Part 23 (1/2)

But it was Nordon's pointed attacks on the Governor's integrity that finally broke Sale's hold and reputation. Nordon had accused Sale of self-dealing in the 192 0 purchase by the HBC, for S~60,000, of a 15 -percent interest in the Merchant Trading Company, owned mostly by the Sale family. Used during the Great War as a purchasing agency for the s.h.i.+pping operation, the firm had continued in business but returned the fIBC almost no dividends. Although it was never identified as such, the HBC acquisition of Sale's shares had been more in the nature of an interest-free loan to reward the then Deputy Governor for his wartime services. Sale's great mistake was to pretend that it had been a legitimate business transaction, thus trapping himself into defending the indefensible.

At the 19 3 0 annual Court, Nordon asked that an internal committee be set up to investigate the Company's affairs. Its report, tabled five months later, vindicated Sale but suggested the HBCs stores be run by a newly established, Canadian-domiciled IIBC subsidiary. Since Sale had just approved a similar arrangement, or at least granted the Canadian Committee all the authority it

*Four times the British (and once the Canadian) squash champion, Cazalet had attended Eton and Oxford (where he earned four Blues), fought with distinction in the trenches during the Great War, and was later elected a Member of Parliament. He inherited the HBC stake from his father. He was killed with General Wadyslaw Sikorski, the Polish premier in exile, in the crash of a Liberator bomber off Gibraltar in 1943.

386 MERCHANT PRINCES.

could handle, there seemed to be no reason for him to resign. Yet be left the governors.h.i.+p just before publication of the report, leading contemporary observers to believe there had been a secret deal: that Sale would be officially exonerated from the accusations of self-dealing by his peers in return for clearing up all the suspicion surrounding the Company by agreeing to abandon his post.

The resignation took place during an extraordinary Court, held at the City Terminus Hotel on Cannon Street on January 16, 193 1. Company records pointed to a loss of Y,746,334 for the fiscal year, which meant there would be no cash for dividends. With the worth of its a.s.sets reduced by an astonis.h.i.+ng.V.2 million in the previous twelve inonths-and facing the prospect of an extended economic downturn-the Company seemed well on its way to technical bankruptcy. Shareholders nearly went berserk, calling for the resignation of the entire board and nominating members of the Nordon committee to take their place. Chaired by Deputy Governor Sir Frederick Richmond, the noisy meeting would not allow Sale to speak. When he rose briefly to rea.s.sert his innocence in the Merchant Trading affair, he was shouted down and could barely be heard, lamenting: ”For my shortcomings I ask your forgiveness.” Five other directors eventually stepped down, and were replaced by three Nordon nominees, including Cazalet. A new board was elected, led by the redoubtable Edward Peac.o.c.k, but the most important item on the agenda was the appointment of a new governor.

THE MAN PICKED TO RESCUE THE COMPANY at this difficult moment was Patrick Ashley Cooper, and his selection was no accident. In an act of direct, almost brutal intervention unprecedented in the HBCs long history, Montagu Norman, Governor of the Bank of England, TRANS-ATLANTIC BLOOD FEUD 387.

personally a.s.signed Cooper to the job, then went on to choose Sir Alexander Murray, one of the City's ablest financiers, tobe Cooper's Deputy.* Incase there mightbe any doubt about the weight of authority behind his nominations, Norman sent a letter to C.L. Nordon not only affirming his personal regard for Cooper but placing the Company of Adventurers in its appropriate context. ”I alone sefected Mr. Patrick Ashley Cooper and recommended him as suitable for the Governors.h.i.+p of the Hudson's Bay Company,” he wrote. I am not concerned with the affairs of the Hudson's Bay Company except as regards the Governors.h.i.+p and that owing to the prestige and imperial importance of the Company.” Norman stressed the same historical link during a private briefing with Cooper. ”Your task,” said the Governor of the Bank of England to the Governor of the Hudson's Bay Company, ”is to rebuild a bridge of Empire.”

A tall, awkward Scot with round tortoise-sh.e.l.l gla.s.ses and a crisp military moustache, Cooper could be kind and approachable, though he never softened his att.i.tude of trying to run the firm like the headmaster of a rowdy boys' school. With the sombre suits he favoured draped over his six-foot-four frame, he commanded instant attentionand got it. Born in middle circ.u.mstances at Aberdeen, C ooper attended Fettes College in Edinburgh (Scotland's Eton), then read law at Aberdeen and went on to Trinity Hall, Cambridge, where his long arms helped him win an oar. Badly wounded in the back while serving as an infantry major during the Great War, he became a City

*Yet another of those peripatetic Scottish financiers who held the Empire together, Murray had spent three decades in India, occupying most of its important administrative positions, including a five-year stint as Governor of the Imperial Bank of India. He later became a director of Lloyds Bank and the Bank of London and South America, remaining a solid influence on the Hudson's Bay board until 1946.

388 MERCHANT PRINCES.

accountant and did so well that the Bank of England began asking him to act on its behalf in helping salvage near-defunct British companies around the globe. At forty-three and married to the beautiful Welsh heiress Kathleen Spickett, he became an important figure in London society, having won kudos for successfully liquidating the Banco Italo-Britannica in Milan and rescuing the Primitiva Gas Company of Buenos Aires. He had accepted the difficult job of turning the Hudson's Bay Company around in the bearpit of the Depression on condition that his initial salary of Y,5,000 be raised when the economy improved. Despite his relatively meagre stipend, Cooper brought the July 1931 proprietors' Court to its feet with the offer to reduce his pay by 10percent. ”Are we to devote ourselves,”

he demanded, ”to searching in the past or building for the future?”

”Both!” cried out an Adventurer.

”No. It cannot be both. You must make up your minds whether you are going to ask us to dig into the past, or go forward into the future, and that is the decision I shall ask you to make. ” It was a clever ploy because the Company's proprietors had become so mesmerized by recent troubles they had lost sight of the future. For the next three years that future was grim indeed, with losses totalling E3.6 million. Cooper threw himself into his new job, leaving almost immediately for Canada, eager to meet Philip Chester, the new General Manager.

The omens were not good. just before he left England, Cooper was informed by the Canadian Committee that henceforth communications to London would be dispatched monthly instead of weekly and that, oh yes, P.J. Parker, the Canadian operation's highestranking executive in charge of stores, had just been fired. In reporting these changes to the Governor, Chester- speaking through Canadian Committee Chairman George Allan-lamely apologized for not having first TRANS-ATLANTIC BLOOD FEUD 389.

consulted or even notified the London board. ”It was purely an oversight,”

Allan explained, caused by very great stress of work at the time.”

Cooper arrived in Montreal on September 3, 193 1, and the first entry in his private diary reflected his sour mood: ”Went to Ritz-Carlton. General Manager of the HBC in the Hotel and still in bed.” His outlook didn't improve at the breakfast he had next morning in the Windsor Hotel. He ordered ”a pot of tea. Dry toast, b.u.t.ter on the side. En,~Iisb marmalade and two eggs boiled three minutes ... three minutes precisely.” When the waiter arrived, all was as requested, but there was only one eggcup with one egg perched on it. Cooper, according to his breakfast companion, berated the hotel employee mercilessly, calling him a ”stupid colonial”

and similar epithets. He stopped only when the waiter, with white-gloved hand and beatific smile, lifted the eggcup to reveal the missing egg, boiled three minutes precisely.

The Governor's mood brightened considerably when he was summoned to Ottawa for a private meeting with the Prime Minister, only to find that the Right Honourable R.B. Bennett was, as Cooper confided to his journal, ”cordial and helpful, but most critical of the Company, its higher personnel and policy.” Still, he stayedat Rideau Hall, the Governor General's official residence, with the Earl of Bessborough and went swim- ming in the Chateau Laurier pool wearing a bathing suit borrowed from CNR Chairman Sir Henry Thornton that had ”room for myself and two others.”

In Toronto he met most of the men who mattered-Sir Joseph Flavelle, Sir John Aird, E.R. Wood, WE. Rundle-and was shown around E-aton's (bv R.Y.

Eaton) and Simpsons (by C.L. Burton). He then went off to Winnipeg and a tour of the Company's retail operation, at one point ”driving down the main street of Kamloops to examine our compet.i.tors' windows.” By the time he left, two months later, Cooper 390 MERCHANT PRINCES.

was not at all pleased with what he had seen. ”I was dismayed at what I found,” he noted. ”As soon as I arrived in Winnipeg, it was perfectly obvious to me that the state of misunderstanding and tension between London and Winnipeg had almost reached an open breach. . . . ” Later, Cooper summarized the areas of serious concern he had uncovered. lie had found not one department or subsidiary operation that wasn't losing money; ”great and thoughtless extravagance in all directions,” he noted in his diary, ”a sense of unthinking security throughout the whole staff,” and ”no general comprehension that the Company was nearing complete collapse.

. . .” As if that diagnosis wasn't gloomy enough, Cooper wisely concluded that his main problem would be learning to live with Chester, the thirty-five-year-old General Manager installed under Sale. Chester, the Governor felt, should have a different att.i.tude towards London, one that would show loyalty to the British board and shareholders.

Fat chance.

MOST FACES BETRAY THE CHARACTER of their owners, reflecting the balance between their generous natures and n.i.g.g.ardly emotions. But Chester's facial features were smooth and uncommunicative, like those of the masked man in The Phantom o the Opera-not ugly, but If expressionless, designed to evoke in others emotions complementary to his own. His eyes were as blank as gun barrels, tinted pewter-grey, revealing nothing. His threepiece suits were all the same: immaculately tailored (by Lloyd Brothers in Toronto or one of the bespoke shops in Savile Row), but interchangeable; no one ever remembered anything he wore. Even his handshake was bereft of feeling. ”Like taking hold of a piece of cold fish,” one Bay employee recalled. ”There was no squeeze. You let go quickly, because you got no response.”

TRANS-ATLANTIC BLOOD FEUD 391.

Philip Alfred Chester, Managing Director, HBC

He grew up in a harsh and sterile place-Long Eaton, an industrial town in the working-cla.s.s region of Derbys.h.i.+re, where his mother (a Rhinelander) worked as a governess and his father as an intermittently employed millhand. In 1914, Philip, who was then barely eighteen, volunteered for the King's Royal Rifle Corps. The day he was set to leave for the Front-already dressed in his uniform and ready to board the troop train-his mother wanted to snap a picture of him with her Brownie. She aimed the camera, but young Philip's grandmother 392 MERCHANT PRINCES.

smashed it out of her hands with the admonition: ”Not on the Sabbath!”

Chester won a field commission (to Staff Captain) and was severely wounded, both times on January 10, first in France and later on the Isonzo Front in northern Italy. He saved his gratuities and had just enough money to put himself through accounting school, then joined the Hudson's Bay Company's London office. He grew to love the Company, but his feelings were poisoned by his intense awareness that no matter what he did, no matter how suc- cessful within the HBCs hierarchy he might become, its upper-cla.s.s directors would make him feel he didn't quite measure up, that he was of lowly birth, a man who had emigrated to make his way in a former colony.

”However nice they are to you, they'll never accept you, because they know where you came from by the sound of your voice,” Frank Walker, his executive a.s.sistant and later editor of the Montreal Star, had warned Chester after he had been f~ted at a social function by members of the London board. Years later, Lady Cooper, Sir Patrick's widow, confirmed that diagnosis. ”Socially,” she recalled, ”Chester wasn't in the same group as the other people he worked with. They were all on a higher plane in London.

He thought they were always looking down on him, which made him feel mad.

He was absolutely off his head. My husband was being invited to stay at Sandringham ... the King would invite him to go down.Then he was made a director of the Bank of England, and Chester hated him more than ever. He'd never even met the Governor of the Bank of England. My husband was moving in those circles-miles above Philip.”

ButChester knewthe rules ofthe game and howitwas played. Confronted by the icy nuances of the British cla.s.s system, he decided to lind a suitable exit. He couldn't change his birthplace, but he could fix his speech, and eventually he did. He invented a new persona for himself TRANS-ATLANTIC BLOOD FEUD 393.

to bypa.s.s the upper-cla.s.s English habit of accepting or dismissing individuals on the basis of their accents. His voice, melodious, incongruously rich coming through those pursed lips, marked him as a certified gentleman. ”Ile never achieved the'oink'of an old Etonian,”

remembered Charles Loewen, the Bay Street broker who married Chester's daughter, Susanne. ”His became an unidentifiable English accent, a sort of Alistair Cooke inflection.”