Railways and The Pacific Scandal
At the same time that Allan was falling out with the Grand Trunk Railway, the Canadian government had committed to building a railway across to British Columbia. Though slow to move into the railway business, by the 1870s Allan had become Canada's most flamboyant railway entrepreneur. He helped to place trusted colleagues (such as his lawyer John Abbott, agent Louis Beaubien and the politician John Hamilton) in senior positions with railways connected to the venture. Allan himself invested heavily, particularly in those that would link the Port of Montreal to the Canadian West, and became president of the Montreal Northern Colonization Railway in 1871. Garnering the support of French-Canada (helped in a large part by his relationship with Antoine Labelle), Allan’s railway gained major benefits in Quebec, including a $1 million subscription from the City of Montreal. Allan was reckoned the most influential capitalist in 1870s Canada, and having staved off American interest in the Pacific Railway, he was the logical choice for winning the contract.
He created a syndicate to build the national railway, promised as a condition of British Columbia joining Confederation. To ensure the contract, he bribed Prime Minister Sir John A. Macdonald, subscribing over $350,000 for Macdonald's re-election campaign in 1872, but the Pacific scandal (and Macdonald's defeat) ended his dreams of supremacy in the railway business. However, through his bank, the Merchant's Bank of Canada, he still financed and maintained a vested interest in many of the Canadian railway companies.
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