Allan Levine is a historian and author of 16 books including Details Are Unprintable: Wayne Lonergan and the Sensational Café Society Murder, which will be published in September.
There is no excusing the poor judgment of Prime Minister Justin Trudeau and Finance Minister Bill Morneau, who both failed to recuse themselves from the decision to award WE Charity a federal contract to distribute up to $912-million despite their families’ relationships with the organization. Mr. Trudeau now finds himself embroiled in another ethical controversy – his third in three years. Still, as bad as the optics are in this and the other two cases, several of his illustrious predecessors – including his father Pierre Trudeau – were mired in worse behind-the-scenes machinations.
It started with our very first prime minister, John A. Macdonald, who experienced serious financial problems through much of his adult life. In 1868, as Conservative prime minister, Macdonald’s annual salary was $5,000 – which today would be about $90,000. Macdonald, however, had accrued significant debts after the death of one of his law partners four years earlier. As interest accumulated, the situation became dire: By April, 1869, he owed nearly $80,000, or about $1.5-million in 2020 dollars. He borrowed funds from associates and relatives, and desperately negotiated settlements with creditors.
In the spring of 1872, David L. Macpherson, a railway financier from Montreal who had relocated to Toronto – and who Macdonald had appointed to the Senate in 1867 – sought discreet donations from wealthy conservatives for a fund to assist the financially ailing prime minister. As historians Keith Johnson and Peter Waite write in The Dictionary of Canadian Biography, Macpherson “thought it unjust that a prime minister could not support and educate his family on his official income. In the service of his country he had become poor.” Within a few months, the fund had reached $67,000, worth approximately $1.4-million today, and just kept growing.
That same year, Macpherson headed up a consortium that attempted to win the federal contract to build the Canadian Pacific Railway (CPR); the group’s chief rival was led by Montreal magnate Hugh Allan. Ultimately, Allan’s team won the contract. Macdonald tried to persuade Macpherson to join Allan, but Macpherson balked at Allan’s links to American investors. A year later, Allan’s substantial financial contributions to Macdonald and the Conservatives’ election campaign coffers in 1872 led to the Pacific Scandal, which prompted the resignation of Macdonald and the fall of his government a year later.
Angered by the awarding of the contract to Allan, Macpherson cut off all ties to Macdonald for several years, though the two men did eventually reconcile. In 1877, when the Liberals learned of the testimonial fund and subsequent deposits to the fund Macpherson had made, he publicly defended Macdonald and himself.
As high and mighty as the Liberals were when it came to judging Macdonald, however, they looked after their own leaders exactly the same way. Following Wilfrid Laurier’s election as prime minister in June, 1896, William Mulock, a wealthy Toronto-area lawyer and businessman who Laurier appointed postmaster general in his first cabinet, set up a fund for the new PM that eventually accumulated $100,000, ensuring that money was not something Laurier would have to worry about during his long political career.
Laurier and his wife, Zoe, also needed a place to live in Ottawa, since Canada did not have an official residence for the prime minister at the time (and would not until the federal government acquired 24 Sussex Dr. in the late 1940s). In March, 1897, a group of Liberal Party stalwarts led by Clifford Sifton, the newly appointed minister of the interior, put up $9,500 (today about $293,500) to purchase a three-storey yellow-brick house in the fashionable Sandy Hill neighbourhood for the Lauriers, while also kicking in additional funds to pay for its pricey upkeep. The house eventually became known as Laurier House, and is now a national historic site and museum.
Laurier died in 1919 and Zoe passed away two years later. In her will, she bequeathed her home to the new Liberal Party leader and, after the December, 1921, election, new prime minister Mackenzie King. Zoe was not enamoured with King, but since he was the Liberal leader at the time, she felt the house should be returned to the party that had originally purchased it. King was honoured by the bequest, yet he quickly discovered that the property required extensive repair and upgrading at a cost that exceeded $30,000 – money that King, famously frugal throughout his life, did not have.
King’s financial dilemma was solved by Peter Larkin – or his “fairy godfather,” as the prime minister dubbed him. The founder of the Salada Tea Co., then the third largest tea business in the world, had also contributed to Mulock’s fund for Laurier in 1896, and he established a fund of $40,000 deposited in the Old Colony Trust in Boston, which was to be used by King to renovate Laurier House.
To further alleviate King’s financial worries, Larkin enlisted some of his rich friends and Liberal Party supporters – including senator Arthur Hardy, who King had appointed, and Herbert Holt, the president of the Royal Bank – and established a personal fund for King in 1925, also at the Old Colony Trust. Within four years, this fund grew to $225,000 ($3.4-million today). A similar fund of $100,000 was raised for cabinet minister Ernest Lapointe, King’s trusted Quebec lieutenant.
King was immensely appreciative for Larkin’s efforts on his behalf – as a reward, King appointed Larkin as Canada’s high commissioner in London in February, 1922, a post in which he served until Larkin’s death in 1930 – but the prime minister was constantly anxious about it being exposed. In mid-January of 1929, as he noted in his diary, he was upset when he learned the names of the various contributors from Larkin, and insisted that Larkin write him a letter “assuring that each contributor understood that [the fund] was to give me political independence … Not a cent has been asked for by me.” A classic rationalizer, King was merely kidding himself about the fund, since no one forced him to accept the money. It also explained his tremendous fear during the 1931 investigation into the controversial Beauharnois hydroelectric project in Quebec. He had appointed W.L. McDougald – a Montreal physician and fund contributor – to the Senate in 1926, and when McDougald was called to testify at a public hearing, King feared that he would reveal the fund’s existence (which was probably known outside Liberal Party circles regardless). McDougald did not, in fact, mention the fund, but nevertheless, the paranoid King shunned McDougald – who was compelled to resign from the Senate in 1932 – and returned $15,000 of the $25,000 McDougald had contributed to the Larkin fund. (Why he did not return the entire amount is not clear.)
After King retired in 1948, his successor as Liberal leader and prime minister, Louis St. Laurent – a lawyer who had been serving in King’s cabinet – told allies that he could not “afford to remain in public life.” Much more reticent than King, and concerned about accusations of conflict of interest, St. Laurent hesitated at accepting private financial assistance. But in the end, he, too, held his nose and accepted money, which was invested without his involvement, from “wealthy admirers,” as his biographer Dale Thomson described them. (Pensions for members of Parliament were established in 1952, but were modest then and for decades after that.)
Likewise, Lester Pearson, who left his diplomatic career to join King’s and then St. Laurent’s Liberal cabinets, did so with greater comfort only after Toronto chartered accountant and businessman Walter Gordon – who was to be one of Pearson’s chief cabinet ministers from 1963 to 1968 – arranged a fund that generated a “modest annuity,” according to political scientist Reginald Whitaker. It was later revealed by NDP politician and journalist Douglas Fisher that the largest donation to the fund was made by Montreal tycoon and philanthropist John W. McConnell, who owned St. Lawrence Sugar Refineries. Pearson never spoke publicly of the annuity, however, nor did he mention it in his memoirs.
Pearson’s Tory rival, Progressive Conservative John Diefenbaker – prime minister from 1957 to 1963 – was in all likelihood the last prime minister to have a secret fund. When Diefenbaker died in August, 1979, his estate became public, revealing that sometime around 1960, PC supporters had set up a fund for him of about $207,000, which ultimately grew to $475,000. However, according to Diefenbaker biographer Denis Smith, Diefenbaker only learned of the fund’s existence in 1973, and by all accounts, neither Diefenbaker nor his wife Olive ever touched it. Nonetheless, the disclosure of the mysterious fund was big political news, angering Diefenbaker’s ardent defenders. As per Diefenbaker’s will, the money in the fund was divvied up between the Diefenbaker Centre at the University of Saskatchewan, the city of Prince Albert where he lived and which he represented in the House of Commons for 26 years, and a program to distribute Diefenbaker’s three-volume memoirs to graduating high-school students.
Unlike his predecessors, Pierre Trudeau appeared to have no qualms about private donors mostly financing the construction of a $275,000 indoor swimming pool at 24 Sussex Dr. in 1975. As Bob Plamondon tells it in his 2013 book, The Truth About Trudeau, the Liberal prime minister initially wanted taxpayers to foot the bill for the pool. His top advisers talked him out of that, but instead, senator Keith Davey raised much of the money from anonymous donors. Mr. Trudeau, who was wealthy in his own right, contributed $10,000 out of his personal fortune for the pool.
In his typical style, he dismissed criticism of the expenditure by opposition MPs and journalists using deflection and witty sarcasm. That strategy might not be available now for his son.
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