Profits and Politics

Profits and Politics: Beaverbrook and the Gilded Age of Canadian Finance

GREGORY P. MARCHILDON
Copyright Date: 1996
Pages: 348
https://www.jstor.org/stable/10.3138/9781442678804
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  • Book Info
    Profits and Politics
    Book Description:

    This study of high finance during the Laurier boom years looks at the innovative tactics that went into Max Aitken?s world of promoting, stockbroking, and mergers.

    eISBN: 978-1-4426-7880-4
    Subjects: History

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Tables
    (pp. vii-vii)
  4. Maps and Figures
    (pp. viii-viii)
  5. Preface
    (pp. ix-xii)
  6. Acknowledgments
    (pp. xiii-2)
  7. Photos
    (pp. None)
  8. 1 Max Aitken and the Nature of Finance Capitalism during the Laurier Boom
    (pp. 3-15)

    Max Aitken, later to become Lord Beaverbrook, captured the English imagination as a social and political phenomenon who rose to prominence despite his obscure colonial origins. His immense wealth, his rapid ascension to the peerage, his scandalous affairs, his political mischief making, and his control over the Express family of newspapers both attracted and repelled some of the most talented writers of his era.³ As a result, he appeared as Lord Copper in Evelyn Waugh’sScoop, Sir Bussy Woodcock in H.G. Wells’sAutocracy of Mr. Parham, Lord Raingo in Arnold Bennett’s novel of the same name, Lord Ottercove in William...

  9. 2 Circuitous Road to Halifax, 1879–1904
    (pp. 16-39)

    No single circumstance or event in Max Aitken’s childhood foreshadowed his future success and fame. Only in hindsight can one see that certain clues, taken together, suggest his rapid rise in the world of business and finance. Nonetheless, almost all of his biographers have found in his childhood the critical element that produced the iconoclastic businessman, politician, and minister. Aitken himself was the main source of the ‘facts’ about his youth, and he shaped these facts to fit his own ‘rags to riches’ legend – Lord Beaverbrook, the millionaire who had worked his way u into the centre of British...

  10. 3 Caribbean Adventurer
    (pp. 40-61)

    Aitken travelled back to Halifax in a private railway car with John F. Stairs’s body and his widow. He was stricken with grief, but as soon as he arrived in Halifax he immediately set about helping the members of the Stairs family cope with their unexpected loss.¹ They thanked him by inviting him to select John F. Stairs’s epitaph and to walk next to the family in the funeral procession to Fort Massey Presbyterian Church.² As the procession was forming, J.C. Mackintosh, an established financier and a leading elder in the church, tried to push Aitken out of line and...

  11. 4 Building the Royal Securities Corporation
    (pp. 62-79)

    Aitken was able to finance his new projects in Cuba and Puerto Rico because he personally shaped an investment bank that could issue, underwrite, and retail the growing number of securities created by these enterprises. By the time of his first visit to Cuba, he had already acquired a talented managerial and sales staff as well as branch offices in Montreal and Saint John. Ambitious young Maritimers such as Izaak Walton Killam and Arthur J. Nesbitt aggressively built up a new clientele of individuals and institutions prepared to invest in Aitken’s new ventures. Good staff and new customers were essential...

  12. 5 The Montreal Engineering Company
    (pp. 80-96)

    The Royal Securities Corporation was already moving beyond the traditional functions of an investment bank when in 1907 it launched the Montreal Engineering Company, thereby providing its family of utilities with a competitive edge through systematized cost accounting as well as purchasing, construction, and engineering advisory services. The first company of its type in Canada, Montreal Engineering was to underpin Royal Securities’ resurgence under Walton Killam in the years following the First World War, a resurgence that culminated in the creation of the International Power Company in 1926, a holding company that consolidated the RSC’s ownership of utility companies throughout...

  13. 6 The Takeover and Transformation of Montreal Trust
    (pp. 97-121)

    Max Aitken’s meteoric rise as a trust company manager in five short years reveals the extent to which he was a financial innovator. In 1905 he had started the Commercial Trust Company of Halifax. By 1907 he had acquired a controlling interest in the moribund Montreal Trust and Deposit Company, and within months he turned it into one of the most aggressive financial ‘department stores’ in the country. He risked incurring the wrath of the powerful chartered banks by taking deposits and then using these funds to offer call loans, which customers, particularly stockbrokers, preferred to the time loans offered...

  14. 7 Hubris and the Young Financier
    (pp. 122-142)

    As the American economic historian Jonathan Hughes pointed out many years ago, there is much more than the profit motive at work in entrepreneurial behaviour.³ In Aitken’s case, a powerful mixture of pride, insecurity, confidence, and vindictiveness drove him forward more than any simple desire for economic gain. His wish to break free of Halifax and the Scotia group, striking back at Robert E. Harris in the process, prompted his trust company ventures as much as his desire for profit. While his survival instinct crowded out concerns about his position in the food chain during the Panic of 1907, he...

  15. 8 Manufacturing the Canada Cement Company
    (pp. 143-180)

    The year 1909 marked the beginning of a bull market that was to sweep the country and produce the first great merger wave in Canadian history. During the next four years, the country saw almost two hundred old firms disappear into fifty multifirm consolidations. In 1909 alone, more than $100 million of securities of Canadian manufacturing companies were issued, many to British investors.¹ The frenzy continued through 1910, 1911, and 1912, slowing with the sharp recession of 1913, and finally dying with the outbreak of the First World War. As outlined in the new statistical series presented in the appendix,...

  16. 9 Merger Promoter Extraordinaire
    (pp. 181-205)

    Although Aitken may eventually have made up to $600,000 out of Canada Cement, much had gone wrong. Some problems were unavoidable in a consolidation involving so many conflicting interests, but others were unquestionably caused by Aitken’s headlong rush to get the securities floated before many of the details – including terms of entry, audits, and appraisals – had been completed. This produced bad press and bitter disputes between Aitken and the owners. Lessons were learned, however, and Aitken’s two subsequent mergers in the rolling stock and steel industries were smooth affairs compared with the Canada Cement fiasco.

    Towards the end...

  17. 10 Combines, Canada Cement, and the Reciprocity Election
    (pp. 206-236)

    The Ashton freeholders who elected Aitken to the House of Commons on 3 December 1910 must have found it difficult to understand his preoccupation with the British Empire. Most Britons took the empire for granted, occasionally debating its value to Britain itself but generally assuming its inevitability and permanence. Few had challenged this conventional view until Joseph Chamberlain launched his tariff reform campaign in 1903. Yet even a man as forceful and charismatic as Chamberlain had been unable to convince even a large minority that his project for a modern imperial federation was worth pursuing.³ Now, seven years later, a...

  18. 11 Conclusion: From Profits to Politics
    (pp. 237-244)

    Although there is no evidence that they ever met, Stephen Leacock probably had Max Aitken in mind when he railed against the ‘age of plutocracy’ that had enveloped his English-Canadian world in Montreal in the years immediately preceding the First World War. In hisArcadian Adventures with the Idle Rich, Leacock reserved a special place for the Wizard of Finance, and although his portrait little resembles Aitken, Leacock had clearly made up his mind that high financiers were a parasitic class infecting the rest of the population with their amoral greed for profit and their disdain for knowledge unconnected with...

  19. APPENDIX: The First Canadian Merger Wave in International Perspective
    (pp. 245-260)
  20. Notes
    (pp. 261-334)
  21. Illustration Credits
    (pp. 335-336)
  22. Index
    (pp. 337-348)