The Pacific Scandal was the first major political scandal in Canada after Confederation. It involved the taking of election funds by Prime Minister John A. Macdonald in exchange for the contract to build the Canadian Pacific Railway. The affair stung Macdonald and forced the resignation of his government, but it didn't destroy him politically. He would eventually lead his Conservatives back to power again.
The scandal originated when Macdonald and his Conservative colleagues George-Etienne Cartier and Hector Langevin went shopping for campaign funds for the 1872 general election. The target of their solicitations was Sir Hugh Allan, a Montreal shipping magnate and railway builder. The Conservatives needed money to fight the election, particularly in Ontario and Québec, where a number of seats were in jeopardy. Despite Allan’s generosity in providing more than $350,000, Macdonald did poorly in the vote. Although he held onto power, the majority he won in 1867 was substantially reduced.
After the election, a railway syndicate organized by Allan was rewarded with the lucrative contract to build the Canadian Pacific Railway — the trans-continental railroad promised to British Columbia when it joined Confederation. Allan was given the contract on the assumption that he would remove American control on the syndicate's board of directors. But Allan, unknown to Macdonald, had used American money to supply the campaign funds to the Conservatives, creating an awkward situation.
Even more difficult was evidence that came to light after the election, showing an agreement between Allan and the Conservatives, assuring Allan the railroad contract in return for his campaign funds. The Liberals broke news of the scandal on 2 April, 1873.
A litany of damaging letters and telegrams appeared in Liberal newspapers in July. One of the most sensational pieces of evidence against the Prime Minister himself was a telegram from Macdonald to Allan's lawyer, John Abbott: "I must have another ten thousand; will be the last time of calling; do not fail me; answer today."
The government was stunned. It managed to weather a royal commission struck on 14 August. But it could not survive in Parliament. The House of Commons met on 23 October. Threatened by the likelihood that members from the new province of Prince Edward Island would vote against it — and with many of its supporters in disarray — the Macdonald government felt obliged to resign.
Allan's company never did get started, and a new contract agreement to build the Canadian Pacific Railway had to wait until 1880.
The scandal was the final political struggle for Cartier, who had lost his Montreal East seat in the 1872 election but was acclaimed to the Manitoba riding of Provencher a month later. Cartier was at the centre of the scandal because he had authored the letter offering the railway contract to Allan. He died the following year, on 20 May in London, where he was receiving treatment for Bright’s disease.
Macdonald would rise to become prime minister again, when his party won the 1878 election, and would remain prime minister until his death in 1891. He was succeeded, ironically, by John Abbott, Allan's one-time lawyer.
Hector Langevin left politics in 1873 because of his role in the scandal. He attempted a return to federal politics in the 1878 election, but lost in the riding of Rimouski. A month later he was acclaimed to the vacant riding of Trois Rivieres and became Minister of Public Works, the Cabinet post he held when the government resigned in 1873. But his fortunes changed after the death of Macdonald in 1891. That year he was implicated with Thomas McGreevy in the so-called McGreevy-Langevin scandal. This affair was uglier and involved kickbacks from federal contracts to McGreevy. Langevin stepped down as public works minister and was exiled to the backbenches until he left politics in 1896. McGreevy was sentenced to a year in jail.
Langevin's name survives at the center of government. The Langevin Block, the large, limestone building across the street from Parliament Hill, houses the Prime Minister's Office today.