Part 26 (1/2)
Gordon Smith, the scion of a wellknown grain family with the appropriate Winnipeg CANADIAN AT LAST 435.
credentials (directors.h.i.+ps in Beaver Lumber and Monarch Life) joined the board, as did James Richardson, who became chairman and the fourth-gen- eration member to head the family grain firm. (This particular Richardson later became minister of national defence in the Trudeau cabinet.) Two other previously named Committeemen, Stewart Searle and Joe Harris, J . oined the parent board.
But the most significant catch was Graham Towers, the former (and first) governor of the Bank of Canada, who during his twenty-year reign at the central bank had become universally recognized as the countrys most respected economic thinker. In his time, Towers had preserved an unsullied reputation for business prescience, but he never lost his shy and self-depreciating presence. At one time he found himself at a Maritimes hotel without enough cash to settle his account. When a suspicious cas.h.i.+er demanded identification before he would cash a cheque, the Bank of Canada Governor tried with considerable embarra.s.sment to avoid revealing who he was, but finally pulled out a dollar bill and reluctantly showed the startled hotel employee his signature, then decorating Canada's paper currency.
As the Canadian Committee grew in stature, the British board was undergoing a similar metamorphosis. The distinguished but largely decorative Lords Waverley and Alanbrooke departed, while J.E.H. Collins, a thirty-six-year-old financier who later headed Morgan, Grenfell, the London banking firm, moved in, as did Henry (later Lord) Benson and Lord Heyworth.
Collins put in a useful decade and a half on the board, questioning policies with youthful vigour, but it was Benson and Heyworth who caused the most troubleand, in retrospect, the most regret. A distinguished Coopers & Lybrand accountant who had served as a colonel in the Grenadier Guards, Benson was a born 436 MERCHANT PRINCES.
troubleshooter, having chaired three dozen commissions and inquiries.
'rough and unsentimental, he took a good look at the HBC and decided the make-up of its non-executive board of directors was all wrong. To help him with what he felt were the required reforms, he recruited to the board Lord Heyworth, the recently retired head of Unilever, one of the world's great trading companies. Heyworth had worked for the AngloDutch soap and food multinational in Canada, had married a Canadian and was vitally interested in improving the HBCs administration.
The pair set down the necessary steps to reorient a firm whose earnings and performance record they felt had been deplorable. They recommended that the Company's most able operating executives be appointed to a revamped board that would include half a dozen Canadians of Graham Towers's stature; that the Company be immediately Canadianized by transfer of its charter across the Atlantic; and that the HBCs Canadian headquarters be moved from Winnipeg to Montreal or Toronto. The hidden item on their agenda was that Keswick, whom they considered too old-fash- ioned and too compa.s.sionate to wield a broad enough axe, be shoved aside and replaced by Heyworth as a fulltime Governor with clear executive powers to modernize the Company and turn it Canadian. The rest of the board demurred, and even if nearly all of the directors would later admit that Benson and Heyworth had been right, not much happened.
What brought the impa.s.se to a head was the move by Keswick to fill a British board vacancy with Lord Cobbold, the retiring governor (1949-61) of the Bank of England. A subsequent Lord Chamberlain of the Royal Household and later a permanent Lord in Waiting to the Queen, Cameron Fromanteel Cobbold CANADIAN AT LAST 437.
was the perfect personification of the trend Benson and Heyworth had been protesting against: perpetuation of the Company's creaky command structure by the naining of yet another distinguished non-executive director with little knowledge of Canada and less of retailing to a board already top-heavy with such creatures. ”Benson and Heyworth,” Links later recalled, ”argued that far from adapting ourselves to change, we were determined to perpetuate the traditional, dccorative, and entirely ineffective board of the past. All of us agreed there was much to be said about the approach of appointing executive directors, but little to be (lone about it until the right people could be found. Interestingly, the Canadian members were aghast at the prospect and demanded that Benson and Heyworth resign immediately. There was no difficulty about this-neither of them wanted to stay under existing conditions. Heyworth just walked out of the board meeting but Benson, cerebrally superior to anv of us, stayed behind to tell us not what he thought of the Canadians but what the Canadians thought of us, one by one. There was no malice in this, nothing more than a sense of duty to ensure that we did not continue under any delusions.”
Keswick won that round (”They had no notion of the strength of the man they were up against,” his wife later declared). It was a remarkable reflection on both men that after it was all over, Benson remained Keswick's personal accountant. Yet it was a hollow victory. Looking back on Benson's thwarted coup dYtat, Peter Wood enthusiastically sided with the departed renegades, ”They were absolutely right,” Wood maintained.
”If their advice had been followed, the Company would have moved to Canada ten years earlier and it would have been very different. For one thing, we could have got into the first instead of third generation of shopping 438 MERCHANT PRINCES.
centreS, which would have meant grabbing a lot of the most desirable locations. We could never do that as long as Chester was around.”
HAVING CONSOLIDATE'D ills POWEIZ and position, by the late 1950s Chester had changed. The provocative complainer of the Cooper period had been replaced by a far more equable and cultured presence who had become a fervent Canadian nationalist. He regarded his past battles with London as having been a microcosm of Canada's struggle to free itself from foreign domination, and in Winnipeg's case to become less dependent on the overwhelming influence of central Canadian bankers. He was part of the small but powerful circle of Manitoba capitalists-the Richardsons, the Rileys, the Gourleys and others-dedicated to halting at Winnipeg the flow of money eastward from British Columbia and the Prairies, which was why they launched financial service inst.i.tutions and insurance conipanies.
Within that context Chester grew frustrated by his confinement to his Winnipeg circle and, incongruous as it seemed, enjoyed nothing so much as his semi-annual visits to London. Corporately, he desperately wanted to be the architect of the Company's patriation to Canada, realizing that it had become silly to have the HBC run from London. But personally, he loved the stays in his suite at the Dorchester Hotel, his dinners with the cultured members of the HBC board at Claridges and the St James's Street clubs, or at Greenwich. He enjoyed especially spending weekends at the country home of Joe Links, playing poker and discussing modern art, ”He was totally dedicated to the HBc and everybody, both in London and Canada, knew it and respected him for it,” Links reminisced. ”We all liked his company, and above all, trusted him.”
CANADIAN AT LAST 439.
Chester did not plan to attend the Company's May 1959 Court because most of the board was due to be in Winnipeg during July in connection with the Queen's visit for the Rent Paying Ceremony. He did, however, go to London in February and et.i.ther caught pneumon1a or suffered a mild stroke. On his way home, he convalesced at Toronto's Park Plaza Hotel for a week.
On July 23 at a Canadian Committee meeting in Winnipeg, one of the subjects discussed was enlargement of the Company board that would have made more room for Canadians while retaining the requirement that eight directors-including the Governor and Deputy Governor-should be U.K.
residents. Chester stood alone in opposing the restriction, and when he recognized there would be no movement on the issue, orally submitted his resignation.
He was on the platform at the Rent Paying Ceremony at a.s.siniboine Park the next day and even gave a large garden party at his home immediately afterwards. Although his resignation did not officially take effect until September 30, he never again set foot in Hudson's Bay House.*
RICHARD MURRAY, WHO NOW BECAME the HBC's Managing Director, possessed the one quality that could never have been ascribed to Chester: he was a diplomat.
*Chester's final bonus and pension payment amounted to $505,000. The pressures of work removed, Chester lived another seventeen years. Although he resolutely stayed away from the HBC and didn't even shop at its Winnipeg store, in 1976, when he knew he was dying, Chester returned to the Company fold. He requested that his burial service be celebrated byJack Dangerfield andjoan Whiti ng, HBC executives who had become Anglican priests. And so it was.
440 MERCHANT PRINCES.
High-strung, romantic and compa.s.sionate, with a wideranging mind and a set of beliefs stronger than the discipline required to contain them, he tended to be indecisive and dithering. Yet Murray was, in a way, the perfect trans-Atlantic gentleirian-in awe of the Establishments on both sides of the ocean, yet their willing and capable instrument. Ile got along with the Canadians who mattered as well as with Keswick, and after one of the Governor's C anadian visits wrote him a typically effusive letter: ”The atmosphere was indeed extraordinary, when vou arrived; in fact, it defied description or a.n.a.lysis. Your direct, constructive and friendly approach to all issues and personalities in the short time you were with us did a tremendous amount of good.” Murray was a true Bay man, outrageously proud of working for what he described as ”the most h.e.l.lishly modern old-fas.h.i.+oned company in the world,” and boasted that the Winnipeg headquarters staff often came to work at 7:45 in the morning, although the office didn't officially open until 8:30, just to get an early start.* He wasn't a retailer, and swore he never would be, but loved what he called ”the trading part” of the Company and was known to comfort employees complaining about their jobs with the slightly incongruous sally: ”How would you like instead to be a vice-president of General Motors in charge of designing tail lights?”
*Murray fitted right in Aith the Compam,'s Scottish traditions, although he had been born in Winnipeg. When he was out driving, he not only tried hard to make sure that the money he put into parking meters covered only his required time, but if he miscalculated and returned before the meter had expired, he'd sit in his car until it did.
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A graduate in liberal arts and law from McGill University, Murrav volunteered for the Royal Canadian Navy and served as a corvette signals officer, then joined External Affairs and was almost immediately posted to the Canadian Emba.s.sy in Was.h.i.+ngton. He worked under Lester Pearson, Hume Wrong, Clifford Clark, Norman Robertson, Wynne Plumptre and John Deutsch, the intellectual giants who dominated Canada's post-war recovery, and emerged from that magic apprentices.h.i.+p as both a patriot and a Liberal.*
Unable to meet the expenses of his growing family on an External salary, Murray joined the HBCs fur department in Montreal and within two years was named head of the New York fur-sales operation. Thrust among the street-wise Jewish traders of Seventh Avenue, he surprised everyone, including himself, by successfully turning the FIBCs auction house into a major profit centre that set the trade's pace and prices. By 1955, he had been transferred to Winnipeg as Chester's chief of staff and heir apparent.
Murray's first major move as Managing Director was his 1960 decision to purchase Henry Morgan & Company, a Montreal-based, family-owned department store with ten outlets and annual sales of $48 million. The move, financed with a rights issue and an increase in equity share capital, broke Chester's most sacred
*During the 1962 general election, when the upstart Quebec wing of the Social Credit party threatened the Liberal party's bastion, Murray was watching the outcome on television in the viceregal suite of the Royal York Hotel in Toronto with a group ofHBC executives. As a news flash appeared on the screen that a Cr6ditiste had captured the traditionally Rouge seat of Quebec East, Murray jumped to his feet and shouted, ”It's a national disgrace! ”
442 MERCHANT PRINCES.
Y. R. ”d.i.c.k” Murray, Managing Director, HBC
commandment that the Company not go ”whoring in the Fast.” Since Morgan's owned five shopping-centre branches, the purchase signalled the Bay's first venture into the suburbs, a move that Chester had also vehemently opposed. Morgan's staff organization and downtown store turned out to be riddled with problems and neglect, while Montreal's carriage trade, which had sustained the main store, promptly switched to shopping at Ogilvy's.
”Those wheat farmers from Winnipeg moved CANADIAN AT LAST 443.
in and catered to a wider market,” Aird Nesbitt, who then owned Ogilvy's, disdainfully declared. ”Now the Morgan family buys in our store.”
Despite its hold steps eastward, the Hudson's Bay Company retained its reputation as ”the sick man of the Canadian retail business,” its image tarnished by age and conservatism. There was growing evidence that the acquisition had been a desperately costly way to break into the East; $12 million had been spent to modernize its stores, and the chain had still to produce any profit. ,,A stroll through any Bay [department store unit]
in the 1950s and 1960s indicated that the ingrained and rigid policies of the 1930s were not about to be abandoned overnight,” reported James Bryant, a department store chronicler. ”In a Bay store in the Boulevard Shopping Centre in the east end of Montreal, six years after the Bay had taken it over from Morgan's, the luggage department consisted of one camper's trunk and one suitcase. On them leaned a lonesome bicycle, the total stock in that category.” Murray hired a top U.S. retailing consultant, Alfred H. Daniels, a former head of Federated Department Stores, to survey the scene. He found deep variances between both stores and departments. ”There were no common denominators,” Daniels reported.