The Windfall debacle, which saw a huge runup and collapse of shares, was part of a pattern of penny stock scandals – often perpetrated around mining shells, and often, but not always, on the wild and woolly Vancouver Stock Exchange. They led up to the granddaddy of hoaxes: the Bre-X scandal of the 1990s. Bre-X was both old and new – it continued the pattern of great resource scams and it was a signal of Calgary’s new wealth. You have to have money to lose it, and Calgarians, in particular, lost a pile when their hometown hero vaporized.
The Bre-X scandal was also Pacific-oriented – the phony gold strike, and its salted core samples, were centred on Indonesia. Now in the 21st century, the scandals continue to go global, proving that Canada’s sure-fire competitive advantage lies in commodity-stock rigging. Most recently, Sino-Forest, once a high-flying TSX company with forests in China, has become the focus of investigations in the Case of the Missing Trees.
In Canada of the 1960s, manufacturing still mattered, but the cast of characters was changing. In one of the ROB’s early editions, an ad announced the placement of a preferred share issue by an obscure Ontario technology company called Magna Electronics.
Magna is obscure no more. Seven years later, an appointment ad noted that a certain Frank Stronach, a curly-haired Austrian-born tradesman, joined the board, having completed a reverse takeover of Magna by his own manufacturing and engineering company. The rise of Mr. Stronach, like Mr. Munk a refugee from the postwar agonies of Central Europe, was a signal that the old anglophile establishment had to make way for a new breed – aggressive, entrepreneurial, outside the old schools and clubs.
Mr. Stronach was opportunistic, coming on the scene just as economic power shifted from Montreal’s St. James Street to Toronto’s Bay Street, and as Canada, now rebuffed by Europe, tied itself more tightly into the continental auto economy.
It transformed Canada’s backwater auto parts business into a global powerhouse, and made Frank Stronach into one of Canada’s richest people. Magna was a master of using its international linkages, while its charismatic founder indulged his love of horse racing and outsized remuneration.
Magna was not the only great Canadian empire whose rise was sketched through the ROB’s pages. In the 1960s, a flinty-eyed New Brunswick entrepreneur named Kenneth Colin Irving was building a private empire as he moved from his forestry roots into energy and retail, and to shipbuilding. K.C.’s ship truly came in last year when, 20 years after his death, his grandson Jim captured a $25-billion contract to build warships for the federal government.
It was a triumph for the Irvings, but also a reminder that Atlantic Canada is the least dynamic region of Canada, and among the most dependent on government largesse. It has largely been left behind in the shift to the West and to the Pacific – although its nomadic workers have certainly hopped on that train. Only Confederation’s newcomer, Newfoundland, is bucking the trend through its energy bounty, while forests and fisheries succumb to the ravages of overharvesting and global market shifts.
Yet the Atlantic region’s entrepreneurs are forced to think big because of the constraints of their home markets. As the ROB began, brothers Harrison and Wallace McCain were building a little frozen French fry business in rural New Brunswick that is now the largest supplier of chips to the world. The McCains had a vision that encompassed not just the United States and Europe, but the Asia-Pacific hot spots. A shopkeeper in Stellarton, N.S., named Frank Sobey harboured his own dream of a grocery empire, which would be taken nationwide by sons Donald, David and Bill.
At the same time, a wide swath of the Canadian economy fell under U.S. control. Even the redoubtable Molson family, brewers in Montreal since 1786, struck an alliance with the Colorado-based Coors clan. And 350-year-old Hudson Bay Company, once a British fur trader, then a Canadian-owned retailer, is now controlled by a U.S. investor. Its journey parallels the Americanization of Canadian retail, underlined by the arrival of Wal-Mart and the death of department store icons Woodward’s and Eaton’s. It makes the story of onetime basket case Loblaws even more compelling, as Garfield Weston’s son Galen and a team of brilliant managers guided its rise from the nadir of a troubled company in the 1970s.
But foreign ownership provides some twisting dilemmas. Could we have developed our energy resources without Imperial Oil? Controlled by Exxon Mobil, it struck oil at Leduc in 1947, setting off the great Alberta oil and gas bonanza, and it has been a pioneer in developing the oil sands.