Читать книгу Quest Biographies Bundle — Books 26–30 - Wayne Larsen - Страница 13

“Mackenzie thinks there are ‘millions in it’ if we can get it into reasonably secure shape,” a jubilant Van Horne wrote to his friend General Russell Alger in 1898. “It has been a long hunt and we mustn’t miss it.” Although Van Horne was writing about the scheme to electrify Havana’s tramway system, he could have been referring to any of the numerous other overseas and Canadian projects he became involved with after he resigned from the CPR.

In these final years of his life, Van Horne dedicated himself to making money and savouring the excitement that comes from discovering new opportunities for doing so. Unlike some financiers, he found no joy in stuffing securities away in a safe. For him, money was a means to an end, a way to renovate houses, perhaps, or purchase works of art. He became involved in a staggering number of companies: by some estimates he was a director of at least forty companies, and he invested in countless more. In addition, he played an active role in the management of several enterprises — of which the Cuba Company was the most conspicuous.

From the early days of his career, Van Horne had been a capitalist who venerated the business corporation — he regarded it as the foundation of modern civilization. He once told Sir John Williston that corporations “have souls — composite souls — larger and purer than any individual soul that ever was or ever will be.” He added, “I have sat at the Directors’ table in corporations for many years and have yet to hear the first deliberately mean suggestion on the part of a Director on any matter of policy and have yet to see the first case in which, as between two lines of policy, the fair and liberal one was not adopted.” Van Horne agreed that corporations should pay “their fair proportion of taxes,” but, he argued, they “should be taxed precisely the same as individuals are taxed.” He saw no valid reason “for making them pay for the privilege of being a corporation, for that privilege is a public necessity and a public good.”

From his early years in the United States, Van Horne was always on the lookout for legitimate ways to make money, and he eagerly seized on investment tips his friends and colleagues provided. These he supplemented with the latest business news he gathered via the telegraph. The returns from his real-estate properties and eventually from his extensive holdings of CPR shares, coupled with his large CPR salary, enabled him to amass a fortune. As a dedicated capitalist, he devoted himself unreservedly to nurturing this fortune and making it grow.

Fortunately for Van Horne, his move to Canada opened up an abundance of investment opportunities, particularly after he left the CPR at the turn of the twentieth century. In these years the Canadian economy moved out of a depression into a period of unprecedented growth, which lasted, with only two minor interruptions, until 1913. During these buoyant years Canada grew faster than any other nation, the United States included. Practically every Canadian indicator soared upward — population, railway mileage, exports, construction, and number of homesteads.

In investing his money, Van Horne always looked to railways, real estate, and companies with tangible assets or intrinsic value to bring the returns he wanted. His real estate holdings included a building in Vancouver and shares in the Montreal Land and Improvement Company and the Winnipeg-based Norwood Improvement Company. Outside the CPR, however, his railway investing was confined to offshore railways, largely in Central and South America. He also invested in a number of Canadian companies that had a product to sell. He succeeded so well that, before he died, Van Horne was recognized as a multimillionaire and one of the most influential businessmen of his generation.

Van Horne began purchasing stock and dabbling in real estate when he was still a young man making his way up the railway hierarchy in the United States. His participation in the business world took on a new dimension, however, in 1894 and 1895, when he became actively involved in organizing the Canadian Salt Company. In due time, this company would carry on business in Windsor, Detroit, and Sandwich. Although Van Horne was still president of the CPR, it eagerly supported this initiative and set out to secure its own share in the Ontario salt traffic. Van Horne would remain president of Canadian Salt until his death.

In the closing years of the nineteenth century, Van Horne also threw himself into the organization and management of several other companies. One of the most prominent among them was the Laurentide Pulp Company (later Laurentide Pulp and Paper), located in northern Quebec. He was drawn into this venture by General Alger, who had made a fortune in the lumber business before becoming secretary of war in William McKinley’s cabinet. Alger wanted a group of Canadians associated with him in the enterprise, so he invited Van Horne to become a company director. Van Horne, in turn, wanted to generate more traffic for the CPR, which had a branch line running northward from Trois-Rivières. He was also more than happy to make additional money for himself.

Before long, Van Horne became Laurentide’s president. As such, he took an active interest in the erection of pulp mills and power plants and in the production and sale of the company’s product. He sank a lot of his own money into it and persuaded a large number of his friends to become investors. The calamity-prone company suffered one setback after another, but in 1902 Van Horne took steps to reverse its fortunes. He reorganized the company and, using a newly discovered process, focused it on the manufacture of paper. Van Horne also took on the laborious task of trying to raise additional capital and, by 1910, the company’s prospects had improved so dramatically that it was paying an impressive annual dividend. Five years later, Laurentide Pulp and Paper was the largest paper-making concern in Canada — and Van Horne was considered the “Dominion’s greatest business authority on the pulpwood question.”

Reorganizing Laurentide should have been challenging enough, but Van Horne, Alger, and some of the company’s other investors established related undertakings in the Maritimes. One of these was the Grand Falls Water Power and Boom Company, located in Grand Falls, New Brunswick. When describing its potential to Alger, an ecstatic Van Horne wrote, “The water power company at Sault Ste. Marie are expending $3,000,000 to get forty thousand of horse power, while we will have at Grand Falls nearly twice the power at a good deal less than one-tenth the cost.” Van Horne and his associates planned to erect a paper-making mill whose eventual capacity would make it “by far the largest paper mill in the world.” They were frustrated, however, by a series of roadblocks, and as late as the spring of 1915 Van Horne was still chasing money for the project.

Neither of these ventures could be described as highly speculative or unethical. Still, some of the others in which Van Horne became involved were “extra hazardous.” They reeked of the shady business practices that dominated North American industry before the stock market crisis of 1929. In this era of unregulated business, capitalist barons frequently watered and manipulated stock, or diverted shareholders’ and policy holders’ money into extremely speculative undertakings. Van Horne certainly did not instigate such practices and schemes. Next to losing a family member, he dreaded nothing more than having his good name sullied by any hint of scandal. Nevertheless, he did allow his name to be associated with some questionable ventures and companies.

Heading the parade were schemes initiated by his young protégé Percival Farquhar, who constantly sought new ways to make money — organizing a new railway, installing an electrified trolley line, or establishing an electrical power distribution system. An avid risk-taker, he shuttled restlessly around the Atlantic in his quest for new money-making projects. Frequently he found them in undeveloped Latin America, where gullible politicians were hungry for modern development. Whenever his search turned up a promising-looking project, he would assemble a syndicate made of bankers, investment dealers, and well-heeled capitalists to invest in the enterprise.

Invariably, Van Horne was sucked one way or another into Farquhar’s schemes, sometimes to his great regret. Such was the case with a railway project in Guatemala. Initially Van Horne spurned the idea of becoming involved, feeling weighed down by his many responsibilities and the steady demands being made on his pocketbook. But then he capitulated, no doubt because of his friendship with Farquhar and his gratitude for his services to the Cuba Company. The difficult terrain across which the new line had to be constructed, coupled with political strife and open warfare, unleashed a host of problems. During Guatemala’s war with Honduras, Salvador, and Costa Rica, all outside funding for railway construction was cut off. As a result, syndicate members had to dig into their own pockets to find the necessary finances to complete the line. Van Horne found himself pressed for funds — probably because he had invested more than he had intended to in Cuba — and he was forced to sell some of his investments in Mexico. He even had to sell part of his interest in the Guatemala Railroad to Farquhar and other parties. In short, by his own admission, he “suffered severely” from his involvement in the railway. To assume his share of the financial burden, he made sacrifices in both money and time.

Van Horne’s association with the Guatemala Railroad, and then with the Brazil Railway, served only to increase his apprehension about the way Farquhar operated — particularly his lack of attention. Although Farquhar was expected to spend most of his time supervising the Guatemala Railroad’s progress, he was, instead, chasing opportunities in Brazil, Colorado, and Alaska. “Success is only possible in taking up one thing and sticking to it exclusively, until it is worked to a conclusion,” Van Horne wrote indignantly to his friend. “I regard failure as certain in every one of those enterprises which depend largely on you.”

So disturbed was Van Horne about Farquhar’s way of operating that he tried to resign from the Brazil Railway Company as soon as possible. However, although he insisted that his name be removed from all the company’s publicity material, it continued to appear among the list of directors for several years. Eventually the railway collapsed, confirming his worst suspicions.

Problems of a different sort confronted Van Horne in his association with two enterprises in the Maritimes: the Dominion Coal Company and the Dominion Iron and Steel Company, both of which were initially headed by Van Horne’s friend Henry Whitney, a Boston industrialist. In 1901 Whitney and his associates sold majority control of the two operations to a syndicate led by James Ross, a prominent Canadian financier and railway contractor, who in 1903 sold the steel company to another financier, J.H.

Plummer. As a director of the two companies, Van Horne became closely involved in a long and bitter contract dispute between them. At issue was a formal contract that the coal company signed in 1899 with the Dominion Iron and Steel Company to furnish high-grade coal. The dispute degenerated into a protracted battle that first played out in Nova Scotia’s Supreme Court. There, Van Horne served as a witness for the steel company, having resigned earlier from the coal company’s board. Initially he lamented the litigation and tried desperately to avert it, but once involved, he revelled in detecting and defeating his adversary’s moves — just as he had years before in his old railway battles. Eventually the case went all the way to the Judicial Committee of the Privy Council in London (then Canada’s highest court of appeal), which upheld the Dominion Iron and Steel Company’s case.

Van Horne demonstrated his national vision by investing in British Columbia, where he became a late subscriber in the British Columbia Lumber Company. Another B.C. venture in which he took an interest began during one of his annual western inspection trips. When his train was delayed for some hours at Yale, Van Horne and his party tried their hand at panning the river soil for gold. Soon after, they all invested in a hydraulic mining plant, which developed into the Horsefly and Hydraulic mining companies. They struggled along for several years in the province conducting placer mining operations, but eventually the companies were wound up after much more than the original investment had been lost.

The fortunes of another company in which Van Horne had an interest, the New York–based Equitable Life Assurance Society, attracted a lot of adverse attention thanks to the shenanigans of its principals. The unwelcome publicity did not occur, however, until several years after Van Horne joined the company’s board, which boasted several leading American financiers he knew well. Confident that the company was in good shape and meeting its obligations, Van Horne attended board meetings only occasionally, and then only in a perfunctory way. Great was his shock, then, when the society, along with the other two big insurance companies, became the subject of screaming newspaper headlines and eventually an investigation by the New York State Legislature. A series of magazine articles had charged the three firms with systematically bribing regulators and politicians and investing policy-holders’ money in risky ventures instead of “safe” government bonds. In 1905, the New York state investigative committee began to take evidence about the scandals. When that investigation revealed serious mismanagement and irregularities, a similar body, the Royal Commission on Insurance, was appointed in Canada in 1906.

Van Horne was shocked by the revelations of misconduct on the part of the North American insurance industry. He was so mortified personally that he began to question the propriety of retaining directorships in companies in which he exercised no control. In 1907, therefore, he began to retire as gracefully as he could from many of them. He still retained an interest, however, in many firms. Several of these firms involved transportation in one form or another, notably street railways and traditional railways. Like other railway tycoons of this era, Van Horne invested in electric street railways, which began replacing horse-drawn trams as a mode of public transit in the late 1880s. Among the urban tramway systems in which he invested were the Toronto Railway Company and the Winnipeg Street Railway, whose reorganization was spearheaded by the wily and crafty William Mackenzie, one of Canada’s best-known entrepreneurs in the first two decades of the twentieth century and a leader in the reorganization and electrification of street railways. In Saint John, New Brunswick, Van Horne and James Ross, an aggressive utility entrepreneur, purchased the property of the Consolidated Electric Company and became actively involved in the modernization of the street railway there.

Abroad, Van Horne invested heavily in Latin America. There, his many investments included the Demerara Electric Company in Georgetown, British Guiana, and the Mexican Light and Power Company, whose head office moved from Halifax to Montreal. In Brazil — a vast, undeveloped country brimming with promise — Van Horne became associated with various enterprises blazed by the well-known promoter and engineer, Fred Pearson. One of these undertakings was a holding company formed in 1912: Brazilian Traction, Light and Power Company, headed by William Mackenzie as chairman and Fred Pearson as president. They appointed Van Horne as a director on its first board. He took great satisfaction in knowing that the company, Brazil’s largest utility company, was making a substantial contribution to the economic development of southeastern Brazil’s industrial heartland.

Launching new companies in an era of unregulated and unscrupulous financial systems and scraping funds together to keep some of them going would have been enough to tax the energies of most men of Van Horne’s age; however, it wasn’t enough for him. In the late 1890s he decided to expand his role as a hobby farmer by starting a stock farm at East Selkirk, Manitoba, the gateway to the Prairies. He began assembling land for the operation in 1898 while he was still president of the CPR. The farm was intended to draw attention to the district’s potential and thereby attract settlers — passengers and freight were essential to the railway’s success. Because the farm was intended as a showplace, Van Horne arranged for the “cultivation and ornamentation” of the CPR’s right-of-way that stretched over the four-mile length of the property. He also hired Edward Maxwell to draw up eye-catching plans and specifications for the farmhouse and its outbuildings.

Regrettably, the Selkirk operation proved to be a steady drain on Van Horne’s purse. Nevertheless, he appreciated the additional opportunity it provided for him to breed stock. Determined that he would become a champion exhibitor, the competitive Van Horne set out to obtain the best stock and to beat rival contenders at the game. He succeeded, acquiring a prize herd of shorthorns that took blue ribbons at shows in Winnipeg, Chicago, and elsewhere.

The farm’s drain on Van Horne’s pocketbook was imitated by another of his ventures — the Canadian Sardine Company, a giant undertaking founded in 1911 to harvest and can the sardines of Passamaquoddy Bay. Van Horne planned to build a cannery and a model residential village at Ross’s Point at Chamcook, just outside St. Andrews. He found skilled workers knowledgeable about the fishery in Norway, but when the twenty-eight young men and one hundred young women arrived at St. Andrews, their promised accommodation was still under construction. Unfortunately, this mishap proved to be but one of many associated with the enterprise, and it finally closed in 1914. Aside from the original stock that Van Horne purchased, he lost about $100,000 in the venture.

Van Horne lost money in many of the projects in which he was involved, all too often because he lacked the time or the skills to carry out some of his schemes effectively. Still, he was certainly a businessman with vision, as his association with the Laurentide Pulp and Paper Company and the East Selkirk ranch both prove. He lacked the business instincts necessary to accumulate a huge fortune, however, because his restlessness and diversity of interests prevented him from focusing his attention on a handful of promising undertakings and fully exploiting their potential. Nevertheless, he undoubtedly made money in such companies as Canadian Salt, Laurentide Pulp and Paper, Royal Trust, and the Equitable Life Assurance Society. Money-making aside, Van Horne was highly respected by his peers and much sought after as a company director. Perhaps that is why, in early 2000, a blue-ribbon panel of judges assembled by the Canadian Business Hall of Fame voted him the most outstanding business leader of the twentieth century.