by C L Smith

Created on: June 30, 2009   Last Updated: January 18, 2012

INTRODUCTION

The Canadian Pacific Railway was Canada's first transcontinental railway. Constructed between 1881 and 1885, the railway ran from Montreal, Quebec to Vancouver, British Columbia. As a result, it supported the expansion of Canadian settlements from the Atlantic to the Pacific coasts of North America. The railway also supported the agricultural development of Canada and the expansion of trade between Britain, Canada and East Asia.

THE PACIFIC SCANDAL

The Canadian Prime Minister Sir John Alexander MacDonald and the Conservative Party government offered a $30 million cash subsidy and a land grant of 50 million acres along the route of the railway to any entrepreneurs who would contract to build the railroad. In 1872, the contract was awarded to a business syndicate led by Sir Hugh Allan.

The following year the Opposition Party in Parliament discovered evidence that Allan and his partners had made political contributions in the amount of $350,000 to Allan, George Etienne Cartier and Hector Louis Langevin during the political campaign of 1872. In fact, the correspondence of Sir Hugh Allan related to the contract clearly indicated that the syndicate attempted to influence Canadian journalists and politicians. For example, a telegram from Macdonald to Allan's legal adviser, John J.C. Abbott, provided the scandal's most sensational evidence, as it read: "I must have another ten thousand; will be the last time of calling; do not fail me; answer today."

On April 1873, the Opposition members of the Canadian Parliament formally charged Governor. Macdonald with the acceptance of campaign funds from Sir Hugh Allan in return for the commitment to contract with Allan's syndicate to build the transcontinental Canadian Pacific Railway. The Parliament discounted subsequent statements by MacDonald that the campaign contributions and the contract were unrelated transactions. The scandal reached the newspapers that, in turn, published accounts of the scandal. As a result, the scandal became known as the 'Pacific Scandal' in reference to the Canadian Pacific Railway that was to have been built.

To make matters worse for MacDonald, former supporters of the Prime Minister in his own party denounced his dealings with the American business syndicate. This withdrawal of support of the Conservation party is thought to be a major element in the downfall of the Conservative administration at that time. In response to the allegations of bribery, MacDonald employed a number of tactics in his attempts to avoid the impact of the scandal on the outcome of the ensuing elections. However, the attacks of the Opposition party were unrelenting. As a result, a Royal Commission was formed in August 1873 to examine the elements of the scandal. The Commission's decision was in favor of MacDonald and the Conservatives.

Whereas, the Conservative government did weather the investigation by the Royal Commission, it did not survive the attacks in Parliament and the associated public ridicule. In November of the same year, MacDonald resigned and the Liberals won the general election that followed. However, although no longer Prime Minister, MacDonald did retain his seat in Parliament irrespective of the scandal. The scandal also forced Sir Hugh Allan to withdraw from the project and the construction of the railway was brought to a standstill. A new agreement to build the railroad was not created until 1880.

The long term effects of the scandal were not significant to the Conservative party in that MacDonald's party returned to power in 1878 and MacDonald once again served as prime minister until his death in 1878 when he was succeeded by his former legal adviser John Abbott who had also been involved in the scandal.

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