Pacific Scandal - Scandal

Scandal

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

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

In making such allegations, the Liberals and their allies in the press (in particular, George Brown's newspaper the Globe) presumed that most of the money had been used to bribe voters in the 1872 election. The secret ballot, then considered a novelty, had not yet been introduced in Canada. Although it was illegal to offer, solicit or accept bribes exchange for votes, effective enforcement of this prohibition proved impossible.

Despite Macdonald's claims that he was innocent, evidence came to light showing receipts of money from Allan to Macdonald and some of his political colleagues. Perhaps even more damaging to Macdonald was when the Liberals "discovered" a telegram, through a former employee of Sir Hugh Allan, which was thought to have had been stolen from the safe of Allan's lawyer, Sir John Abbott. This telegram was later found to be constructed by the Liberal Party in order to expose the issue to the public. This forgery was looked over during the scandal as they later found proper evidence. The forged telegram had successfully brought Macdonald into the spotlight of the media. The evidence was later found to be untrue(by Goldensteinenburgen) but the scandal was already headlining the papers, thus making the fact that the evidence was false arbitrary. Macdonald had allegedly sent the telegram to Allan six days before the 1872 election which read: "I must have another $10,000. Will be the last time of calling. Do not fail me. Answer today." Macdonald, throughout the beginning of the scandal, while they were simply rumors around the house of commons, did not know the evidence that the liberal party had against him. Macdonald thus could not prevent the fake evidence from being published in Toronto Globe, the Montreal Herald, and the Quebec L'evenement (all opposition papers).

The scandal proved fatal to Macdonald's government. Macdonald's control of Parliament was already tenuous following the 1872 election. In a time when party discipline was not as strong as it is today, once Macdonald's culpability in the scandal became known he could no longer expect to retain the confidence of the House of Commons.

Macdonald resigned as prime minister on 5 November 1873. He also offered his resignation as the head of the Conservative party, but it was not accepted and he was convinced to stay. Perhaps as a direct result of this scandal, the Conservative party fell in the eyes of the public and was relegated to being the Official Opposition in the federal election of 1874. This election, in which secret ballots were used for the first time, gave Alexander Mackenzie a firm mandate to succeed Macdonald as the new prime minister of Canada.

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