance and di verted the interest of its chief officials, The vision of a great Main Trunk li ne bi nding all th e British Nortb American colonies, running from Halifax to Quebec and on tbrougb Montreal and Toronto to the western bounda ry at the Detroit River, bad seized the imagination of leading men in all parts of the sca ttered colonies. Foremost in conceiving and in executing the first part of th is greater project, the Grand Trunk Railway of Ca nada, was A. T. Galt.

3: The Building of the Grand Trunk The railwDY era; the ri valry of the United States; Howe and the Intercolonial; Canadian plans for the G rand Trunk; Hincks and the EngHsh contractors; the struggle for the contract; tbe amalgamntion; the building of the road; Gzowski and Company: later years; the balance sheet of the Grand Trunk .

The fifties form the first great railway era in Canada's history. In 1850 there were o nly six ty-six miles of railway in aU the British North American colonies; in 1860 there were two thousand and sixty-five. At the beginning of tbat period the only roads in operation or actively projected were short and as yet unconnected fragments, for the most part portage roads betwecn the leading waterways. At the close Canada possessed the longest rai lway in the world under single management - the Main or Grand Trunk Railway. running from the Great Lakes to the sea.1 As has been see n, the experience derived in the building of the St. Lawrence and Atlantic deeply infl uenced later developments. In spite of the difficu lties and dangers encountered, in spi te of tbe narrow escapes from bankruptcy and complete cessation of work, the men most closely concerned in its management were fired with ambition to attempt yet greater tasks. They had learned how to finance a nd how to build a railway, how to secure the help of the British investor and of the provincial governmen t, and bow to bargain with contractors and hold them to the bargain. Their appeals to the province fo r aid had led to the introduction of the bond guarantee policy, and had defi nitely turned the thoughts of government a nd of public alike from canals to ra ilways. When the road to Portland was first projected, it was assumed tbat Montreal, or ralher Longueuil , on the south shore of the St. Lawrence opposite Montreal, would remain tbe western terminus. The products of the interior were to come down by ri ver and canal, and to seek a further market direct by sea from Montrea l or by tbe new road to Portland and beyond. T he rai l w'~y could supplement river a nd can al, but couid not compete with them in carrying bul ky products. This assumption was soon rudely shattered. The United States ports and rai lways to the south were not content to let

28 - LIFE AND T I MES OF SIR A. T. GALT

Montreal win so eas ily a commanding share of the trade of the golden west. Every important port on the Atlantic was striving to become the outlet of the growing western traffic. Baltimore and Philade lphia pushed ra ilways west to the Ohio country. New York supplemented the Erie Ca nal by the Erie Railway, and piece by piece put through the road to Buffalo later known as the New York Central. Boston tapped the same stream by its Western road to Albany. Still more threatening to Montreal interests was the Ogdensburg Railway, which ran from Ogdensburg on the St. Lawrence, just so uth of the Canadian border, to Lake Cha mplain, where it was to co nnect with roads to Boston and New York. If all the expectations of its builders were fulfilled, thi s road would sec ure every ton of ocean-bound traffic that had filtered past Buffalo and other western points, and Montreal would see the whole st ream of western trade deflected to the south. This wide activity, and especiall y the competition of the Ogdensburg road, soon convinced Montreal interests, and not least th e men behind th e S1. Lawrence and Atlantic, that a further step must now be taken. 1t was not enough to supplemen t river and canal; they mu st now be paralleled and rivalled by the railway. Late in 1850 a public meeting was held in Montreal, and a committee appointed to co nsider the possibility of building a road to Prescou or Kingston. Galt and Young were members of this committee, a nd equally active were two men whose future was to be closely lin ked wit l) Galt's, Luther Hamilton Hollon and Dav id Lewis Macpherson . A preliminary survey was made by C. S. Gzowsk i, and later a more detailed su rvey by T. C. Keefer; the municipalities along the line we re interested, and in J 85 1 a charter was sought from the legislature. The men who carne together in this ra ilway enterprise we re all destined to achieve a place of distinction in the life of Canada. Eq ually notable was the experience upon which their interest and confidence in the new undertaking were based. They were not mere promoters, seizing an opportunity in a field in wh ich they had no personal expe ri ence and in which they did not expect to continue. Each had had tra ining of a kind eminentl y desirable for the founders of a great railway project. David L. Macpherso n was a yo un g Scot who had come to Canada in 1833 to enter the Mo ntreal forwarding firm of Macpherson, Cra ne & Co., in which his brother was se nior partner; by 1842 he had himself become a partner. Luther H. Hoiton , of Upper Canada birth and New E ngland ancestry. had

THE BUILDING OF THE GRAND TRUNK - 29

entered the same field, and was junior partner in the Montreal firm of Hooker, Holton & Co. Both these firms were active and enterprising, and in their vessels and wagons they carried on a large part of the transportation work of the province to which the rai lway was to fall heir. Casimir S. Gzowski had had an experience more pictu resq ue and varied but equally helpful for his present task. Born at St. Petersburg in 18 13, the son of a Polish nobleman in the Russian military service, he had taken a / course in military engineeri ng and then entered the Russian army. When the Polish insurrection of 1830 broke out, young Gzowski threw himself into his country's cause and faced in turn treache ry. defeat, wounds, imprisonment and exile. He escaped across the At lantic, landed in New York without know ing a word of English, and in six years had qualified himself for admission to the bar. After a brief practice he returned to his ea rlier fi eld of engineeri ng, and in J841, on coming to Canada, he was appointed to a post in the provincial Department of Public 'A'orks whi ch he filled with ability until his appointment to the st. Lawrence and Atlantic. It was a notable group. * ... . ..... The railway situat ion became complicated when Joseph Howe succeeded in attracting considerable support for the Intercolonial railway project wh ich would connect Halifax and Saint John with Quebec and Montreal, and eventually with Toronto and the western border of Canada. Early proposals for th is railway included a route from Nova Scotia diagonally across New Brunswick to Canada. Another suggestion was for a connection from Nova Scotia through southern New Brunswick to Portland, Maine, where it would join with the eastern terminus of the St. Lawrence and Atlantic railway. A third altern ative was a line wh ich wou ld follow closely the northern coast of New Brunswick, thus avoid ing th e American border completely, and from the military point of view be the soundest of the three. Howe, flushed with his constitutional triumphs, became the • It was, indeed, a notable group. It was also a very rich one, composed of men who, thanks to the first railway "boom," had done / very well. See A. R. M. Lower, Colony to Nation (Toronto, 1946), V p. 285; and R. G. Troller. Canadiall Federat/oll, Its Origills and AcliiCI'elllcllu (London, 1924). p. 167. Skelton's somcwhat bland description of them as "not mere promoters" may be accurate, but in view of the evidence it is difficult to avoid reaching lhe conclusion that they we re prjmarily promoters.

30 - LI FE AND TIMES OF SIR A. T. GALT

leading advocate of an Intercolonial rai lway in one form or another. His personal preference was for the line from Nova Scotia to Maine via southern New Brunswick. It could be built quickly and cheaply, and could be complemented by a more direct northern connection between Halifax and Quebec later. He went 10 London 10 enlist the fina ncial support of the British government and return ed with what he thought was an Imperial guarantee to back the southern line to Maine. On the basis of this "understandi ng," he negotiated successfull y wit h the New Brunswick and Canadian governments concerning their share in the costs of construction. The Canadian govern ment undertook to see that a continuous railway system from Quebec to the western border of the province would be completed. The key to the enormous project, however, was the financial support expected from the Bri tish government. Suddenly the Colonial Office announced th at il wo uld un derwrite the northern New Brunswick route only and declared that any line which passed close to the American border was unacceptable for military reasons. Since the New Brunswick government was unwi lling to accept the northern route alone, the whole project collapsed. Francis Hincks, the Inspector-General (Finance Minister) in the Canadian government, quickly sought to avoid having the rail li nk between Quebec and western .Canada fail merely because it had been part of the greater Intercolonial scheme. He had been impressed by the glowing proposals of C. D . Archibald, an agent of the English contracting firm of Peto, Brassey, Jackso n and Betts, which had built rai lways all over the world. Early in 1852 he reached an agreement with this fir m to organize the Grand Trunk Compa ny, which wou ld conslruct a line between Montreal and Hamilton. This decision contravened th e interes ts of Ga lt and his colleagues who already had a charter to bu ild between Montreal and Hamilton. While the negotiations over the J ntercolonial were going on, this charter had been suspe nded but, when the Intercolonial scheme was abandoned, the Montreal and Kingston charte r came into force. "'""

J

Galt was in London at the time, on St. Lawrence and Atlantic business, and Hincles at once endeavoured to allay his natural opposition to this calm attempt to ignore all th at had been done in Canada an d override the rights of the Canadian promoters. Hincks contended that "no Canada company could be established that would be able to finance the road," a nd that

THE BUILDING OF THE GRAND TRUNK - 31

the incidental advantages of the bargain he had just made were so great th at "even if we pay a little too much it will be to our interest to do so." H e hoped, therefore, that Galt would see his way to co-operate. But Galt decl ined the cool request, and protested agai nst th is sudden and unwarranted shift of policy. From London th e scene changed to Quebec, when the provincial parliament assembled in August, 1852. Hin cks and Jackson, who accompanied hi m to Canada, seem to have concluded that the simplest method to pursue was to obtain control of the ex isting charters. Accordingly, on A ugust 7, a royal proclamation was issued, bringing into force the suspended Montreal and Kingston and Kingston and Toronto companies. Stock books for the former company were opened shortly afterwards, but a week later, on August 23, when Jackson was preparing to subscribe a controlling share of the stock, the Can;tdian promoters forestalled him by subscribing every farthing of tbe £ 600,000 capital authorized, in the fo llowing proportions : -

.. ........... . Montreal , 20 shares, J. Torrance £500 .. Montreal , 20 shares, 500 William M olson ... .... ...... Montreal, 20 shares, 500 John Rose ....... Montreal, 20 shares, H . N. Jones . 500 . Montreal, 20 shares, G. E. Jacqlles . 500 ... M Ol1treal, 20 shares, William MacDougall 500 Thomas Galt, per attorney A. T. Galt, .... Toronto, 20 shares, 500 A. T. Galt .... Sherbrooke, 7,940 shares, £ 198,500 L . H. Holtoll ........... Mo ntreal, 7,960 shares, 199,000 D. L. Macpherson ............ Montreal, 7,960 shares, 199,000 By a preliminary agreement each of the main subscribers bou nd himself not to t.ransfer any of the stock without the express written authority of the o ther two. Directors were at once appointed, an engineering department organi zed, a 10 per cent caJl paid in, and the government called upon to sanction the location of the roads. This stroke compelled a change of tactics upon H incks' and Jackson's part. A bill was in troduced to charter a new compan y. the Grand Trunk Railway of Canada, to run from Montreal to Toronto - the G reat Western having meanwhile acquired the charter for the Toronto-Hamilton link, thus making it necessary to accept Toronto rather than Hamilton as

32 - LIFE AND TIMES OF SIR A. T. GALT

the western terminus. The capital authorized amo unted to £ 16,000, currency, a mi le. Holton as President and Galt as Vice· President of the Montreal and Kingston, protested against this attempt to override them and a battle royal began before the Rai lway Committee. Hincks used all his influence to push the Jackso n contract through, and Jackso n himscif di splayed all the powers of a ra il road lobbyist in a degree rare even in America. He talked of mill ions as the awed provincials talked of thousands, and claimed tb at be and his fellow-contractors possessed a power of "open sesame" in the London money markets. So great were their resources th at the provincial guarantee was merely a form; in the act as finally passed a solemn clause was actually inse rted permitting th em to renounce this aid - for why should they consent to pay 6 pe r cent on the provincial debe ntures exchanged for the company's bonds, when London was overflowi ng with money unab le to find investm ent at 3 per cent? Such arguments dazzl ed the legislators, but the promoters were not content with mere ly dazzling the eyes; they made assurance doubly sure by filling their pockets where it was advisable. A well-known contractor of the day. who had come from Pennsylvania a few years earlier to take a contract on th e Weiland Canal, and had stayed to become the first boss in Canadian politics, lent his ./ influence for an interest in the contract, which he soon wisely commuted for a cash sum of £ 12,000 sterJing. For public consum ption other arguments were stressed. No Ca nadian compa ny coul d hope to secure in Canada a tithe of the capital needed, and could not borrow in London on terms half as favourable as could th e English promoters - especiall y if the latter blocked th eir efforts. The SUbscript ion of the Montreal and Kingston stock, by Holton, Galt and Macpherson, was denounced as a sham and its legality ques tioned on accou nt of their preliminary agreement. The fact that New Brunswick and Nova Scotia were making cont racts wi th the sa me English firm , and that they had also sec ured contracts for the Quebec and Richmond, made it desirable to give them the control of the western sections as well. Un iformity of management and a standard of const ruct ion far above that usual on American roads, permitti ng a savi ng of 15 or 20 per cent in operation, would thus be secured. On the other band, Holton and Galt vigorously asserted that there was no occasion to bring in these London wizards. Of the five sections into which th e Grand Trunk line from

THE BUILDING OF THE GRAND TRUNK - 33

Quebec to Windsor mi ght be divided, two, the St. Lawrence and Atlantic and the Great Western, were under construction, a contract had been made fo r a th ird , the Quebec and Richmond, and they themselves stood ready to complete the Mo ntrea l and K ingston section. The K ingston-Toronto link would doubtless also be begu n shortl y. So far as the Montreal and Kingston road was concerned, they anticipated no insuperable diffic ul ty in financing its const ruction. True, th ey did not intend to reta in all the stock they had subscribed, but would keep it until a fair bargain had been assured. Between the provincial guara ntee, subscripti ons by every municipality but one along the li ne, and especially substantial aid by Montreal, and partial payment of the contractors in stock, they had no doub t they cou ld secure the fund s required. * They believed, further, th at th ey could build the road for a third or more less than the E nglish contractors. Already three tenders had been submitted from responsib le contractors, one of them the contractor for th e Ogdensburg road. They were prepared to receive a tender from Jackson and his partners, and, if it was lowest, to award them the contract. What mo re could fairly or honestly be asked? The interest of the province was certainly identical with the interest of the compa ny in gett ing the wo rk done at the least possible cost, and th is could not be atta ined by a "sham company for med merely to homologa te a foregone bargain wi th outside contractors." "The ra il way policy of the country was settled," H olton and Galt declared befo re the Co mmi ttee, "and important sections of the Grand Trunk line in course of construction long befo re Mr. Jackson was heard of in connection wit h our railroads. T he act ion of the gove rnment in proclaiming the charter was alone wanting to secure a vigorous commencement of the remai ning sections. That act ion had hardly been take n, when it is a ll at once discovered that nothing can be done withou t Mr. Jackson, and it is according ly proposed that our previous legislation be reversed, our estab lished poli cy abrogated, and existing charters cancell ed, in order to meet the views and secure the • Skelton implies that Galt and his partners would have been able to raise suflicient capital in Canada and that the roads could have been built under Canadian control. On this point there wou ld apl)Car to be somc doubt. Glazebrook, for example. is no t so sure as Skelton and prefers to suspend judgment: "Whether or not the Montecal financie rs could have found enough capital must remain all open question" G. P. deT. Glazebrook, A History 0/ Trans portation in Canada {Carleton Library. 1964] I , 162; see also A. W. Currie, Th e Grand Trunk Railway 0/ Canada [Toronto, 1957], p. 11.

34 - LIFE AND TIMES OF S I R A . T. GALT

services of that gentleman .. . . Is the instrum entality of Mr. Jackson and his associates so essential for procu rin g loans of English' capital that they shall be paid from 30 to 50 per cent over th e cash va lue of th eir work, merely for the faci lities they are supposed to possess as money brokers, or is it pretended that a little knot of rai lway jo bbers hold the key of the great mo ney market of the world?" Both Holton and Galt protested strongly aga inst the assumpt ion th at mere colonists co uld no t carry through the undertaking. In words that bear the mark of H olton's impetuousness rather than Galt's tact, they pro tested aga inst being asked to withdraw in favour of "strangers and foreigners." "We feel strongly on this subject," they continued, "not merely from our direct interest, but because, as colonists, we desi re to see the pub lic men of this country pro moting provincial enterprise. We desire to see the standard of self-reliance raised. We den y the inferiority of our resources. We assert th at a perma nent injury is done by repressi ng every effort to act for ourselves, and we repudiate most solemnl y the necessity for call ing in foreign aid , to do that which we are amply able to do ourselves." H ere was a declaration of financial independence in words which fo reshadow the declaration of industrial independence that was made half a dozen years later with the establishment of the Cayley-Ga lt tariff, They were careful to discrimin ate. It was outside control, not outside capital, to which they objected. " It is argued tbat because the Montreal and Kingston Railway Comp any do not consider the employment of Mr. Jackson on his own terms essential to the construction of our great line of rai lroads, they are therefore opposed to the in troduction of E nglish capital into the country. Nothing could be more unfounded, more unjust. It is admitted on all bands that it is not only desirable but absolutely necessary that E nglish or foreign capital sho uld be obtained for the construction of all o ur great public \,·lorks. The question is mainly one of instrumentalities . . . . There can be no doubt that a great leadi ng thoroughfare, such as our Trun k Line is designed to be, would be managed more in conso nance with the wants, the habits and the whole genius of o ur people, by a local company than by any association of speculators residing abroad, having no interest in the Company beyond the punctual receipt of the largest divi dends that ca n be wrung from it. ... We can construct a ra ilroad in less Lime, for about o ne-half the declared capital, and with a smaller amou nt of a id than the

THE BUILDING OF THE GRAND TRUNK - 3S

parties applying for the charter in question. Our enterprisq, if it fail, will not be burdened with the complaints of the confiding and ruined shareholders in England. If we succeed we shall stilt be connected with the work, we shall always stand open to the criticism and rebuke of the public, and our profits will be those derived fairly and honestly from th e correct appreciation by us of a vast public work, and by an economical and jud ~cious application of the resources at our command in constructing it." In these shrewd and prophetic words, Holton and ] Galt made plain the weakest spot in the Jackson offer. The company applying for the new charter was merely a creature of the contractors. Its shareholders and managers were nol yet in existence. From this domination of the company by the contractors many of the most serious difficulties of the construction period were to sp ring. But that was not all. Apparenlly Hincks and those who thought with him considered that all tr~ubJes wou ld be over when the railroad was buiJt. How it was Ito be operated did not trouble them. Holton and Galt, with shrewder foresight, realized the difficulty of efficient and satisfactory operation of a great Canadian railway by capitalists three thousand miles away, and for fifty years the experience of the Grand Trunk was to prove that they were abso lutely right. In making this and other criticisms they did not assume to be acting solely as disinterested patriots. They fought for their own prestige and pockets, but at the same time they had the interest of Montreal and the whole province at heart. This they proved by making in September an offer to withdraw, seeking nothing for themselves but the repayment of survey co~ts, on condition that in the agreement with Jackson certain stipulations in the provincial interest should be inserted - limitation of the guarantee and of the total issue of securities, control by the government over future management, and particulanly the construction of a railway bridge across the St. Lawrence at Montreal. It seemed likel y for a time that this offer would be accepted, but Holton and Galt soon became convincetl that Hincks was not playing fair, and withdrew it, continuing their opposition to the new company. Opposition appeared vain. The government was definitely committed to the Jackson agreement. The Governor-GJneral, Lord Elgin, gave it his blessing. The rank and file of thd legislators fe lt it wou ld be quixotic to refuse the offer of thes~ great capitalists. Some members of Parliament stood by Galt and Hatton, including George Brown and the member for Kingston,

36 - LIFE AND TIM ES OF SIR A. T. GALT

John A. Macdonald, but Hincks had th e majority both in House and in Committee and all seemed over. Jackson sailed for home, assured of a charter and contract not only for the MontrealToron to section, but for a part of the Ca nadian end of the Intercolonial, from Quebec to Trois Pistoles. But Galt had still a trump card to play. As president of the St. Lawrence and Atlantic he proposed to th at compa ny to ama lgamate with the Montreal and Kingston, a proposal wh ich the directors at once accep ted. This assured strong Montreal support and gave control of an essential link in the Main Trunk Line. Alarmed at this st roke, Hincks telegraphed to Galt aski ng him to go down to Q uebec aga in, stating that proceedings in the Bill would be stayed until his arrival. In the disc ussion which fo llowed, H incks stated that if opposition were withdrawn to the Grand Trunk - Jackson's road - he wou ld urge that it should amalgamate with the St. Lawrence and Atlantic, and, further, that it should bu ild the bridge across the St. Lawrence to connect both roads, ayd tbus fulfil a project of which Montreal long had dreamed.\ The proposal meant that Galt and Holton must give up their own personal interest in th e road, but tbe odds were aga inst them in any case. Their opposition had already led Jackson to reduce his demands for aid from a gua rantee of bonds equal to half the cost, whatever that might be, to a guarantee of £3,000, currency, a mi le. If the new company had such command of mi llions as was assumed, its co-operation wou ld help the St. Lawrence and Atl antic, which was still in need of funds for the last st rokes, and the building of the bridge would certainl y be a boon to Montreal. Accordingly all opposition was withdrawn. The Grand Trunk Rai lway of Ca nada was incorporated to build from Montreal to Toronto. It had a capital of £ 3 mi llion stg., and was given a provincial guarantee of £3,000 currency a mile. At the same . time the Grand Trunk Railway of Canada East was incorporated, chartered to build from Point Levis, opposite Que bec, to the New Brunswick border, and was promised a provincial guarantee of £3,000 a mile as far as Trois Pistoles, and a subsidy of a million acres of land for the further extension. The legislature completed its work by an Amalgamation Act, repea ling th e charters of the Mon treal and Kingston a nd the Kingston and Toronto, and enabling any railway form in g part of the main trunk line to unite with any other such company, or, as a later amendment provided, with any company whose line joined or intersected the main trunk line. In token of reconciliation,

I

THE BUILDING OF TH E GRAND TRUNi

- 37

Hol ton a nd Galt were named directors of the Grand Trunk of Canada, but they never took the ir seats and resigned bef9re tbe amalgamation was effected. All was ready for.. the London market. Meanwhile Galt and his associates had become interested in railways from a different a ngle. Holton, Macpherso n, Gzowski and Ga lt had now united to form the contracting firm of Gzowski and Compa ny. It was a well-balanced and welI-ro~nded partnership. Galt was the negotiator and diplomat of the combination, Hollon took care of the detailed fi nancing, Macp~erson ./ supervised the general ad ministration, and Gzowski tbe pClual work of construction. The first important contract whic? they secured was to build the Toronto and Guelph Railway, Jw hich later received power to extend to Sarnia. No provincial aId had been given, but Toronto and other municipalit ies had subshribed liberally to the stock, and as the road was to run through a rich and promisi ng district, it was believed that its bonds could be floated at no grea t discount. Construction was begun in the summ er of 1852. Galt was empowered by the rai lway company to go to London and a id its London agent, Alexander Gillespie, and Mr. Franks, the President of the Canada Company, th rough whose lands the road would run , in placing the bonds. lThe St. Lawrence and Atlantic and the Maine road, the Atlantic ~ nd St. Lawrence, which it was also proposed to amalgamate, put their interests in hi s hands at the same time. When he sailed for Eng land in December, 1852, accordingly, he had a thrbefold task to perform. The negotiations for amalgamation and the settlement of the details of proposed financing occupied nearly four mpnths. The chief parties concerned were : H on. John Ross, SolicitorGeneral for Canada, \vho , at the nomination of the contractors, was to be president of the amalgamated company; Samuel Peto, the financial member of the contracting firm; George Carr GIyn, of Glyn, Mills and Co., and Thomas Baring , of Baring Brothers and Co., who were London financial agents fbr the province and also bankers fo r the new company; and A. T l Galt, acting for the Portland and Sarnia roads. Others took a m inor part, including Messrs. Rhodes, Forsyth and Pemberton, of Quebec, directors of the Grand Trunk, and A. M. Rossl chief engineer of the new road. Galt soon came to form a !much hi gher and morc cordial estimate of the other members of the Brassey firm than the experience in Canada of J ackson's "bluff and bluster" methods had made seem poss ible, and his inter-

/

38 - LIFE AND TIMES OF SIR A. T. GALT

course with Messrs. G lyo and Baring led to a lifelong friendship and a valuable financial conn ecti on. Little difficulty was experienced in coming to terms as to tbe Portland road, since the need of a winter outlet to the sea was clear. It was agreed to offer th e shareholders of the St. Lawrence and Atlantic equivalent shares in the new company. and to lease the Ma ine section in perpetuity at a rental of 6 per cent upon its cost. As the shares of both roads were at a large discount, th is was a very fa vourable barga in for Galt's clients.· A bridge was to be built at Montreal to connect the Toronto and Portland roads. Then Liverpool and London interests con nected with the Quebec and Ri chmond and Gra nd Trunk East urged their inclusion, which was finall y agreed to, upon tbe same terms as given to th e St. Lawrence. Ga lt protested aga inst this arrangement, as he rightly considered that the traffic possibilities of th ese eastern sections were poor, and that their inclusion would lesse n the value of th e securit ies received by the st. Lawrence shareholders. He held out, therefore, for a further payment to them of some £ 75,000, equal to the interest during th e period of construction, and as in all the contracts for new work it was being provided that th e shareholders were to receive interest during this period, the Other pa rties to the settlement agreed. The westernmost extension gave more difficu lty. If the plan of a Main Trun k line from end to end of the province, under si ngle management, was to be carri ed out, it had seemed essential to secure control of the Great Western, running from Toronto to Windsor. Negotiations were carried on with the English and Canadian interests who co ntrolled it, but without success. The Great Western demand ed what was co nside red an excessive price. but a more serious obstacle to amalgamation was the close traffic relations between it and the roads in Michigan and New York wh ich it linked together. It would lose much of its best pay ing traffic if it atte mpted to divert it from the United States roads to th e new Canadian through li ne. At this juncture Galt and Gi llespie proposed th at the Toronto a nd Sarn ia be made the western lin k rather than the Great Western , and th is proposal was agreed to, the Grand Trunk simply takin g over the charter and obliga tio':ls of the road . • This arrangement has been described ;J.S "imprudent" on the: p;J.rt of the G rand T ru nk. The stock o f the S1. La wre nce a nd Atlantic had been selling at discounts o f as much as 30 or 40 per cent. T he terms offered by the Grand Trunk were so generous that the s ha res rose nea rly to par and some stockholders made q uick prollts. The liberality of the terms has been attributed, in large measure, to Galt's skill as a bargainer (Currie, The Grm ld Trunk Railwa)'. p. 14).

THE BU ILDI NG OF THE GRAND T RUN ' - 39

Still the project grew. Refusing to take as final the decision of the British governm ent as to the Intercolonial road, IHon. John Ross sought out the Duke of Newcastle, Colonial Secretary in the Derby admin istration, and once more opened negotiations for a guarantee of the remaining sections from the Canadia n bar.der through to Halifax. This time more favour was shown, and it appeared probable that an agreement would be reached whereby the British government would not only guarantee a loan for the road from Trois Pistoles to Halifax, but wou ld make such ar rangements with the Cunard Steamship Company as wou ld induce it to extend its H alifax service. Unfortunately once more the cup was dashed from the lips of the provinces by the sea. The war with Russia which loomed . up shortly afterwards made the British gove rnment withhold its aid. The In tercolonial section of th e Grand T runk was left suspended at Trois Pistoles (in reality, construction stopped at Riviere du Loup, thirty-five miles farther west), and the British mail subsidy to the Cunard line con ti nued to build up Boston rather than Halifax. Definite contracts were made for all the unbuilt sections of the road. This was done, accordi ng to the directors, in order to remove any apprehension upon tbe part of the shareholders that the capital first authorized wou ld not suffice to comple e the undertaking. Six-sevenths of the work fell to the firm of Peto, Brassey, Jackson and Betts. For the Quebec and R ichmond their contract price was £6,500 stg. a mile, for the ~rois Pi stoles seclion and a loop line from Belleville to Peterborough, £8,000 and for the Mon trea l-Toronto section, £9,000! The Victoria Bridge was set at £ J ,400,000. The Gzowski cor tract was revised on the same terms and specifications, being ~ ut at £8,000 a mile. By a 1110St unusual provision both contracting firms were obliged to pay interest at 6 per cent upon the cbst of construction un til completion. The total capita l was fixed at £9,500,000. Of this, £ 1,416,400 had already been ra ised for the St. Lawrence and Atlantic and the Quebec and Richmond. £837,600 w~s reserved for the Canadian shareholders in these roads and for the bondholders of the Ontario, Simcoe and Huron (Iatcr the Northern), who might wish to share in the opportun i ~. The remain ing capital was to be provided, half in shares, one quarter in company debentures and one quarter in debentures cdnvertible into provincial 6 per cent bonds. The guarantee, or lmore strictJy speak ing, the loan, tbus made by the province amounted all told to £ I ,81 1,500.

I

40 - LIFE AND TI MES OF S I R A . T . GALT

Eight or ten days before the prospectus was issued - April 12, J 853 - the banking firms involved insisted upon a provision which, wh ile meant for the best, proved a source of serious trouble for the company in the future . They bega n to doubt whether it would be possible to float the whole seven millions sterling called for, and urged that only half should be issued at once, the remainder to be issued a yea r later, with a further provision tha t if called upon, the English cont ractors were to take it up. To this requirement Sir Morton Peto strongly objecled, but finall y agreed. The prospectus was then drawn up by the chief negotiators. It was a compelling document. The British directors were the best names in London - Thomas Baring, George Carr G lyn, Henry Blake, Robert McCalmont, K irkman Hodgson and Alderman T hompson. The Ca nadia n directors were Hon. John Ross, Hon. Francis H incks, H on. E. P. Tache, Hon. James Morris, Hon. Malcolm Came ron, and Ha n. R. E. Ca ron, all members of the prov incial cabinet; Han. Peter McGill, President of the Bank of Montreal, Benjamin H olmes, Vi ce-President of (he 5t. Lawrence and Atlantic, George Crawford, of Brockville, W. N. Ponton, of Belleville, W. Rhodes of Quebec, a nd E. F. Vvhittemore of Toronto. The new road, it was pointed out, wou ld be 1,11 2 miles in length, thu s constituting the most comprehensive system of railway in the world. "The G rand Trunk Railway of Canada, it wi ll be therefore seen, commencing at the debouchure of the three largest lakes in the world, pours th e acc umul ating traffic in one unbroken line throughout the en tire length of Canada into the 5t. Lawrence at Montreal and Quebec, on wbich it rests at tbe north, while on the soutb it reaches the magnificent harbours of Portland and S1. John on the ope n ocean." Special stress was laid on the completeness of the ra ilway a nd its freedom from competition; the definite lim itation of the cost by having the contracts sig ned in adva nce, removing all fear of the capital being insufficient; the hi gh stand ing of the English contractors, and th e large gove rnm ent guarant ee. In the li ght of later eve nts, the most interest ing and most controve rted sect ion was the estimate of net revenue. · It Deed only be said here that in 1860-1861, when the railway • The es timate of net re ve nue was wildly optimistic. The gross annual revenue was calculated at '£ 1,479,660. When Ihe working expenses, interes t o n debentures, and fellwl of the 81. Law re nce a nd Atla ntic were deduc ted, a net revenue of .£ 549,696 was expec ted. This would have given a hnndsolne profit o r 11 % per cellI annually on the share cnpitru (Currie, Tilt! Gmlld Trunk Railway, pp. 19,63·64) .

I

THE BUILDING OF THE GRA N D TRUNK - 41

was opened throughout, the gross traffic amoun ted to only £ 714,956, and the surplus over working expenses was only £ 103,469. The low estimate of working ex penses, 40 per cent, as against the actua l 65 or 70 with which we are now fa rl.iliar. was based upon th e expectation that the sta nd ard of con!tructi on wou ld be so much higher than th at clIstom ary in A~e rica that all record s of low operating costs would be distanced. This optimi stic estimate was framed by the Chief Engineer, ~ . M . Ross, who had spent a year in Ca nada on behalf of the English contractors, gathering data. Three days after the issue of th e prospectus, Ga lt wrote to Benjamin Holmes, Vice-President of the St. Lawrence and Atlantic, as fo ll ows: I The reception of the scheme by the public has beell marked by th e most perfect success. The shares are already at a large premium and a perfect rush exists to get them . ... 1 am gratified to state that I have been mel ill the most hOllourable and open mOlmer by Hall. JO/Ill Ross, as representing the Government; and also by M essrs. Jackson, Peto, Brassey alld Belts, to whose influential position alld admirable arrangement it is only due to say , that the successful introductioll of this scheme is in my judgment mainly attributable. The delays, di!Jicultie~ and anxieties attelldant on my present mission have, as yo u may Sllppose, been a source of infinite solicitude to me, but I trust the great advantages flowin g from th e complelion of the work will now soon enable me to forget them.

I

Once the negotiations were completed and th e new company so successfu ll y launc hed, Gall hastened to retu n to Canada, where the deta ils of the arran geme nt made were awa ited with keen interest. T he provisional agreements e~tered into we re laid before the directors of the various companrcs he had represented, and were speedily approved. His effo ~ t s on their behalf were recognized by glowing resolut ions a 9d by cheques written in a more res trained mood. Wit h these transactions Galt's official connec tio n with the Grand Trunk and all its works, except as a member of the contracti ng fi qm of G zowski and Company, came to an end for some years, tough he was co nstantly call ed upon by Presiden t Ross for c unsel in the many difficulties whi ch soon beset the company. These difficulties were at the outset due to th e sudden clouding of the international horizon. \Vestern Europ~ had seemed about to enter a period of prolonged peace; only the

42 - LIFE AND TI MES OF SI R A. T. GALT

year before, the navy of the German Bund had been sold by publ ic auct ion, and the In ternational Exhibition of 185 1 at London had been the occasion for many prophecies of a new era in fo reign relation s. But Eastern Europe was not yet ready for peace. The Turk still held the Balkans in un easy gr ip; from Montenegro to the Black Sea a rev iving sense of nati onalism was stirring revol t, and Russ ia a nd Austria were open ly or secretly plotting to share in the spoils. Napoleon Ill, the newly crowned Emperor of Fra nce, was eager fo r fore ign conquest to consolid ate hi s power at home, and English fears of Russian dominat ion at Constantin ople led them to join that pseudowarlord in the unavai li ng attempt to prolong Turkish barbarism a nd misrule. Before the year was out th e Crimean War was begun, and ea rly in the summ er the market had felt the coming sto rm. Money rose from 2 or 3 to 6 or 8 per cent, and was not easy to get even on these terms. The Grand Trunk found it extremely difficult to secure the balance of the capital required for the vast undertaking. The shares set aside for Canadian investors were not taken up, as they fell below par at once. The Portland roads were found to require heavy expenditu re to bring them up to the standa rd set for th e rest of the li ne, and these expenditures still further strai tened the company's resources. The English contractors were released in J 855 from their agreement to take up the remainder of the stock and bonds authorized, undertaking only to accept half their futu re payments in the company's secu rities now selling at a di sco unt. In these circumstances the company tu rned aga in and aga in to th e provinces as the readiest so urce of aid. From 1854 to 1862 scarcely a year passed without some Gra nd T runk legislation. The demand for a provincial guarantee of th e co mpany's stock, made again and again by directors, shareholders' committees and contractors, was not assented to, but an additional bond guara ntee of £900,000 was give n in 1855, and by subsequent acts the prov in ce first took a pos ition as second mortgagee, in order to permit the issue of preference bonds, a nd later postponed its lien still further. Its guara ntee of bonds became practicall y a gift, amounting in principal and interest to over $26 mill ion by Confederation. The amoun t is still carried on the books of the Dominion as a li abi lity of the Grand Trunk, but it has long since ceased to be conside red as more than a nomin al debt. The financial straits of the company great ly hampered the

THE BUILDING OF TH E GRAND TR UNK - 43

contracting activities of Gzowski and Company, and comI?eiJed tbem in 1855 to acqu iesce in tbe suspension of the section of thei r co ntract between Stratford and Sarnia. Fortunately the partners possessed in Ga lt and H olton two financiers of u~usua l capacity - both later Finance Ministers of Canada - and they succeeded in turning every difficult corner. Even with the financing secure, the difficulties were Dot ended. All calculations of cost were disturbed by the boom wh ich developed in the province before work was fairly begun. The Crimean war shut out Russia from the western market and sent wheat up to two dollars a bushel. Reciprocity witb the Un ited States opened a vast and growing market. Farm lands doubled in value and town lots shot up still fas ter. Every phase of the speculative orgy with which Canada again bc!came fa miliar for a brief period in the eighties and still .more markedl y in the first dozen yea rs of the twenti et h century) now developed. The demand of the contractors themselves, employing as many as fifteen tho usand men at one time, sent prices soaring. Wages and supplies and right of way all rose to heights undreamed of in the sleepy provinces of the pre-railway years. Sub-contractor after sub-contractor was threatened with rankruplcy, and a readjustment of the contract price was time and again made necessary. These unlooked-fo r evils of too much prosperity lessened the profit Gzowski and Co mpany had counted upon, but good management saved the day and brought all the partners a more than modest competency. They we re more fortu nate than their English felJow-contractors, who lost heavily in money and prestige in their Ca nadian work and found it necessary to aband on tbe Maritime contracts altogether. Their loss was partly due to being req uired to take part of the ir compen~ation in depreciated securities, but it was due in greater deg~ee to thei r inability to cope with the peculiar co nditi ons y.rhich construction wo rk in America demanded. All th eir work had bee n done in countries where wages were low, and la..boursaving methods had not been a necessity, as they were to Gzowski and Company and other contractors accustomed to our conditions. The fin ancial straits of the Grand Trunk, it had been Qoted , led la te in 1853 to a request that Gzowski and Company should abandon or slacken all co nstruction west of Stratford. It was felt advisable and, in the chastened mood wh ich adve rsity had brought to both roads, possible, to make terms between the

44 - LIFE AND TIM ES OF SIR A . T. GALT

G rand Trunk and the Grear Western which would save unnecessary duplication in construction. In the spri ng of 1854 Galt visited London and with Hiocks and the London directors of the two boards tried to bring about an amalgamation. This was found impossible, but as a temporary measure, the G rand Trunk agreed to halt construction beyond Stratford, aod the Great Western to abandon its London to Sarnia branch. The contractors were compensated for the loss caused by this pos tponement. Meanwh ile they rushed ahead the eastern section of their contract. The road from Toronto to Stratford was formall y opened in November, J 856. It was two years later before the ten miles further to St. Mary's were completed, and a branch opened from that point to London, to connect with the Great Western. T he section of the Toronto and Sarnia road be tween Toronto and Stratford, where work was halted, was, in th e words of Wa lter Shanly, then the company engi neer of thi s division, and later general manager of the whole company, "of a more expensive character than any other equal portion of the Canad ian lines." The bridge and culvert work was extremely heavy, both because of the number of streams crossed and because of the dep th and width of the ir valleys. The masonry of the viaduct over the Credit river was over one hundred a nd twenty feet in height, whi le the Humber, Eramosa and Grand River structures were of almost equally great size. No difficulty or un expected expe nse deterred the contractors from doing thorough ly what they had undertaken to do. Complaints were made late r of excessive grades, of poor rails, a nd of inadequate equipment on the Grand Trunk as handed ove r to the company, but none of these criticisms were directed against th e wcstern section. The contract was carried out with an efficiency and a thoroughness wh ich testified strongly to the executive capacity of Mr. Gzowski and the honourable business stand ards of all th e pa rtners. The real prosperity and the spec ulati ve ferment of the early fifti es gave rise to countless further projects of railway building. There were few among the more important proposals in which one or more members of the Gzowski firm did not have an interest. The Great Western. in its early days received such large traffic and earned such good div idends as to attract attention largely to the Western Ontario peninsula. Plans for double trackin g the Great Western, plans for building a branch from London to Sarnia or Amhcrstburgh. plans for a new road

THE BUILDING OF THE GRAND TRUNK - 45

paralleling it but running fu rther south, ncar Lake Erie, plans for extensions through Michigan, were all ac ti ve ly presse~. The rivalry to secu re the contracts was kee n, and many and rapid were the sh ifts of alliance made between the various contracting groups. Samuel Zimmerman n, the railway king of Canada, Wythes and Company, th e English contracto rs who had buiJt the G reat Wes tern, and Gzowski and Co mpa ny at one time joined forces and parcelled Qut among themselves the bulk of the work to be done, but th e alliance was not a stable one, and each firm soo n went its own straight or devious way, se~k ing what contracts it could secllre by fair means, or by what in the I language of the day was termed a "chisel." When th e line to Stratfo rd was nearing completion, the contractors operated it for a few months befo re it was form all y accepted by the company. The experience thu s acquired led them to make a proposal which testifi ed to their faith in the road whi ch th ey had built and had in part promoted. They offered to lease the who le road from Toront o to Sarnia for 6 per ce nt on the cost, intending to build extensions to London and Det roit and secure through as well as local traffic. It woul d have been a n interesting and probably a successful experiment, but the English directors had not yet lost hope of success under their own management, and declined the offe r. In 1858 Galt a nd Holton determined to ret ire fro,], the contracting fi eld. The financial crisis of 1857 bad brought a sudden stop to all new projects, and for other reasons they des ired to sever their connection with the Gra nd Trunk, which still had a good deal of work to carry throu gh. They had been grow ing more a nd more absorbed in politics. It was understood on all sides tha t either or both at th e next turn of th e wheel wou ld probably be called to high office. In any case it wou ld have been impossible or inadvisable for men who wished to do wo rk in the House or Min istry that wo uld cou nt, to remain closely connected with a busy co ntracting firm. Unde~ the special circumstances wh ich had deve loped in Canad a it was 1 impossi ble. For th e Grand Trunk itself was in politics. Its repeated requests for provincia l aid, the log-rolling by members Cdr th e various sec lions 1110st directly concern ed in its further exterlsion, the measure of responsibility assumed by the Hincks mioistry and its successors, made its affa irs a staple of pa rli amentary controversy. Charges tha t Hincks was bribed by English contractors added Cue I to the fla me kindled by th e realization of the

46 - LIF E AND TIM ES OF SIR A. T . GALT

burden tbrow n upon the province by the failure of those co ntractors to do the impossible in the Lo ndon money market. George Brown and the Globe di lige ntly fan ned the flame. In th e early days of the Grand Trunk controversy, he had sided wi th Galt and Holton, but when they joined forces with the Brassey firm he turned all his batteries against them as well. As Chairman of a special legislati ve committee appointed in 1857 to inquire into "the condition, management and prospects of the Grand Trunk," Brown probed the details of the organizati on and later opera tions of the company, and made a special effort to discover so me shady transactions involving Galt as well as Hincks. Ga lt was the chief wit ness throughout the long inquiry. His straightforward tes timony and his able cross-exami nation of Brown's star witness, Benjamin Holmes, at that time VicePresident of the G rand Trunk, made the rcal situation clear beyond dispute, and he emcrged from the ordeal with his honour henceforth unqu estioned and his abi lity more widely recognized than ever. Yet in such bad odou r was the rai lway in many quarters, and so certain was it to come to parliament again for aid, that both Gal t and Holton determined to sevc r all connection, even as contractors. The firm of Gzowski and Co mpany was accordingly dissolvcd in 1858 , and a divisio n of asscts made. The othe r partners decided to carryon the work under the sa me firm name, and bcforc railw;ay co nstruction camc to a halt in 1860, they built thc extension to Sarnia, a branch from St. Mary's to London, and a loop line in Michiga n which gave the Grand Trunk access to Det roit. Perhaps the most notable of these later enterprises was the building of the famo us International Bridge across the N iaga ra River. Both Sir Casimi r Gzowski and Sir David Macpherson were destined to attain high place in Canadi an public life, and wit h both Gal t maintained close personal relations long after the business lie was severed. Shortly after retiring [rom all contracting connection with the Grand Trunk, Galt was urged to become a member of the railway'S board of directors. H e was reluctant to do so, but at the earnest solicitation of Mr. G lyn and of the new Managing D irector, Mr. T. E. Blackwell, he agreed, and was elected a director early in 1858. His term of office was short, however, as he res igned a few mon ths later upon taking office as Inspector-General in the Cartier-Macdonald cabinet. With this step, Galt's active connection with Canadian

I

THE nUILD[ NG OF TH E G RAND TRU NK - 47

railways came to a close." It had been a connection of mdmcntous importance for the co untry. Mistakes had been made, in wh ich be had hi s share, but the net result was unquesti60ablY such as to justify tb e hi gh reputation which this decade's activity gave him both in Canada and in Great Britain. The straggling colony bad been bound togetber from end to end by nea rl y two thousand miles of ra il, and a good beg inn ing had been made in lin king up tb e provinces by the sea. The new facilities of transport made it poss ible to take advantage of the wide m,arkets opened up both in America and Eu rope. J n this period Canada's commercial isolation came to an end, and this change involved the extension a nd elaborat ion of the primitive financial structure of the forties. The fer tilizing stream of London capital was turned into Canadian channels. For good or for ill, Canada was hencefo rth more th an a pioneer settlement. It had defin itely become a part of the great world of commerce and fin ance. For ill as well as good. There was ground for much jheartsearching as to some of the incidents and effects of this transition period. The moral tone of public life had been se[liously lowered. The cou ntry had bee n saddled with a heavj, debt through the failure of the Grand Trunk a nd other guadnteed roads to fulfil expectations. London sharehold ers suffered ~eavy losses. For these ill results Alexander T. Galt bad little responsibility. The province could not for all time remain in the untempted garden of an agricultura l Eden, and when tem dtation came to its public men, nothing but good would have followed had all possessed the hi gh and un yielding standard of pe~sonal integrity which Galt mai ntained in all hi s countless negotiations. The material loss to the province through its guarante~ was small in comparison with the widespread commercial b~ nefits received from the building of the road. And if English rhoney was lost in tbe building and operation, that only ser ved to\prove [he fo resight of th e man who early in 1852 pointed out the need of encouraging local abili ty and local responsi bility, a~d the difficulty of managi ng a ny ra ilway effectively from three • This statement is technically corre